Product and Services for Consumers

Product and Services for Consumers:

A product can be defined in terms of its tangible, physical attributes- such things as weight, dimensions and materials. Thus, an automobile could be defined as 3,000 pounds of metal or plastic, measuring 190” long , 75” wide and 59” high.

In economics, any tangible commodity which is produced and subsequently consumed by the consumer, to satisfy its current wants or needs, is a consumer good or final good. Consumer goods are goods that are ultimately consumed rather than used in the production of another good. For example, a microwave oven or a mixer grinder which is sold to a consumer is a final good or consumer good, where as the components which are sold to be used in to final good those goods are called intermediate goods. For example, tires for automobile industry or copper which can be used to make some further goods.

When used in measures of national income and output, the term "final goods" only includes new goods. For instance, the GDP excludes items counted in an earlier year to prevent double counting of production based on re-sales of the same item second and third hand. In this context the economic definition of goods includes what are commonly known as services.

Manufactured goods are goods that have been processed in any way. As such, they are the opposite of raw materials, but include intermediate goods as well as final goods.

Phillips 66 offers numerous products and services designed specifically for the consumer. The company markets fuels in the U.S. and Europe, primarily under the brands Phillips 66,^® Conoco,^® 76,^® and JET.^® In addition to branded fuels, Phillips 66 also offers consumers a variety of high-quality lubricants, including 76 Lubricants, Conoco Lubricants, Phillips 66 Lubricants, and Kendall Motor Oil. The lubricants are supplied from the company’s five proprietary blending facilities to all 50 U.S states and more than 50 countries.

Service marketing is a sub field of marketing which covers the marketing of both goods and services. Goods marketing include the marketing of fast moving consumer goods (FMCG) and durables. Services marketing typically refer to the marketing of both business to consumer (B2C) and business to business (B2B) services. Common examples of service marketing are found in telecommunications, air travel, health care, financial services, all types of hospitality services, car rental services, and professional services.

A service according to (Stauss 2005) is ‘the application of specialized competences (knowledge and skills) through deeds, processes, and performances for the benefit of another entity or the entity itself^[1]’ Services are economic activities, rather than tangible products, offered by one party to another. Rendering a service to recipients, objects, or other assets depends on a time-sensitive performance to bring about the desired result. In exchange for money, time, and effort, service customers expect value from access to goods, labor, professional skills, facilities, networks, and systems; but they do not normally take ownership of any of the physical elements involved.

Green marketing is the marketing of products that are presumed to be environmentally safe. Thus green marketing incorporates a broad range of activities, including product modification, changes to the production process, packaging changes, as well as modifying advertising. Yet defining green marketing is not a simple task where several meanings intersect and contradict each other; an example of this will be the existence of varying social, environmental and retail definitions attached to this term. Other similar terms used are environmental marketing and ecological marketing.

Green, environmental and eco-marketing are part of the new marketing approaches which do not just refocus, adjust or enhance existing marketing thinking and practice, but seek to challenge those approaches and provide a substantially different perspective. In more detail green, environmental and eco-marketing belong to the group of approaches which seek to address the lack of fit between marketing as it is currently practiced and the ecological and social realities of the wider marketing environment.

The legal implications of marketing claims call for caution. Misleading or overstated claims can lead to regulatory or civil challenges.

International Product Planning

 The main objectives of all businesses are survival. Many companies have more aggressive objectives, such as growth, market share, profitability, etc. Company resources, such as finance and labor, may restrict or encourage ambitions for company growth. All these factors influence whether and why companies choose to internalize. In case of internationalization there is also need to plan product which may company like to introduce or simply like to extend their product and range of domestic market in international market also.

In reality not all companies set out to be international.  Experience suggests that many start off with local markets, and some of these then develop into international markets, either proactively or reactively chasing opportunities in response to market leads. Others are set up as international concerns, or acquire companies with international operations.

