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International Marketing
Chapters 12 and 13
Products and Services –
Consumer and Business
Introduction
• The opportunities for international marketers of consumer goods
and services today have never been greater
• New consumers are springing up in many emerging markets,
which promise to be huge markets in the future
• In the more mature markets consumers’ tastes become more
sophisticated and complex due to increases in purchasing power
Quality
•
•
Intense global competition is placing new
emphasis on manufacturing quality products
Quality, as a competitive tool, is the deciding
factor in world markets
Quality can be defined on two dimensions:
(1) market-perceived quality and
(2) performance quality
•
•
•
Quality is associated with customer satisfaction
Quality is also measured in many industries by objective third
parties such as JD Power and Associates
Customer satisfaction indexes developed are now being used
to measure satisfaction across a wide variety of consumer
products and services
Physical or Mandatory Requirements and Adaptation
•
Products may have to change in a number of ways to meet the
physical or mandatory requirements of a new market, ranging
from simple package changes to total redesign of the physical
core product
•
•
Legal, economic, political, technological,
and climatic requirements of the local
marketplace often dictate product adaptation
Changes may also have to be made to
accommodate climatic differences
Product Adaptation
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Lehar-Pepsi in India
Chevrolets in the Mid-east
Crackers shipped to humid areas
“Small sizing” products like razor blades (India)
and cheetos (China)
• Electrolux cold wash only washing machines
where energy costs are high
• Cake mixes in England
• Selling Harry Potter in English in Japan
(unusual?)
Green Marketing and Product Development
• At the forefront of the “green movement,” with strong public
opinion and specific legislation favoring environmentally friendly
marketing and products
• Green marketing is a term used to identify concern with the
environmental consequences of a variety of marketing activities
• The designation that a product is “environmentally friendly” is
voluntary, and environmental success depends on the consumer
selecting the eco-friendly product
• In some countries each level of the distribution chain is
responsible for returning all packaging, packing, and other waste
materials up the chain
Products and Culture
A product is more than a physical item: It is a bundle of
satisfactions (or utilities) that the buyer receives
1.
2.
3.
Facets of products include its form, taste, color,
odor, and texture; how it functions in use; the
package; the label; the warranty; manufacturer’s
and retailer’s servicing; the confidence or prestige
enjoyed by the brand; the manufacturer’s
reputation;
The adoption of some products by consumers can
be affected as much by how the product concept
conforms with norms, values, and behavior
patterns
Thus, many facets of products are influenced by
culture, which marketers must pay attention to.
Diffusion of Innovation
• Product diffusion depends on:
a. Relative advantage
b. Compatibility
c. Complexity
d. Trialability
e. Observability
Analyzing Product Components
for Adaptation
•
A product is multidimensional, and the sum of all its features
determines the bundle of satisfactions (utilities) received by the
consumer
•
The many dimensions of products can be divided into three
distinct components:
(1) core component,
(2) packaging component, and
(3) support services component
•
These components include all a product’s tangible and
intangible elements and provide the bundle of utilities the
market receives from use of the product
Dimensions of a Product
The many dimensions of a product can be divided into three distinct components as illustrated in the
model below:
Marketing Consumer Services Globally
Advice regarding adapting products for international consumer
markets also applies to adapting services or intangible products
However, many consumer services are distinguished by four
unique characteristics:
1.
2.
3.
4.
intangibility,
inseparability,
heterogeneity, and
perishability
•
There are several services opportunities in global markets from
travel and tourism, TV, movies, to financial services
Barriers to Entering Global
Markets for Consumer Services
•
Most services are inseparable and require production and
consumption to occur almost simultaneously; thus, exporting is
not a viable entry method for them
•
Globally, consumer services marketers face the following four
barriers:
•
•
•
•
protectionism,
controls on transborder data flows,
protection of intellectual property, and
cultural requirements for adaptation
Brands in International Markets
A global brand is defined as the worldwide use of a name, term,
sign, symbol (visual and/or auditory), design, or combination
thereof intended to identify goods or services of one seller and
to differentiate them from those of competitors
A successful brand is the most valuable resource of a company
Brand image is at the very core of business identity and strategy
1.
2.
