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Chapter 10 Product and
Brand Decisions
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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
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The Product Offering
Core Benefit
Generic Product
Expected Product
Augmented Product
Potential Product
Source : Adapted from: P. Kotler, Marketing Management, 1994
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Basic Product Concepts
A product is a good, service, or idea– Tangible Attributes– Intangible Attributes
Product classification– Consumer goods– Industrial goods
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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
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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)
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Sales of Rights - Examples
Franchising business :
- Coca-Cola : use of its name to licensedbottlers around the world.
- Pilkington: licensing of the process of float glass.
- Other : Manpower, McDonald's, etc.
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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.
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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.
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International Product Strategies
StraightExtension
Product ProductAdaptation 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 aproduct from scratchfor foreign customers.
Source: W.J. Keegan, Multinational Product Planning: Strategic Alternatives, Journal of Marketing, 33, 1969, pp.58-62
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Extend, Adapt, Create: Strategic Alternatives in Global Marketing
Extension – offering product virtually unchanged in markets outside of home countryAdaptation – changing elements of design, function, and packaging according to needs of different country marketsCreation – developing new products for the world market
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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."
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Reasons for Product Standardization
Economies of scale : Production, R&D, Marketing
Common Consumer needs : Drinking patterns, car sizes
Consumer Mobility : Customer retention & LoyaltyAmerican Express, Kodak, ...
Home Country Image : US jeans, French Perfumes,...
Impact of technology : B to B Markets
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Convergence in Drinking Patterns
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Convergence of Car Sizes
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Reasons for Product AdaptationClimate: 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)
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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%
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Drivers of Product AdaptationExample 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
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Drivers of Product AdaptationExample 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
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managing marketing
from global headquarters
©2005 Dr.Gerard Ryan, Universitat Rovira i Virgili.
International Marketing Mix DecisionsStrategic 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
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managing marketing
from global headquarters
©2005 Dr.Gerard Ryan, Universitat Rovira i Virgili.
International Marketing Mix DecisionsStrategic 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
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Product Types
Buyer orientation– Amount of effort expended on purchase– Convenience– Preference– Shopping– Specialty
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Brands
Bundle of images and experiences in the customer’s mindA promise made by a particular company about a particular productA quality certificationDifferentiation between competing productsThe sum of impressions about a brand is the Brand Image
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Brands
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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
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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
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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
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International Products and Brands
Offered in several markets in a particular region– ‘Euro-brands’
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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
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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)
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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
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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
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Family Brands
Family Brand Volkswagen
USA Europe Mexico
"Rabbit" "Golf" "Caribe"
-> lightness -> prestige -> avoid negative connotation
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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)
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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
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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
31978
31285
32672
32968
11386
More expensiveSameLess expensive
21683
57817
2908
37819
77122
47718
Higher qualitySameLower quality
67321
67421
38412
47323
106624
57421
More confidenceSameLess confidence
77122
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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.
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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
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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
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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?
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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
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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
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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
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Local versus Global Products and Brands: A Needs-Based Approach
Physiological
Safety
Social
External/Internal Esteem
Self-actualization
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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
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Packaging
Consumer Packaged Goods when the packaging is designed to protect or contain the product during shippingEco-Packaging because package designers must address environmental issuesOffers communication cues that provide consumers with a basis for making a purchase decision
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Product Packaging and Labeling
Protection
Legal ConstraintsPromotion
ClimateTransport & HandlingBuyer's slow usage rateLack of storage facilites
Merchandising ( income level, shopping habits)Minimum breakage / theftEase of handlingMultilingual Labels to Convey an International Image (Zara, Hollywood Chewing Gum)
Recycling of Packaging(Duales System, Eco-Emballage)Regulations on consumer info.(Origin, weight, ingredients)
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POM brand Pomegranate juice used a distinctively shaped bottle to gain attention on the grocery shelf
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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
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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
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Aesthetics
Global marketers must understand the importance of visual aesthetics
Aesthetic Styles (degree of complexity found on a label) differ around the world
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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
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New Products in Global Marketing
Pursue opportunities in competitive arenas of global marketplaceFocus on one or only a few businessesActive involvement from senior managementAbility to recruit and retain best employeesUnderstand the importance of speed in bringing product to market
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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
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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
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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
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Looking Ahead
Chapter 11 Pricing decisions
