Global Products and Brands - Chapter 13 Study Guide

Global Products and Brands- Chapter 13 What are brands?- A brand is the overall perception, identity, and emotional connection that consumers have with a product, company, or service. What are brands? (spreading activation model, brands and memory, )- In the context of the spreading activation m...

Global Products and Brands- Chapter 13 What are brands?- A brand is the overall perception, identity, and emotional connection that consumers have with a product, company, or service. What are brands? (spreading activation model, brands and memory, )- In the context of the spreading activation model, brands are mental nodes in a consumer’s memory network that trigger associated thoughts, feelings, and experiences—activating related concepts like quality, emotion, or past experiences whenever the brand is encountered. Approaches to branding-  Individual Branding – Each product or service has its own unique brand name (e.g., Procter & Gamble’s Tide, Pampers, Gillette).  Umbrella (Family) Branding – Multiple products share the same brand name to build trust and recognition (e.g., Apple: iPhone, iPad, Mac).  Co-Branding – Two or more brands collaborate on a single product to combine brand equity (e.g., Nike + Apple Fitness).  Private Label Branding – Retailers create their own in-house brands (e.g., Costco’s Kirkland Signature).  Personal Branding – Individuals market themselves as a brand (e.g., Oprah, Elon Musk).  Corporate Branding – The company’s name is the brand across all offerings, shaping the perception of the entire business (e.g., Google, Amazon). The difference between brands and logos- The difference between brands and logos is:  A brand is the overall perception, identity, and emotional connection people have with a product, company, or person.  A logo is the visual symbol or design that represents that brand and helps people recognize it. How is the legal environment related to brands- The legal environment is closely related to brands because it provides protection and regulation through: 1. Trademarks – Brands can register names, logos, slogans, and symbols as trademarks to legally protect them from imitation or misuse.  2. Intellectual Property (IP) Laws – These laws ensure a brand’s identity and creative assets are safeguarded, giving exclusive rights to the brand owner. 3. Regulatory Compliance – Brands must follow advertising, labeling, and consumer protection laws, especially in different countries or regions. 4. Enforcement – The legal system allows brands to take legal action against counterfeit products, trademark infringement, or deceptive branding practices. Country of origin effect (definition , how does it affect branding?- Country of Origin Effect refers to the influence that a product’s country of manufacture or brand origin has on consumer perceptions and purchase decisions. How it affects branding:  Positive Effect: Products from countries with strong reputations in certain industries can boost brand image (e.g., "Made in Germany" for cars = quality and engineering).  Negative Effect: Products from countries with weaker reputations may face bias or skepticism, regardless of actual quality.  Brand Strategy Impact: Companies may emphasize or hide their origin depending on how consumers perceive that country. For example, a fashion brand might highlight being "Italian" for luxury appeal. Power and importance of brands- Brands are powerful because they shape consumer perceptions, build trust, and create emotional connections that drive loyalty and influence buying decisions. Their importance lies in differentiating products, adding financial value, and serving as a strategic asset that enhances marketing and long- term business growth. Consideration of going global with brands, Characteristics of global brands- When going global, brands must consider cultural sensitivity, legal standards, and whether to standardize or adapt their branding to local markets. Global brands are recognized worldwide, maintain a consistent identity, and often symbolize quality and trust. They also succeed by balancing global consistency with local relevance to connect emotionally with diverse audiences. Benefits of global brand orientation- Benefits of a global brand orientation include: 1. Stronger brand recognition across international markets, leading to increased consumer trust and loyalty.  2. Cost efficiency through standardized marketing, packaging, and advertising. 3. Competitive advantage by projecting a consistent and powerful brand image worldwide. 4. Easier market entry as a known brand opens doors with distributors and consumers. 5. Higher brand equity, which boosts financial value and attracts global partnerships. Products and culture- Culture influences how products are perceived, used, and accepted by consumers in different regions. It affects preferences, behaviors, and expectations—meaning brands often need to adapt product features, marketing messages, or packaging to align with local customs and values. Ignoring cultural differences can lead to product rejection or brand miscommunication. Innovation- model of diffusion (characteristics of diffusion.. relative advantage etc.. and how they relate to the rate of acceptance e.g. + or - relationships)- The Model of Diffusion of Innovation explains how new products or ideas spread through a population over time. The rate of acceptance depends on key characteristics of the innovation, each having a positive (+) or negative (–)relationship with adoption speed: 1. Relative Advantage (+) – The greater the perceived benefit over existing options, the faster the adoption. 