WILEY IM CHAP 10
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This chapter discusses managing international product lines, combating product piracy, dealing with country of origin stereotypes, and branding strategies. It also addresses the challenges and opportunities in global service marketing. Managing a multinational product line involves considerations of customer preferences, price points, competition and more. Combating piracy includes lobbying, legal action, and product policies. Country of origin perceptions can be addressed through product policies, pricing, distribution, and communication strategies. Global and local branding approaches are discussed.
WILEY IM CHAP 10
- 1. Chapter 10 MARKETING GOODS AND SERVICES Prepared by Robin Roberts Griffith University
- 2. Learning objectives After studying this chapter you should be able to: Discuss the nature and processes of managing multinational product lines Explain strategies for overcoming product piracy Discuss the effects of a country of origin and identify strategies to accommodate these effects
- 3. Learning objectives Describe international good and service branding strategies Discuss the challenges and opportunities in marketing services globally and identify global service marketing strategies
- 4. Managing multinational product lines Product assort is described on two dimensions: width and length Four possible product mix variations: extension of a domestic line a subset of the home market’s product line a mix if local and non-local products a completely localised product line
- 5. Managing multinational product lines Drivers that affect an international product line: customer preferences price spectrum competitive climate organisation structure product’s history
- 6. Product piracy On-going problem particularly in many parts of Asia Shijingshan Amusement Park in Beijing offers Disney trademarked characters one of the slogans used states ‘Disneyland is too far away’ copied trade-marked characters include Mickey Mouse, Bugs Bunny and Hello Kitty
- 7. Combating piracy Strategic actions against product piracy include: Lobbying activities Legal action Customs Product policy decisions Communications options
- 8. Country-of-origin stereotypes Country of origin can have a powerful effect German cars Italian fashion French wine Perceptions change over time French wine loses out to ‘new world’ wines
- 9. Country-of-origin stereotypes Generally consumers prefer domestic products over imports ‘ Made in Australia’ Powerful locally Country of design and manufacture play a big part Mercedes Benz assemble the C Class motor vehicle in China but still manufacture in Germany
- 10. Country-of-origin stereotypes Strategies to cope with country-of-origin stereotypes: Product policy Pricing Distribution Communication
- 11. International branding strategies Global versus local branding Brand name changeover Spread of private label brands globally Co-branding Umbrella branding Protecting brand names
- 12. Global brands A brand that is marketed and recognised in most parts of the world The big question is: ‘ To global brand or not to global brand?’ Many of the previous arguments regarding standardisation versus adaptation apply
- 13. Global brands Table 10.1 The top 20 global brands by value, 2009
- 14. Global brands Table 10.1 The top 20 global brands by value, 2009 cont’d
- 15. Global brands Advantages of a global brand Economies of scale, across dimensions product design communication strategies distribution networks Global awareness could mean local awareness global television programming and the internet provide access to consumers
- 16. Global brands How consumers value global brands: Quality Signal often believe that global brands have better quality Global Myth consider global brand engender cultural ideals Social Responsibility consumers expect global players to be good global citizens
- 17. Global brands Inter-country differences in brand equity due to: History Some brands are stronger/weaker in some local markets Competitive climate Few competitors in one country but many in another Marketing support Communication strategy used varies Cultural receptivity to brands Product category penetration
- 18. Local branding A global company can continue to market a local brand it owns National Australia Bank continues to use Bank of New Zealand as a brand in that country Sometimes a local brand is more powerful than a global brand Jollibee versus McDonald’s in the Philippines
- 19. Local branding Sometimes language demands a local brand name In mainland China: Perrier translates directly as ‘Paris Water’ ( Bali Shui ) Hoegaarden Beer translates as ‘Belgian White Beer’ ( Bilishi Bai Pi ) Park Hyatt is ‘Bo Yue’ with Yue meaning Imperial
- 20. Global or local brands? Organisations need to consider their brand structure (brand portfolio) 4 types of branding approaches: solo branding hallmark branding family branding extension branding Brand architecture guidelines for use of brand names
- 21. Global or local brands? Figure 10.1 Dimensions of international brand architecture