Global brands such as Kodak, Sony,
Coca-Cola, McDonald’s, Toyota,
and Marlboro play an important role
in that process
Perceived brand “globalness” leads to
increases in sales
Country-of-Origin Effect and
Global Brands
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Brands are used as external cues to taste,
design, performance, quality, value, and
prestige
Many factors affect brand image, but one factor
of great concern is the country-of-origin effect
on the market’s perception of the product
Country-of-origin effect (COE) can be defined
as any influence that the country of
manufacture, assembly, or design has on a
consumer’s positive or negative perception of a
product
When the customer becomes aware of the
country of origin, there is the possibility that
the place of manufacture will affect product or
brand image
The country, the type of product, and the image
of the company and its brands all influence
whether the country of origin will engender a
positive or negative reaction
Introduction –Business-to-Business
1. Industrial products sold in business-to-business
markets also constitute a large part of global marketing
2. The inherent nature of industrial goods makes
marketing mix standardization more common
3. Industrial products and services are used in the process
of creating other goods and services; consumer goods
are in their final form and are consumed by individuals
4. The motive differs: Industrial consumers are seeking
profit, whereas the ultimate consumer is seeking
satisfaction
5. Although prevalent for industrial goods, protectionism
can be much more pronounced for the service provider
Demand in Global Business-to-Business
Markets
•
Three factors seem to affect the demand in international
industrial markets differently than in consumer markets
1.
2.
3.
Demand in industrial markets is by nature more
volatile
Stages of industrial and economic development
(discussed in Chapter 9) affect demand for
industrial products maybe more than for
consumer products.
The level of technology of products and
services makes their sale more appropriate for
some countries than others
Derived Demand Example
Quality and Global Standards
1.
2.
3.
4.
5.
6.
7.
Quality is important with industrial products as well
Quality is defined by the buyer
One important dimension of quality is how well a product meets
the specific needs of the buyer
This price–quality relationship is an important factor in
marketing industrial products
Total quality management must be a part of all MNCs’
management strategy
A lack of universal standards is another problem in international
sales of industrial products
Conflicting standards are encountered in test methods for
materials and equipment, quality control systems, and machine
specifications
ISO 9000 Certification:
An International Standard of Quality
1.
2.
3.
4.
5.
6.
ISO 9000s, a series of five international industrial standards (ISO 9000–9004)
originally designed by the International Organization for Standardization in
Geneva to meet the need for product quality assurances in purchasing
agreements
ISO 9000 concerns the registration and certification of a manufacturer’s
quality system
It is a certification of the existence of a quality control system a company has
in place to ensure it can meet published quality standards
ISO 9000 standards do not apply to specific products
It is a certification of the production process only, and does not guarantee that
a manufacturer produces a “quality” product or service.
The series describes three quality system models, defines quality concepts,
and gives guidelines for using international standards in quality system
Business Services
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•
For many industrial
products, e.g., cell
phones, the revenues
from associated services
exceed the revenues
from the products
Customer training is
rapidly becoming a
major after-sales service
when selling technical
products in countries
that demand the latest
technology but do not
always have trained
personnel
•
For many industrial
products after-sales service
is also important
•
After-sales services are
crucial in building strong
customer loyalty and are
also almost always more
profitable than the actual
sale of the machinery or
product
Trade Shows: A Crucial Part
of Business-to-Business Marketing
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Trade shows serve as the most important vehicles for selling products,
reaching prospective customers, contacting and evaluating potential agents
and distributors, and marketing in most countries
Trade shows serve a much more important role in other countries where most
prospects are found
European trade shows attract high-level decision makers who are there to buy
products
Trade shows provide the facilities for a manufacturer to exhibit and
demonstrate products to potential users and to view competitors’ products
Trade shows create an opportunity to create sales and establish relationships
with agents, distributors, franchisees, and suppliers that can lead to morepermanent distribution channels in foreign markets
Relationship Marketing
in Business-to-Business Contexts
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Building long-term relationships with customers is a viable
strategy for business-to-business marketing
The objective of relationship marketing is to make the
relationship an important attribute of the transaction, thus
differentiating oneself from competitor
It shifts the focus away from price to service and long-term
benefits
The reward is loyal customers that translate into substantial
long-term profits
Focusing on long-term relationship building will be especially
important in most international markets where culture dictates
stronger ties between people and companies