International Marketing

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
McGraw-Hill/Irwin
International Marketing 14/e

Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

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
12-2

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 firms goal should be quality products
and services that meet the needs and wants of
consumers at an affordable price

12-3

Quality
Shift to a customers 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
12-4

Maintaining Quality
Damage in the distribution chain
Russian chocolate

Quality is essential for success in todays

competitive global market/ if competition is
quality based.
The decision to standardize or adapt a product
is crucial in delivering quality/ standardized or
adapted quality.

12-5

Physical or Mandatory
Requirements and Adaptation
Product homologation (approval)
Product adaptation requirements

Legal
Economic
Political
Technological
Climate

12-6

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
The Hybrid
12-7

Products and Culture

A product is the sum of the physical and
psychological satisfactions it provides the user
Primary function/ performance
Psychological attributes/ beauty, handsomeness, previous user,
design.

The need for cultural adaptation is often

necessary, affected by how the product
conforms : is the product accepted by culture?
Norms
Values
Behavior patterns
12-8

Innovative Products
and Adaptation
Determining the degree of newness as
perceived by the intended market
Diffusion/ deployment
How much innovation to be accepted
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

12-9

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
12-10

Five Characteristics
of an Innovation
Relative advantage: is the newness innovation
related to the product function.
Compatibility: is it needed or suitable to our
needs.

Complexity: is it easy to use (camera)

Trialability: is it possible to be tried before
buying.
Observability: is it noticeable and recognized by
others.
12-11

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

12-12

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

12-13

Product Component Model

Exhibit 12.1

12-14

Core Components
Product platform
Design features
Functional features

12-15

Packaging Component
Price
Quality
Packages
Styling
Trademark
Brand name
12-16

Support Services Component

Deliveries
Warranty
Spare parts
Repair and maintenance
Installation
Instructions
Other related services/ finance, training.
12-17

Marketing Consumer
Services Globally
Consumer services characteristics
Intangibility/ untouchable
Inseparability/ spontaneous production and
consumption
Heterogeneity/ no two services are a like
Perishability/ not able to be stored
A service can be marketed
As an industrial (business-to-business)
A consumer service
12-18

Services Opportunities
in Global Markets
Tourism

Transportation
Financial services
Education
Communications
Entertainment

Information
Health care
12-19

Barriers to Entering Global Markets

for Consumer Services
Protectionism
Restrictions on transborder data flows
Protection of intellectual property
Cultural barriers and adaptation

12-20

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

12-21

Top Twenty Brands

Exhibit 12.2

12-22

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

12-23

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

12-24

Country-of-Origin Effects
and Global Brands
Country-of-Origin effect
Influences that the country of manufacture, assembly, or design
Has on a consumers 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

Sometime perception is mistaken/ First

class Chinese products.
12-25

Country-of-Origin Effects
and Global Brands
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
12-26

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

It is the distributer (retailer or wholesaler )

brand if overwhelming. Sears in the U.S,
12-27

Summary
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

12-28

Summary
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

12-29