The New

Global Marketing

Global Products and Brands

Chapter 9
 Outline

I. The Pros and Cons of Product

Standardization
II. Global Product Lines
III. Developing Global Products
IV. Global Brands and Brand Equity
V. The Pros and Cons of Global Branding
VI. Takeaways
 Product Standardization
While demand for local variety exists, global
products are usually standardized in some ways.
• Global products:
– Gillette razor blades
– Sony television sets
– Benetton sweaters
• Regional products unique to a particular trading region:
– Honda’s European car model “Concerto”
– P&G’s Ariel and Vizir in Europe
I. The Pros and Cons of Standardization
Advantages Disadvantages
• Cost reduction • Off-target
• Improved quality • Lack of uniqueness
• Enhanced customer • Vulnerability to trade
preference barriers
• Global customers • Strong local competitors
• Global segments
 Standardization
• Localization: Usually taken for granted
– Changes required for a product to function in
a new country
– Usually usage related
– Example: Printer cord to match wall socket
• Adaptation: Can be advertised as a benefit
– Changes made to match local preferences
– Example: Tablet computer made smaller for
Asian markets
• Most standardized global products need
to be localized.
 Uniform vs Adapted Product
+
PREFER

Line shows
likelihood of
purchase

Global/ Localized Adapted

Uniform

REJECT
-
 Optimal Level of Standardization
Minimum combined costs do not necessarily occur at the point of
intersection - it depends on the slope of the lines.

Incremental
manufacturing
cost

Combined
costs Cost of
lost sales

Fully adapted Fully standardized

Localization: Two Kinds of Adaptation
Adaptation to Regulations and Adaptation To Customer
Infrastructure Preferences
• Changes required for a • Changes to match customer
product to function in a tastes and preferences
new country • Gives customers a positive
– Fax machines with country- reason for choosing a given
appropriate phone jacks product
– Required three-point
breaking lights in cars
• Avoids having potential
customers reject a product
outright
 How to Standardize?
• 100% standardization is rare.
• Starts with a core product as the foundation.
• Various features are added that differ by
country market – “mass customization.”
• Modular design includes features packaged as
modules with various assembly combinations
in different markets.
 Localization to Adaptation
• Disneyland Paris became a “French”
rather than a “European” park
to improve attendance.
• 51% of the annual visitors are now
from France and 14% come from
the U.K.
• Disney supports 18 additional
languages for the remaining 35%
of visitors.
Ex. 9.4: Copyright © 2014 by Shutterstock/Radu Razvan.
 II. Global Product Lines
• History
– Different local products were well established before
standardization was feasible.
• Mergers and acquisitions (M&A)
– Complete integration is often difficult.
• Capacity
– Global product lines need large production capacity
• Channels
– Loyalties makes it difficult to drop local products.
• Adaptation
– Different preferences force custom product lines.
Honda’s Non-Global Car Models
Adaptation for Each Market
Fig. 9.12a: Copyright © 2009 by Auswandern Malaysia, (CC BY 2.0) at
https://commons.wikimedia.org/wiki/File:Honda_Stream_-_001.jpg.

EUROPE Honda Stream

Fig. 9.12c: Source: https://commons.wikimedia.org/wiki/File:Honda_City_fourth_gen.jpg.

ASIA Honda City

NORTH AMERICA Honda Element

LATIN AMERICA Honda Fit

Fig. 9.12b: Copyright © 2013 by Dennis Elzinga, (CC BY 2.0) at
https://commons.wikimedia.org/wiki/File:Honda_Element_(9474647182).jpg.

Fig. 9.12d: Source: https://commons.wikimedia.org/wiki/File:Silver_First-generation_Honda_Fit.jpg.

