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PRODUCTS AND SERVICES

PRODUCTS AND SERVICES. Product functions across culture Standardization vs. customization; adaptation as a compromise Communication vs. product adaptations Branding Services. Review issues. Country economics Demand for quality vs. low cost Cost of labor Within country segment variations

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PRODUCTS AND SERVICES

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  1. PRODUCTS AND SERVICES • Product functions across culture • Standardization vs. customization; adaptation as a compromise • Communication vs. product adaptations • Branding • Services

  2. Review issues • Country economics • Demand for quality vs. low cost • Cost of labor • Within country segment variations • Local competitive situation • Overall competition • Competition for specific product lines • Possible competition with partners in other countries

  3. Product Need Satisfaction • Products serve different purposes in different countries; e.g., • Autos: transportation in U.S.; largely status symbol in Japan • Toothpaste: Cavity prevention in U.S.; breath freshener in Ireland • Tang: convenience, low cost beverage in U.S.; pineapple flavor as special treat in Brazil (real oranges are cheap and plentiful)

  4. Approaches to Product Introduction ●Standardization ● Adaptation ● Localization ● Customization Not suitable for the Middle East!

  5. Product Design Philosophies ETHNOCENTRIC STANDARDIZATION GEOCENTRIC ADAPTATION POLYCENTRIC CUSTOMIZATION REGIOCENTRIC

  6. Avoiding high costs of standardization, if applicable Technological intensity Reduced confusion International compatibility among product group components Faster spread of rapid life cycle products Convergence of global consumer tastes/needs Country of origin positioning Reasons for Standardization

  7. Standardization--Advantages • Benefits • Economies of scale • More resources available for development effort • Better quality • Enhanced customer preference (?) • Realistic when all cultural needs cannot be met • Global customers • Global segments

  8. Standardization--Disadvantages • Unnecessary features • Vulnerability to trade barriers • Strong local competitors

  9. Product Adaptations • Mandatory • legal requirements • infrastructure • physical requirements • “Discretionary” • local tastes • fit into cultural environment

  10. Legal Infrastructure Consumer demographics Culture Religious impact Cultural context of use Local traditions/ customs—e.g., Food usage occasions Aesthetic preferences Local usage conditions Pricing pressures/ tradeoffs Motivations for Adaptation

  11. The Reality: Continuum of “Mandatoriness” Legal requirements Completely mandatory Completely “discretionary” Manner of use Electric Voltage Product labeling Taste Optimization Style, color Performance Optimization Economic Suitability Strong Cultural Conflict

  12. Mandatory Adaptation Issues • Choices in approach to mandatory conditions--examples • Power drills with noise suppression filters • Non-public ear piercing in Japan • Distribution and promotion implications • “Arbitrary” standards (e.g., TV, DVD players) • Conflicting rules between countries—may not be possible to make product legal in all

  13. Compatibility Issues • Basic requirements • E.g., voltage, infrastructure, plugs • Compatibility • Ability to be used within a local system (e.g., frequencies, electronic protocols) • Multi-system compatibility • Product can be set to operate within several standards

  14. Physical Product vs. Communication Adaptations

  15. Global Product Lines • Historical decisions • Very difficult to change position of a product • Mergers and acquisitions • Trademark ownership across markets • Preferences • For products • For manufacturers of product types • Capacity • Product Life Cycle (PLC) and market growth • Channels

  16. Waterfall Initial introduction in selected market(s) with “trickle down” to markets of later entry Market readiness Concentration of resources Sprinkler Immediate entry into all targeted markets Preemption of early entry advantage Fewer resources available for each market Entry Timing Strategy

  17. Definitions Innovation: “An idea, practice, or product perceived to be new by the relevant individual or group.” Diffusion process: “The manner in which innovations spread through the market.”

