Brand and P d Product Decisions in Global Marketing

Global Marketing (Global Edition) ( ) Chapter 10

1

Introduction
Chapter topics: Product concepts Branding concepts Local, international & global brands Country-of-origin effect Strategic alternatives New products Brand Asset Valuator (BAV) PLC/International PLC BCG Product Portfolio g successful brand names Protecting
110v or 220v?
2011 Pearson Education, Inc.

10-2

Basic Product Concepts

A product is a good, service, or idea
Tangible Attributes Intangible Attributes

Product Warranties
Express Warranty is a written guarantee that assures the buyer is getting what s/he paid for or provides a remedy in case of a product f il failure Warranties can be used as a competitive p tool

Product classification
Consumer goods Industrial goods
PVC pipe i is i an example l of an industrial product
2011 Pearson Education, Inc.

10-3
2011 Pearson Education, Inc.

10-4

Packaging
Consumer Packaged Goods refers to products whose h packaging k i is i designed d i d to t protect t t or contain the product during shipping, at retail, or point i t of f use Eco-packaging is key because package designers must address environmental issues Offers communication cues that provide p consumers with a basis for making a purchase decision p
10-5
2011 Pearson Education, Inc.

Labeling
P Provides id consumers with ith various types of information Regulations R l ti differ diff by b country t regarding various products
H Health lth warnings i on tobacco t b products American Automobile Labeling Act clarifies the country of origin and final assembly point European Union requires labels on all food products that include ingredients from genetically modified crops
2011 Pearson Education, Inc.

10-6

Aesthetics
Global marketers must understand the importance of visual aesthetics Aesthetic styles y ( (degree g of complexity found on a ) differ around the label) world
10-7
2011 Pearson Education, Inc. 2011 Pearson Education, Inc.

Buyer Orientation
Buyer orientation
Amount of effort expended Level of risk Buyer involvement

Buyer y orientation framework

Convenience Preference Shopping Specialty

10-8

Brands
Bundle of images and experiences in the customers t mind i d A promise made by a particular company about a particular product Aq quality y certification Differentiation between competing products The sum of impressions about a brand is the

Brands

Brand Image

10-9
2011 Pearson Education, Inc. 2011 Pearson Education, Inc.

10-10

Brand Equity
The added value that accrues to a product as a result of investments in th marketing the k ti of f th the b brand d An asset that represents the value created by the relationship between the brand and customer over time
10-11
2011 Pearson Education, Inc. 2011 Pearson Education, Inc.

Brand Equity Benefits

Greater loyalty Less vulnerability to marketing actions Less vulnerability to marketing crises L Larger margins i More inelastic consumer response to price increases More elastic consumer response to price decreases Increased marketing communication effectiveness ff ti
10-12

Local Products and Brands

Brands that have achieved success in a single national market Represent R t th the lifeblood lif bl d of f domestic d ti companies Entrenched local products/brands can be a significant competitive hurdle to global companies
10-13
2011 Pearson Education, Inc. 2011 Pearson Education, Inc.

Intl Int l Products and Brands

Offered in several markets k t i in a particular region
Euro-brands Honda 5-door hatchback auto is known as Fit in J Japan and d Jazz J in i Europe

The Smart car was developed by DaimlerChrysler for the European market and is now sold in the US
10-14

Global Products and Brands

Global products meet the wants and needs of a global market and are offered in all world regions Gl Global b l brands b d have h the h same name and d similar i il image and positioning throughout the world

Global Brand Characteristics

Quality signal allows a company to charge a premium price in a highly competitive market Global myth marketers can use global positioning g to link the brand consumer culture p identity to any part of the world Social responsibility shows how a company addresses social problems
10-16
2011 Pearson Education, Inc.

Harley Davidson has dealers in over 60 countries

10-15
2011 Pearson Education, Inc.

Global Products and Brands

Global brands are not the same as global products iPod = brand mp3 3 player l = product d Brand Asset Valuator (Landor Associates): worlds most powerful b d ? brands?
10-17
2011 Pearson Education, Inc. 2011 Pearson Education, Inc.

Branding Strategies
Combination or tiered branding allows marketers to leverage a companys company s reputation while developing a distinctive identity for a line of products
Sony Walkman

Co-branding features two or more company or product brands

NutraSweet and Coca Coca-Cola Cola Intel Inside
CPU
10-18

Brand Extension
Brand acts as an umbrella for new products
Example: The Virgin Group
Virgin Virgin g Virgin Virgin Virgin Virgin Virgin Virgin Virgin Entertainment: Virgin Mega-stores and MGM Cinemas Trading: g Virgin g Cola and Virgin g Vodka Radio Rail (UK only) Media Group: Virgin Publishing, Virgin Television, Net (UK only) Hotels Travel Group: Virgin America Airways, Virgin Holidays, Galactic
10-19
2011 Pearson Education, Inc. 2011 Pearson Education, Inc.

