Presentation on theme: "GLOBAL PRODUCT POLICY AND STRATEGIES"— Presentation transcript:
1 GLOBAL PRODUCT POLICY AND STRATEGIES CHAPTER OVERVIEWGlobal Product Strategies StandardizationVersus CustomizationMultinational DiffusionDeveloping New Products for Global MarketsTruly Global Innovation Global BrandingStrategiesManaging Multinational Product LinesProduct PiracyCountry-of-Origin (COO) EffectsGlobal Marketing of Services
2 Copyright (c) 2007 John Wiley & Sons, Inc. IntroductionA cornerstone of a global marketing mix program is the set of product policy decisions that multinational companies (MNCs) constantly need to formulate.The range of product policy questions may include:What new products should be developed for what markets?What products should be added, removed, or modified for the product line in each of the countries in which the company operates?What brand names should be used?How should the product be packaged and serviced?Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc.
3 IntroductionExamples of improper product policy decisions in global marketing:Ikea in the United StatesProctor & Gamble in AustraliaU.S. Car Makers in Japan
4 1. Global Product Strategies Three global strategies to penetrate foreign markets:Extension strategyAdaptation strategyInvention strategy
5 1. Global Product Strategies Five strategic options for the global marketplace:Strategic Option 1: Product and Communication Extension -- Dual ExtensionStrategic Option 2: Product Extension -- Communications AdaptationStrategic Option 3: Product Adaptation -- Communications ExtensionStrategic Option 4: Product and Communications Adaptation -- Dual AdaptationStrategic Option 5: Product Invention
7 2. Standardization versus Customization Five forces favoring a globalized product strategy:1. Common customer needs2. Global customers3. Scale economies4. Time to market5. Regional market agreements
8 2. Standardization versus Customization Degree of StandardizationModular ApproachCore-Product (Common Platform) ApproachBalancing act between standardization and adaptationOverstandardization vs. overcustomization
9 3. Multinational Diffusion Examples:Microsoft’s Xbox videogameNTT DoCoMo’s iModeThe Adoption of new products is driven by three types of factors:Individual DifferencesPersonal InfluencesProduct Characteristics1. Relative advantage2. Compatibility3. Complexity4. Trialability5. Observability
10 3. Multinational Diffusion Other country characteristics used to predict new product penetration patterns include:Homogeneous populationLead countriesLag countriesCosmopolitanismMobilityLabor force profile, Developing vs. Developed countries
11 3. Multinational Diffusion Time-to-Takeoff - Most new products display a distinct tradeoff-average 6 years from launch - Varies a great deal across product categories, between countries, previous takeoff experience
12 4. Development of New Products for Global Markets Identifying New Product Ideas4 C’s:CompanyCustomersCompetitionCollaboratorsNew Product Development (NPD) ProcessScreening (see Exhibit 11-3 in your text)Concept TestingConjoint AnalysisTo Standardize or not to StandardizeChapter 11Copyright (c) 2007 John Wiley & Sons, Inc.
13 4. Development of New Products for Global Markets Test MarketingTiming of Entry: Waterfall versus Sprinkler Strategies (see Exhibit 11-9)Waterfall Strategy: Global phased rollout where new products trickle down in a cascade-like mannerSprinkler Strategy: Simultaneous worldwide entry
14 4. Development of New Products for Global Markets
15 5. Truly Global Innovation Scores of companies have research centers spread across the world. Challenge is to establish a truly global innovation process that transcends local clusters, i.e., to become a metanational innovator.To harvest the benefits of metanational innovation:Prospecting- find valuable new pockets of knowledge around the world.Assessing- decide on an optimal footprint (number and dispersion of knowledge sources).
16 5. Truly Global Innovation Mobilizing- to harness the benefits of global innovation, companies must find ways to mobilize pockets of knowledge (e.g., technical blueprints, patents, equipment, market knowledge).The optimal strategy for mobilizing knowledge depends on the type (simple vs. complex) and nature (technical vs. market) of the knowledge involved.
17 5. Truly Global Innovation 4 possible strategic scenarios for mobilizing knowledge:Exchange information (arm’s length, digital transfer is sufficient).Move information about the market where the technology is.Move information about the technology to where the market knowledge isMove knowledge by rotating people and by temporary co-location
19 6. Global Branding Strategies Companies that brand their products have various options when they sell their goods in multiple countries.More and more companies see global (or at least regional) branding as a must.
