2. Products and Services for Consumers
Chapter 12
Products and Services for Consumers
McGraw-Hill/Irwin
International Marketing, 13/e
© The McGraw-Hill Companies, Inc., All Rights Reserved.

3. Chapter Learning Objectives
The importance of offering a product suitable for the intended market
The relationship between product acceptance and the market into which it is introduced
The importance of quality and how quality is defined
Country-of-origin effects on product image
Physical, mandatory, and cultural requirements for product adaptation
The need to view all attributes of a product in order to overcome resistance to acceptance

4. Global Perspective Hong Kong – Disney Rolls the Dice Again
Tokyo Disneyland – successful
EuroDisney – disaster
Hong Kong Disneyland – open for business
The opportunities and challenges for international marketers of consumer goods and services today is great and diverse.
Market offerings
Business-to-consumer marketing
Quality products and services that meet the needs and wants of consumers at an affordable price should be the goal of any marketing firm.

5. Quality Shift to a customer’s market Increased customer knowledge
The customer defines quality
The cost and quality of a product are among the most important criteria by which purchases are made

6. Quality Defined Quality can be defined on two dimensions:
Market-perceived quality
Performance quality
Most consumers expect performance quality to be a given
In many industries quality is measured by objective third parties
JD Power and Associates

7. Maintaining Quality Damage in the distribution chain
Russian chocolate
Quality is essential for success in today’s competitive global market
The decision to standardize or adapt a product is crucial in delivering quality

8. Physical or Mandatory Requirements and Adaptation
Product homologation
Product adaptation dictated by the following requirements:
Legal
Economic
Political
Technological
Climate

9. Green Marketing and Product Development
Critical issues affecting product development:
Control of the packaging component of solid waste
Consumer demand for environmentally friendly products
European Commission guidelines for ecolabeling
Laws to control solid waste
Green marketing is a term used to define concern with the environmental consequences of a variety of marketing activities.

10. 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

11. 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

12. 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

13. Five Characteristics of an Innovation
Relative advantage
Compatibility
Complexity
Trialability
Observability

14. Production of Innovations
Inventiveness of companies and countries
Expenditures
Japanese solutions
American-style education programs
American design centers
New ideas come from a growing variety of sources, countries, acquisitions, and even global collaborations

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

16. Marketing Consumer Services Globally
Consumer services characteristics:
Intangibility
Inseparability
Heterogeneity
Perishability
A service can be marketed both as an industrial (business-to-business) or a consumer service

17. Services Opportunities in Global Markets
Tourism
Transportation
Financial services
Education
Communications
Entertainment
Information
Health care

18. Barriers to Entering Global Markets for Consumer Services
Protectionism
Restrictions on transborder data flows
Protection of intellectual property
Cultural barriers and adaptation

19. 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.

20. Top Twenty Brands Rank 2005/2004 2005 Brand Value (millions)
Change (%)
Country of Ownership
1/1 Coca Cola
$67,525
$67, 394 0%
U.S.
2/2 Microsoft
59,941
61,732 -2
3/3 IBM
53,376
53, 791 -1
4/4 GE
46, 996
44,111 7
5/5 Intel
35,588
33,499 6
6/8 Nokia
26,452
24,041 10
Finland
7/6 Disney
26,441
27,113
8/7 McDonalds
26,041
25,001 4
9/9 Toyota
24,837
22,673
Japan
10/10 Marlboro
21,139
22,128 -4

21. Top Twenty Brands (continued)
Rank 2005/2004
2005 Brand Value (millions)
2004 Brand Value (millions)
Change (%)
Country of Ownership
11/11 Mercedes-Benz
$20,006
$21,331 -6
Germany
12/13 Citi
19,967
19,971
U.S.
13/12 HP
18,559
17,683 5
14/14 Am Ex
18,534
16,723
15/15 Gillette
17,534
16/17 BMW
17,126
15,886 8
17/16 Cisco
16,592
15,948 4
18/44 L Vuitton
16,077 NA
France
19/18 Honda
15,788
14,874 6
Japan
20/21 Samsung
14,956
12,553 19
S. Korea

22. Global Brands
The Internet and other technologies accelerate the pace of the globalization of brands
Ideally gives the company a uniform worldwide image
Balance
Ability to translate

23. 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

24. 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.

25. 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

26. 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.