0. Products and Services for Consumers
Chapter 12 and Chapter 13
Products and Services for Consumers
McGraw-Hill/Irwin
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.

1. Chapter Learning Objectives
1. The importance of offering a product suitable for the intended market
2. The relationship between product acceptance and the market into which it is introduced
3. The importance of quality and how quality is defined

2. Chapter Learning Objectives
4. Country-of-origin effects on product image
5. Physical, mandatory, and cultural requirements for product adaptation
6. The need to view all attributes of a product in order to overcome resistance to acceptance

3. Global Perspective Disney’s experiences internationally Tokyo Disney
Euro Disney
Hong Kong Disney (2006)

4. What Is a Product ? Product: A bundle of attributes The Total Product
Tangible attributes: materials, size, weight, design, packaging, performance, comfort
Intangibles: brand image, styling, other benefits (installation, delivery, credit, warranty, after-sale service, return policy)

5. Quality Defined in 2 ways: 1. “Market-perceived” quality
How does the market (consumer) perceive the quality of the product or service
2. “Performance” quality
What is the overall “performance” of the product or service (firm’s perspective)
Tends to be focused on attributes or features or meeting certain “performance” criteria

6. Quality (Cont.) Physical or Mandatory Requirements and Adaptation
Many countries require “homologation”
Requires changes to be made to products based on local product and service standards
Mandatory adaptation vs. cultural adaptation
Many believe adaptation occurs most often based upon local laws, or policies that are economic, political or environmental
Green Marketing and Product Development
Quality is associated with customer satisfaction
Customer satisfaction indexes developed are now being used to measure satisfaction across a wide variety of consumer products and services

7. An International Standard of Quality (Ch 13)
ISO 9000 Certification:
An International Standard of Quality (Ch 13)
ISO 9000s, a series of five international industrial standards (ISO 9000–9004) originally designed by the International Organization for Standardization in Geneva to meet the need for product quality assurances in purchasing agreements
ISO 9000 concerns the registration and certification of a manufacturer’s quality system
It is a certification of the existence of a quality control system a company has in place to ensure it can meet published quality standards
ISO 9000 standards do not apply to specific products
It is a certification of the production process only, and does not guarantee that a manufacturer produces a “quality” product or service.
The series describes three quality system models, defines quality concepts, and gives guidelines for using international standards in quality system

8. Products and Culture
A product is more than a physical item: It is a bundle of satisfactions (or utilities) that the buyer receives
Facets of products include its form, taste, color, odor, and texture; how it functions in use; the package; the label; the warranty; manufacturer’s and retailer’s servicing; the confidence or prestige enjoyed by the brand; the manufacturer’s reputation;
The adoption of some products by consumers can be affected as much by how the product concept conforms with norms, values, and behavior patterns
Thus, many facets of products are influenced by culture, which markets must pay attention to

9. Products and Culture ▶ Degree of Perceived Newness
 Cultural Influences
 Innovative Products and Adaptation
 Three Variables Affecting Diffusion of Innovations
▶ Degree of Perceived Newness
▶ Perceives attributes of Innovation
▶ Communication Methods
 Characteristics of Innovations
 Product of Innovation
12-3
Irwin/McGraw-Hill

10. Innovative Products and Adaptation
Product Diffusion
1. Defined:
“process by which innovation spreads”
2. “Crucial elements” of diffusion of new ideas are (Everett Rogers):
1) an innovation; 2) which is communicated thru certain channels 3) over time 4) among members of a social system

11. Degree of Newness Congruent Innovations Continuous Innovation
12-4
Continuous Innovation
Dynamically Continuous Innovation
Discontinuous Innovation
Irwin/McGraw-Hill

12. The 5 Characteristics That Affect the “Rate of Acceptance”
Relative Advantage (marginal value of new vs. old)
Compatibility (to values, norms)
Complexity (more complex, more time)
Trialability (risk associated with product use)
Observability (how easily benefits are communicated)
12-5
Irwin/McGraw-Hill

13. Product Component Model
SUPPORT SERVICES COMPONENT
PACKAGING
COMPONENT
 Repair and maintenance
12-6
 Deliveries
CORE
COMPONENT
 Trademark
 Price
 Product platform
 Design features
 Functional features
 Legal
 Installation
 Warranty
 Quality
 Brand name
 Package
 Instructions
 Spare parts
 Legal
 Styling
 Other related
services
 Legal
Irwin/McGraw-Hill

14. Product Component Analysis for Adaptation
● Core Component
▶ Physical Product ▶ Features
▶ Design
● Packaging Component
▶ Style ▶ Brand Name
▶ Packaging ▶ Quality
▶ Labeling ▶ Price
▶ Trademarks
● Support Services Component
▶ Repair ▶ Warranties
▶ Maintenance ▶ Deliveries
▶ Instructions ▶ Spare Parts
▶ Installation
12-7
Irwin/McGraw-Hill

