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Global Products Definition -Global Products are standardized products with a common brand name, with uniform features in all countries Eg: Gillette,

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Presentation on theme: "Global Products Definition -Global Products are standardized products with a common brand name, with uniform features in all countries Eg: Gillette,"— Presentation transcript:

1

2 Global Products

3 Definition -Global Products are standardized products with a common brand name, with uniform features in all countries Eg: Gillette, Benetton Sweaters -Regional products & regional brands are unique to a particular region. E.g: P&Gs Ariel, Hondas City etc -Regional products are latently global. They may become global as more customers know about it -Marketing Global products is lot more complex than selling Regional Products

4 Advantages of Standardization -For many products standardization is inevitable Uniform need for the product – Steel, Metals Economies of Scale & Scope. Benefit from a large market -Key Benefits Cost Reduction – Economies of scale & scope Improved Quality Enhanced Customer Preference Global Customers Global Market Segments

5 Drawbacks of Standardization -Off-Target or Wrong positioning in some countries Customers may have different needs Market segmentation is not always identical across cultures -Lack of Uniqueness – Customers want to differentiate themselves with unique things -Vulnerable to Trade Barriers – Global products need free trade -Strong Local Competitors – Local competitors are better at adapting to local needs, making a global products vulnerable

6 Extent of Standardization -In reality 100% standardization is rare -Some features have to be localized Packaging, pricing etc -Only the Core Product which acts as the foundation is standardized -All additional features are standardized in varying degrees to meet local tastes E.g : Coca-Cola -Standardization can involve use of Modular design

7 Factors Favoring Localization -Cultural Demands – Local Tastes & preferences Even a Globally standardized product needs to be localized -Compatibility Requirements Government Rules Local Climate & weather Local Technology standards

8 Pitfalls of Standardization Five Common Reasons why Standardized products fail 1.Insufficient Market Research 2.Over-Standardization 3.Rigid Implementation 4.Narrow Vision 5.Poor Follow-up

9 Insufficient Market Research -Insufficient Market Research leads to assumed market similarities, wrong demand estimations -Local subsidiaries may become disenchanted -Non-Acceptance of the product in local markets

10 Over-Standardization -A standard Product is assumed to be used in a standard way irrespective of the local preferences. -This leads to: Poor product positioning Wrong market segmentation -Standard product may need localized marketing efforts

11 Rigid Implementation -A standardized marketing program is not always beneficial -Often Head-Quarters drives the standardization of all efforts and fails to notice local tastes and ignores better ideas from subsidiaries -Standardized strategies increases overall sales growth but lowers ROI & ROA

12 Narrow Vision -Increased Standardization leads to a myopic view of the local markets -Local subsidiaries fail to learn from other subsidiaries of the parent -Knowledge sharing and knowledge transfer becomes limited, leading to duplication of efforts, lost opportunities & profits

13 Poor Follow-up -Launching Standard Global products world wide is a complex task -Often firms do a poor job on following up on efforts and results from other subsidiaries -Local Subsidiaries may not have the required resources to support the global product

14 Challenges of Global Products Its difficult to maintain a global product line History : Existing local products M&A: Integration of product lines is tough Local Preferences differ Distribution Channels are different Manufacturing Capacity Constrains -Colgate has been quite successful in developing a long line of global products

15 Globalizing New Products -Successful New products can be Globalized if the factors for its success can be Globalized -Often times factors for a products success in not clearly understood More than 50% of global new products fail Market orientation & commitment of senior management is a must Asian markets need a higher level of technological sophistication, marketing synergies and longer commitment

16 New Product Success Factors -Some of the common success factors are: Relative Product Advantage – Advantage over existing alternatives Synergy with the existing products Degree to with the new product is innovative Market orientation & Management Commitment Intensity of competitive reaction. If more number of competitors react, lesser is the chance of success Compatibility of the new product with existing infrastructure

