Session 9 gm product decision


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  • A product’s tangible attributes can be assessed in physical terms such as weight, dimensions, or materials used. Consider, for example, a flat-panel TV with an LCD screen that measures 42 inches across. The unit weighs 100 pounds, is 4 inches thick, and has a tuner capable of receiving high-definition TV signals over the air. These tangible, physical features translate into benefits that enhance the enjoyment of watching prime time TV and movies on DVR’s.
  • Companies differ in terms of both their willingness and capability to identify and produce profitable product adaptations. Unfortunately, in companies where an ethnocentric mind-set predominates, executives and managers are oblivious to the issues presented here. One new-product expert described three stages that a company must go through, they are listed above.
  • This slide sums up the section regarding choosing a product-communication strategy. It is important to note that only after analysis of the product-market fit and of company capabilities and costs can executives choose the most profitable strategy.
  • Aesthetic elements that are deemed appropriate, attractive, and appealing in one’s home country may be perceived differently elsewhere. In some cases, a standardized color can be used in all countries; examples include the distinctive yellow color on Caterpillar’s earth-moving equipment and its licensed outdoor gear and the red Marlboro chevron. In other instances, color choices should be changed in response to local perceptions.
  • The starting point for an effective worldwide new-product program is an information system that seeks new-product ideas from all potentially useful sources and channels these ideas to relevant screening and decision centers within the organization. Ideas can come from many sources, including customers, suppliers, competitors, company salespeople, distributors and agents, subsidiary executives, headquarters executives, documentary sources (e.g., information service reports and publications), and, finally, actual firsthand observation of the market environment. The diagram on this slide illustrates the continuum that new products will fall into and the amount of learning that consumers will have to go through in order to use the product.
  • A high volume of information flow is required to scan adequately for new-product opportunities, and considerable effort is subsequently required to screen these opportunities to identify candidates for product development. The best organizational design for addressing these requirements is a new product department. Managers in such a department engage in several activities. First, they ensure that all relevant information sources are continuously tapped for new-product ideas. Second, they screen these ideas to identify candidates for investigation. Third, they investigate and analyze selected new-product ideas. Finally, they ensure that the organization commits resources to the most likely new-product candidates and is continuously involved in an orderly program of new-product introduction and development on a worldwide basis.
  • Product planning notes Products difficult to differentiate: steel, aspirin, chicken Yet companies do differentate these Bayer aspirin can charge a price premium, based on its reputation. And Perdue chickens typically command a 10% price premium in the market through persuading customers that its products are more tender and fresher A key to profitability - if two or more products are perceived to be identical, consumers will choose the product with the lower costs (monetary, time, risk/anxiety)
  • A frequently used framework for classifying products distinguishes between consumer and industrial goods. Consumer and industrial goods, in turn, can be further classified on the basis of criteria such as buyer orientation. Buyer orientation is a composite measure of the amount of effort a customer expends, the level of risk associated with a purchase, and buyer involvement in the purchase. The buyer orientation framework includes such categories as convenience, preference, shopping, and specialty goods.
  • Customers integrate all their experiences of observing, using, or consuming a product with everything they hear and read about it. The essence of a brand exists in the mind; as such, brands are intangible. However, companies develop logos, distinctive packaging, and other communication devices to provide visual representations of their brands. A logo can take a variety of forms, starting with the brand name itself.
  • This Slide illustrates that information about products and brands comes from a variety of sources and cues, including advertising, publicity, sales personnel, and packaging. Perceptions of service after the sale, price, and distribution are also taken into account. Information about products and brands comes from a variety of sources and cues, including advertising, publicity, sales personnel, and packaging. Perceptions of service after the sale, price, and distribution are also taken into account.
  • Products and brands can be broken down into three different categories. These are local, international and global. The next few slides illustrate the difference between the categories.
  • Companies should place a priority on creating strong brands in all markets through global brand leadership.
  • Both this slide and the next offer 8 suggestions for managers that are seeking to develop global brand leadership.
