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CHAPTER 10

BRAND AND PRODUCT DECISIONS IN GLOBAL MARKETING


SUMMARY
The product is the most important element of a companys marketing program. Global
marketers face the challenge of formulating coherent product and brand strategies on a
worldwide basis. A product can be viewed as a collection of tangible and intangible
attributes that collectively provide benefits to a buyer or user. A brand is a complex
bundle of images and experiences in the mind of the customer. In most countries, local
brands compete with international brands and global brands. A local product is
available in a single country; a global product meets the wants and needs of a global
market.
A global brand has the same name and a similar image and positioning in most parts of
the world. any global companies leverage favorable brand images and high brand
equity by employing combination (tiered) branding, cobranding, and brand
extension strategies. !ompanies can create strong brands in all markets through global
brand leadership. Maslow`s hierarchy is a needs"based framework that offers a way of
understanding opportunities to develop local and global products in different parts of the
world. #ome products and brands benefit from the country-of-origin effect. $roduct
decisions must also address packaging issues such as labeling and aesthetics. Also,
express warranty policies must be appropriate for each country market.
$roduct and communications strategies can be viewed within a framework that allows for
combinations of three strategies% extension strategy, adaptation strategy, and creation
strategy. &ive strategic alternatives are open to companies pursuing geographic
expansion% product-communication extension' product extension-communication
adaptation' product adaptation-communication extension' product-communication
adaptation' and product invention (innovation). The strategic alternative(s) that a
particular company chooses will depend on the product and the need it serves, customer
preferences and purchasing power, and the costs of adaptation versus standardi*ation.
Product transformation occurs when a product that has been introduced into new
country markets serves a different function or is used differently than originally intended.
+hen choosing a strategy, management should consciously strive to avoid the ~not
invented here syndrome.
Global competition has put pressure on companies to excel at developing standardi*ed
product platforms that can serve as a foundation for cost"efficient adaptation. ,ew
products can be classified as discontinuous, dynamically continuous, or continuous
innovations. A successful product launch re-uires an understanding of how markets
develop% se-uentially over time or simultaneously. Today, many new products are
launched in multiple national markets as product development cycles shorten and product
development costs soar.
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OVERVIEW
$roducts 5 and the companies and brands associated with them"are arguable the most
crucial element of a companys marketing program' they are integral to the companys
value proposition. 2very aspect of a firms marketing program, including pricing,
distribution, and communication policies, must fit the product.
This chapter examines the ma6or dimensions of global product and brand decisions. &irst
is a review of basic product and brand concepts, followed by a discussion of local,
international, and global products and brands. $roduct design criteria are identified, and
attitudes toward foreign products are explored. The next section outlines strategic
alternatives available to global marketers.
BASIC PRODUCT CONCEPTS
The product P of the marketing mix is at the heart of the challenges and opportunities
facing global companies today% anagement must develop product and brand policies
and strategies that are sensitive to market needs, competition, and company ambitions
and resources on a global scale. 2ffective global marketing often entails finding a
balance between the payoff from extensively adapting products and brands to local
market preferences and the benefits that come from concentrating company resources on
relatively standardi*ed global products and brands.
A product is a good, service, or idea with both tangible and intangible attributes that
collectively create value for a buyer or user.
A products tangible attributes can be assessed in physical terms such as weight,
dimensions, or materials used.
Intangible product attributes, including status associated with product ownership, a
manufacturer7s service commitment, and a brands overall reputation or mysti-ue, are
also important.
Product Types
A fre-uently used framework for classifying products distinguishes between consumer
and industrial goods.
!onsumer and industrial goods, can be further classified on the basis of buyer
orientation. 8uyer orientation is a composite measure of the amount of effort a customer
expends, the level of risk associated with a purchase, and buyer involvement in the
purchase.
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The buyer orientation framework includes such categories as convenience, preference,
shopping, and specialty goods.
Brands
A brand is a complex bundle of images and experiences in the customers mind.
8rands perform two important functions.
1. A brand represents a promise by a particular company about a particular product.
/. 8rands enable customers to better organi*e their shopping experience by helping
them seek out and find a particular product.
The sum of a consumers impressions is a brand image, defined as perceptions about a
brand as reflected by brand associations that consumers hold in their memories.
8rand image is one way that competitors in the same industry sector differentiate
themselves.
Brand equity represents the total value that accrues to a product as a result of a
companys cumulative investments in the marketing of the brand.
8rand e-uity can also be thought of as an asset representing the value created by the
relationship between the brand and customers over time. The stronger the
relationship the greater the e-uity.
!ompanies develop logos, distinctive packaging, and other communication devices to
provide visual representations of their brands.
!ompanies develop logos, distinctive packaging, and other communication devices to
provide visual representations of their brands.
A logo can take a variety of forms, starting with the brand name itself, a word mark
consisting of words like :!oke; or a non-word mark such as the ,ike swoosh.
Local Products and Brands
A local product or local brand is one that has achieved success in a single national
market.
#ometimes a global company creates local products and brands in an effort to cater to the
needs and preferences of particular country markets.
<ocal products and brands also represent the lifeblood of domestic companies.
2ntrenched local products and brands can represent significant competitive hurdles to
global companies entering new country markets. (In !hina, a sporting goods company
started by =lympic gold medalist <i ,ing sells more sneakers than ,ike.)
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In developing countries, global brands are sometimes perceived as overpowering local
ones. Growing national pride can result in a social backlash that favors local products and
brands.
International Products and Brands
International products and international brands are offered in several markets in a
particular region. &or example, for many years the two"seat #mart car developed by
?aimler!hrysler was offered for sale in 2urope only (see !ase 10"/).
