1. GLOBAL PRODUCT POLICY AND STRATEGIES
CHAPTER OVERVIEW
Global Product Strategies Standardization
Versus Customization
Multinational Diffusion
Developing New Products for Global Markets
Truly Global Innovation Global Branding
Strategies
Managing Multinational Product Lines
Product Piracy
Country-of-Origin (COO) Effects
Global Marketing of Services

2. Copyright (c) 2007 John Wiley & Sons, Inc.
Introduction
A cornerstone of a global marketing mix program is the set of product policy decisions that multinational companies (MNCs) constantly need to formulate.
The range of product policy questions may include:
What new products should be developed for what 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?
Chapter 11
Copyright (c) 2007 John Wiley & Sons, Inc.

3. Introduction
Examples of improper product policy decisions in global marketing:
Ikea in the United States
Proctor & Gamble in Australia
U.S. Car Makers in Japan

4. 1. Global Product Strategies
Three global strategies to penetrate foreign markets:
Extension strategy
Adaptation strategy
Invention strategy

5. 1. Global Product 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

6. 1. Global Product Strategies

7. 2. Standardization versus Customization
Five forces favoring a globalized product strategy:
1. Common customer needs
2. Global customers
3. Scale economies
4. Time to market
5. Regional market agreements

8. 2. Standardization versus Customization
Degree of Standardization
Modular Approach
Core-Product (Common Platform) Approach
Balancing act between standardization and adaptation
Overstandardization vs. overcustomization

9. 3. Multinational Diffusion
Examples:
Microsoft’s Xbox videogame
NTT DoCoMo’s iMode
The Adoption of new products is driven by three types of factors:
Individual Differences
Personal Influences
Product Characteristics
1. Relative advantage
2. Compatibility
3. Complexity
4. Trialability
5. Observability

10. 3. Multinational Diffusion
Other country characteristics used to predict new product penetration patterns include:
Homogeneous population
Lead countries
Lag countries
Cosmopolitanism
Mobility
Labor force profile, Developing vs. Developed countries

11. 3. Multinational Diffusion
Time-to-Takeoff - Most new products display a distinct tradeoff-average 6 years from launch - Varies a great deal across product categories, between countries, previous takeoff experience

12. 4. Development of New Products for Global Markets
Identifying New Product Ideas
4 C’s:
Company
Customers
Competition
Collaborators
New Product Development (NPD) Process
Screening (see Exhibit 11-3 in your text)
Concept Testing
Conjoint Analysis
To Standardize or not to Standardize
Chapter 11
Copyright (c) 2007 John Wiley & Sons, Inc.

13. 4. Development of New Products for Global Markets
Test Marketing
Timing of Entry: Waterfall versus Sprinkler Strategies (see Exhibit 11-9)
Waterfall Strategy: Global phased rollout where new products trickle down in a cascade-like manner
Sprinkler Strategy: Simultaneous worldwide entry

14. 4. Development of New Products for Global Markets

15. 5. Truly Global Innovation
Scores of companies have research centers spread across the world. Challenge is to establish a truly global innovation process that transcends local clusters, i.e., to become a metanational innovator.
To harvest the benefits of metanational innovation:
Prospecting- find valuable new pockets of knowledge around the world.
Assessing- decide on an optimal footprint (number and dispersion of knowledge sources).

16. 5. Truly Global Innovation
Mobilizing- to harness the benefits of global innovation, companies must find ways to mobilize pockets of knowledge (e.g., technical blueprints, patents, equipment, market knowledge).
The optimal strategy for mobilizing knowledge depends on the type (simple vs. complex) and nature (technical vs. market) of the knowledge involved.

17. 5. Truly Global Innovation
4 possible strategic scenarios for mobilizing knowledge:
Exchange information (arm’s length, digital transfer is sufficient).
Move information about the market where the technology is.
Move information about the technology to where the market knowledge is
Move knowledge by rotating people and by temporary co-location

18. 5. Truly Global Innovation

19. 6. Global Branding Strategies
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.

20. 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?
Global marketers also face the issue of global piracy.
In global marketing, firms have to use a multitude of strategies to handle the negative country-of-origin stereotypes.

21. Global Brands (see Exhibit 12-1)
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.

23. 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:
History
Competitive climate
Marketing support
Cultural receptivity to brands
Product category penetration

24. A firm’s global brand is shaped by three types of factors:
Local Branding
Examples: Coca Cola owns numerous local and regional brands across the globe; Mecca Cola from France
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:
Firm-based drivers
Product-market drivers
Market dynamics

27. Brand Name Changeover Strategies
Fade-in/fade-out
Co-branding
Umbrella branding
Transparent forewarning
Summary axing

28. Improved quality of private-label products
Private Label Branding (“Store Brands”): Factors explaining success of private labels:
Improved quality of private-label products
2. Development of premium private-label brands
A system where a single banner brand is used worldwide, often with a sub-brand name, for almost the entire product mix of the company.
3. Shift in balance of power between retailers and manufacturers
4. Expansion into new product categories
5. Internationalization of retail chains
6. Economic downturns

29. Umbrella (Corporate) Branding
Umbrella branding facilitates brand-building efforts over a range of products.
Umbrella branding makes it easier to add or drop new products.
Protecting Brand Names
Brands are vital assets to brand owners.

30. In the area of brand protection, the oldest treaty is the Paris Convention for the Protection of Intellectual Property.
The difference in opinion held by industrialized and developing countries on intellectual property (see Exhibit 12-5)
Many elements of the brand franchise may require protection.

32. 7. Management of Multinational Product Lines
The product assortment is usually described on two dimensions: the width and the length.
Drivers affecting the composition of a firm’s international product line:
Customer Preference
Price Spectrum
Competitive Climate
Organizational Structure
History

33. Categories of product lines:
Core products
Niche products
Seasonal products
Filler products

36. 8. Product Piracy
Any aspect of the product is vulnerable to piracy, including the brand name, the logo, the design, and the package (see Exhibit 12-8).
Strategic Options Against Product Piracy:
Lobbying Activities
Legal Action
Customs
Product Policy Options
Distribution
Communication Options

37. 9. Country-of-Origin (COO) Stereotypes
Country-of-Origin (COO) Influences on Consumers
For many products, the “made in” label matters a great deal to consumers.
Key research findings of COO effects:
COO effects are not stable
Consumers prefer domestic products over imports
Both the country of design and the country of manufacturing/assembly play a role in consumer attraction.

38. COO particularly influences the elderly, less educated, and politically conservative; consumer expertise also makes a difference.
Cultural orientation play a role.
Consumers are likely to use the origin of a product as a cue when they are unfamiliar with the brand name carried by the product.
COO effects depend on the product category.

39. Strategies to Cope with COO Stereotypes: Product Policy
Pricing
Distribution
Communication

42. 10. Global Marketing of Services
Challenges in Marketing Services Internationally:
Protectionism
Immediate Face to Face Contacts with Service Transactions
Difficulties in Measuring Customer Satisfaction Overseas
Opportunities in the Global Service Industries:
Deregulation of Service Industries
Increasing Demand for Premium Services
Increased Value Consciousness

43. Global Service Marketing Strategies:
Capitalize on Cultural Forces in the Host Market
Standardize and Customize
Give Information Technologies (IT) a Central Role
Add Value by Differentiation
Establish Global Service Networks