Global Product Decisions in Marketing Management

1. Global Marketing ManagementGlobal Product DecisionsB2C MKTG 3215-001 Spring 2013 Mrs. Tamara L. Cohen Class # 20

2. Global Product DecisionsB2C Reading for this class: Course Pack #9

3. Product suitable for market ? Quality - importance & definition ? Country-of-origin effects on product image ? Physical, mandatory, and cultural requirements for product adaptation ? Overcome resistance to acceptance ? B 2 C :Business Consumers KEY CONCEPTS

4. Is the product SUITABLE for the market? • Product = sum of physical + psychological satisfactions provided to user • primary function • psychological attributes • Cultural adaptation often necessary; affected by how product conforms • norms • values • behavior patterns

5. Primary function moving passengers from A to B+ how it functions in use = product satisfaction

6. Who defines Q U A L I T Y ? • customer defines quality • increased customer knowledge • cost + quality of product • among most important criteria to make purchases QUALITY defined in 2 dimensions: • Market-perceived quality • Performance quality • most consumers expect performance quality In some industries quality measured by 3rd parties e.g. JD Power and Associates but in restaurant, don’t ask server for her/his favorite dish! Quality standards vary with country’s industrialization.

7. Maintaining Q U A L I T Y • damage in distribution chain e.g. Russian chocolate • QUALITY essential for success in today’s competitive global market • decision to standardize or adapt product is crucial in delivering quality • manage expectations

8. What do YOU think of chocolate Q U A L I T Y ? • Swiss Milka • American Hershey • English Cadbury

9. Q U A L I T Y = managing expectations

10. Country-of-Origin Effects • Country-of-Origin effect • influences country of manufacture, assembly, or design has on consumer’s perception of product • broad but vague stereotypes about specific countries and specific product categories consumers judge to be “best” • ethnocentrism

11. Country-of-origin stereotypes?

12. more Country-of-Origin Effects • Countries stereotyped - on basis of whether industrialized / in process of industrializing / in process of developing • Technical products • perception of manufacturing in LDCs or NICs less positive • Fadsoften surround products from particular countries or regions

13. Physical or Mandatory Requirements and Adaptation • Product homologation = changes mandated by local standards • Product adaptation requirements • legal e.g. package size/weight • economic e.g. units per package • political e.g. censorship issues • technological e.g. data products; different electrical current • climate e.g. perishables

14. Product Adaptation • Labels & packaging • Literacy • Trademark & brand name • Standard measurement • Specific words

15. cans canscans smaller cans in Japan clear cans in France “standard” can in USA thick can in South Africa

16. Innovative Products & Adaptation • Determining degree of newness as perceived by intended market (= innovation or not) • Diffusion(= process by which innovation spreads) • Established patterns of consumption and behavior • Foreign marketing goal • gaining largest number of consumers in market in shortest span of time • probable rate of acceptance • are you trying to change behavior?

17. Famous urinals at Amsterdam’s Schiphol Airport: ‘Spillage’ on floor fell by 80%

18. 5 Characteristics of an Innovation • Relative advantage – perceived marginal value of new product relative to old • Compatibility – with acceptable behavior, norms, values • Complexity – re product use – negative relationship • Trialability – economic & social risk associated with product use • Observability – ease of communicating product benefits h “open your mind to the car that challenges the status quo” h 33 mpg h easy to park h safe image of Mercedes

19. Green Marketing & Product Development • Green marketing = environmental conse- quences of various marketing activities • Critical issues affecting product development • control of packaging component of solid waste • consumer demand for environmentally friendly products • European Commission guidelines for ecolabeling • Laws to control solid waste

20. Global Brands = worldwide use of a name, term, sign, symbol, design, or combination • identify goods / services of seller • differentiate from competitors • worldwide image • importance is unquestionable • most valuable company resource • Internet facilitates

21. Brand Ranking Interbrand, the brand consulting agency, ranks 100 brands most valuable based on criteria that include financial performance and the role the brand plays in influencing customer choices.

22. National Brands • acquiring national brand names • using global brand names • nationalistic pride impact on brands • use global brands where possible and national brands where necessary

23. Private Brands • Growing as challengers to manufacturers’ brands • Private labels • provide retailer with high margins • receive preferential shelf space & in-store promotion • quality products at low prices • Manufacturers’ brands must be competitively priced & provide real consumer value

24. Barriers to Entering Global Markets for Consumer SERVICES • Protectionism • Restrictions on transborder data flows • Protection of intellectual property • Cultural barriers & adaptation Barriers to Exit • Threats to national security

25. Keys to success in Global Product Decisions • In spite of homogenization, consumers also see world of global symbols, company images, & product choice through lens of their own local culture & its stage of development & market sophistication • Each product must be viewed in light of how it is perceived by each culture with which it comes in contact • Analyzing a product as an innovation & using Product Component Model may provide marketer with important leads for adaptation

26. Next class: Global Distribution Decisions Preparation: -0- Homework: -0-