2. Compatibility (+) – If the innovation fits well with existing values, habits, and experiences, it is more readily accepted. 3. Complexity (–) – The more difficult the innovation is to understand or use, the slower the adoption. 4. Trialability (+) – If people can test it before fully committing, adoption is quicker. 5. Observability (+) – The more visible and noticeable the benefits are, the faster others are likely to adopt. Product component model (know the components, and support services)- know where would each- The Product Component Model breaks down a product into three key components that help marketers adapt it for global markets: 1. Core Component  What it is: The product's essential benefit or function.  Examples: A smartphone's ability to make calls, a car’s transportation function.  Adaptation? Usually standardized, but may be slightly modified if local needs differ. 2. Packaging Component  What it is: Branding, features, packaging, design, price, and quality.  Examples: Labeling in the local language, package size, color preferences.  Adaptation? Frequently adapted to meet cultural, regulatory, or market preferences. 3. Support Services Component  What it is: Additional services like warranties, delivery, customer service, and after-sales support.  Examples: Local repair services, return policies, tech support in the local language.  Adaptation? Often adapted to meet customer expectations and local infrastructure. Marketing services global (know the different characteristics- Marketing services globally is challenging because services are intangible, variable, and consumed as they are produced. These characteristics require global marketers to focus on building trust, ensuring consistent quality, and adapting the service experience to local cultural expectations. Since services can't be stored or owned, emphasizing the value of the experience is key across different markets. Modes of Entry and Channels -Chapter 15 p.430-438 and chapter 12 p 340- 354 The different trends of Global Marketing Management- Trends in Global Marketing Management include: 1. Digital globalization – Use of digital platforms and e-commerce to reach international consumers more easily and cost-effectively. 2. Localization and personalization – Adapting products and marketing messages to suit local cultures, languages, and preferences. 3. Sustainability and ethical branding – Growing demand for environmentally and socially responsible brands worldwide. 4. Data-driven decision-making – Using AI, analytics, and big data to target global consumers more precisely. 5. Cross-border partnerships – Forming alliances with local firms for distribution, branding, or product development. The planning process for international launch (four phases) The **four phases of the international marketing planning process** are: 1. Preliminary Analysis and Screening – Evaluate potential foreign markets based on economic, political, legal, and cultural environments to identify viable opportunities. 2. Adapting the Marketing Mix (4Ps) – Modify the product, price, place, and promotion strategies to fit the target market's needs and preferences. 3. Developing the International Marketing Plan – Create a detailed action plan that includes objectives, entry strategy, resource allocation, and timelines for launch. 4. Implementation and Control – Launch the plan, monitor performance, gather feedback, and make necessary adjustments to ensure long-term success. These phases help companies launch internationally with focus, flexibility, and reduced risk. Know the different modes of entry (pros and cons, distinction, when is it appropriate to use).  Exporting Selling products made in the home country to foreign markets. Pros: Low cost and risk, fast entry. Cons: Limited control, possible tariffs and shipping costs. Best for: Testing new markets or when resources are limited.  Licensing Allowing a foreign company to use your intellectual property. Pros: Low investment, quick expansion. Cons: Less control, risk of intellectual property misuse. Best for: Expanding without large capital and entering regulated markets.  Franchising Granting rights to operate using your brand and business model. Pros: Rapid expansion, low capital required. Cons: Harder to maintain quality and consistency. Best for: Standardized business models like food and retail.  Joint Venture Partnering with a foreign firm to share ownership and operations. Pros: Shared risk, local market knowledge. Cons: Possible conflicts, shared control limits flexibility. Best for: Entering complex or highly regulated markets.  Wholly Owned Subsidiary (FDI) Full ownership of operations in the foreign market. Pros: Full control, higher long-term profits. Cons: High cost, high risk, complex setup. Best for: Long-term commitment and full strategic control.  