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Chapter13ProductsandServicesforCustomers©McGraw-HillEducation.Allrightsreserved.Authorizedonlyforinstructoruseintheclassroom.
NoreproductionorfurtherdistributionpermittedwithoutthepriorwrittenconsentofMcGraw-HillEducation.LearningObjectives13-1 Theimportanceofofferingaproductsuitablefortheintendedmarket13-2 Theimportanceofqualityandhowqualityisdefined13-3 Physical,mandatory,andculturalrequirementsforproductadaptation13-4 Theneedtoviewallattributesofaproducttoovercomeresistancetoacceptance13-5 Country-of-origineffectsonproductimageInternationalMarketersEmergingOpportunitiesandChallengesNewconsumersinemergingmarketsDistinctionbetweenproductsandservicesMarketofferingsandbusiness-to-consumer(B2C)marketingProductadaptationQuality1of5Productlifecyclesbecomingshorterandfocusingon:ImportanceofqualityCompetitivepricesInnovativeproductsPowerisshiftingfromsellertobuyerCustomerdefinesqualityintermsofownneedsandresourcesCostandqualityamongmostimportantcriteriaforpurchasesinmostglobalmarketsQuality2of5QualityDefinedMarket-perceivedqualityConsumerperceptionsofqualityPerformancequalityFirm’sperceptionofqualityExpectedasagivenincompetitivemarketFirmsoftenmisrepresentperformancequalityCustomersatisfactionindexes“Fairtrade”designationMalcolmBaldrigeQualityAwardProductAdaptationProductsarenotusedinthesamewaysinallmarkets.Here,aboyinaneasternMexicanvillageispreparedfora“Jaguardance”tobringrain.Clay,ashes,andthegloballyubiquitousCokebottlemakeforthebestcatcostumes.©KennethGarrett/AlamyQuality3of5MaintainingQualityPerformancequalityiscriticalMaybedamagedasproductpassesthroughdistributionchainChallengeforglobalbrands;longdistributionchains,lesscontrolMarket-perceivedqualitymattersGlobalCompetitioninChocolateIndustryRedOctoberbrandchocolate(ontheleft)stillcompeteswellagainstforeignrivalsNestléandMarsonMoscowstoreshelves.OneadvertisingexecutiveinMoscowreportsthatRussiansareexperiencingarenewednationalisminproductpreferences.Wehavenoideawhatthe“forMen”appealisallabout,butitapparentlyworksinMoscow.©JohnGrahamQuality4of5PhysicalorMandatoryRequirementsandAdaptationProducthomologationChangesmandatedbylocalproductandservicestandardsMostoftenreasonforadaptation;notoutofchoiceOtherfactorsLesseconomicallydevelopedmarketsrequiregreaterdegreeofadaptationforacceptanceClimatedifferencesmustbeaccommodatedLaw,politics,technologyQuality5of5GreenMarketingandProductDevelopmentImpactsproductdevelopmentControlofpackagingcomponentofsolidwasteConsumerdemandforenvironmentally-friendlyproductsEuropeattheforefrontEcolabelingguidelinespassedbyEuropeanCommissionin1992EUlawrequiresrecyclingorreuseofallpackagingmaterialProductsandCulture1of7ProductismorethanphysicalitemBundleofsatisfactionsorutilitiesabuyerreceivesSumofphysicalandpsychologicalsatisfactions,andculturalinfluencesPsychologicalaspectsmayrequireadaptationofproductProblemsofadaptingaproducttosellabroadsimilartothoseassociatedwithintroducingnewproductdomesticallyPerformanceofTurkishColaBrandColaTurkaholdsasurprisinglylargepercentageofshelfspacevis-à-visCokeandPepsiinthissupermarketinIstanbul.The2-literbottleispricedat2.00lira,justunderCoke’s2.05lira.ColaTurka’sTVads,initiallyfeaturingAmericanactorChevyChasespeakingTurkish,seemtohaveworkedwell.©JohnGrahamProductsandCulture2of7InnovativeProductsandAdaptationFirststeptoadaptation:considerinnovationDetermineperceivednewnessofproductinintendedmarketDiffusionofinnovationGoalisproductacceptancebylargestnumberofconsumersintheshortestspanoftimeNewproductsnotalwaysreadilyacceptedbycultureMayultimatelybeaccepted,buttakestimeandeffortDiffusionresearchshowsthatprobablerateofacceptancecanbepredictedandacceleratedifnecessaryProductsandCulture3of7DiffusionofInnovationsDiffusionaccordingtoEdwardRogersAninnovationcommunicatedthroughcertainchannelsovertimeamongmembersofasocialsystemElementoftimeuniquetodiffusionresearchGoaltoshortenlagbetweenintroductionandwidespreadadoptionofideaorproductRatesofproductacceptanceanddiffusionvaryImpactedbyculture,technology,adoptionfromneighboringcountriesInnovationoftheToilet:JapanJapan’slonghistoryofcrowdinghaspromptedtheculturetofocusoncleanliness,frequentbathing,andhigh-techbathrooms.Thus,Matsushita’stoiletreadsyourbodyweight,temperature,andbloodpressure.Soonyouwillalsobeabletogetareadoutonglucoseandproteinlevelsinyoururine!