Marketing in the International Environment

1. Marketing in the International Environment Ch 10 Product Adaptation Ch 14 Global Product Management and Branding Ch 15 Global Services

2. Marketing and the Environment Economic Social Demographic Marketing Mix Product Price Promotion Place Marketer Target Market Political Cultural Feedback Technological Legal

3. Product vs. Service • What is a product or a service? Is there any distinction? • A product or a service is a complex combination of tangible or intangible elements that distinguishes it from other entities in the marketplace • Country of Origin Effect

4. Elements of a Product • Core product • Tangible product • Intangible product • Augmented Product • Exhibit 10.1 –Elements of a Product

5. Product Item A specific version of a product that can be designated as a distinct offering among an organization’s products. Product Line A group of closely-related product items. Product Mix All products that an organization sells. Product Items, Lines, and Mixes

6. Factors Affecting the Optimum Product Mix Decision of Company • Level of market/economic development • Sales/Profit • Competition • Market characteristics • Product characteristics • Legal considerations

7. Standardization-Adaptation Model • Planning involves 4 Ps • Standardization Adaptation Debate and Continuum Standardization __________________ Adaptation Product 5______4______3______2______1 Price 5______4______3______2______1 Promotion 5______4______3______2______1 Distribution 5______4______3______2______1 Planning 5______4______3______2______1 • Factors favoring Standardization or Adaptation

8. Standardization versus Adaptation Factors Encouraging Standardization Factors Encouraging Adaptation Differing use conditions Government and regulatory influences Differing consumer behavior patterns Local Competition True to the marketing concept • Economies of scale in production • Economies in product R&D • Economies in marketing • “Shrinking” of the world marketplace/ economic integration • Global competition

9. Exhibit 10.4 Factors Affecting Product-Adaptation Decisions Decisions to Alter Product for Export

10. Market Environment/Characteristics • Government Regulations • Nontariff Barriers • Customer Characteristics, Expectations, and Preferences • Economic Development • Competitive Offerings • Climate and Geography

11. Product Characteristics • Product Constituents and Content • Branding • Packaging • Appearance • Method of Operations or Usage • Quality • Service • Country-of-Origin Effects • Also look at the Cultural and Psychological Factors Affecting Product Adaptation in Exhibit 10-6

12. Company Considerations • Profitability • Market Opportunity (Market Potential, Product-Market Fit) • Cost of Adapting • Policies (Commonality, Consistency) • Organization • Resources

13. Relationship between Standardization-Adaptation (Waheeduzzaman and Dube, 2004)

14. Product Counterfeiting • What is product counterfeiting? • Counterfeit goods bearing an unauthorized representation of a trademark. • According to the book, 75% of counterfeit goods are manufactured outside the USA. • Where are these products manufactured? • Measures to combat counterfeiting

15. Measures to Combat Counterfeiting Public SectorPrivate Sector Legislative TRIPS Input to Trade Section 301 Action Negotiation Lobbying Cooperation Conventions Industry and Liaison Organizations Enforcement Custom Services Task Forces Task Forces Private Investigation Prevention Education Education/Publicity Strategic Alliances Marketing Strategy Assessment and Application

16. Chapter 14 Global Product Management and Branding

17. Global Product Development • MNE goal is to create products that appeal to consumers worldwide • Could be modified later by country/market needs • Product vs. functional modification • It is a culture by itself • Depends on market and market development

18. Number of new product ideas 0 Time New Product Development Process Ideageneration Ideascreening Businessanalysis Development Testmarketing Commercialization

19. Location of R&D Activities • (Host Country) Innovation Centers • Closer to the target market • Use of local talents • Favorable public Relations • Preferred by host country • R&D outsourcing • advantage vs. disadvantage

20. Organization of Global Product Development • Role of International teams (in-house): • Streamline decision making process • Reduce complicated reporting mechanisms • Multidisciplinary approach in R&D • R&D Consortia: research on core technologies • The United States Council for Automotive Research • Unilever and the hi-tech companies

21. Testing of New Product Concepts • High rate of new product failure (67-95%) • Lack of product distinctiveness • Technical problems • Mismatch between functions: engineering and marketing, engineering and design • Lack of research • Cost $1 to $1.5 million per market • Limited launch…..specific countries first and then the region/world

22. Global Product Launch • Introducing a product into countries in three or more regions within a narrow time frame • Contagious publicity • Higher profits if margins are high at the early stage • Localization and translation

23. Product-Market Portfolio Source: Adapted from Jean-Calude Larreche, “The International Product-Market Portfolio,” in 1978 AMA Educators’ Proceedings (Chicago:American Marketing Association, 1978), 276

25. Managing the Brand Portfolio • Brands • Shape customer decisions • Price premium • Simplify choices • Provide emotional benefits • Offer a sense of community • Branding strategy: • Feature corporate name • Co-branding • Combination of partners’ brands

26. Nestle’s Branding Tree

27. Private Brand Policies

28. Chapter 15 Global Service

29. Intangible Inseparable Heterogeneous Perishable How Services differ from Goods No physical object makes it hard to communicate benefits. Production and consumption are simultaneous, meaning the consumer takes part in production. Services depend on their employees for quality, which makes consistency difficult to achieve. Services cannot be saved, and it is challenging to synchronize supply and demand.

30. The Tangibility Continuum

31. Examples of Services in Thailand: Thai Massage

32. Examples of Services-Thailand Tourism

33. Tangible and Intangible Offerings of Airlines

34. Employment in Industrial as a Percentage of the Total Labor Force (Exhibit 15.3)

35. U.S. Private-Sector Gross Domestic Product, by Sector, 2006 (Exhibit 15.4)

36. U.S. Exports of Services, by Industry 2006 (Exhibit 15.6)

37. U.S. Imports of Services, by Industry 2006 (Exhibit 15.7)

38. Global Transformation of Service Industry • Factors which aided rapid growth in global service trade: • Deregulation-Liberalization policies of governments, Stimulated demand • Advancement in Technology-Lower cost, Unlimited location, Increase in quality of service • International Trade Problems in Services • One of the most neglected area • Data collection problems • Trade negotiations-barriers, national security • Ecommerce and service industry