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10-1
Chapter 10
Product and
Brand Decisions
10-2
Introduction: What to Sell ?
The international marketer needs to
determine what the market offering should
be in a fo...
10-3
The Product Offering
Core Benefit
Generic Product
Expected Product
Augmented Product
Potential Product
Source : Adapt...
10-4
Basic Product Concepts
A product is a good, service, or idea
– Tangible Attributes
– Intangible Attributes
Product cl...
10-5
Product Warranty and Service
Product Warranty :
– Should a company keep the same warranty for
all markets or adapt it...
10-6
Goods versus Services/Rights
Instead of marketing a product abroad, the
company may also sell rights or services in
a...
10-7
Sales of Rights - Examples
Franchising business :
- Coca-Cola : use of its name to licensed
bottlers around the world...
10-8
Sales of Rights - Examples
Management Contracts :
- Sheraton Hotels :
• Management contract for hotels abroad
• Sale ...
10-9
Sales of Rights - Examples
Turn-Key operations :
–The firm is selling technical and engineering skills.
–The firm is ...
10-10
International Product Strategies
Straight
Extension
Product Product
Adaptation Innovation
The firm adopts the
same p...
10-11
Extend, Adapt, Create: Strategic
Alternatives in Global Marketing
Extension – offering product virtually
unchanged i...
10-17
Standardization versus
Customization
Although the products sold abroad
generally are not identical to their domestic...
10-18
Reasons for Product Standardization
Economies of scale : Production, R&D, Marketing
Common Consumer
needs : Drinking...
10-19
Convergence in Drinking Patterns
10-20
Convergence of Car Sizes
10-21
Reasons for Product Adaptation
Climate: US Air-conditioning equipment
Skill level of users : Computers in Africa
Nat...
10-22
Example:
European Toothpaste Market
Market Size in France:
FF 1,8 Bill. (1996)
Trends:
– Multiple number of
toothpas...
10-23
Drivers of Product Adaptation
Example COLGATE Toothpaste
(1) Differences in National Regulations
– Triclosan forbidd...
10-24
Drivers of Product Adaptation
Example COLGATE Toothpaste
Packaging:
– Ecological Stand-up tubes in Germany
– Failure...
10-25
managing
marketing
from global headquarters
©2005 Dr.Gerard Ryan, Universitat Rovira i Virgili.
International Market...
10-26
managing
marketing
from global headquarters
©2005 Dr.Gerard Ryan, Universitat Rovira i Virgili.
International Market...
10-27
Product Types
Buyer orientation
– Amount of effort expended on purchase
– Convenience
– Preference
– Shopping
– Spec...
10-28
Brands
Bundle of images and experiences in the
customer’s mind
A promise made by a particular company
about a partic...
10-29
Brands
10-30
Brands
The added value that accrues to a product as
a result of investments in the marketing of
the brand
An asset t...
10-31
Brands
“We have to shift to high value-
added products, and to do that we
need to improve our brand.”
- Noboru Fujim...
10-32
Local Products and Brands
Brands that have achieved success in a
single national market
Represent the lifeblood of d...
10-33
International Products and Brands
Offered in several markets in a particular
region
– ‘Euro-brands’
10-34
Naming your product
Alu-Fanny: French Foil wrap
Crapsy Fruit: French cereal
Kum Onit: German pencil sharpeners
Plopp...
10-35
Naming your product
 Phonetic Problems with Brand Names
- Bardok (Sounds like Brothel in Russian)
- Misair (Sounds ...
10-36
Global Products and Brands
Global products meet the wants and needs
of a global market and is offered in all
world r...
10-37
Global Products and Brands
A multinational has operations in different countries.
A global company views the world a...
10-38
Family Brands
Family Brand
Volkswagen
USA Europe Mexico
"Rabbit" "Golf" "Caribe"
-> lightness -> prestige -> avoid n...
10-39
Private Label Branding
Large retailers are moving increasingly into
their own brand, i. e. Marks &Spencer.
They try ...
10-40
European Consumer Preferences
Regarding Private Labels
Product Category Fr. All. It. Es. GB
Edible Oils
Pasta
Yoghur...
10-41
European Households Judging
Credibility of Private Labels
Private labels per product category (% of sales in qunqtit...
10-42
Country of Origin effect
Country-of-Origin (COO) Influences on Consumers
– For many products, the “made in” label ma...
10-43
Branding Strategies
Combination or tiered branding: allows marketers
to leverage a company’s reputation while
develo...
