Product and Brand Decision

7/29/2019 Product and Brand Decision

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Product and

Brand Decisions

Ms. Kiran Sharma


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10-2

Analyzing Product Components

for Adaptation

(1) core component,

(2) packaging component, and

(3) support services component

Tangible vs. intangible productsConsumer vs. Industrial products

Components of products:


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Product Core : the core benefit or problem solving

services offered by the product

Packaging : the features, quality, design,

packaging, branding, and other attributesintegral to a products core benefit

Augmented : the support services and other

augmented components such as warranties,guarantees and after sales service

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Product standardization

The process of marketing a product in overseas markets with

little change except for some cosmetic changes such as modified

packaging and labelling

BENEFITS

o Projecting a global product image

o Catering to customers globally

o Cost savings in terms of economies of scale in production

o Designing and monitoring various components of marketingmix economically

o Facilitating the development of a product as a global brand


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Product adaptation

The process of making changes in a product in response to theneeds of the target market is termed product adaptation orcustomization

BENEFITS

Enables a firm to tap markets, which are not accessible due tomandatory requirements.

Fulfils the needs and expectations of customers in variedcultures and environments.

Helps in gaining market share. Increases sales leading to economies of scale.


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Factors influencing product adaptation in

International Markets

Mandatory factors

Governmentregulations

Packaging andlabelling regulations

Legal requirements

Voluntary

Consumer demographics

Culture

Local customs andtraditions

Price

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Brands

Bundle of images and experiences in thecustomers mind

A promise made by a particular company

about a particular productDifferentiation between competing products

The sum of impressions about a brand is theBrand Image


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Brand equity

The added value that accrues to a product as

a result of investments in the marketing of

the brandAn asset that represents the value created by

the relationship between the brand and

customer over time


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Local Products and Brands

Brands that have achieved success in a singlenational market

Represent the lifeblood of domestic companies

Entrenched local products/brands can be asignificant competitive hurdle to global company

Coca Cola in Japan

o Non carbonated Ginseng flavored beverage beverage

o a blended tea known as Sokenbicha

o Lactia brand fermented milk drink

o Sports Goods company By Li NingSneakers in China


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International Products and Brands

Offered in several markets in a

particular region

Euro Products and Euro-brandsoffered only in the European market


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Global Products and BrandsThese products meet the wants and needs of

a global market and are offered in all world

regions

Global brands have the same name and

similar image and positioning throughoutthe world

Nestle makes the very best

Gillette the best a man can get

BMW the ultimate driving machine

GE Imagination at work


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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 themthe same products, we use the same production

methods, we have the same corporate policies. We

even use the same advertisingin a different

language, of course.

- Alfred Zeien Former Gillette CEO


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Branding Strategies

Combination or tiered branding: allowsmarketers to leverage a corporate name

(Sony) is combined with a product brand

name (Walkman).

Co-branding features two or more different

company or product brands are featured on

product packaging or in advertising.

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:

Whether such a move fits well with theircompanies/ markets?

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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Country of Origin as Brand Element

Perceptions about attitudes towardparticular countries often extend to

products and brands known to

originate in those countriesJapan - electronics

Germany quality engineering

Italystyle and fashion


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Packaging

Consumer Packaged Goods when thepackaging is designed to protect orcontain the product during shipping

Eco-Packaging because packagedesigners must address environmentalissues

Offers communication cues thatprovide consumers with a basis formaking a purchase decision


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Labeling

Provides consumers with various types of

informationRegulations differ by country regarding various

products

Health warnings on tobacco products

American Automobile Labeling Act clarifies

the country of origin, and final assembly point

All food products sold in USA must present

information regarding nutrition ( fats, calories)and serving size.

Indiaindication between vegetarian and non

vegetarian products is mandatory.


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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 aproduct failure

Warranties can be used as a competitive

tool


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Extend, Adapt, Create: Strategic

Alternatives in Global Marketing

Extensionoffering product virtuallyunchanged in markets outside of homecountry

Adaptationchanging elements of design,function, and packaging according to needsof different country markets

Creationdeveloping new products for theworld market


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Global Product Planning: Strategic

Alternatives

Product

Same Different

Communication

Different

SameStrategy 1:

Dual Extension

Strategy 2:

Product ExtensionCommunication

Adaptation

Strategy 4:

Dual Adaptation

Strategy 3:Product Adaptation

Communication

Extension


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Strategy 1: Dual Extension

Sell exactly the same product, with sameadvertising and promotional appeals as usedin the home country, in some or all world-market countries or segments.

This strategy is utilized by companies instage 2 i.e. International companies. Thedual extension strategy grows out ofethnocentric orientation.

Companies learn the hard way that dualextension approach does not wok in everymarket.

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Strategy 1: Dual Extension

For instance, Campbell soup tried to sell its

tomato soup in the United Kingdom and

realized after substantial losses that theEnglish prefer a more bitter taste than

Americans.

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Alternatives

Product

Same Different

Communication

Different

SameStrategy 1:

Dual Extension

Strategy 2:


Adaptation

Strategy 4:

Dual Adaptation


Communication

Extension


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Strategy 2:Product Extension

Communication Adaptation

- Low cost of implementation, unchangedphysical product.

