INTERNATIONAL MARKETING MKTG3417

1. INTERNATIONAL MARKETINGMKTG3417 Professor: Bob Carpenter

2. INTERNATIONAL MARKETINGMKTG3417 Product Marketing to Consumers and Businesses Professor: Bob Carpenter

3. Today’s Agenda • Product Adaptation • Quality • Branding and Adoption • Innovation and diffusion • Business to Business Refresher • International Business to Business

4. 1. The importance of offering a product suitable for the intended market 2. The importance of quality and how quality is defined 3. Country-of-origin effects on product image 4. Physical, mandatory, and cultural requirements for product adaptation

5. 5. The need to view all attributes of a product in order to overcome resistance to acceptance 6. The strategic importance of branding 7. The trade-off between standardization and adaptation in international markets

6. Introduction • The opportunities for international marketers of consumer goods and services today have never been greater • New consumers are springing up in many emerging markets, which promise to be huge markets in the future • In the more mature markets consumers’ tastes become more sophisticated and complex due to increases in purchasing power • The lack of distinction between tangible products and services has lead to a single term for both: market offerings • It is important to recognize the difference between business-to-consumer and business-to-business marketing

7. Quality • Intense global competition is placing new emphasis on quality, competitive prices and innovative products • Quality, as a competitive tool, is the deciding factor in world markets • Quality can be defined on two dimensions: • market-perceived quality, and • performance quality • Quality is associated with customer satisfaction • Quality is also measured in many industries by objective third parties such as JD Power and Associates • Customer satisfaction indexes developed are now being used to measure satisfaction across a wide variety of consumer products and services • The Canadian Manufacturers and Exporters’ Association annually recognizes Canadian firms for the quality

8. Relationship Quality • “Quality is a measure of how closely a product or service conforms to specified standards.” • “Quality is the ability of a product or service to consistently meet or exceed customer expectations.”

9. Dimensions of Quality • Performance - main characteristics of the product/service • Special features - extra characteristics • Durability - useful life of the product/service • Safety - Risk of injury • Reliability - consistency of performance • Serviceability - handling of customer complaints or checking on customer satisfaction • Aesthetics - appearance, feel, smell, taste • Perceived Quality - indirect evaluation of quality (e.g. reputation)

10. Dimensions of Quality - Services • Tangibles – physical appearance of equipment , staff and communications.main characteristics of the product/service • Service reliability – whether the service meets the clients expectations. Not only as promised but as expected. • Responsiveness – the willingness of the providerto be helpful and prompt. • Assurance – provider’s employees’ ability to inspire trust and confidence. Competency. • Empathy – caring individual service

11. Examples of Quality Dimensions

12. Examples of Quality Dimensions (Cont’d)

13. The Cost of Quality (Juran’s Model)

14. The Consequences of Poor Quality • Loss of business • Liability • Productivity • Costs

15. Green Marketing and Product Development • Europe is at the forefront of the “green movement,” with strong public opinion and specific legislation favouring environmentally friendly marketing and products • Green marketing is a term used to identify concern with the environmental consequences of a variety of marketing activities • The designation that a product is “environmentally friendly” is voluntary, and environmental success depends on the consumer selecting the eco-friendly product • In some countries each level of the distribution chain is responsible for returning all packaging, packing, and other waste materials up the chain

16. Innovative Products and Adaptation • Products new to a social system are innovations. Product diffusion is the process by which innovation spreads. A critical factor in the newness of a product is its effect on established patterns of consumption and behaviour. • Q: Can the probable rate of acceptance be predicted before committing resources? • And more critically: • Q: If the probable rate of acceptance is too slow, can it be accelerated?

17. Diffusion Innovations • “Crucial elements in the diffusion of new ideas are: • An innovation, • Which is communicated through certain channels, • Over time, • Among the members of a social system.” Everett Rogers

18. Characteristics of Innovations All the characteristics effect the resistance to adoption: • Relative advantage • Compatability • Complexity • Trialability • Observability

19. Production of Innovations • Researchers consider the possibility that cultural factors explain some of the difference in product take-off, particularly the degree of innovativeness, which comprises: • achievement need • industriousness • low uncertainty avoidance

20. Analyzing Product Components for Adaptation • A product is multidimensional, and the sum of all its features determines the bundle of satisfactions (utilities) received by the consumer (1) core component (2) packaging component (3) support services component • The many dimensions of products can be divided into three distinct components: • These components include all a product’s tangible and intangible elements and provide the bundle of utilities the market receives from use of the product

21. Physical or Mandatory Requirements and Adaptation • Legal, economic, political, technological, and climatic requirements of the local marketplace often dictate product adaptation • The less economically developed a market is, the greater the degree of change a product may need for acceptance • Products may have to change in a number of ways to meet the physical or mandatory requirements of a new market, ranging from simple package changes to total redesign of the physical core product

22. Products and Culture • A product is more than a physical item: It is a bundle of satisfactions (or utilities) that the buyer receives • Facets of products include its form, taste, colour, odour, and texture; how it functions in use; the package; the label; the warranty; manufacturer’s and retailer’s servicing; the confidence or prestige enjoyed by the brand; the manufacturer’s reputation; the country of origin. • The adoption of some products by consumers can be affected by how the product concept conforms with norms, values, and behaviour patterns. • Thus, many facets of products are influenced by culture. The greater the cultural differences between the two markets, the greater the extent of adaptation that may be necessary.