20 Multinational product line management entails issues such as: What product assortment should the company launch when it first enters a new market?How should the firm expand its multinational product line over time?What product lines should be added or dropped?Global marketers also face the issue of global piracy.In global marketing, firms have to use a multitude of strategies to handle the negative country-of-origin stereotypes.
21 Global Brands (see Exhibit 12-1) A truly global brand is one that has a consistent identity with consumers across the world.The development costs for products launched under the global brand name can be spread over large volumes.A global brand has much more visibility than a local brand.The fact of being global adds to the image of a brand country.
23 Global brands are also able to leverage the country association for the product. The value of a global brand (brand equity) usually varies a great deal from country to country (three key value dimensions: quality signal, global myth, and social responsibility).Inter-country gaps in brand equity may be due to any following factors:HistoryCompetitive climateMarketing supportCultural receptivity to brandsProduct category penetration
24 A firm’s global brand is shaped by three types of factors: Local BrandingExamples: Coca Cola owns numerous local and regional brands across the globe; Mecca Cola from FranceGlobal or Local Brands?Solo branding, hallmark branding, family branding, and extension branding.A firm’s global brand is shaped by three types of factors:Firm-based driversProduct-market driversMarket dynamics
27 Brand Name Changeover Strategies Fade-in/fade-outCo-brandingUmbrella brandingTransparent forewarningSummary axing
28 Improved quality of private-label products Private Label Branding (“Store Brands”): Factors explaining success of private labels:Improved quality of private-label products2. Development of premium private-label brandsA system where a single banner brand is used worldwide, often with a sub-brand name, for almost the entire product mix of the company.3. Shift in balance of power between retailers and manufacturers4. Expansion into new product categories5. Internationalization of retail chains6. Economic downturns
29 Umbrella (Corporate) Branding Umbrella branding facilitates brand-building efforts over a range of products.Umbrella branding makes it easier to add or drop new products.Protecting Brand NamesBrands are vital assets to brand owners.
30 In the area of brand protection, the oldest treaty is the Paris Convention for the Protection of Intellectual Property.The difference in opinion held by industrialized and developing countries on intellectual property (see Exhibit 12-5)Many elements of the brand franchise may require protection.
32 7. Management of Multinational Product Lines The product assortment is usually described on two dimensions: the width and the length.Drivers affecting the composition of a firm’s international product line:Customer PreferencePrice SpectrumCompetitive ClimateOrganizational StructureHistory
33 Categories of product lines: Core productsNiche productsSeasonal productsFiller products
36 8. Product PiracyAny aspect of the product is vulnerable to piracy, including the brand name, the logo, the design, and the package (see Exhibit 12-8).Strategic Options Against Product Piracy:Lobbying ActivitiesLegal ActionCustomsProduct Policy OptionsDistributionCommunication Options
37 9. Country-of-Origin (COO) Stereotypes Country-of-Origin (COO) Influences on ConsumersFor many products, the “made in” label matters a great deal to consumers.Key research findings of COO effects:COO effects are not stableConsumers prefer domestic products over importsBoth the country of design and the country of manufacturing/assembly play a role in consumer attraction.
38 COO particularly influences the elderly, less educated, and politically conservative; consumer expertise also makes a difference.Cultural orientation play a role.Consumers are likely to use the origin of a product as a cue when they are unfamiliar with the brand name carried by the product.COO effects depend on the product category.
39 Strategies to Cope with COO Stereotypes: Product Policy PricingDistributionCommunication
42 10. Global Marketing of Services Challenges in Marketing Services Internationally:ProtectionismImmediate Face to Face Contacts with Service TransactionsDifficulties in Measuring Customer Satisfaction OverseasOpportunities in the Global Service Industries:Deregulation of Service IndustriesIncreasing Demand for Premium ServicesIncreased Value Consciousness
43 Global Service Marketing Strategies: Capitalize on Cultural Forces in the Host MarketStandardize and CustomizeGive Information Technologies (IT) a Central RoleAdd Value by DifferentiationEstablish Global Service Networks