International Marketing GLOBAL PRODUCTS AND BRANDS

Global Product Management
Global Product Management - a core product which can be adapted for different markets to avoid the cost of developing separate products for each.

Standardisation or Adaptation?
Key question in International Marketing
All elements of the marketing mix can be modified
Do they need to be modified?
Different needs
Different conditions of use or consumption
Extra costs

Global Convergence of Consumption Patterns
Broad product categories over a long time
Through imitation of foreign consumption patterns and adoption of foreign items which become progressively global and local
Globalization and modernization
Socio-demographic trends
Age, size of household, proportion of immigrants, gender equality

Beer consumption in northern and southern Europe
(Source: Smith and Heede, 1996, p. 1081)
Macro Trends

0
50
100
150
200
250
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
Year
Thousands of tons of cheese
Source : www.fao.org
Consumption of cheese in China (thousands of tons)

Why are there differences in local consumption patterns?
Climate (e.g. ice-cream)
Local diets (for food and beverages especially)
Local regulations (genetic modifications)
Different use of similar items (Camembert paniert)
Different meaning in context for similar products
(colours => certain symbolic attributes)
Differences in motivations and buying behaviour
Local consumption habits rooted in early childhood, and socialization at school and in the family (Vegemite)

Example of consumer behaviour for milk-based products in France and China
Consumption/cap: 68 litres /year
Consumption of diversified milk-based products: milk, cheese, butter, yoghurt, etc.
Daily consumption.
Purchasing decision: basic quality being well controlled, price is a key factor
Consumers are used to milk-based products and receptive to symbols which emphasize genuineness, origin, organic manufacturing (labels, bio, etc.)
Consumption/cap: 3 litres/year
Consumption focused on yoghurt (80%)
Product perceived as exotic
Purchasing decision: choice of high quality imported products perceived as having superior quality when compared with domestic products
Consumers are uneducated for using this kind of product properly (especially as concerns conservation …)
France
China

Product/Country Example: Rice
in Malaysia vs. The United States
Malaysia
Mainly local, Thai rice manufacturers
Differentiated by grade
Frequent main dish, crosses social strata
Mainly plain white rice
10 kilogram bags of rice
Hands also used for serving
US
Minute Rice, Rice-a-Roni, Uncle Ben’s
Differentiated by brand, flavour, convenience
Infrequent side dish, ethnic consumption
A lot of flavoured rice
Small, quick cooking portions
Silverware used for rice eating

Emergence of a global consumer culture
World standard package
Limitations?
'McDonaldization' of society:
Standard (key benefit = predictable performance)
the same for everybody
the same everywhere in the world
the same over time
Ritzer (1993): 4 elements
Efficiency
Systematic quantification
Predictability
Control: substitution of non-human for human

Standardisation - Adaptation Tradeoff
Fully Adapted
Fully Standardised
Costs £
Opportunity cost
of lost orders
Incremental
manufacturing
costs
Combined cost

Components of a Service
Brand
Scope for standardisation
decreases

Economies of scale
production, R&D, marketing
Global segments, global customers
converging customer needs, increased customer mobility, demand spillover
Need to reduce time to market
Regional market agreements
Factors Encouraging Standardisation

Product policy: adapt or standardize
Levitt’s (1983) thesis on the globalization of markets
Standardize as much as feasible
a lot can be done
Customize when needed around a standard core product
Coca Cola or McDonald's
In global industries (more standardization opportunities), firms which standardize show superior performance
Within an industry (similar world markets & opportunities), firms which customize perform better (Samiee & Roth, 1992)
A down-to-earth approach based on product attributes

Standardization: Product element
78% product quality
72% brand name
71% image
67% performance
54% size & colour
52% packaging & style
48% design & features
45% pre-sales service
43% after sales service & warrantees
42% delivery & install

Levels of product attributes
A car :
Steel+plastics+length+weight, etc.
Number of persons, gas mileage, level of comfort
Luxury, economy, dynamism, sporty, …
A Perfume :
Physical base: scents based on flowers, fruits, woods, spices, animals scents
Deodorize, cover odours, etc.
Feminine/Masculine, Old/young, etc.
Service
Attributes
Physical
Attributes

Product Attributes
Physical attributes (size, weight, colour, etc.)
The greatest potential for economies of scale
Service attributes are difficult to standardize:
Delivery differs widely
Performed in direct relation to local customers
More dependent on culture
Symbolic attributes (interpretive attributes, brand, origin)
Ambiguous: consumers have confused attitudes
A liking for domestic goods based on nationalism
A penchant and even fascination for foreign cultures and goods
National identity symbols intermingle with symbols of exoticism

