Global Products and Brands

1. Global Products and Brands Stefano Pelle November 2012

2. Contents • Products and Brands • Product policies and strategies • Standardization vs. Adaptation • New Product Development and Innovation • Branding and Global Brands • Some live examples

3. Basic Product Concepts • A product is a good, service, or idea • Tangible Attributes • Intangible Attributes • Product classification • Consumer goods • Industrial goods

4. Brands are much more than products or services • They are symbolic constructs created by companies to represent a collection of information about a product or group of products: these constructs typically consist of a name, identifying mark, logo, visual images or symbols, and mental concepts which distinguish the product or service What Brands Are

5. Brands: Different Perspectives • Bundle of images and experiences in the customer’s mind (tradition, reputation..) • An emotional relationship • A promise made by a particular company about a particular product • A quality certification • A Differentiating element

6. Brands: Different Perspectives • The added value that accrues to a product as a result of investments in the marketing of the brand • An asset that represents the value created by the relationship between the brand and the customer over time The sum of impressions about a brand is the Brand Image. The value of the same in the market is its Brand Equity

7. Brands: Information Sources

8. Global Products and Brands • Global products meet the wants and needs of a global market and are offered in all world regions • Global brands have the same name and similar image and positioning throughout the world

9. Product Policies and Strategies

10. Product Policies on the International Markets The products offering of a company influences the main marketing decision of the same Countries and demand segments Entry Strategy and policy Other marketing mix variables Product policy has a driving role for the offer policies of companies, including the choice of international countries

11. Product Policy Questions • What new products should be developed and for which markets? • What products should be added, removed, or modified for the product line in each of the countries in which the company operates? • What brand names should be used? • How should the product be packaged and serviced?

12. Product Policy Decisions • Examples of improper product policy decisions in global marketing • Ikea in the United States • Procter & Gamble in Australia • U.S. Car Makers in Japan

13. Global Product Strategies • Three global strategies to penetrate foreign markets • Extension strategy: the same homegrown product is marketed virtually unchanged to foreign markets • Adaptation strategy: some elements of the mix are adapted to the local market places • Invention strategy: new products are created according to the market places

14. Product/Communication Strategies • Often Companies decide to adopt similar strategies both in the products as well as in the communication • Looking at the combination of the strategies for the two variables, different scenarios are found in the global market place

15. Product/Communication Strategies • Five strategic options for the global marketplace: • Strategic Option 1: Product and Communication Extension -- Dual Extension • Strategic Option 2: Product Extension -- Communications Adaptation • Strategic Option 3: Product Adaptation -- Communications Extension • Strategic Option 4: Product and Communications Adaptation -- Dual Adaptation • Strategic Option 5: Product Invention

16. Global Product Strategies

17. Standardization vs. Adaptation “The world is becoming a common market place, in which people, no matter where they live, desire the same products and lifestyles… … Global companies must stop targeting the idiosynchronitic differences between countries and …. and instead concentrate on satisfying universal desires” Theodore Levitt, “The Globalization of Markets”, HBR, June 1983

18. Drivers of Standardization • Five forces favoring a globalized product strategy: 1. Common customer needs 2. Global customers 3. Economies of scale 4. Time to market 5. Regional market agreements Product driven Strategy

19. Drivers of Adaptation Market Factors • The satisfaction of different consumer needs in various national markets • Consumers’ purchase power • Matching the product attributes offered by competing firms • Distribution and Trade needs Market driven Strategy

20. Drivers of Adaptation Environment Factors • Climate differences • Logistics differences • Cultural Compatibility

21. Drivers of Adaptation Legal Factors • Product Technical standards • Patent laws • Packaging requirements • Local content rules • Health and safety regulations • Consumer protection laws • Structure of Custom duties

22. Standardization vs. Adaptation Standardization Focus on Similarities Economies High Quality Brands / Reasonable Prices Adaptation Focus on Diversities More Effective Marketing Mix Higher Brand Equity

23. Standardization vs. Adaptation • Find the right balance : maintain core brand personality and adapt the adaptable elements • One possible criteria to use : incremental revenues (thanks to the modification) vs. increased costs (of adaptation)

24. Adaptation: Some Packaging Examples

25. Marketing Mix Innovation • A necessity in a globalized environment • Consumer fast access to world wide information and markets • Rapidly changing consumer needs

26. Innovation: a Faster Pace We are experiencing an extraordinary acceleration in the change • It took 24 generations to perfect the art the technique of printing • In less than 20 years the world web/internet technology has changed lives • Renown scientists foresee that by 2050 our memory could be stored so as to make us virtually “immortal”

27. Innovation Oriented Companies An innovation oriented company must have • Strong commitment from the top management to innovation since: - Important investments are required - Resistance to change needs to be overcome - A fast innovation-to-cash cycle needs a well structured coordination between all the operative departments