- 22. Brand name changeover strategies Transitioning from one brand name to another usually from a local to a global fade in/fade out The new global brand is tied with the existing brand name in the host market and after a transition period the old name is dropped HSBC’s strategy globally Midlands Bank UK becomes HSBC UK
- 23. Private-label branding In a number of industries, retailers have backward integrated brands into their retail brand where once Nescafé and Illy commanded the shelves at retail now sit Carrefour or Metro’s own brand of coffee One of the most significant global phenomena of the last decade in retailing
- 24. Co-branding US company Unilever partners with Campbell's in Australia Streets Ice-Cream (Unilever) in a Tim Tam flavour (Campbell's) 20% of Unilever’s business in the US is made up of co-branded products
- 25. Umbrella (corporate) branding A good corporate image has a positive impact on a consumer’s decision about a product’s attributes particularly if little other information is available Corporate branding facilitates brand-building efforts over a range of products the Sony brand as an umbrella for their product range
- 26. Protecting brand names Difficult in some places different view between developed and developing nations litigation does not work in many Asian locations mediation is often encouraged Requiring membership of the WTO has helped enforce some codes Best protection is to continually innovate
- 27. Global marketing of services Challenges in marketing services internationally: Protectionism The face-to-face nature of service Difficulty in measuring customer satisfaction internationally
- 28. Opportunities in the global service industries: Deregulation of service industries Increasing demand for premium services Increased value consciousness Global marketing of services
- 29. Global service marketing strategies: Capitalise on cultural forces in the host market Standardise and customise Central role of information technologies Add value of differentiation Global marketing of services
- 30. Summary You should now have an understanding of: The nature and processes of managing multinational product lines Strategies for overcoming product piracy The effects of a country of origin and identify strategies to accommodate these effects International good and service branding strategies The challenges and opportunities in marketing services globally and identify global service marketing strategies
Editor's Notes
- #5: Refer to header: Managing multinational product lines Most organisations sell a wide assortment of products. The product assortment is usually described on two dimensions: the width and the length of the product mix. The first dimension width, refers to the collection of different product lines marketed by the organisation. For most organisation these product lines are closely related. The second dimension length, refers to the number of items that the organisation sells within the given product line.
- #6: Refer to header: Managing multinational product lines Several drivers affect the composition of an organisation’s international product line.
- #7: Refer to header: Product piracy Product piracy is one of the downsides that marekters with popular global brand names face. Any aspect of the product is vulnerable to piracy, including the brand name, the logo, the design and the packaging. Even services are pirated.
- #8: Refer to header: Product piracy A global industry such as entertainment is a prime target for pirates. Individuals and organised crime groups in many countries take part, inflicting damage on the profits and successes of manufacturers. For example, many movies are available in pirated DVD form even when the films are still in their early theatre release stage.
- #9: Refer to header: Country-of-origin stereotypes In the 1970’s the idea that Australian wines might become celebrated around the world was nonsense to many. Countries such as France and Italy, and to some degree Germany, were seen as the true birthplaces of high-quality wines. Over time, the influence of country of origin on perceptions of wine has changed. The new world wines from Australia, New Zealand, South Africa and the United States have an image that suggests innovation and new experiences.
- #10: Refer to header: Country-of-origin stereotypes The impacts of ‘Made in Australia’ labels for products such as wine, glazed apricots, honey and more specifically, perhaps, a cheese labelled ‘Margaret River, Australia’ are significant. The country-of-origin effect is positive and suggests to the world’s consumers that the products are fresh, high quality and from a clean, healthy environment.
- #11: Refer to header: Country-of-origin stereotypes Before exploring strategic options to deal with country of origin, organisations should conduct market research to investigate the extent and the impact of country-of-origin stereotypes for their particular product. Such studies would reveal whether the country of origin really matters to consumers and to what degree it hurts or helps the product’s evaluation.
