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14

CHAPTER FOURTEEN

DEVELOPING AND
MARKETING PRODUCTS

Copyright 2016 Pearson Education, Inc. Chapter 14-1


Learning Objectives

1. Describe the factors to consider in developing international


product strategies.
2. Outline the international promotional strategies and methods
available to firms.
3. Explain the factors to consider when designing international
distribution strategies.
4. Describe the two main international pricing strategies and factors
to consider.

Copyright 2016 Pearson Education, Inc. Chapter 14-2


Wings for Life

Red Bull (www.redbull.com)


Identical product is sold worldwide
Promotes brand on college campuses
Sponsors extreme sporting events

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Developing Product Strategies
Standardize-versus-Adapt Decision

Going
International

Standardizing Adapting

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Developing Product Strategies
Standardize-versus-Adapt Decision

Laws and Regulations


Cultural Differences
Brand and Product Names
National Image
Counterfeit Goods and Black
Markets
Shortened Product Life Cycles

Copyright 2016 Pearson Education, Inc. Chapter 14-5


Quick Study 1

1. Deciding whether to keep a marketing strategy the same or to


modify it abroad is also known as the what?
2. What factors influence a companys international product
strategy?
3. What product characteristic is more likely than others to offend
people in another culture?

Copyright 2016 Pearson Education, Inc. Chapter 14-6


Creating Promotional Strategies

Efforts by a company to reach


distribution channels and to target
Promotion customers through
Mix communications, such as personal
selling, advertising, public
relations, and direct marketing

Copyright 2016 Pearson Education, Inc. Chapter 14-7


Creating Promotional Strategies
Push and Pull Strategies

Promotional strategy designed to create


Pull buyer demand that will encourage
Strategy distribution channel members to stock
a companys product
Promotional strategy designed to
Push pressure distribution channel members
Strategy to carry a product and to promote it to
final users of the product

Copyright 2016 Pearson Education, Inc. Chapter 14-8


Creating Promotional Strategies
Choosing Push or Pull

Choosing Push or Pull


Distribution System

Access to Mass Media

Type of Product

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Creating Promotional Strategies
International Advertising

Consider Cultural Nuances


Standardizing or Adapting
Advertisements
The Elusive Euro-Consumer
National differences
Europes many languages

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Blending Product and Promotional Strategies
Communicating Promotional Messages

Click icon to add picture

Marketing
Communication:
Process of sending
promotional messages
about products to
target markets.
Copyright 2016 Pearson Education, Inc. Chapter 14-11
Blending Product and Promotional Strategies
Product/Promotional Methods

Product/Promotional Methods

Product/Communications Extension (Dual Extension)

Product Extension/Communications Adaptation

Product Adaptation/Communications Extension

Product/Communications Adaptation (Dual Adaptation)

Product Invention

Copyright 2016 Pearson Education, Inc. Chapter 14-12


Product/Promotional Methods
Product/Communications Extension (Dual Extension)

Extend the same home-market product and marketing promotion into target
markets
Can be the simplest and most profitable strategy
Will probably grow more popular
Better suited for brand-conscious teenagers, business executives, and
wealthy individuals
Better suited for companies that use a global strategy with their products
Appropriate for global brands that have mass appeal and that cut across
all age groups and social classes
Useful to companies that are the low-cost leaders in their industries

Copyright 2016 Pearson Education, Inc. Chapter 14-13


Product/Promotional Methods
Product Extension/Communications Adaptation

Extend the same product into target markets but alters its
promotion
Helps companies contain costs
Level of economic development
Alternative techniques: Door-to-door personal selling and
regional product shows or fairs
Modern telecommunications system: TV, radio, and the World
Wide Web
Localizing Websites

Copyright 2016 Pearson Education, Inc. Chapter 14-14


Product/Promotional Methods
Product Adaptation/Communications Extension

Adapt the product to the requirements of the international market


while retaining the products original marketing communication
Legal requirements in the local market.
Local content laws
Can be costly
Appropriate for differentiated product

