Chapter 13 products & services

1. International Marketing
16th edition
Philip R. Cateora, Mary C. Gilly, and John L. Graham
McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

2. 13
Introduction
• The opportunities and challenges for
international marketers of consumer goods and
services today have never been greater or more
diverse
• The lack of distinction between “goods” and
“services” has led to the invention of new terms
encompassing both products and services, such
as “market offerings” and “business-to-
consumer marketing”
• The trend for larger firms is toward becoming
global in orientation and strategy
Roy Philip 13-2

3. 13
Overview
• Quality
• Products and culture
– Innovative products and culture, diffusion of
innovations, and production of innovations
• Analyzing product components for adaptation
– Core component, packaging component, and
support services component
• Marketing consumer services globally
• Brands in international markets
– Global brands, national brands, country-of-origin
effects and global brands, and private brands
Roy Philip 13-3

4. 13
Global Perspective China –
Disney Rolls the Dice Again
• Tokyo Disneyland – successful
• EuroDisney – disaster
• Hong Kong Disneyland – open for business
• Opportunities and challenges for international
marketers of consumer goods and services are
great and diverse
• Any marketing firm’s goal should be quality
products and services that meet the needs and
wants of consumers at an affordable price
• 2009 – new Disney park in Shanghai (2015)
Roy Philip 13-4

5. 13
Quality
• Shift to a customer’s market
• Increased customer knowledge
• The customer defines quality
• The cost and quality of a product
– Among the most important criteria by which purchases are
made
• Most consumers expect performance quality
• In many industries quality is measured by third parties
– JD Power and Associates
Roy Philip 13-5

6. International Marketing
16th edition
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin

7. 13
Quality
• Conformance to customer specifications and
expectations.
Roy Philip 13-7

8. International Marketing
16th edition
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin

9. 13
Quality
• defined on two dimensions
– Market-perceived quality
– Performance quality
Roy Philip 13-9

10. 13
Maintaining Quality
• Damage in the distribution chain
– Russian chocolate
• Quality is essential for success in today’s
competitive global market
• The decision to standardize or adapt a product is
crucial in delivering quality
Roy Philip 13-10

11. International Marketing
16th edition
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin

12. 13
Physical or Mandatory
Requirements and Adaptation
• Product homologation
• Product adaptation requirements
– Legal
– Economic
– Political
– Technological
– Climate
Roy Philip 13-12

13. 13
Green Marketing
and Product Development
• Green marketing concerns the environmental
consequences of a variety of marketing activities
• Critical issues affecting product development
– Control of the packaging component of solid
waste
– Consumer demand for environmentally friendly
products
• European Commission guidelines for ecolabeling
• Laws to control solid waste
Roy Philip 13-13

14. International Marketing
16th edition
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin

15. 13
Products and Culture
• A product is the sum of the physical and
psychological satisfactions it provides the user
– Primary function
– Psychological attributes
• The need for cultural adaptation is often
necessary, affected by how the product conforms
– Norms
– Values
– Behavior patterns
Roy Philip 13-15

16. International Marketing
16th edition
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin

17. 13
Innovative Products
and Adaptation
• Determining the degree of newness as perceived
by the intended market
• Diffusion
• Established patterns of consumption and
behavior
• Foreign marketing goal
– Gaining the largest number of consumers in the
market
• In the shortest span of time
– Probable rate of acceptance
Roy Philip 13-17

18. 13
Diffusion of Innovations
• Crucial elements in the diffusion of new ideas
– An innovation
– Which is communicated through certain channels
– Over time
– Among the members of a social system
• The element of time
• Variables affecting the rate of diffusion of an object
– Degree of perceived newness
– Perceived attributes of the innovation
– Method used to communicate the idea
Roy Philip 13-18

19. 13
Production of Innovations
• Inventiveness of companies and countries
• Expenditures
• Japanese solutions
– American-style education programs
– American design centers
• New ideas come from a variety of sources
– Countries
– Acquisitions
– Global collaborations
Roy Philip 13-19

20. International Marketing
16th edition
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin

21. 13
Five Characteristics
of an Innovation
• Relative advantage
• Compatibility
• Complexity
• Trialability
• Observability
Roy Philip 13-21

