1. International Marketing Chapters 12 and 13
Products and Services – Consumer and Business

2. Introduction
The opportunities for international marketers of consumer goods and services today have never been greater
New consumers are springing up in many emerging markets, which promise to be huge markets in the future
In the more mature markets consumers’ tastes become more sophisticated and complex due to increases in purchasing power

3. Quality
Intense global competition is placing new emphasis on manufacturing quality products
Quality, as a competitive tool, is the deciding factor in world markets
Quality can be defined on two dimensions:
market-perceived quality and
performance quality
Quality is associated with customer satisfaction
Quality is also measured in many industries by objective third parties such as JD Power and Associates
Customer satisfaction indexes developed are now being used to measure satisfaction across a wide variety of consumer products and services

4. Physical or Mandatory Requirements and Adaptation
Products may have to change in a number of ways to meet the physical or mandatory requirements of a new market, ranging from simple package changes to total redesign of the physical core product
Legal, economic, political, technological, and climatic requirements of the local marketplace often dictate product adaptation
Changes may also have to be made to accommodate climatic differences

5. Product Adaptation Lehar-Pepsi in India Chevrolets in the Mid-east
Crackers shipped to humid areas
“Small sizing” products like razor blades (India) and cheetos (China)
Electrolux cold wash only washing machines where energy costs are high
Cake mixes in England
Selling Harry Potter in English in Japan (unusual?)

6. Green Marketing and Product Development
At the forefront of the “green movement,” with strong public opinion and specific legislation favoring environmentally friendly marketing and products
Green marketing is a term used to identify concern with the environmental consequences of a variety of marketing activities
The designation that a product is “environmentally friendly” is voluntary, and environmental success depends on the consumer selecting the eco-friendly product
In some countries each level of the distribution chain is responsible for returning all packaging, packing, and other waste materials up the chain

7. Products and Culture
A product is more than a physical item: It is a bundle of satisfactions (or utilities) that the buyer receives
Facets of products include its form, taste, color, odor, and texture; how it functions in use; the package; the label; the warranty; manufacturer’s and retailer’s servicing; the confidence or prestige enjoyed by the brand; the manufacturer’s reputation;
The adoption of some products by consumers can be affected as much by how the product concept conforms with norms, values, and behavior patterns
Thus, many facets of products are influenced by culture, which marketers must pay attention to.

8. Diffusion of Innovation
Product diffusion depends on:
a. Relative advantage
b. Compatibility
c. Complexity
d. Trialability
e. Observability

9. Analyzing Product Components
for Adaptation
A product is multidimensional, and the sum of all its features determines the bundle of satisfactions (utilities) received by the consumer
The many dimensions of products can be divided into three distinct components:
(1) core component,
(2) packaging component, and
(3) support services component
These components include all a product’s tangible and intangible elements and provide the bundle of utilities the market receives from use of the product

10. Dimensions of a Product
The many dimensions of a product can be divided into three distinct components as illustrated in the model below:

11. Marketing Consumer Services Globally
Advice regarding adapting products for international consumer markets also applies to adapting services or intangible products
However, many consumer services are distinguished by four unique characteristics:
intangibility,
inseparability,
heterogeneity, and
perishability
There are several services opportunities in global markets from travel and tourism, TV, movies, to financial services

12. Barriers to Entering Global Markets for Consumer Services
Most services are inseparable and require production and consumption to occur almost simultaneously; thus, exporting is not a viable entry method for them
Globally, consumer services marketers face the following four barriers:
protectionism,
controls on transborder data flows,
protection of intellectual property, and
cultural requirements for adaptation

13. Brands in International Markets
A global brand is defined as the worldwide use of a name, term, sign, symbol (visual and/or auditory), design, or combination thereof intended to identify goods or services of one seller and to differentiate them from those of competitors
A successful brand is the most valuable resource of a company
Brand image is at the very core of business identity and strategy
Global brands such as Kodak, Sony, Coca-Cola, McDonald’s, Toyota, and Marlboro play an important role in that process
Perceived brand “globalness” leads to increases in sales

