Transcript Ch14 - Webster University

Chapter 14
Global Product
Management and Branding
Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.
Global Product Development
• The heart of the global marketing process that focuses on
building adaptability into products to achieve worldwide
appeal.
• The product development process
– The main goal is to build adaptability into products and
product lines for worldwide appeal.
• Step 1: Idea generation
• Step 2: Screening
• Step 3: Product/process
development
• Step 4: Scale up
• Step 5: Commercialization
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Global Program Management
SOURCE: Llkka A. Ronkainen, “Product Development in the Multinational Firm,” International Marketing Review I(Winter 1983):24-30.
Initiator
Managing
Unit
Initiator Becomes
Managing Unit
Technical Development and
Design
Affected
Units(s)
Viable Concept
Yes
Does Initiator Have
Resources?
No
New Management
Unit Assigned
Unique Requirements to be
Incorporated in Product
Goals and Specifications
Review of Design
Activities to Plan, Develop,
Manufacture, Introduce,
and Support Product
Integration and
Coordination of All
Multinational Program
Activities
Activities to Plan, Develop,
Manufacture, Introduce,
and Support Product
Nonoccurrence with
Managing Unit
Guidelines for Program
Execution
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The Location of R&D Activities
• Past tendency was to keep activities centrally located
with parent corporation headquarters.
• Using foreign-based resources improves ability to
compete successfully internationally.
• Outsourcing shortens product
development cycle time.
• Determined by the existence
of specific skills.
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Reasons for R&D Investments
Abroad
• To aid technology transfer from parent to subsidiary.
• To develop new and improved products specifically
for foreign markets.
• To develop new products and processes for
application in world markets of the firm.
• To generate new technology.
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Global Product Development
Organization
• Product development team that is functionally and
internationally representative.
• Focus on customer input to identify universal and
market-unique product features.
• R&D consortia allows companies to cooperate in
developing new products and technologies.
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The Testing of New Product
Concepts
• Testing for performance and customer acceptance is the final
stage of product development.
• Testing ranges from reliability tests to mini-launches.
• Reasons that new international products fail:
– Relying on instinct or hunch rather than testing and
research.
– Lack of product distinctiveness.
– Unexpected technical problems.
– Mismatch between functions.
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International Product Testing
Techniques
• Limited product launch in one country market.
• Laboratory test markets to capture consumer
reactions in a controlled environment.
• Microtest marketing uses a permanent panel of
consumers and assesses their willingness to buy
after exposure to media and purchase incentives.
• Forced distribution tests rely on the continuous report
of consumer reactions to new products already in the
market.
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The Global Product Launch
• Introducing the product into countries in three or more regions
within a narrow timeframe.
• Successful launches require:
– Involvement of country managers
– Pre-launch attention to localization
and translation requirements
– Increased education and
support of the sales channel
• Benefits of a global launch
– Showcases the product
– Removes old models at once
– Captures new product’s higher margins
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Product and Brand Portfolio
Management
• The marketer must have a balance of new, growing,
and mature products capable of creating sustainable
competitive advantage in the firm’s efforts to expand
geographically or add to existing market operations.
• Analyzing the product portfolio
– Market growth rates
– Market share positions
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Example of a Product-Market
Portfolio
40
40
B
S
F
GB
D
C
10
US
0
10
1
0
Market Growth
B
S
J
F
GB
D
10
C
US
0
10
1
Relative Market Share
Relative Market Share
Company A
Company B
0
(B=Brazil, C=Canada, D=Germany, F=France, GB=Great Britain, J=Japan, S=Spain, US=United States)
SOURCE: Adapted from Jean-Claude Larreche, “The International Product-Market Portfolio,” in 1978 AMA Educators’ Proceedings (Chicago:American Marketing
Association, 1978), 276
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Market-Product-Business
Portfolio Example
Market Attractiveness
High
Canned Tea-US
Canned Tea-Asia
Ice Cream-US
Canned Tea-Europe
Frozen Main DishesEurope
Ice Cream-Asia
Ice Cream-Europe
Frozen VegetablesEurope
Frozen Vegetables-US
Low
Low
Competitive Strength
——— Market and Distribution Interconnectedness
………. Technology and Production Interconnectedness
High
SOURCE: Adapted from Susan P. Douglas and Samuel Craig, “Global Portfolio Planning
and Market Interconnectedness,” Journal of International Marketing 4 (no.I, 1996):93-110.
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Product Portfolio Approach
ADVANTAGES
• A global view of competitive
structures.
• Global strategy based on
allocation of scarce
resources.
• Marketing objectives based
on product lines in markets
served .
• A convenient visual
communication goal.
DISADVANTAGES
• Foreign competition does not
follow the same rules as
domestic competition.
• Relationships between
market share and profitability
may vary.
• Government regulations.
• Local content laws.
• Different production sites
impact perceptions of risk
and quality.
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Managing the Brand Portfolio
• A strong brand is a global marketing asset.
• Co-branding
– A strategic alliance where two or more brands are combined
in an offer.
• Brand strategy decisions
– Use of the corporate name.
– Family brands for a wide product line.
– Individual brands for each item in the product line.
• Private (store) branding
– Umbrella branding with the intermediary’s name.
– Separate brand names.
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Nestle’s Branding Tree
Examples
7,500 Local Brands
Responsibility of local
markets
140 Regional Strategic
Brands
Responsibility of strategic
business unit and regional
management
45 Worldwide Strategic
Brands
Responsibility of general
management at strategic
business unit level
10 Worldwide Corporate
Brands
•Wonka
•Chambinho
•Bona
•Fruitips
•Macintosh
•Vittel
•Stouffer’s
•Kit Kat
•Cerelac
•Baci
•Herta
•Alpo
•Mighty Dog
•Smarties
•After Eight
•Coffee-Mate
•Nestle
•Maggi
•Carnation
•Perrier
•Buitoni
SOURCE: Adapted from Andrew J. Parsons,”Nestle: The Visions of Local Managers,”The McKinsey Quarterly, no 2, 1996, 5-29;see also http://www.nestle.com; http://brand/index.asp.
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Private Brand Strategy
Strategy
Rationale
Circumstance
No participation
Refusal to produce
private label
Heavily branded markets; high
distinctiveness; technological
advantage
Capacity filling
Market control
Opportunistic
High brand shares where
Influence category sales distinctiveness is less; more
switching by consumers
Competitive leverage
Stake in both markets
Chief source of business Major focus
Dedicated producer
Leading cost position
Little or no differentiation by
consumers
SOURCES:Adapted from Sabine Bonnot, Emma Carr and Michael J. Reyner, “Fighting Brawn with Brain,” The McKinsy Quarterly 40 (no 2. 2000): 85-92; and Francois
Glemet and Rafael Mira, “The Brand Leader’s Dilemma,” The Mckinsey Quarterly 33 (no 2. 1993):4.
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