Turnkey Projects Building and handing over a fully operational facility to a client. Pros: Good for industrial sectors, efficient short-term gain. Cons: No lasting market presence or brand development. Best for: Specialized equipment or infrastructure projects. Piggybacking, EMC and MEA, Trading companies, Middlemen based on location, Middlemen based on ownership Piggybacking  A smaller company uses the international distribution network of a larger company to enter foreign markets.  Advantage: Low cost, fast access to new markets.  Used when: The smaller firm lacks resources to expand internationally on its own. 2. EMC (Export Management Company)  A domestic firm that acts as an export department for other companies.  Services: Handles shipping, documentation, marketing, and sales abroad.  Best for: Firms new to exporting or with limited expertise. 3. MEA (Manufacturer’s Export Agent)  An individual or agency that represents a manufacturer for export sales only.  Difference from EMC: Focuses solely on sales, not full export operations.  Best for: Occasional exports or when a full export department isn’t needed. 4. Trading Companies  Large firms that handle the buying and selling of a wide variety of goods across global markets.   Role: Facilitate trade by offering financing, shipping, and market knowledge.  Common in: Japan (Sogo Shosha), Korea, and increasingly China. 5. Middlemen Based on Location  Home-Country Middlemen: Located in the exporter’s country (e.g., EMCs, export agents). o Pros: Easier communication and control. o Cons: Less direct contact with foreign market.  Foreign-Country Middlemen: Located in the target foreign market (e.g., foreign distributors, retailers). o Pros: Local knowledge, better customer access. o Cons: Less control for the exporter, potential cultural or legal barriers. 6. Middlemen Based on Ownership  Agent Middlemen: Do not take ownership of goods; earn commission on sales. o Examples: Export agents, brokers. o Best for: When you want to retain ownership and control of pricing.  Merchant Middlemen: Take title and ownership of the goods; buy and resell. o Examples: Distributors, wholesalers. o Best for: Offloading inventory and letting intermediaries handle sales. What are the factors affecting choice of channels? (know the 6 cs).  Cost – The expenses involved in setting up, maintaining, and operating the channel (e.g., transportation, commissions, infrastructure).  Capital Requirements – The financial investment needed to establish or control a channel; direct channels may require more capital than using intermediaries.  Control – The degree of influence a company wants over how its product is marketed, priced, and delivered; more control often means higher cost.  Coverage – The geographic reach and ability of the channel to deliver the product to the target market effectively.  Character – The nature of the product (perishable, luxury, technical), customer buying habits, and the type of market (B2B vs. B2C).  Continuity – The long-term reliability and stability of the channel partners; important for building lasting relationships and customer loyalty. How does international environment affect channels of distribution? The international environment affects channels of distribution by influencing how products are delivered, promoted, and sold in foreign markets due to differences in: 1. Economic Conditions – Wealth levels, infrastructure, and logistics systems determine how easily products can reach consumers. 2. Cultural Factors – Buying behaviors, trust in middlemen, and preferred shopping methods vary across cultures and affect channel design. 3. Legal and Political Environment – Import laws, tariffs, restrictions on foreign ownership, and local regulations may limit or shape channel choices. 4. Technological Development – In advanced markets, e-commerce may dominate; in less developed regions, traditional or informal channels may be more effective. 5. Geographical Factors – Terrain, climate, and distance influence transportation and delivery options. 6. Competitive Landscape – The presence of local or global competitors can impact channel access and pricing strategies. Integrated Marketing Communication -Chapter 16 What are Integrated Marketing Communications? Why Integrated? Which are the most widely used ones? Integrated Marketing Communications (IMC) is the strategic coordination of all promotional tools and channels—like advertising, public relations, sales promotion, direct marketing, and digital media—to deliver a consistent, unified message across all customer touchpoints. Why Integrated? Integration ensures that:  All messages reinforce the same brand image and values.  Customers receive a clear, coherent message—building trust and recognition.  