International Marketing · –Marketers adapt packaging and labels in response to differences in...
Transcript of International Marketing · –Marketers adapt packaging and labels in response to differences in...
International
Marketing
© Daniel W. Baack, Barbara
Czarnecka & Donald Baack
Part Three
International product
marketing
Chapter 9
International product and
brand marketing
Learning objectives
1. What basic product categories and product dimensions are
available in domestic and international markets?
2. What types of decisions must be made with regard to a
company’s international product mix?
3. What types of international business products and services
are available?
4. What types of patterns exist as new products move from
introduction to eventual decline?
5. What role does brand development and management play
in international marketing?
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Learning objective #1
• What basic product categories and product dimensions are
available in domestic and international markets?
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Types of products
• A product consists of a bundle of attributes that provide
value for exchange partners.
• Products offer value in many ways. International marketers
conceptualize value in terms of tangible, intangible, and
symbolic elements.
• A product as simple as a screwdriver allows consumers to
solve a tangible, basic problem (assembling a bicycle) while
potentially delivering both intangible benefits (a feeling of
safety) and symbolic benefits (the feelings associated with
owning a nice set of tools).
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Goods versus services
• A good is a physical product sold to and used by an
individual, household, or business.
– Durable goods are items that are consumed over time.
Televisions and household appliances are durable goods.
– Nondurable goods are consumed more quickly.
Toothpaste and food items are nondurable goods. Many
nondurable goods are consumed in daily life.
– Businesses sell consumer products to consumers either
directly or through a market channel that employs
intermediaries. The buyers, or end users, are individual
persons or families.
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Goods versus services
– Business products are marketed to the other businesses,
which are the end users.
• A service is an intangible product that generally centers on
an act or performance that delivers value to individuals,
households, and businesses.
– Services play a major role in the global economy.
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Classifications of products – convenience products
• Features of Convenience Products:
– Inexpensive and frequently purchased
– Consumers do not spend much time or effort when
purchasing.
– Marketers normally make the items widely available,
using an intensive distribution strategy, because a
consumer generally will not go out of his or her way to
buy them.
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Classifications of products – convenience products
• Types of Convenience Products
– Impulse products, or items purchased spontaneously with
no preplanning for the enjoyment that the purchase
provides
o This contrasts with unplanned purchases, which are
also not planned but provide no pleasure.
– Staples are goods that are used regularly and tend to be
replenished often, such as sugar, flour, rice, millet, salt,
and soap.
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Classifications of products – shopping products
• Features of Shopping Products:
– Consumers expend more effort when searching for and
purchasing
– More expensive than convenience products and are
purchased less frequently
– Consumers compare several brands and more carefully
consider prices.
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Classifications of products – shopping products
– Marketers typically employ selective distribution strategies
for shopping products, which means retail outlets are
chosen for each geographic region.
– International marketers pay close attention to cultural
differences for shopping goods.
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Classifications of products –specialty products
• Features of Specialty Products:
– Items that consumers spend much time searching for and
will not accept a substitute
– Expensive and are marketed with a significant degree of
exclusivity, meaning only select retailers offer the
products
– Consumers generally do not consider competing brands,
as they usually have chosen one particular alternative
and expend effort to purchase the preferred brand.
– Luxuries represent a subcategory of specialty products.
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Product dimensions
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Product dimension
• The core product satisfies or remedies a basic need.
• Packaging includes the elements of the product that are
used to communicate the brand name, logo, and trademark,
as well as to protect the core product.
– Marketers adapt packaging and labels in response to
differences in legal systems, local traditions, and cultures.
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Product dimension
• The auxiliary dimensions include warranties, instructions,
company contact information, as well as the image of the
particular brand.
– Shopping products are sometimes differentiated based on
auxiliary dimensions.
• International marketers often consider the total value
concept, or the complete set of values from products that
customers receive.
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Learning objective #2
• What types of decisions must be made with regard to a
company’s international product mix?
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International product mix management – product lines
• Product lines are groups of similar products within a
particular category.
