2. Global Product/Brand Decision 3/31, 2016

3. Types of Attributes u u Features u u Benefits u u Functions u u Theoretically, the three basic types of attributes occur in sequence; a feature permits a certain function, which in turn leads to a benefit

4. Localization and Adaptation u u Localization refers to the changes required for a product or service to function in a new country u u When products are adapted, changes are made to match customer tastes or preferences u u Localization is necessary for customers to even consider the product; adaptation tries to make them prefer it over other choices

5. Product Standardization u u A core product u u In automobiles this core is the “platform” chassis that forms the basic structure of the model u u A modular design: the various features are prepackaged as modules that can then be assembled in different combinations to target different markets u u To offer slightly different models in different countries, not only to adapt to demand differences but also to discourage gray trade

6. 2008 Automotive Color Popularity

9. A Framework for Choosing Products to Globalize Initially Degree Of local Adaptation required Low High LowHigh Expected pay-offs from Globalization 1 2 43 Less Attractive Moderately Attractive Most Attractive

10. Service Standardization u u The standardization of services starts with a certain “core” service u u Most fast-food restaurants, following McDonald’s, focus on the basic principles of friendliness, cleanliness of the premises, and quick service u u The “back room” aspects of the service u u The “front line” meeting of consumers u u The front-line personnel in even the most global service companies are usually natives, whose command of language and customs enables them to deliver the service appropriately

11. Global Product Planning Communications Different Same Product SameAdapt Product Develop New Product Product Extension, Communications Adaptation Dual Extension Dual Adaptation Product Adaptation, Communication Extension Product Invention

12. A Brand Is More Than A Product Scope Attributes Uses Quality/Value Functional benefits Brand Product Organizational associations Brand Personality Country of Origin User Imagery Emotional benefits Self-expressive benefits Symbols Brand/Customer Relationship

13. Global Brand Management Effective Global Brand ManagementEffective Management Planning System Global Brand Planning System Organizational Entity to Create Cross-CountrySynergyOrganizational Cross-CountrySynergy Global Internal BrandCommunicationSystem BrandCommunicationSystem System to Create Brand-BuildingBrilliance Brand-BuildingBrilliance

14. Global Branding Strategies u u Global Brands – –A truly global brand is one that has a consistent identity with consumers across the world. – –The development costs for products launched under the global brand name can be spread over large volumes. – –A global brand has much more visibility than a local brand. – –The fact of being global adds to the image of a brand country.

15. Advantages for Using Global Brands u u Demand spillover – –Sales – –Media coverage u u Global customers – –The business-to-business markets – –The consumer goods markets u u Scale economies – –Standardization of logo, packaging, and production

16. Global Branding Strategies II – –Global brands are also able to leverage the country association for the product. – –The value of a global brand (brand equity) usually varies a great deal from country to country (three key value dimensions: quality signal, global myth, and social responsibility). – –Inter-country gaps in brand equity may be due to any following factors: F F History F F Competitive climate F F Marketing support F F Cultural receptivity to brands F F Product category penetration

17. Global Branding Strategies III u u Local Branding – –Examples: Coca Cola owns numerous local and regional brands across the globe such as Thums Up in India u u Global or Local Brands? – –Solo branding, hallmark branding, family branding, and extension branding. – –A firm’s global brand is shaped by – –three types of factors: F F Firm-based drivers F F Product-market drivers F F Market dynamics

18. Dimensions of International Brand Architecture

19. Nestlé Branding Tree

20. Stereotyping Product Evaluation As a halo construct As a summary construct As an informational argument As a simple peripheral cue for inferring product quality Activate concepts and knowledge that bias information processing Affect the extent of the attribute information provided Issues of Country of Origin

21. National stereotyping u u Customers stereotype the quality, suitability and attractiveness of products coming from certain countries and regions u u They associate product quality with images of the economic and social conditions of the COO u u Consequently they show stronger purchase intentions for goods from countries about which they have favorable images u u Generally, developed countries are ranked higher than developing countries and customer evaluate products differently that are identical in all aspects except for COO

22. Elaboration Likelihood Model of Persuasion Motivation to Elaborate Ability to Elaborate Amount of Elaboration Central Route to Persuasion Peripheral Route to Persuasion Message Arguments Determine Persuasion Peripheral Cues Determine Persuasion Low High

23. National Culture and COO beliefs u u Collectivist cultures evaluate home country products more favorably regardless of product attributes, whereas individualist cultures do so only when products are clearly superior u u Preferences motivated by cultural affinity could encourage consumers to buy products from ethnically-affiliated countries, especially if there are intra-national variations in culture

24. Inter-Country COO Beliefs u u Inter-country differences in national stereotyping, sometimes described as “halo effects” u u Customers in advanced countries consider domestically produced brands to be superior to those from developing countries u u Customers in less developed countries consider imports from developed countries superior to products made in the home country u u Customers in under-developed countries consider products from developed countries to be superior to imports form other under-developed countries u u Nevertheless, South African Blacks believe South African products to be better adapted to local conditions and expect local beauticians to have more knowledge about South African product than those from the USA

25. COO Beliefs Across Products u u Customers consciously or unconsciously use COO cues when making judgments about product quality u u COO beliefs can vary for different products from one source country—Electronic products from Japan are perceived to be high quality whereas Japanese food products do not engender the same level of positive beliefs u u Customers accept new brands or products more readily from countries with favorable COO images u u Identification with favorably perceived countries enables marketers to adopt premium pricing and product positioning strategies

26. COO Effects Across Product- Market Segments u u Younger consumers and individuals from lower income classes hold more favorable beliefs regarding foreign products u u COO is stronger among the elderly u u COO was stronger among the less educated u u Customers may prefer to purchase domestic products even if prices are higher because of national pride and patriotism, in the belief that the domestic economy would be threatened by imports, on account of expectations regarding potential standards of after sales service, or simply because of unfamiliarity with foreign products and brands

27. COO Effects Across Brands and Hybrid Products u u The effect of branding on product beliefs and quality and evaluations can be more pronounced than COO effects u u Positive brand images can be diminished if the product is designed or assembled in a country that has a negative COO image u u Purchase intentions of high value and luxury products such as cars tend to be influenced both by brand and COO beliefs u u A stronger brand can reduce the strength of COO beliefs u u Customers do not distinguish between where the product is designed and where it is made

28. COO Effects and Price Elasticity u u Customers expect to pay lower prices for products that originate from countries with less favorable country images u u Favorable COO image reduces the tendency of customers to associate higher prices with better quality products

29. Country-of-Origin (COO) Stereotypes