International Marketing Topic-8 SAMIRA PDF

B RAND & P RODUCT D ECISION IN G LOBAL M ARKETING Chapter-10 1  Key Points  Brand and product concepts  Local, international, and Things to global brands  Product design issues...

B RAND & P RODUCT D ECISION IN G LOBAL M ARKETING Chapter-10 1  Key Points  Brand and product concepts  Local, international, and Things to global brands  Product design issues Discuss  Attitudes toward foreign products  Strategic alternatives  New product issues 2  BASIC PRODUCT CONCEPTS  A product is an offering of a firm that satisfies the needs of customers Management must develop product and brand policies and strategies that are sensitive to market needs, competition, and the company’s ambitions and resources on a global scale. 10-3  BASIC PRODUCT CONCEPTS  A product is a good, service, or idea  Tangible attributes: A product’s tangible attributes can be assessed in physical terms, such as weight, dimensions, or materials used. Consider, for example, a flat-panel TV with an OLED screen that measures 42 inches  Intangible attributes: attributes including the status associated with product ownership, a manufacturer’s service commitment, and a brand’s overall reputation or mystique, are also important 10-4  PRODUCT TYPES Framework for Product classification 5  PRODUCT TYPES Buyer orientation: It is a composite measure of the amount of effort a customer spends, the level of risk associated with a purchase, and buyer involvement in the purchase. The buyer orientation framework includes Convenience Shopping Specialty For Example, Electronics products are often high-involvement purchases, and many shoppers will compare several brands before making a decision. Products can also be categorized in terms of their life span (durable, nondurable, and disposable) 6  PRODUCT WARRANTIES An Express warranty is a written guarantee that assures the buyer is getting what he or she paid for or provides a remedy in case of a product failure A warranty can be an important element of a product’s value proposition. In global marketing, warranties can be used as a competitive tool to position a company in a positive way. For example, in the late 1990s, Hyundai Motor America chief executive O’Neill realized that many American car buyers perceived Korean cars as “cheap” and were skeptical about the Hyundai nameplate’s reliability. Although the company had made significant improvements in the quality and reliability of its vehicles, consumer perceptions of the brand had not kept pace with the changes. O’Neill instituted a 10-year, 100,000-mile warranty program that represents the most comprehensive coverage in the auto industry. The results have been impressive: Hyundai’s U.S. sales jumped from approximately 90,000 vehicles in 1998 to nearly 665,000 7  PACKAGING  Packaging is an integral element of product-related decisions:  for protecting the product: Packaging is an especially important consideration for products that are shipped to markets in far-flung corners of the world.  for information: “Eco-packaging” is a key issue today, and package designers must address environmental issues such as recycling, biodegradability, and sustainable forestry Packaging also serves important communication functions: Packages (and the labels attached to them) offer communication cues that can influence consumers when making a purchase decisions 8  PACKAGING  Improves Brand Experience:. Today, many industry experts agree that packaging must engage the senses, make an emotional connection, and enhance a consumer’s brand experience. According to Bernd Schmitt, director of Columbia University’s Center on Global Brand Leadership, “Packages are creating an experience for the customer that goes beyond the functional benefits of displaying and protecting the object Coca-Cola’s distinctive (and trademarked) contour bottle comes in both glass and plastic versions and helps consumers seek out the “real thing.” The bottle design, which dates back to 1916, was intended to differentiate Coke from other soft drinks. The design is so distinctive that a consumer could even use his or her sense of touch to identify the bottle in the dark! The Coke example also illustrates the point that packaging strategies can vary by country and region 9  PACKAGING  Nestlé’s worldwide network of packaging teams contributes packaging improvement suggestions on a quarterly basis. Implemented changes include a plastic lid to make ice cream containers easier to open, slightly deeper indentations in the flat end of candy wrappers in Brazil that make them easier to rip open, and deeper notches on single-serve packets of Nescafé in China. Nestlé also asked suppliers to find a type of glue to make the clicking sound louder when consumers snap open a tube of Smarties-brand chocolate candies. 