Global Products and Brands
Globali*ation is putting pressure on companies to develop global products and to
leverage brand e-uity on a worldwide basis. A global product meets the wants and
needs of a global market. A true global product is offered in all world regions, including
the Triad and in countries at every stage of development.
A global brand has the same name and, in some instances, a similar image and
positioning throughout the world.
#ome companies are well established as global brands. &or example, Gillette (:The best a
man can get;), 8+ (:The ultimate driving machine;), G2 (:Imagination at work;), and
3arley"?avidson (:An American legend;).
In the twenty"first century, global brands are becoming increasingly important.
+orldwide, consumers, corporate buyers, governments, activists, and other groups
associate global brands with three characteristics.
1. Quality signal. Global brands compete fiercely with each other to provide
world"class -uality. A global brand name differentiates product offerings and
allows marketers to charge premium prices.
/. Global myth. Global brands are symbols of cultural ideals.
@. Social responsibility. !ustomers evaluate companies and brands in terms
of how they address social problems and how they conduct business.
A global brand is not the same thing as a global product.
The #ony +alkman is an example of combination or tiered branding, whereby a
corporate name (#ony) is combined with a product brand name (+alkman).
8y using combination branding, marketers can leverage a companys reputation while
developing a distinctive brand identity for a line of products.
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Co-branding is a variation on combination branding in which two or more different
company or product brands are featured prominently on product packaging or in
advertising. $roperly implemented, co"branding can engender customer loyalty and allow
companies to achieve synergy.
Global companies can also leverage strong brands by creating brand extensions. This
strategy which entails using an established brand name as an umbrella when entering new
businesses or developing new product lines that represent new categories to the company.
(The Birgin brand is one example.)
Table 10"1 shows the four combinations of local and global products and brands in
matrix form. 2ach represents a different strategy, a global company can use one or more
strategies as appropriate.
Global Brand Development
Table 10"/ shows global brands ranked in terms of their economic value as determined
by analysts at the Interbrand consultancy and !itigroup.
?eveloping a global brand is not always an appropriate goal.
anagers contemplating the development of a global brand must be aware of three
points%
1. anagers must assess whether anticipated scale economies will materiali*e.
/. anagers must recogni*e the difficulty of building a successful global brand
team.
@. anagers must be alert to instances in which a single brand cannot be
imposed on all markets successfully.
Aaker and Coachimsthaler recommend that companies place a priority on creating strong
brands in all markets through global brand leadership.
The following six guidelines can assist marketing managers in their efforts to establish
global brand leadership
1. !reate a compelling value proposition for customers in every market
entered, beginning with the home country market.
/. Think about all elements of brand identity and select names, marks, and
symbols that have the potential for globali*ation. Give special attention to the
Triad and 8DI! nations.
@. ?evelop a company"wide communication system to share and leverage
knowledge and information about marketing programs and customers in
different countries.
E. ?evelop a consistent planning process across markets and products.
4. Assign specific responsibility for managing branding issues to ensure that
local brand managers accept global best practices.
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9. 2xecute brand"building strategies that leverage global strengths and
respond to relevant local differences.
!oke is arguable the -uintessential global product and global brand. !oke relies on
similar positioning and marketing in all countries. The basic underlying strategic
principle that guide the management of the brand are the same worldwide% are we
offering essentially the same product and brand promiseG
Local versus Global Products and Brands: A Needs-Based Approach
!oca"!ola, c?onalds, #ingapore Airlines, ercedes"8en*, and #ony are a few of the
companies that have transformed local products and brands into global ones.
The essence of marketing is finding needs and filling them.
Maslow`s hierarchy of needs (see &igure 10"1), a staple of sociology and psychology,
provided a framework for extending local products and brands abroad.
aslow hypothesi*ed that peoples desires can be arranged into a hierarchy of five needs.
An individual fulfills needs at each level and progresses to higher levels.
At the basic level of human existence, physiological and safety needs must be met.
$eople need food, clothing, and shelter, and a product that meets basic needs has the
potential for globali*ation.
3owever, the basic need to eat is not the same as wanting a 8ig ac or a !oke.
8ecause !oca"!ola and c?onalds fulfill basic human needs and market their products
well, they built global brand franchises.
8oth know that some food and drink preferences are embedded in culture, both
companies created local products and brands for particular markets.
id"level needs in the hierarchy include self"respect, self"esteem, and the esteem of
others.
These social needs create demand for status"oriented products and cut across stages of
country development (e.g., consumers in alaysia buy the same upscale $arker pen as
Americans shopping at ,eiman arcus).
<uxury goods marketers are especially skilled at catering to esteem needs on a global
basis. (e.g., Dolex).

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#ome consumers flaunt their wealth% this behavior is called conspicuous consumption or
luxury badging.
$roducts fulfill different needs in different countries. The primary function of the
refrigerator in high"income countries relates to basic needs.
In developing countries, refrigerators have a secondary purpose related to higher"order
needs 5 prestige.
3ellmut #chHtte proposed a modified hierarchy to explain the needs and wants of Asians.
The three highest levels emphasi*e the intricacy and importance of social needs.
Affiliation needs in Asia are satisfied when an individual feels accepted by a group'
conformity with group norms is a key force driving consumer behavior.
The next level is admiration, a higher"level need that can be satisfied through acts that
command respect within a group.
At the top of the Asian hierarchy is status, the esteem of society as a whole.
The -uest for status leads to luxury badging (e.g., half of Guccis sales revenues are
generated in Asia).