Over time, some companies earn most of their income and / or profit from outside of their home market. For example, Distillers, which includes brands such as Guinness earns nearly 90 percent of its profit outside the UK. Nike sells about 40% of its goods outside the US. Overseas sales account for half of the business of its competitor Reebok.

In case of product planning there is always a trade-off between Standardization v/s Customization approaches.

By mass-producing a standardized output, the firm can realize substantial unit cost reductions from experience curve and other scale economies. This planning can be applicable if consumers as similar in their tastes and preferences in countries where company is intruding their products. But this approach can lead to failure if there are differences in consumer tastes and preferences. Thus an international business’s marketing function needs to determine when product standardization is appropriate and when it is not.  Similarly the firm’s R&D function needs to develop globally standardized products when appropriate as well as products customized to local requirements when they are needed.

A critical aspect of the marketing function is identifying gaps.  Developing new products requires R&D; thus the linkage between marketing and R&D.  Specifically new products should be developed with market needs in mind, and only marketing can define those needs for R&D personnel. 

It is only through international marketing experience firm can identify whether to go  what kind of R and D is required to produce  globally standardized or locally customized products.  However, there is close link between marketing and R & D. If linkage between R&D and product planning are greater the success rate would also be high.

International product planning is derived from a company’s global strategy, and build on its competitive scope and stance. There are various forms of global marketing strategies. Depending on the choices of global marketing strategies product planning can be done.

Generic product planning strategies can focus on all or some areas of the globe, and with all or some of the company’s products. It does not seek to define specific strategies on a product by product or market by market basis. Rather it takes a “macro” view examining the company’s general global intentions. Jeannet and Hennessey (1998) define five options.

•        In case of complete globalization : In this scenario companies decide that all their businesses should compete globally, which is common with industrial companies like General Electric, Nokia and Siemens, which have customers throughout the world.

•        Selective globalization is scenarios where companies choose to target their foreign activity, and which typically choose to implement their global marketing activity by going global in selected product categories. For example, Coca- Cola have chosen not to sell their coffee drinks in all markets. Indeed, few companies in consumer markets do offer all product lines in all the markets which they serve.

•        Regional specialization is scenarios where companies choose to focus on key regions of the market. For example, for many years, Renault and Fiat car companies focused on European markets.

•        Product niche specialization is scenarios where companies choose to globalize their strategy, but do not offer a wide range of products. In other words, they combine Porter’s competitive strategy with a broad global reach. Many up market designer brands are using this approach.

•        Unfocussed globalization is scenarios where companies have no pattern to global development, do not normally reflect a developed strategy, but rather reflect the piecemeal and opportunistic approach to development. Companies with a strategic mindset are unlikely to pursuer this strategy.

Within these overall strategies, companies can choose between the two other dimension of global marketing strategy mentioned earlier – standardization and adaptation – within their chosen products and markets. At this stage, these strategies are ‘macro’ in context – they reflect the ‘global’ thinking, but not the local implementation.

PRODUCT DEVELOPMENT STRATEGIC ORIENTATION

Product

Some managers believe that the product is the most important element of a company’s marketing mix, as it visibly represents the company in its markets. Indeed, Keegan stated that:

‘To a very important degree, a company’s products define its business. Every aspect of enterprise –including pricing, communication and distribution policies –must fit the product. A firm’s customers and competitors are defined by the product it offers’

It could be argued that this is a product, rather than market, focused view of the business. However, it reflects the reality for many businesses, especially in international markets- many work from the product out, seeking markets, rather than from the market in.

Managing products in international markets build on the basic principles of managing products in domestic markets. These include consideration of:

•        Developing and launching new products

•        Deciding which and how many products to offer

•        Branding strategies for international markets

•        Managing products over their life-cycles in different countries

Product development strategy is an approach to develop the framework to provide an orientation to company’s development projects as well as its development process. Out of so many strategies there is one strategy that can be adopted. Although nobody can say that the strategy that has been chosen is a right strategy for a company. But the selection of strategy should be done after taking into consideration the company's capabilities (strengths, weaknesses and core competencies), the competition's capabilities (strengths, weaknesses, core competencies and strategy), market needs and opportunities, goals, and financial resources.

