Global Marketing Management

Chapter 11 Product Decisions

Warren J. Keegan

Chapter 11 Product Decisions

Keegan: Global Marketing Perspective

Chapter 11/ 2

 National Products: offered in a single national market and caters to the product function needs of the of a particular country market

Keegan: Global Marketing Perspective

Chapter 11/ 3

 Represent a significant opportunity cost for the marketer as single-market brands do not provide the market opportunity to develop and utilize global R&D and production Prestige Pressure Cooker and Pressure Pan; Chawanaprash; Amrutanjan pain balms; supari; Baba zarda; pan masala To satisfy local tastes for a herbal-based soft drink, CocaCola developed a non-carbonated, ginseng- flavored beverage for sale in Japan only (1990) Inca Cola sells in only in Peru and contains extracts of the locally grown coca leaves (a mild stimulant)

Keegan: Global Marketing Perspective

Chapter 11/ 4

 Coke launched a yellow-coloured, carbonated flavoured soft drinks Pasturina in 1994 to compete with Perus favourite national drink Failed to dislodge the market leader and ended up acquiring Inca Cola to gain a strategic position in Peru

Keegan: Global Marketing Perspective

Chapter 11/ 5

 International Products: products offered in multinational markets the classic international product is the range of salted rice meal snack Kurkure developed by Pepsico for the South Asian market Suzuki 800 and the Bajaj three stroke engine three wheeler commercial vehicle

Keegan: Global Marketing Perspective

Chapter 11/ 6

 Global Products: products offered in global markets and consist of product categories marketed in every region of the world Global Brands: global brands are symbols about which consumers have beliefs or perceptions; global brand names are used as an umbrella for introducing new products Global products differ from global brands in one important respect: a global product does not carry the same name and image from country to country

Keegan: Global Marketing Perspective

Chapter 11/ 7

 There are four attributes of a global brand: 1.Guided by the same principles. 2. Same name, similar image. 3. Similar positioning vis--vis competitor brands. 4. Marketing mix may vary. examples: Marlboro, Coke, Sony, Avon, BMW, Volvo marketing mix varies from country to country: The Mercedes which is exclusively a luxury car in the US is also marketed as a strong competitor in the taxi market in Europe Avon which is a premium priced and packaged cosmetic line in Japan is popularly priced in the rest of the world

Keegan: Global Marketing Perspective

Chapter 11/ 8

 When a company develops global products it is confronted with a global brand issue should the global product be turned into a global brand by attaching to it the same name and image across global markets? Yes. This requires the name and image of the product to be standardized Standard Oil consolidated and aligned its many different local brands to converge under Exxon Let us now picture how Mars Inc. and Coca-Cola are today arguably the quintessential global product and global brand

Keegan: Global Marketing Perspective

Chapter 11/ 9

Mars Inc. Mars Inc. confronted a global issue with its chocolatecovered caramel bar that sold under a variety of national brand names, such as Snickers in the US and Marathon in the UK Mars decided to transform the candy bar a global product into a global brand in the early 1980s by converging different national brand names of its candy bar under a global brand: Snickers Similarly, Mars changed the name of its successful global chocolate biscuit product Raider to Twix

Keegan: Global Marketing Perspective

Chapter 11/ 10

Coca-Cola is arguably the quintessential global product and global brand Cokes positioning and strategy are the same in all countries and its projects a global image of fun, good times, and enjoyment Coke Is the real thing. There is only one Coke

Keegan: Global Marketing Perspective

Chapter 11/ 11

The positioning is a considerable accomplishment when you consider the fact that Coke is a low/no-tech product In its basic form it is a flavored, carbonated, sweetened water in a plastic bottle or can The companys strategy is to make a mundane product within arms reach of desire This is a brilliant example of market differentiation : a real cola for cola lovers across the world

Keegan: Global Marketing Perspective

Chapter 11/ 12

international product and communication (promotion) strategies 1. Straight extension: one product, one message. 2. Communication adaptation: one product, message adaptation. 3. Product adaptation: local adaptation of product design. 4. Dual adaptation: customizing the product and promotion strategy. 5. Product invention: new product inventions, new marketing communication.

Keegan: Global Marketing Perspective

Chapter 11/ 13

PRODUC T

PROMOTI ON Do not change promoti on

Do not change product

Straight Extension

Adapt product
Product Adaptation

Develop a new product

Adapt promoti on

Promotion Adaptation

Dual Adaptation

Product Inventio n

International Product-Promotion Strategies

Keegan: Global Marketing Perspective

Chapter 11/ 14

Overview
Basic Concepts Product Positioning Product Saturation Levels Product Design Considerations Attitudes Towards Country of Origin Geographic Expansion New Products in Global Marketing
Summary
Keegan: Global Marketing Perspective Chapter 11/ 15

Learning Objectives
Know the differences between local, national, international & global brands Learn alternatives for positioning global brands Appreciate the importance of saturation levels Be aware of design considerations and attitudes toward country of origin Know why development of new products are keys to survival and global growth
Keegan: Global Marketing Perspective Chapter 11/ 16