15. Managing a Global Product Line
Exploiting Product Life Cycles
Possible Product Life Cycle for a Product in Different Countries
Time
Introduction Growth Maturity Saturation Decline
Unit Sales
Country A
Country B
Country C
Country D
Home
Country

16. Marketing Consumer Services Globally
Advice regarding adapting products for international consumer markets also applies to adapting services or intangible products
However, many consumer services are distinguished by four unique characteristics:
intangibility,
inseparability,
heterogeneity, and
perishability
There are several services opportunities in global markets from travel and tourism, TV, movies, to financial services

17. Top Consumer Services Exports -Service Opportunities in Global Markets
Tourism Telecommunications
Transportation Entertainment
Financial Services 7. Information
Education Health Care
12-9
Irwin/McGraw-Hill

18. Four Barriers That Face Consumer Services Marketers
1. Protectionism
2. Restrictions on trans-border data flows
Transferring personal data on consumers over borders (income, spending preferences) conflict with rights to privacy.
Protection of intellectual property
Cultural Barriers and Adaptation
Foreign companies policies or “ways of conducting business” may be conflicting with host country values
12-10
Irwin/McGraw-Hill

19. Brands in International Markets
A global brand is defined as the worldwide use of a name, term, sign, symbol (visual and/or auditory), design, or combination thereof intended to identify goods or services of one seller and to differentiate them from those of competitors
A successful brand is the most valuable resource of a company
Brand image is at the very core of business identity and strategy
Global brands such as Kodak, Sony, Coca-Cola, McDonald’s, Toyota, and Marlboro play an important role in that process
Perceived brand “globalness” leads to increases in sales

21. Insert Photo of two cars

22. Branding Strategies 1. Global Brands 2. National Brands
Uniform worldwide
2. National Brands
Country specific
3. Private Brands
Note: Country-of-origin effect can create positive or negative impact on consumers’ perceptions

23. Country-of-Origin Effect and Global Brands
Brands are used as external cues to taste, design, performance, quality, value, and prestige
Many factors affect brand image, but one factor of great concern is the country-of-origin effect on the market’s perception of the product
Country-of-origin effect (COE) can be defined as any influence that the country of manufacture, assembly, or design has on a consumer’s positive or negative perception of a product
When the customer becomes aware of the country of origin, there is the possibility that the place of manufacture will affect product or brand image
The country, the type of product, and the image of the company and its brands all influence whether the country of origin will engender a positive or negative reaction

24. Global Warranty and Service Policies
Product Warranties
Global Product Service

25. Global Product Strategies
International Product Decisions
Industrial and Consumer Product Elements
Features
Branding
Packaging
Warranty
Service
Quality
Industrial and Consumer Service Elements
Service Design
Service Name
Delivery Systems
Locations
Quality Levels
Generic International Product Strategies
Managerial Issues
Product Line Decisions
Product Life Cycles
Standardized Products
Customized Products
Customization
Barriers to
Standardization

26. The View from Toyota
Our global strategy used to center on “world cars,” which we would modify slightly to accommodate demand in different markets. Today our focus is shifting to models that we develop and manufacture especially for selected regional markets.

27. The View from Honda
“We are the most international of the Japanese companies. At the moment we are the most diversified, and we will be more diversified in the future. Still, I think it would be very hard to build a one-type world car. In the end, I don’t think it would be very efficient.”
---Nobuhiko Kawamoto
President and CEO, Honda Motor Company

29. Ch 13--Trade Shows: A Crucial Part of Business-to-Business Marketing
Trade shows serve as the most important vehicles for selling products, reaching prospective customers, contacting and evaluating potential agents and distributors, and marketing in most countries
Trade shows serve a much more important role in other countries where most prospects are found
European trade shows attract high-level decision makers who are there to buy products
Trade shows provide the facilities for a manufacturer to exhibit and demonstrate products to potential users and to view competitors’ products
Trade shows create an opportunity to create sales and establish relationships with agents, distributors, franchisees, and suppliers that can lead to more-permanent distribution channels in foreign markets

31. Relationship Marketing in Business-to-Business Contexts
Building long-term relationships with customers is a viable strategy for business-to-business marketing
The objective of relationship marketing is to make the relationship an important attribute of the transaction, thus differentiating oneself from competitor
It shifts the focus away from price to service and long-term benefits
The reward is loyal customers that translate into substantial long-term profits
Focusing on long-term relationship building will be especially important in most international markets where culture dictates stronger ties between people and companies