To learn Product Design Strategies- Standardization v/s Customizations

 Product attributes, Standardization and Customization

A product can have bundle of attributes.  For example, the attributes that make up a car include power, design, quality, performance, fuel consumption and comfort; the attributes of a hamburger include taste, texture and size; a hotel’s attributes include atmosphere, quality, comfort, and service. 

Products sell well when their attributes match consumer needs (and when their prices are appropriate).  BMW cars sell well to people who have high needs for luxury, quality, and performance, precisely because BMW build those attributes into its cars.  It consumer needs were the same the world over, a firm could simply sell the same product worldwide. This is known as standardization.

Actually, however, consumer needs vary from country to country depending on culture and the level of economic development.  In addition a firm’s ability to sell the same product worldwide is further constrained by countries differing product standards.  Therefore companies go for customization as well as adaptation. Following are major differences across countries that forces companies to go for customization:-

Cultural Differences

There was pointed out that countries differ along a whole range of dimensions including social structure language, religion, and education.  These differences have important implications for product development.

Culture differs in values and attitudes.  For example, “hamburgers” do not sell well in Islamic countries, where Islamic law forbids the consumption of ham.  The most important aspect of countries’ cultural differences is probably the impact of tradition.  Tradition is particularly important in foodstuffs and beverages.

For example, reflecting differences in traditional eating habits, the Findus frozen food division of nestle, the Swiss good giant, markets fish cakes and fish fingers in Great Britain, but beef bourguignon and coq auvin in France, and vitello con funghi and braviola in Italy. 

In addition to its normal range of products, Coca-Cola in Japan markets “Georgia,” a cold coffee in a can and “Aquarius”, a tonic drink, products that appeal to traditional Japanese tastes.

 Gift giving is an important part of culture, but knowing what to give is important. Asians like to give prestigious brand name items, such as Dunhill, Hermes, Chanel and Wedgwood.

For historical and idiosyncratic reasons, a whole range of other cultural differences exists between countries.  Some countries (such as Latin and Arab nations) have a poor sense of time and punctuality other such as Germany or Switzerland) see punctuality as important. Customs are the things we do in our life. For example, scent preferences differ from one country to another. 

S C Johnson & son, a manufacturer of waxes and polishes, encountered resistance to its lemon-scented pledge furniture polishes among older consumers in Japan.  Careful market research revealed the polish smelled similar to latrine disinfectant used widely in Japan in the 1940s.  Sales rose sharply after the scent was adjusted.

At the same time, there is some evidence of the trends Levitt talked about.  Tastes and preferences are becoming more cosmopolitan. Coffee is gaining ground against tea in Japan and Great Britain, while American-style frozen dinners have become popular in Europe (with some fine-turning to local tastes).

Taking advantage of these trends, Nestle has found that it can market its instant coffee, spaghetti Bolognese, and Lean Cuisine dinners in most of the rest of the world, and there may never be. 

The diet-conscious Asian is difficult to find.  Although some cultural convergence has occurred, particularly among the advanced industrial nations of North America and Western Europe, Levitt’s global culture is still a long way off.

Economic Differences

Just as important as differences in culture are differences in the level of economic development. Economic evaluation is complex. Some countries initially appear attractive, in terms of GNP per-capita and economic growth potential, but have large foreign debts.

The level of economic development of a country influences consumer behavior.  Firms based in highly developed countries such as the United States tend to build a lot of extra performance attributes into their products.

 Consumers in less-developed nations, where the preference is for more basic products, do not usually demand these extra attributes.

Thus cards sold in less-developed nations typically lack many of the features found in the West, such as air-conditioning, power steering, power windows, radios, and cassette players.

