PP 11 Product

Global Marketing Management

Warren J. Keegan

Chapter 11 Product Decisions

Keegan: Global Marketing Perspective Chapter 11/ 2

Chapter 11Product Decisions


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


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 productionPrestige Pressure Cooker and Pressure Pan; Chawanaprash; Amrutanjan pain balms; supari; Baba zarda; pan masalaTo satisfy local tastes for a herbal-based soft drink, Coca-Cola 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)


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


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


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


There are four attributes of a global brand:1. Guided by the same principles.2. Same name, similar image.3. Similar positioning vis-à-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


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


Mars Inc. Mars Inc. confronted a global issue with its chocolate-covered caramel bar that sold under a variety of national brand names, such as Snickers in the US and Marathon in the UKMars 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: SnickersSimilarly, Mars changed the name of its successful global chocolate biscuit product – Raider – to Twix


Coca-Cola is arguably the quintessential global product and global brand Coke’s 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’


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 company’s strategy is to make a mundane product within arm’s reach of desire This is a brilliant example of market differentiation : a real cola for cola lovers across the world


international product and communication (promotion) strategies1. 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.


Straight Extension

Product Adaptation

Product

Invention

Promotion Adaptation

Dual Adaptation

PRODUCT

PROMOTION

Do not change product

Adapt product

Develop a new

productDo not change promoti

on

Adapt promoti

onInternational Product-Promotion

Strategies


Overview

Basic Concepts Product Positioning Product Saturation Levels Product Design ConsiderationsAttitudes Towards Country of OriginGeographic ExpansionNew Products in Global MarketingSummary


Learning Objectives

Know the differences between local, national, international & global brands

Learn alternatives for positioning global brandsAppreciate the importance of saturation levelsBe aware of design considerations and attitudes

toward country of originKnow why development of new products are

keys to survival and global growth


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


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


Global Brand

A symbol about which customer have beliefs & perceptions

Same name or same meaning in another language

Similar image & positionGuided by same strategic principlesMarketing mix may vary from country to

country


Positioning of Products and Services

Attribute or BenefitQuality/PriceUse/UserHigh-Tech PositioningHigh-Touch Positioning


Product Saturation Levels in Global Markets

Many factors determine a product`s market potentialProduct saturation level increases as national income per

capita increasesThe presence or absence of a particular companion

product can be significant


Product and Service Design Considerations

PreferencesCostsLaws and RegulationsCompatibilityLabeling and instructions


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


Geographic Expansion-Strategic Alternatives

Different

Same

Same DifferentedlichProduct

Co

mm

un

ica

tio

ns

Strategy 2: Product Extension,CommunicationsAdaptation

Example: Motorbikes

Strategy 1: Dual Expansion

Example: Applications Software

Strategy 4: Dual Adaptation

Example: Greeting Cards

Strategy 3: Product Adaptation,CommunicationExtension

Example: Electrical products

Global Product Planning: Strategic Alternatives for Expanding into Global Markets


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 alikeDoes not work in all marketsOften used because it saves costsExample: Campbell Soup


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 accidentCheap implementation because product does not changeExample: Motor scooters


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


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


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


How to Choose a Strategy

3 StagesCave Dweller – primary motivation is to dispose of excess capacityNaïve Nationalist – Sees adaptation as the only alternativeGlobally Sensitive- Evaluated across countries with some standardization & some differentiation


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)


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 new-

product ideas Organisation of sufficient resources

The international new-product departmentTesting new products & services in national markets


New Products in Global Markets - Reiner

Global companies in fierce competition so must be world class

Focus on 1 or a few businessesSenior management is actively involvedRecruit & retain the best & the brightestUnderstand the importance of speed to

market


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

Documents

PP 11 Product