Transcript Chapter11 - MBA Program Resources

Global Marketing
Management
A European Perspective
Product and Service Decisions
Warren J. Keegan
Bodo B. Schlegelmilch
Overview
Basic Concepts of Products and Services
Positioning of Products and Services
Product Saturation Levels in Global Marketing
Product and Service Design Considerations
Attitudes towards Country of Origin
Geographic Expansion
New Products and Services in Global Marketing
Summary
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Learning Objectives
Know the differences between services and products and
global brands
Learn several alternatives for positioning global brands
Appreciate the importance of saturation levels
Be aware of strategic alternatives for geographical
expansion
Know why development of new products are keys to
survival and global growth
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Product and Services: Important
Concepts
Product
Service
Characteristics of Services
National, International, Global Products and Services
Global Brand
Positioning
Country of Origin Effects
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Basic Concept of Products
Products can be defined as a collection of physical,
psychological and symbolic attributes that can
collectively yield satisfaction, or benefit, to a buyer or
user.
Products can also be defined by intangible attributes
Products can be classified into consumer and industrial
goods
Products can be classified by the way their are
purchased or their life-span
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Basic Concept of Services
Service can be defined as intangible benefits purchased
by customers that do not involve ownership
Characteristics:
Intangibility
Perishability
Variability
Simultaneous Production and Consumption
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Product-Service Continuum
Oil & Grease
Office Supplies
Machinery
Computer
Telecommunication Systems
Meeting or Convention Hotel
Tangible
Dominant
Product-Related
Advertising Agency
Plant janitorial and cleaning
Freight Forwarding
ManagementConsulting
University Class
Equipment-Based
Intangible
Dominant
People-Based
Source: Adopted from: G. Lynn Shostack, „Breaking Free from Product Marketing;“ Journal of Marketing 41 (April
1997): p.77
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National, International and Global
Products and Services
National products or services are offered in a single
national Market
International products or services are offered in
multinational, regional markets
Global products and services are offered in the global
market. They are international and multiregional
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Positioning of Products and Services
Attribute or Benefit
Quality/Price
Use/User
High-Tech Positioning
High-Touch Positioning
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Product Saturation Levels in Global
Markets
Many factors determine a product`s market potential
Product saturation level increases as national income per
capita increases
The presence or absence of a particular companion
product can be significant
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Product and Service Design
Considerations
Preferences
Costs
Laws and Regulations
Compatibility
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Attitude towards the Country of
Origin
Stereotyped attitudes toward foreign products and
services can favour or hinder marketing efforts
If the quality is perceived to be low
Foreign origin of the product can be disguised
Foreign identification of the product can be continued and
consumer attitudes towards the product can be changed
In some market segments foreign products have a
substantial advantage because they are foreign
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Geographic Expansion-Strategic
Alternatives
Communications
Different
Strategy 2: Product Extension,
Communications
Adaptation
Strategy 4: Dual Adaptation
Example: Greeting Cards
Example: Motorbikes
Strategy 1: Dual Expansion
Example: Applications Software
Strategy 3: Product Adaptation,
Communication
Extension
Example: Electrical products
Same
Same
Product
Different
edlich
Global Product Planning: Strategic Alternatives for Expanding into Global Markets
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Strategy 1: Product/Communication
Extension (Dual Expansion)
Company sells exactly the same product or service with
the same advertising as used in the home country
Company assumes that all markets are alike
Dual Extension does not work in all markets
Dual Extension is often used because it saves costs
Example: Campbell Soup
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Strategy 2: Product Extension,
Communications Adaptation
If the product serves different needs in various
countries, only marketing communication may have to
be adapted
Adaptation can happen by design or accident
Cheap implementation because product does not change
Example: Motorbikes
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Strategy 3: Product Adaptation,
Communication Extension
Product is adapted to the new market, but basic home
market communication strategy remains unchanged
Product is adapted to the environment and the
preferences of the consumers in the new market
Example: Mueslix
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Strategy 4: Product/Communication
Adaptation (Dual Adaptation)
Using Dual Adaptation the company must adapt the
product or service as well as the marketing
communication to the foreign market
Example: Colgate
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New Products and Services in
Global Marketing (1)
New to consumer and company ( Product or service
innovation)
New to consumer but not new to company
(Product/service or line extension)
Not new to consumer but new to company (New product
or service duplication)
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New Products and Services in
Global Marketing (2)
New-product development process
Permanent identification of new-product ideas
Screening of these ideas and identification of candidates for
further investigation
Stringent investigation and analysis of the selected newproduct ideas
Organisation of sufficient resources
The international new-product department
Testing new products and services in national markets
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Summary
Product and services are the most important elements of
the marketing program
Important factors: preferences, costs, laws and
regulations, and compatibility
Five strategic alternatives for geographic expansion:
Product/communication extension, product
extension/communications adaptation, product
adaptation/communications extension, dual adaptation and
product invention
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