At the same time, for most consumer durables, product reliability may be a more important attribute in less-developed nations, where such a purchase may account for a major proportion of a consumer’s income, than it is in advanced nations.

The growth of the ‘Tiger Economies’–of Japan, China and the ‘ Four Tigers’: Hong Kong, South Korea, Singapore and Taiwan- have been a major change in international trade in the second half of the 20th century.

In recent years, multinationals from these ‘tiger’ economies have become key players in many markets, including Sony, Hitachi, Samsung, Panasonic, Toyota, Hyundai, LG, Acer, NEC, Singapore Airlines, Salim Group etc.

The other side of the coin is that, contrary to Levitt’s suggestions; consumers in the most development countries are often not willing to sacrifice their preferred attributes for lower prices. 

Consumers in the most advanced countries often shun globally standardized products that have been developed with the lowest common denominator in mind.  They are willing to pay more for products that have additional features and attributes customized to their tastes and preferences. 

For example, demand for top-of-the-line four-wheel-drive sports utility vehicles, such as Chrysler’s Jeep, Ford’s Explorer, and Toyota’s Land Cruiser, is almost totally restricted to the United States.

 This is due to a combination of factors, including the high-income level of U S consumers, the country’s vast distances, the relatively low cost of gasoline, and the culturally grounded “outdoor” theme of American life.

Standardization adaptation

A final element of global marketing activity is often stated to be the co-ordination of activities between different markets. Global form seek to exploit (or leverage) strengths across different markets. It will not necessarily base its operations in the home country, but will choose the most appropriate place for its key activities. While local decisions may still be made on a market by market basis, there will be some co-ordination of these activities.

Through management of these areas, global firms seek to gain competitive advantage in the marketplace. Thus global marketing is often defined as being about:

•        Scope (geography or size of markets)

•        Co-ordination (transfer of knowledge, strategy, resources, etc.) and (or to deliver)

•        Competitive advantage.

Making effective international marketing decision will actively consider all these elements. Good marketing management internationally is about improving the company performance. Sadly, some companies operating internationally are not optimizing their potential returns. They could benefit from more effective management of their international marketing activities.

What is standardized?

The original Coca-Cola has a standardized name is global markets. McDonalds has a common self-service operating system in international markets, and golden arches appear alongside the McDonalds name in different alphabets. Clinique (Linique) cosmetics have a common positioning in international markets. IKEA has a standardized store format and core range. Marks and Spencer’s offers products from a standardized range. Intel chips are promoted consistently internationally, with the same logo and the jingle. Cisco Systems’ network routers are standardized, but able to work in all markets. Shell’s aviation fuel must meet the international standards for this product in all of their markets. Microsoft’s Office 2000 suite can allow data to be shared between people in working in different countries and in different languages.

Finding the balance between standardization and adaptation is at the heart of effective international marketing decision making. Companies with products which appeal to people in different international markets constantly have to review this balance. The cost issue benefits of standardization are important, but they must be balanced against local preferences.

What is adapted or customized?

Products made and sold by Coca- Cola may have different names in different markets- Coca-Cola Light is called Diet Coke in the UK –or different flavors – Fanta has different tastes and appearances in different markets and with different flavour options- such as with herbs in Germany. Also, Coca-Cola’s Georgia coffee products are offered in some countries (such as Japan), but not in other (such as UK). Their Minute Maid orange juice is available in supermarkets in the US, but harder to find in European retail markets, although it is commonly served on airlines.

In business markets, software is normally adapted to the language and the alphabet of the target countries. Microsoft makes its Office 2000 Word package available in (amongst others) Arabic, Basque, Catalan, Chinese, Croatian, Finnish, Hungarian, Korean, Latvian, Lithuanian, Swedish and Thai.

