Creating Products for Consumers in Global Markets

1. Creating Products for Consumers in Global Markets

2. Developing an international marketing strategy • Segmenting • Targeting • Positioning

3. Properties of a Market Segment • Properties • Measurable • Sizable • Accessible • Actionable • Competitive Intensity • Growth Potential

4. Bases for Global Segments • Geographic • Demographic • Psychographic • Behavior • Benefits

5. Average Monthly Expenditures for Chinese Households National and Urban Areas - 1994 National Urban Areas Food (includes eating out) $22.10 $38.00 Savings 11.40 17.00 Clothing 5.60 9.00 Child's Education 4.70 7.00 Home (includes Rent & Utilities) 4.30 8.20 Daily Goods other than Food 3.50 4.80 Medical Expenses & Drugs 2.30 4.00 Entertainment 1.30 3.20 SOURCE: Gallup China.

6. Y&R’s Cross-Cultural Consumer Characterizations (4Cs)

7. Global Scan Segmentation Study

8. Life Style Exhibit : Typology of European Car Market

9. Roper Starch Worldwide Global Study • Shopping Styles • Deal Makers (29%) - love the buying process • Price Seekers (27%) - place primary value on the product that they are buying • Brand Loyalists (23%) - purchase name brands and remain true to them • Luxury Innovators (21%) - seek new, prestigious brands 40,000 consumers in 40 countries

10. How the World Shops Source: “How the World Shops,” Advertising Age, June 5, 1995, p.3.

11. How the World Shops Source: “How the World Shops,” Advertising Age, June 5, 1995, p.3.

12. How the World Shops Source: “How the World Shops,” Advertising Age, June 5, 1995, p.3.

13. International Positioning Strategies • Global Positioning and Segmentation Strategies • Universal Segment / Uniform Positioning Theme • Universal Segment / Different Positioning Themes • Different Segment / Different Positioning Themes

14. Global Positioning & Segmentation Strategies

15. International Product Trade Cycle Model production High Income Countries consumption Quantity 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Medium Income Countries 1 2 3 7 4 5 6 8 9 10 11 12 13 14 15 Low Income Countries Time 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 New Product Maturing Product Standardized Product Stages of Production Development

16. Products and Culture  Cultural Influences  Innovative Products and Adaptation  Diffusion of Innovations  Degree of Newness  Characteristics of Innovations

17. Adopter Categories in Diffusion Process

18. Degree of Newness Congruent Innovations Continuous Innovation Dynamically Continuous Innovation Discontinuous Innovation

19. Characteristics of Innovations  Relative Advantage  Compatibility  Complexity  Trialability  Observability

20. Product Components Core Component Packaging Component Support Services Component

21. Product Component Model SUPPORT SERVICESCOMPONENT PACKAGING COMPONENT  Repair and maintenance  Deliveries CORE COMPONENT  Trademark  Price  Product platform  Design features  Functional features  Legal  Warranty  Installation  Quality  Brand name  Package  Instructions  Spare parts  Legal  Styling  Other related services  Legal

22. 4 Ps - Product • Product decisions are all decision which relate to the physical product and/or service offering, including its name, packaging, warranty, and availability. Product dimensions include: • Size of the product • Color(s) of product • Scent of the product • Materials/ composition of the product • Design of the product • Packaging materials • Package colors and package design • Brand name • Warranty • Availability of options • Customizing services • After-sale service offerings • Inventory levels

23. Factors Influencing Product Adaptation vs. Standardization Stage in Product Life Cycle Legal/Standards Constraints Product Innovativeness Cultural Differences

24. Standardization versus Adaptation • Factors Encouraging Standardization • Economies of scale in production • Economies in product R&D • Economies in marketing • “Shrinking” of the world marketplace/ economic integration

25. Standardization versus Adaptation • Factors Encouraging Adaptation • Differing use conditions • Government and regulatory influences • Differing consumer behavior patterns • Local Competition • True to marketing concept

26. Strategic Adaptation to Foreign Markets High Need for Adaptation Degree of Cultural Grounding Low Industrial/ Technology Intensive Consumer Nature of Product

27. Global v. Local branding • In 1989, Mars changed the name of Kal Kan cat food to Whiskas. • Why? • Sharing of ideas in global corporation • Pet owners travel and might switch if their familiar brand was not available somewhere. • Two years earlier, Mars had created to other global brands • Kal Kan dog food  Pedigree in U.S. • Mealtime dry dog food  Pedigree Mealtime • High market share in U.S. • Brand associations

28. What is a brand? • A name, term, sign, symbol, or design, or combination of them which is intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors (Kotler, 1991)

29. What is brand equity? • A set of brand assets linked to a brand, its name and symbol, that add to or subtract from the value provided by a product or service to a firm and/or to that firm’s customers.

31. Brand Associations

32. What is customer-based brand equity? • The differential effect of brand knowledge on customer response to the marketing of the brand.

33. Developing A Framework For Generic Brands Based on Brand Knowledge • Brand Awareness • Recognition • Recall • Brand Image • Type • Strength • Favorability • Uniqueness Components of Brand Knowledge (Keller, 1992) of Brand Associations

34. Customer-Based Brand Equity

35. Decomposing Consumer Knowledge of Brands * Brand Image = Strength, uniqueness, & favorability of associations

36. Brand Strategies Global Brands National Brands Global/National Brand Mix Private Brands

37. Global brands provide: Scale economies in the Development of advertising, packaging, promotion, etc. Exploitation of: Media overlap Exposure to customers who travel Associations of a global presence of the “home” country Local brands provide: Names, symbols, and associations that can be: Developed locally Tailored to local market Selected without the constraints of a global brand Reduced risk from “Buy Local” sentiments Global v. Local Brands