Chapter 8 - International Product and Service

Management
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 Learning Objectives
• Understand the nature of international product and
service marketing and appreciate the elements that
make up the product and service offer
• Evaluate the factors affecting international product
and service strategy development both external and
internal to the firm
• Explain the issues that affect international product
and service management across borders
• Identify the implications of the image, branding and
positioning of products and services in international
markets
• Understand how innovation contributes to the
international product and service strategy
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The nature of products and
services

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 Service Characteristics are

• Intangibility
– Services include both tangible and intangible elements.
Intangible elements cannot be touched, smelt or seen.
• Perishability
– services cannot be stored.
• Heterogeneity
– services are rarely the same because they often involve
interactions between different people with different
expectations
• Inseparability
– the service is produced and the experience consumed
simultaneously.

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 Gastronomy in sacred
places Illustration 8.1
• Dining experiences provided Intangible elements include:
through tangible and former hospital for pilgrims,
intangible sacred place of worship, place of
• Hostel San Marcos sanctuary and prayer
Monastery in Leon, Spain
• Tangible elements include:
Jacobean motifs, carvings,
historical furniture, plates
and uniforms

More information about the

hostel can be found here:
https://www.parador.es/en/para
dores/parador-de-leon

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 3 Additional Ps for Services

• People
– Includes consumers and staff

• Process
– The designed delivery process to provide a
total customer experience

• Physical aspects
– Product displays, layout of store, logos etc

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Product Levels (Levitt 1986)

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 The components of the international
product offer
• For what purpose has the product been developed
– how would it be used in that country?

• What distinctive properties does it have?

• What benefits is the consumer expected to gain?
• How is it positioned
– what image do consumers perceive it to have?

• Which consumer segments are expected to buy it

– on what occasions and for what purpose?

• How does it fit into the total market?

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The components of the international
product offer (cont.)

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Brand Image and Brand Equity
• Bundle of images and
experiences in the customer’s
mind
• A promise made by a particular
company about a particular
product
• A quality certification
• Differentiation between
competing products

The sum of impressions about a brand is the

Brand Image

BrandForEquity is the
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Do you know what the parent company is?

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International Products and Brands

Offered in several
markets in a particular
region
– ‘Euro-brands’
– Honda 5-door
hatchback auto is
known as Fit in
Japan and Jazz in
Europe

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 Jolly Bee

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 Fast food in Sweden

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Strategic Alternatives in Product
Decisions

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Extend, Adapt and Create can be developed into 5 options:

International Product Consumer Need Product Communication

Product Strategy Example Satisfied Strategy Strategy
Strategy 1
Product and Gillette Disposable, easy Extension Extension
Communication Razor to use product
Extension
Strategy 2 USA: Substitute
Product Extension Wrigley for Smoking Extension Adaptation
Communication Chewing Gum Europe: Dental
Adaptation benefits
Strategy 3
Product McDonalds Fast-Food Adaptation: Extension:
Adaptation Adding local Using global
Communication products to campaign
Extension range
Strategy 4 Adaptation:
Product and Slim Fast Identical: Consumer Adaptation:
Communication Lose Weight preferences Celebrity in Germany,
Adaptation for different Teacher in UK
flavors
Strategy 5 Non-alcoholic Develop new
Product Invention Buckler Beer beer Invention communication

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Reasons for Product Standardisation
 Economies of scale : Production, R&D, Marketing
 Common Consumer Drinking patterns, luxury goods,
needs and Mobility American Express

 Customer retention & Loyalty Hilton H Honors

 Home Country Image : US jeans, French Perfumes,…
 Impact of technology : B to B Markets

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Reasons for Product Adaptation

• Climatic factors: Chocolate, Fashion

• Usage factors :
- front-loading/top-loading washing machines
• Legal factors: on products, packaging, and labels.
• Company history and operations (subsidiaries)
• Cultural factors: Flavour preferences, aesthetics in
design/colours etc

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Drivers of Product Adaptation
Example COLGATE Toothpaste

Differences in National Regulations

– Triclosan forbidden in Germany
– High fluorine content in local water (UK)
– Obligation to sell high fluorine content
toothpaste in pharmacy (France)
– Stringent clinical tests in France

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 Managing products
across borders

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 Managing products
across borders (cont.)

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 International branding
Brands add value by having:

• Price premium: They should allow higher prices to be charged

than for products that have an equivalent specification but no
brand.
• Higher volumes: Alternatively branded products can generate
higher volumes than non-branded products if they are priced at
market rates, rather than at a premium.
• Lower costs: Higher volumes should lead to cost reductions
from the economies of scale and the experience effect, so
improving competitiveness.
• Better utilization of assets: The predictably high level of sales
should lead brand managers to make effective use of assets
such as equipment, the supply chain and distribution channels.

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Image, branding and position

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 Innovation and new
product development (cont.)

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 Innovation and new
product development (cont.)

• Uncover unmet needs and problems

• Develop a product with competitive

advantage

• Shepherd the products through the firm

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 COO – Country Of Origin

The country of origin (COO) of a product,

which is normally communicated through
the phrase “made in …,” is an extrinsic
product cue, an intangible product
attributes. COO is also an important
element in branding or one of the
secondary associations” (Keller, 1993).

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Country of Origin as Brand Element

Perceptions about and attitudes toward particular countries

often extend to products and brands known to originate in
those countries
– Japan
– Germany
– France
– Italy

German cars
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 Complexity in COO
• Country of design,
• Country of production,
• Country of assembly,
• Country of supply of components,
• Country of brand origin,
• Country of brand ownership

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 COO strategies
If COO is positive, it is emphasised
– Audi: Vorsprung durch Technik (Advantage
through technology)
If COO is negative, it is played down
– Avoiding mentioning the product's origin.
Package, label and product design can minimize
evidence of COO, but in some countries, the law
requires proper origin identification.
– Using English sounding brand names as
Japanese firms widely did in 1960s : Panasonic
– Use reputable distributors, e.g. Made in China for
M&S

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