  • The essence of marketing is finding needs and filling them. Maslow’s hierarchy of needs, a staple of sociology and psychology courses, provides a useful framework for understanding how and why local products and brands can be extended beyond home country borders. Maslow hypothesized that people’s desires can be arranged into a hierarchy of five needs.14 As an individual fulfills needs at each level, he or she progresses to higher levels. At the most basic level of human existence, physiological and safety needs must be met. People need food, clothing, and shelter, and a product that meets these basic needs has potential for globalization. Mid-level needs in the hierarchy include self-respect, self-esteem, and the esteem of others. These social needs, which can create a powerful internal motivation driving demand for status-oriented products, cut across the various stages of country development.
  • One of the facts of life in global marketing is that perceptions about and attitudes toward particular countries often extend to products and brands known to originate in those countries. Such perceptions contribute to the country-of-origin effect; they become part of a brand’s image and contribute to brand equity. This is particularly true for automobiles, electronics, fashion, beer, recorded music, and certain other product categories. Perceptions and attitudes about a product’s origins can be positive or negative. On the positive side, as one marketing expert has pointed out, “‘German’ is synonymous with quality engineering, ‘Italian’ is synonymous with style, and ‘French’ is synonymous with chic.”
  • In many instances, packaging is an integral element of product-related decisions. Packaging is an important consideration for products that are shipped long distances to markets in all parts of the world.
  • One hallmark of the modern global marketplace is the abundance of multi-language labeling that appears on many products. In today’s self-service retail environments, product labels may be designed to attract attention, to support a product’s positioning, and to help persuade consumers to buy.
  • Session 9 gm product decision

    1. 1. International Marketing Mix: Using the example of any one country (USA / UK any other) Product Decisions Product Decisions – Concepts, positioning, design, geographic expansion, strategic alternatives, new products; Statutory Compliance; Product Customization
    2. 2. When launching a product into foreign markets firms can usea standard marketing mix or adapt the marketing mix, to suitthe country they are carrying out their business activities in.
    3. 3. Product: The P, that carries your substance
    4. 4. Product Why Crucial???• Basic marketing concepts tell us that we will sell more of a product if we aim to meet the needs of our target market.• Product decisions are probably the most crucial as the product is the very epitome of marketing planning.• The decision whether to sell globally standardized or adapted products is too simplistic for todays market place. Many product decisions lie between these two extremes.
    5. 5. Product??• A product can be defined as a collection of physical, service and symbolic attributes which yield satisfaction or benefits to a user or buyer. A product is a combination of physical attributes say, size and shape; and subjective attributes say image or "quality".
    6. 6. Product???A products physical properties are characterized the same the world over. They can be convenience or shopping goods or durables and nondurables; however, one can classify products according to their degree of potential for global marketing:i) local products - seen as only suitable in one single market.ii) international products - seen as having extension potential into other markets.iii) multinational products - products adapted to the perceived unique characteristics of national markets.iv) global products - products designed to meet global segments.
    7. 7. Basic Product Concepts Products can also be• A product is a good, classified as: service, or idea Based on users – Tangible Attributes Consumer Goods Industrial Goods – Intangible Attributes Based on purchase Convenience• Product classification Preference Shopping – Consumer goods Specialty goods – Industrial goods Based on life span Durable, Non-durable Disposable
    8. 8. Product & brands categories:• Local products• National products• International products• Global products
    9. 9. Product: What to Sell ?• The international marketer needs to determine what the market offering should be in a foreign market : – Defining the product offering – Products versus Services/Rights
    10. 10. The Product Offering Potential Product Augmented Product Expected Product Generic Product Core BenefitSource : Adapted from: P. Kotler, Marketing Management, 1994
    11. 11. International Product Strategies Straight Product Product Extension Adaptation InnovationThe firm adopts the The company caters The firm designs asame policy used in to the needs and wants product from scratchits home market. of its foreign customers. for foreign customers. Source: W.J. Keegan, Multinational Product Planning: Strategic Alternatives, Journal of Marketing, 33, 1969, pp.58-62
    12. 12. Extend, Adapt, Create: Strategic Alternatives in Global Marketing• Extension – offering product virtually unchanged in markets outside of home country• Adaptation – changing elements of design, function, and packaging according to needs of different country markets• Creation – developing new products for the world market
    13. 13. International strategic alternatives Product Communications Product/functions Conditions of product Examples strategy strategy Met use1 Extension Extension Same Same Pepsi2 Extension Adaptation Different Same Soups3 Adaptation Extension Same Different Agriculture chemicals4 Adaptation Adaptation Different Different Farm implements5 Invention New Same - Tyson turbine water pump Thailand tuna
    14. 14. Product Warranty and Service• Product Warranty : – Should a company keep the same warranty for all markets or adapt it country by country ? – Should the firm use warranty as a competitive weapon ?• Product Service : – Service capability to accredit the firm with foreign suppliers – high investment in facilities, staffing, training, and distribution network
    15. 15. Goods versus Services/Rights• Instead of marketing a product abroad, the company may also sell rights or services in a foreign market: - rights : brand / trademark / patent - services : management skills (hotel chain)
    16. 16. Sales of Rights - Examples• Franchising business : - Coca-Cola : use of its name to licensed bottlers around the world. - Pilkington: licensing of the process of float glass. - Other : Manpower, McDonalds, etc.