14. Country-of-Origin Effect and Global Brands
Brands are used as external cues to taste, design, performance, quality, value, and prestige
Many factors affect brand image, but one factor of great concern is the country-of-origin effect on the market’s perception of the product
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
When the customer becomes aware of the country of origin, there is the possibility that the place of manufacture will affect product or brand image
The country, the type of product, and the image of the company and its brands all influence whether the country of origin will engender a positive or negative reaction

15. Introduction –Business-to-Business
Industrial products sold in business-to-business markets also constitute a large part of global marketing
The inherent nature of industrial goods makes marketing mix standardization more common
Industrial products and services are used in the process of creating other goods and services; consumer goods are in their final form and are consumed by individuals
The motive differs: Industrial consumers are seeking profit, whereas the ultimate consumer is seeking satisfaction
Although prevalent for industrial goods, protectionism can be much more pronounced for the service provider

16. Demand in Global Business-to-Business
Markets
Three factors seem to affect the demand in international industrial markets differently than in consumer markets
Demand in industrial markets is by nature more volatile
Stages of industrial and economic development (discussed in Chapter 9) affect demand for industrial products maybe more than for consumer products.
The level of technology of products and services makes their sale more appropriate for some countries than others

17. Derived Demand Example

18. Quality and Global Standards
Quality is important with industrial products as well
Quality is defined by the buyer
One important dimension of quality is how well a product meets the specific needs of the buyer
This price–quality relationship is an important factor in marketing industrial products
Total quality management must be a part of all MNCs’ management strategy
A lack of universal standards is another problem in international sales of industrial products
Conflicting standards are encountered in test methods for materials and equipment, quality control systems, and machine specifications

19. An International Standard of Quality
ISO 9000 Certification:
An International Standard of Quality
ISO 9000s, a series of five international industrial standards (ISO 9000–9004) originally designed by the International Organization for Standardization in Geneva to meet the need for product quality assurances in purchasing agreements
ISO 9000 concerns the registration and certification of a manufacturer’s quality system
It is a certification of the existence of a quality control system a company has in place to ensure it can meet published quality standards
ISO 9000 standards do not apply to specific products
It is a certification of the production process only, and does not guarantee that a manufacturer produces a “quality” product or service.
The series describes three quality system models, defines quality concepts, and gives guidelines for using international standards in quality system

20. Business Services
For many industrial products, e.g., cell phones, the revenues from associated services exceed the revenues from the products
For many industrial products after-sales service is also important
Customer training is rapidly becoming a major after-sales service when selling technical products in countries that demand the latest technology but do not always have trained personnel
After-sales services are crucial in building strong customer loyalty and are also almost always more profitable than the actual sale of the machinery or product

21. Trade Shows: A Crucial Part of Business-to-Business Marketing
Trade shows serve as the most important vehicles for selling products, reaching prospective customers, contacting and evaluating potential agents and distributors, and marketing in most countries
Trade shows serve a much more important role in other countries where most prospects are found
European trade shows attract high-level decision makers who are there to buy products
Trade shows provide the facilities for a manufacturer to exhibit and demonstrate products to potential users and to view competitors’ products
Trade shows create an opportunity to create sales and establish relationships with agents, distributors, franchisees, and suppliers that can lead to more-permanent distribution channels in foreign markets

22. Relationship Marketing in Business-to-Business Contexts
Building long-term relationships with customers is a viable strategy for business-to-business marketing
The objective of relationship marketing is to make the relationship an important attribute of the transaction, thus differentiating oneself from competitor
It shifts the focus away from price to service and long-term benefits
The reward is loyal customers that translate into substantial long-term profits
Focusing on long-term relationship building will be especially important in most international markets where culture dictates stronger ties between people and companies