Local adaptation of marketing activities can also create problems for marketers. People travel more and (as mentioned earlier) use international media (such as MTV channels on e.g. Sky or Star satellite TV) or even seek things out on the Internet. We watch global sports events, such as the Olympics or World Cup. A company which presents its products and services in different ways will find that a lack of consistency confuses customers, or blocks the use of different media. How could for example, Unilever advertise its main supermarket brand, Persil internationally, when it is known as Omo in Holland, and in Germany, the brand name Persil belongs to a competition, Henkel?

The extent to which marketing strategy and practice is standardized depends on a blend of three factors:

1.      Market factors, including culture, lifestyles ,income

2.      Product factors, including the environment and legal influences on product use. Adaptation can be mandatory. Fir example food, drugs and confectionery must meet Indian regulations and, vice versa.

3.      Company factors, including the costs and returns from adaptation. Companies need to balance the benefits of standardization (the cost benefits and simplicity) against the likehood of sales being increased if they modify the marketing activities to meet local needs more closely.

Reconciling global market strategy with standardization and adaptation confuses many people. Is Coca-Cola a global product, when it amends packaging for different markets? Cola-Cola has a global strategy but global products can be adapted locally within a consistent global strategy. So, the view of a global product as being one version of a product offered internationally is not correct. For example:

•        Sony TVs AND Videos vary in voltage and broadcast

•        McDonald’s vary in menu and décor of restaurants

•        Levi jeans vary in size mix, fabric and cut.

In the following examples, what factors might prevent a company from adopting a standardized marketing approach in the following examples, and why:

•        British ‘ Fish and chips’ fast food outlets in Thailand and Germany

•        Guinness stout being sols to the Middle East and Japan

•        Smart card hardware and software systems being sold into Sudan and Venezuela

Keegan’s Strategies

Keegan’s early work on standardization decisions reflects product and communication adaptation options. Keegan distinguished five alternative strategies for adapting or standardizing products and promotion in foreign markets.

In summary, the strategies are:

•        Straight Extension-i.e. same product and same message worldwide

The product is introduced into the foreign market without change, and using the same communication strategy worldwide, i.e. a strategy of one product and one message. This involves no additional R & D and only limited additional expenses promotional expenses (for example, copy right might be translated),but it is does not reflect local market requirements. Do they use the product in the same way as in the company’s home market? Do they shop in the same way? Do they value the same features? It can work with products for global segments, which span national boundaries. For example, this is used by American Express for their charge card operations.

•        Product Extension, product adaptation-i.e. same product, different communication

The product is introduced in the market unchanged but promotional strategy is different, possibly because of legal or cultural differences. This strategy is attractive because it can take into account some differences between markets, and offers a cheaper option than offering product. However there still can be significant savings by standardizing promotion. HaagenDasz used this promotion adaptation strategy in Europe, where the UK advertising campaign was based on a ‘sexy’ positioning, which was not suitable in other European countries.

•        Product Adaption, promotion extension-i.e. different version of the product, same communications

Adapts the product to meet local conditions by producing versions for different regions (for example changing the composition of chocolate to cope with hot weather) or national version ( for example ,coffee is commonly modified for different national markets).Promotion stays the same however,i.e .it is extended into new markets. Nestle’s Gold Blend coffee is called Bonka in Spain, and is available in different form from the UK ( where the main form is in ‘instant Coffee’) but has similar packaging and market positioning to that used in the UK

The International Marketing Mix

A product or brand positioning is delivered through the marketing mix in both domestic and international markets. Marketing mix approach focuses specifically on four main elements- products, price, and place and promotion-, which are especially important in, or unique to, international marketing.