    17. 17. Sales of Rights - Examples• Management Contracts : - Sheraton Hotels : • Management contract for hotels abroad • Sale of consulting and management contracts • Little equity invested : Sheraton manages almost 400 hotels worldwide but has equity in only 40 of them. • Advantages : minimum risk & strong competitive position.
    18. 18. Sales of Rights - Examples•Turn-Key operations : – The firm is selling technical and engineering skills. – The firm is training foreign nationals to run a plant. – The firm is supplying material and equipment.
    19. 19. Product design• Changes in design are largely dictated by whether they would improve the prospects of greater sales, and this, over the accompanying costs. Changes in design are also subject to cultural pressures. The more culture-bound the product is, for example food, the more adaptation is necessary. Most products fall in between the spectrum of "standardisation" to "adaptation" extremes.
    20. 20. Standardization versus Customization• Although the products sold abroad generally are not identical to their domestic counterparts, there is always a core of expertise that the firm can carry abroad.• Principle " All Business is local."
    21. 21. Reasons for Product Standardization• Economies of scale : Production, R&D, Marketing• Common Consumer needs : Drinking patterns, car sizes• Consumer Mobility : Customer retention & Loyalty American Express, Kodak, ...• Home Country Image : US jeans, French Perfumes,...• Impact of technology : B to B Markets
    22. 22. Reasons for Product Adaptation• Climate: US Air-conditioning equipment• Skill level of users : Computers in Africa• National consumer habits : - front-loading/top-loading washing machines - car models : four-door (F) - two-door (Germ.)• Government regulations on products, packaging, and labels.• Company history and operations (subsidiaries)
    23. 23. Example: European Toothpaste Market• Market Size in France: FF 1,8 Bill. (1996) • Competitors in France :• Trends: – Unilever 33% – Multiple number of – Colgate 22,5% toothpastes/family – Henkel 19% – Therapeutic / – Smithkline B. 12% sophisticated products – P&G 0% – Cosmetic products – Volume – Price
    24. 24. Drivers of Product Adaptation Example COLGATE Toothpaste• (1) Differences in National Regulations – Triclosan forbidden in Germany – High fluorine content in local water (UK) – Obligation to sell high fluorine content toothpaste in pharmacy (France) – Stringent clinical tests in France
    25. 25. Drivers of Product Adaptation Example COLGATE Toothpaste• Packaging: – Ecological Stand-up tubes in Germany – Failure in France (Carrefour)• Distribution: – Role of pharmacy in Italy and Spain – Role of drugstore in UK• Communication: – Medical in Italy and Spain (recommended by dentist) – Non-medical in UK
    26. 26. Factors behind Standardization• Factors encouraging standardisation are:• i) economies of scale in production and marketing ii) consumer mobility - the more consumers travel the more is the demand iii) technology iv) image, for example "Japanese", "made in".
    27. 27. Factors encouraging adaptationi) Differing usage conditions. These may be due to climate, skills, level of literacy, culture or physical conditions.ii) General market factors - incomes, tastes etc.iii) Government - taxation, import quotas, non tariff barriers, labelling, health requirements. Non tariff barriers are an attempt, despite their supposed impartiality, at restricting or eliminating competition.iv) History. Sometimes, as a result of colonialism, production facilities have been established overseas.v) Financial considerations. In order to maximise sales or profits the organisation may have no choice but to adapt its products to local Pressure. Sometimes, as in the case of the EU, suppliers are forced to adapt to the rules and regulations imposed on them if they wish to enter into the market.
