Global Marketing Management, 5e Chapter 11Copyright (c) 2009 John Wiley & Sons, Inc. 1 Chapter 11 Global Product Policy Decisions II: Marketing Products and Services

Chapter Overview 1. Global Branding Strategies 2. Managing Multinational Product Lines 3. Product Piracy 4. Country-of-Origin (COO) Effects 5. Global Marketing of Services Chapter 11Copyright (c) 2009 John Wiley & Sons, Inc. 2

Introduction  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. Chapter 11Copyright (c) 2009 John Wiley & Sons, Inc. 3

Introduction  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. Chapter 11Copyright (c) 2009 John Wiley & Sons, Inc. 4

1. Global Branding Strategies  Global Brands (Exhibit 11-1)  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. Chapter 11Copyright (c) 2009 John Wiley & Sons, Inc. 5

Exhibit 11-1: World’s Most Valuable Brands (2008) Chapter 11Copyright (c) 2009 John Wiley & Sons, Inc. 6

1. Global Branding Strategies  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: History Competitive climate Marketing support Cultural receptivity to brands Product category penetration Chapter 11Copyright (c) 2009 John Wiley & Sons, Inc. 7

1. Global Branding Strategies  Local Branding  Examples: Coca Cola owns numerous local and regional brands across the globe such as Thums Up in India  Global 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 drivers Product-market drivers Market dynamics Chapter 11Copyright (c) 2009 John Wiley & Sons, Inc. 8

Chapter 12Copyright (c) 2007 John Wiley & Sons, Inc. 9 Exhibit 11-2: Sample of Philip Morris International Brands

Exhibit 11-3: Dimensions of International Brand Architecture Chapter 11Copyright (c) 2009 John Wiley & Sons, Inc. 10

Exhibit 11-4: Nestlé Branding Tree Chapter 11Copyright (c) 2009 John Wiley & Sons, Inc. 11

1. Global Branding Strategies  Brand Name Changeover Strategies  Fade-in/fade-out  Co-branding  Umbrella branding  Transparent forewarning  Summary axing Chapter 11Copyright (c) 2009 John Wiley & Sons, Inc. 12

Chapter 12Copyright (c) 2007 John Wiley & Sons, Inc. 13 Exhibit 11-5: German Print Ad for Raider/Twix Change-Over

Chapter 12Copyright (c) 2007 John Wiley & Sons, Inc Management of Multinational Product Lines  Width of product line refers to the number of different product lines of the firm  Length of product line is the number of different products within a single line  Firms with a narrow product assortment usually extend the domestic lines  Large companies select a subset for international dispersal

Chapter 12Copyright (c) 2007 John Wiley & Sons, Inc Management of Multinational Product Lines  Adaptations of products introduced in foreign markets are driven by: 1) consumer preferences 2) price spectrum 3) competitive climate 4) organizational structure 5) history

Chapter 12Copyright (c) 2007 John Wiley & Sons, Inc. 16 Exhibit 11-6: Pantene Shampoo Brands in Asia

Chapter 12Copyright (c) 2007 John Wiley & Sons, Inc. 17 Exhibit 11-7: How McDonald’s Customizes Its Menu

Chapter 12Copyright (c) 2007 John Wiley & Sons, Inc. 18 Exhibit 11-8: KitKat Flavors in Japan

Chapter 12Copyright (c) 2007 John Wiley & Sons, Inc. 19 Exhibit 11-9: Coca-Cola Local Brands in Japan

Chapter 12Copyright (c) 2007 John Wiley & Sons, Inc Product Piracy  Over $500 billion in world merchandise sold in 2004 was bogus products  China is a major counterfeit product nation  Counterfeiting depresses profits directly  Bogus goods damage brand images  Any aspect of the product is vulnerable to piracy, including the brand name, the logo, the design, and the package

Chapter 12Copyright (c) 2007 John Wiley & Sons, Inc Product Piracy  Options against Product Piracy  Lobby  Take legal action  Customs seizures  Product protection options like holograms  Change the distribution strategy  Cut prices  Launch educational campaigns against piracy

Chapter 12Copyright (c) 2007 John Wiley & Sons, Inc. 22 Exhibit 11-11: Guidelines for IP Protection in China

4. Country-of-Origin (COO) Effects  Country-of-Origin (COO) Influences  For many products, the “made in” label matters a great deal to consumers. Chapter 11Copyright (c) 2009 John Wiley & Sons, Inc. 23

Exhibit 11-12: Quality Image of Products Made in Various Countries Chapter 12Copyright (c) 2007 John Wiley & Sons, Inc. 24

4. Country-of-Origin (COO) Effects  Key research findings of COO effects: COO effects change over time Both the country of design and the country of manufacturing/assembly play a role in consumer attraction. COO influences are greater among elderly, less educated and politically conservative Emotions affect COO use Culture affects COO outcomes COO varies with product category Chapter 11Copyright (c) 2009 John Wiley & Sons, Inc. 25

Chapter 12Copyright (c) 2007 John Wiley & Sons, Inc. 26 Exhibit 11-13: Product-Country Matches and Mismatches: Examples and Strategic Implication

4. Country-of-Origin (COO) Effects 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. Chapter 11Copyright (c) 2009 John Wiley & Sons, Inc. 27

4. Country-of-Origin (COO) Effects  Strategies to Cope with COO Stereotypes:  Product Policy  Pricing  Use highly respected distribution channels  Communication Improve the country image Bolster the brand image Chapter 11Copyright (c) 2009 John Wiley & Sons, Inc. 28

5. Global Marketing of Services  Challenges Marketing Services Internationally  Protectionism  Immediate Face to Face Contacts with Service Transactions  Difficulties in Measuring Customer Satisfaction Overseas  Opportunities for Global Services  Deregulation of Service Industries  Increasing Demand for Premium Services  Increased Value Consciousness Chapter 11Copyright (c) 2009 John Wiley & Sons, Inc. 29

5. Global Marketing of Services  Global Service Marketing Strategies:  Capitalize on Cultural Forces in the Host Market  Standardize and Customize  Give Information Technologies (IT) a Central Role  Add Value by Differentiation  Establish Global Service Networks Chapter 11Copyright (c) 2009 John Wiley & Sons, Inc. 30