23. Product Component Model

24. Country Selection • Things to consider

25. Countries • United Kingdom • France • India • Argentina • Israel

26. Product – Electric Razor from Mexico

27. Product – Mexican Food Franchise from Mexico

28. Product – Seadoo from Canada

29. Marketing Consumer Services Globally • Advice regarding adapting products for international consumer markets also applies to adapting services or intangible products. • There are several services opportunities in global markets from travel and tourism, TV, to financial services • Other top consumer services exports include transportation, education, information, entertainment, and health care

30. Barriers to Entering Global Markets for Consumer Services • Most services are inseparable and require production and consumption to occur almost simultaneously; thus, exporting is not a viable entry method for them • 85 per cent of services enter foreign markets by licensing, franchising, or direct investment • Globally, consumer services marketers face the following four barriers: • protectionism • controls on transborder data flows • protection of intellectual property • cultural requirements for adaptation

31. Brands in International Markets • A global brand is defined as the worldwide use of a name, term, sign, symbol (visual and/or auditory), design, or combination thereof intended to identify goods or services of one seller and to differentiate them from those of competitors. • A successful brand is the most valuable resource of a company. Brand image is at the very core of business identity and strategy.

32. Brands in International Markets (2) • Global brands such as Kodak, Sony, Coca-Cola, McDonald’s, and Toyota are recognized worldwide. • Perceived brand “globalness” leads to increases in sales.

33. Country-of-Origin Effect and Global Brands • Brands are used as external cues to taste, design, performance, quality, value, and prestige • Many factors affect brand image, but one factor of great concern is the country-of-origin effect on the market’s perception of the product • Country-of-origin effect (COE) can be defined as any influence that the country of manufacture, assembly, or design has on a consumer’s positive or negative perception of a product • When the customer becomes aware of the country of origin, there is the possibility that the place of manufacture will affect product or brand image • The country, the type of product, and the image of the company and its brands all influence whether the country of origin will engender a positive or negative reaction

34. Private Brands • Private brands are owned by retailers. They are growing as challenges to manufacturers’ brands, whether global or country specific. • Private labels are formidable competitors. They provide the retailer with high margins; they receive preferential shelf space and strong in-store promotion; and, perhaps most important for consumer appeal, they are quality products at low prices.

35. Chapter 1/2 Business to Business Marketing

36. 1. The importance of derived demand in industrial markets 2. How demand is affected by technology 3. Characteristics of an industrial product 4. The importance of ISO 9000 certification

37. 5. The growth of business services and nuances of their marketing 6. The importance of trade shows in promoting industrial goods 7. The importance of relationship marketing for industrial products and services 8. How commodity and service classification systems can aid in locating business customers

38. What is Marketing? • The same principles apply whether B2B or consumer: • Define the market to be addressed • Product • Channels to market • Promotion and publicity • Selling • Pricing • Packaging • Positioning • Differentiating • …

39. Who are B2B’s customers? • Consumers/Customers are organizations rather than people … but aren’t organizations “made” of people? • Organization … is a consciously coordinated social unit, composed of a group of people, that work interdependently toward some purpose or goals.

40. Organizational Buying Behaviour • The buying decision-making process of an organization rather than by an individual customer. Organizational buying behavior differs from consumer buying behavior in that (a) normally, multiple individuals are involved, (b) buying decision rules or standards may be applicable, and (c) purchases occur as a result of derived demand.

41. 3 main types of Organizations • Federal • Provincial • City • Foreign • Businesses • Governments • Institutions • Manufacturers • Construction • Service firms • Transportation • Professional • Resellers • Hospitals • Schools • Charities

42. Demand • Derived demand • Fluctuations in demand one removed • Stimulating demand • Price elasticity of demand … insulated?

43. Comparison B2B & Consumer Marketing

44. Some characteristics of B2B markets • Customers concentrated financially and geographically • Focus on performance and functionality • Larger budgets than consumers • Needs often well defined • Must have a sound value proposition • Spending other people’s money

45. Manufacturers & Size • Approximately 350,000 in the U.S. • 10%, or 36,000 firms, employ more than 100 workers. • That 10% ship 75% of all products manufactured in the U.S. • Business marketers typically serve far fewer, but far larger, customers.

46. Manufacturers & Geography • In the US, half located in eight states • Important implications: • First, can concentrate marketing efforts • Second, with distribution centers in large volume areas rapid delivery is possible • Third, sales personnel may not be tied to specific geographic areas

47. Purchasing Function Goals

48. Levels of Procurement Development

49. Segmenting Purchase Categories

50. Canadian Government Buying • Spending “our” money. • Huge spender. • No credit risk? • Transparency in dealings • Tries to make its needs clear • Posts opportunities