    28. 28. Production decisions• In decisions on producing or providing products and services in the international market it is essential that the production of the product or service is well planned and coordinated, both within and with other functional area of the firm, particularly marketing.• The main elements to consider are the production process itself, specifications, culture, the physical product, packaging, labelling, branding, warranty and service
    29. 29. Aesthetics• Global marketers must understand the importance of visual aesthetics• Aesthetic Styles (degree of complexity found on a label) differ around the world
    30. 30. Product Warranties• Express Warranty is a written guarantee that assures the buyer is getting what they paid for or provides a remedy in case of a product failure• Warranties can be used as a competitive tool
    31. 31. New Products in Global Marketing• Pursue opportunities in competitive arenas of global marketplace• Focus on one or only a few businesses• Active involvement from senior management• Ability to recruit and retain best employees• Understand the importance of speed in bringing product to market
    32. 32. Identifying New Product Ideas• What is a new Product? – New to those who use it or buy it – New to the organization – New to a market
    33. 33. The International New Product Department• How big is the market for this product at various prices?• What are the likely competitive moves in response to our activity?• Can we market the product through existing structure?• Can we source the product at a cost that will yield an adequate profit?• Does product fit our strategic development plan
    34. 34. Testing New Products• When do you test a new product? – Whenever a product interacts with human, mechanical, or chemical elements because there is the potential for a surprising and unexpected incompatibility• Test could simply be observing the product being used within the market
    35. 35. Key terms and concepts• Product – It is everything (both favorable and unfavorable) that a buyer receives in a transaction. – It is not just the “thing” - it’s the need satisfying offering of a firm• Quality – the ability of a product to satisfy a customer – relative to competitors – a moving target - changing expectations
    36. 36. Product Differentiation• Defined: the degree to which competing products are perceived to be different.• Some products are difficult to differentiate.• Product differentiation is a key to profitability – Motorola had it – have they lost it?• Consider the entry of a new product/service to the market.
    37. 37. Classifications of Consumer Products Products Products Consumer Consumer Business Business Products Products Products ProductsConvenienceConvenience Shopping Shopping Specialty Specialty Unsought Unsought Products Products Products Products Products Products Products Products
    38. 38. Classification of Consumer Products• Convenience products – Inexpensive, little shopping effort expended – Location is paramount• Shopping products – More expensive and found in fewer stores than convenience products. There are two types: • Homogenous shopping products: difference is on price • Heterogeneous shopping products: difference is on style/features – What are the implications of marketing each of these two types?
    39. 39. Classification of Consumer Products• Specialty products – Products the consumer is willing to spend considerable effort to locate – Need to maintain image, limit outlets to those that will provide specific attention to the product.• Unsought products – Products the consumer does not actively seek. – Key is identification of buyers and targeted promotions, including personal selling
    40. 40. The Product Life Cycle (typical) Intro. Growth Maturity Decline Total Industry Sales Total Industry $0 Profit Time
    41. 41. Introduction Stage• Product category has recently been introduced into the market - consumers are unaware of the product.• Proper capitalization is important.• Industry sales are low, but growing.• Industry profits are negative.• Advertising frequently includes an orientation toward primary demand.• Creating awareness and trial are common marketing objectives.• Sales promotion used to trigger product trial.
    42. 42. Growth Stage• Sales are rising rapidly.• Profits appear, peak, and begin to decline just before the end of the period.• Profit possibilities attract competitors, but many competitors will be “shaken out” during this phase as well. Why?• Promotion shifts from primary to selective demand.• Building market share is a common marketing objective.
    43. 43. Growth Stage (continued)• Keys in the growth stage – Maintain strong distribution networks (must be able to get products to consumers) – Control costs – Product differentiation (better at meeting customer needs) – Incremental improvements in product features/benefits and product quality are critical (competitors are refining/improving marketing mixes)
    44. 44. Maturity Stage• Sales rise to their peak, then level off.• Industry profits are in a slow decline.• Competition increases.• Promotional costs increase (selective demand), and sales promotion to trigger switching is more common
    45. 45. Maturity Stage (continued)• Products become more homogenous, triggering price competition. Need to differentiate brand.• Diversify brand and models.• Can be difficult to enter the market in this phase (capturing vs. retaining share)• Efficiency is a key.