~COUNTRY OF ORIGIN AS BRAND ELEMENT
=ne of the facts of life in global marketing is that perceptions about and attitudes towards
particular countries often extend to products and brands known to originate in those
countries. #uch perceptions contribute to the country-of-origin effect' they become part
of a brands image and contribute to brand e-uity.
$erceptions and attitudes can be positive or negative 5 :German; is synonymous with
-uality engineering, :Italian; with style, and :&rench; with chic.
+ithin a given country, consumers are likely to differ in terms of both the importance
they ascribe to a products country of origin and their perceptions of different countries.
oreover, as industries and markets globali*e, the origin issue is becoming more
complex. !ounty of design, country of manufacturer, and county sources for parts can all
become relevant considerations.
The manufacturing reputation of a particular country can change (e.g., ade in the I#A
or ade in Capan and &inlands ,okia rose in stature to a global brand).
#tereotyping presents disadvantages. =ne study compared perceptions of microwave
ovens and blue 6eans produced in the I.#, exico, and Taiwan.
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There was a bias in favor of I.#."made microwaves and 6eans and no difference between
microwave ovens :made in the I#A; and :made in Taiwan.;
If a country produces high"-uality products perceived as low -uality, one alternative is to
disguise the country of origin.
The other is to keep foreign identification and change buyer attitudes.
#ome foreign products have a substantial advantage over thie domestica counterparts
simply because of their :foreign"ness;. Global marketers have an opportunity to
capitali*e on the situation by charging premium prices. (e.g., foreign beers).
PACKAGING
In many instances, packaging is an integral element of product"related decisions.
$ackaging is an important consideration for products that are shipped to markets in far"
clung corners of the world.
oreover, the phrase : consumer packaged goods; applies to a wide variety of products
whose packaging is designed to protect or contain the product during shipping, at retail
locations, and at the point of use or consumption.
:2co"packaging; is a key issue today, and package designers must address environmental
issues such as recycling and biodegradability.
$ackaging serves important communication functions, by offering cues that provide
consumers with a basis for making a purchase decision.
$ackaging must engage the senses, make emotional connections, and enhance a
consumer7s brand experience
8rewers, soft drink marketers, distiller, and other beverage firms typically devote
considerable thought to ensuring that packages speak to consumers or provide some kind
of benefit beyond holding li-uid.
Labeling
=ne hallmark of the modern marketplace is the abundance of multi"language labeling on
many products. In todays self"service retail environments, product labels may be
designed to attract attention, to support a products position, and to help persuade
consumers to buy. <abels can also provide consumers with various types of information.
!are must be taken to ensure that all ingredient information and use and care instructions
are properly translated.
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The content of product labels may be dictated by country" or region"specific regulations
which vary in different parts of the world
&or example, the 2uropean Inion now re-uires mandatory labeling for some foods
containing genetically modified ingredients.
Today, virtually all food products sold in the Inited #tates must present information
regarding nutrition and serving si*e in a standard format.
Aesthetics
Global marketers must understand the importance of visual aesthetics embodied in the
color or shape of a product, label, or package.
<ikewise, aesthetic styles, such as the degree of complexity found on a label, are
perceived differently in different parts of the world.
&or example, it has been said that German wines would be more appealing in export
markets if the labels were simplified.
Aesthetic elements that are deemed appropriate, attractive, and appalling in ones home
country may be perceived differently elsewhere.
In some cases, a standardi*ed color can be used in all countries' an example is the
distinctive yellow color on !aterpillars earth"moving e-uipment. In other instances,
color choices should be changed in response to local perceptions.
PRODUCT WARRANTIES
A warranty can be an important element of a products value proposition. An express
warranty is a written guarantee that assures the buyer is getting what he or she has paid
for or that provides recourse in case a products performance falls short of expectations.
In global marketing, warranties can be used as a competitive tool to position a company
in a positive way.
EXTEND, ADAPT, CREATE: STRATEGIC ALTERNATIVES IN GLOBAL
MARKETING
To capitali*e on opportunities outside the home country, company managers must devise
and implement appropriate marketing programs. ?epending on organi*ational ob6ectives
and market needs, a particular program may consist of extension strategies, adaptation
strategies, or a combination of the two.
The following strategies are possibilities%
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An extension strategy that calls for offering a product virtually unchanged (i.e.,
:extending; it) in markets outside the home country.
An adaptation strategy involves changing elements of design, function, or
packaging in response to needs or conditions in particular country markets.
Product invention entails developing new products :from the ground up; with
the world market in mind.
<aws and regulations in different countries fre-uently lead to obligatory product design
adaptations. This may be seen most clearly in 2urope, where one impetus for the
creation of the single market was the desire to dismantle regulatory and legal barriers that
prevented pan"2uropean sales of standardi*ed products.
In the food industry, for example, there were /00 legal and regulatory barriers to cross"
border trade within the 2I in 10 food categories. Among these were prohibitions or taxes
on products with certain ingredients and different packaging and labeling laws. As these
barriers are dismantled there will be less need to adapt product designs and many
companies will be able to create standardi*ed :2uro"products.;
The extensionJadaptationJcreation decision is one of the most fundamental issues
addressed by a company7s global marketing strategy.
Although it pertains to all elements of the marketing mix, extensionJadaptation is of
particular importance in product and communications decisions.
2arlier in the chapter, Table 10"1 displayed product and brand strategic options in matrix
form. &igure 10"E expands on those options% All aspects of communicationKnot 6ust
brandingKare considered.
!ompanies in the international, global, and transnational stages of development all
employ extension strategies. The critical difference is one of execution and mind"set.
In an international company, the extension strategy reflects an ethnocentric orientation
and the assumption that all markets are alike.
