IB 3880 –International Marketing 2010-2011

21/02/2011

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Warwick Business School

Dr. Madhumita Banerjee

Warwick Business School

Warwick Business School

Catch up from last week

Brand Decisions – product categories, lines and brands

Brand Structures

Adaptation strategies

Service characteristics

Internationalisation routes for Services

Challenges for international marketing of Services

Seminar: Javalgi and White (2002) and Group Exercise

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Session Agenda

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Key issues learnt for PRODUCT What is a product?

What factors influence international product decisions International PLC

Product levels and extent of adaptation; Factors influencing adaptation

Key issues learnt for BRAND What is a brand? Why do firms and customers need brands?

The brand equity model and its components - brand loyalty, brand awareness, perceived quality, brand associations

COO effects and brands

Mini Case: Danish Klassic

Paper and Video Case: L’Oreal

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First though, Catch up from last week...

IB 3880 –International Marketing 2010-2011

21/02/2011

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Video Case: L’Oreal in Thailand What challenges were faced by L’Oreal in Thailand ? How did

the organisation meet and overcome these challenges?

What lessons can we learn from L’Oreal’s experience in Thailand?

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Product categories, lines and brands

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Brand Structures

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MASTER BRANDThe corporation and mostoperating units and brandsshare the same name

♥HOLDING COMPANYThe corporation, operatingunits, and brands do not sharethe same name

ASYMMETRICALThe corporation and anoperating unit or brand sharethe same name

♥

IB 3880 –International Marketing 2010-2011

21/02/2011

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Warwick Business School

Adaptation – Strategic AlternativesKeegan and Green (2011)

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Virtually no adaptationSame advertising and promotion appealsacross countries

Strategy 2 Product extension

communication adaptation

Strategy 4Dual Adaptation

Strategy 1Dual Extension

Strategy 3 Product

adaptationCommunication

extension

PRODUCTSame Different

CO

MM

UN

ICAT

ION

Different

Same

Adaptation of communication to address different needs orproduct positioning

Adapt the product to suit local tastes Minimal changes to the communication

Adaptation of communication and products to suit different markets

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Adaptation in practice: Case: Oreo Cookies

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Everyone is in service (Levitt 1972)

Services “…include all economic activities whose output is not a physical product or construction, is generally consumed at the time it is produced, and provides added value in forms (such as convenience, amusement, timeliness, comfort or health) that are essentially intangible concerns of its first purchaser” (Zeithaml and Bitner, 2003:3)

S-D logic : application of specialized competences (skills and knowledge) through deeds, processes and performances for the benefit of another entity or the entity itself (self service) (Vargo and Lusch 2004)

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Service

IB 3880 –International Marketing 2010-2011

21/02/2011

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Scale of Market Entities

Source: Shostack (1977)

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Salt

Dog food

Car

Burger bar

Advertisingagency

Nursing

Teaching

Intangible dominantentities

Tangible dominantentities

Balanced entityequally weightedbetween product

And services

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Service Characteristics

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1. Intangibility

○ Cannot be touched or tested

2. Perishability

○ Cannot be stored

3. Heterogeneity

○ Cannot be standardized

4. Inseparability

○ Cannot be separated from

the moment of consumption

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Service Marketing Mix Elements

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PEOPLE PROCESS

PHYSICAL ASPECTS

Customers and Employees Service delivery process

Physical location and Aesthetics

IB 3880 –International Marketing 2010-2011

21/02/2011

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Services in the global economy Service as a % of GDP

United States 80%

United Kingdom 75%

Germany 72%

France 79%

Italy 73%

Spain 70%

Portugal 73%

Australia 72%

Brazil 68%

Russia 58%

India 63%

China 40%

South Africa 65%

Mexico 65% Source: CIA World Fact Book 2009

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Internationalisation routes for Services Gronroos (1999) Direct exports - Base in domestic market but moving consulting, repair

and service of valuable equipments for the client abroad

Systems export/following the large customer abroad – A joint export by two or more firms whose solutions complement each other. Traditional form of service export.

Direct entry/own subsidiary – The service firm establishes a service producing organisation of its own in the foreign market

Indirect entry/intermediate mode – When the service firm wants to avoid establishing a local operation that is totally or partly owned by itself but wants to establish a permanent operation in the foreign market.

Electronic marketing/Internet

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Challenges for the International Marketing of Services Coping with service intangibility

Personal contact in services

Standardisation and customisation of services

Scale and cultural effects

Restrictions on the international marketing of services

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IB 3880 –International Marketing 2010-2011

21/02/2011

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Warwick Business School

‘Perceived Risk’ in the International Marketing of Services

Keh and Sun (2008) Personal and non-personal risk

Post-purchase evaluation and risk Contextual factors (involvement, face consciousness) Other factors (prior usage experience, consumer

knowledge) Impact on customer satisfaction and perceived value

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The Services Profit Chain

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Company

Employees Customers

Internalmarketing

Interactivemarketing

Externalmarketing

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The Service Profit Chain in the International Context Case: BP

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IB 3880 –International Marketing 2010-2011

21/02/2011

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Warwick Business School

Suggested Readings

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Gronroos, C. (1999), Internationalisation strategies for services, Journal of Services Marketing, 13, (4/5), 290-297

Javalgi, R.G. and D.S White (2002), Strategic challenges for the marketing of services internationally, International Marketing Review, 19 (6), 563-581

Keh, H.T and J. Sun (2008), The complexities of perceived risk in cross-cultural services marketing, Journal of International Marketing, 16 (1), 120-146

Lovelock, C. and G.S. Yip (1996), Developing global strategies for service businesses, California Management Review, 38 (2), 64-86

Foundational readings on Services Marketing:

Levitt, T. (1972), Production-line approach to services, Harvard Business Review, 56 (July-August), 158-165.

Lovelock, C. and J. Wirtz (2011), Services Marketing: People, Technology and Strategy, Seventh Edition, New jersey: Pearson

Shostack , L. (1977), Breaking free from product marketing, Journal of Marketing, 41 (2), 73-80

Zeithaml V. and Bitner M.J. (2003), Services Marketing: Integrating customer focus across the firm, 3rd edition, New York: McGraw-Hill

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For Next Week Article to read: Shoham, Rose and Kropp (1997)

Case to read: Levis Strauss Signature: A new brand for mass channel retail stores from the textbook Ghauri and Cateora (2010)

Case Questions: 1. What are the main reasons that made Levi Strauss decide to launch Levi Strauss Signature

in Europe?

2. Based on the case information, analyse the distribution strategy followed by Levi Strauss Europe?

3. Evaluate the current distribution strategy of Levi Strauss Europe and its key competitors?

4. What will be your recommendations to Levi Strauss Europe to maintain its competitiveness in the future?

Seminar groups 9 and 10

To discuss in class the key points of the Shoham, Rose and Kropp (1997) paper Each group has 7-10 minutes to make a presentation

Seminar groups 11 and 12

Group 11- To present answers to case questions 1 and 2

Group 12 – To present answers to case questions 3 and 4

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