– The depth of a product line refers to the total number of
products in that line.
– The width (sometimes called the breadth) of the product
mix refers to the total number of product lines that the
company offers.
• The product mix refers to the total number of products that
a firm carries.
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International product mix management – packaging
• Packaging decisions represent a key aspect of international
product marketing. When exporting or shipping goods, the
product’s package serves to protect the item until it safely
arrives. Packaging facilitates the movement of products
through the distribution channel—from the factory to the
consumer. Packaging can become an aspect of a brand’s
identity, thereby affecting the relationship between the
customer and the brand.
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International product mix management – packaging
• Packaging should be adapted to individual markets based on consumer tastes, preferences, and culture. Matching the package to the market can become the deciding factor in a product’s success, because consumers actually make many purchase decisions at the point of purchase. A recent study of Thai consumers indicated that packaging technology (such as the convenience of the package) was the most important determinant affecting the intention to buy a product. Other package determinants include packaging shape, product information, color and graphics, and layout of product information.
• Many marketers view packaging as a place for innovation.
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Packaging
• Visual Elements
– Elements such as shape, color, font usage, and pictorials
help to communicate brand meaning to customers and
differentiate the product from the competition.
– Much of the sensory experience of consumers comes
from the visual elements, which play an important role in
package design.
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Packaging
• Informational Elements
– The package transmits vital and legal information
regarding the contents of the package and the product.
– Marketers should ensure that the language and metrics
used on the package will be suitable for the selected
target market.
• Protective Elements
– Protect the product, and some elements, such as plastic,
must be carefully considered by international marketers
due to regional restrictions and sustainability issues.
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Packaging
• Symbolic Elements
– Package shapes and features that help the consumer
recognize the brand
– The symbolic nature of packaging not only appeals to a
consumer's inner needs, but also helps to convey desired
images to others.
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Labeling
• Consumers cannot judge the attributes of many products until after the purchase, and labeling helps customers learn about various aspects of the product prior to purchase.
• Cultural factors affect designs of labels, including the use of art, various colors, images, and wording. Marketers respond to these variations in taste by changing labels.
• Aesthetics are concepts of beauty. What is considered beautiful in one country may be considered garish or unattractive in another country.
– Colors are important aesthetic ingredients in packaging and labeling decisions. Marketers pay close attention to the meaning of color in different cultures.
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Labeling
• Legal requirements also drive labeling.
– For labeling in the European Union (EU), the “CE Mark”
signifies that a product has met EU health, environmental,
and safety requirements.
– In the United States, companies must adhere to the Fair
Packaging and Labeling Act.
• Labeling standards vary significantly by product type.
– Cigarette manufacturers in the United States must place
the surgeon general’s warning on each pack.
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Sustainability and international product marketing
• Product design can become more sustainable by using
recycled or recyclable materials, identifying areas where
fewer materials can be utilized, and ensuring that production
techniques are as efficient as possible.
• Several countries and organizations have taken steps to
address sustainability issues related to packaging.
– In 2010, the Consumer Goods Forum released the report
“A Global Language for Packaging and Sustainability”
which describes how packaging can be designed
holistically with the product to optimize overall
environmental performance.
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Sustainability and international product marketing
– In the United States, organizations such as the
Sustainable Packaging Coalition work to encourage
environmentally friendly packaging. The ISO 14000 family
addresses various elements of environmental
management and provides a general framework for
product management as it pertains to sustainability.
• Consumer demand for environmentally friendly products
remained strong even during the recent turbulent economy.
– One study reported that 44% of consumers stated that
their green buying habits did not change despite difficult
economic times.
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Learning objective #3
• What types of international business products and services
are available?
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International business products
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International business products
• Raw Materials
– Materials used in the manufacture of end products, and
including natural resources (minerals, ore, chemicals, and
fuel) and farm products (beef, cotton, poultry, milk, and
soy beans) are all raw materials.