A multinational company utili*ed the adaptation strategy because of its polycentric
orientation and the assumption that all markets are different.
The geocentric orientation of managers and executives in a global company has
sensiti*ed them to actual, rather than assumed, differences between markets.
Strategy 1: Product-Communication Extension (dual extension)
any companies employ product-communication extension as a strategy when
pursuing opportunities outside the home market.
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Inder the right conditions, this is the easiest product marketing strategy' it can be the
most profitable one as well.
As a general rule, extensionJstandardi*ation strategies are utili*ed more fre-uently with
industrial (business"to"business) products than with consumer products. The reason is
simple% Industrial products tend not to be as rooted in culture as consumer goods. A
brands high"tech, high"touch image lends itself to global consumer culture positioning
(G!!$).
The product"communication extension strategy has an enormous appeal to global
companies because of the cost savings associated with this approach.
Strategy 2: Product Extension/Communication Adaptation
In some instances, a product or brand can be successfully extended to multiple country
markets with some modifications of the communication strategy.
Desearch may have revealed that consumer perceptions about one or more aspects of the
value proposition are different from country to country. It may also turn out that a
product fills a different need, appeals to a different segment, or serves a different function
in a particular county or region.
+hatever the reason, extending the product while adapting the marketing communication
program bay be the key to market success.
The appeal of the product extension-communication adaptation strategy is its
relatively low cost of implementation.
arketers of premium American bourbon brands such as +ild Turkey have found that
images of ?elta blues music, ,ew =rleans, and Doute 99 appeal to upscale drinkers
outside the Inited #tates. 3owever, images that stress bourbon7s rustic, backwoods
origins do not appeal to Americans.
CLgermeister is an example of product transformation% The same physical product ends
up serving a different function or use than that for which it was originally designed or
created.
Strategy : Product Adaptation-Communication Extension
A third approach to global product planning is to adapt the product to local use or
preference conditions while extending, without minimal change, the basic home"market
communication strategy or brand name.
This third strategy option is known as product adaptation-communication extension.
A new !adillac model, the 8<#, built in #weden, is 9 inches shorter than the current !T#
and a four cylinder engine is standard.
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Mrafts experience with =reos in !hina is an example of changing from a product
extension to product adaption strategy.
Strategy !: Product-Communication Adaptation (dual adaptation)
A company may also utili*e the product-communication adaptation (dual adaptation)
strategy. As the name implies, both the product and one or more promotional elements
are adapted for a particular country or region.
The four alternatives are not mutually exclusive. A company can simultaneously utili*e
different productJcommunication strategies in different parts of the world.
,ikes :bad boy; image is at odds in !hina and their price of their shoes were out of line
with average !hinese household incomes so ,ike adapted both their advertising and
pricing programs.
Strategy ": #nno$ation
Invention is a demanding but potentially rewarding product strategy for reaching mass
markets in less developed countries as well as important market segments in
industriali*ed countries.
The winners in global competition are the companies that can develop products offering
the most benefits, which in turn create the greatest value for buyers anywhere in the
world.
In some instances, value is not defined in terms of performance, but rather in terms of
customer perception.
How to Choose a Strategy
ost companies seek product"communications strategies that optimi*e company profits
over the long term.
+hich strategy for global markets best achieves this goalG There is no general answer to
this -uestion.
anagers run the risk of committing two types of errors regarding product and
communication decisions.
1. To fall victim to the "not invented here" (NIH) syndrome, ignoring decisions
made by subsidiary or affiliate managers.
/. To impose policies upon all affiliate companies on the assumption that what is
right for customers in the home market must also be right for customers
everywhere.
In sum up, the choice of product"communication strategy in global marketing is a
function of three key factors%
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1. The product itself, defined in terms of the function or need it serves'
/. The market, defined in terms of the conditions under which the product is used,
the preferences of potential customers, and the ability and willingness to buy' and
@. Adaptation and manufacture costs to the company considering these product"
communication approaches.
NEW PRODUCTS IN GLOBAL MARKETING
The four strategic options described in the matrix (&igure 10"E) do not necessarily
represent the best possible responses to global market opportunities.
In todays dynamic, competitive market environment, many companies reali*e that
continuous development and introduction of new products are keys to survival and
growth. That is the point of #trategy 4, product invention.
Identifying New-Product Ideas
What is a new product?
The product may be an entirely new invention or innovation that re-uires a relatively
large amount of learning on the part of users. +hen such products are successful, they
create new markets and new consumption patterns that literally represent a break with the
past' they are sometimes called discontinuous innovations.
An intermediate category of newness is less disruptive and re-uires less learning on the
part of consumers' such products are called dynamically continuous innovations.
$roducts that embody this level of innovation share certain features with earlier
generations while incorporating new features that offer value such as a substantial
improvement in performance or greater convenience.
ost new products fall into a third category, continuous innovation. #uch products are
typically :new and improved; versions of existing ones and re-uire less DN?
expenditure to develop than dynamically continuous innovations. !ontinuous
innovations cause minimal disruptions of existing consumption patterns and re-uire the
lease amount of learning on the part of buyers.
!onsumer packaged goods companies and food marketers rely heavily on continuous
innovation when rolling out new products. These often take the form of line extensions
such as new si*es, flavors, and low"fat versions (see Table 10"E).
New-Product Development
A ma6or driver for the development of global products is the cost of product DN?. As
competition intensifies, companies discover they can reduce the cost of DN? for a
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product by developing a global product design. =ften the goal of new product
development is to create a single platform, or core product design element or component
that can be -uickly and cheaply adapted to various country markets.
2ven automobiles are now are being designed with global markets in mind. The &ord
&ocus and Gs minivan are two recent examples.