The central issue in managing the marketing mix is the extent to which the marketing mix should be standardized. Although, standardization  maybring many advantages to the company. Managers make standardization and an adaptation decision in many marketing decisions areas. It is difficult to generalize on what will be adapted and what will be standardized, but many managers consider there to be a continuum of which ranges from:

 

•        Pricing                                                 Most Likely to be adapted

•        Distribution                                               

•        Sales Force

•        Sales Promotion

•        Product

•        Image

•        Objectives                                       Most Likely to be standardized

•        Strategy                                

Prices are most likely to be adapted, and strategy most likely to be standardized. Even gold and diamonds, which is essentially commodity product sold by quality, are likely to vary in price, from bazaars in Iran, to gold souks in Dubai, to Koenigsalle in Dusseldorf

Standardization of global strategy (and other aspects of marketing activity is more likely for: industrial goods, consumer goods which are ‘recent ‘development (such as digital cameras or DVDs); and consumer non-durables used or consumed outside the home (such as Coca-Cola or Levis)

By contrast, those which are most likely to be adapted are consumer non-durables, which are used in the home, and consumer durables, which are linked to traditional values. So, kettles, coffee and sewing machines are likely to differ, as they reflect the cultural background.

Product and Technical Standards

Standardization of global strategy (and other aspects of marketing activity) is more likely for industrial goods; consumer goods which are ‘recent’ development (such as digital cameras or DVDs); and consumer non-durable used or consumed outside the home (such as Coca-Cola or Lewis).

Samiee and Roth (1992) conducted a study on the influence of global marketing standardization on performance, and what they have to say is very interesting.

By contrast, those, which are likely to be adapted, are consumer non-durables, which are used in home, and consumer durables, which are linked to traditional values. So, kettles, coffee and sewing machines are likely to be adapted, but computers and videos are not. Food products in particular are likely to differ, as they reflect the cultural background.

Notwithstanding the forces that are creating some convergence of consumer tastes and preferences (at least among advanced, industrialized nations), Levitt’s vision of global markets may still be a long way off due to national differences in product and technological standards.

Differing product standards mandated by governments can rule out mass production and marketing of a standardized product.

For example, Caterpillar, the U S construction equipment firm, manufactures backhoe-loaders for all of Europe in Great Britain.  These tractor-type machines have a bucket in front and a digger at the back. 

Several special parts must be built into backhoe-loaders that will be sold in Germany: a separate brake attached to the rear axle, a special locking mechanism on the backhoe operating valve, specially positioned valves in the steering system, and a lock on the bucket for traveling.

These extras account for 5 percent of the total cost of the product in Germany.  Interestingly enough, the European Union (EU) is trying to harmonize such divergent product standards among its member-nations.

 If the EU is successful, the need to customize products will be reduced, at least within the boundaries of the EU.

Differences in technical standards also constrain the globalization of markets. Some of these differences result from idiosyncratic decisions made at particular points in history, rather than government actions. 

Their long-term effects are nonetheless profound.  For example, video equipment manufactured for sale in the United States will not play videotapes recorded on equipment manufactured for sale in Great Britain, Germany, and France (and vice versa). 

Different technical standards for frequency of television signals emerged in the 1950s that require television and video equipment to be customized to countries’ prevailing standards.

RCA stumbled in the 1980s when it failed to account for this in its marketing of TVs in Asia.  Although several Asian countries had adopted the U. S standard, Singapore, Hong Kong, and Malaysia had adopted the British standard.

The result: people who bought RCA TVs in those countries could receive a picture but no sound.

 Adoption and Diffusion of new products

 New product development activities have been variously defined. They can be classified into the firm, market and product oriented definitions. When a product is new to the firm, it is considered a new product. This definition helps in examining the impact of a new product on the firm. However, it ignores whether is new to the market place or consumers.

It does not therefore; capture fully the task of new product to meet the competition. The market oriented approach judges the newness of the product in terms of how much exposure consumers have to the new product.

This definition helps in examining the task of new product introduction, but does not capture the difficulty or pains in development of a new product and developing technology for its large-scale production to reap the benefits from the economies of scale.

Firms that successfully develop and market new products can earn enormous returns. Some examples are:

•        Xerox’s 20-year domination of the photocopier market.

•        Du Pont’s steady stream of inventions such as cellophane, nylon, Freon (used in all air-conditioners), and Teflon.