• Maintenance, Repair, and Operating Supplies
– Maintenance, repair, and operating supplies are marketed
to businesses for use in production and other operations.
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International business products
• Component Parts
– Finished products that eventually become parts of other
products are component parts.
• Accessory Equipment
– Products that help facilitate the production of other
products but that do not become a part of the products
themselves are forms of accessory equipment.
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International business products
• Business Services
– Business services assist companies in normal business
operations, either with the production or maintenance of
goods, or with general business operations such as
delivery services, telecommunication services, or
logistical services.
• Process Materials
– Materials that become a part of other products in an
unidentifiable way are process materials, such as food
additives and resins.
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International business products
• Installations
– Major capital equipment products used directly in the
manufacturer of other products are installations. Heavy
machinery and assembly line equipment are examples.
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Bottom-of-the-pyramid international product marketing
• A central issue will be the “price-quality” relationship.
– Traditional market logic assumes that consumers are
willing, sometimes more than willing, to pay premium
prices for high-quality products. Some segments will go
out of their way to buy specialty and luxury items.
• An alternative approach is to rethink the price-quality
relationship and design products that offer basic essentials
at minimal prices.
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Bottom-of-the-Pyramid International Product Marketing
• Marketing remanufactured products presents one
opportunity.
– Remanufactured products, used products that have been
refurbished through manufacturing processes in order to
be restored to acceptable functioning, often fit with the
needs of bottom-of-the-pyramid consumers.
• Another opportunity may be found in offering smaller
package sizes and quantities.
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International product support services
• Product support services accompany a vast number of
consumer and business purchases.
– Include installation, maintenance, servicing and repair,
providing credit, answering questions by telephone or
over the Internet, assisting businesses with inventory
management, and more general activities such as
providing market information
• High-quality product support generates goodwill for a variety
of domestic and international companies.
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International product support services
• Product support services help build longer-term
relationships with customers, making the sale of the next
product easier.
• The term “service” can create confusion.
– Product support services are not directly sold to
customers.
– Instead, they provide added dimensions to the sale of a
product.
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International services
• The global economy has
largely shifted toward a
services base.
• Services are intangible
products that are based
around some act or
performance that delivers
value.
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Importance of services globally
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Tourism
• Tourism often plays an
important part of
international marketing; it
exhibits a major influence
on the gross domestic
product (GDP) of many
countries.
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Product quality dimensions
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Quality standards
• Demonstrating that a product meets a quality standard can
become key ingredient in international marketing success.
• Individual companies, countries, and regions seek to meet
or exceed quality standards when marketing internationally.
– The International Organization for Standardization (ISO)
provides standards that guide management practice as it
relates to quality management and assurance
(www.iso.org).
o The ISO organization includes more than 160 member
nations. ISO standards are widely used in the
European Union.
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Quality standards
• The American Society for Quality (ASQ), a global
community of experts in quality management, is also the
sole administrator of the Malcolm Baldrige National Award
(www.asq.org).
– The annual award is presented in manufacturing,
services, small business, education, health care, and
nonprofit sectors.
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2010 Malcolm Baldrige national award winners
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Learning objective #4
• What types of patterns exist as new products move from
introduction to eventual decline?
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The product life cycle
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Development
• Development takes place before the product life cycle
actually begins.
• Prior to a product's introduction, the development process
involves creating and testing a product concept.
– Development requires companies to commit significant
resources in terms of human capital, financial investment,
and market research.
– Profits are nonexistent in this point, because the product
has not been sold to consumers. Only the expenses
required for successful development are present.
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Development
• A small percentage of products introduced each year
continue to be marketed five years later.
– In the vast majority of cases, the product’s failure results
from insufficient or poorly executed market research.
• Some firms attempt to become the pioneers of new
innovations. The pioneering advantage refers to all of the
benefits that result from being the first mover in a market.
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Introduction
• When the product has been initially released to the targeted
market segment, the introduction stage commences.
• Educating the target segment about the new product is a
key activity.