©MichaelEdrington/TheImageWorksInnovationoftheToilet:TheDutchTheDutcharealsoworriedaboutplumbing—muchoftheircountryisbelowsealevel.SphinxinMaastrichtproducesaurinalforwomenandaflyimbeddedintheporcelainfortheirmen’surinal.Thelatterreducesmaintenancecosts,asthecompany’sresearchhasshownthatmostmenwillaimforthefly,whichisstrategicallyplacedtominimizesplash.BothDutchinnovationscanbeseenintheSchipholAirportoutsideofAmsterdam.©JohnGraham©JohnGrahamProductsandCulture4of7DiffusionofInnovationscontinuedDiffusiontheoryknowledgebeneficialPredictdiffusiontimebeforemakingfinancialcommitmentIdentifyproductfeaturesthatprovokeresistanceProvideopportunitytolessenresistanceandhastenacceptanceExtraneousvariablesthataffectrateofdiffusionDegreeofperceivednewnessPerceivedattributesoftheinnovationMethodsusedtocommunicatethedataProductsandCulture5of7RateofacceptanceorresistancecanbepredictedFivecharacteristicsofinnovationbasisRelativeadvantageCompatibilityComplexityTrialabilityObservabilityAnalyst’sself-referencecriterionmaycausebiaswheninterpretingcharacteristicsofproductProductsandCulture6of7ProductionofInnovationsDiversitygoodforinnovation;highercreativeoutputLong-termstudyonthelong-termimpactonworkteamperformanceDiversegroupsinitiallydisadvantagedbycommunicationissuesOnceissuesovercome,diversegroupsproducedmoreideasExhibit13.1AverageNumberofIdeasPutontheTableJumptolongdescription.ProductsandCulture7of7ProductionofInnovationscontinuedConflictingopinionsonculture’sroleininnovationOnestudysuggeststhatindividualismenhancescreativityAnothersuggeststhatcorporateculture,trainingmoreimportantResearchon“conversion-ability”DegreeofsuccessfirmshavewhentakinginventionstomarketThreefactors:patience,focusonfewimportantinnovations,experienceAnalyzingProductComponentsforAdaptation1of4
AproductismultidimensionalSumofallitsfeaturesdeterminesthebundleofsatisfactions(utilities)receivedbyconsumerProductComponentModelHelpstodeterminehowproductmightbeadaptedtomarketSeparatesmanydimensionsintothreedistinctcomponentsSupportservices,packaging,andcorecomponentEffectsofcultural,physical,andmandatoryfactorscanbefocusedoneachcomponentExhibit13.3ProductComponentModelJumptolongdescription.AnalyzingProductComponentsforAdaptation2of4
CoreComponentConsistsofphysicalproductItsdesignandfunctionalfeaturesVariationscanbeaddedordeletedfordifferentmarketsAlterationindesignandfunctiontofitculturaltastesMayaffectproductprocesses;requiresadditionalcostsSomealterationsmaybemandatedbymarketAnalyzingProductComponentsforAdaptation3of4
PackagingComponentFrequentlyrequiresmandatoryadaptationsCountry-of-originlabelingforfood,sizestipulationsLawsvaryfromcountrytocountryDiscretionaryadaptationsshouldbeconsideredChecktrademarkforunintendedsymbolicmeaningPayattentiontotranslationofbrandnamesandcoloruseConsiderclimateofmarketAnalyzingProductComponentsforAdaptation4of4