Factors influencing adaptation or standardization of product attributes

Categories of symbolic attributes
Symbolic associations related to physical attributes
colour of a product, its shape,...
Meanings related to the brand name
product/corporate
Connotative meaning of product-design and aesthetics
Functional? Easy-to-use? Modern? Luxurious?
Consumer perceptions of product origin
if they are searching for this information,
it is available, and
they take origins into account
manufacturing origin (made-in)
country of design
country suggested by the brand name

Service Attributes
Difficult to standardize
Differences in delivery
Limited potential for pure economies of scale
Some potential for economies related to learning
international transfer of knowledge is a key issue
Delivery processes vary cross-culturally
Level of performance
Style of personnel in contact and attitudes in customer interactions
Culture and waiting time: pre-, in- and post-process

Standardisation vs Customisation
Heinz Ketchup
Taste
US: sweet
Mexico: hot
Europe: curry
Usage
Greece: poured on pasta, eggs, meat
Japan: omlette, sausages, pasta
Sweden: meatballs, fishballs

Mandatory Adaptation or ‘Localisation’
Government regulations
Product standards, testing, design
Labelling
Compatibility
Adapting to local infrastructure
TV standards
Voltages
RH / LH drive etc
Brand name availability (trade marks - © ™)

Standardisation Continuum
Pricing
Distribution
Sales force
Communications
Product
Positioning
Objectives
Strategy
Easier to adapt
Harder to adapt
Source: Merffet, (1986)

Standardisation or Adaptation?
Adapted from Keegan, W. (1969)

Disadvantages of Standardisation
Unresponsive to local taste
Lost sales due to ‘overstandardisation’ (Kashani, 1989)
Lack of uniqueness
Unresponsive to local competition
Harder to respond to competitive activity
May allow strong local competitors to develop
Demotivates overseas employees
NIH syndrome
Can’t they understand what our market needs?

New Products and Services in Global Marketing
New-product development process
Permanent identification of new-product ideas
Screening of these ideas and identification of candidates for further investigation
Stringent investigation and analysis of the selected new-product ideas
Organisation of sufficient resources
The international new-product department
Testing new products and services in national markets

Evaluating Potential of a New Product
How big is the market for this product at various prices?
What are the likely competitive moves in response to our activity?
Can we market the product through existing structure?
Can we source the product at a cost that will yield an adequate profit?
Does product fit our strategic development plan?

Global Branding

How Global is Branding?
Source: Boze and Patton (2005)

Nestle
NESCAFE Instant Coffee (16)
Original
Gold Blend
Decaf
Half Caff
Blend 37
Black Gold
Fine Blend
Alta Rica
Cap Colombie
Kenjara
Espresso
Cappuccino
Mocha
Latté
Café Style
Frappé

Kelloggs
Breakfast Cereals Brand Portfolio (45)
Corn Pops
Country Store
Crunchy Nut Corn Flakes
Crunchy Nut Bar
Rice Crispies
Frosties
Fruit and Nut
All-bran
Apricot Bites
Bran Flakes
Bran Flakes Yoghurty
Choco Crispies
Choco Frosties
Choco Pops Crunchies
Choco Pops
Corn Flakes
Corn Flakes Banana Crunch

Top Ten UK Breakfast Cereal Brands

Brand Hierarchy
Shows
the ordering of brand elements
captures potential branding relationships among different products sold by the firm
graphic illustration of a firm’s branding strategy
Different ways of defining levels of hierarchy

Brand Hierarchy Levels
Corporate Brand
Family Brand
Individual Brand
Individual Item or Model (Modifier)
A brand hierarchy can involve multiple levels:

Hierarchy levels
Corporate
mostly visible on the product/package
adds shareholder value
e.g. Nestle, Ford, PepsiCo
Family
used in more than one product category but is not necessarily the corporation name
e.g.
Ben and Jerry’s (Unilever): Ice cream, Yoghurt
Tropicana (Pepsi): Juices, Juice Drinks, Smoothies

Hierarchy levels…cont.
Individual Brand
Restricted to essentially one product category
e.g.
Lipton Tea: Black, Lemon, Green, Herbal, Chai;
Frito-Lay: Doritos, Fritos corn chips
Dasani?
Individual Item/Modifier/Variant
Flavours (e.g. banana, custard, summer)
pack-sizes (e.g. small, medium, large, extra large)
Forms (e.g. tablet, liquid, powder)
pack-types (e.g. pouch, carton, bag)