10  LABELING In today’s self-service retail environments, product labels may be designed to attract attention, support a product’s positioning, and help persuade consumers to buy. Labels can also provide consumers with various types of information. One hallmark of the modern global marketplace is the abundance of Multilanguage labeling that appears on many products 11  LABELING Mandatory health warnings on Nestlé introduced Nan, an infant- tobacco products are required in formula brand that is popular in Latin most countries. America, in the American market. The American Automobile Labeling Targeted at Hispanic mothers, Nan’s Act clarifies the country of origin, the instructions are printed in Spanish on final assembly point, and the the front of the can. percentages of the major sources of In 2008, the United States enacted a foreign content of every car, truck, country-of-origin labeling (COOL) and minivan sold in the United States law. The law requires supermarkets (effective October 1, 1994). and other food retailers to display Responding to pressure from information that identifies the consumer groups, in 2006 country from which meat, poultry, McDonald’s began posting nutrition and certain other food products are information on all food packaging sourced. France enacted a similar and wrappers in approximately law in January 2017 12  AESTHETICS A BOOK IS JUDGED BY ITS COVER  Global marketers must understand the importance of visual aesthetics  Aesthetic styles (degree of complexity found on a label) differ around the world  Red: South Africa = mourning; India = purity; China = celebration, good luck; Russia = Bolsheviks, communism; Western = excitement  Blue: Iran = heaven and spirituality; Western = depression, sadness, “something blue” bridal tradition, conservative  White: Japan white carnation = death; Eastern = funerals; Western = brides, angels, good guys, hospitals, doctors, peace 10-13  BRANDS A brand can be defined as “ a name, term, sign, symbol, or combination of them which is intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors” Bundle of images and experiences in the customer’s mind. 10-14  BRANDS Functions of Brand:  A promise made by a particular company about a particular product; it is a type of quality certification Differentiate between competing products; brands enable customers to better organize their shopping experience by helping them seek out and find a particular product  The sum of impressions about a brand is the Brand Image 10-15 BRAND IMAGE Information about products and brands comes from a variety of sources and cues, including advertising, publicity, sales personnel, and packaging. Perceptions of service after the sale, price, and distribution are also taken into account. 10-16  BRAND IMAGE Brand image is one way that competitors in the same industry sector differentiate themselves. Take Apple and Samsung, for example. Both companies market smartphones. The late Steve Jobs, Apple’s legendary cofounder, and CEO, was a constant media presence and a master at generating buzz; the iPhone, iPad, and other Apple products generally receive stellar reviews for their sleek designs, powerful functionality, and user-friendly features. Apple’s retail stores reinforce the brand’s hip, cool image. By contrast, Samsung’s brand image is more heavily skewed toward 10-17  BRAND EQUITY  The value added to the brand over the years as a result of investments in the marketing of the brand  Brand equity can also be thought of as an asset representing the value created by the relationship between the brand and its customers over time.  The value of global megabrands such as Coca-Cola runs in the tens of billions of dollars.  the strongest global brands have tremendous brand equity. 10-18  BRAND EQUITY Strong Brand Equity brings numerous benefits to the company  Greater loyalty  Less vulnerability to marketing actions  Less vulnerability to marketing crises  Larger margins  More inelastic consumer response to price increases  More elastic consumer response to price decreases  Increased marketing communication effectiveness 10-19  BRAND COMPONENTS Companies develop logos, distinctive packaging, and other communication devices to provide visual representations of their brands A logo can take a variety of forms, starting with the brand name itself. For example, the Coca- Cola brand is expressed in part by a word mark consisting of the words Coke and Coca-Cola written in a distinctive white script. The “wave” that appears on red Coke cans and bottle labels is an example of a non-word mark logo, sometimes known as a brand symbol. 20  BRANDS To protect the substantial investment of time and money required to build and sustain brands, companies register brand names, logos, and other brand elements as trademarks or service marks. Safeguarding trademarks and other forms of intellectual property is a key issue in global marketing 10-21  LOCAL PRODUCTS AND BRANDS Brands that have achieved success in a Single National Market Represent the lifeblood of domestic companies Entrenched local products/brands can be a significant competitive hurdle to global companies 10-22  INTERNATIONAL PRODUCTS AND BRANDS  Products are offered in several markets in a particular region. For example, a number of “Euro products” and “Euro brands”. GM’s Opel Corsa the “Accidental World Car” was originally designed and introduced for the European market. GM then decided to build different versions of the Corsa for China, Mexico, and Brazil 10-23 GLOBAL PRODUCTS AND BRANDS Global 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 throughout the world A true global product is offered in all world regions. Global brands are not the same as global products iPod = brand; Mp3 player= product Coca-Cola =brand; soft drinks= product 10-24 GLOBAL PRODUCTS AND BRANDS McDonald’s Menu around the Globe. The product becomes different but the Brand remains the same 25 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 them the same products, we use the same production methods, and we have the same corporate policies. We even use the same advertising—in a different language, of course. —Alfred Zeien Former Gillette CEO 10-26  GLOBAL BRAND CHARACTERISTICS Key Value Dimensions that answer how consumers value the Brand  Quality signal—Global brands compete fiercely locally and internationally resulting in superior quality. A global brand name differentiates product offerings and also allows marketers to charge premium prices  Global Myth- Global brands are seen as cultural ideals. Global brands gives it customers a sense of belonging  Social responsibility—Global brands should act as good citizens. 