    46. 46. Decline Stage• Sales decrease.• Profits decrease and eventually disappear.• Declining numbers of competitors.• Spend enough on promotion to retain hard core brand loyal customers.• Eliminate unprofitable outlets.• Marketing objective: reduce costs and milk the brand, or drop it.
    47. 47. How to use the PLC(or, how not to get used by the PLC) • The PLC applies to product categories/ideas, not individual brands. • The PLC is market-specific. • The PLC is not deterministic. – Increase frequency of use by current customers – Add new users to the product. – Add new uses for the product. – Packaging/quality improvements (industry-wide) which add significant consumer benefits.
    48. 48. New Product Development Process • Idea Generation • Screening – Strengths/weaknesses, compatible, ROI estimate • Idea Evaluation – Concept testing, cost/sales estimates • Development – Develop prototype, test marketing mix, revise ROI estimate • Commercialization – Finalize all plans, start production, final ROI estimate
    49. 49. Why New Products Sometimes Fail• Inadequate marketing research• Product deficiencies• Cost overruns• Unanticipated competitor reactions• Poor timing
    50. 50. Case: Cotton Production/Marketing InterfaceSpinnersMachines are highly flexible, that is they can usually switch to a variety of yarn requirements. The machines are geared tohigh production, are automated and are of a precision for constant quality provision. There are strict process controls andbuilt - in quality control. Poor raw material, especially when contaminated with metal particles, damages opening mills, gridknives, fans and card clothing. Previous devices employed to remove these (magnets) are becoming less effective. Theconsequences are damage in the blowroom and carding and danger of fire. Quality is therefore defined as properties of theend use (clothing etc.), efficiency of weaving and knitting and the efficient running of the spinning plant. Spinners requireraw cotton which is free of trash, dust, sugar and honey dew contamination, seed coats, bark and foreign fibres and, willnot nep the cloth. Further requirements are a certain length (could be short, medium or long), uniformity of length, strength,fineness, maturity and a certain elongation and colour.SuppliersIn order to meet these high quality demands, the growers have to ensure that the production, picking and ginning is of avery high standard.Cotton gradingThe Liverpool Cotton exchange, for one, relied on the skills of its experts to manually classify raw fibre purchases for itsclients. It still holds the "standards" for length, colour and trash content. As well as the demands of modem machinery, thelack of standardised measuring and cotton classification procedures has resulted in commercial conflict and legal disputesabout the true nature of traded cotton. Now, computer based high volume instrument listing systems of raw cotton (HVIsystems) are available. The system can handle large numbers of bales, reduce variation in classification and the need forhighly trained bate classifiers.For cotton exporters the system offers the following advantages:• enhanced objectivity in classification• improve communication if similar systems are used by sellers or buyers• reduced conflict and need for arbitration• enhanced competitiveness against synthetic fibres• improved integration with modern spinning machines• reduced costs on training of experts and in measuring time.The system can process 2000 bales per day and give a printout on the seven parameters of grading. These include lengthand length uniformity, strength and elongation, micronaire or fineness, leaf and colour. Manufacturers include SPINLARINC. of Knoxville, USA.
    51. 51. managingmarketing International Marketing Mix Decisions What aspects of Product can be modified?from global headquarters  Attributes  Brand (Global vs. Local)  Packaging  Quality  Services (after-sale services, support)  Positioning.
    52. 52. managingmarketing International Marketing Mix Decisions Strategic Alternatives in international and global marketing mix decisions. Managerial issues Advantages and Disadvantages of International Brands  Strong customer recognition/reassurancefrom global headquarters  Economies of scale and scope  Leverages power with retailers  Consolidates efforts across countries  Potential for extension  Not locally responsive  Demotivating for country managers  Difficult to manage  Need to maintain consistency across countries and product-lines.