Durability and quality are important product characteristics that must be appropriate for
the proposed market.
The International New Product Department
As noted previously, a high volume of information flow is required to
scan adequately for new product opportunities, and considerable effort
is subsequently required to screen these opportunities to identify
candidates for product development. The best organizational design
for addressing these requirements is a new-product department.
Managers in such a department engage in several activities. First, they
ensure that all relevant information sources are continuously tapped
for new-product ideas. econd, they screen these ideas to identify
candidates for investigation. Third, they investigate and analyze
selected new-product ideas. Finally, they ensure that the organization
commits resources to the most li!ely new-product candidates and is
continuously involved in an orderly program of new-product
introduction and development on a worldwide basis.
+ith the enormous number of possible new products, most companies establish screening
grids in order to focus on those ideas that are most appropriate for investigation. The
following -uestions are relevant to this task%
1. 3ow big is the market for this product at various pricesG
/. +hat are the likely competitive moves in response to our activity with this
productG
@. !an we market the product through our existing structureG If not, what
changes will be re-uired, and what costs will be incurred to make the
changesG
E. Given estimates of potential demand for this product at specified prices with
estimated levels of competition, can we source the product at a cost that will
yield an ade-uate profitG
4. ?oes this product fit our strategic development planG (a) Is the product
consistent with our overall goals and ob6ectivesG (b) Is the product consistent
with our available resourcesG (c) Is the product consistent with our
management structureG (d) ?oes the product have ade-uate global potentialG
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Testing New Products
The ma6or lesson of new"product introduction outside the home market has been that
whenever a product interacts with human, mechanical, or chemical elements, there is the
potential for a surprising and unexpected incompatibility.
8ecause virtually every product matches this description, it is important to test a product
under actual market conditions before proceeding with full"scale introduction. A test does
not necessarily involve a full scale test"marketing effort. It may be simply observing the
actual use of the product in the target market.
&ailure to assess actual use conditions can lead to big surprises.
DISCUSSION QUESTIONS
1. +hat is the difference between a product and a brandG
A product can be defined as a collection of tangible and intangible attributes. The former
include physical features, design attributes, and packaging. The chrome on a 3arley"
?avidson motorcycle is a physical attribute, as are cup holders in a minivan. Intangible
product attributes include such things as reputation, mysti-ue, or a distinguished heritage.
A brand is defined in the text as a symbol about which consumers have beliefs or
perceptions. A more complete definition would describe a brand as a complex bundle of
images, promises, and experiences in the customers mind that represent a promise by a
particular company about a particular product. In other words, brand represents the
relationship that marketing has established with a customer.
/. 3ow do local, international, and global products differG !ite examples.
A local product or brand is perceived to have potential in a single national or
regional market. !oca"!olas Georgia"brand canned coffee is an example cited in
the text. Begemite is a vegetable food spread popular only in Australia.
nternational products or brands are those originally intended for a single home"
country market or a specific geographic region' however, marketers are aware of
extension possibilities. &or example, G2 recently experienced success in
exporting full"si*ed refrigerators to Capan where consumers have responded
favorably to the simple designs. A typical Capanese refrigerator from atsushita
has three doors and a special chilling compartment for fish. The #mart car is an
example of an international product' it was specifically designed for the needs of
the 2uropean market. If the 2uropean launch is successful, #mart may be
exported to the I.#. and other markets. Global products are designed to meet the
needs of a global market rather than the needs of an individual country market or
a well"defined regional market. The #ony +alkman, !olgates Total toothpaste,
and !isco #ystems network routers are all examples of products developed for
the global market.
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@. +hat are some of the elements that make up a brandG Are these elements tangible or
intangibleG
The components of a brand image are shown in &igure 10"1. At the heart of the
brand is a persons expertise with it. In addition, the brand name and logo,
company name, packaging, after"sales service, and attitudes of family and friends
help define the brand. These elements are intangible' however, many brands
include tangible aspects. 2xamples include the contoured !oke bottle, the three"
pronged ercedes hood ornament.
E. +hat criteria should global marketers consider when making product design decisionsG
A standardi*ed global product platform can offer potential cost savings. !ustomer
preferences, costs, country laws and regulations, and environmental compatibility
are all noted in the text as factors affecting design decisions. &or example,
2uropes #ingle arket means a common harmoni*ed standard for many
products. This creates an opportunity for many companies to design pan"
2uropean products, sub6ect to remaining cultural differences between 2uropean
countries. 3owever, product safety provisions in 2urope are still established on a
country"by"country basis.
4. 3ow can buyer attitudes about a products country of origin affect marketing strategyG
If buyers feel positive about a country, a company should consider playing up the
country"of"origin in its marketing communications. &or example, Bolkswagens
:&ahrvehrgnugen; campaign from the early 1FF0s proclaimed the companys
German roots, even though many of the cars it sells are assembled in low"wage
countries like exico. :ade in I.#.A. is part of the appeal of 3arley"?avidson'
similarly, #wit*erland is synonymous with high"-uality watches in various price
ranges.
Dussia and the #outh Africa are two countries in which policy makers and
business leaders have an uphill battle in combating negative country"of"origin
perceptions. +hile Dussia is synonymous with high"-uality vodka (a fact played
up in ads for #tolichnaya), few other consumer products benefit from an
association with the former !ommunist country. #imilarly, #outh Africa produces
very fine wines at attractive prices, but American consumers have been
unresponsive even though apartheid has ended. Bietnam is another country that
may encounter negative bias, at least in the Inited #tates. =ver time, lingering
biases may evaporate and attitudes can be changed. eanwhile, in countries for
which negative biases exist, country of origin should be downplayed in packaging
and marketing communications.
