Chap012 [Compatibility Mode]

8/9/2019 Chap012 [Compatibility Mode]

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1 4 t h E d i t i o n

P h i l i p R. C a t e o r aM a r y C. G i l l y

J o h n L . G r a h a m

Products

and Services

for Consumers

McGraw-Hill/IrwinInternational Marketing 14/e Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Mid termMid term

Chapter 1, 4, 5, 8, 9, 12

60 questions

m nu es

One A4 (2 sided) summary is allowed in testroom

12-2

DiscussionDiscussion

Define the country of origin effect and give examples

The text in the book discusses stereotypes, ethnocentrism, degree of

economic development as the basis for generalizations about country

of origin effect on product perception. Explain and give an example.

What are the three major components of a product? Discuss their

important to product adaptation.

How can knowledge of the diffusion of innovations help a product

manager plan international investment?

Explain the PLC theory and how it applies to International Marketing

If the product sells in Dallas, it will sell in Tokyo or Berlin. Comment

Discuss environmentally friendly products and product

development. 12-3

What Should You Learn?What Should You Learn?

The importance of offering a product suitable for the

intended market

The relationship between product acceptance ande mar e n o w c s n ro uce

The importance of quality and how quality is defined

Country-of-origin effects on product image

Physical, mandatory, and cultural requirements for

product adaptation

The need to view all attributes of a product in order

12-4

o overcome res s ance o accep ance


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Global Perspective Hong Kong Global Perspective Hong Kong

Tokyo Disneyland successful

EuroDisney disaster

Opportunities and challenges for internationalmarketers of consumer oods and services are

great and diverse

Any marketing firms goal should be quality products

and services that meet the needs and wants ofconsumers at an affordable price

12-5

ualitualit

Shift to a customers market

Increased customer knowledge The customer defines quality

The cost and quality of a product

Among the most important criteria by which purchases are made

ua y can e e ne on wo mens ons

Market-perceived quality

Performance quality

Most consumers expect performance quality

In many industries quality is measured by third parties

12-6

JD Power and Associates

Maintainin ualitMaintainin ualit

Damage in the distribution chain

Russian chocolate

Quality is essential for success in todayscompetitive global market

The decision to standardize or adapt a product

is crucial in delivering quality

12-7

Physical or MandatoryPhysical or Mandatory

Product homologation

Product adaptation requirements

Economic

Political

Technological

Climate

12-8


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Green MarketingGreen Marketing

Green marketing concerns the environmental

consequences of a variety of marketing activities Critical issues affecting product development

Control of the packaging component of solid waste

Consumer demand for environmentally friendly products

European Commission guidelines forecolabeling

Laws to control solid waste

12-9

Products and CultureProducts and Culture

A product is the sum of the physical and

psychological satisfactions it provides the user Primary function

Psychological attributes

The need for cultural adaptation is often,

conforms

Norms

Values

Behavior patterns

12-10

Innovative ProductsInnovative Products

Determining the degree of newness asperceived by the intended market

Diffusion

Established patterns of consumption andbehavior

Foreign marketing goal

In the shortest span of time

Probable rate of acceptance

12-11

Diffusion of InnovationsDiffusion of Innovations

Crucial elements in the diffusion of new ideas

An innovation

Which is communicated through certain channels Over time

Among the members of a social system

Variables affecting the rate of diffusion of an

Degree of perceived newness Perceived attributes of the innovation

12-12

Method used to communicate the idea


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Five CharacteristicsFive Characteristicso an nnova ono an nnova on

Relative advantage

Compatibility

omp ex y

Trialability

Observability

12-13

Production of InnovationsProduction of Innovations

Inventiveness of companies and countries

Expenditures

apanese so u ons

American-style education programs

New ideas come from a variety of sources

,

Acquisitions

Global collaborations

12-14

Analyzing ProductAnalyzing Product

Product is multidimensional

Sum of its features determines the bundle of

satisfactions (utilities) received by consumer

Three distinct components

Packaging

Support services

12-15

Product Com onent ModelProduct Com onent Model

Exhibit 12.1

12-16


5/12

Product Levels: TheCustomerValueProduct Levels: TheCustomerValueerarc yerarc y

Product Levels: The Customer ValueProduct Levels: The Customer Value

Turned into basic product

Expected product - attributes expected

Augmented product - exceeds expectations

Potential product- all possible futureaugmentations & transformations of product

Core Com onentsCore Com onents

Product platform

Design features

unc ona ea ures

12-19

Packa in Com onentPacka in Com onent

Price

Quality

ac ages

Styling

Trademark

12-20


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Su ort Services Com onentSu ort Services Com onent

Deliveries

Warranty

pare par s

Repair and maintenance

Installation

Other related services

12-21

Marketing ConsumerMarketing Consumererv ces o a yerv ces o a y

Consumer services characteristics

Intangibility

Inseparability

Heterogeneity

Perishability

As an industrial (business-to-business)

A consumer service

12-22

Services OpportunitiesServices Opportunitiesn o a ar e sn o a ar e s

Tourism

Transportation

Education

ommun cat ons

Entertainment

Information

Health care

12-23

Barriers to Entering Global MarketsBarriers to Entering Global Markets

Protectionism

Restrictions on transborder data flows

ro ec on o n e ec ua proper y

Cultural barriers and adaptation

12-24


7/12

Brands in International MarketsBrands in International Markets

Aglobal brand is the worldwide use of a name,

term, sign, symbol, design, or combination Intended to identify goods or services of one seller