10-27  BRANDING STRATEGIES COMBINATION OR TIERED BRANDING Emphasizing a corporate or family name as well as an individual brand name in product marketing.  Combination or tiered branding allows marketers to leverage a company’s reputation while developing a distinctive identity for a line of products ─Volkswagen Polo, family name is Volkswagen and the individual product name is Polo ─Honda Civic family name Honda and the individual product name is Civic 10-28  BRANDING STRATEGIES  CO-BRANDING is when a product is labelled with more than Filling a Doritos shell with Taco one brand. Bell’s ingredients was a partnership made in heaven. These two sold a  Co-branding features two or more billion of these tasty treats in its company or product brand first year alone. This partnership  Taco Bell and Doritos proved to be strategic as Doritos fans were introduced to Taco Bell and vice versa. Doritos benefitted from Taco Bell’s amazing product innovation. In return, Taco Bell fans got acquainted with Doritos’ loyal following. Having much the same target audience may have 10-29 helped,  BRANDING STRATEGIES BRAND EXTENSION Ex: The Virgin Group  Brand extension is a marketing Virgin Entertainment: Virgin strategy in which a company uses its Mega-stores and MGM brand name and reputation to launch Cinemas a new product or service in a different Virgin Trading: Virgin Cola product category or market segment. The brand extension strategy aims to and Virgin Vodka leverage the brand equity of an Virgin Radio established brand to increase the Virgin Media Group: Virgin chances of success for the new Publishing, Virgin Television, product or service Virgin Net  Brand acts as an umbrella for new Virgin Hotels Virgin Travel Group: Virgin products Atlantic Airways, Virgin Holidays 10-30  BRANDING STRATEGIES BRAND EXTENSION Example:  Nike –Nike has successfully extended its brand into new categories. In addition to athletic shoes, the company now sells clothing, accessories, and even technology products like fitness trackers. Nike doesn’t sell shoes. It sells an idea with its marketing strategy!!  Apple – Apple has expanded its brand from personal computers to other technology products, including smartphones, tablets, and smartwatches. This has helped the company become one of the most valuable brands in the world. 10-31  GLOBAL BRAND DEVELOPMENT A truly global brand is one that has a consistent identity with consumers across the world. This means that the same product formulation, the same core benefit and values proposition, and the same positioning. Very few brands meet these strict criteria  Even a global marketing juggernaut like Proctor and Gamble has only a few brands in its portfolio that can be considered as truly global (e.g., Pringles, Pantene, Duracell, Gillette)  Advantages of Global Brands  Economies of Scale  Brand Awareness  Prestige factor 10-32  GLOBAL BRAND DEVELOPMENT Developing a global brand is a difficult and costly endeavor and managers should evaluate their decisions critically on the basis of : 1. Realistic Goal Assessment: managers must realistically assess whether anticipated scale economies will actually materialize. 2. Global Team Building: managers must recognize the difficulty of building a successful global brand team 3. Need for Customization: managers must be alert to instances in which a single brand cannot be imposed on all markets successfully 10-33 GLOBAL PRODUCTS AND BRANDS McDonald’s Menu 34  GLOBAL BRAND DEVELOPMENT Therefore companies should prioritize on creating strong brands through the: Global Brand Leadership Using organizational structures, processes, and cultures to allocate brand-building resources globally, to create global synergies, and to develop a global brand strategy that coordinates and leverages country brand strategies 10-35  GLOBAL PRODUCT -> GLOBAL BRAND Mars Inc. confronted the global brand issue with its chocolate-covered caramel bar that was sold under a variety of national brand names, such as Snickers in the United States and Marathon in the United Kingdom. Management decided to transform the candy bar— already a global product— into a global brand. This decision entailed some risks, such as the possibility that consumers in the United Kingdom would associate the name Snickers with knickers. Mars also changed the name of its successful European chocolate biscuit from Raider to Twix, the same name used in the United States. In both instances, having a single brand name gave Mars the opportunity to leverage all of its product 36  GLOBAL BRAND DEVELOPMENT Guidelines for Establishing Global Brand Leadership 1. Create a compelling value proposition 2. Think about all elements of brand identity and select names, marks, and symbols that have the potential for globalization 3. Research