  18. Notes on Degrees of Innovation • Newness must be considered in context of • Local market • Segment within market • The less continuous an innovation (for a given region), the more marketing is needed

  19. To Adopt or Not to Adopt: How Will Consumers Answer the Question? • Some causes of resistance to adoption • perceived risk--financial and social • self image • effort to implement and/or learn to use the product • incompatibility • inertia

  20. Types of Innovations • Fashions—preferred styles change over time; often with repetition • Fads—a product or practice gains large but temporary interest (can be revised) • Trends—the prevalence of usage or acceptance of a product or practice increases or decreases consistently over time

  21. One Diffusion Pattern--Nicely Balanced... 100% adoption orsaturation point

  22. Influences on the Speed of Diffusion • Risk to expected benefit ratio (relative advantage) • Observability • Product pricing • Trialability • Switching difficulties and learning requirements/ ease of use

  23. Pioneering Advantage • Consumer expectations are usually shaped by the first encountered brand • Order of entry vs. pioneering advantage • Positioning of existing pioneer vs. strategy of first entry

  24. Societal Conditions Conducive to Diffusion • Modernity • Homophily • Physical distance • High proportion of women in the workforce • Opinion leadership

  25. Developing New Global Products IDEA GENERATION PRELIMINARY SCREENING CONCEPT RESEARCH FOCUS GROUPS CONCEPT TESTING TEST MARKETING SALES FORECAST TARGET RESEARCH

  26. Concept Research • Focus groups: Find out very broad background for further research • Concept testing • Prototypes • Benefit package evaluations • Target research • Decision making strategies • Shopping habits • Beliefs/expectations CONCEPT RESEARCH FOCUS GROUPS CONCEPT TESTING TARGET RESEARCH

  27. Branding Choices BRANDING NO BRAND INTERNATIONAL NATIONAL/ LOCAL MANUFACTURER PRIVATE LABEL SINGLE BRAND “UMBRELLA” BRANDS MULTIPLE BRANDS

  28. Branding Choices--Notes • Combinations are possible—e.g., • Own branding plus additional sales to store branding • International brand (e.g., Coca Cola) plus local brand(s), usually sold at lower prices

  29. Branding Issues • Demand spillover • Media coverage • Internet exposure • Global customers • Scale economies • Importance of brands within country • Country of origin • Expertise • Prestige

  30. Local Market Branding Expectations • Asian consumers typically have more concern with brands • conglomerates have brands encompassing large range of goods (e.g., Mitsubishi food products)

  31. The Brand Portfolio • Brand extensions vs. • Creation of new brands • Brand ownership (brand tiers) • Brand hierarchies

  32. Word meanings Word appeal Pleasantness of associations Suitability of associations Pronouncability Pleasantness of sound Writing and pictoral appearance Trademark and name availability Access to desired name Protection against close imitations by others (e.g., Lindows) Complementarity with other product line items Growth plans—regional vs. international Brand Globalization Potential

  33. Implementation • Brand building (see promotion material) • Fade-in/fade-out • “Endorsement branding” • For implementation • For distinction of lower tier brand • Double branding

  34. Positioning a Brand • Position relative to existing brands? • Same • Generally better • Foreign image • Lower price • Special, unique benefit • Appeal across segments? • Usage occasion/need

  35. Counterfeit Products • Impact • Loss of sales • Loss of exclusivity/price pressure • Possible lack of confidence in quality • Warranty issues • Approaches • Legal • “Search and destroy”

  36. Physical Product vs. Communication Adaptations

  37. Market for older technology tends to exist in less developed countries Manufacturing of older generation technology—e.g., Pentium I computers Resale of capital equipment—e.g., DC 8 aircraft, old three part canning machines Some countries tend to be more receptive to innovation than others “Leap frogging” Going directly from old technology to the very newest, skipping intermediate step (e.g., wireless rather than wired technology) Shortening of product life cycles The International Life Cycle

  38. Country of Origin Effects • Perception of product • quality (e.g., Japan, Germany) • elegance and style (e.g., France, Italy) • Historical associations • Positioning strategies • Emphasis on origin (e.g., French wine) • De-emphasis/obfuscation of of country of origin (e.g., French beer, American products with French language labels)

  39. Services • Scope • Characteristics • Intangibility • Heterogeneity • Inseperability • Perishability • The Service-Tangible Product Continuum

  40. Country expectations Willingness to pay Quality Speed Competence of personnel Courtesy/deference Decision making authority of personnel Cost Availability of skilled personnel Control over personnel performance Overhead issues Service Issues

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