9. Identify several global brands. +hat are some of the reasons for the global success of
the brands you choseG
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?epending on what a particular students home country is, he or she may mention
!oca"!ola, Modak, #ony, ercedes"8en*, or ,ike. As discussed in the text, ,ike
has tremendous brand vitality, due in part to the use of celebrity athletes in its ads.
An interesting discussion topic would be potential long"term damage to the !oke
brand stemming from the product recalls in 2urope during summer 1FFF.
>. 2ach August, !usiness "eek maga*ine features a survey of global brands as a cover
story. The top"ranked brands for /00A are shown in Table 10"/. 8rowse through the list
and choose any brand that interests you. !ompare its /00A ranking with the most recent
ranking, which you can find either by referring to the print version of !usiness "eek or
by accessing the article online. 3ow has the brands ranking changedG !onsult additional
sources (e.g., articles from print media, annual reports, the companys +eb site) to
enhance your understanding of the factors and forces that contributed to the brands move
up or down in the rankings.
2ach student answers will vary according to his J her choice. &or example, in
/00F the top three :global brands; by 8+ were% !oke"!ola, I8, and icrosoft.
In /00A, the top three were $orsche, !oke"!ola, I8. &or /00F, $orsche fell to
O >E.
A. 3ofstedes social values framework can be used to help explain the Asian version of
aslows hierarchy. +hich dimension from Table E"@ (p. 1/1) is most relevantG In
!hapter E, we also noted the differences between innovation diffusion processes in Asia
and the +est. Deview the discussion on pages 1/F and 1@0, paying particular attention to
&igure E"/. !an you relate it to &igure 10"@G
&rom Table E"@ we find that masculinity, long"term orientation, and uncertainty
avoidance are the most relevant to understanding the Asian market. And from
&igure 10"1 we noted the changes to aslows hierarchy, in which self"
actuali*ation (personal) and social needs are important to Asians. Additionally,
culture and communication patterns that affect the diffusion process and the high"
context cultures with a relatively homogeneous population and a high degree of
environmental sensitivity are key drivers to the Asian markets.
F. 8riefly describe various combinations of product"communication strategies available
to global marketers. +hen is it appropriate to use eachG
Meegans product"communication strategy mix is a conceptual tool that has been
widely cited in the marketing literature. As outlined in the text, the five strategies
and their uses include%
$roduct"!ommunication 2xtension, used when a product fulfills the same
function and use conditions are the same
$roduct 2xtensionJ!ommunication Adaptation, used when a product
fulfills the same function but use conditions are different.
$roductJ!ommunication Adaptation, used when both need to be fulfilled
and use conditions are different.
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Invention, used to satisfy needs on a worldwide basis using a new
communications strategy.
10. !ompare and contrast the three categories of innovation discussed in the chapter.
+hich type of innovation do flat"panel widescreen 3?TBs representG
$roducts that create new markets and consumption patterns are called
discontinuous innovations (e.g., the B!Ds impact is explained by time shifting% it
freed viewers from programming schedules).
?ynamically continuous innovations refer to products that share certain features
with earlier generations while incorporating new features (e.g., #ony7s +alkman).
#uch products cause relatively smaller disruptions of previously existing
consumption patterns.
!ontinuous innovation refers to products that are :new and improved; versions of
existing ones and re-uire less DN? expenditure to develop than dynamically
continuous innovations. !ontinuous innovations cause minimal disruption of
existing consumption patterns and re-uire the least amount of learning.
The &lat"screen TB is a continuous innovation although it represents a departure
from the cathode"ray tube (!DT) technology. Thanks to innovative li-uid"crystal
display (<!?) and plasma"gas technologies used to manufacture screens for
personal computers, TB sets are sleek, sexy, and cool. +ith their sharper, brighter
pictures, they enhance the en6oyment of viewing wide"screen ?B? movies at
home.
CASES
Case 10-1: Suzion Energy: The Assignment
Overview: A worldwide, consumer"driven movement toward renewable energy solutions
has created global market opportunities for entrepreneurial companies. In 1FF4, after
facing rising electricity costs for his familys textile factory in $une, India, Tulsi Tanti
decided to build two wind turbines to power the facility. Tanti soon reali*ed that he had
stumbled upon a promising opportunity. Tantis company, now called #u*lon 2nergy
<imited, was well positioned to take advantage of the growing demand for alternative
energy sources $roduct problems initially made headlines in =ctober /00A after
a turbine blade manufactured by #u*lon and financed by Cohn ?eere +ind 2nergy
cracked and broke off a tower in Illinois. ?espite #u*lons efforts to address the -uality
issue, problems The fact that doubts have been raised about the reliability and durability
of #u*lons products suggests that the companys research and technology"update
programs have not kept pace with customer needs.
1. Assess the global market opportunity for sustainable energy sources such as wind
turbines.
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+ith the ever increasing global demand for consumer products coupled with
increased living standards, and population growth there is a growing need for
sustainable energy sources. The -uestion that is posed is% Is wind the right
alternativeG
/. ?o you think #u*lon can address the -uality control issue before the companys brand
image is damagedG
"roduct quality affects brand image and brand perception #
brand perception is the $money% A brand is defined in the text as a
symbol about which consumers have beliefs or perceptions. A more complete
definition would describe a brand as a complex bundle of images, promises, and
experiences in the customers mind that represent a promise by a particular
company about a particular product. In other words, brand represents the
relationship that marketing has established with a customer.
@. +hat impact do you think the global economic downturn and credit crunch will have
on a company like #u*lonG
#hort"term it would and is severely impacting #u*lon as credit markets tighten
and entrepreneurs become reluctant to invest in new technologies or with
companies with reliability issues such as #u*lon.
