Chap012

(1)

I n t e r n a t i o n a l M a r k e t i n g

Products

and Services

for Consumers

Chapter 12

(2)

Mid term

• Chapter 1, 4, 5, 8, 9, 12 • 60 questions

• 90 minutes

(3)

Discussion

• 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

(4)

What Should You Learn?

• The importance of offering a product suitable for the intended market

• The relationship between product acceptance and the market into which it is introduced

• The importance of quality and how quality is defined • Country-of-origin effects on product image

• Physical, mandatory, and cultural requirements for product adaptation

(5)

Global Perspective Hong Kong –

Disney Rolls the Dice Again

Global Perspective Hong Kong –

Disney Rolls the Dice Again

• Tokyo Disneyland – successful

• EuroDisney – disaster

• Hong Kong Disneyland – open for business

• Opportunities and challenges for international marketers of consumer goods and services are great and diverse

• Any marketing firm’s goal should be quality products and services that meet the needs and wants of

(6)

Quality

• Shift to a customer’s 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

• _{Quality can be defined on two dimensions}

– Market-perceived quality

– Performance quality

• Most consumers expect performance quality

(7)

Maintaining Quality

• Damage in the distribution chain

– Russian chocolate

• Quality is essential for success in today’s competitive global market

(8)

Physical or Mandatory

Requirements and Adaptation

Physical or Mandatory

Requirements and Adaptation

• Product homologation

• Product adaptation requirements

– Legal

– Economic

– Political

– Technological

(9)

Green Marketing

and Product Development

Green Marketing

and Product Development

• 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 for ecolabeling

(10)

Products 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 necessary, affected by how the product conforms

– Norms

– Values

(11)

Innovative Products

and Adaptation

Innovative Products

and Adaptation

• Determining the degree of newness as perceived by the intended market

• Diffusion

• Established patterns of consumption and behavior

• Foreign marketing goal

– Gaining the largest number of consumers in the market

► _{In the shortest span of time}

(12)

Diffusion 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

• The element of time

• Variables affecting the rate of diffusion of an object

– Degree of perceived newness

– Perceived attributes of the innovation

(13)

Five Characteristics

of an Innovation

Five Characteristics

of an Innovation

• Relative advantage • Compatibility

• Complexity • Trialability

(14)

Production of Innovations

• Inventiveness of companies and countries • Expenditures

• Japanese solutions

– American-style education programs

– American design centers

• _{New ideas come from a variety of sources}

– Countries,

– Acquisitions

(15)

Analyzing Product

Components for Adaptation

Analyzing Product

Components for Adaptation

• Product is multidimensional

• Sum of its features determines the bundle of satisfactions (utilities) received by consumer • Three distinct components

– Core

– Packaging

(16)

Product Component Model

(17)

Product Levels:

The Customer

Value Hierarchy

Product Levels:

The Customer

(18)

Product Levels: The Customer Value

Hierarchy

Product Levels: The Customer Value

Hierarchy

• Core benefit: Service customer buys

• _{Turned into}_{basic product}

• Expected product - attributes expected

• _{Augmented product}_{- exceeds expectations}

• Potential product- all possible future

(19)

Core Components

• Product platform • Design features

(20)

Packaging Component

• Price • Quality

• Packages • Styling

(21)

Support Services Component

• Deliveries • Warranty • Spare parts

• Repair and maintenance • Installation

• Instructions

(22)

Marketing Consumer

Services Globally

Marketing Consumer

Services Globally

• Consumer services characteristics

– Intangibility

– Inseparability

– Heterogeneity

– Perishability

• A service can be marketed

– As an industrial (business-to-business)

(23)

Services Opportunities

in Global Markets

Services Opportunities

in Global Markets

• _Tourism

• _{Transportation}

• _{Financial services} • _Education

• _{Communications} • _{Entertainment}

(24)

Barriers to Entering Global Markets

for Consumer Services

Barriers to Entering Global Markets

for Consumer Services

• Protectionism

• Restrictions on transborder data flows • Protection of intellectual property

(25)

