international marketing (7)
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IMR300 – Lecture 8
Products and Services for Consumers
Products and Services for Businesses
Products and Culture
Psychological attributes Diet Coca Cola in Japan:
Japanese women don’t like to admit to dietingWeight loss – figure maintenance
Products and Culture
The need for cultural adaptation is often necessary, affected by how the product conforms
NormsValuesBehavior patterns
Innovative Products and Adaptation Determining the degree of newness as
perceived by the intended market New product diffusion Established patterns of consumption and
behavior
Innovative Products and Adaptation US cake mix company entered the British
market Carefully eliminated most of the newness
of the product 500 British housewives – favorite cake The sponge cake mix first
Innovative Products and Adaptation Foreign marketing goal
Gaining the largest number of consumers in the market
In the shortest span of time
Probable rate of acceptance
Diffusion of Innovations
Crucial elements in the diffusion of new ideasAn innovationWhich is communicated through certain
channelsOver timeAmong the members of a social system
Diffusion of Innovations
The element of time Variables affecting the rate of diffusion of
an objectDegree of perceived newnessPerceived attributes of the innovationMethod used to communicate the idea
Adoption of innovation
Five Characteristics of an Innovation• Relative advantage
• Marginal value
• Compatibility• Behavior, norms, values
• Complexity• Trialability
• Economic and social risk
• Observability
Production of Innovations
Inventiveness of companies and countriesUSA and the internet
Expenditures (R&D) New ideas come from a variety of sources
CountriesAcquisitionsGlobal collaborations
Analyzing Product Components for Adaptation Product is multidimensional Sum of its features determines the bundle of
satisfactions (utilities) received by consumer
Three distinct componentsCore Packaging Support services
Product Component Model
Core Component
Product platform Design features Functional features
Product variations added or deleted to satisfy local differences
Core Component Adaptation Nestle Corn Flake in Japan Not like a breakfast – snacks Japanese eat fish and rice for breakfast Nestle reformulated cereals with seaweed,
carrots and zucchini, and coconut and papaya
Packaging Component
Price Quality Packages Styling Trademark Brand name
Packaging Component Adaptation Hong Kong Disney Land: Cantonese,
Mandarin, English Country of origin labeling for food products Package size and price in bottom of the
pyramid countries Sunsilk shampoo – in a tiny plastic bag
Packaging Component Adaptation Labeling laws: Saudi Arabia: product names must be
specific “Hot chili” – “Spiced hot chili” Venezuela: prices are required to be
printed on the labels Chile: putting prices on labels are illegal
Support Services Component
Deliveries Warranty Spare parts Repair and maintenance Installation Instructions Other related services
Marketing Consumer Services Globally Consumer services characteristics
Intangibility InseparabilityHeterogeneityPerishability
A service can be marketed As an industrial (business-to-business) A consumer service
Services Opportunities in Global Markets
Tourism Transportation Financial services Education Communications Entertainment Information Health care
Barriers to Entering Global Markets for Consumer Services
Protectionism Restrictions on transborder data flows Protection of intellectual property Cultural barriers and adaptation
Spaniards talk during the lectureJapanese tend to take a few long vacations
Brands in International Markets
A global brand is the worldwide use of a name, term, sign, symbol, design, or combination Intended to identify goods or services of one seller To differentiate them from those of competitors
Importance is unquestionable Most valuable company resource
Top Brands 2010
http://www.interbrand.com/en/best-global-brands/best-global-brands-2008/best-global-brands-2010.aspx
Global Brands
The Internet and other technologies accelerate the pace of the globalization of brands
Worldwide image Balance Ability to translate
Heinz brand, Gillete
National Brands
Acquiring national brand names Using global brand names Nationalistic pride impact on brands Use global brands where possible and
national brands where necessary
Nestle
A different strategy is followed by the Nestlé Company, which has a stable of global and country-specific national brands in its product line.
In some markets it acquires well established national brands when it can and builds on their strengths—there are 7,000 local brands in its family of brands.
Nestle
In other markets - it uses global brand names.
The company is described as preferring brands to be local, people to be regional, and technology to be global. It does, however, own some of the world’s
largest global brands; Nescafé is but one.
Country-of-Origin effect
Influences that the country of manufacture, assembly, or design
Has on a consumer’s positive or negative perception of a product
Country-of-Origin Effects and Global BrandsCountry-of-Origin Effects and Global Brands
Country-of-Origin Effects and Global Brands
Consumers have broad but somewhat vague stereotypes about specific countries and specific product categories that they judge “best”
English tea, French perfume, Chinese silk, Italian leather, Japanese electronics, Jamaican rum
Country-of-Origin Effects and Global Brands
Ethnocentrism“buy American effect”Chile - chopsticks
Countries are stereotyped On the basis of whether they are industrialized In the process of industrializing In process of developing
More knowledgeable consumers are more sensitive to a product’s COE
Country-of-Origin Effects and Global BrandsCountry-of-Origin Effects and Global Brands
Country-of-Origin Effects and Global Brands
Technical productsPerception of one manufactured in a less-
developed or newly industrializing country less positive
Fads often surround product from particular countries or regions
Private Brands
Growing as challengers to manufacturers’ brands
Private labels Provide the retailer with high margins Receive preferential shelf space and in-store promotion Are quality products at low prices
Manufacturers brands must be competitively priced and provide real consumer value
Chapter Learning Objectives
• The importance of derived demand in industrial markets • How demand is affected by technology • Characteristics of an industrial product • The importance of ISO 9000 certification • The growth of business services and nuances of their marketing • The importance of trade shows in promoting industrial goods • The importance of relationship marketing for industrial products and services
Global PerspectiveIntel, the Boom and the Inescapable Bust In industrial markets, including global ones, what goes up must come down • The majority of export sales for industrialized countries is technology • Issues of standardization versus adaptation have less relevance to marketing industrial goods than consumer goods • Factors accounting for greater market similarities in industrial goods customers versus consumer goods customers: - The inherent nature of the product - The motive or intent for the user differs
Demand in Global Business-to-Business Markets Demand in industrial markets is by nature
more volatile Stages of industrial and economic
development affect demand for industrial products
The level of technology of products and services make their sales more appropriate for some countries than others
The Volatility of IndustrialDemand Cyclical swings in demand
Professional buyers tend to act in concertDerived demand accelerates changes in
markets
Derived demand can be defined as demand dependent on another source.
