Global Product Management and BrandingPesewa
Presentat ions
Philip Kotler
Defining a Product
A product is anything that can be offered to a market for attention, acquisition, use or consumption; it includes physical objects, services, personalities, places, organisations and ideas.
CoreProduct
Actual Product
Product Augmented
Warranty
Delivery& Credit Installation
After SalesService
Styling
QualityBrand
Pkg.Features
DesignCapabilities
Customer Service
Personnel
Global Product Development
• The heart of the global marketing process that focuses on building adaptability into products to achieve worldwide appeal.
• The product development process– The main goal is to build adaptability into products and
product lines for worldwide appeal.• Step 1: Idea generation• Step 2: Screening• Step 3: Product/process development• Step 4: Scale up• Step 5: Commercialization
Standardisation
FACTORS ENCOURAGING STANDARDIZATION
• Economies of scale in production• Economies in product R&D• Economies in marketing• “Shrinking” of the world
marketplace/economic integration• Global competitions
Initiator Becomes Managing Unit
Technical Development and Design
Integration and Coordination of All Multinational Program Activities
New Management Unit Assigned
Unique Requirements to be Incorporated in Product Goals and Specifications
Review of Design
Activities to Plan, Develop, Manufacture, Introduce, and Support Product
Guidelines for Program Execution
Nonoccurrence with Managing Unit
Activities to Plan, Develop, Manufacture, Introduce, and Support Product
Global Program Management
Viable Concept
Does Initiator Have Resources?
InitiatorManaging
UnitAffected Units(s)
Yes No
The Location of R&D Activities
• Past tendency was to keep activities centrally located with parent corporation headquarters.
• Using foreign-based resources improves ability to compete successfully internationally.
• Outsourcing shortens product development cycle time.
• Determined by the existence of specific skills.
Reasons for R&D Investments Abroad• To aid technology transfer from parent to
subsidiary.• To develop new and improved products
specifically for foreign markets.• To develop new products and processes for
application in world markets of the firm.• To generate new technology.
Global Product Development Organization• Product development team that is functionally
and internationally representative.• Focus on customer input to identify universal
and market-unique product features.• R&D consortia allows companies to cooperate
in developing new products and technologies.
The Testing of New Product Concepts• Testing for performance and customer acceptance
is the final stage of product development.• Testing ranges from reliability tests to mini-
launches.• Reasons that new international products fail:
– Relying on instinct or hunch rather than testing and research.
– Lack of product distinctiveness.– Unexpected technical problems.– Mismatch between functions.
International Product Testing Techniques• Limited product launch in one country market.• Laboratory test markets to capture consumer
reactions in a controlled environment.• Microtest marketing uses a permanent panel of
consumers and assesses their willingness to buy after exposure to media and purchase incentives.
• Forced distribution tests rely on the continuous report of consumer reactions to new products already in the market.
The Global Product Launch
• Introducing the product into countries in three or more regions within a narrow timeframe.
• Successful launches require:– Involvement of country managers– Pre-launch attention to localization
and translation requirements– Increased education and
support of the sales channel• Benefits of a global launch
– Showcases the product– Removes old models at once– Captures new product’s higher margins
Product and Brand Portfolio Management
• The marketer must have a balance of new, growing, and mature products capable of creating sustainable competitive advantage in the firm’s efforts to expand geographically or add to existing market operations.
• Analyzing the product portfolio– Market growth rates– Market share positions
Example of a Product-Market Portfolio
10 1 0
0
10
40
S
GBD
USC
B
F
10 1 0
0
10
40
US
GB
D
J
C
S
F
B
Relative Market Share Relative Market Share
Mar
ket
Gro
wth
Company A Company B(B=Brazil, C=Canada, D=Germany, F=France, GB=Great Britain, J=Japan, S=Spain, US=United States)
B
SOURCE: Adapted from Jean-Claude Larreche, “The International Product-Market Portfolio,” in 1978 AMA Educators’ Proceedings (Chicago:American Marketing Association, 1978), 276
Market-Product-Business Portfolio ExampleM
arke
t A
ttra
ctiv
enes
s
——— Market and Distribution Interconnectedness
………. Technology and Production Interconnectedness
High
Low
HighCompetitive StrengthLow
Canned Tea-US
Canned Tea-Europe
Canned Tea-Asia
Ice Cream-US
Ice Cream-Europe
Ice Cream-Asia
Frozen Vegetables-Europe
Frozen Vegetables-US
Frozen Main Dishes-Europe
SOURCE: Adapted from Susan P. Douglas and Samuel Craig, “Global Portfolio Planning and Market Interconnectedness,” Journal of International Marketing 4 (no.I, 1996):93-110.
Product Portfolio Approach
ADVANTAGES• A global view of
competitive structures.• Global strategy based on
allocation of scarce resources.
• Marketing objectives based on product lines in markets served .
• A convenient visual communication goal.
DISADVANTAGES• Foreign competition does not
follow the same rules as domestic competition.
• Relationships between market share and profitability may vary.
• Government regulations.• Local content laws.• Different production sites
impact perceptions of risk and quality.
The Role of Brands
A brand is a distinguishing name and/or symbol (such as a logo, trademark or package design) intended to identify the goods or services of either one seller or a group of sellers, and to differentiate those goods or services from those of competitors. A brand thus signals to the customer the source of the product, and protects both the customer and the producer from competitors who would attempt to provide products that appear to be identical.
The International Brand: Four Approaches
• Translation.• Transliteration testing existing brand name for
connotative meaning, e.g., “flic” pen.• Transparency, i.e., meaningless brand name to
minimize complexities.• Transculture. Foreign language name forms a
brand, e.g., vodka or perfume.
Managing the Brand Portfolio
• A strong brand is a global marketing asset.• Co-branding
– A strategic alliance where two or more brands are combined in an offer.
• Brand strategy decisions– Use of the corporate name.– Family brands for a wide product line.– Individual brands for each item in the product line.
• Private (store) branding– Umbrella branding with the intermediary’s name.– Separate brand names.
Nestle’s Branding Tree
10 Worldwide Corporate Brands
45 Worldwide Strategic BrandsResponsibility of general management at strategic business unit level
140 Regional Strategic BrandsResponsibility of strategic business unit and regional management
7,500 Local BrandsResponsibility of local markets
•Nestle•Carnation•Buitoni
•Kit Kat•Cerelac•Baci
•Macintosh•Vittel•Stouffer’s
•Wonka•Chambinho•Bona•Fruitips
Examples
•Herta•Alpo
•Mighty Dog•Smarties•After Eight•Coffee-Mate
•Maggi•Perrier
SOURCE: Adapted from Andrew J. Parsons,”Nestle: The Visions of Local Managers,”The McKinsey Quarterly, no 2, 1996, 5-29;see also http://www.nestle.com; http://brand/index.asp.
Private Brand Strategy
Strategy Rationale Circumstance
No participation Refusal to produce private label
Heavily branded markets; high distinctiveness; technological advantage
Capacity filling Market control
Opportunistic Influence category sales
High brand shares where distinctiveness is less; more switching by consumers
Competitive leverage Chief source of business Dedicated producer
Stake in both markets Major focus Leading cost position
Little or no differentiation by consumers
SOURCES:Adapted from Sabine Bonnot, Emma Carr and Michael J. Reyner, “Fighting Brawn with Brain,” The McKinsy Quarterly 40 (no 2. 2000): 85-92; and Francois Glemet and Rafael Mira, “The Brand Leader’s Dilemma,” The Mckinsey Quarterly 33 (no 2. 1993):4.
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