- Avoid expenditures of R & D,manufacturing and inventory.

- Ben & Jerrys Homemade Ice creamlaunched in UK

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The product extension/ communicationadaptation strategy ultimately results inproduct transformation.

Costs are in identifying different productfunctions and revising marketingcommunications (advertising, salespromotion, and point-of-sale material) andother communication material.

This strategy can be used by stage 3 i.e.

multinational companies.

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Alternatives

Product

Same Different

Communication

Different

SameStrategy 1:

Dual Extension

Strategy 2:


Adaptation

Strategy 4:

Dual Adaptation


Communication

Extension


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Strategy 3: Product Adaptation/Communication Extension.

Involves extending the basic home marketcommunications strategy while adaptingthe product to local use or preferences.

This strategy may be utilized by both stage3 and 4 i.e. Multinational as well as Globalcompanies.

In case of stage 3 i.e. multinationalcompany, the product adaptation strategygrows out of polycentric orientation as itassumes that all markets are different.


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In case of stage 4 i.e. global companies, theproduct adaptation is due to geocentric

orientation that makes their managers moresensitive to actual differences between themarkets.

(1) Exxon adapts its gasoline formulations tomeet the weather conditions prevailing indifferent markets while extending the basiccommunications appeal, Put a tiger in your

tank without change.


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(2)Soap and detergent manufacturers have adjustedtheir product formulations to meet the local

water and washing equipment conditions with nochange in their basic communications approach.

(3) Household appliances have been scaled to sizes

appropriate to different use environments.

(4) Food products due to high degree ofenvironmental sensitivity are often adapted suchas Kellogg.


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Alternatives

Product

Same Different

Communication

Different

SameStrategy 1:

Dual Extension

Strategy 2:


Adaptation

Strategy 4:

Dual Adaptation


Communication

Extension


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Strategy 4:Dual Adaptation

Marketers experience that environmentalconditions and consumer preferences in theforeign markets are different when compared tohome markets.

This calls for a different product offering as wellas different receptivity to advertising appeals.

This strategy of product and communicationsadaptation is used by stage 4 company i.e. globalcompanies

Stage 3 company i.e. multinational can also usedual adaptation as it may be warranted by marketconditions, preferences.


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Examples:

Fabric Softener marketed by Unilever inEurope is typical case of multinational roadto adaptation. It had in 10 different

countries under 7 different brand namesand marketing strategies

Because of decentralized structure productand marketing decisions were left to

country managers, they chose names thathad local-language appeal and selectedpackage designs to fit local tastes.


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In Europe the function of greeting cards is

to provide for a space for a sender to writean individual message whereas U.S. cardscontain a prepared message.

This calls for changing both product andcommunications in response toenvironmental differences.


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How to Choose a Strategy?

The product itself, defined in terms of thefunction or need it serves

The market, defined in terms of theconditions under which the product is used,preferences of potential customers, andability to buy the product

Adaptation and manufacturing costs thecompany will incur


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New Products in Global Marketing

Pursue opportunities in competitive arenasof global marketplace

Focus on one or only a few businesses

Active involvement from seniormanagement

Ability to recruit and retain best employees

Understand the importance of speed inbringing product to market


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New product launch

Waterfall approachThe launch of a new product in

international markets in a phased

manner

Useful when:

lifecycle of product is long

high fixed costs of entry into

individual markets

foreign markets are not equally

developed

some customization is needed

firms have little foreign

experience

Sprinkler approachSimultaneous product launch in

various international markets

Useful when:

short product life cycle

high R&D costs in product

development

competition is very strong

(pre-emption of markets)

firms have existing

presence in targetcountries

homogenized preferences

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The International New Product

Department

How big is the market for this product at variousprices?

What are the likely competitive moves in response

to our activity?Can we market the product through existingstructure?

Can we source the product at a cost that will yield

an adequate profit?


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The International Product Life

Cycle

MNC Manufactures

Product in Developed

Countries; Exports to

Developing Countries

MNC Moves

Production to

Developing

Country; BeginsImporting to

Home Country

Developing

Country

Competitor

Exports ProductTo MNC Home

Country;

Competes

with MNC

Imports

Developing Country

Markets Remain Viable

Target Markets for

MNC; MNC HomeCountry Market Is

Diminishing

Sales

Introduction

and Growth

Stages:

Early

Maturity:

Late

Maturity

Decline

Time


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International Product Life Cycle,

continuedThe Product Introduction Stage Products are developed and marketed in developed countries


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continued

The Growth Stage Increasing competition and rapid product adoption

Marketed primarily in developed countries

Product is exported to developing countries


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continued

The Maturity Stage Product is adopted by most target consumers

Sales are leveling off

Profits decline due to intense competition Manufacturing operations move to developing countries to take

advantage of cheap labor

New competitors: firms from developing countries


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continued

The Decline Stage Products are rapidly losing ground to new technologies and

product alternatives

Decrease in sales and profits Product lifecycle is extended through sales to consumers in

developing countries

Product and Brand Decision

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