10-44
Branding Strategies
Brand acts as an umbrella for new products
– Example: The Virgin Group
• Virgin Entertainment: V...
10-45
Global Brand Development
Questions to ask when management seeks
to build a global brand:
– Will anticipated scale ec...
10-46
Global Brand Development
Global Brand Leadership
– Using organizational structures, processes, and
cultures to alloc...
10-47
Global Brand Development
Create a compelling value proposition
Think about all elements of brand identity and
select...
10-48
Global Brand Development
Develop a consistent planning process
Assign specific responsibility for managing
branding ...
10-49
Local versus Global Products and
Brands: A Needs-Based Approach
Physiological
Safety
Social
External/Internal
Esteem...
10-50
Country of Origin as Brand Element
Perceptions about and attitudes toward
particular countries often extend to produ...
10-51
Packaging
Consumer Packaged Goods when the
packaging is designed to protect or contain
the product during shipping
E...
10-52
Product Packaging and Labeling
Protection
Legal ConstraintsPromotion
Climate
Transport & Handling
Buyer's slow usage...
10-54
POM brand
Pomegranate
juice used a
distinctively
shaped bottle to
gain attention on
the grocery shelf
10-55
Labeling
Provides consumers with various types of
information
Regulations differ by country regarding various
produc...
10-56
10-57
As Americans become
increasingly concerned
about cholesterol, the
FDA (Food and Drug
Administration) has
responded b...
10-58
10-59
Aesthetics
Global marketers must understand the
importance of visual aesthetics
Aesthetic Styles (degree of complexi...
10-60
Product Warranties
Express Warranty is a written guarantee that
assures the buyer is getting what they paid
for or p...
10-61
New Products in Global Marketing
Pursue opportunities in competitive arenas
of global marketplace
Focus on one or on...
10-62
Identifying New Product Ideas
What is a new Product?
– New to those who use it or buy it
– New to the organization
–...
10-63
The International New Product
Department
How big is the market for this product at various
prices?
What are the like...
10-64
Testing New Products
When do you test a new product?
– Whenever a product interacts with human,
mechanical, or chemi...
10-65
Looking Ahead
Chapter 11 Pricing decisions
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Product and brand discussion

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Product and brand discussion

  1. 1. 10-1 Chapter 10 Product and Brand Decisions
  2. 2. 10-2 Introduction: 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
  3. 3. 10-3 The Product Offering Core Benefit Generic Product Expected Product Augmented Product Potential Product Source : Adapted from: P. Kotler, Marketing Management, 1994
  4. 4. 10-4 Basic Product Concepts A product is a good, service, or idea – Tangible Attributes – Intangible Attributes Product classification – Consumer goods – Industrial goods
  5. 5. 10-5 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
  6. 6. 10-6 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)
  7. 7. 10-7 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, McDonald's, etc.
  8. 8. 10-8 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.
  9. 9. 10-9 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.
  10. 10. 10-10 International Product Strategies Straight Extension Product Product Adaptation Innovation The firm adopts the same policy used in its home market. The company caters to the needs and wants of its foreign customers. The firm designs a product from scratch for foreign customers. Source: W.J. Keegan, Multinational Product Planning: Strategic Alternatives, Journal of Marketing, 33, 1969, pp.58-62
  11. 11. 10-11 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
  12. 12. 10-17 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."
