Svend Hollensen

GLOBAL MARKETING4th Edition

Product decisions

Lecture by Ewa Baranowska-Prokop, Ph.D.

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-2

Learning objectives

Discuss the influences that lead a firm to standardize or adapt its products

Explore how international service strategies are developed

Distinguish between the product life cycle and the international product life cycle

Discuss the challenge of developing new products for foreign markets

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-3

Learning objectives (2)

Explain and illustrate the alternatives in the product communication mix

Define and explain the different branding alternatives

Discuss brand piracy and the possible anti-counterfeiting strategies

Explain what is meant by a ‘green’ productDiscuss alternative environmental management

strategies

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-4

Figure 1 Environmental factors influencingthe balance between standardization

and adaptation

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-5

Figure 2 Standardization and adaptationof the international marketing mix

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-6

Figure 3 Analysis of a company’sstandardization potential

Source: adapted from Kreutzer, 1988. Reproduced with kind permission from Emerald Group Publishing Ltd.

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-7

Figure 14.1 The three levels of a product

functional features, performance,perceived value, image,

technology

Delivery, installation, guarantees, after-sales service,

spare parts

brand, quality, design, packaging, price,country of origin, staff behaviour, size

Core productbenefits

Productattributes

Support services

Ability to standardize product elements

Low

High

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-8

Figure 14.2 Scale of elemental dominance

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-9

Characteristics of services

Intangibility

Perishability

Heterogeneity

Inseparability

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-10

Three categories of service

People processing

Possessionprocessing

Information-based

services

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-11

Categories of supplementary service

InformationConsultation/adviceOrder takingHospitality

SafekeepingExceptionsBillingPayment

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-12

Differences in the B2B market (versus consumer markets)

Fewer and larger buyersDerived, fluctuating, and relatively inelastic

demandMany participants in buying processProfessional buyersCloser relationshipsAbsence of intermediariesTechnological links

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-13

What is this?

The _____ states products or brands follow a sequence of stages including introduction, growth, maturity, and sales decline.

Product life cycle

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-14

Figure 14.3 The product life cycle

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-15

Figure 14.4 Comparisons of PLCs

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-16

International product life cycles

Describes diffusion of an innovation across national boundaries

Demand grows first in innovating country and is then exported

Eventually demand grows in LDCs

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-17

Figure 14.6 IPLC curves

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-18

Figure 14.7 PLCs of different countries for a specific product

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-19

Japanese manufacturers compete on time to market

Early integration of customers and suppliersMultiskilled project teamsInterlinking of R&D, production and marketingTotal quality managementParallel planning of new products and required

production facilitiesOutsourcing

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-20

Figure 14.8 Compression of R&D cycles and PLCs

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-21

Figure 14.9 Development and test periods for suppliers

to the car industry

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-22

Figure 14.10 Different degrees of product newness

Low Newness to Company High

High

Newnessto

InternationalMarket

Low

RepositionExistingproducts

Line extensions/

improvements

New to company

New to home

country

Cost reductions

New toInternational

markets

Increasingrisk

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-23

Figure 14.11 Product/ communication mode

Promotion

Product

Standard

Adapt

NewAdaptStandard

Straight extension

Promotionadaptation

Productadaptation

Dualadaptation

Productinvention

Source: Source: adapted from Keegan, 1995.

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-24

Motorola’s promotion adaption for Korean market

http://www.motorola.com/kr/

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-25

Kellogg’s dual adaption for Indian market

http://www.kelloggcompany.com

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-26

What is this?

Which term refers to the effect on quality perceptions caused by knowledge of the production country location for the product?

Country of origin effects

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-27

What is this?

Which term refers to the premium a customer would pay for the branded product compared to an identical unbranded version of the same product?

