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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
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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
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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
Country-of-Origin EffectsCountry-of-Origin Effects
English tea
an o a ran san o a ran s
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
.
Country-of-Origin EffectsCountry-of-Origin Effects
Countries are stereotyped
an o a ran san o a ran s
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%
..
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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
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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
Product Strategy Communications Strategy Highlight
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
Product Strategy Communications Strategy Highlight
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
Product Strategy Communications Strategy Highlight
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