1. Lecture by Ewa Baranowska-Prokop, Ph.D.
Product decisions

2. Learning objectives
Discuss the influences that lead a firm to standardize or adapt its products
Explore how international service strategies are developed
Distinguish between the product life cycle and the international product life cycle
Discuss the challenge of developing new products for foreign markets

3. Learning objectives (2)
Explain and illustrate the alternatives in the product communication mix
Define and explain the different branding alternatives
Discuss brand piracy and the possible anti-counterfeiting strategies
Explain what is meant by a ‘green’ product
Discuss alternative environmental management strategies

4. Figure 1 Environmental factors influencing the balance between standardization and adaptation

5. Figure 2 Standardization and adaptation of the international marketing mix

6. Figure 3 Analysis of a company’s standardization potential
Source: adapted from Kreutzer, Reproduced with kind permission from Emerald Group Publishing Ltd.

7. Figure 14.1 The three levels of a product
Low
Delivery, installation, guarantees,
after-sales service,
spare parts
Support
services
Ability to
standardize
product
elements
brand, quality, design, packaging, price,
country of origin, staff behaviour, size
Product
attributes
functional features, performance,
perceived value, image,
technology
Core product
benefits
High

8. Figure 14.2 Scale of elemental dominance

9. Characteristics of services
Intangibility
Perishability
Heterogeneity
Fundamentally, there are four ways of using information to create business value
(Marchand, 1999):
1 Managing risks. In the twentieth century the evolution of risk management stimulated the growth of functions and professions such as finance, accounting, auditing and controlling. These information-intensive functions tend to be major consumers of IT resources and people’s time.
2 Reducing costs. Here the focus is on using information as efficiently as possible to achieve the outputs required from business processes and transactions. This process view of information management is closely linked with the re-engineering and continuous improvement movements of the 1990s. The common elements are focused on eliminating unnecessary and wasteful steps and activities, especially paperwork and information movements, and then simplifying and, if possible, automating the remaining processes.
3 Offering products and services. Here the focus is on knowing one’s customers, and sharing information with partners and suppliers to enhance customer satisfaction. Many service and manufacturing companies focus on building relationships with customers and on demand management as ways of using information. Such strategies have led companies to invest in point-of-sale systems, account management, customer profiling and service management systems.
4 Inventing new products. Finally, companies can use information to innovate – to invent new products, provide different services and use emerging technologies. Companies such as Intel and Microsoft are learning to operate in ‘continuous discovery mode’, inventing new products more quickly and using market intelligence to retain a competitive edge. Here, information management is about mobilizing people and collaborative work processes to share information and promote discovery throughout the company.
Inseparability

10. Three categories of service
People
processing
Possession
processing
Information-
based
services

11. Categories of supplementary service
Information
Consultation/advice
Order taking
Hospitality
Safekeeping
Exceptions
Billing
Payment

12. Differences in the B2B market (versus consumer markets)
Fewer and larger buyers
Derived, fluctuating, and relatively inelastic demand
Many participants in buying process
Professional buyers
Closer relationships
Absence of intermediaries
Technological links

13. What is this? Product life cycle
The _____ states products or brands follow a sequence of stages including introduction, growth, maturity, and sales decline.
There follows an explanation of some key terms:
Coordinate its marketing activities: coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness.
Find global customer needs: this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries.
Satisfy global customers: adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions.
Being better than the competition: assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image.
Product life cycle

14. Figure 14.3 The product life cycle

15. Figure 14.4 Comparisons of PLCs

16. International product life cycles
Describes diffusion of an innovation across national boundaries
Demand grows first in innovating country and is then exported
Eventually demand grows in LDCs

17. Figure 14.6 IPLC curves

18. Figure 14.7 PLCs of different countries for a specific product

19. Japanese manufacturers compete on time to market
Early integration of customers and suppliers
Multiskilled project teams
Interlinking of R&D, production and marketing
Total quality management
Parallel planning of new products and required production facilities
Outsourcing

20. Figure 14.8 Compression of R&D cycles and PLCs

21. Figure 14.9 Development and test periods for suppliers to the car industry

22. Figure 14.10 Different degrees of product newness
New to
International
markets
Increasing
risk
High
Newness to
International
Market
Low
New to
home
country
Reposition
Existing
products
New to
company
Line
extensions/
improvements
Cost
reductions
Low Newness to Company High

23. Figure 14.11 Product/ communication mode
Standard
Adapt
New
Promotion
Standard
Straight
extension
Product
adaptation
Product
invention
Adapt
Promotion
adaptation
Dual
adaptation
Source: Source: adapted from Keegan, 1995.

