Chapter 10

Product and
Brand Decisions

10-1
Introduction: What to Sell ?
The international marketer needs to
determine what the market offering should
be in a foreign market :

Defining the product offering

Products versus Services/Rights

10-2
The Product Offering
Potential Product
Augmented Product
Expected Product
Generic Product
Core Benefit

Source : Adapted from: P. Kotler, Marketing Management, 1994

10-3
Basic Product Concepts
A product is a good, service, or idea
Tangible Attributes
Intangible Attributes
Product classification
Consumer goods
Industrial goods

10-4
Product Warranty and Service
Product Warranty :
Should a company keep the same warranty for all
markets or adapt it country by country ?
Should the firm use warranty as a competitive weapon ?
Product Service :
Service capability to accredit the firm with foreign
suppliers
high investment in facilities, staffing, training, and
distribution network

10-5
Goods versus Services/Rights
Instead of marketing a product abroad, the
company may also sell rights or services in
a foreign market:

- rights : brand / trademark / patent

- services : management skills (hotel chain)

10-6
Sales of Rights - Examples

Franchising business :

- Coca-Cola : use of its name to licensed

bottlers around the world.
- Pilkington: licensing of the process of
float glass.
- Other : Manpower, McDonald's, etc.

10-7
Sales of Rights - Examples
Management Contracts :

- Sheraton Hotels :
Management contract for hotels abroad
Sale of consulting and management contracts
Little equity invested : Sheraton manages almost 400
hotels worldwide but has equity in only 40 of them.
Advantages : minimum risk & strong competitive
position.

10-8
Sales of Rights - Examples
Turn-Key operations :

The firm is selling technical and engineering skills.

The firm is training foreign nationals to run a plant.
The firm is supplying material and equipment.

10-9
International Product Strategies

Straight Product Product

Extension Adaptation Innovation

The firm adopts the The company caters The firm designs a
same policy used in to the needs and wants product from scratch
its home market. of its foreign customers. for foreign customers.

Source: W.J. Keegan, Multinational Product Planning: Strategic Alternatives,

Journal of Marketing, 33, 1969, pp.58-62

10-10
Extend, Adapt, Create: Strategic
Alternatives in Global Marketing
Extension offering product virtually
unchanged in markets outside of home
country
Adaptation changing elements of design,
function, and packaging according to needs
of different country markets
Creation developing new products for the
world market

10-11
Standardization versus
Customization
Although the products sold abroad
generally are not identical to their domestic
counterparts, there is always a core of
expertise that the firm can carry abroad.

Principle " All Business is local."

10-17
Reasons for Product Standardization
Economies of scale : Production, R&D, Marketing
Common Consumer
needs : Drinking patterns, car sizes

Consumer Mobility : Customer retention & Loyalty

American Express, Kodak, ...

Home Country Image : US jeans, French Perfumes,...

Impact of technology : B to B Markets

10-18
Convergence in Drinking Patterns

10-19
Convergence of Car Sizes

10-20
Reasons for Product Adaptation
Climate: US Air-conditioning equipment
Skill level of users : Computers in Africa
National consumer habits :
- front-loading/top-loading washing machines
- car models : four-door (F) - two-door (Germ.)
Government regulations on products, packaging,
and labels.
Company history and operations (subsidiaries)

10-21
Example:
European Toothpaste Market
Market Size in France:
FF 1,8 Bill. (1996) Competitors in France :
Unilever 33%
Trends:
Multiple number of Colgate 22,5%
toothpastes/family Henkel 19%
Therapeutic / Smithkline B. 12%
sophisticated products P&G 0%
Cosmetic products
Volume
Price

10-22
Drivers of Product Adaptation
Example COLGATE Toothpaste
(1) Differences in National Regulations
Triclosan forbidden in Germany
High fluorine content in local water (UK)
Obligation to sell high fluorine content
toothpaste in pharmacy (France)
Stringent clinical tests in France

10-23
Drivers of Product Adaptation
Example COLGATE Toothpaste
Packaging:
Ecological Stand-up tubes in Germany
Failure in France (Carrefour)
Distribution:
Role of pharmacy in Italy and Spain
Role of drugstore in UK
Communication:
Medical in Italy and Spain (recommended by dentist)
Non-medical in UK

10-24
managing
marketing International Marketing Mix Decisions
Strategic Alternatives in international and
global marketing mix decisions. Managerial issues

What aspects of Product can be modified?