 Goodyear’s Globally Uniform Tires
Standardized for Each Market
EUROPE Goodyear Eagle F1

ASIA Goodyear Eagle F1

NORTH AMERICA Goodyear Eagle F1

LATIN AMERICA Goodyear Eagle F1

Fig. 9.13: Source: https://pixabay.com/en/tyre-wheel-tire-car-automobile-

1714669/.
 III. Developing Global Products
• Five stages of new development
1. Idea Generation
• Local subsidiaries have ideas from their respective
markets and new technology produces new product
ideas.
2. Preliminary Screening
• Is an idea compatible with the company objectives,
strategies, and resources?
3. Concept Research and Testing
• Focus groups offer spontaneous reactions to a new
concept and provide suggestions for improvement.
• Can also select product attributes using techniques
such as trade-off analysis or conjoint analysis.
Five Stages of New Development
(cont’d)
4. Sales Forecasting
• Based on the product life cycle (see Ch.4).
5. Test Marketing
• Once the sales forecast looks promising, the
new product is placed in production and test
marketed.
New Product Development Stages

Number of
surviving
new
product
ideas

Idea Preliminary Concept Sales Test

generation screening research and forecasting marketing
(leading markets) testing
(focus groups,
concept testing)
Entirely New Global Products Are Rare
• Few new products are developed as global
products from the beginning:
– Cars: Same car different names (Ford Escort,
Mondeo, Focus); Same car same name (Toyota
Corolla)
– Consumer electronics: Cell-phones
– Computers: PCs(?), Apple’s Mac, I-Pad, I-Phone(?)
– Software: Yes
– Luxury products: Yes
 Not Entirely New Global Products
• Firms typically start with winners in a leading
market and expand (“waterfall”).
– Cars: Mercedes, BMW, Volvo, Toyota (not Honda)
– Consumer electronics: PlayStation 2
– Wines, food, drink (Heineken), apparel
• Some companies can be “born globals,”
aiming for the world market from the start.
– Red Bull
– Pop music, entertainment, drinks
Development Shortcut: “Me-too”
• Many firms benchmark competitors.
• Benchmarking: Measuring your performance
against competitors and monitoring their new
products.
• The strategy is known as imitative, targeted, or
“me-too.”
• Firms cannot let competitors stay unchallenged.
Targeted New Product Development
• Because new product development is so
uncertain, firms target leading models:
– Step 1: Track competitors’ new products and find
desirable features in the most successful versions.
– Step 2: Reverse engineer the competitive success
products.
– Step 3: Develop a “me-too” version.
– Step 4: Add new features to provide differentiation
and a superior offering.
Targeted New Product Development
Diagonal zone of “me-too” offerings: Better vs less expensive

HI END

PRODUCT
SPECIFICATION

TARGET
BRAND

LO END

LO PRICE PRICE POSITION HI PRICE

New Global Products: Diffusion Factors
• Relative advantage: How much better is it?
• Compatibility: Can it be used with local
infrastructure and customs?
• Complexity: Is it easy to use?
• Trialability: Is it easy to try the new product?
• Observability: Are the advantages obvious?
Diffusion Cannot Always Be Predicted

Even Apple founder

Steve Jobs did not
foresee how iPads
would revolutionize
the way doctors
access all patient
data on rounds.
Ex. 9.6: Copyright © by Shutterstock/Lorena Fernandez.
IV. Global Brands and Brand Equity
Brands are legally protected trademarks that
identify the product or service.
• Global brands are brands associated with well
known global products.
– Sony, Mercedes-Benz, Microsoft, Coca-Cola.
• The typical multinational firm has a “portfolio”
of brands: some global, some regional, and
some local.
 AB-InBev Brand Portfolio Example
• AB-InBev is the world’s biggest brewer.
• “Focus” global brands:
– Budweiser, Becks and Stella Artois
• Three regional or multi-country brands:
– Staropramen sold in 30 countries, Hoegaarden and Leffe
• Dominant ‘local jewels:’
– Brazil’s Brahma and Harbin Lager in China
• Also follows the small local brands.
 Are They Global Brands?

Fig. 9.26a: Source: https://pixabay.com/en/beer-the-bottle-wine-shop-alcohol-428121/.

