Industry Studies: Consumer Goods Industry

Topic: Product Design: Theories and Approaches

Topic Number:3

Overview

2

Following on from the last lecture, where we looked at globalisation versus localisation today we will focus on this from a product perspective.

We will initially evaluate the approaches taken to develop global products that are to be distributed around the world and look at a number of challenges in doing so.

We will thereafter assess the pros and cons of developing global products and evaluate the extent to which they need to be adapted to meet local needs.

Finally, we will develop our understanding of the ‘think global, act local’ debate from a product perspective.

Learning Outcomes

3

• Determine and develop a view on how and whyglobal products are developed and sold

• Critically evaluate and articulate the challengeswith global product design and how these areovercome

• Assess and discuss the pros and cons ofdeveloping global products

• Highlight key issues in the ‘think global, act local’debate from a product perspective

Convergence of Products

What Warhol said about Coke is, he said, "What I

really like about Coca-Cola is the president of the

United States can't get a better Coke than the bum

on the corner of the street." Now, that is,

actually, when you think about it -- we take it for granted -- it's actually a remarkable achievement,

to produce something that's that democratic.

Rory Sutherland

Does Coca-Cola taste the same all around the world?

Theodore Levitt’s view…

“Gone are accustomed differences in national or regional preference… nothing confirms this as much as the success of

McDonald’s from the Camps Elysees to the Ginza, of Coca-Cola in Bahrain and Pepsi-Cola in Moscow, and of rock music, Greek salad, Hollywood movies, Revlon cosmetics, Sony Televisions and Levi jeans everywhere… The global corporation operates

with resolute constancy – at low relative cost – as if the entire world (or major regions of it) were a single entity: it sells the

same things in the same way everywhere” Levitt 1983:92

Sold exactly the same in 74 different countries

Did you know, no matter where you are in the world… 10 companies control everything you eat?

Do people prefer global products?

“Today, nearly every industry has a significant global segment in which

customers prefer products that are much more global than they are local… The global

segment is increasing in size in nearly all cases.”

George Yip, 2000

Why consumers prefer global products?

Convey higher quality

Enjoy higher prestige and

status reflected onto the

consumer

Satisfy customers’ desire to be apart of a

global community

Cater to homogenising

tastes

Source: Batra, 2000

Global products do not mean 100% standardised

Consider each level of a

product and determine the elements that

can be adapted for local

countries.

Examples of Product Adaptions

Iran Europe

Africa USA

Pros of Global Products

Attainability of scale and experience economies

Rising Technological

feasibility

Homogenisationof needs and preferences

Intensification of consumers’

mobility

Cons of Global Products

Unsuited to some

aspects of business

Stifles creativity and response time

Loss of uniqueness

Loss of responsiveness in

new markets

Global design standardisation is easier said than done

Cultural Influences

Legal/ Political Forces

Economic Factors

Legal/Political Requirements

Legal Political

Some countries, for instance, have

imposed detailed labeling requirements and health standards on consumer products that firms must follow.

Grupo Modelo SA had to reduce the

nitrosamine levels of the beer it sells in Germany to meet

those countries’ health standards

A minimum level of local content is sometimes a requirement

under trade laws when giving foreign companies the right to

manufacture in a particular place.

Economic Factors

Cultural Influences

Understand local needs and appreciate differences

Or consumers will just adapt things for you

Care for masala coke?

View video: https://www.youtube.com/watch?v=zFB-Yd6GW7k

What do consumers really want?

View video: http://www.ted.com/talks/joseph_pine_on_what_consumers_want

Which one is it?

Think Global, Act Local Think Local,

Act Global?

Think Global, Act Local: Not Enough

Global vs Holistic

Simply put, global is too broad and undefined. It implies thatwe should standardize and lead from the center, so that wecan better drive efficiencies that meet the burgeoningdemands of local markets. This is in stark contrast withthinking holistically, which I define as the ability to take intoaccount complex linkages and inter-connections in order tofacilitate decision-making of the highest order.

It is no longer enough to “think global,” we must:

• Gain appreciation of the world at large, and in turn,know how to best position organizations to win thesupreme jackpot of sustained profit and growth.

• Capture interlocking elements, interdependencies, andsynergies of the commercial environment.

Source: Deloitte, 2013

Think Global, Act Local: Not Enough

Local vs Personal

Similar to thinking globally, acting locally does not touch uponthe essence of human behavior—what we do or don’t do inresponse to change, challenge, and the status quo. Actingpersonal, however, mirrors human dynamics and the multi-dimensional profile of each individual. Act personal allows youto engineer communities, making messages and actions arelevant and timely response to the big picture needs ofpeople.

At Deloitte, we see the benefits of acting personal in our socialmedia efforts every day. Addressing the individual concernsand aspirations of our stakeholders—talking to them aboutwhat they really care about—drives the engagement to boostclient and employee satisfaction, retention, profits, and multi-stakeholder advocacy. It has the capacity to not just act, but todeliver “happiness” with each experience.

A different perspective

Video View: http://www.ted.com/talks/sheikha_al_mayassa_globalizing_the_local_localizing_the_global

Appendix – Sources for illustrations

Slide 4:www.weekendcontent.com

Slide 5:www.mixerdirect.com

Slide 6:www.telegraph.com

Slide 7:www.businessinsider.com

Slide 10:www.marketingteacher.com

Slide 11:Unilever and Nokia websites

Slide 15:www.beerbrewguru.com

Slide 16www.wikipedia.org

Slide 17:www.unilever.com

Slide 22:www.jugaadinnovation.com

End of presentation

© Pearson College 2013