Marketing efforts are more efficient and effective, avoiding duplication or mixed messaging. Most Widely Used IMC Tools: 1. Advertising (TV, radio, print, digital ads) 2. Sales Promotion (coupons, discounts, contests)  3. Public Relations (press releases, events, media coverage) 4. Direct Marketing (emails, catalogs, texts) 5. Personal Selling (salespeople, in-person or virtual consultations) 6. Digital and Social Media Marketing (social platforms, influencers, SEO) What are sales promotion? Advertising? PR? – what are the challenges of carrying out these in international context? Sales promotion offers short-term incentives, advertising uses paid media to inform or persuade, and public relations builds brand image through unpaid channels. In international markets, these tools face challenges like cultural and language differences, legal restrictions, and varying media access. To succeed globally, companies must balance local adaptation with consistent global messaging. How should companies adapt? Companies should adapt by conducting thorough market research to understand local culture, language, consumer behavior, and legal regulations. They should customize their marketing mix—especially messaging, visuals, and promotions—to align with local preferences while maintaining a consistent brand identity. Building relationships with local partners and using local talent also helps ensure relevance and trust in each market. Be able to explain the international communication process? (diagram) International Communication Process: 1. Sender (Company/Brand) → Has a message to communicate (e.g., a new product, brand value). 2. Encoding → Translates the message into symbols, words, or visuals suitable for the target market. 3. Message (Medium/Channel) → The ad, social media post, commercial, etc., delivered through a chosen channel (TV, radio, internet, etc.). 4. Noise → Any interference that distorts the message (e.g., cultural misunderstanding, translation errors, poor timing, stereotypes). 5. Decoding → The audience interprets the message based on their cultural and personal background. 6. Receiver (Target Audience) → The consumer receives and reacts to the message.  7. Feedback → The audience responds (e.g., purchasing, commenting, sharing), which informs future marketing. What are the steps involved in international advertising campaign? (know the order)  Perform Market Research – Understand the target audience, culture, media habits, and competition in each market.  Define Advertising Goals – Set clear objectives (e.g., brand awareness, product trial, repositioning).  Develop the Message – Create a message that resonates culturally and emotionally with the local audience.  Select the Media Channels – Choose the most effective platforms (TV, digital, print, social media, etc.) based on local usage.  Budget Planning – Allocate resources for creative development, media buying, translation, and localization.  Execute the Campaign – Launch the campaign across selected markets, ensuring local compliance and coordination.  Measure and Evaluate Effectiveness – Analyze performance metrics (reach, engagement, ROI) and adjust future campaigns accordingly. What are some of the challenges faced in IMC? Know in detail (legal, linguistic and cultural, media consideration) Integrated Marketing Communications (IMC) faces challenges internationally due to legal restrictions, cultural differences, and media availability. Laws vary across countries, affecting what can be advertised and how promotions are conducted, while language and cultural nuances can lead to misinterpretation of messages. Media habits also differ globally, requiring companies to tailor their channels and content to reach audiences effectively. Benefits of segmentation, and reasons of segmentation Benefits of segmentation include better targeting of customers, more efficient use of marketing resources, and stronger customer relationships through personalized messaging. It helps companies tailor products and promotions to specific groups, increasing satisfaction and profitability. Reasons for segmentation are to recognize diversity within markets, identify profitable customer groups, and gain a competitive advantage by meeting specific needs more effectively than competitors. The four main promotional strategies- The four main promotional strategies are: 1. Advertising – Paid, non-personal communication through media channels to inform or persuade a broad audience (e.g., TV, social media, online ads). 2. Sales Promotion – Short-term incentives to boost sales or trial (e.g., discounts, coupons, contests). 3. Public Relations (PR) – Managing the brand's image through unpaid or earned media, events, and press relations. 4. Personal Selling – Direct interaction between a salesperson and a potential customer to build relationships and close sales. Know some common ranks : like major advertisers, products, social media and internet usage 1. Major Global Advertisers (Top Companies by Ad Spend)  Procter & Gamble (P&G) – Consistently ranks #1 in global ad spending.  Amazon – Massive digital ad investment across markets.  L’Oréal – Strong presence in beauty advertising globally.  Samsung – High spending across electronics and mobile divisions.  Coca-Cola – Iconic global campaigns across multiple platforms. 2. Top Global Products (by Brand Value or Popularity)  Apple (iPhone) – Leading product in consumer electronics.  Nike (footwear & apparel) – High brand equity in fashion and sportswear.  Toyota (Corolla) – One of the world’s best-selling car models.  Nestlé (Nescafé) – Widely consumed global food and beverage product.  Samsung (Galaxy smartphones) – Competitive global tech product. 