Fig. 9.26b: Source: https://pixabay.com/en/beer-father-s-day-drink-refreshment-210197/.
Fig. 9.26c: Source: https://pixabay.com/en/beer-drink-alcohol-beverage-party-414914/.
Fig. 9.26d: Source: https://pixabay.com/en/craft-beer-ale-brewery-micro-brewer-1998293/.
Fig. 9.26e: Source: https://pixabay.com/en/cold-beer-drink-alcohol-beverage-564401/.
Fig. 9.26f: Source: https://pixabay.com/en/beach-beer-blur-bottle-close-up-1869523/.
 Typical Brand Portfolios
Heavily weighted toward local brands
company total number brands found in brands marketed
of brands 50% or more countries (%) in only one country (%)
Colgate 163 6 (4%) 59 (36%)
Kraft GF 238 6 (3%) 104 (44%)
Nestle 560 19 (4%) 250 (45%)
P&G 217 18 (8%) 80 (37%)
Quaker 143 2 (1%) 55 (38%)
Unilever 471 17 (4%) 236 (50%)
total 17921

Source: Journal
Source: Journal
.
of Consumer of Consumer
Marketing Marketing 12 no. 4 (1995)
12 No.4 (1995)

As brands come and go, how will this chart change?

 Why Brands Are So Important
• Imitative targeting of new
product development
makes differentiation
difficult to sustain.
• Customers know quality
and features are
comparable across
competitors.
• End result: The only
sustainable competitive
advantage is in the brand.
 Results of Beer Taste Tests
COLT 45

PABST

COORS

GUINNESS

MILLER LITE

BUDWEISER

Taste perceptions of six beer brands when

the drinker knows what he is drinking.
Results of Blind Beer Taste Tests

PABST
GUINNESS
BUDWEISER COLT 45
MILLER LITE
COORS

Taste perceptions of six beer brands when the

drinker does not know what he is drinking
The power of the brand name
 Any Product Can Be Branded
Two conventional – but incorrect – wisdoms:
• Brands are only important for luxury products.
– Typical reasoning: Luxury products are “hedonic,” not
bought for functional utility.
• Brands are not important for business-to-
business products.
– Typical reasoning: Business buyers are coldly rational and
not influenced by emotions.
 What Research Finds About Brands
• Utilitarian product choices are influenced by brands.
• The driving force is competition.
• With intense competition, products soon offer equal
functional advantages (benchmarking, “me-too” strategies,
follow-the-leader, etc.)
• The one sustainable advantage is brand image.
• Ted Levitt: “Anything can be differentiated.”
 Global Brand Equity
• Brand equity is the value of positive associations
consumers have with a brand name.
– Emotional attachments, affinity, positive brand image,
and brand identity
– Cognitive factors: Familiarity, knowledge, perceived
quality
– Social factors: Peer group acceptance
• When these associations turn negative, the brand
equity can go down very quickly.
 Brand Value
To raise the value of a firm’s brands:
• Increase brand equity in each market.
• Expand into new foreign markets.
BRAND REACH is the number of countries
where the brand is available.
• The dollar value of the brand is its average equity
in each market times the number of countries.
Brand Value = Brand Equity x Brand Reach

• Global brands have higher dollar values.

Brand Value = Brand Equity x Brand
Reach
The World’s Most Valuable Brands
(2014)
V. The Pros and Cons of Global Branding
Advantages
• Demand spillover: Brand name is familiar
because of media, satellite communications,
word-of-mouth, etc.
• Global customers: Travelling and multinational
customers make the global brand a natural
choice everywhere.
• Scale economies: Spending on product
improvements and advertising can be leveraged
across more markets.
 Disadvantages of Global Brands
• Negative spillover: Bad news travels faster
across country markets and affects other
products.
• Domestic brand loyalty: Local brand loyalties
can be strong. The global brand could be a
misfit.
• Local motivation: Imposes local constraints.
Consumer Reactions to Global Brands
• Perceived “globalness” of a brand is associated
with higher product quality, across all countries
and product categories.
• Globalness is associated with status and
prestige.
• Globalness adds a cachet of esteem and
celebrity (cosmopolitan).
• Global brands have associations with power and
competitive dominance (slightly negative).
Globalizing a Brand Name: Checklist
1. Does the brand name make sense outside
of the source country?
2. If the name suggests a country
association, is the effect positive?
3. Is the name available legally in many
countries?
4. Does the brand compete with other
brands in the portfolio?
5. Should growth be limited to the creation
of a regional brand?
 Brand Name and Logo Can Create Conflict
• Classic mistake: Chevy Nova.
• Corona in Spain is “Coronita.”
• Budweiser in Germany is “Bud.”
• Honda-Hyundai conflict.
• Chinese characters for Coca-Cola© literally translate as "Tastes
good and makes your mouth happy” but Coke’s first Chinese
attempt: “Bite the wax tadpole.”