22. International Marketing
16th edition
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin

23. 13
Analyzing Product
Components for Adaptation
• Product is multidimensional
• Sum of its features determines the bundle of
satisfactions (utilities) received by consumer
• Three distinct components
– Core
– Packaging
– Support services
Roy Philip 13-23

24. 13
Product Component Model
Roy Philip
Exhibit 13.1
13-24

25. 13
Core Components
• Product platform
• Design features
• Functional features
Roy Philip 13-25

26. 13
Packaging Component
• Price
• Quality
• Packages
• Styling
• Trademark
• Brand name
Roy Philip 13-26

27. 13
Support Services Component
• Deliveries
• Warranty
• Spare parts
• Repair and maintenance
• Installation
• Instructions
• Other related services
Roy Philip 13-27

28. International Marketing
16th edition
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin

29. 13
Marketing Consumer
Services Globally
• More than half of Fortune 500 companies are
primarily service providers
• Consumer services characteristics
– Intangibility
– Inseparability
– Heterogeneity
– Perishability
• A service can be marketed
– As an industrial (business-to-business)
– A consumer service
Roy Philip 13-29

30. International Marketing
16th edition
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin

31. 13
Services Opportunities
in Global Markets
• Tourism
• Transportation
• Financial services
• Education
• Communications
• Entertainment
• Information
• Health care
Roy Philip 13-31

32. 13
Barriers to Entering Global
Markets for Consumer Services
• Four kinds of barriers face consumer service
marketers:
– Protectionism
– Restrictions on transborder data flows
– Protection of intellectual property
– Cultural barriers and adaptation
Roy Philip 13-32

33. International Marketing
16th edition
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin

34. 13
Brands in
International Markets
• A global brand is the worldwide use of a name,
term, sign, symbol, design, or combination
– Intended to identify goods or services of one
seller
– To differentiate them from those of competitors
• Importance is unquestionable
• Most valuable company resource
Roy Philip 13-34

35. 13
Top Twenty Brands
Roy Philip
Exhibit 13.2
13-35

36. 13
Top Twenty Brands
(continued)
Roy Philip
Exhibit 13.2
13-36
Best Global
Brands in 2012
Best Global
Brands in 2013

37. 13
Global Brands
• The Internet and other technologies accelerate
the pace of the globalization of brands
• Ideally gives the company a uniform worldwide
image
• Balance
• Ability to translate
Roy Philip 13-37

38. International Marketing
16th edition
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin

39. 13
National Brands
• Acquiring national brand names
• Using global brand names
• Nationalistic pride impact on brands
• Use global brands where possible and national
brands where necessary
Roy Philip 13-39

40. 13
• Country-of-Origin effect
– Influences that the country of manufacture,
assembly, or design
• Has on a consumer’s positive or negative
perception of a product
• Consumers have broad but somewhat vague
stereotypes about specific countries and specific
product categories that they judge “best”
• Ethnocentrism
Country-of-Origin Effects
and Global Brands (1 of 2)
Roy Philip 13-40

41. 13
• Countries are stereotyped
– On the basis of whether they are industrialized
– In the process of industrializing
– In process of developing
• Technical products
– Perception of one manufactured in a less-
developed or newly industrializing country less
positive
• Fads often surround product from particular
countries or regions
Country-of-Origin Effects
and Global Brands (2 of 2)
Roy Philip 13-41

42. 13
Private Brands
• Growing as challengers to manufacturers’ brands
• Private labels
– Provide the retailer with high margins
– Receive preferential shelf space and in-store
promotion
– Are quality products at low prices
• Manufacturers brands must be competitively
priced and provide real consumer value
Roy Philip 13-42

43. 13
Summary (1 of 2)
• The growing globalization of markets must be
balanced with the continuing need to assess all
markets for those differences that might require
adaptation for successful acceptance
• In spite of the forces of homogenization,
consumers also see the world of global symbols,
company images, and product choice through
the lens of their own local culture and its stage of
development and market sophistication
Roy Philip 13-43

44. 13
Summary (2 of 2)
• Each product must be viewed in light of how it is
perceived by each culture with which it comes in
contact
• Analyzing a product as an innovation and using
the Product Component Model may provide the
marketer with important leads for adaptation
Roy Philip 13-44