1. Global Products

2. 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&G’s Ariel, Honda’s 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

3. 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

4. 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

5. 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

6. 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

7. Pitfalls of Standardization
Five Common Reasons why Standardized products fail
Insufficient Market Research
Over-Standardization
Rigid Implementation
Narrow Vision
Poor Follow-up

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. Brand Globalization Potential
Not all local brands can become global. Here’s 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?

21. 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

22. 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

23. Top Global Brands Coca Cola Sony Mercedes-Benz Kodak Disney Nestle
Toyota
McDonald’s
IBM
Pepsi-Cola
Rolls-Royce
Honda
Panasonic
Levi’s
Kleenex
Ford
Volkswagen
Kellogg’s
Porsche

24. 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

25. 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

26. 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