SupportServicesComponentImportantnottoneglectManyotherwisesuccessfulmarketingprogramsfailhereRepairandmaintenanceachallengingfeatureNotasaccessibleorcommoninothercountriesInstructionmanualsmayneedtobeadaptedCountrieshavevaryingliteracyandeducationlevelsMarketingConsumerServicesGlobally1of3AdaptationofServicesMuchofadviceusedforproductscanstillbeappliedBut,servicesaredifferentbecausetheyareintangibleIntangibilityresultsinthreeotherimportantcharacteristicsInseparable:creationcannotbeseparatedfromconsumptionHeterogeneous:individuallyproducedandisthusuniquePerishable:mustbeconsumedsimultaneouslywithcreationMarketingConsumerServicesGlobally2of3ServicesOpportunitiesinGlobalMarketsTourismTransportationFinancialservicesEducationTelecommunicationsEntertainmentInformationHealthcareTouristServicesTwoofthebestvistasintheworldareTahitiabovethewater(BoraBoraissilhouettedinthebackground)andthecoralreefsoffBelizeunderthewater.Touristsflocktobothfromaroundtheworld.Servicescompaniesfollowthetourists,includingtheProfessionalAssociationofDivingInstructors(PADI),whichcertifiesscubadiversandinstructorsfromitsheadquartersinCostaMesa,California.©JohnGraham©JohnGrahamMarketingConsumerServicesGlobally3of3BarrierstoEnteringGlobalMarketsServicesinseparable;exportingnotanentryoptionLicensing,franchising,directinvestmentaremainmethodsFourbarriers:ProtectionismRestrictionsontransborderdataflowProtectionofintellectualpropertyCulturalbarriersandadaptationBrandsinInternationalMarkets1of5GlobalBrandWorldwideuseofname,term,sign,symbol,designUsedtoidentifygoodsandservicesofonesellerDifferentiatessellerfromitscompetitorsBrandmostvaluableresourceacompanyhasNameencompassesyearsofadvertising,goodwill,qualityevaluations,productexperience,andotherattributesImageatverycoreofbusinessidentityandstrategyImportanceandimpactvariesbycultureExhibit13.4TopTwentyBrands1of2RankBrandCountrySector1AppleU.S.Technology2GoogleU.S.Technology3MicrosoftU.S.Technology4Coca-ColaU.S.Beverages5AmazonU.S.Retail6SamsungSouthKoreaTechnology7ToyotaJapanAutomotive8FacebookU.S.Technology9Mercedes-BenzGermanyAutomotive10IBMU.S.BusinessservicesSource:“BestGlobalBrands2017,”
/best-brands/best-global-brands,online.Exhibit13.4TopTwentyBrands2of2RankBrandCountrySector11GEU.S.Diversified12McDonald’sU.S.Restaurants13BMWGermanyAutomotive14DisneyU.S.Media15IntelU.S.Technology16CiscoU.S.Technology17OracleU.S.Technology18NikeU.S.SportingGoods19LouisVuittonFranceLuxury20HondaJapanAutomotiveSource:“BestGlobalBrands2017,”
/best-brands/best-global-brands,online.BrandsinInternationalMarkets2of5GlobalBrandsCompanieswithstrongbrandstrytoglobalizethemIdeallygivescompanyuniformlypositiveassociationworldwideEnhancesefficiencyandcostofintroducingnewproductsInternetandtechnologyacceleratesbrandglobalizationNotallcompaniesbelievesingleglobalapproachisbestThosewithalreadyestablishedcountry-specificbrandsmightnotwanttoabandonthem;riskyandcostlyBrandextensionsinglobalmarketsaresometimesdifficultBrandsinInternationalMarkets3of5NationalBrandsCountry-specificbrandsMultinationalsmustconsiderculturalfactorsIncreasednationalisminsomecountriesimpactsbrandAcceptancevariesacrossregions,withincountries,anddependingonknowledgeofbrandManycompaniesmixnationalandglobalbrandingBrandsinInternationalMarkets4of5Country-of-OriginEffect(COE)andGlobalBrandsInfluencethatcountryofmanufacture,assembly,ordesignhasonconsumer’sperceptionofproductReactioninfluencedbycountry,product,andimageofbrandsEthnocentrismimpactsattitudestowardforeignproductsStereotypesagainststatusofeconomy:industrial,developingFadsforattractiveness;“xenocentrism”GoodmarketingcanovercomeanegativeCOEBrandingAstheysay,“twobrandsarebetterthanone!”Howaboutfour?ThefourflagsyouseeingflyingontheradarmastoftheEndeavoratseaamongtheGalapagosIslandsrepresentEcuador(bottom),theBahamasregistryofthe85-personcruiseship(right),theNationalGeographicSociety,andLindbladExpeditions.Thelattertwoareagreatexampleofco-branding.ThemultifacetedstrategicalliancethatLindbladExpeditionshaswiththeNationalGeographicSociety,“enablestravelerstoparticipateintheworldofnaturalandculturalhistoryasengaged,activeexplorerswhocareabouttheplanet.”©JohnGrahamBrandsinInternationalMarkets5of5PrivateBrandsFormidablecompetitorstomanufacturer’sbrandsParticularlyduringrecessionsintargetmarketsConsumerspreferlessexpensive,“morelocal”privatebrandsGlobalbrandsmustbepricedcompetitivelytobesuccessf
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