•        Sony’s development of the Walkman and compact disc.

•        Bausch & Lomb’s development of contact lenses

•        Matsushita’s development of the videocassette recorder.

•        Intel’s pioneering work with microprocessors

In the late 20the century competition is as much about technological innovation as anything else.  The pace of technological change has accelerated since the industrial revolution in the 18th century, and it continues to do so today.

The result has been a dramatic shortening of product life cycles.  Technological innovation is both creative and destructive.  An innovation can make established products obsolete overnight.  At the same time an innovation can make a host of new products possible.   

The advent of transistors destroyed the market for vacuum valves, but at the same time it created new opportunities connected with transistors.  Transistors took up far less space than vacuum valves, creating a trend toward miniaturization that continues today.

The transistor held its position as the major component in the electronics industry for just a decade. In the 1970s microprocessors were developed, and the market for transistors declined rapidly. 

At the same time, however, the microprocessor created yet another set of new-product opportunities-handheld calculators (which destroyed the market for slide rules), compact disc players (which destroyed the market for analog record players), personal computers (which destroyed the market for typewriters), to name a few.

This process of “creative destruction” unleashed by technological change makes it critical that a firm stay on the leading edge of technology, lest it lose out to a competitor’s innovations. This not only creates a need for the firm to invest in R&D, but it also requires the firm to establish R&D activities at those locations around the globe where expertise is concentrated.

Branding Strategies

A standardized global strategy is often linked to their development and support of global brands. People often refer to global brands, but, actually, there are not many brands which are truly global. Often people assume that products which are strong in one (or several) markets will be strong worldwide, when usually they are not. Oreo and Hershey are best sellers in the US, but not widely available in the UK. Marlboro, often listed as one of the world’s biggest brands, has a relatively weak market share in the UK.

Further, many products are not available globally. The effective companies choose to enter only those markets which will allow them to realize their corporate objectives, and not necessarily go everywhere. For example, the brand Tommy Hilfiger was initially launched in the US in the early in many markets, such as Israel. Companies often restrict the sales of their products in same regions, through distributors, to ensure that the level of service support or the environment in which the products are sold is appropriate. Sometimes market entry may be limited due to political or legal reasons. Marlboro, a US brand, was virtually unheard of in eastern and central Europe before the end of communism ; the firm,’ Eyes Wide Shut, with Tom Cruise and Nicole Kidman, will not be distributed in India because some Hindus were offended that their sacred music was sung during an orgy scene. Warner Brothers apologized for this and cut the scene from the movie in Europe and Africa, but decided not to release the film in India.

A study which compared the top 100 products in Europe ,US, and Japan ,found only seven brands were in the top brands in each region- Coca-Cola, McDonald’s, Kleenex, Nestle, Sony, Panasonic , KFC.The limited overlaps results from the market distribution and also from brands offering in popularity between regions, especially for food or domestic products. Many regional or local brands outsell international brands.

In summary, there are fewer truly global brands than most managers realize. However, these are likely to increase in future due to increasing global convergence in customer tastes, and corporate drivers towards rationalization.

Developing an International branding strategy

Not all products sold internationally are ‘brands’. Brands refer to the sum of the tangible and intangibles attributes of products, including the values or personality of a product. Building a successful brand is expensive and needs considerable management support. Clearly companies must consider this carefully, and decide whether to develop brands, and how to manage these internationally.

The Key decisions in this process are identified below.

•        Do we wish to brand our product? If so, how? What aspects of the brand will be supported?

•        Will we offer more than one brand in each market which we serve?

•        Will we have a consistent strategy internationally, or will this be locally developed?

 

Most of the work on international branding focuses on the last of these decisions, as it links closely to standardization and adaptation issues. This can be further developed to make decisions on whether to have:

•        A uniform brand worldwide, with a common brand name and positioning internationally. Companies using this approach include American Express, Sony, and McDonalds. The result is greater recognition and identification with the brand, especially as consumers travel more and recognize brands that they use at home.