Attributes
from global headquarters

Brand (Global vs. Local)

Packaging
Quality
Services (after-sale services, support)
Positioning

2005 Dr.Gerard Ryan, Universitat Rovira i Virgili. 10-25

managing
marketing International Marketing Mix Decisions
Strategic Alternatives in international and
global marketing mix decisions. Managerial issues

Advantages and Disadvantages of International Brands

Strong customer recognition/reassurance

from global headquarters
Economies of scale and scope
Leverages power with retailers
Consolidates efforts across countries
Potential for extension

Not locally responsive

Demotivating for country managers
Difficult to manage
Need to maintain consistency across
countries and product-lines
2005 Dr.Gerard Ryan, Universitat Rovira i Virgili. 10-26
Product Types
Buyer orientation
Amount of effort expended on purchase
Convenience
Preference
Shopping
Specialty

10-27
Brands
Bundle of images and experiences in the
customers mind
A promise made by a particular company
about a particular product
A quality certification
Differentiation between competing products
The sum of impressions about a brand is the
Brand Image

10-28
Brands

10-29
Brands
The added value that accrues to a product as
a result of investments in the marketing of
the brand
An asset that represents the value created by
the relationship between the brand and
customer over time

10-30
Brands

We have to shift to high value-

added products, and to do that we
need to improve our brand.
- Noboru Fujimoto, President Sharp Electronics
Corporation

10-31
Local Products and Brands
Brands that have achieved success in a
single national market
Represent the lifeblood of domestic
companies
Entrenched local products/brands can be a
significant competitive hurdle to global
companies

10-32
International Products and Brands

Offered in several markets in a particular

region
Euro-brands

10-33
Naming your product

Alu-Fanny: French Foil wrap Atum Bom: Portuguese tuna

Kack: Danish sweets

Crapsy Fruit: French cereal

Mukk: Italian yogurt

Kum Onit: German pencil sharpeners

Pocari Sweat: Japanese sport drink

Plopp: Scandinavian chocolate

Poo: Argentine curry powder

Pschitt: French lemonade

10-34
Naming your product
Phonetic Problems with Brand Names
- Bardok (Sounds like Brothel in Russian)
- Misair (Sounds like Misery in French)
Translations
Intent Translation
- Stepping Stone - Stumbling Block
- Car Wash - Car Enema
- Highly Rated - Over Rated
Symbols
- Owl - Bad Luck in India
Other Countries make mistakes too
- Zit (Chocolate from Germany)
- Koff (Beer)

10-35
Global Products and Brands
Global products meet the wants and needs
of a global market and is offered in all
world regions
Global brands have the same name and
similar image and positioning throughout
the world

10-36
Global Products and Brands
A multinational has operations in different countries.
A global company views the world as a single
country. We know Argentina and France are
different, but we treat them the same. We sell them
the same products, we use the same production
methods, we have the same corporate policies. We
even use the same advertisingin a different
language, of course.
- Alfred Zeien Former Gillette CEO

10-37
Family Brands

Family Brand
Volkswagen

USA Europe Mexico

"Rabbit" "Golf" "Caribe"

-> lightness -> prestige -> avoid negative
connotation
10-38
Private Label Branding
Large retailers are moving increasingly into
their own brand, i. e. Marks &Spencer.
They try to obtain greater control and
higher margins.
Private branding can be an effective way to
break into foreign markets.
(Asian TV manufacturers)

10-39
European Consumer Preferences
Regarding Private Labels
Product Category Fr. All. It. Es. GB
Edible Oils 19 20 10 11 27
Pasta 16 24 12 12 24
Yoghurt 14 14 6 6 12
Frozen Vegetables 5 11 5 6 34
Fresh Pasta 3 7 4 3 5
Breakfast Cereals 4 8 2 2 18
Instant Soups 3 9 0 2 14
Icecream 6 10 4 2 21
Whiskey 3 1 2 1 4
Smoked Salmon 3 4 1 1 2
Champagne 3 4 2 3 6
Private labels per product category (% of sales in qunqtities in hypermarkets and supermarkets)
Source: Secodip International, 1998 10-40
European Households Judging
Credibility of Private Labels
Criteria Europe Germ. Spain France Italy UK
More expensive 3 3 2 3 3 1
Same 19 12 16 26 29 13
Less expensive 78 85 83 72 68 86
Higher quality 5 2 6 3 7 4
Same 78 90 73 78 71 77
Lower quality 17 8 21 19 22 18
More confidence 6 3 7 4 10 5
Same 74 84 71 73 66 74
Less confidence 21 12 22 23 24 21
Private labels per product category (% of sales in qunqtities in hypermarkets and supermarkets)
Source: Secodip International, 1998

10-41
Country of Origin effect
Country-of-Origin (COO) Influences on Consumers
For many products, the made in label matters a
great deal to consumers.
Key research findings of
COO effects:
COO effects are not stable
Consumers prefer domestic
products over imports
Both the country of design
and the country of
manufacturing/assembly play
a role in consumer attraction.

