Global Product Management and BrandingPesewa

Presentat ions

Philip Kotler

Defining a Product

A product is anything that can be offered to a market for attention, acquisition, use or consumption; it includes physical objects, services, personalities, places, organisations and ideas.

CoreProduct

Actual Product

Product Augmented

Warranty

Delivery& Credit Installation

After SalesService

Styling

QualityBrand

Pkg.Features

DesignCapabilities

Customer Service

Personnel

Global Product Development

• The heart of the global marketing process that focuses on building adaptability into products to achieve worldwide appeal.

• The product development process– The main goal is to build adaptability into products and

product lines for worldwide appeal.• Step 1: Idea generation• Step 2: Screening• Step 3: Product/process development• Step 4: Scale up• Step 5: Commercialization

Standardisation

FACTORS ENCOURAGING STANDARDIZATION

• Economies of scale in production• Economies in product R&D• Economies in marketing• “Shrinking” of the world

marketplace/economic integration• Global competitions

Initiator Becomes Managing Unit

Technical Development and Design

Integration and Coordination of All Multinational Program Activities

New Management Unit Assigned

Unique Requirements to be Incorporated in Product Goals and Specifications

Review of Design

Activities to Plan, Develop, Manufacture, Introduce, and Support Product

Guidelines for Program Execution

Nonoccurrence with Managing Unit

Activities to Plan, Develop, Manufacture, Introduce, and Support Product

Global Program Management

Viable Concept

Does Initiator Have Resources?

InitiatorManaging

UnitAffected Units(s)

Yes No

The Location of R&D Activities

• Past tendency was to keep activities centrally located with parent corporation headquarters.

• Using foreign-based resources improves ability to compete successfully internationally.

• Outsourcing shortens product development cycle time.

• Determined by the existence of specific skills.

Reasons for R&D Investments Abroad• To aid technology transfer from parent to

subsidiary.• To develop new and improved products

specifically for foreign markets.• To develop new products and processes for

application in world markets of the firm.• To generate new technology.

Global Product Development Organization• Product development team that is functionally

and internationally representative.• Focus on customer input to identify universal

and market-unique product features.• R&D consortia allows companies to cooperate

in developing new products and technologies.

The Testing of New Product Concepts• Testing for performance and customer acceptance

is the final stage of product development.• Testing ranges from reliability tests to mini-

launches.• Reasons that new international products fail:

– Relying on instinct or hunch rather than testing and research.

– Lack of product distinctiveness.– Unexpected technical problems.– Mismatch between functions.

International Product Testing Techniques• Limited product launch in one country market.• Laboratory test markets to capture consumer

reactions in a controlled environment.• Microtest marketing uses a permanent panel of

consumers and assesses their willingness to buy after exposure to media and purchase incentives.

• Forced distribution tests rely on the continuous report of consumer reactions to new products already in the market.

The Global Product Launch

• Introducing the product into countries in three or more regions within a narrow timeframe.

• Successful launches require:– Involvement of country managers– Pre-launch attention to localization

and translation requirements– Increased education and

support of the sales channel• Benefits of a global launch

– Showcases the product– Removes old models at once– Captures new product’s higher margins

Product and Brand Portfolio Management

• The marketer must have a balance of new, growing, and mature products capable of creating sustainable competitive advantage in the firm’s efforts to expand geographically or add to existing market operations.

• Analyzing the product portfolio– Market growth rates– Market share positions

Example of a Product-Market Portfolio

10 1 00

10

40

S

GBD

USC

B

F

10 1 00

10

40

US

GB

D

J

C

S

F

B

Relative Market Share Relative Market Share

Mar

ket G

row

th

Company A Company B(B=Brazil, C=Canada, D=Germany, F=France, GB=Great Britain, J=Japan, S=Spain, US=United States)

B

SOURCE: Adapted from Jean-Claude Larreche, “The International Product-Market Portfolio,” in 1978 AMA Educators’ Proceedings (Chicago:American Marketing Association, 1978), 276

Market-Product-Business Portfolio ExampleM

arke

t Attr

activ

enes

s

——— Market and Distribution Interconnectedness ………. Technology and Production Interconnectedness

High

Low

HighCompetitive StrengthLow

Canned Tea-US

Canned Tea-Europe

Canned Tea-Asia

Ice Cream-US

Ice Cream-Europe

Ice Cream-Asia

Frozen Vegetables-Europe

Frozen Vegetables-US

Frozen Main Dishes-Europe

SOURCE: Adapted from Susan P. Douglas and Samuel Craig, “Global Portfolio Planning and Market Interconnectedness,” Journal of International Marketing 4 (no.I, 1996):93-110.

Product Portfolio Approach

ADVANTAGES• A global view of

competitive structures.• Global strategy based on

allocation of scarce resources.

• Marketing objectives based on product lines in markets served .

• A convenient visual communication goal.

DISADVANTAGES• Foreign competition does not

follow the same rules as domestic competition.

• Relationships between market share and profitability may vary.

• Government regulations.• Local content laws.• Different production sites

impact perceptions of risk and quality.

The Role of Brands

A brand is a distinguishing name and/or symbol (such as a logo, trademark or package design) intended to identify the goods or services of either one seller or a group of sellers, and to differentiate those goods or services from those of competitors. A brand thus signals to the customer the source of the product, and protects both the customer and the producer from competitors who would attempt to provide products that appear to be identical.

The International Brand: Four Approaches

• Translation.• Transliteration testing existing brand name for

connotative meaning, e.g., “flic” pen.• Transparency, i.e., meaningless brand name to

minimize complexities.• Transculture. Foreign language name forms a

brand, e.g., vodka or perfume.

Managing the Brand Portfolio

• A strong brand is a global marketing asset.• Co-branding

– A strategic alliance where two or more brands are combined in an offer.

• Brand strategy decisions– Use of the corporate name.– Family brands for a wide product line.– Individual brands for each item in the product line.

• Private (store) branding– Umbrella branding with the intermediary’s name.– Separate brand names.

Nestle’s Branding Tree

10 Worldwide Corporate Brands

45 Worldwide Strategic BrandsResponsibility of general management at strategic business unit level

140 Regional Strategic BrandsResponsibility of strategic business unit and regional management

7,500 Local BrandsResponsibility of local markets

•Nestle•Carnation•Buitoni

•Kit Kat•Cerelac•Baci

•Macintosh•Vittel•Stouffer’s

•Wonka•Chambinho•Bona•Fruitips

Examples

•Herta•Alpo

•Mighty Dog•Smarties•After Eight•Coffee-Mate

•Maggi•Perrier

SOURCE: Adapted from Andrew J. Parsons,”Nestle: The Visions of Local Managers,”The McKinsey Quarterly, no 2, 1996, 5-29;see also http://www.nestle.com; http://brand/index.asp.

Private Brand Strategy

Strategy Rationale Circumstance

No participation Refusal to produce private label

Heavily branded markets; high distinctiveness; technological advantage

Capacity filling Market control

Opportunistic Influence category sales

High brand shares where distinctiveness is less; more switching by consumers

Competitive leverage Chief source of business Dedicated producer

Stake in both markets Major focus Leading cost position

Little or no differentiation by consumers

SOURCES:Adapted from Sabine Bonnot, Emma Carr and Michael J. Reyner, “Fighting Brawn with Brain,” The McKinsy Quarterly 40 (no 2. 2000): 85-92; and Francois Glemet and Rafael Mira, “The Brand Leader’s Dilemma,” The Mckinsey Quarterly 33 (no 2. 1993):4.