  13. 13. 10-18 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
  14. 14. 10-19 Convergence in Drinking Patterns
  15. 15. 10-20 Convergence of Car Sizes
  16. 16. 10-21 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)
  17. 17. 10-22 Example: European Toothpaste Market Market Size in France: FF 1,8 Bill. (1996) Trends: – Multiple number of toothpastes/family – Therapeutic / sophisticated products – Cosmetic products – Volume – Price Competitors in France : – Unilever 33% – Colgate 22,5% – Henkel 19% – Smithkline B. 12% – P&G 0%
  18. 18. 10-23 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
  19. 19. 10-24 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
  20. 20. 10-25 managing marketing from global headquarters ©2005 Dr.Gerard Ryan, Universitat Rovira i Virgili. International Marketing Mix Decisions Strategic Alternatives in international and global marketing mix decisions. Managerial issues What aspects of Product can be modified?  Attributes  Brand (Global vs. Local)  Packaging  Quality  Services (after-sale services, support)  Positioning
  21. 21. 10-26 managing marketing from global headquarters ©2005 Dr.Gerard Ryan, Universitat Rovira i Virgili. International Marketing Mix Decisions Strategic Alternatives in international and global marketing mix decisions. Managerial issues Advantages and Disadvantages of International Brands  Strong customer recognition/reassurance  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
  22. 22. 10-27 Product Types Buyer orientation – Amount of effort expended on purchase – Convenience – Preference – Shopping – Specialty
  23. 23. 10-28 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
  24. 24. 10-29 Brands
  25. 25. 10-30 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
  26. 26. 10-31 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
  27. 27. 10-32 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
  28. 28. 10-33 International Products and Brands Offered in several markets in a particular region – ‘Euro-brands’
  29. 29. 10-34 Naming your product Alu-Fanny: French Foil wrap Crapsy Fruit: French cereal Kum Onit: German pencil sharpeners Plopp: Scandinavian chocolate Pschitt: French lemonade Atum Bom: Portuguese tuna Kack: Danish sweets Mukk: Italian yogurt Pocari Sweat: Japanese sport drink Poo: Argentine curry powder
  30. 30. 10-35 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)
  31. 31. 10-36 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
  32. 32. 10-37 Global Products and Brands A multinational has operations in different countries. A global company views the world as a 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
  33. 33. 10-38 Family Brands Family Brand Volkswagen USA Europe Mexico "Rabbit" "Golf" "Caribe" -> lightness -> prestige -> avoid negative connotation
  34. 34. 10-39 Private Label Branding Large retailers are moving increasingly into their own brand, i. e. Marks &Spencer. They try to obtain greater control and higher margins. Private branding can be an effective way to break into foreign markets. (Asian TV manufacturers)
  35. 35. 10-40 European Consumer Preferences Regarding Private Labels Product Category Fr. All. It. Es. GB Edible Oils Pasta Yoghurt Frozen Vegetables Fresh Pasta Breakfast Cereals Instant Soups Icecream Whiskey Smoked Salmon Champagne 19 16 14 5 3 4 3 6 3 3 3 20 24 14 11 7 8 9 10 1 4 4 10 12 6 5 4 2 0 4 2 1 2 11 12 6 6 3 2 2 2 1 1 3 27 24 12 34 5 18 14 21 4 2 6 Private labels per product category (% of sales in qunqtities in hypermarkets and supermarkets) Source: Secodip International, 1998
  36. 36. 10-41 European Households Judging Credibility of Private Labels Private labels per product category (% of sales in qunqtities in hypermarkets and supermarkets) Source: Secodip International, 1998 Europe Germ. Spain France Italy UKCriteria 3 19 78 3 12 85 3 26 72 3 29 68 1 13 86 More expensive Same Less expensive 2 16 83 5 78 17 2 90 8 3 78 19 7 71 22 4 77 18 Higher quality Same Lower quality 6 73 21 6 74 21 3 84 12 4 73 23 10 66 24 5 74 21 More confidence Same Less confidence 7 71 22
  37. 37. 10-42 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.
  38. 38. 10-43 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
  39. 39. 10-44 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
  40. 40. 10-45 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?
  41. 41. 10-46 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
  42. 42. 10-47 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
  43. 43. 10-48 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
  44. 44. 10-49 Local versus Global Products and Brands: A Needs-Based Approach Physiological Safety Social External/Internal Esteem Self-actualization
  45. 45. 10-50 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
  46. 46. 10-51 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
  47. 47. 10-52 Product Packaging and Labeling Protection Legal ConstraintsPromotion Climate Transport & Handling Buyer's slow usage rate Lack of storage facilites Merchandising ( income level, shopping habits) Minimum breakage / theft Ease of handling Multilingual Labels to Convey an International Image (Zara, Hollywood Chewing Gum) Recycling of Packaging (Duales System, Eco-Emballage) Regulations on consumer info. (Origin, weight, ingredients)
  48. 48. 10-54 POM brand Pomegranate juice used a distinctively shaped bottle to gain attention on the grocery shelf
  49. 49. 10-55 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
  50. 50. 10-56
  51. 51. 10-57 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. Labeling
  52. 52. 10-58
  53. 53. 10-59 Aesthetics Global marketers must understand the importance of visual aesthetics Aesthetic Styles (degree of complexity found on a label) differ around the world
  54. 54. 10-60 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
  55. 55. 10-61 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
  56. 56. 10-62 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
  57. 57. 10-63 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
  58. 58. 10-64 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
  59. 59. 10-65 Looking Ahead Chapter 11 Pricing decisions

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