    53. 53. Product Types• Buyer orientation – Amount of effort expended on purchase – Convenience – Preference – Shopping – Specialty
    54. 54. Brands• Bundle of images and experiences in the customer’s mind• A promise made by a particular company about a particular product• A quality certification• Differentiation between competing products• The sum of impressions about a brand is the Brand Image
    55. 55. Brands
    56. 56. Brands• The added value that accrues to a product as a result of investments in the marketing of the brand• An asset that represents the value created by the relationship between the brand and customer over time
    57. 57. Brands “We have to shift to high value-added products, and to do that we need to improve our brand.”- Noboru Fujimoto, President Sharp Electronics Corporation
    58. 58. Local Products and Brands• Brands that have achieved success in a single national market• Represent the lifeblood of domestic companies• Entrenched local products/brands can be a significant competitive hurdle to global companies
    59. 59. International Products and Brands• Offered in several markets in a particular region – ‘Euro-brands’
    60. 60. Naming your productAlu-Fanny: French Foil wrap Atum Bom: Portuguese tunaCrapsy Fruit: French cereal Kack: Danish sweetsKum Onit: German pencil sharpeners Mukk: Italian yogurtPlopp: Scandinavian chocolate Pocari Sweat: Japanese sport drinkPschitt: French lemonade Poo: Argentine curry powder
    61. 61. Naming your product Phonetic Problems with Brand Names - Bardok (Sounds like Brothel in Russian) - Misair (Sounds like Misery in French) Translations Intent Translation - Stepping Stone - Stumbling Block - Car Wash - Car Enema - Highly Rated - Over Rated Symbols - Owl - Bad Luck in India Other Countries make mistakes too - Zit (Chocolate from Germany) - Koff (Beer)
    62. 62. Global Products and Brands• Global products meet the wants and needs of a global market and is offered in all world regions• Global brands have the same name and similar image and positioning throughout the world
    63. 63. Global Products and Brands A multinational has operations in different countries. A global company views the world asa single country. We know Argentina and France are different, but we treat them the same. We sell them the same products, we use the same production methods, we have the same corporate policies. We even use the same advertising—in a different language, of course. - Alfred Zeien Former Gillette CEO
    64. 64. Country of Origin effect• Country-of-Origin (COO) Influences on Consumers – For many products, the “made in” label matters a great deal to consumers. Key research findings of COO effects: •COO effects are not stable •Consumers prefer domestic products over imports •Both the country of design and the country of manufacturing/assembly play a role in consumer attraction.
    65. 65. Branding Strategies• Combination or tiered branding: allows marketers to leverage a company’s reputation while developing a distinctive identity for a line of products – Sony Walkman• Co-branding features two or more company or product brands – NutraSweet and Coca-Cola – Intel Inside
    66. 66. Branding Strategies• Brand acts as an umbrella for new products – Example: The Virgin Group • Virgin Entertainment: Virgin Mega-stores and MGM Cinemas • Virgin Trading: Virgin Cola and Virgin Vodka • Virgin Radio • Virgin Media Group: Virgin Publishing, Virgin Television, Virgin Net • Virgin Hotels • Virgin Travel Group: Virgin Atlantic Airways, Virgin Holidays
    67. 67. Global Brand Development• Questions to ask when management seeks to build a global brand: – Will anticipated scale economies materialize? – How difficult will it be to develop a global brand team? – Can a single brand be imposed on all markets successfully?
    68. 68. Global Brand Development• Global Brand Leadership – Using organizational structures, processes, and cultures to allocate brand-building resources globally, to create global synergies, and to develop a global brand strategy that coordinates and leverages country brand strategies
    69. 69. Global Brand Development• Create a compelling value proposition• Think about all elements of brand identity and select names, marks, and symbols that have the potential for globalization• Research the alternatives of extending a national brand versus adopting a new brand identity globally• Develop a company-wide communication system
    70. 70. Global Brand Development• Develop a consistent planning process• Assign specific responsibility for managing branding issues• Execute brand-building strategies• Harmonize, unravel confusion, and eliminate complexity
    71. 71. Local versus Global Products andBrands: A Needs-Based Approach Self-actualization External/Internal Esteem Social Safety Physiological
    72. 72. Country of Origin as Brand Element• Perceptions about and attitudes toward particular countries often extend to products and brands known to originate in those countries – Japan – Germany – France – Italy
    73. 73. Packaging• Consumer Packaged Goods when the packaging is designed to protect or contain the product during shipping• Eco-Packaging because package designers must address environmental issues• Offers communication cues that provide consumers with a basis for making a purchase decision
    74. 74. Product Packaging and Labeling Protection Climate Transport & Handling Buyers slow usage rate Lack of storage facilites Promotion Legal ConstraintsMerchandising ( income level, shopping habits) Recycling of PackagingMinimum breakage / theft (Duales System, Eco-Emballage)Ease of handling Regulations on consumer info.Multilingual Labels to Convey an International (Origin, weight, ingredients)Image (Zara, Hollywood Chewing Gum)
    75. 75. • POM brand Pomegranate juice used a distinctively shaped bottle to gain attention on the grocery shelf
    76. 76. Labeling• Provides consumers with various types of information• Regulations differ by country regarding various products – Health warnings on tobacco products – American Automobile Labeling Act clarifies the country of origin, and final assembly point – European Union requires labels on all food products that include ingredients from genetically modified crops
    77. 77. Labeling As Americans become increasingly concerned about cholesterol, the FDA (Food and Drug Administration) has responded by requiring food manufacturers to list trans fat (i.e., trans fatty acids) on the Nutrition Facts portion of product labels, effective 1/1/06.