– The focus turns to establishing primary demand, or
demand for the generic product itself rather than
necessarily the specific brand being introduced.
– To create this demand, point marketers explain the
benefits of the new product.
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Introduction
• Marketing costs tend to be high during the introduction
stage.
– Profits are normally not realized during this stage.
• International marketers may attempt to introduce products
at different periods in different countries and/or regions,
thereby staggering demand for the product.
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Growth
• When sales begin to grow more rapidly and profits are
realized, the product has entered the growth stage.
• Competition begins to enter the market during this stage.
– Competing firms, or followers, enter the industry after
pioneering firms have developed and introduced a
product.
• Firms that introduced the product are forced to develop
defensive strategies that concentrate on retaining current
customers.
• During the growth stage, primary demand ceases to be the
focus and market differentiation becomes the key.
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Maturity
• When sales begin to increase at a decreasing rate and market saturation begins, the product has reached the maturity stage.
• Due to saturation and intense competition, the only way marketers can obtain new customers is by taking them from competitors.
– Prices generally begin to drop during this phase due to the intense competition and to increased marketing efforts aimed at customer retention.
– Market saturation in one country leads many international marketers to consider introducing a product in other countries.
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Maturity
• Many consumer durables, such as appliances, have
reached the maturity phase in developed countries.
• Firms may attempt to extend the maturity phase in a
number of different ways:
– Increasing the number of users by expanding the overall
market,
– Finding new uses for the product, or
– Attempting to increase the frequency of product usage.
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Decline
• The decline stage occurs when a gradual or rapid drop in
sales takes place.
– As consumer tastes change and new innovations are
introduced, product sales fall.
• During this stage, the company’s marketing team begins to
decide how long to stay in the market.
– Sometimes, a company will completely discontinue a
product.
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Product cycle theory
• The theory explains how products and production move
from developed countries to lesser-developed countries.
– Separates nations into lead innovation nations, developed
nations, and developing nations
• Process follows set stages:
– A new product is first developed, produced, and
consumed in a lead innovation nation.
– Over time, as the product becomes widely accepted and
foreign demand for the product emerge, the manufacturer
exports the product to other developed nations.
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Product cycle theory
– Production gradually shifts to these overseas markets,
and eventually the manufacturer exports the product from
these markets to both the original market and to lesser-
developed countries.
– Finally, production again shifts, this time to lesser-
developed or developing nations. Then companies from
the original, developed countries devote capabilities to
new innovations.
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Product cycle theory criticisms
• Product cycle theory has been criticized for relying on studies of the United States as the lead innovative nation.
• The research appears to neglect the current trend in which many products are launched simultaneously around the world.
– Companies that are international in scope from their inception are born-global firms. Product cycle theory does not appear to fit products introduced by these firms.
• Companies often target emerging wealthy customer segments in developing markets early in the product cycle.
– Later, the company may begin to target other market segments, as predicted by the theory.
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Market/product matrix
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Market penetration
• A firm uses a market penetration strategy when it attempts
to increase sales of existing products in existing markets.
– Baking soda may be used in cooking, or to deodorize a
refrigerator or freezer, or in toothpaste.
• An alternative strategy for successful market penetration,
repositioning, is the process of changing perceptions of the
product in the minds of consumers.
– Repositioning a company and its product offerings can
help the firm to better connect with its customers, and
may lead to higher levels of market penetration.
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Product development
• Product development strategies take place when the
marketing team attempts to introduce new products to
existing markets or to enhance existing products with new
features or options.
• Product development strategies are highly popular in
international marketing. Many firms actively engage in
product development.
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Diversification
• Firms employ a diversification strategy by marketing new
products in new markets.
• Company leaders often choose this strategy as a response
to perceived opportunities or as a way to defend against
increased competition in existing markets and product lines.
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Market development
• A market development strategy occurs when a firm attempts
to market existing products in new markets.
• This international marketing strategy allows a company to
minimize problems with local or domestic market saturation
by expanding into new countries or regions.
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Learning objective #5
• What role does brand development and management play
in international marketing?