However this approach is not always effective. Volkswagen are trying to standardize names on new models, but the name of its ‘people carrier’ model- the Sharan- is causing problems in the UK. Sharon is a name associated with a ‘good time girl’ in the UK, and Volkswagen close to keep this name in the UK despite being advised of its negative connotations. Unsurprisingly, most UK car buyers find this name to be a ‘turn-off’.

•        Different brand names in different markets, which was the traditional approach to brand internationally. Unilever was well known for this, with familiar products and packaging carrying different names in different countries. Often names are changed because they do not transfer well into different markets. Famous examples of this are the Volkswagen Golf (not named after the sport, but after a wind in German) being called the Rabbit in the US and caribe in Latin American countries. The TV programme ‘Sesame Street’ is offered in 20 different national versions, but changes its name in many countries 9 and even, within countries!) For example, it is called both ‘RehovSumsum’ (Hebrew) and ‘SharaaSimsim’ (Arabic) in Israel.

The overall trend is towards international standardization of brand names internationally where possible. As Douglas and Craig’s model shows, companies go through stages in the development of international markets. Often they use different brand names in different markets because local companies were initially independent, and local markets may have an attachment to particular brand names. For example, Frito-Lay and Walkers was a regional company in the UK. It has the dominant share of the UK market, and there is strong local attachment to the name. However, Frito-Lay is used by PepsiCo IN other markets, such as the Gulf States.

However, failing to address the brand management issues have resulted in brand    strategy problems in recently launched brands. The snack food brand Doritos was initially launched in the UK under the Walkers family brand name; in Benelux markets it carried the family name of Smiths Food Group; and in Spain and Portugal it carried the Matutano brand name. However, PepsiCo group has recently decided to consolidate the brand across these different markets, and decided to drop the parent company brand names from the packaging.

PepsiCo IS NOT alone in recognizing difficulties in operating such localized branding strategies, and companies are now trying to rationalize and exploit their brand s internationally. Mars has been changing brand names since the 1980 ( Marathon and Snickers; Twix and Raiders; Opal Fruits and Starburst; KAL KAN/PAL brands to pedigree; Caesar and Mr. Dog; etc) in many markets to ensure that they have consistent international brand names, which can make use of global media. Unilever have recently taken steps to unify their corporate branding on ice-cream products, which were sold under different family names (such as Iglo, Ola and Walls) and logos in different markets. A common logo has recently introduced, and it is believed that this will be followed by a common family name in the future. Further, Unilever has announced a new international branding strategy which follows a similar structure that used by Nestle.

International product life cycle

Raymond Vernon developed the International product life cycle theory. This model states that in the introduction phase, a product will normally be developed for a local market, and will compete mainly against products from local competitors. In time, as the market starts to grow, these innovatory companies will seek markets in other countries with similar needs as production exceeds local demand. Once they enter these markets, local manufacturers will also develop versions of the product, and thus will enter into competition with the original suppliers. As the international markets mature, all competitors will compete for share. Prices may fall, because of volume of sales and strong competition. Companies may export to developing countries. Finally, in the decline stage, companies in these developing markets will also seek to compete internationally, and other companies will also relocate manufacturing to these developing countries to take advantage of their relative low cost.

There are various versions of this theory, and a major textbook describes it as being ‘iffy’ (i.e. not totally robust). However, like the product life cycle concept, it does highlight some important issues. First, the pattern of competition may change throughout a life cycle. Second, some products will be at different stages of their life cycle in national markets and compared with the international life cycle for that product. Thirdly, that companies involved in international marketing may change the basis of operation in different countries will play different roles in the manufacturing, exporting and importing of products at different stages of the life cycle

Summary

This unit focused on Product strategies. It also discussed the international product planning, product design strategies – standardization v/s customization (adaptation) In addition unit also describe the process of adoption and diffusion of new products, branding strategies, international product life cycle.