1. Developed by Cool Pictures & MultiMedia PresentationsCopyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Product and Brand Management Chapter 14

2. Developed by Cool Pictures & MultiMedia PresentationsCopyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Global Product Development The heart of the global marketing process that focuses on building adaptability into products to achieve worldwide appeal. The product development process –The main goal is to build adaptability into products and product lines for worldwide appeal. Step 1: Idea generation Step 2: Screening Step 3: Product/process development Step 4: Scale up Step 5: Commercialization

3. Developed by Cool Pictures & MultiMedia PresentationsCopyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Initiator Becomes Managing Unit Technical Development and Design Integration and Coordination of All Multinational Program Activities New Management Unit Assigned Unique Requirements to be Incorporated in Product Goals and Specifications Review of Design Activities to Plan, Develop, Manufacture, Introduce, and Support Product Guidelines for Program Execution Nonoccurrence with Managing Unit Activities to Plan, Develop, Manufacture, Introduce, and Support Product Global Program Management Viable Concept Does Initiator Have Resources? Initiator Managing Unit Affected Units(s) YesNo SOURCE: Llkka A. Ronkainen, “Product Development in the Multinational Firm,” International Marketing Review I(Winter 1983):24-30.

4. Developed by Cool Pictures & MultiMedia PresentationsCopyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. The Location of R&D Activities Past tendency was to keep activities centrally located with parent corporation headquarters. Using foreign-based resources improves ability to compete successfully internationally. Outsourcing shortens product development cycle time. Determined by the existence of specific skills.

5. Developed by Cool Pictures & MultiMedia PresentationsCopyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Reasons for R&D Investments Abroad To aid technology transfer from parent to subsidiary. To develop new and improved products specifically for foreign markets. To develop new products and processes for application in world markets of the firm. To generate new technology. Host governments see R&D centers as highly desirable investments.

6. Developed by Cool Pictures & MultiMedia PresentationsCopyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Global Product Development Organization Product development team that is functionally and internationally representative. Focus on customer input to identify universal and market-unique product features. R&D consortia allows companies to cooperate in developing new products and technologies.

7. Developed by Cool Pictures & MultiMedia PresentationsCopyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. The Testing of New Product Concepts Testing for performance and customer acceptance is the final stage of product development. Testing ranges from reliability tests to mini-launches. Reasons that new international products fail: –Relying on instinct or hunch rather than testing and research. –Lack of product distinctiveness. –Unexpected technical problems. –Mismatch between functions.

8. Developed by Cool Pictures & MultiMedia PresentationsCopyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. International Product Testing Techniques Limited product launch in one country market. Laboratory test markets to capture consumer reactions in a controlled environment. Microtest marketing uses a permanent panel of consumers and assesses their willingness to buy after exposure to media and purchase incentives. Forced distribution tests rely on the continuous report of consumer reactions to new products already in the market.

9. Developed by Cool Pictures & MultiMedia PresentationsCopyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. The Global Product Launch Introducing the product into countries in three or more regions within a narrow timeframe. Successful launches require: –Involvement of country managers –Pre-launch attention to localization and translation requirements –Increased education and support of the sales channel Benefits of a global launch –Showcases the product –Removes old models at once –Captures new product’s higher margins

10. Developed by Cool Pictures & MultiMedia PresentationsCopyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Product and Brand Portfolio Management The marketer must have a balance of new, growing, and mature products capable of creating sustainable competitive advantage in the firm’s efforts to expand geographically or add to existing market operations. Analyzing the product portfolio –Market rates –Market positions

11. Developed by Cool Pictures & MultiMedia PresentationsCopyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Example of a Product-Market Portfolio 1010 0 40 S GB D US C B F 1010 0 40 US GB D J C S F B Relative Market Share Market Growth Company A Company B (B=Brazil, C=Canada, D=Germany, F=France, GB=Great Britain, J=Japan, S=Spain, US=United States) B SOURCE: Adapted from Jean-Claude Larreche, “The International Product-Market Portfolio,” in 1978 AMA Educators’ Proceedings (Chicago:American Marketing Association, 1978), 276

12. Developed by Cool Pictures & MultiMedia PresentationsCopyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Market-Product-Business Portfolio Example Market Attractiveness ——— Market and Distribution Interconnectedness ………. Technology and Production Interconnectedness High Low High Competitive Strength Low Canned Tea-US Canned Tea-Europe Canned Tea-Asia Ice Cream-US Ice Cream-Europe Ice Cream-Asia Frozen Vegetables- Europe Frozen Vegetables-US Frozen Main Dishes- Europe SOURCE: Adapted from Susan P. Douglas and Samuel Craig, “Global Portfolio Planning and Market Interconnectedness,” Journal of International Marketing 4 (no.I, 1996):93-110.

13. Developed by Cool Pictures & MultiMedia PresentationsCopyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Product Portfolio Approach ADVANTAGES A global view of competitive structures. Global strategy based on allocation of scarce resources. Marketing objectives based on product lines in markets served. A convenient visual communication goal. DISADVANTAGES Foreign competition does not follow the same rules as domestic competition. Relationships between market share and profitability may vary. Government regulations. Local content laws. Different production sites impact perceptions of risk and quality.

14. Developed by Cool Pictures & MultiMedia PresentationsCopyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Managing the Brand Portfolio A strong brand is a global marketing asset. Co-branding –A strategic alliance where two or more brands are combined in an offer. Brand strategy decisions –Use of the corporate name. –Family brands for a wide product line. –Individual brands for each item in the product line. Private (store) branding –Umbrella branding with the intermediary’s name. –Separate brand names.

15. Developed by Cool Pictures & MultiMedia PresentationsCopyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Nestle’s Branding Tree 10 Worldwide Corporate Brands 45 Worldwide Strategic Brands Responsibility of general management at strategic business unit level 140 Regional Strategic Brands Responsibility of strategic business unit and regional management 7,500 Local Brands Responsibility of local markets Nestle Carnation Buitoni Kit Kat Polo Cerelac Baci Macintosh Vittel Contadina Stouffer’s Texicana Brigadeiro Rocky Soils Examples Herta Alpo Findus Mighty Dog Smarties After Eight Coffee-Mate Maggi Perrier L’Oreal SOURCE: Adapted from Andrew J. Parsons,”Nestle: The Visions of Local Managers,”The McKinsey Quarterly, no 2, 1996, 5-29;see also http://www.nestle.com; http://brand/index.asp.

16. Developed by Cool Pictures & MultiMedia PresentationsCopyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved. Private Brand Strategy SOURCES:Adapted from Sabine Bonnot, Emma Carr and Michael J. Reyner, “Fighting Brawn with Brain,” The McKinsy Quarterly 40 (no 2. 2000): 85-92; and Francois Glemet and Rafael Mira, “The Brand Leader’s Dilemma,” The Mckinsey Quarterly 33 (no 2. 1993):4.