The Volatility of IndustrialDemand
Measures to manage volatility: Maintain broad product lines Raise prices faster and reduce advertising
expenditures during booms Ignore market share as a strategic goal Eschew layoffs (Southwest airlines) Focus on stability
Stages of Economic Development Stage 1 – the traditional society – natural
resources extraction (Africa, Middle east) Stage 2 – preconditions for takeoff –
Infrastructure (Vietnam) Stage 3 – take off – equipment, supplies to support
manufacturing (Russia and Eastern Europe) Stage 4 – drive to maturity – all categories of
industrial products (Korea and Czech Republic) Stage 5 – the age of mass consumption – highest
technology products and services from 5, consumer products from 3,4 (Japan, Germany)
Technology and Market Demand
Education, economic growth, competitive edge
Trends spurring demand for technologically advanced products:
Expanding economic and industrial growth in Asia The disintegration of the Soviet empire The privatization of government-owned industries
worldwide
Quality and Global Standards
Perception of quality rests solely with the customer
Level of technology reflected in the product Compliance with standards that reflect customer
needs Support services and follow-through Price relative to competitive products
Relevant quality features
Quality is Defined by the Buyer
How well a product meets the specific needs of the buyer
The price-quality relationship Product design must be viewed from all aspects
of use Climate Terrain
Total Quality Management (TQM) Lack of universal standards Country-specific standards The metric system
Total quality management
Since the late 1980s, firms around the world have launched (TQM) programs in an attempt to
retain competitiveness in order to achieve customer satisfaction in the face of increasing competition
Total quality management
TQM is an integrative philosophy of management for continuously improving the quality of products and processes.
The practices of TQM as discussed in six empirical studies, Cua, McKone, and Schroeder (2001
Total quality management
TQM - quality of the products and processes is the responsibility of everyone who is involved with the creation or consumption of the products or services
TQM capitalizes on the involvement of management workforce suppliers customers
9 common TQM practices1. cross-functional product design 2. process management3. supplier quality management4. customer involvement5. information and feedback6. committed leadership7. strategic planning8. cross-functional training 9. employee involvement
ISO 9000 Certification
The registration and certification of a manufacturer’s quality system.
Meet the published quality standards. Do not apply to specific products – generic
system standards that enable a company, through a mix of internal and external audit to provide assurance that it has a quality control system.
ISO 9000 Certification: An International Standard of Quality
Positively affects the performance and stock prices of firms
Generally voluntary EU Product Liability Directive Now a competitive marketing tool in
Europe and around the world The ACSI approach
Worldwide total of ISO 9001:2000/2008 certificates
Dec 2005 Dec 2006 Dec 2007 Dec 2008 Dec 2009
773867 896929 951486 982832 1064785
Top 10 countries for ISO 9001 certificates - 2009
Rank Country No. of certificates
1 China 257076
2 Italy 130066
3 Japan 68484
4 Spain 59576
5 Russian Federation 53152
6 Germany 47156
7 United Kingdom 41193
8 India 37493
9 USA 28935
10 Korea, Republic of 23400
Business Services
For many industrial products the revenues from associates services exceed the revenues from the products Cellular phones Printers
Leasing capital equipment Services not associated with products
Boeing at-sea-satellite-launch services Ukrainian cargo company space rental on giant jets
After-Sale Services
Installation Training Spare and replacement parts
Delivery time Cost of parts
Service personnel Crucial in building strong customer loyalty Almost always more profitable than the actual
sale of the machinery or product
Other Business Services
Client followers Mode of entry
LicensingFranchisingDirect investment
Protectionism Restrictions on cross-border data flows
Trade Shows: A Crucial Part of Business-to-Business Marketing Secondary methods for marketing:
Advertising in print media Catalogs Web sites Direct mail
Trade shows have become the primary and most important vehicle for doing business in many foreign countries
Total annual media budget spent on trade events: Europeans – 22 percent Americans – 5 percent
Trade Shows: A Crucial Part of Business-to-Business Marketing Trade shows:
Provide the facilities for a manufacturer to exhibit and demonstrate products to potential users
Allow manufacturers to view competitors products Are an opportunity to create sales and establish
relationships with agents, distributors, franchisees, and suppliers
Online trade shows: Become useful in difficult economic and/or political
circumstances Are obviously a less than adequate substitute for live
trade shows
Relationship Marketing in Business-to-Business Contexts
It is not a matter of selling the right product the first time,
but rather of continuously changed the product to keep it right over time.
The objective of relationship marketing is to make the relationship an important attribute of the transaction, thus differentiating oneself from competitors.