3. Social Media Usage (Most Popular Platforms Worldwide)  Facebook – Still the most widely used platform globally.  YouTube – High engagement and second-largest search engine.  WhatsApp – Dominant in messaging, especially in Latin America, India, and Europe.  Instagram – Popular for brand engagement and influencer marketing.  TikTok – Fastest-growing platform, especially among Gen Z. 4. Internet Usage (Countries with Highest Users by Volume)  China – Largest number of internet users globally.  India – Second-largest internet population, rapidly growing.  United States – High internet penetration and digital consumption.  Indonesia – Large and active online user base.  Brazil – Major player in social media and e-commerce. What are some of the tactical consideration when planning media? 1. Media Availability – Assess which media channels (TV, radio, digital, print, etc.) are accessible and popular in the target market. 2. Media Cost – Compare the cost of different media options relative to their reach and effectiveness in each region. 3. Audience Reach and Frequency – Ensure the chosen media can reach the right audience often enough to create impact. 4. Cultural Relevance – Select media that aligns with local habits, language, and values to avoid miscommunication. 5. Timing and Scheduling – Align campaigns with local events, holidays, and consumer behavior patterns for maximum engagement. 6. Regulatory Environment – Follow advertising laws and restrictions in each country to avoid fines or banned content. 7. Digital Infrastructure – Consider internet access and device usage if using online platforms, especially in developing markets. These factors help ensure that media choices are cost-effective, culturally appropriate, and strategically timed for each market. How can a company implement a campaign?  Set Clear Objectives – Define what the campaign aims to achieve (e.g., brand awareness, sales growth, product launch).  Develop the Message – Craft a compelling message tailored to the target audience and aligned with the brand.  Choose the Right Channels – Select media platforms (e.g., social media, TV, print) that best reach the intended audience.  Create Campaign Materials – Design advertisements, content, and visuals that support the message and suit each platform.  Coordinate Timing and Launch – Schedule the rollout across channels to maximize impact and audience engagement.  Monitor and Adjust – Track performance using KPIs (e.g., impressions, clicks, sales) and make adjustments as needed.  Evaluate Results – Analyze the campaign’s effectiveness post-launch and apply learnings to future efforts. What are some of major international advertising concerns/criticism? Major international advertising concerns and criticisms include: 1. Cultural Insensitivity – Ads that overlook local customs, values, or religious beliefs can cause offense or backlash. 2. Stereotyping – Overuse of cultural, gender, or racial stereotypes can reinforce harmful biases and damage brand reputation. 3. Misleading Claims – Some international ads exaggerate benefits or make false claims, leading to trust issues or legal challenges. 4. Language and Translation Errors – Poor translation or word choices can result in confusion, humor, or unintended offense. 5. Ethical Concerns – Advertising to vulnerable groups (like children) or promoting materialism can be viewed as unethical in some cultures. 6. Regulatory Violations – Failing to comply with local advertising laws, such as bans on alcohol or comparative advertising, can result in fines or bans. Price- Chapter 18 (till page 544) The importance of pricing Pricing is critically important in international marketing because it directly affects a company’s revenue, competitiveness, and brand perception. It influences consumer purchasing decisions, determines market entry success, and reflects the product’s value relative to local expectations and competition. Additionally, pricing must consider factors like currency fluctuations, tariffs, local income levels, and cost structures, making it both a strategic and tactical decision in global markets. Active and static pricing objective Active Pricing Objective  A dynamic, strategic approach where pricing is used as a tool to achieve specific goals like increasing market share, penetrating new markets, or responding to competition.  Example: A company lowers prices to enter a competitive market or raises them to position as a premium brand. Static Pricing Objective  A more passive approach where prices are set to maintain existing market conditions without major changes or strategic shifts.  Example: A company keeps the same price across countries just to cover costs and maintain operations, not to aggressively grow. How does parallel pricing works and gray markets? Parallel Pricing  Occurs when companies in the same industry set similar prices without formal agreements—often to avoid price wars.  It’s legal if done independently, but illegal if companies collude (which would be price- fixing).  It can happen in global markets where competitors react to each other’s international pricing strategies to stay competitive. Gray Markets (or Parallel Imports)  Happen when genuine branded products are imported and sold through unauthorized channels, often at lower prices.  