Products and Services: Branding Decisions in International Markets

1. Products and Services: Branding Decisions in International Markets Dana-Nicoleta Lascu Chapter 9

2. Chapter Objectives • Describe drivers for international standardization and off an overview of the international standardization-local adaptation continuum and respective company strategies • Examine country-of-origin effects on brand evaluations in relation to product stereotypes and consumer ethnocentrism • Examine challenges faced by service providers in international markets • Address issues related to brand name protection and the reasons behind widespread international counterfeiting

3. Standardization versus Adaptation • Global Standardization: standardization of products across markets and standardization of the marketing mix worldwide • Addresses needs of global consumers (homogeneous consumer groups sharing similar interests and product/ brand preferences) • International travel (brand awareness built through exposure to identical communication worldwide) • Consumer preference for higher quality and lower price • Allows for global branding – using the same brand name, logo, image, and positioning everywhere in the world

4. Standardization versus Adaptation, continued • Regional Standardization • Global Localization • Modular Adaptation • Core Product Strategy • Regional Standardization: Using a uniform marketing strategy in a particular region

5. Standardization versus Adaptation, continued • Global Localization: The practice of global branding and localized marketing adaptation to differences in local culture, legislation, etc. • Modular Adaptation: Offer parts (modules) that can be assembled worldwide in different configurations, depending on market needs • Core Product Strategy: Involves using a standardized strategy for the core product worldwide, but varying certain aspects of the offering (product ingredients, advertising, for example) from market to market

6. Standardization versus Adaptation, continued • Mandatory Adaptation: • Adapting products to local requirements so that they can legally and physically operate in the respective countries – for example: Left-hand driving in the United Kingdom • Local Non-Mandatory Adaptation: • Adapting a product to better meet the needs of the local market, or developing new brands for individual local markets, even though such adaptation is not required

7. Private Label (Retailer) Brands • Compete effectively with multinational corporations because they: • Offer premium store brands perceived by local markets as high-quality • Are innovative • Appeal to consumers during economic downturns, and in general, since consumers today demand high quality at lower prices

8. Global Branding • Country of Origin • Country with which good/service is associated • Country of Manufacture • Country where the product is manufactured (for products) • Country where the headquarters are located (for services) • In the absence of other product information, country of origin impacts consumers’ product evaluations

9. Stereotypes • Product-country stereotypes • Service stereotypes

10. Ethnocentrism • The belief that purchasing foreign products hurts the local economy by causing loss of jobs, and that it is morally wrong and unpatriotic • Leads to the rejection of foreign products BUY AMERICAN!

11. Service Entry Barriers • Represent a manifestation of protectionism at the • Firm level • Government level • Consumer level • Examples: • Requirement to use national service providers • Prohibition against employment of foreign nationals • Direct competition from government providers • Restrictions on movement • Tariffs on international services

12. Products, Services, Culture Service encounters are primarily social encounters, and rules and expectations related to services vary from culture to culture.

13. Protecting Brand Names • Addressed first by GATT; now under WTO umbrella • Counterfeiting • Design • Brand Name

14. Counterfeiting Factors • Consumer Factors: • Willingness to purchase counterfeit goods • Prevalent for products where risk is low and prestige gains are high • Prevalent for products that are consumed publicly • Consumers and retailers in developing countries might not notice the difference

15. Counterfeiting Factors, continued • Technology factors • Affordable, quality copying technology • Local partners of multinational have access to know-how and other technology

16. Counterfeiting Factors, continued • Distribution factors • Supply chains are not adequately controlled • Traders may use Internet chat rooms and unauthorized dealership

17. Counterfeiting Factors, continued • Local government factors • Governments may not interfere, especially where government enterprises run the counterfeiting operations • Cracking down would lead to loss of jobs and unrest • Customs representative and other enforcement officials may not be familiar with authentic brands

18. Combating Counterfeiting • Lobbying the U.S. government • Lobbying other governments involved • Change product’s appearance to differentiate the authentic brands from copies • Key: Cooperation with the local government

19. Chapter Summary • Addressed the drivers for international standardization • Examined the standardization-adaptation continuum and the related strategies of international companies • Examined country-of-origin effects on brand evaluations • Examined entry barriers faced by service providers • Addressed issues related to brand name protection