10-42
Branding Strategies
Combination or tiered branding: allows marketers
to leverage a companys reputation while
developing a distinctive identity for a line of
products
Sony Walkman
Co-branding features two or more company or
product brands
NutraSweet and Coca-Cola
Intel Inside

10-43
Branding Strategies
Brand acts as an umbrella for new products
Example: The Virgin Group
Virgin Entertainment: Virgin Mega-stores and MGM Cinemas
Virgin Trading: Virgin Cola and Virgin Vodka
Virgin Radio
Virgin Media Group: Virgin Publishing, Virgin Television,
Virgin Net
Virgin Hotels
Virgin Travel Group: Virgin Atlantic Airways, Virgin Holidays

10-44
Global Brand Development
Questions to ask when management seeks
to build a global brand:
Will anticipated scale economies materialize?
How difficult will it be to develop a global
brand team?
Can a single brand be imposed on all markets
successfully?

10-45
Global Brand Development
Global Brand Leadership
Using organizational structures, processes, and
cultures to allocate brand-building resources
globally, to create global synergies, and to
develop a global brand strategy that coordinates
and leverages country brand strategies

10-46
Global Brand Development
Create a compelling value proposition
Think about all elements of brand identity and
select names, marks, and symbols that have the
potential for globalization
Research the alternatives of extending a national
brand versus adopting a new brand identity
globally
Develop a company-wide communication system

10-47
Global Brand Development
Develop a consistent planning process
Assign specific responsibility for managing
branding issues
Execute brand-building strategies
Harmonize, unravel confusion, and
eliminate complexity

10-48
Local versus Global Products and
Brands: A Needs-Based Approach

Self-actualization
External/Internal
Esteem
Social

Safety

Physiological

10-49
Country of Origin as Brand Element

Perceptions about and attitudes toward

particular countries often extend to products
and brands known to originate in those
countries
Japan
Germany
France
Italy

10-50
Packaging
Consumer Packaged Goods when the
packaging is designed to protect or contain
the product during shipping
Eco-Packaging because package designers
must address environmental issues
Offers communication cues that provide
consumers with a basis for making a
purchase decision

10-51
Product Packaging and Labeling

Protection

Climate
Transport & Handling
Buyer's slow usage rate
Lack of storage facilites

Promotion Legal Constraints

Merchandising ( income level, shopping habits) Recycling of Packaging

Minimum breakage / theft
Ease of handling
Multilingual Labels to Convey an International
Image (Zara, Hollywood Chewing Gum)
(Duales System, Eco-Emballage)
Regulations on consumer info.
(Origin, weight, ingredients)
10-52
POM brand
Pomegranate
juice used a
distinctively
shaped bottle to
gain attention on
the grocery shelf

10-54
Labeling
Provides consumers with various types of
information
Regulations differ by country regarding various
products
Health warnings on tobacco products
American Automobile Labeling Act clarifies the country
of origin, and final assembly point
European Union requires labels on all food products that
include ingredients from genetically modified crops

10-55
10-56
Labeling
As Americans become
increasingly concerned
about cholesterol, the
FDA (Food and Drug
Administration) has
responded by requiring
food manufacturers to
list trans fat (i.e., trans
fatty acids) on the
Nutrition Facts portion
of product labels,
effective 1/1/06.
10-57
10-58
Aesthetics
Global marketers must understand the
importance of visual aesthetics
Aesthetic Styles (degree of complexity
found on a label) differ around the world

10-59
Product Warranties
Express Warranty is a written guarantee that
assures the buyer is getting what they paid
for or provides a remedy in case of a
product failure
Warranties can be used as a competitive tool

10-60
New Products in Global Marketing

Pursue opportunities in competitive arenas

of global marketplace
Focus on one or only a few businesses
Active involvement from senior
management
Ability to recruit and retain best employees
Understand the importance of speed in
bringing product to market

10-61
Identifying New Product Ideas

What is a new Product?

New to those who use it or buy it
New to the organization
New to a market

10-62
The International New Product
Department
How big is the market for this product at various
prices?
What are the likely competitive moves in response
to our activity?
Can we market the product through existing
structure?
Can we source the product at a cost that will yield
an adequate profit?
Does product fit our strategic development plan

10-63
Testing New Products
When do you test a new product?
Whenever a product interacts with human,
mechanical, or chemical elements because there
is the potential for a surprising and unexpected
incompatibility
Test could simply be observing the product
being used within the market

10-64
Looking Ahead
Chapter 11 Pricing decisions

10-65