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International brand management
• A brand is the name, sign, symbol, and/or design that
identifies the products of a firm and distinguishes it from
competition.
• Key components:
– A brand name is the verbal part of a brand that can be
spoken.
– A brandmark is comprised of the nonverbal elements that
signify the brand.
– A trademark is a legally protected brand name and a
servicemark is a legally protected service name.
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Family and individual branding
• Family branding means a number of products in a line or
mix share the same brand name worldwide.
– The family brand approach capitalizes on the company’s
reputation and its trusted, established name.
• An individual branding strategy involves creating distinct
brand names for the individual products created by a
company.
– An individual branding strategy works when the brands do
not share common features or uses.
– In international marketing, distinctive brands may be
developed for individual countries.
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Brand and product line extensions
• A brand extension strategy takes the brand name and
adds it to a new product.
• A product line extension strategy means products are
introduced that are in a related product category.
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Cobranding
• Cobranding is the practice of placing two or more brand
names on the same product.
• Cobranding strategies can follow ingredient, cooperative, or
complementary approaches.
– Ingredient cobranding occurs when one brand becomes a
“part” of another brand’s final product.
– Cooperative cobranding agreements are reached when
two brands receive equal attention and promotion.
– Complementary brands are brands that enter into
agreements to be promoted in way that suggests that
consumers use both brands.
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Building powerful international brands
• A series of steps help lead consumers to favor a brand.
• First, brand awareness results from marketing efforts that
place the brand in a consumer’s mind. Instilling brand
awareness begins with creating simple recognition.
• Second, the marketing team attempts to create the
perception that the company’s brand represents a product
that is different from and better than what the competition
offers.
– Brand image, or the perceptions consumers have of the
brand. Brand image includes perceptions of brand quality.
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Building powerful international brands
• Brand building only results from paying consistent attention
to product quality, offering excellent customer service, and
exceeding the expectations of consumers.
– Advertising and promotional efforts can then be used to
support the message.
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Building power international brands
• When a company’s product enjoys the benefits associated
with brand equity, it becomes easier to move consumers to
a third stage: brand loyalty.
• Elements of brand loyalty include brand preference and
brand insistence.
– Brand preference, which goes beyond simple liking to a
mental ranking in which the brand’s attractiveness
becomes foremost in the consumer’s mind
– Brand insistence occurs when the customer accepts no
substitutes for the preferred brand.
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Building power international brands
• Advantages of brand loyalty:
– Brand-loyal customers seek out a specific name and often
are willing to pay a higher price for the product than what
the competition charges.
– Brand-loyal customers are less likely to switch brands or
be enticed to try other brands due to marketing tactics
such as coupons, discounts, bonus packs, and other
methods.
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Brand valuation
• Brand equity and brand loyalty become part of brand
valuation, which is the process of estimating the financial
value of a brand.
• The ISO (International Standards Organization) produced
ISO Standard 10668 in 2010 that states three types of
analysis are required for brand valuation:
– Legal analysis, including assessments of the legal
protections of the brand;
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Brand valuation
– Behavioral analysis, including the contribution of the
brand to purchase decisions as well as the attitudes of all
stakeholder groups; and
– Financial analysis, including market values, cost, and
income figures.
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Top 20 global brands
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Ethical issues in international product marketing
• Companies are sometimes criticized for knowingly selling
unsafe or even recalled products in other countries to
increase international sales or to offset sagging domestic
sales.
– The unsafe products may not be perceived as unsafe in
the market where sold.
• If wasteful or if used to mask the contents, packaging can
come under attack.
– The use of air to make packages seem fuller and the
waste associated with plastic bottles of water
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Ethical issues in international product marketing
• Using imagery on the package that targets children when
the product may not be appropriate for that age group can
be another packaging issue.
• Treatment of animals in product testing garners much
attention.
• The product line itself may be an ethical issue. Companies
may choose not to sell the full product line in certain
markets, denying those consumers access to the benefits
from some products.
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