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?

4

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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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