Fig. 9.41a: Source: https://pixabay.com/en/coca-cola-cold-drink-soft-drink-462776/. Fig. 9.41c: Source: https://pixabay.com/en/honda-logo-car-1596081/.

Fig. 9.41b: Source: https://pixabay.com/en/soda-can-drink-chinese-cola-1545777/.
 Hard Choices
• Cadbury-Schweppes bought French Orangina and kept
the name.
• Mars changed European Marathon to global Snickers,
kept the Mars bar but called it Milky Way in the U.S.
• Toyota’s top Lexus model started in Japan as the Celsior,
changed to Lexus in 2005.

Fig. 9.42a: Source: https://pixabay.com/en/candy-bar-sweetness- Fig. 9.42b: Copyright © 2006 by Jane Mejdahl, (CC BY 2.0) at
chocolate-mars-1735569/. https://commons.wikimedia.org/wiki/File:Orangina.jpg.
 Changing a Local Brand to Global
• Fade-in/fade-out
– The global brand is linked to the local brand for a
time, after which the local brand is dropped.
• Summary axing
– Simply drops the local brand name and introduces
the new brand (less gradual approach).
• Companies also use forewarning in media to
minimize changeover dissonance among loyal
customers.
 International Brand Portfolio
• Local brands next to global brands
– Unilever’s U.S. “Snuggle” is “Comfort” in the U.K.

Ex. 9.10a: Copyright © by 123RF/Anna Yakimova. Ex. 9.10b: Copyright © by iStockphoto/dem10.

• Unilever uses local brands with soft names but

keeps the same market positioning everywhere.
– Cajoline in France, FaFa in Japan
L'Oréal's International Brand Portfolio

Ex. 9.9: Copyright © 2013 by Shutterstock/Ekaterina_Minaeva.

Changing a Country-of-Origin Effect
• Global branding can also apply to a
country.
– What comes to mind as you think about Peru?
• Peru’s attempt at branding: International Campaign
Launch 2012
• https://www.youtube.com/watch?v=sTUi3JTuRys
• 3 minutes Peru Tourism commercial
– What comes to mind as you think about Peru
now?
• Advantages/Disadvantages
 VI. Takeaways
• Product standardization is never 100%, but
management must select which features to
keep uniform and which to adapt to local
markets.
• When preferences show wide variance across
countries, adaptation will be necessary.
• Adaption to usability will always be important,
especially at the bottom of the pyramid.
 Takeaways
• New global products are rarely built from
scratch.
• Global products are successful first in the home
market.
• A successful global product will always spawn
imitators.
– “Me-too” versions by competitors
 Takeaways

• Global brands are often a firm’s most valuable

asset.
• The monetary value of a brand equals:

Brand Equity x Brand Reach

 Takeaways

• Advantages of global brands include:

– Perceptions of quality, status, global
aspirations
• Disadvantages include:
– Lack of adaptation, aim at dominance
 Takeaways
• Global brand names need to be the same
everywhere.
• Otherwise, spillovers will not materialize.
• But the brand names also have to be
culturally acceptable.
• Abstract names and three-letter
abbreviations solve this issue.
– Acura, Altria, Lenovo, KFC, IBM