Case 10-2: The Smart Car
Overview: The #mart car invented by ?aimler!hrysler is supposed to hit the American
market and then global. The 2uropean market didnt bring a profit to its parent company.
The management of ?aimler!hrysler has hesitations about the demand for the #mart car
in the Inited #tates.
1. +hat is #marts competitive advantageG Its brand imageG
The #mart car boasts several competitive advantages. &irst is its diminutive si*e.
There is nothing else -uite so small. This, in itself, is a uni-ue advantage. #econd
is #marts uni-ue design. It will never be mistaken for an :ordinary; car. &inally,
being manufactured by ercedes holds a distinct advantage. 3owever, when first
introduced the #mart !ar was called a :motori*ed ski boot; and other such
comments.
/. Assess the I.#. market potential for the #mart. ?o you think the car will be a
successG +hy or why notG
The I.#. market may not be ready for this type of car. $eople in the Inited #tates
love big comfortable cars. The trend is :I am the car that I own.; The Inited
#tates is a country where people need to impress others to win. The speed
restriction of A0 miles is also not the winning feature. The chance for the car to
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find its niche in the I.#. market is to advertise its ecological safety. There are
people in America who really care about the ecological misbalance nowadays and
they might be the pro6ected buyers.
@. Identify other target markets into which you would introduce this car. +hat
se-uence of countries would recommend for the introductionG
The Inited Mingdom is probably the first market I would introduce the car.
2ngland is not the country of speed. 2nglish people prefer comfort but at the same
time they are not too demanding about luxurious way of living. The #mart car
might be successful because of its simplicity and economical benefits in gas.
=ther 2uropean countries might be a target but not with an extensive supply.
Capan and !hina might be the good market because of their busy life and large
population. The economy of space and ecological safety might be the advertised
features.
E. Deview !ase >"/ on the 3onda 2lement and Toyota #cion. Are these models targeting
the same consumers as the #martG In view of these Capanese carmakers success with
these brands, do you think the #marts I.#. launch is too lateG
=n the surface, it seems that the #mart !ar and the 3onda 2lement and Toyotas
#cion are targeting different consumers 5 the 3onda and Toyota to the Gen P
markets, the #ADT car due to their affiliation with ercedes to a different
generation " 8aby 8oomers. 3owever, this could change as in the case of 3onda
and Toyota, their initial target markets, Gen P, morphed into Gen Q and even
8aby 8oomers.
,o, the #mart I.#. launch is not too late due to the increase in gasoline in the
I.#. and the growing sensitivity of environmental issues. 3onda and Toyota have
done ercedes a service by increasing the total market and demand for such
products.
4. Assess Inited Auto Groups marketing strategy for the #mart. ?o you think the
strategy will be effective in reaching the niche market for minicarsG

The answer all depends on your definition of the target market for minicars. If it
is Gen P then yes, the marketing program outlined has a good chance of being
successful. If on the other hand the target market for the #mart is 8aby 8oomers
or early Gen Qers, then another strategy would have to be employed.
TEACHING TOOLS AND EXERCISES
Additional Case: :,anosolar, Inc.; Thomas #teenburgh' Alison 8erkley +agonfeld.
#!S $%&&'(.
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Activity: #tudents should be preparing or presenting their !ultural"2conomic Analysis
and arketing $lan for their country and product as outlined in !hapter 1.
Movie: Assign your students the movie )ool *unnings. )ool *unnings concerns the
Camaican bobsled team that competed in the 1FAA +inter =lympics. The film is both
entertaining and provides a nice uni-ue look at branding.
Internet Exercice% Go to 8usiness +eek (www.businessweek.com) and compare and
contrast the Top 100 Global 8rands for /00F and /00A. +hat brands have shifted
positions G #peculate on why brands shift global positioning in 1 years time frame.
+hich brands are you familiar with, which ones are you not G
Go to the Cohnson N Cohnson website to see the value of the consumer goods giants
brand e-uity. 3ow many different brands does Cohnson N Cohnson haveG +hat are the
companys global marketsG www.+n+.com
Small Group Activity: In small groups, take a new product idea and carry the new
product through a new product development process for the global marketplace. Pou may
have to use your imagination in certain phases. +hen you have finished, analy*e your
effort. ?o you think your product has a chance of successG +hat factors would be critical
to the success of the productG +hat additional information do you need to be able to
make the idea workG +here would you get the informationG
Written Exercise: <ist 10 of your favorite brand names. +hich are global brandsG +hat
do you like about the product andJbrand nameG +hat do you dislikeG +hat image does
the brand have in your mindG 3ow loyal are you toward the brandG #tudents can write a
short paper and share their answers with the class.
SUGGESTED READING
Books
Aacker, ?avid. !uilding Strong !rands. ,ew Pork% &ree $ress, 1FF9.
Aacker, ?avid and 2rich Coachimsthaler. !rand ,eadership. ,ew Pork% &ree $ress,
/000.
Muc*marski, Thomas ?. -anaging .ew Products/ 0he Power of nnovation. 2nglewood
!liffs, ,ew Cersey% $rentice"3all, Inc., 1FF/.
acrae, !hris. "orld )lass !rands. Deading, ass.% Addison"+esley, 1FF1.
Temporal, $aul. !randing in Asia/ 0he )reation1 2evelopment1 and -anagement of
Asian !rands for the Global -arket. ,ew Pork% Cohn +iley N #ons, /000.
Pip, George. 0otal Global Strategy. 2nglewood !liffs, ,C% $rentice 3all, 1FF/.
