Chapter 11 Product Management and Global Brands 2013

Chapter 11 Product Management and Global Brands © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Product Variables The Core Product ◦ a product or services that is essentially the same as that of competitors. The Tangible Product ◦ a product or service that is differentiated composition, origin or tangible features from competing products. ( Brand name, Aesthetics, country of origin, positioning, quality, packaging) The Augmented Product ◦ a product or service which is serviced after the sale and carries a warrantee from the producer, producing a continuing relationship with the seller.

Standardization versus Adaptation Alternative approaches to international marketing: ◦ Sell the product as it is internationally. ◦ Modify product for different countries or regions. ◦ Design new products foreign markets. ◦ Incorporate all differences into one product and introduce it globally.

Standardization versus Adaptation FACTORS ENCOURAGING STANDARDIZATION Economies of scale in production Economies in product R&D Economies in marketing “Shrinking” of the world marketplace/economic integration Global competitions FACTORS ENCOURAGING ADAPTATION Differing use conditions Government and regulatory influences Differing consumer behavior patterns Local competition

Strategic Adaptation to Foreign Markets High Need for Adaptation Degree of Cultural Grounding Low Industrial/ Technology Intensive Nature of Product Consumer

The Market Environment Government Regulations ◦ Political and social agendas often dictate regulatory requirements. (Sweden Spray, Google China) Nontariff Barriers ◦ Product standards, testing, subsidized local products. Customer Characteristics, Expectations, and Preferences ◦ Physical size, local behaviors, tastes, attitudes, and traditions. ◦ Consumption patterns, psychosocial characteristics, and general cultural criteria.

The Market Environment Economic Development ◦ The stage of economic development affects the market size and demand characteristics. Backward innovation of the product may be required to meet local requirements. Competitive offerings ◦ Monitoring competing local products is critical in adjusting the product for competitive advantage. Climate and geography ◦ Local climatic conditions and can make products vulnerable to damage. (Kitkat in Asia, Winter wares)

Product Characteristics Product components (Oreo in China, Maharaja Mac) Branding Packaging Appearance Method of Operation or Usage Quality Service Country-of-Origin Effects

Packaging and Appearance Packaging �Protection serves three major functions: Improper handling and pilferage �Promotion Language and symbols �User convenience Packaging aesthetics- color and shape, overall size, and purchase quantity Adaptations in styling, color, size, and other appearance features play an important role in how a consumer perceives a product.

Method of Operation or Usage The product that is operable in the domestic market may not be operable in the foreign market. Electrical voltages and connectors vary around the world. English and metric standards are not comparable. Software may have to be translated into the local language.

Quality and Service Quality is essential to marketing products internationally ISO compliance may be required by buyers. Servicing products in international markets requires producers to develop local repair staffs.

Country-of-Origin Effects The origin of a product may have a strong effect on consumer perceptions and biases about foreign products. Swiss France “Mad Cow”

Company Considerations Organizational Is capabilities? it worth it? Can we afford not to do it? Can a specific return-on-investment (ROI) be attained? What about quality, price, and user perceptions? Warranties? Managerial talent?