Worlds Most Valuable Brands (2010)

Brand Leveraging Strategy

LINE EXTENSION BRAND EXTENSION
Minor variants of a single product are marketed under the same brand name Extensions of the brand name to other product categories Similar --Similar --Dissimilar
10-21
2011 Pearson Education, Inc. 2011 Pearson Education, Inc.

Leveraging Alternatives
LINE EXTENSIONS BRAND EXTENSIONS

Horizontal Extension

Vertical Extension Up from Core Brand

Another Product Class

Range Brand

CoBranding

Down from Core Brand

10-22

Global Brand Development

Questions to ask when management seeks to b ild a global build l b l brand: b d
Does this move fit the company and/or its markets? Will anticipated scale economies materialize? How difficult will it be to develop a global brand team? ? Can a single brand be imposed on all markets successfully?

Global Brand Development

Global Brand Leadership
Using organizational structures, processes, g and cultures to allocate brand-building resources globally, to create global y g , and to develop p a global g brand synergies, strategy that coordinates and leverages y brand strategies g country

10-23
2011 Pearson Education, Inc. 2011 Pearson Education, Inc.

10-24

Global Brand Development

1. Create a compelling value proposition 1 2. Think about all elements of brand identity and select names, a es, marks, a s, a and d symbols sy bo s that t at have a et the e pote potential t a for o globalization 3. Develop a company-wide communication system to share & leverage l knowledge k l d & info i f 4. Develop a consistent planning process across markets and products 5. Assign specific responsibility for managing branding issues to ensure that local brand managers accept global best practices 6 Execute brand-building 6. brand building strategies that leverage global strengths and respond to relevant local differences 10-25
2011 Pearson Education, Inc.

Country-of-Origin as Brand Element

Perceptions about and attitudes toward particular countries often extend to products and brands known to originate i those in th countries ti
Japan Germany France Italy
French perfume

10-26
2011 Pearson Education, Inc.

Attitude towards COO

Stereotyped attitudes toward foreign products & services i can favour f or hinder hi d marketing k ti efforts ff t If the quality is perceived to be low Foreign origin of the product can be disguised Foreign identification of the product can be continued & consumer attitudes towards the product can be changed In some market segments foreign products have a substantial advantage because they are f i foreign
10-27
2011 Pearson Education, Inc. 2011 Pearson Education, Inc.

Strategic Alternatives in Global Marketing

Extension offering product virtually unchanged in markets outside of home country Adaptation changing elements of design, function and packaging according to needs function, of different country markets Creation C e tion developing de eloping new ne products p od t for fo the world market
10-28

Global Product Planning: Strategic Alternatives

Same

Innovation
Strategy 5: Innovation
Important for reaching mass markets in less industrialized nations and certain segments in i d t i li d countries industrialized ti
Hand-cranked radios for areas with no electricity Total toothpaste by Colgate uses global benefit segmentation

Product

Different

Different

Strategy 2: Product extension Communication adaptation

Strategy 4: Dual adaptation

Communication
Same
Strategy 1: Dual extension Strategy 3: Product adaptation Communication extension
10-29
2011 Pearson Education, Inc. 2011 Pearson Education, Inc.

Product q quality y is essential but must be supported with imaginative, value-creating advertising & marketing communication
10-30

How to Choose a Strategy?

Two errors that management makes in choosing h i a strategy t t
NIH (not invented here) syndrome means managers ignore i the h advancements d of f subsidiaries overseas Managers M impose i policies li i upon subsidiaries b idi i because they assume what is right for customers in one market is right in every market
10-31
2011 Pearson Education, Inc. 2011 Pearson Education, Inc.

How to Choose a Strategy?

The product itself, defined in terms of the function or need it serves The market market, defined in terms of the conditions under which the product is used, preferences of potential customers customers, and ability to buy the product Adaptation Ad pt tion and nd manufacturing m n f t ing costs o t the company will incur
10-32

New Products in Global Mktg

Pursue opportunities pp in competitive p arenas of global marketplace Focus on one or only a few businesses Active involvement from senior management Ability Abilit to t recruit it and d retain t i best b t employees l Understand the importance of speed in bringing product to market
10-33
2011 Pearson Education, Inc. 2011 Pearson Education, Inc.

New Product Continuum

What is a new product?

New to those who use it or buy y it New to the organization New to o a market a
10-34

The International New Product Department

How big is the market for this product at various prices? What are the likely competitive moves in response to our activity? Can we market the product through existing structure? Can we source the product at a cost that will yield an adequate profit? Does product fit our strategic development plan?
10-35
2011 Pearson Education, Inc. 2011 Pearson Education, Inc.

