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CH. 14 DEVELOPING AND MARKETING PRODUC TS

CH. 14 DEVELOPING AND MARKETING PRODUC TS. By Wild, Wild, and Han. LEARNING TO FLY Dietrich Mateschitz traveled from Austria to Asia Found popular energy drinks Brought them back: created Red Bull Sold in 45 countries, $1 B in revenue Identical in every market, the can, the ingredients

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CH. 14 DEVELOPING AND MARKETING PRODUC TS

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  1. CH. 14 DEVELOPING AND MARKETING PRODUC TS By Wild, Wild, and Han

  2. LEARNING TO FLY • Dietrich Mateschitz traveled from Austria to Asia • Found popular energy drinks • Brought them back: created Red Bull • Sold in 45 countries, $1 B in revenue • Identical in every market, the can, theingredients • Cartoon character ads • Top athletes and sporting events • Recruits young people to hand out RedBull at events • Very sweet: caffeine, carbohydrates,vitamins, amino acid

  3. I. GLOBALIZATION AND MARKETING • A. STANDARDIZATION V. ADAPTATION • Influence of national business environments • Need to modify products for different tastes, lifestyles • Different income, education, laws • Some products same worldwide; red wine • II. DEVELOPING PROUCT STRATEGIES • A. LAWS AND REGULATIONS • Laws vary from country to country • Laws cover product ingredients,labeling, consumer safety

  4. B. CULTURAL DIFFERENCES • Consumer tastes vary from country to country • Chocolate, coffee, tea need to be modified • C. BRAND AND PRODUCT NAMES • Has brand image and certain qualities associated with it • Worldwide brand image is valuable asset, increases sales • Need to keep products consistent to maintain brand image • Selecting international brand and product names • Morphemes: language building blocks, make up brand names • Western languages based on Indo-European languages, same words have same root meaning: accu=accuracy=Acura • NameLab: makes up names – Compaq,Kodak, Lumina, Sony • Names could offend, could have othermeanings • Names can be misleading

  5. D. NATIONAL IMAGE • Can enhance attractiveness or detract • Russian vodka v. Russian car • Changes over time • E. COUNTERFEIT GOODS AND BLACK MARKETS • Many countries do not respect firms sole right to their inventions • Allow reproductions: Bulgaria, China, India, Russia, Turkey • Lose $50-80B a year • Damage reputation of firm when counterfeits are poor quality • F. SHORTENED PRODUCT LIFE CYCLES • Firms used to be able to introduce product consecutively in markets • Now products introduced instantly all over • Intense technological competition and advancement

  6. III. CREATING PROMOTIONAL STRATEGIES • A. PUSH AND PULL STRATEGIES • Pull: attract buyers, trial packages, advertising • Push: pressure channel members to carry product and promote it • Push won’t work when channel members strong or lengthy • Pull hard when mass media islimited • Pull works when consumers arebrand loyal or industrial buyers • Push works when low brandloyalty and consumers shopfor best buy

  7. B. INTERNATIONAL ADVERTISING • High growth expected in developing nations • Ads most effective when designed for specific cultures • Standardizing or adapting advertisements • Standardizing saves money • Standardized ads less effective • Can standardize some elements,modify others • Can market over World Wide Web • Sponsor global sports events • Case: the elusive Euro-Consumer • Pan-European ads usually fail • Too many language differences • Too many symbol,color, custom differences • Highly visual, few word ads, can succeed

  8. C. BLENDING PRODUCT AND PROMOTIONAL STRATEGIES • Communicating promotional messages • Benefits of products • Language, law, and cultural differences • Company has idea, encodes it, uses communication channel or media, consumer decodes message • Product/communications extension (dual extension) • Extend home country product and promotioninto foreign market • Works when language and culturesimilar • Cheap • Works for teen-agers, executives,wealthy • Works for global brand names,mass appeal

  9. Product extension, communications adaptation • Same product, adapt promotion in new markets • Maybe different consumers, different needs, different uses • Expensive, but more effective ad • In LDCs, use vans, personal selling, product shows, or fairs • Product adaptation, communications extension • Adapt product, keep same marketing communication • Local laws, local availability, local labor, local conditions • Expensive • Product/communications adaptation • Adapt both product and communication • Product changed to meet needs of new buyers • Communication changed to explain these needs • Very costly

  10. Product invention • Entirely new product for the target market • May need to develop new product which local market can afford • May need new product because of lack of infrastructure • IV. DESIGNING DISTRIBUTION STRATEGIES • A. DESIGNING DISTRIBUTION CHANNELS • Degree of exposure • Exclusive channel: resellers only sell firm’s products • Intensive channel: resellers sell many firms’ products • Private-label brands: created by retailers • Channel length and cost • Zero-level: producers sell directly to buyers • One-level channel: one intermediary • The more intermediaries, the more costly • For price sensitive products, can’t have toomany intermediaries

  11. B. INFLUENCE OF PRODUCT CHARACTERISTICS • Value density: value of a product relative to its weight and volume • The lower a product’s value density, the more localized the distribution system • Most commodities have low value-density ratios: cement, iron ore, crude oil • Cost of transporting them is high,processed close to original locations • Contact lenses have high value-density,can be processed in optimal locationand shipped anywhere

  12. C. SPECIAL DISTRIBUTION PROBLEMS • Every country’s distribution system is unique • Need to understand peculiarities of each • Theft and corruption: sell to local distributors who know how to deal with their environment • V. DEVELOPING PRICING STRATEGIES • A. WORLDWIDE PRICING • One price everywhere • Hard to achieve, production andmarketing costs differ • Costs of exporting makes priceshigher • Purchasing power varies • Fluctuating currency causes prices tochange

  13. B. DUAL PRICING • One price at home, another outside • Price escalation: higher abroad • Export price can be lower, only needs to cover direct costs • Need to keep buyers separate • C. FACTORS THAT AFFECT PRICING DECISIONS • Transfer price • Price for good moves between subsidiaries • Tax rates and custom rates affect price • Arm’s length pricing • Free market price • Price controls • Government sets upper or lower limits • Dumping • Price abroad lower than at home • Firms fined when proven

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