To differentiate them from those of competitors

Importance is unquestionable

Most valuable company resource

12-25

To Twent BrandsTo Twent Brands

12-26

To Twent BrandsTo Twent Brands

12-27

Global BrandsGlobal Brands

The Internet and other technologies acceleratethe pace of the globalization of brands

Ideally gives the company a uniform worldwideimage

Balance

Ability to translate

12-28


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National BrandsNational Brands

Acquiring national brand names

Using global brand names

a ona s c pr e mpac on ran s

Use global brands where possible and nationalran s w ere necessary

12-29

Country-of-Origin EffectsCountry-of-Origin Effects

Country-of-Origin effect

an o a ran san o a ran s

Influences that the country of manufacture, assembly, or design Has on a consumers positive or negative perception of a product

onsumers ave roa u somew a vaguestereotypes about specific countries and specificroduct cate ories that the ud e best

Ethnocentrism

12-30


English tea


French perfume

nese s

Italian leather

Japanese electronics

12-31

Ethnocentrism and COOEthnocentrism and COO

Buy American concept

12-32


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Animosit model of forei n roduct urchaseAnimosit model of forei n roduct urchase

Animosit is defined as the remnants of

antipathy related to previous or on-going military, political, or economicevents. It will affect consumerspurchase behavior in the internationalmarketplace.

Animosit model of forei n roduct urchaseAnimosit model of forei n roduct urchase

Source: Klein, Ettenson and Morris (1998)

Findings from empirical study on 244 Chinese consumers

.


Countries are stereotyped


On the basis of whether they are industrialized

In the process of industrializing In process of developing

Technical products

Perception of one manufactured in a less-developed or newly

industrializing country less positive

Fads often surround roduct from articularcountries or regions

12-35

Diffusion of InnovationDiffusion of Innovation

ogers, .ogers, .

InnovatorsInnovators

2.5%2.5%

MajorityMajority

34%34%

LateLate

MajorityMajority

34%34%

Early AdoptersEarly Adopters

LaggardsLaggards

16%16%

..


10/12

Private BrandsPrivate Brands

Growing as challengers to manufacturers

brands Private labels

Provide the retailer with high margins

Receive preferential shelf space and in-store promotion

Are quality products at low prices

Manufacturers brands must be competitively

12-37

SummarSummar

The growing globalization of markets must be

balanced with the continuing need to assess allmarkets for those differences that might require

In spite of the forces of homogenization,,

company images, and product choice throughthe lens of their own local culture and its stage of

12-38

SummarSummar

Each product must be viewed in light of how it isperceived by each culture with which it comes incontact

Analyzing a product as an innovation and usingthe Product Component Model may provide the

12-39

2. International Product2. International Productra eg esra eg es

Straight

ExtensionProduct Product

Adaptation Innovation

The firm adopts The company caters The firm designs a

used in its 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


11/12

International

Product Strategy

Product

Example

Consumer Need

Satisfied

Product Strategy Communication Strategy

Source: W.J. Keegan

Strategy 1

Product andCommunication

Extension

GilletteRazor

Disposable, easy to useproduct

Extension Extension

Strate 2Product Extension

Communication

Adaptation

Wrigley

Chewing Gum

USA: Substitute for

Smoking

Europe: Dental benefits

Extension Adaptation

Product Adaptation

Communication

Extension

McDonalds Fast-Food Adaptation:

Adding local products to

range

Extension:

Using global campaign

Strategy 4ro uct an

CommunicationAdaptation

m ast ent ca :

Lose Weight

aptat on:

Consumer preferencesfor different flavors

aptat on:

Celebrity in Germany,Teacher in UK

Strategy 5Product Invention Buckler Beer Non-alcoholic beer Invention Develop new

communication

OPTION 1.

PRODUCT EXTENSION COMMUNICATION EXTENSION

Product Strategy Communications Strategy Highlight

1. Extension Extension Standardized product with same

communications strategy across the

lobe.

- This strategy is Cost effective

- ows or greater econom es o

scale

- Rarely used for consumer type

products except soft drink and someluxury type goods

-Used mainly for industrial type

products

OPTION 2.

PRODUCT EXTENSION COMMUNICATION ADAPTATION

1. Extension Adaptation Standardized product with different

communications strategies across theglobe.

- Cost effective because

communications adaptation is

less expensive than the tailoring

product to a local market.

- Can be used for consumer type

products eg. Bicycles

OPTION 3.

PRODUCT ADAPTATION - COMMUNICATION EXTENSION


1. Adaptation Extension Changes made to the product, same

communications strategy across the

globe.- Pro uct ormu at ons are c ange

without consumers knowing it. E.g.

detergents

- Entails research, development

expenses and tooling costs.

- Do not allow for economies of scale

to the extent possible under an product

extension strategy

- savings can be realized from the

creation of a single communications

strategy


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OPTION 4.

PRODUCT ADAPTATION - COMMUNICATION ADAPTATION


1. Adaptation Adaptation Dual adaptation:Changes made to the product, changes

made to communications strategy

- Recognizes the socio-cultural

differences from country to country

-To make this option profitable, the

foreign market or markets need to be

of sufficient volume

-

development expenses and toolingcosts

OPTION 5.

PRODU T INVENTION


1. Invention Develop new communications Usually redesigning of an originalproduct at a lower level of

complexity.

- Recognizes the socio-cultural

and economic differences from

country to country

-Leads to more purchases as a result

of the reinvention of the product

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Chap012 [Compatibility Mode]