- #12: Refer to header: International branding strategies A brand can be defined as ‘a name, term, sign, symbol, or combination of them which is intended to identify the gods and services of one seller or group of sellers and to differentiate them from those of competitors’. Linked to brand name is a collection of assets and accountabilities: The brand equity tied to the brand name. These include brand-name awareness, perceived quality and other associations invoked by the brand name in the customer’s mind.
- #13: Refer to header: International branding strategies
- #14: Refer to header: International branding strategies
- #15: Refer to header: International branding strategies
- #16: Refer to header: International branding strategies
- #17: Refer to header: International branding strategies One important issue is how consumers value global brands. There are 3 key dimensions: Quality signal, global myth and social responsibility.
- #18: Refer to header: International branding strategies The arguments for global branding sound very powerful. Note, however, that as with many other aspects of international marketing, the value of a band – its brand equity – usually varies a great deal from country to country. Inter-country differences in brand equity may be due to any of the following: History Competitive climate Marketing support Cultural receptivity to brands Product category penetration
- #19: Refer to header: International branding strategies Outside Australia, New Zealand and their closest neighbours, few people have heard of Hungry Jack’s or Holden cars. Yet these 2 brands come under the umbrella of two global, well-known brands, Burger King and General Motors. Cars designed and produced in Australia by Holden are exported and badged mostly as General Motors cars.
- #20: Refer to header: International branding strategies Cultural barriers also often justify local branding. Without localising the brand name, the name might be hard to pronounce or may have undesirable association in the local language.
- #21: Refer to header: International branding strategies Clearly there are no simple answers to global/local brand dilemma. Organisations such as Nestle and Unilever have a portfolio of local, regional and global brands. For example, in Russia Nestle balances its global brand portfolio with local brands that it has acquired. Organisations need to consider their brand structure (brand portfolio) An organisation’s current set of brands across countries, businesses and product markets Brand architecture - Guidelines regarding how brand names should be used
- #22: Refer to header: International branding strategies Brand architecture has 3 key dimensions. These are: The level in the organisation at which the brand is used The geographic scope of the brand and The product scope.
- #23: Refer to header: International branding strategies When the case for a transition from local to a global (or regional) brand name is made, the organisation needs to decide how to actually do the changeover. Four broad strategic options exist: Fade-in / fade-out Combine brands via co-branding or under one umbrella brand Transparent forewarning and summary axing.
- #24: Refer to header: International branding strategies The spread of private labels (store brands) is one of them most visible retailing phenomena of the last decade. Private labels come in various guises. At one extreme are the generic products that are packaged very simply and sold at bottom prices. At the other, are premium store brands that deliver quality that is sometimes superior to national brands.
- #25: Refer to header: International branding strategies Co-branding exists where two products are linked to take advantage of the equity to each brand to build product success.
- #26: Refer to header: International branding strategies Umbrella branding is a system where single banner brand is used worldwide, often with sub-brand name, for almost the entire product mix of the organisation. Often the banner is the organisation's name: Sony, Kodak, Siemens, Virgin, to name a few.
- #27: Refer to header: International branding strategies Given the strategic importance of brands, a major task facing the brand owner is protection of the brand name. This entails several questions: How should the brand be protected? Which aspects of the brand? When? Where? For which product classes? Answers to these questions can largely be found in an analysis of costs and benefits of protecting the brand.
- #28: Refer to header: Global marketing of services Compared with marketers of tangible goods, services marketers face several unique hurdles on the road to international expansion. These include protectionism (trade barriers), cultural barriers for service transactions, and difficulties in measuring customer satisfaction overseas.
- #29: Refer to header: Global marketing of services Despite the challenges just described, many international service industries offer enormous opportunities to savvy services marketers. The major ones are: Deregulation of service industries Increasing demand for premium services Increased value consciousness
- #30: Refer to header: Global marketing of services To compete in foreign markets, service organisations resort to a wide range of different strategies. Capitalise on cultural forces in the host market Standardise and customise Central role of information technologies Add value by differentiation
- #31: Refer to header: S ummary