24. Motorola’s promotion adaption for Korean market

25. Kellogg’s dual adaption for Indian market

26. What is this? Country of origin effects
Which term refers to the effect on quality perceptions caused by knowledge of the production country location for the product?
There follows an explanation of some key terms:
Coordinate its marketing activities: coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness.
Find global customer needs: this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries.
Satisfy global customers: adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions.
Being better than the competition: assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image.
Country of origin effects

27. What is this? Brand equity
Which term refers to the premium a customer would pay for the branded product compared to an identical unbranded version of the same product?
There follows an explanation of some key terms:
Coordinate its marketing activities: coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness.
Find global customer needs: this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries.
Satisfy global customers: adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions.
Being better than the competition: assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image.
Brand equity

28. Brand equity’s assets and liabilities
Brand loyalty
Brand awareness
Perceived quality
Brand associations
Fundamentally, there are four ways of using information to create business value
(Marchand, 1999):
1 Managing risks. In the twentieth century the evolution of risk management stimulated the growth of functions and professions such as finance, accounting, auditing and controlling. These information-intensive functions tend to be major consumers of IT resources and people’s time.
2 Reducing costs. Here the focus is on using information as efficiently as possible to achieve the outputs required from business processes and transactions. This process view of information management is closely linked with the re-engineering and continuous improvement movements of the 1990s. The common elements are focused on eliminating unnecessary and wasteful steps and activities, especially paperwork and information movements, and then simplifying and, if possible, automating the remaining processes.
3 Offering products and services. Here the focus is on knowing one’s customers, and sharing information with partners and suppliers to enhance customer satisfaction. Many service and manufacturing companies focus on building relationships with customers and on demand management as ways of using information. Such strategies have led companies to invest in point-of-sale systems, account management, customer profiling and service management systems.
4 Inventing new products. Finally, companies can use information to innovate – to invent new products, provide different services and use emerging technologies. Companies such as Intel and Microsoft are learning to operate in ‘continuous discovery mode’, inventing new products more quickly and using market intelligence to retain a competitive edge. Here, information management is about mobilizing people and collaborative work processes to share information and promote discovery throughout the company.
Other proprietary brand assets

29. The functions of branding
To distinguish a company’s offering and differentiate one particular product from its competitors
To create identification and brand awareness
To guarantee a certain level of quality and satisfaction
To help with promotion of the product

30. Figure 14.12 Branding decisions
Source: Source: adapted from Onkvisit and Shaw, 1993, p. 534.

31. Figure 14.13 Three brand options
Private branding
100% externalizing
Co-branding
Brand alliance
Manufacturer’s
brand
100% internalizing

32. What is this? Private label
Which term refers to a retailer’s own brand (like Marks & Spencer’s)?
There follows an explanation of some key terms:
Coordinate its marketing activities: coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness.
Find global customer needs: this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries.
Satisfy global customers: adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions.
Being better than the competition: assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image.
Private label

33. Perspectives on private labels
Manufacturer perspective
No promotional expenses
Provides access to shelf space
Requires competing on price
Loss of control
May cannibalise other manufacturer brands
Retailer perspective
Better profit margins
Strengthens retailer image

34. What is this? Co-branding
_____ describes a form of cooperation between two or more brands, which can create synergies that are valuable for both participants, above the value they would expect to generate on their own.
There follows an explanation of some key terms:
Coordinate its marketing activities: coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness.
Find global customer needs: this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries.
Satisfy global customers: adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions.
Being better than the competition: assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image.
Co-branding

35. Shell and Ferrari co-branding

36. Requirements for ingredient suppliers
Supplier should offer a product with substantial advantages over existing products
Ingredient should be critical to success of final product

37. What is this?
_____ branding involves sight, sound, smell, touch, and taste.
There follows an explanation of some key terms:
Coordinate its marketing activities: coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness.
Find global customer needs: this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries.
Satisfy global customers: adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions.
Being better than the competition: assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image.
Sensory

