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Module 11 Product and Brand Decisions

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1 Module 11 Product and Brand Decisions

2 Product A product is a bundle of utilities
e.g., Attributes of a Wine are flavor, taste, quality as a thirst quencher, cool refreshment etc. But different wine’s have (emphasize) different product attributes intended to meet the demands of particular market segments. These products are now brands.

3 Brands Bundle of images and experiences in the customer’s mind
A promise made by a particular company about a particular product A quality certification An assurance of a certain level of quality (providing a level of satisfaction by use of a certain brand) Differentiation between competing products The sum of impressions about a brand is the Brand Image Customers integrate all their experiences of observing, using, or consuming a product with everything they hear and read about it. The essence of a brand exists in the mind; as such, brands are intangible. However, companies develop logos, distinctive packaging, and other communication devices to provide visual representations of their brands. A logo can take a variety of forms, starting with the brand name itself.

4 Brands This Slide illustrates that information about products and brands comes from a variety of sources and cues, including advertising, publicity, sales personnel, and packaging. Perceptions of service after the sale, price, and distribution are also taken into account. Information about products and brands comes from a variety of sources and cues, including advertising, publicity, sales personnel, and packaging. Perceptions of service after the sale, price, and distribution are also taken into account.

5 Brands The added value that accrues to a product as a result of investments in the marketing of the brand An asset that represents the value created by the relationship between the brand and customer over time

6 Market Segmentation

7 Product Differentiation
A product’s perceived uniqueness that can be used as a competitive advantage.. .

8 Product Positioning A strategy that attempts to occupy a favorable space in the consumers mind in relation to space occupied by other competitive products. It is the most important decision made regarding direction for new or existing products in the market Combine aspects of both market segmentation and product differentiation in creating a unique product image It’s primary purpose is to create a perceived added value distinctive from that of competitive products Advertising and sales promotion play significant roles in successfully positioning a product or a service Positioning virtually influences all other marketing strategies

9 Aim of Positioning To get the customer to respond to a given product or service in a way the firm wants to them to respond and not the way competition wants them to.

10 Standardization and Customization
In global marketing when dealing with the four P’s, one of the most important questions to answer is whether to standardize or customize.

11 Standardization vs. Customization (Globalize or Localize)
Standardization – offering a uniform product on a regional or worldwide basis. Minor alterations are usually made to meet local regulations and market conditions Customization – appropriate changes are made to match local changes.

12 Factors Favoring Standardization (Globalization)
Common customer needs Global customers Scale of economies Cost savings Worldwide production Duplication of R&D costs Ease of introducing products EU and other regional market agreements

13 Products that are likely to be Standardized
High tech products such as TVs, VCRs, Cameras, Computers High image products-such as cosmetics, clothes-with strong associations of fashionability, sensuality, wealth, status Service and Business to Business products that emphasize corporate image in their global marketing campaign (banks, airlines) Brands positioned primarily on the basis of their country-of-origin (Coke, Levi’s Jeans)

14 Factors Favoring Customization (Localizations)
To meet local taste better Acquiring a strong local brand Obligatory (mandatory) modifications Need for local linkages

15 Standardization Vs. Customization Decision Criteria
Nature of the product Market development Cost/benefit relationship Legal requirements Competition Support systems Physical environment Market conditions

16 Global Brand Development
All brands have been local at some point. But they all became global brands eventually. Key reasons: -Added value to customers -Differential attributes of the brand -Ability to transfer key differential attributes to local markets

17 Characteristics of a Global Brand
Consistent identity, message, and price-value proposition Same product/brand vision across countries (name, logo, who they are, why brand in better than competitors, clear message, credible, relevant (meaningful), communicate to customers

18 Benefits of Global Brand Orientation
Economies of scale Transfer of experience Uniform global image Control and coordination

19 Branding Strategies Combination or tiered branding: allows marketers to leverage a company’s reputation while developing a distinctive identity for a line of products Sony Walkman Co-branding features two or more company or product brands NutraSweet and Coca-Cola Intel Inside

20 Branding Strategies Brand acts as an umbrella for new products
Example: The Virgin Group Virgin Entertainment: Virgin Mega-stores and MGM Cinemas Virgin Trading: Virgin Cola and Virgin Vodka Virgin Radio Virgin Media Group: Virgin Publishing, Virgin Television, Virgin Net Virgin Hotels Virgin Travel Group: Virgin Atlantic Airways, Virgin Holidays

21 Global Brand Development
Questions to ask when management seeks to build a global brand: Will anticipated scale economies materialize? How difficult will it be to develop a global brand team? Can a single brand be imposed on all markets successfully?

