Lecture International marketing (14/e) - Chapter 12

International Marketi
ng
14th Edition
P h i l i p R. C a t e o r a
M a r y C. G i l l y
John L. Graham

Products
and Services
for Consumers
Chapter 12
McGraw­Hill/Irwin
International Marketing 14/e

Copyright © 2009 by The McGraw­Hill Companies, Inc. All rights reserved.


Mid term
• Chapter 1, 4, 5, 8, 9, 12
• 60 questions
• 90 minutes
• One A4 (2 sided) summary is allowed in test
room

12-2


Discussion
• Define the country of origin effect and give examples
• The text in the book discusses stereotypes, ethnocentrism, degree of
economic development as the basis for generalizations about country

of origin effect on product perception. Explain and give an example.
• What are the three major components of a product? Discuss their
important to product adaptation.
• How can knowledge of the diffusion of innovations help a product
manager plan international investment?
• Explain the PLC theory and how it applies to International Marketing
• “If the product sells in Dallas, it will sell in Tokyo or Berlin”. Comment
• Discuss “environmentally friendly” products and product
development.

12-3


What Should You Learn?
• The importance of offering a product suitable for the
intended market
• The relationship between product acceptance and
the market into which it is introduced
• The importance of quality and how quality is defined
• Country-of-origin effects on product image
• Physical, mandatory, and cultural requirements for
product adaptation
• The need to view all attributes of a product in order
to overcome resistance to acceptance
12-4


Global Perspective Hong Kong –
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
12-5


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

• Quality can be defined on two dimensions
– Market-perceived quality
– Performance quality

• Most consumers expect performance quality
• In many industries quality is measured by third parties
– JD Power and Associates
12-6


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

12-7


Physical or Mandatory
Requirements and Adaptation
• Product homologation
• Product adaptation requirements
–
–
–
–
–

Legal
Economic
Political
Technological
Climate

12-8


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

12-9


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

12-10

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

12-11


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
12-12


Five Characteristics
of an Innovation
• Relative advantage
• Compatibility
• Complexity
• Trialability
• Observability

12-13


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
12-14


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

12-15


Product Component Model
Exhibit 12.1

12-16


Product Levels: The Customer
Value Hierarchy


Product Levels: The Customer Value
Hierarchy
• Core benefit: Service customer buys

• Turned into basic product
• Expected product - attributes expected
• Augmented product - exceeds expectations
• Potential product- all possible future
augmentations & transformations of product


Core Components
• Product platform
• Design features
• Functional features

12-19


Packaging Component
• Price
• Quality
• Packages
• Styling
• Trademark
• Brand name

12-20


Support Services Component
• Deliveries
• Warranty
• Spare parts

• Repair and maintenance
• Installation
• Instructions
• Other related services
12-21


Marketing Consumer
Services Globally
• Consumer services characteristics
–
–
–
–

Intangibility
Inseparability
Heterogeneity
Perishability

• A service can be marketed
– As an industrial (business-to-business)
– A consumer service

12-22


Services Opportunities
in Global Markets
• Tourism

• Transportation
• Financial services
• Education
• Communications
• Entertainment
• Information
• Health care
12-23


Barriers to Entering Global Markets
for Consumer Services
• Protectionism
• Restrictions on transborder data flows
• Protection of intellectual property
• Cultural barriers and adaptation

12-24


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

12-25