. /011 $earson 2ducation, Inc. publishing as $rentice 3all
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Articles
Aacker, ?avid A., and 2rich Coachimsthaler. :The <ure of Global 8randing.; #arvard
!usiness *eview >>, no. 9 (,ovember"?ecember 1FFF), pp. 1@>"1EE.
Alden, ?ana <., Can"8enedict #teenkamp, and Da6eev 8atra. :8rand $ositioning through
Advertising in Asia, ,orth America, and 2urope% The Dole of Global !onsumer
!ulture.; 3ournal of -arketing 9@, no. 1 (Canuary 1FFF), pp. >4"A>.
8uil, Isabel, !hernatony, <eslie, 3em, <eif. :8rand 2xtension #trategies% $erceived &it,
8rand Type, and !ultural Influences;. 4uropean 3ournal of arketing. /00F. v E@. issue
11J1/. pp. 1@00"1@/E.
8u**ell, Dobert ?. :!an Pou #tandardi*e ultinational arketingG; #arvard !usiness
*eview (,ovember"?ecember, 1F9A), pp.10/"11@.
!hao, $aul. :Impact of !ountry"of"=rigin ?imensions on $roduct Ruality and ?esign
Ruality $erceptions.; 3ournal of !usiness *esearch E/, no. 1 (ay 1FFA), pp. 1"9.
!ordell, Bictor B. :2ffects of !onsumer $references for &oreign #ourced $roducts.;
3ournal of nternational !usiness Studies /@, no. / (#econd Ruarter 1FF/), pp. /41"/>0.
2lliott, Gregory D., and Doss !. !ameron. :!onsumer $erception of $roduct Ruality and
the !ountry"of"=rigin 2ffect.; 3ournal of nternational -arketing /, no. / (1FFE), pp.
EF"9/.
&oscht, Thomas, aloles III, !esar, #woboda, 8ernhard, orschett, ?irk, sinha, Indra6it.
:The Impact of !ulture on 8rand $erceptions% A #ix",ation #tudy.; 3ournal of Product
5 !rand -anagement. /00A. v.1>. issue% @. pp 1@1"1E/.
2wing, ichael, Culie ,apoli, and <eyland $itt. :anaging #outheast Asian 8rands in
the Global 2conomy.; !usiness #ori6ons EE, no. @ (ay"Cune /001), pp. 4/"4A.
3enthorne, Tony <. :!onsumers $erceptions of Ruality as Delated to Automobiles.;
Akron !usiness and 4conomic *eview 1>, no. E (+inter 1FA9), FA"10>.
Coachimsthaler, 2rich, and ?avid A. Aacker, :8uilding 8rands +ithout ass edia.;
#arvard !usiness *eview (Canuary"&ebruary 1FF>), pp. @FS.
TTTTT, Ilkka A. Donkainen and ichael D. !*inkota. :,egative !ountry"of"=rigin
2ffects% The !ase of the ,ew Dussia.; 3ournal of nternational !usiness Studies /4, no. 1
(&irst Ruarter 1FFE), pp. 14>"1>9.
Mohli, !hiran6eev, Da6neesh #ure, and rugank Thako. :!reating 2ffective <ogos%
Insights from Theory and $ractice.; !usiness #ori6ons E4, no. @ (ayJCune /00/), pp.
4A"9E.
oskowit*, 3oward D., and #amuel Dabino. :#ensory #egmentation% An =rgani*ing
$rinciple for International $roduct !oncept Generation.; 3ournal of Global -arketing A,
no. 1 (1FFE), pp. >@"FE.
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Doth, artin #., and Cean 8. Domeo. :atching $roduct !ategory and !ountry Image
$erceptions% A &ramework for anaging !ountry"of"=rigin 2ffects.; 3ournal of
nternational !usiness Studies /@, no. @ (Third Ruarter 1FF/), pp. E>>"EFA.
#amiee, #aeed. :!ustomer 2valuation of $roducts in a Global arket.; 3ournal of
nternational !usiness Studies /4, no. @ (Third Ruarter 1FFE), pp. 4>F"90E.
#eaton, &. 8., and 3.A. <askey. :2ffects of $roduction <ocation on $erceived
Automobile Balues.; 3ournal of Global -arketing 1@, no. 1 (1FFF) pp. >1"A4.
:The 8est Global 8rands.; !usiness "eek (?ecember /00F).
Brontis, ?emetris, Thrassou, Alkins, <amprianou, Iasonas. :International arketing
Adaption Bersus #tandardisation of ultinational !ompanies;. nternational -arketing
*eview. /00F. v./9. issue% EJ4. pp. E>>"400.
+ang, Guangping, ?ou, +enyu, Uhou, ,an. :!onsumption Attitudes and Adoption of
,ew !onsumer $roducts% A !ontingency Approach;. 4uropean 3ournal of -arketing.
/00A. v E/. issue% 1J/. pp. /@A"/4E.
+ashburn, Cudith 3., 8rian ?. Till, and Dandi $riluck. :!o"8randing% 8rand 2-uity and
Trial 2ffects.; 3ournal of )onsumer -arketing 1>, no. > (/000), pp. 4F1"90E.
+itt, Cerome, and !.$. Dao. :The Impact of Global #ourcing on !onsumers% !ountry"of"
=rigin 2ffects on $erceived Disk.; 3ournal of Global -arketing 9, no. @ (1FF/), pp. 104"
1/A.
Uhang, #hi, and 8ernd 3. #chmitt. :!reating <ocal 8rands in ultilingual International
arkets.; 3ournal of -arketing *esearch @A, no. @ (August /001), pp. @1@"@/4.
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