22 Local versus Global Products and Brands: A Needs-Based Approach
Physiological Safety Social External/Internal Esteem Self-actualization The essence of marketing is finding needs and filling them. Maslow’s hierarchy of needs, a staple of sociology and psychology courses, provides a useful framework for understanding how and why local products and brands can be extended beyond home country borders. Maslow hypothesized that people’s desires can be arranged into a hierarchy of five needs.14 As an individual fulfills needs at each level, he or she progresses to higher levels. At the most basic level of human existence, physiological and safety needs must be met. People need food, clothing, and shelter, and a product that meets these basic needs has potential for globalization. Mid-level needs in the hierarchy include self-respect, self-esteem, and the esteem of others. These social needs, which can create a powerful internal motivation driving demand for status-oriented products, cut across the various stages of country development.

23 Country of Origin as Brand Element
Made in label matters a lot to some customers Used a lot to evaluate products if the user is unfamiliar with the product Consumer holds cultural stereotypes about countries that will influence their product assessment One of the facts of life in global marketing is that perceptions about and attitudes toward particular countries often extend to products and brands known to originate in those countries. Such perceptions contribute to the country-of-origin effect; they become part of a brand’s image and contribute to brand equity. This is particularly true for automobiles, electronics, fashion, beer, recorded music, and certain other product categories. Perceptions and attitudes about a product’s origins can be positive or negative. On the positive side, as one marketing expert has pointed out, “‘German’ is synonymous with quality engineering, ‘Italian’ is synonymous with style, and ‘French’ is synonymous with chic.”

24 Some Key Research Findings of COO
COO effects are not stable: perceptions change over time Generally, consumers prefer domestic products over imports The place of manufacturing is more important than where the company is located Demographics make a difference Consumers use COO as a cue when they are unfamiliar with a brand name COO effects depend on product category

25 Country Image Dimension Country Image Dimension as a Product Feature
Product-Country Matches & Mismatches Examples and Strategic Implications Country Image Dimension Positive Negative Favorable Match Examples: Japanese auto German watch Strategic Implications Brand name reflect COO Package includes COO information Promote brands COO 2. Unfavorable Match Hungarian auto Computer manufactured in Indonesia Emphasize benefits other than COO Joint venture with a favorable match partner 3. Favorable Mismatch Examples Australian/Japanese Beer Strategic Implications: Alter importance of product category image dimension Promote COO a s a secondary benefit 4. Unfavorable Mismatch Taiwanese beer Ignore COO-such information not beneficial Country Image Dimension as a Product Feature Not Important Important CD

26 Strategies to Cope with COO Stereotypes
Conduct research to determine how much COO effect the product category (Can benefits or hurt a company) Product Policy Select a brand name that disguises the COO or invoke a favorable COO Pricing Low price attract value conscious customers who are less concerned about COO Distribution Use a highly respected distribution channel if a product is manufactured in a country where consumers have a negative image Communications Alter consumer attitude about the product

27 Diffusion Theory The Adoption Process Characteristics of Innovations
Awareness> Interest> Evaluation> Trial> Adoption Characteristics of Innovations Relative advantage Compatibility Complexity Divisibility Communicability

28 Diffusion Theory Adopter Categories
Innovators > early adopters > early majority > late majority > laggards

29 Categories of Adopters
The first 2.5 percent of people to purchase a product are defined as innovators. The next 13.5 percent are early adopters, the next 34 percent are the early majority, the next 34 percent are the late majority, and the final 16 percent are laggards. Studies show that innovators tend to be venturesome, more cosmopolitan in their social relationships, and wealthier than those who adopt later. Early adopters are the most influential people in their communities, even more than the innovators. Thus the early adopters are a critical group in the adoption process, and they have great influence on the early and late majority, who comprise the bulk of the adopters of any product. Several characteristics of early adopters stand out. First, they tend to be younger, with higher social status, and in a more favorable financial position than later adopters. They must be responsive to mass media information sources and must learn about innovations from these sources because they cannot simply copy the behavior of early adopters. Return

30 Diffusion of Innovation in an Asian Context
E.g., Japan, S. Korea, Taiwan, India etc. Different cultural characteristics impact the diffusion process - High Context - More Group oriented and risk averse Impact -Faster rates of diffusion than in the U.S. -Adoption would proceed more quickly in markets where innovations were introduced relatively late (gives more time to assess relative advantage, compatibility and other product attributes) - because risk avoidance is high, fewer innovators but once they see others use it, because of group mentality, no one wants to be left behind.

31 Extend, Adapt, Create: Strategic Alternatives in Global Marketing
Extension – offering product virtually unchanged in markets outside of home country Adaptation – changing elements of design, function, and packaging according to needs of different country markets Creation – developing new products for the world market

32 Global Product Planning: Strategic Alternatives
Communication Product Same Different Strategy 2: Product Extension Communication Adaptation Strategy 4: Dual Adaptation Different Same Strategy 3: Product Adaptation Communication Extension Strategy 1: Dual Extension


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