Brand equity

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-28

Brand equity’s assets and liabilities

Brand loyalty

Brand awareness

Perceived quality

Brand associations

Other proprietary brand assets

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-29

The functions of branding

To distinguish a company’s offering and differentiate one particular product from its competitors

To create identification and brand awareness

To guarantee a certain level of quality and satisfaction

To help with promotion of the product

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-30

Figure 14.12 Branding decisions

Source: Source: adapted from Onkvisit and Shaw, 1993, p. 534.

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-31

Figure 14.13 Three brand options

Private branding 100% externalizing

Co-branding Brand alliance

Manufacturer’sbrand

100% internalizing

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-32

What is this?

Which term refers to a retailer’s own brand (like Marks & Spencer’s)?

Private label

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-33

Perspectives on private labels

Retailer perspective Better profit margins Strengthens retailer

image

Manufacturer perspectiveNo promotional expensesProvides access to shelf

spaceRequires competing on

priceLoss of controlMay cannibalise other

manufacturer brands

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-34

What is this?

_____ describes a form of cooperation between two or more brands, which can create synergies that are valuable for both participants, above the value they would expect to generate on their own.

Co-branding

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-35

Shell and Ferrari co-branding

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-36

Requirements for ingredient suppliers

Supplier should offer a product with substantial advantages over existing products

Ingredient should be critical to success of final product

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-37

What is this?

_____ branding involves sight, sound, smell, touch, and taste.

Sensory

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-38

What is this?

When a famous person uses his or her status in society to promote a product, it is called _____.

Celebrity branding

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-39

Determinants of value of celebrity license

Celebrity Q score

Product being promoted

Quality of licensed product

Amount of design control

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-40

Steps involved with international celebrity licensing

Identify the rights involvedNegotiate the terms and scope of the

licenseDetermine the payment and other terms of

the license

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-41

What is this?

What term refers to the integration of business practices and products that are friendly to the environment while also meeting the needs of the consumers?

Green marketing

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-42

Figure 14.16 Types of environmental

strategic posture

Changeorientation

Value creation approach

Proactive

Accommo-dative

Cost reductionBenefit

enhancement

Green productinnovation

Green productdifferentiation

Pollution preventionBeyond compliance

Pollution preventionCompliance

Source:Source: adapted from Starik et al., 1996, p. 17.

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-43

Benefits of strategic alliances with environmental groups

Increased consumer confidence in green products and claims

Access to environmental informationMarketer access to new marketsPositive publicity and reduction of criticismEducation for consumers about key

environmental issues

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-44

Swiss Army: A case study (2)

Are there any problems for channels of distribution associated with the prospect of Swiss Army stores?

How might Swiss Army use ‘non-traditional advertising’ to promote its brands and new products?

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-45

For discussion (1)

How would you distinguish between services and products? What are the main implications of this difference for the global marketing of services?

What implications does the product life cycle theory have for international product development strategy?

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-46

For discussion (2)

To what degree should international markets be offered standardized service and warranty policies that do not differ significantly from market to market?

Why is the international product policy likely to be given higher priority in most firms than other elements of the global marketing mix?

Describe briefly the IPLC theory and its marketing implications.

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-47

For discussion (3)

What are the requirements that must be met so that a commodity can effectively be transformed into a branded product?

Discuss the factors that need to be taken into account when making packaging decisions for international product lines.

When is it appropriate to use multiple brands in (a) a single market and (b) several markets?

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-48

For discussion (4)

What is the importance of ‘country of origin’ in international product marketing?

What are the distinguishing characteristics of services? Explain why these characteristics make it difficult to sell services in foreign markets.

Identify the major barriers to developing international brands.

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-49

For discussion (5)

Discuss the decision to add or drop products to or from the product line in international markets.

Why should customer-service levels differ internationally? Is it, for example, ethical to offer a lower customer-service level in developing countries than in industrialized countries?

What are the characteristics of a good international brand name?

Hollensen, Global Marketing 4e, © Pearson Education 2008 14-50

Swiss Army: A case study (1)

Which factors are attributable to the strong global brand equity of Swiss Army?

What are the main motives behind the product line extension from Swiss Army Knives into other product areas?

Requires web access