Testing New Products

When do you test a new product? Whenever a product interacts with human, mechanical or mechanical, o chemical elements because beca se there is the potential for a surprising and unexpected incompatibility Test could simply be observing the product being used within the market
10-36

Brand Asset Valuator

2011 Pearson Education, Inc.

Happy Year of the Dragon (http://landor.com/#!/locations/hong-kong/gong-xi-fa-cai/)

10-38
2011 Pearson Education, Inc.

International PLC

International PLC
"An Examination "A E i ti of f the th IPLC and d it its A Application li ti within ithi Marketing M k ti Onkvisit & Shaw
- diffusion of innovations across national boundaries (e.g., semiconductors, t pe ite s rubber typewriters, bbe products, p od cts leathe leather goods) - incorporates supply-side variables (comparative advantages)

4 stages: [local innovation] 1. overseas innovation (pioneering or international introduction stage) 2. maturity 3 worldwide imitation 3. 4. reversal (product standardization and comparative disadvantage) 3 curves: 1. USA (initiating country) 2. MDCs (other advanced nations) (lesser developed p countries) ) 3. LDCs (
10-39
2011 Pearson Education, Inc.

10-40 Applies to prods which satisfy basic homogeneous needs and have functional utility
2011 Pearson Education, Inc.

IPLC Stages & Characteristics

Stage 0) local innovation 1) overseas innovation 2) maturity 3) worldwide imitation 4) reversal Import/Export none increasing export stable export declining export Target Market USA USA & advanced nations advanced nations & LDCs LDCs Competitors f few: local f firms few: local firms advanced nations advanced nations Prodn. Costs initially high decline due to econ. of f scale l stable increase due to lower econ. of scale increase due to comparative disadvantage 10-41
2011 Pearson Education, Inc.

Marketing Implications
1. Product policy continue innovating (high quality & sophisticated models in maturity stage) produce diff. components in diff. countries to best use comparative advantage use patents t t (ti (time advantage) d t ) 2. Pricing policy high introductory price to recoup R&D costs lower prices in middle stages (maintain market share) skim in reversal 3. Promotion policy p y non-price promotion i.e., promote premium product with high quality image 4. Distribution policy build strong dealer network
10-42
2011 Pearson Education, Inc.

increasing import

USA& LDCs

advanced nations

BCG Product Portfolio

Relative Market Share
High g Low

BCG Product Portfolio

Unit z z z of analysis - Strategic Business Unit (SBU) key business unit within diversified firms a division, product line, or single product may define an SBU firms may redefine their SBUs as market conditions dictate

In ndustry y Grow wth Ra ate

p among g three characteristics of each p product: Relationships (1) market share relative to that of largest competitor high vs. low (dividing line at 1x, arbitrary) leader vs. follower (2) growth rate in market (corrected for inflation) high vs. vs low (dividing line at 10%, 10% arbitrary) growth vs. maturity stages of PLC (3) products d t contribution t ib ti to t organization i ti in i terms t of f dollar d ll sales l 10-44 represented by area or diameter of circle
2011 Pearson Education, Inc.

Low

High

10-43
2011 Pearson Education, Inc.

BCG Product Portfolio

Strategic implications of matrix interpreted according to following rules of thumb: margins and cash generated are a function of market share ( (experience curve effect) ff ) growth requires cash input to finance added assets high market share must be earned or bought no product market can grow indefinitely Relative market share cash generated Industry growth rate cash used
10-45
2011 Pearson Education, Inc. 2011 Pearson Education, Inc.

Protecting Successful Brand Names

Strong brand name is one of most valuable assets that company possesses Trademark registration: Lodge application at Trade Marks Registry in country to which application is made Separate application in every country Specify category of goods to which registration will relate (e.g., Ray-Ban sunglasses will not protect use of mark on shorts)
10-46

Protecting Successful Brand Names

Name pirates register others famous trademarks Once granted, granted seek to sell it back to trademark owner at large profit Some countries (e.g., Indonesia) operate trademark registration system based on first to file application, rather than first to use system adopted in HK; only way to get it back is by buying it Legislative Council of HK introduced bill for service marks (e.g., insurance companies, banks, accountants, retail shops)
10-47
2011 Pearson Education, Inc.

Protecting Successful Brand Names

Not always possible to transliterate words made up of letters in Roman alphabet into Chinese characters; not problem in countries with phonetic local alphabet alphabet, like Thailand Thailand, Korea Korea, Japan In countries like HK, Taiwan and China, local population insists that products have Chinese names; nicknames may develop (not always desirable) e.g., Quaker Oats old man brand (laoren pai), Polo three legged horse (santui ma) Chinese character trademarks should be developed and registered prior to product introduction (e.g., Volvo fuho) Club Volvo 10-48
2011 Pearson Education, Inc.