1. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 1 PRODUCTS AND SERVICES Product functions across culture Standardization vs. customization; adaptation as a compromise Communication vs. product adaptations Branding Services

2. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 2 Review issues Country economics –Demand for quality vs. low cost –Cost of labor Within country segment variations Local competitive situation –Overall competition –Competition for specific product lines –Possible competition with partners in other countries

3. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 3 Product Need Satisfaction Products serve different purposes in different countries; e.g., –Autos: transportation in U.S.; largely status symbol in Japan –Toothpaste: Cavity prevention in U.S.; breath freshener in Ireland –Tang: convenience, low cost beverage in U.S.; pineapple flavor as special treat in Brazil (real oranges are cheap and plentiful)

4. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 4 Approaches to Product Introduction Not suitable for the Middle East! ● Customization ● Localization ● Adaptation ●Standardization

5. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 5 Product Design Philosophies STANDARDIZATION ADAPTATION CUSTOMIZATION ETHNOCENTRIC GEOCENTRIC POLYCENTRIC REGIOCENTRIC

6. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 6 Reasons for Standardization Avoiding high costs of standardization, if applicable Technological intensity –Reduced confusion –International compatibility among product group components –Faster spread of rapid life cycle products Convergence of global consumer tastes/needs Country of origin positioning

7. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 7 Standardization--Advantages Benefits –Economies of scale –More resources available for development effort Better quality –Enhanced customer preference (?) –Realistic when all cultural needs cannot be met Global customers Global segments

8. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 8 Standardization--Disadvantages Unnecessary features Vulnerability to trade barriers Strong local competitors

9. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 9 Product Adaptations Mandatory –legal requirements –infrastructure –physical requirements “Discretionary” –local tastes –fit into cultural environment

10. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 10 Motivations for Adaptation Legal Infrastructure Consumer demographics Culture –Religious impact –Cultural context of use Local traditions/ customs—e.g., –Food usage occasions –Aesthetic preferences Local usage conditions Pricing pressures/ tradeoffs

11. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 11 The Reality: Continuum of “Mandatoriness” Completely mandatory Completely “discretionary” Electric Voltage Product labeling Taste Optimization Style, color Performance Optimization Strong Cultural Conflict Legal requirements Economic Suitability Manner of use

12. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 12 Mandatory Adaptation Issues Choices in approach to mandatory conditions--examples –Power drills with noise suppression filters –Non-public ear piercing in Japan Distribution and promotion implications “Arbitrary” standards (e.g., TV, DVD players) Conflicting rules between countries—may not be possible to make product legal in all

13. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 13 Compatibility Issues Basic requirements –E.g., voltage, infrastructure, plugs Compatibility –Ability to be used within a local system (e.g., frequencies, electronic protocols) Multi-system compatibility –Product can be set to operate within several standards

14. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 14 Physical Product vs. Communication Adaptations

15. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 15 Global Product Lines Historical decisions –Very difficult to change position of a product Mergers and acquisitions –Trademark ownership across markets Preferences –For products –For manufacturers of product types Capacity Product Life Cycle (PLC) and market growth Channels

16. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 16 Entry Timing Strategy Waterfall –Initial introduction in selected market(s) with “trickle down” to markets of later entry Market readiness Concentration of resources Sprinkler –Immediate entry into all targeted markets –Preemption of early entry advantage –Fewer resources available for each market

17. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 17 Definitions Innovation : “An idea, practice, or product perceived to be new by the relevant individual or group.” Diffusion process: “The manner in which innovations spread through the market.”

18. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 18 Notes on Degrees of Innovation Newness must be considered in context of –Local market –Segment within market The less continuous an innovation (for a given region), the more marketing is needed

19. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 19 To Adopt or Not to Adopt: How Will Consumers Answer the Question? Some causes of resistance to adoption –perceived risk--financial and social –self image –effort to implement and/or learn to use the product –incompatibility –inertia

20. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 20 Types of Innovations Fashions—preferred styles change over time; often with repetition Fads—a product or practice gains large but temporary interest (can be revised) Trends—the prevalence of usage or acceptance of a product or practice increases or decreases consistently over time

21. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 21

22. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 22 100% adoption or saturation point One Diffusion Pattern--Nicely Balanced...

23. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 23 Influences on the Speed of Diffusion Risk to expected benefit ratio (relative advantage) Observability Product pricing Trialability Switching difficulties and learning requirements/ ease of use

24. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 24 Pioneering Advantage Consumer expectations are usually shaped by the first encountered brand Order of entry vs. pioneering advantage Positioning of existing pioneer vs. strategy of first entry

25. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 25 Societal Conditions Conducive to Diffusion Modernity Homophily Physical distance High proportion of women in the workforce Opinion leadership

26. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 26 Developing New Global Products IDEA GENERATION SALES FORECAST TEST MARKETING CONCEPT RESEARCH PRELIMINARY SCREENING FOCUS GROUPS CONCEPT TESTING TARGET RESEARCH

27. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 27 Concept Research Focus groups: Find out very broad background for further research Concept testing –Prototypes –Benefit package evaluations Target research –Decision making strategies –Shopping habits –Beliefs/expectations CONCEPT RESEARCH FOCUS GROUPS CONCEPT TESTING TARGET RESEARCH

28. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 28 Branding Choices BRANDINGNO BRAND NATIONAL/ LOCAL INTERNATIONAL MANUFACTURER PRIVATE LABEL MULTIPLE BRANDS SINGLE BRAND “UMBRELLA” BRANDS

29. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 29 Branding Choices--Notes Combinations are possible—e.g., –Own branding plus additional sales to store branding –International brand (e.g., Coca Cola) plus local brand(s), usually sold at lower prices

30. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 30 Branding Issues Demand spillover –Media coverage –Internet exposure Global customers Scale economies Importance of brands within country –Country of origin –Expertise –Prestige

31. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 31 Local Market Branding Expectations Asian consumers typically have more concern with brands –conglomerates have brands encompassing large range of goods (e.g., Mitsubishi food products)

32. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 32 The Brand Portfolio Brand extensions vs. –Creation of new brands –Brand ownership (brand tiers) Brand hierarchies

33. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 33 Brand Globalization Potential Word meanings Word appeal –Pleasantness of associations –Suitability of associations –Pronouncability –Pleasantness of sound –Writing and pictoral appearance Trademark and name availability –Access to desired name –Protection against close imitations by others (e.g., Lindows) Complementarity with other product line items Growth plans—regional vs. international

34. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 34 Implementation Brand building (see promotion material) Fade-in/fade-out “Endorsement branding” –For implementation –For distinction of lower tier brand Double branding

35. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 35 Positioning a Brand Position relative to existing brands? –Same –Generally better –Foreign image –Lower price –Special, unique benefit Appeal across segments? Usage occasion/need

36. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 36 Counterfeit Products Impact –Loss of sales –Loss of exclusivity/price pressure –Possible lack of confidence in quality –Warranty issues Approaches –Legal –“Search and destroy”

37. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 37 Physical Product vs. Communication Adaptations

38. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 38 The International Life Cycle Market for older technology tends to exist in less developed countries –Manufacturing of older generation technology— e.g., Pentium I computers –Resale of capital equipment—e.g., DC 8 aircraft, old three part canning machines Some countries tend to be more receptive to innovation than others “Leap frogging” –Going directly from old technology to the very newest, skipping intermediate step (e.g., wireless rather than wired technology) Shortening of product life cycles

39. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 39 Country of Origin Effects Perception of product –quality (e.g., Japan, Germany) –elegance and style (e.g., France, Italy) Historical associations Positioning strategies –Emphasis on origin (e.g., French wine) –De-emphasis/obfuscation of of country of origin (e.g., French beer, American products with French language labels)

40. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 40 Services Scope Characteristics –Intangibility –Heterogeneity –Inseperability –Perishability The Service-Tangible Product Continuum

41. MKTG 769 PRODUCTS AND SERVICES Lars Perner, Instructor 41 Service Issues Country expectations –Willingness to pay –Quality –Speed –Competence of personnel –Courtesy/deference –Decision making authority of personnel Cost Availability of skilled personnel Control over personnel performance Overhead issues