Brands in International Markets

• A global 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

(26)

(27)

(28)

Global Brands

• The Internet and other technologies accelerate the pace of the globalization of brands

• Ideally gives the company a uniform worldwide image

• Balance

(29)

National Brands

• Acquiring national brand names • Using global brand names

• Nationalistic pride impact on brands

(30)

• Country-of-Origin effect

– Influences that the country of manufacture, assembly, or design

► _{Has on a consumer’s positive or negative perception of a product}

• Consumers have broad but somewhat vague

stereotypes about specific countries and specific product categories that they judge “best”

• Ethnocentrism

Country-of-Origin Effects

and Global Brands

(31)

• English tea

• French perfume • Chinese silk

• Italian leather

• Japanese electronics • Jamaican rum

Country-of-Origin Effects

and Global Brands

(32)

Ethnocentrism and COO

(33)

Animosity model of foreign product purchase

•

Animosity is defined as the remnants of

antipathy related to previous or

on-going military, political, or economic

events. It will affect consumers’

(34)

Animosity model of foreign product purchase

Findings from empirical study on 244 Chinese consumers

(35)

• 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 product from particular countries or regions

Country-of-Origin Effects

and Global Brands

(36)

Innovato Innovato rs rs 2.5% 2.5% Early Early Early Early Majorit Majorit y y 34% 34% Late Late Majorit Majorit y y 34%

34% _Laggard_Laggard s

s 16% 16%

Rogers, E.M (1983)

(37)

Private 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

(38)

Summary

• The growing globalization of markets must be balanced with the continuing need to assess all markets for those differences that might require adaptation for successful acceptance

• In spite of the forces of homogenization,

consumers also see the world of global symbols, company images, and product choice through

(39)

Summary

• Each product must be viewed in light of how it is perceived by each culture with which it comes in contact

(40)

2. International Product

Strategies

2. International Product

Strategies

Straight

Extension _AdaptationProduct _InnovationProduct

The firm adopts the same policy used in its home market.

The company caters to the needs and wants of its foreign customers.

(41)

Five Options

International Product Strategy Product Example Consumer Need Satisfied

Product Strategy Communication Strategy

Strategy 1 Product and Communication Extension Gillette Razor

Disposable, easy to use product Extension Extension Strategy 2 Product Extension Communication Adaptation Wrigley Chewing Gum

USA: Substitute for Smoking

Europe: Dental benefits

Extension Adaptation

Strategy 3 Product Adaptation

Communication Extension

McDonalds Fast-Food Adaptation: Adding local products to

range

Extension: Using global campaign

Strategy 4 Product and Communication

Adaptation

Slim Fast Identical: Lose Weight

Adaptation: Consumer preferences

for different flavors

Adaptation: Celebrity in Germany,

Teacher in UK Strategy 5

(42)

OPTION 1.

PRODUCT EXTENSION – COMMUNICATION EXTENSION

Product StrategyCommunications Strategy Highlight

1. Extension Extension Standardized product with same

communications strategy across the

globe.

- This strategy is Cost effective

- Allows for greater economies of

scale

- Rarely used for consumer type

products except

soft drink and some luxury type

(43)

OPTION 2.

PRODUCT EXTENSION – COMMUNICATION ADAPTATION

1. Extension Adaptation Standardized product with different

communications strategies across the

globe.

- Cost effective because

communications adaptation is

less expensive than the tailoring

(44)

OPTION 3.

PRODUCT ADAPTATION - COMMUNICATION EXTENSION

1. AdaptationExtension Changes made to the product, same

communications strategy across

the globe.

- Product formulations are changed

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

(45)

OPTION 4.

PRODUCT ADAPTATION - COMMUNICATION ADAPTATION

1. AdaptationAdaptation 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

(46)

OPTION 5.

PRODUCT INVENTION

1. Invention Develop new communications Usually redesigning of an original product 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