1. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-1 12 Products for Consumers Chapter

2. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-2 Chapter Learning Objectives The importance of analysing the product components Physical, mandatory, and cultural requirements for product adaptation The relationship between product acceptance and the market into which it is introduced The need to view all attributes of a product in order to overcome resistance to acceptance The special issues in global marketing for services

3. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-3 Global Perspective Hong Kong – Disney Rolls the Dice Again Tokyo Disneyland – successful EuroDisney – disaster Hong Kong Disneyland – open for business The opportunities and challenges for international marketers of consumer goods and services today has never been greater or more diverse. –Market offerings –Business-to-consumer marketing Quality products and services that meet the needs and wants of consumers at an affordable price should be the goal of any marketing firm.

4. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-4 What is a Product? A mixture of tangible and intangible attributes that provide a benefit to consumers. Can be broken into three components: –Core component –Actual component –Supporting services component Firm must determine what need the product fulfills, what benefit and satisfaction it provides to the user and if they have a competitive advantage.

5. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-5 Product Component Model

6. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-6 Product Strategies Three stages of complexity: –Product extension –Product adaptation –Product invention As competition for world markets intensifies and market preferences become more global, selling what is produced for the domestic market in the same manner as at home becomes less effective.

7. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-7 Product Adaptation Domains

8. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 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 with: –Norms –Values –Behaviour patterns The extent of product adaptation depends on cultural differences in product use and perception between the market the product was originally developed for and the new market.

9. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-9 Product Innovation and Diffusion of Innovation Determining the degree of newness as perceived by the intended market. Knowledge regarding diffusion of innovation is helpful in developing a successful product strategy. Effect on established patterns of consumption and behaviour. Foreign marketing goal: gaining the largest number of consumers in the market in the shortest span of time. –Probable rate of acceptance Any idea perceived as new by a group of people is an innovation.

10. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 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: –The degree of perceived newness –The perceived attributes of the innovation –The method used to communicate the idea

11. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-11 Five Characteristics of an Innovation 1.Relative advantage 2.Compatibility 3.Complexity 4.Trialability 5.Observability Perception of product characteristics by the potential adopter, not the marketer, is crucial to evaluation.

12. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-12 Country and Culture and Innovations Inventiveness of companies and countries Expenditures Japanese solutions –American-style education programs –American design centres New ideas come from a growing variety of sources, countries, acquisitions, and even global collaborations. Influence of culture on adoption of innovations can be studied using Hofstede’s dimensions of: –Power distance –Uncertainty avoidance –Individualism/collectivism –Masculinity/femininity

13. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-13 Brands in International Markets Very important Most valuable resource a company has Brand image is at core of business identity and strategy A global brand is defined as the worldwide use of a name, term, sign, symbol, design, or combination thereof intended to identify goods or services of one seller and to differentiate them from those of competitors.

14. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-14 Top Twenty Brands Rank 2005/2004 2005 Brand Value (millions) 2004 Brand Value (millions) Change (%) Country of Ownership 1/1 Coca Cola$67,525$67, 3940%U.S. 2/2 Microsoft59,94161,732-2U.S. 3/3 IBM53,37653, 791U.S. 4/4 GE46, 99644,1117U.S. 5/5 Intel35,58833,4996U.S. 6/8 Nokia26,45224,04110Finland 7/6 Disney26,44127,113-2U.S. 8/7 McDonalds26,04125,0014U.S. 9/9 Toyota24,83722,67310Japan 10/10 Marlboro21,13922,128-4U.S.

15. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-15 Top Twenty Brands (continued) Rank 2005/20042005 Brand Value (millions) 2004 Brand Value (millions) Change (%) Country of Ownership 11/11 Mercedes- Benz $20,006$21,331-6Germany 12/13 Citi19,96719,9710U.S. 13/12 HP18,55917,6835U.S. 14/14 Am Ex18,53416,7235U.S. 15/15 Gillette17,53416,7235U.S. 16/17 BMW17,12615,8868Germany 17/16 Cisco16,59215,9484U.S. 18/44 L Vuitton16,077NA France 19/18 Honda15,78814,8746Japan 20/21 Samsung14,95612,55319S. Korea

16. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-16 Brands in International Markets (cont.) The Internet and other technologies accelerate the pace of the globalisation of brands. Global brand gives the company a uniform worldwide image. Balance benefits of a global brand against the risk of losing the benefits of an established brand. Ability to translate Nationalistic pride

17. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-17 Nestle Branding Tree

18. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-18 Country-of-Origin Effects Consumers have broad but somewhat vague stereotypes about specific countries and specific product categories that they judge “best.” Ethnocentrism Countries stereotyped on the basis of whether they are industrialised, in the process of industrialising, or developing. The more technical the product, the less positive is the perception of one manufactured in a less-developed or newly industrializing country. Foreign-made products generally preferred over domestic- made in less developed countries. 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.

19. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-19 Country-of-Origin Effects (cont.) Fads often surround product from particular countries or regions. Poor country image can be compensated for by lower prices, longer warranties or selling through high quality retailer. COE and it underlying country image operate at a direct level to affect consumer decision-making. ‘Country brand’ enhancing strategies.

20. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-20 Product–Country Match and Mismatches: Examples and Strategic Implications

21. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-21 Marketing Consumer Services Globally Consumer services characteristics: –Intangibility –Inseparability –Heterogeneity –Perishability A service can be marketed both as an industrial (business-to-business) or a consumer service.

22. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-22 Opportunities for Services in International Markets Tourism Transportation Financial services Education Telecommunications Entertainment Information Health care

23. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-23 Barriers to Entering International Markets for Consumer Services Protectionism Restrictions on transborder data flows Protection of intellectual property Cultural barriers and adaptation

24. Copyright  2009 McGraw-Hill Australia Pty Ltd PPTs t/a International Marketing by Cateora Slides prepared by Kate Mizerski, Edith Cowan University 12-24 Summary The growing internationalisation of markets provides the impetus to adopt a global mindset. Understanding that an established product in one culture may be considered an innovation in another is critical in planning and developing consumer products. Exporting products requires awareness of factors that affect diffusion of innovation and the effect of culture. Country-of-origin effects and international brands are important areas of marketing focus. Services have been showing strong positive growth as exports and pose special challenges to international marketers.