1. Products and Services for Consumers Chapter 10 McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved.

2. Chapter Learning Objectives 1. The importance of offering a product suitable for the intended market 2. The relationship between product acceptance and the market into which it is introduced 3. The importance of quality and how quality is defined

3. Chapter Learning Objectives 4. Country-of-origin effects on product image 5. Physical, mandatory, and cultural requirements for product adaptation 6. The need to view all attributes of a product in order to overcome resistance to acceptance

4. 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 The difference between tangible products and services The difference between business-to-consumer and business-to- business markets

5. Ⅰ. 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: (1)market-perceived quality and (2)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 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

6. Physical or Mandatory Requirements and Adaptation 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 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 Product homologation is used to describe the changes mandated by local product and service standards 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 Product homologation is used to describe the changes mandated by local product and service standards

7. 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

8. Ⅱ. Products and Culture 1.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 country of origin;and other symbolic utility received from the possession or use of the goods. A product is more than a physical item: It is a bundle of satisfactions (or utilities) that the buyer receives

9. Products and Culture 2.The adoption of some products by consumers can be affected as much by how the product concept conforms with norms, values, and behavior patterns 3.Thus, many facets of products are influenced by culture, which markets must pay attention to

10. Innovative products and adaptation 1.From a sociological viewpoint,any idea perceived as new by a group of people is an innovation. 2.Products new to a social system are innovation,and knowledge about the product diffusion of innovation is helpful in developing a successful product strategy. An important first step in adaptation a product to a foreign market is to determine the degree of newness as perceived by the intended market.

11. Diffusion of innovation Everrett Rogers notes that “crucial elements in the diffusion of new ideas are (1) an innovation,(2)which is communicated through certain channels,(3)over time,(4)among the members of a social system.” The goals of the diffusion researcher and the marketer are to shorten the time lag between introduction of an idea or product and its widespread adoption. At least three extraneous variables affect the rate of diffusion of an object: (1)The degree of perceived newness (2)The perceived attributes of the innovation (3)The method used to communicate the idea At least three extraneous variables affect the rate of diffusion of an object: (1)The degree of perceived newness (2)The perceived attributes of the innovation (3)The method used to communicate the idea

12. Diffusion of innovation Five characteristics of an innovation can assist in determining the rate of acceptance or resistance of the market to a product. A product’s (1)relative advantage; (2)compatibility; (3)complexity; (4) trialability; (5)observability

13. Ⅲ.Analyzing Product Components for Adaptation (1) core component, (2) packaging component, and (3) support services component 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: 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

14. Ⅳ.Marketing Consumer Services Globally 1.intangibility, 2.inseparability, 3.heterogeneity, and 4.perishability 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: 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: There are several services opportunities in global markets from travel and tourism, TV, movies, to financial services

15. Barriers to Entering Global Markets for Consumer Services protectionism, controls on transborder data flows, protection of intellectual property, and cultural requirements for adaptation 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:

16. Ⅴ. Brands in International Markets 1.Global brands such as Kodak, Sony, Coca-Cola, McDonald’s, Toyota, and Marlboro play an important role in that process 2.Perceived brand “globalness” leads to increases in sales 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 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

17. 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

18. Country-of-Origin Effect and Global Brands 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