    78. 78. Brands• Brand: A name,sign, symbol intended to identify/differentiate a product from others.• A brand can imply many things to a consumer, including quality and the image of the buyer/user.• Key branding decisions: – Name – Brand sponsor – Brand strategy
    79. 79. Major Branding Decisions• Decision #1: Choosing a brand name – Should suggest product benefits/qualities • Sunkist, Spic and Span, DieHard, Easy-Off – Easy to pronounce, recognize, remember • Tide, Aim, Puffs, but “I Can’t Believe It’s Not Butter” works too! – Distinctive • Taurus, Kodak, Exxon – Translates easily into foreign languages – Capable of registration and legal protection
    80. 80. Major Branding Decisions• Decision #2: Brand Sponsor – Manufacturer’s brand or private brand? – Retailers like private brands • Builds loyalty to the retailer • Frequently better profit margins • But they can be expensive to develop – Family brand or individual brand? • Do existing associations work for the new product?
    81. 81. Major Branding Decisions Decision #3: Product Category Brand Strategy Existing New Line Brand Existing Extension Extension Brand Name New New Multibrands BrandsSource: Kotler and Armstrong (1999). Principles of Marketing, 8th edition. Upper Saddle River, NJ: Prentice Hall
    82. 82. International Branding Strategies One brand name everywhere One brand name everywhere (greater identification of the (greater identification of the product worldwide, but are all product worldwide, but are all consumer needs the same?) consumer needs the same?) Different brand names Different brand names Adaptions and Adaptions and in different markets in different markets modifications modifications (new marketing mixes (new marketing mixes(modifying elements to (modifying elements to for each market – for each market – fit each market – will fit each market – will will this make you will this make you this help you achieve this help you achieve more effective?) more effective?) economies of scale?) economies of scale?)
    83. 83. Brand Equity• A brand has value, called brand equity. Brand equity is based on brand loyalty, name awareness, perceived quality, strong associations, patents, etc.• What are the top brands worldwide for brand equity?• Brand equity makes brand and line extensions easier.
    84. 84. Managing Brand Equity• Brand equity is an asset, and needs to be managed. – maintain/improve top-of-mind awareness – improve perceptions of quality – create positive brand associations• To manage brand equity, you should: – continuous R & D investment – skillful advertising – avoid short-term actions which undermine the brand in the long-term
    85. 85. Five levels of brand familiarity• Brand rejection: won’t buy unless a relevant factor changes• Brand non-recognition: consumers don’t pay attention to brands (commoditization)• Brand recognition: consumers are aware of the brand and recognize it with/without prompting• Brand preference: consumers usually choose a specific brand• Brand insistence:consumers are willing to prolong search to find the desired brand
    86. 86. Packaging• Four primary functions – Containing and protecting products – Promoting products • Persuasive labeling (critical for many products) • Informational labeling (helps make wsie purchase, lowers cognitive dissonance) – Facilitating storage, use and convenience – Facilitating recycling and reducing environmental damage
    87. 87. Summary• The marketing mix, which is the means by which an organisation reaches its target market, is made up of product, pricing, distribution, promotion and people decisions. These are usually shortened to the acronym "5Ps". Product decisions revolve around decisions regarding the physical product (size, style, specification, etc.) and product line management.