the alternatives of extending a national brand versus adopting a new brand identity globally 4. Develop a company-wide communication system 10-37  GLOBAL BRAND DEVELOPMENT 5. Develop a consistent planning process 6. Assign specific responsibility for managing branding issues 7. Execute brand-building strategies 8. Harmonize, unravel confusion, and eliminate complexity 10-38  COUNTRY OF ORIGIN AS BRAND ELEMENT Perceptions about and attitudes toward particular countries often extend to products and brands known to originate in those countries Germany: Germany is known for its engineering and automotive industry, as well as its precision manufacturing France: France is the leading country for the fashion industry in French perfume the world Switzerland: Swiss Watches, 10-39  GLOBAL PRODUCT STRATEGIES New Product Development Process In The Foreign Market: Marketers while developing global products needs to answer few Product Policy Questions What new products should be developed for what markets? What product should be added, or discarded or modified from the product line in each of the countries in which the company operates? What brand name should be used? How should the product be packaged and serviced? 40  POOR PRODUCT POLICY  Ikea in the USA: Reason behind the initial market failure Poor selection of store location Stubbornly refused to resize its beds and kitchen cabinet to fit American standard Self-service and self-assembly puzzled Americans High price American preferences for big spacious furniture:  sofa sets were too hard Bookshelves too small Customers mistake vases for drinking glasses 41  GLOBAL PRODUCT MARKETING STRATEGIES Three global strategies to penetrate foreign markets:  Extension strategy—offering products virtually unchanged in markets outside of the home country  Adaptation strategy—changing elements of design, function, and packaging according to the needs of different country markets  Creation strategy—developing new products for the world market 42  GLOBAL PRODUCT MARKETING STRATEGIES 10-43  GLOBAL PRODUCT STRATEGIES Five strategic options for the global marketplace  Strategic Option 1: product and communication Extension: Dual EXTENSION  Strategic Option 2: product Extension: communication Adaptation  Strategic Option 3: Product Adaptation: communication Extension  Strategic Option 4: product and communication adaption: 10-44 GLOBAL PRODUCT STRATEGIES Strategic Option-1: DUAL EXTENSION A company can choose to market a standardized product using a uniform communication strategy.  Early entrants prefer this approach  Small companies with fewer resources prefer this form of extension ADVANTAGE: Substantial savings coming from Economies of Scale LIMITATIONS:  product-driven rather than market-driven 45  GLOBAL PRODUCT STRATEGIES Strategic Option-2: Product Extension: Communication Adaptation The company can choose to market a standardized product using a modified communication strategy.  As culture and competition differ  Positioning themes ae often used in the Ad campaigns ADVANTAGE: Low cost of implementation LIMITATIONS:  biggest costs associated with this approach stem from researching the market and revising advertising, sales promotion efforts, point-of-sale material, and other communication elements as appropriate. 10-46  GLOBAL PRODUCT STRATEGIES Strategic Option-3: Product Adaptation: Communication Extension A third approach to global product planning is to adapt the product to local use or preference conditions while extending, with minimal change, the basic home-market communications strategy or brand name. ADVANTAGE: clever marketing ideas can be transferred; brands are added as firms buy local companies Taiwan-produced commercial for P&G’s Pantene shampoo was successfully transferred to Latin America with minor changes in the product 10-47  GLOBAL PRODUCT STRATEGIES Strategic Option-4: DUAL ADAPTATION As the name of this strategy implies, both the product and one or more promotional elements are adapted for a particular country or region. Difference in cultural as well as physical environment: Sometimes marketers discover that environmental conditions or consumer preferences differ from country to country; the same may be true of the function a product serves or consumer receptivity to advertising appeals. In cases where country managers who have been granted considerable autonomy order adaptations, they may be simply 10-48 exercising their power to act independently.  GLOBAL PRODUCT STRATEGIES Strategic Option-5: Product Invention/Innovation  Important for reaching mass markets in developing/ emerging nations and certain segments of industrialized countries.  Genuinely global marketers focus on developing products with a global scope rather than a single country perspective  Total Toothpaste by Colgate uses global benefit segmentation 10-49 1. Apple’s second-generation iPhone was launched in 21 countries simultaneously 2. Shampoo; need is different-dandruff, silky hair, condition is same- to clean 50  PRODUCT INVENTION  What is a new product?  New to those who use it or buy it  New to the organization  New to a market 10-51  TESTING NEW PRODUCTS  When do you test a new product?  Whenever a product interacts with human, mechanical, or chemical elements because there is the potential for a surprising and unexpected incompatibility  Test could simply be observing the product being used within the market 10-52