Basic Concept of Products

Products can be defined as a collection of physical, psychological and symbolic attributes that can collectively yield satisfaction, or benefit, to a buyer or user. Products can be classified into consumer & industrial goods Products can be classified by the way they are purchased or their life-span
Keegan: Global Marketing Perspective Chapter 11/ 17

Local, National, International and Global Products

Local products are offered in a portion of a national market National products are offered in a single national Market International products are offered in multinational, regional markets Global products are offered in the global market. They are international and multi-regional
Keegan: Global Marketing Perspective Chapter 11/ 18

Global Brand
A symbol about which customer have beliefs & perceptions Same name or same meaning in another language Similar image & position Guided by same strategic principles Marketing mix may vary from country to country
Keegan: Global Marketing Perspective Chapter 11/ 19

Positioning of Products and Services

Attribute or Benefit Quality/Price Use/User High-Tech Positioning High-Touch Positioning

Keegan: Global Marketing Perspective

Chapter 11/ 20

Product Saturation Levels in Global Markets

Many factors determine a product`s market potential Product saturation level increases as national income per capita increases The presence or absence of a particular companion product can be significant

Keegan: Global Marketing Perspective

Chapter 11/ 21

Product and Service Design Considerations

Preferences Costs Laws and Regulations Compatibility Labeling and instructions

Keegan: Global Marketing Perspective

Chapter 11/ 22

Attitude towards the Country of Origin

Stereotyped attitudes toward foreign products & services can favor or hinder marketing efforts 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 foreign

Keegan: Global Marketing Perspective

Chapter 11/ 23

Geographic Expansion-Strategic Alternatives

Different Strategy 2: Product Extension, Communications Adaptation Example: Motorbikes Strategy 4: Dual Adaptation Example: Greeting Cards

Communications

Strategy 1: Dual Expansion Example: Applications Software

Strategy 3: Product Adaptation, Communication Extension Example: Electrical products

Same Same

Product

Different edlich

Global Product Planning: Strategic Alternatives for Expanding into Global Markets

Keegan: Global Marketing Perspective

Chapter 11/ 24

Strategy 1: Product/Communication Extension or Dual Extension

Company sells exactly the same product or service with the same advertising as used in the home country Company assumes that all markets are alike Does not work in all markets Often used because it saves costs Example: Campbell Soup

Keegan: Global Marketing Perspective

Chapter 11/ 25

Strategy 2: Product Extension, Communications Adaptation

If the product serves different needs in various countries, only marketing communication may have to be adapted Adaptation can happen by design or accident Cheap implementation because product does not change Example: Motor scooters

Keegan: Global Marketing Perspective

Chapter 11/ 26

Strategy 3: Product Adaptation, Communication Extension

Product is adapted to the new market, but basic home market communication strategy remains unchanged Product is adapted to the environment and the preferences of the consumers in the new market Example: Exxon

Keegan: Global Marketing Perspective

Chapter 11/ 27

Strategy 4: Product/Communication Adaptation or Dual Adaptation

Using Dual Adaptation the company must adapt the product or service as well as the marketing communication to the foreign market Example: Unilever fabric softener

Keegan: Global Marketing Perspective

Chapter 11/ 28

Strategy 5: Product Invention

Demanding but potentially rewarding strategy for reaching mass markets in LDCs Product quality is essential but must be supported with imaginative, value-creating advertising & marketing communication

Keegan: Global Marketing Perspective

Chapter 11/ 29

How to Choose a Strategy

3 Stages Cave Dweller primary motivation is to dispose of excess capacity Nave Nationalist Sees adaptation as the only alternative Globally Sensitive- Evaluated across countries with some standardization & some differentiation
Keegan: Global Marketing Perspective Chapter 11/ 30

New Products and Services in Global Marketing (1)

New to consumer & company ( Product or service innovation) New to consumer but not new to company (Product/service or line extension) Not new to consumer but new to company (New product or service duplication)

Keegan: Global Marketing Perspective

Chapter 11/ 31

New Products and Services in Global Marketing (2)

New-product development process
Permanent identification of new-product ideas Screening of these ideas and identification of candidates for further investigation Stringent investigation and analysis of the selected newproduct ideas Organisation of sufficient resources

The international new-product department Testing new products & services in national markets
Keegan: Global Marketing Perspective Chapter 11/ 32

New Products in Global Markets Reiner

Global companies in fierce competition so must be world class Focus on 1 or a few businesses Senior management is actively involved Recruit & retain the best & the brightest Understand the importance of speed to market
Keegan: Global Marketing Perspective Chapter 11/ 33

Summary
Product and services are the most important elements of the marketing program Important factors: preferences, costs, laws and regulations, and compatibility Five strategic alternatives for geographic expansion:
Product/communication extension, product extension/communications adaptation, product adaptation/communications extension, dual adaptation and product invention
Keegan: Global Marketing Perspective Chapter 11/ 34