17 Speed of Diffusion -Speed at which a new product is introduced into other countries is termed Speed of Diffusion -Speed of Diffusion depends on: Relative Advantage Compatibility with existing systems Complexity – How easy is it to use? Trailability – How easy is it to try a new product Observability – Ability of potential customers to observe the benefits of the new product Cosmopolitianism - Hetrogeneity slows down product adaptation

18 Global Brand Management -Global Brands needs Global brand management -Brand has Brand value and Brand Equity Coca-Cola brand is worth $69 Billion Intel Brand is worth $35 Billion -Brand Equity is the present value of the net revenues the brand can be expected to generate over time -Brand Equity depends on intangibles like Awareness, Knowledge, attractiveness – Brand Stature Differentiation, Relevance – Brand Vitality -Brand Value is off-books but affects how Brands are managed

19 Advantages of Global Brand -Demand Spillover Marketing efforts in one country can create demand on other countries. TV, Internet etc -Global Customers Global customers often demand a globally standardized products -Scale Economies Global Advertising, Standardized packaging can cut costs

20 Brand Portfolio -Consumer goods makers usually have a portfolio of few global brands and several local Brands -Less than 10% of brands are global -In 2001, Study by ACNielson found only 43 global brands in consumer packaged goods -Typically Brands are managed in a Brand Hierarchy, Global/Corporate brand at the top and local brand next E.g: Honda Accord, Intel Pentium, Sony Vega TV -Global Brands are managed by the parent. Local brands are managed by subsidiaries -Brand Extensions is done to introduce a new product

21 Brand Globalization Potential -Not all local brands can become global. Heres a checklist to see the brand fit: Does the brand name make sense outside the country? Does the brand suggest a country association? Can the brand name registered abroad? Is there synergy with existing Global Brands? Can a new Global Brand be Justified? Does the regional brand offer tough competition to global brands in that region?

22 Implementing Global Brand Implementing a globalization strategy raises few issues: -In the globalization product based involving product entry into new markets? -Is the product category unique to the company? -Can the local brand names be replaced with a global brand name? -E.g: Nokia brands all its telecom products as Nokia, even replacing brand names of acquired companies

23 Implementing Global Brand -Can Local Brands be replaced without affecting market share? -E.g: Electrolux maintains a host of local brands to retain its local customers -Does replacing a local brand has a significant impact on the product? E.g: Budweiser in Europe, Thumbs up in India -Does replacing a local brand affect the local competitiveness in the local market? Local Brands tend to be strongly associated with local culture & offers a higher competitiveness than global brands

24 Top Global Brands 1.Coca Cola 2.Sony 3.Mercedes-Benz 4.Kodak 5.Disney 6.Nestle 7.Toyota 8.McDonalds 9.IBM 10.Pepsi-Cola 11.Rolls-Royce 12.Honda 13.Panasonic 14.Levis 15.Kleenex 16.Ford 17.Volkswagen 18.Kelloggs 19.Porsche

25 Replacing Local Brands Several standard brand Changeover tactics are: -Fade-in/fade-out: Global brand is first associated with the local brand then the local brand is slowly faded out -Endorsement Branding: Use a strong local brand to introduce a global brand Eg: Acura by Honda -Double Branding: Local-Global brands or Old-New brand together -Summary Axing: Simply drop a local brand & introduce a Global Brand

26 Counterfeit Products -Strong & Successful Global brand names attracts counterfeiters. -Counterfeit product is more common in high end fashion products Eg: Gucci, Ray-Ban etc -Counterfeit or fake products are now seen in chemicals, computers etc -Extensive, sustained operation is needed to fight fake goods, often government help is needed

27 Closing Thoughts -Globalization involves global products and global brand names -Global products is standardized to an extent to gain economies of scale & scope but localized to meet local requirements -Global Brands are few in number and require global scale brand management -New Global brands can be developed with substantial effort & commitment -Changing local Brand names is not easy & requires extensive resources -Counterfeit products is a major threat to established Brand names


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