Products and Culture A product is the sum of the physical and psychological satisfactions it provides the user. -Primary function -Psychological attributes The need for cultural adaptation is often necessary, affected by how the product conforms with: -Norms -Values -Behavior patterns

Innovative Products and Adaptation Determining the degree of newness as perceived by the intended market Diffusion Established patterns of consumption and behavior Foreign marketing goal: gaining the largest number of consumers in the market in the shortest span of time -Probable rate of acceptance

Diffusion of Innovations Crucial elements in the diffusion of new ideas: -An innovation -Which is communicated through certain channels -Over time -Among the members of a social system The element of time Variables affecting the rate of diffusion of an object: -The degree of perceived newness -The perceived attributes of the innovation -The method used to communicate the idea

Five Characteristics of an Innovation 1.Relative advantage 2.Compatibility 3.Complexity 4.Trialability 5.Observability

Analyzing Product Components for Adaptation Insert Exhibit 12.1 – Product Component Model Exhibit 12.1

Brands in International Markets Very important Most valuable resource a company has A global brand is defined as the worldwide use of a name, term, sign, symbol, design, or combination thereof intended to identify goods or services of one seller and to differentiate them from those of competitors.

Top Twenty Brands Rank 2005/ Brand Value (millions) 2004 Brand Value (millions) Change (%) Country of Ownership 1/1 Coca Cola$67,525$67, 3940%U.S. 2/2 Microsoft59,94161,732-2U.S. 3/3 IBM53,37653, 791U.S. 4/4 GE46, 99644,1117U.S. 5/5 Intel35,58833,4996U.S. 6/8 Nokia26,45224,04110Finland 7/6 Disney26,44127,113-2U.S. 8/7 McDonalds26,04125,0014U.S. 9/9 Toyota24,83722,67310Japan 10/10 Marlboro21,13922,128-4U.S.

Top Twenty Brands (continued) Rank 2005/ Brand Value (millions) 2004 Brand Value (millions) Change (%) Country of Ownership 11/11 Mercedes- Benz $20,006$21,331-6Germany 12/13 Citi19,96719,9710U.S. 13/12 HP18,55917,6835U.S. 14/14 Am Ex18,53416,7235U.S. 15/15 Gillette17,53416,7235U.S. 16/17 BMW17,12615,8868Germany 17/16 Cisco16,59215,9484U.S. 18/44 L Vuitton16,077NA France 19/18 Honda15,78814,8746Japan 20/21 Samsung14,95612,55319S. Korea

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

Country-of-Origin Effect and Global Brands Consumers have broad but somewhat vague stereotypes about specific countries and specific product categories that they judge “best.” Ethnocentrism Countries stereotyped on the basis of whether they are industrialized, in the process of industrializing, or developing The more technical the product, the less positive is the perception of one manufactured in a less-developed or newly industrializing country Fads often surround product from particular countries or regions 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.

Private Brands Growing as challengers to manufacturers’ brands Private labels: -Provide the retailer with high margins -Receive preferential shelf space and in-store promotion -Are quality products at low prices Must be competitively priced and provide real consumer value

Summary The growing globalization of markets must be balanced with the continuing need to assess all markets for those differences that might require adaptation for successful acceptance. In spite of the forces of homogenization, consumers also see the world of global symbols, company images, and product choice through the lens of their own local culture and its stage of development and 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 and using the Product Component Model may provide the marketer with important leads for adaptation.