28. Product Innovation Innovation to Cash Curve 0 Source: Boston Consulting Group

29. Product Innovation • The initiative is often in the hands of marketing, sometimes in the top management, but all functions are in some way involved in the process

30. Innovation: a Continuous Process Marketing (Feedback) Marketing (Ideas) Sales (Distribution) R&D Process Marketing (Ideas) Supply Chain (Logistics) Technical (Feasibility) Marketing (Launch) Finance (Evaluation) Technical (Production) R&D/Technical (Trial Runs) Supply Chain (Procurement)

31. Phases of Development of New Products • Sources of New Product Ideas • Company • Customers • Competition • Collaborators • New Product Development (NPD) Process • Screening

32. Innovation: a Continuous Process The innovation process does not end with the product launch • The product, and more generally the marketing mix, is subject to regular changes • Even when the product cycle is in the declining phase, companies might try to prolong it through innovation thus starting a new cycle

33. Innovation: a Continuous Process Product Life Cycle Maturity Growth Innovation Launch Decline Source: Philip Kotler, Marketing Management

34. Innovation and Emerging Countries Emerging countries start having a relevant role in innovation, though the same is not yet reflected in the annual number of registered patents, which is still relatively modest China is investing more and more in renewable energies, aviation and innovative form of transportation; India is becoming more important in the pharmaceutical sector

35. Innovation and Emerging Countries  General Electric has R&D centers both in India and China. Its healthcare branch has developed a low cost ECG equipment in India; has improved it in China and eventually launched the same in the USA market. GE China has developed a low cost ultrasound equipment

36. Sustainable Innovation • Some brands have not been able to sustain the innovation rate and have hence disappeared or drastically lost market share (e.g. Timex vs. Casio) • Particularly in technological sectors, this loss could happen in a short period, and competitors operating in similar industries will have to be regularly monitored (e.g. Nintendo vs. Sega )

37. Innovation in the Marketing Mix • Product innovation, particularly if substantial, offers an opportunity to revive the whole marketing mix • A complete re-launch provides momentum to the brand, and, if effectively implemented, gives impulse to the sales of the same

38. Can existing channels be used to distribute the product? Screening Criteria Can the design be easily counterfeited? Length of expected lifecycle Will the intended new Product complement Existing products? Minimum feasible price compared to prices of similar items supplied by competitors Potential for easy adaptation to satisfy various national markets Product feasibility Number of unique selling points Will new production Technologies be Necessary? Market size and profitability Expected product positioning in various countries Resource availability: know-how, personnel, Equipment and materials Relations with existing product lines and distribution channels Time scale for developing Technical capacities

39. Phases of Development of New Products • Concept Testing • Test Marketing • Timing of Entry: Waterfall versus Sprinkler Strategies • Waterfall Strategy: Global phased rollout where new products trickle down in a cascade-like manner • Sprinkler Strategy: Simultaneous worldwide entry

40. Phases of Launch of New Products

41. Branding and Global Brands

42. Branding Approaches The global marketers brand structure (portfolio) includes the current set of brands across countries, business and markets and can be approached mainly in four ways • Solo branding – each brand stands alone • Hallmark branding – one brand to all products • Umbrella (family) branding – Main brand and sub brands • Extension branding – one product starts and later the brand is stretched in different categories

43. Brand Extension/Innovation

44. Brand Extensions Brand acts as an umbrella for new products • Example: The Virgin Group • Virgin Entertainment: Virgin Megastores and MGM Cinemas • Virgin Trading: Virgin Cola and Virgin Vodka • Virgin Radio • Virgin Media Group: Virgin Publishing, Virgin Television, Virgin Net • Virgin Hotels • Virgin Travel Group: Virgin Atlantic Airways, Virgin Holidays

45. Brand Portfolios Shaped by three factors: 1) Company’s based drivers, such as the firm’s heritage (e.g. centralization, expansion strategy, etc) 2) Product/Market drivers – nature of segments, culture and competitive structure 3) Market dynamics – economic integration, regulations, market infrastructures, consumer mobility

46. Branding Strategies • Brand Name Changeover Strategies • Fade-in/fade-out • Co-branding • Transparent forewarning • Summary axing

47. Global Brands • Companies that brand their products have various options when they sell their goods in multiple countries • More and more companies see global (or at least regional) branding as a must

48. Global Brand Management • Multinational product line management entails issues such as: • What product assortment should the company launch when it first enters a new market? • How should the firm expand its multinational product line over time? • What product lines should be added or dropped?

49. Global Brands Advantages Consistent identity across the world • High visibility • Often High image • Opportunity of spreading development costs • Opportunity of saving in promotional costs

50. Global Brands Disadvantages • May alienate local consumers • May face the issue of piracy • May be rejected due to stereotypes (e.g. Country of Origin, anti-globalization)