Copyright 2016 Pearson Education, Inc. Chapter 14-15


Product/Promotional Methods
Product/Communications Adaptation (Dual Adaptation)

Adapt both the product and its marketing communication to suit the
target market:
Product is adapted to match the needs or preferences of local
buyers.
Promotional message is adapted to explain how the product
meets those needs and preferences.
Can be expensive
Appropriate if a sufficiently large and profitable market segment
exists
Copyright 2016 Pearson Education, Inc. Chapter 14-16
Product/Promotional Methods
Product Invention

Develop an entirely new product for the target market.


Many important differences exist between the home and target
markets.
Local buyers cannot afford a companys current product because
of low purchasing power.
Lack of adequate infrastructure needed to operate certain
products.

Copyright 2016 Pearson Education, Inc. Chapter 14-17


Quick Study 2

1. A strategy that pressures channel members to carry and promote a


product is called a what?
2. Firms that standardize international advertising often control
campaigns from where?
3. The process of sending promotional messages about products to
target markets is called what?

Copyright 2016 Pearson Education, Inc. Chapter 14-18


Designing Distribution Strategies

Planning, implementing, and


controlling the physical flow of a
Distribution
product from its point of origin to its
point of consumption
Distribution The physical path that a product
Channel follows on its way to customers

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Designing Distribution Strategies
Designing Distribution Channels

Degree of Channel Length


Exposure and Cost
Exclusive Number of
Channel Intermediaries
Intensive Cost
Channel Implications
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Designing Distribution Strategies
Influence of Product Characteristics

Value of a product relative


to its weight and volume
Value The lower a products
Density value density, the more
localized the distribution
system

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Designing Distribution Strategies
Special Distribution Problems

Special Distribution Problems

Lack of Market Theft and


Understanding Corruption
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Quick Study 3

1. What type of channel grants the right to sell a product to many


resellers?
2. In terms of channel length, direct marketing is also known as a
what?
3. A product with a low value density tends to have a distribution
system that is more what?

Copyright 2016 Pearson Education, Inc. Chapter 14-23


Developing Pricing Strategies
Pricing Policies

Policy in which one selling price is


Worldwide
established for all international
Pricing
markets
Policy in which a product has a
Dual different selling price (typically
Pricing higher) in export markets than it has
in the home market

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Developing Pricing Strategies
Worldwide Pricing

Can be difficult to implement for several reasons:


Production costs
Cost of reaching different markets
Purchasing power of buyers in a target market
Fluctuating currency values

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Developing Pricing Strategies
Dual Pricing

Dual Pricing: Price Escalation:


Different selling Higher selling price Export price is
price in export in the target market lower than the price
markets than in the than in the home in the home market
home market market

Copyright 2016 Pearson Education, Inc. Chapter 14-26


Developing Pricing Strategies
Factors That Affect Pricing Decisions

Price charged for a good or service


Transfer
transferred among a company and its
Price
subsidiaries
Arms Length Free-market price that unrelated parties
Price charge one another for a specific product
Price Upper or lower limits placed on the prices of
Controls products sold within a country
Occurs when the price of a good is lower in
Dumping export markets than it is in the domestic
market
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Quick Study 4

1. What makes a worldwide pricing policy difficult to achieve in


practice?
2. To apply dual pricing successfully, how must a firm treat its
domestic and international buyers?
3. Parent firms and subsidiaries often transfer products among
themselves at a price called what?

Copyright 2016 Pearson Education, Inc. Chapter 14-28


MAMOUN BENMAMOUN
ASSISTANT PROF OF INTERNATIONAL
BUSINESS
BOEING INSTITUTE OF INTERNATIONAL
BUSINESS
JOHN COOK SCHOOL OF BUSINESS
SAINT LOUIS UNIVERSITY

Copyright 2016 Pearson Education, Inc.


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