I n t e r n a t i o n a l M a r k e t i n g Products and Services for Consumers Chapter t h E d i t i o n P h i l i p R. C a t e o r a M a r y C. G i l l y J o h n L. G r a h a m McGraw-Hill/Irwin International Marketing 14/e Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

12-2 What Should You Learn? The importance of offering a product suitable for the intended market The relationship between product acceptance and the market into which it is introduced The importance of quality and how quality is defined Country-of-origin effects on product image Physical, mandatory, and cultural requirements for product adaptation The need to view all attributes of a product in order to overcome resistance to acceptance

12-3 Global Perspective Hong Kong – Disney Rolls the Dice Again Tokyo Disneyland – successful EuroDisney – disaster Hong Kong Disneyland – open for business Opportunities and challenges for international marketers of consumer goods and services are great and diverse Any marketing firm’s goal should be quality products and services that meet the needs and wants of consumers at an affordable price

12-4 Quality Shift to a customer’s market Increased customer knowledge The customer defines quality The cost and quality of a product –Among the most important criteria by which purchases are made Quality can be defined on two dimensions –Market-perceived quality –Performance quality Most consumers expect performance quality In many industries quality is measured by third parties –JD Power and Associates

12-5 Maintaining Quality Damage in the distribution chain –Russian chocolate Quality is essential for success in today’s competitive global market The decision to standardize or adapt a product is crucial in delivering quality

12-6 Physical or Mandatory Requirements and Adaptation Product homologation Product adaptation requirements –Legal –Economic –Political –Technological –Climate

12-7 Green Marketing and Product Development Green marketing concerns the environmental consequences of a variety of marketing activities Critical issues affecting product development –Control of the packaging component of solid waste –Consumer demand for environmentally friendly products European Commission guidelines for ecolabeling Laws to control solid waste

12-8 Products and Culture A product is the sum of the physical and psychological satisfactions it provides the user –Primary function –Psychological attributes The need for cultural adaptation is often necessary, affected by how the product conforms –Norms –Values –Behavior patterns

12-9 Innovative Products and Adaptation Determining the degree of newness as perceived by the intended market Diffusion Established patterns of consumption and behavior Foreign marketing goal –Gaining the largest number of consumers in the market ► In the shortest span of time –Probable rate of acceptance

12-10 Diffusion of Innovations Crucial elements in the diffusion of new ideas –An innovation –Which is communicated through certain channels –Over time –Among the members of a social system The element of time Variables affecting the rate of diffusion of an object –Degree of perceived newness –Perceived attributes of the innovation –Method used to communicate the idea

12-11 Five Characteristics of an Innovation Relative advantage Compatibility Complexity Trialability Observability

12-12 Production of Innovations Inventiveness of companies and countries Expenditures Japanese solutions –American-style education programs –American design centers New ideas come from a variety of sources –Countries, –Acquisitions –Global collaborations

12-13 Analyzing Product Components for Adaptation Product is multidimensional Sum of its features determines the bundle of satisfactions (utilities) received by consumer Three distinct components –Core –Packaging –Support services

12-14 Product Component Model Exhibit 12.1

12-15 Core Components Product platform Design features Functional features

12-16 Packaging Component Price Quality Packages Styling Trademark Brand name

12-17 Support Services Component Deliveries Warranty Spare parts Repair and maintenance Installation Instructions Other related services

12-18 Marketing Consumer Services Globally Consumer services characteristics –Intangibility –Inseparability –Heterogeneity –Perishability A service can be marketed –As an industrial (business-to-business) –A consumer service

12-19 Services Opportunities in Global Markets Tourism Transportation Financial services Education Communications Entertainment Information Health care

12-20 Barriers to Entering Global Markets for Consumer Services Protectionism Restrictions on transborder data flows Protection of intellectual property Cultural barriers and adaptation

12-21 Brands in International Markets A global brand is the worldwide use of a name, term, sign, symbol, design, or combination –Intended to identify goods or services of one seller –To differentiate them from those of competitors Importance is unquestionable Most valuable company resource

12-22 Top Twenty Brands Exhibit 12.2

12-23 Global Brands The Internet and other technologies accelerate the pace of the globalization of brands Ideally gives the company a uniform worldwide image Balance Ability to translate

12-24 National Brands Acquiring national brand names Using global brand names Nationalistic pride impact on brands Use global brands where possible and national brands where necessary

12-25 Country-of-Origin effect –Influences that the country of manufacture, assembly, or design ► Has on a consumer’s positive or negative perception of a product Consumers have broad but somewhat vague stereotypes about specific countries and specific product categories that they judge “best” Ethnocentrism Country-of-Origin Effects and Global Brands

12-26 Countries are stereotyped –On the basis of whether they are industrialized –In the process of industrializing –In process of developing Technical products –Perception of one manufactured in a less-developed or newly industrializing country less positive Fads often surround product from particular countries or regions Country-of-Origin Effects and Global Brands

12-27 Private Brands Growing as challengers to manufacturers’ brands Private labels –Provide the retailer with high margins –Receive preferential shelf space and in-store promotion –Are quality products at low prices Manufacturers brands must be competitively priced and provide real consumer value

12-28 Summary The growing globalization of markets must be balanced with the continuing need to assess all markets for those differences that might require adaptation for successful acceptance In spite of the forces of homogenization, consumers also see the world of global symbols, company images, and product choice through the lens of their own local culture and its stage of development and market sophistication

12-29 Summary Each product must be viewed in light of how it is perceived by each culture with which it comes in contact Analyzing a product as an innovation and using the Product Component Model may provide the marketer with important leads for adaptation