Designing the Brand Hierarchy (Keller 2007)
Decide on the number of levels
Principle of simplicity: Employ as few levels as possible
Principle of clarity: Logic and relationship of all brand elements employed must be obvious and transparent
Decide on the levels of awareness and types of associations to be created at each level
Principle of relevance: Create global associations that are relevant across as many individual items as possible
Principle of differentiation: Differentiate individual items and brands

Designing the Brand Hierarchy
Decide on how to link brands from different levels for a product
Principle of prominence: The relative prominence of brand elements affects perceptions of product distance and the type of image created for new products
Decide on how to link a brand across products
Principle of commonality: The more common elements shared by products, the stronger the linkages

Diageo: A Corporate Brand
Smirnoff
Johnnie Walker
Guinness
Baileys
J&B
Captain Morgan
Cuervo
Tanqueray

Achieving Global Branding Excellence
Clearly Defined Brand Architecture
Understand potential of each brand in portfolio
Develop strong power brands with broad market footprints
Only introduce sub-brands of a core brand that have clear strategic
roles
Maximize market coverage and minimize overlap of all brands
Co-brand with appropriate brand partners

Achieving Global Branding Excellence: an example
BMW
Clever straddle positioning with corporate brand
Points-of-parity and points-of-difference
Luxury and Performance
Clearly defined sub-brand roles
Brand hierarchy: 3, 5, & 7 series
New models and brands to expand the brand
footprint
X3, X5, Z4, M3, 6 series, & Mini
Ingredient brand: Apple iPod

Linguistic elements of brands as marketing assets:e.g. Brand Names
Brand Name:
Spelling (letters+numbers)
writing systems
Speaking the name
pronunciation and phonology
Matsushita vs. Technics
Denotative meaning
Choco-BN
Connotative meaning
Kinder (semantics)
Rhetorical value
persuasive content (Tide)
Visual associated with a brand (logo/design)
The Whiskas example
Visual aspects in ideographic writing systems
Global companies must play on a large register of languages and meanings to develop global brands

Linguistic characteristics of brands
Morphological devices
Affixation:
Jell-O, Tipp-Ex
Compounding:
Janitor-in-a-Drum, Vache-qui-rit
Semantic devices: rhetoric
Metaphor:
Aqua-Fresh, Longeurs et Pointes, Head and Shoulders, Tendres Promesses
Metonymy: Application of an object or quality
Midas, Ajax, Uncle Ben's, Bounty
Personification: Humanizing nonhuman or ascribing human emotions to the inanimate
Clio, Kinder
Oxymoron: Conjunction opposites
Crème de peinture
Paranomasia: Pun and word plays
Fédor - orange juice
Semantic appositeness: Fit of name with object
Nutella

Bimbo (Spanish bread brand)
Attractive but empty-headed young woman
Bums (Dutch bread brand)
In German associated with sex; In English…
MR2 (Toyota brand)
Renamed MR in France, MR2 pronounced as merdeux (‘full of shit’)
Fiat Uno
Not popular in Finland (Uno = dope)
Super Piss
In Finland a popular anti-freeze brand for car locks
Axe (deo) changed to Lynx in the UK
Names Problematic Abroad

Brand Globalisation Problems

Recommendations for international brand names
Simple spelling: 2 or 3 syllables
no long sequence of either consonants or vowels
avoid phonemes which are not translinguistic
Avoid unintended meaning in target languages
Chevy Nova / Laque Cabynet / Cue Tooth paste, etc.
Mere translation is dangerous: Tide => Marée (noire)
Transliteration: Gillette’s Silkience (US+D); Soyance (F) => Sientel (I)
Transparence: Sony, National
The loss of a brand source meaning is not a major problem since local consumers reinvest the brand name with new meanings (which may fit with the intended local positioning)

Country of Origin effect
Perceptions about and attitudes toward particular countries often extend to products and brands known to originate in those countries
Japan
Germany
France
Italy
Stereotyped attitudes toward foreign products and services can favour or hinder marketing efforts
If the quality is perceived to be low
Foreign origin of the product can be disguised
Foreign identification of the product can be continued and consumer attitudes towards the product can be changed
In some market segments foreign products have a substantial advantage because they are foreign

Some examples of the combined influence of brand name and country of origin on product image