38. What is this? Celebrity branding
When a famous person uses his or her status in society to promote a product, it is called _____.
There follows an explanation of some key terms:
Coordinate its marketing activities: coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness.
Find global customer needs: this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries.
Satisfy global customers: adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions.
Being better than the competition: assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image.
Celebrity branding

39. Determinants of value of celebrity license
Celebrity Q score
Product being promoted
Quality of licensed product
Amount of design control
Fundamentally, there are four ways of using information to create business value
(Marchand, 1999):
1 Managing risks. In the twentieth century the evolution of risk management stimulated the growth of functions and professions such as finance, accounting, auditing and controlling. These information-intensive functions tend to be major consumers of IT resources and people’s time.
2 Reducing costs. Here the focus is on using information as efficiently as possible to achieve the outputs required from business processes and transactions. This process view of information management is closely linked with the re-engineering and continuous improvement movements of the 1990s. The common elements are focused on eliminating unnecessary and wasteful steps and activities, especially paperwork and information movements, and then simplifying and, if possible, automating the remaining processes.
3 Offering products and services. Here the focus is on knowing one’s customers, and sharing information with partners and suppliers to enhance customer satisfaction. Many service and manufacturing companies focus on building relationships with customers and on demand management as ways of using information. Such strategies have led companies to invest in point-of-sale systems, account management, customer profiling and service management systems.
4 Inventing new products. Finally, companies can use information to innovate – to invent new products, provide different services and use emerging technologies. Companies such as Intel and Microsoft are learning to operate in ‘continuous discovery mode’, inventing new products more quickly and using market intelligence to retain a competitive edge. Here, information management is about mobilizing people and collaborative work processes to share information and promote discovery throughout the company.

40. Steps involved with international celebrity licensing
Identify the rights involved
Negotiate the terms and scope of the license
Determine the payment and other terms of the license

41. What is this? Green marketing
What term refers to the integration of business practices and products that are friendly to the environment while also meeting the needs of the consumers?
There follows an explanation of some key terms:
Coordinate its marketing activities: coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness.
Find global customer needs: this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries.
Satisfy global customers: adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions.
Being better than the competition: assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image.
Green marketing

42. Figure 14.16 Types of environmental strategic posture
Value creation approach
Benefit
enhancement
Cost reduction
Change
orientation
Proactive
Green product
innovation
Pollution prevention
Beyond compliance
Accommo-
dative
Green product
differentiation
Pollution prevention
Compliance
Source:Source: adapted from Starik et al., 1996, p. 17.

43. Benefits of strategic alliances with environmental groups
Increased consumer confidence in green products and claims
Access to environmental information
Marketer access to new markets
Positive publicity and reduction of criticism
Education for consumers about key environmental issues

44. Swiss Army: A case study (2)
Are there any problems for channels of distribution associated with the prospect of Swiss Army stores?
How might Swiss Army use ‘non-traditional advertising’ to promote its brands and new products?

45. For discussion (1)
How would you distinguish between services and products? What are the main implications of this difference for the global marketing of services?
What implications does the product life cycle theory have for international product development strategy?

46. For discussion (2)
To what degree should international markets be offered standardized service and warranty policies that do not differ significantly from market to market?
Why is the international product policy likely to be given higher priority in most firms than other elements of the global marketing mix?
Describe briefly the IPLC theory and its marketing implications.

47. For discussion (3)
What are the requirements that must be met so that a commodity can effectively be transformed into a branded product?
Discuss the factors that need to be taken into account when making packaging decisions for international product lines.
When is it appropriate to use multiple brands in (a) a single market and (b) several markets?

48. For discussion (4)
What is the importance of ‘country of origin’ in international product marketing?
What are the distinguishing characteristics of services? Explain why these characteristics make it difficult to sell services in foreign markets.
Identify the major barriers to developing international brands.

49. For discussion (5)
Discuss the decision to add or drop products to or from the product line in international markets.
Why should customer-service levels differ internationally? Is it, for example, ethical to offer a lower customer-service level in developing countries than in industrialized countries?
What are the characteristics of a good international brand name?

50. Swiss Army: A case study (1)
Which factors are attributable to the strong global brand equity of Swiss Army?
What are the main motives behind the product line extension from Swiss Army Knives into other product areas?
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