Example: A retailer buys branded electronics from a low-price country and resells them in a high-price country without the brand’s permission.  Issues for brands: Loss of pricing control, warranty conflicts, and damage to brand image.  Caused by price differences between countries, often due to currency shifts, taxes, or local market strategies. Full cost versus variable cost pricing Full Cost Pricing  Involves setting a price based on total costs (fixed + variable) plus a markup for profit.  Ensures all costs are covered, making it useful for long-term sustainability.  Common in stable, less competitive markets or when companies aim to maintain consistent margins globally.  Example: A manufacturer calculates production, marketing, and administrative costs, then adds a profit margin to set the price. Variable Cost Pricing  Bases the price only on variable (direct) costs plus a markup, ignoring fixed costs.  Used to penetrate new markets, compete on price, or offload excess inventory.  Riskier long-term but can help in short-term market entry or competitive positioning.  Example: A company enters a price-sensitive market by pricing just above production cost to attract customers. Price skimming versus penetration Price Skimming  Involves setting a high initial price for a new or innovative product, then gradually lowering it over time.  Targets early adopters willing to pay more for exclusivity or advanced features.  Best for tech, luxury, or unique products with little initial competition.  Pros: High early profits, recovers R&D costs, builds premium brand image.  Cons: Slower adoption, risk of competitors entering with lower prices. Penetration Pricing  Involves setting a low initial price to quickly attract a large number of customers and gain market share.  Encourages fast adoption and can deter competitors.  Best for price-sensitive markets or mass-market products.  Pros: Rapid market entry, economies of scale, customer base growth.  Cons: Lower initial profit, may be hard to raise prices later. Reasons for price escalation and ways of minimizing it 1. Tariffs and Import Duties – Taxes imposed by governments increase the landed cost of goods.  2. Exchange Rate Fluctuations – Currency changes can make products more expensive in foreign markets. 3. Shipping and Transportation Costs – International freight and insurance can significantly raise costs. 4. Middlemen and Distribution Costs – Markups by agents, wholesalers, or retailers inflate final prices. 5. Product Modification – Adapting products to meet local regulations or preferences adds cost. 6. Local Taxes and Regulations – VAT, sales tax, and compliance costs can increase pricing. 7. Smaller Market Size – Lower sales volumes reduce economies of scale, raising per-unit costs. Ways to Minimize Price Escalation: 1. Re-design Products – Modify products to lower production or shipping costs without sacrificing value. 2. Manufacture Locally – Avoid import tariffs and reduce shipping by producing in or near the target market. 3. Use Foreign Trade Zones (FTZs) – Store and process goods in tax-exempt zones before distribution. 4. Shorten Distribution Channels – Sell directly or reduce the number of intermediaries to cut markups. 5. Adjust Pricing Strategy – Use variable cost or marginal cost pricing for market entry. 6. Bundle Products or Services – Add value without raising price, making higher prices more acceptable. 7. Negotiate Tariff Reductions – Use trade agreements or local partnerships to lower import costs. Regulating price/ administered price A regulated or administered price is a price set by a government or authority rather than determined by market forces, often used for essential goods like fuel, medicine, or utilities. It aims to ensure affordability, prevent exploitation, or stabilize the economy. In international marketing, it can limit pricing flexibility and affect profit margins, requiring companies to adjust strategies accordingly. What are foreign trade zones? What are their main advantages? What are they use for? Foreign Trade Zones (FTZs) are special areas where imported goods can be stored, processed, or manufactured without immediate payment of customs duties or taxes. They are mainly used for warehousing, assembly, packaging, and re-exporting goods. The key advantages include deferred or reduced duties, improved cash flow, and greater operational flexibility for international businesses. Hofstede’s dimensions  Power Distance – The extent to which less powerful members accept unequal power distribution (high = hierarchy accepted; low = equality preferred).  Individualism vs. Collectivism – Whether people prioritize individual goals (e.g., U.S.) or group loyalty (e.g., Japan).  Masculinity vs. Femininity – The value placed on competition and achievement (masculine) versus care and quality of life (feminine).  Uncertainty Avoidance – How comfortable a culture is with ambiguity and risk (high = prefers rules and structure).  Long-Term vs. Short-Term Orientation – Focus on future planning and perseverance (long- term) versus tradition and quick results (short-term).  Indulgence vs. Restraint – The degree to which societies allow free gratification of desires versus controlling them through strict norms.