Date post: | 29-Mar-2015 |
Category: |
Documents |
Upload: | chandler-pilley |
View: | 220 times |
Download: | 0 times |
Global Products
Definition Global Products are standardized products with
a common brand name, with uniform features in all countries Eg: Gillette, Benetton Sweaters
Regional products & regional brands are unique to a particular region. E.g: P&G’s Ariel, Honda’s City etc
Regional products are latently global. They may become global as more customers know about it
Marketing Global products is lot more complex than selling Regional Products
Advantages of Standardization
For many products standardization is inevitable Uniform need for the product – Steel, Metals Economies of Scale & Scope. Benefit from a
large market Key Benefits
Cost Reduction – Economies of scale & scope Improved Quality Enhanced Customer Preference Global Customers Global Market Segments
Drawbacks of Standardization Off-Target or Wrong positioning in some
countries Customers may have different needs Market segmentation is not always identical across
cultures Lack of Uniqueness – Customers want to
differentiate themselves with unique things Vulnerable to Trade Barriers – Global
products need free trade Strong Local Competitors – Local
competitors are better at adapting to local needs, making a global products vulnerable
Extent of Standardization
In reality 100% standardization is rare Some features have to be localized
Packaging, pricing etc Only the “Core Product” which acts as the
foundation is standardized All additional features are standardized in
varying degrees to meet local tastes E.g : Coca-Cola
Standardization can involve use of Modular design
Factors Favoring Localization
Cultural Demands – Local Tastes & preferences Even a “Globally standardized” product
needs to be localized
Compatibility Requirements Government Rules Local Climate & weather Local Technology standards
Pitfalls of Standardization
Five Common Reasons why Standardized products fail
1. Insufficient Market Research
2. Over-Standardization
3. Rigid Implementation
4. Narrow Vision
5. Poor Follow-up
Insufficient Market Research
Insufficient Market Research leads to assumed market similarities, wrong demand estimations
Local subsidiaries may become disenchanted
Non-Acceptance of the product in local markets
Over-Standardization
A standard Product is assumed to be used in a standard way irrespective of the local preferences.
This leads to: Poor product positioning Wrong market segmentation
Standard product may need localized marketing efforts
Rigid Implementation
A standardized marketing program is not always beneficial
Often Head-Quarters drives the standardization of all efforts and fails to notice local tastes and ignores better ideas from subsidiaries
Standardized strategies increases overall sales growth but lowers ROI & ROA
Narrow Vision
Increased Standardization leads to a myopic view of the local markets
Local subsidiaries fail to learn from other subsidiaries of the parent
Knowledge sharing and knowledge transfer becomes limited, leading to duplication of efforts, lost opportunities & profits
Poor Follow-up
Launching Standard Global products world wide is a complex task
Often firms do a poor job on following up on efforts and results from other subsidiaries
Local Subsidiaries may not have the required resources to support the global product
Challenges of Global Products
Its difficult to maintain a global product line History : Existing local products M&A: Integration of product lines is tough Local Preferences differ Distribution Channels are different Manufacturing Capacity Constrains
Colgate has been quite successful in developing a long line of global products
Globalizing New Products
Successful New products can be Globalized if the factors for its success can be Globalized
Often times factors for a products success in not clearly understood More than 50% of global new products fail Market orientation & commitment of senior
management is a must Asian markets need a higher level of
technological sophistication, marketing synergies and longer commitment
New Product Success Factors
Some of the common success factors are: Relative Product Advantage – Advantage over
existing alternatives Synergy with the existing products Degree to with the new product is innovative Market orientation & Management Commitment Intensity of competitive reaction. If more
number of competitors react, lesser is the chance of success
Compatibility of the new product with existing infrastructure
Speed of Diffusion Speed at which a new product is introduced
into other countries is termed Speed of Diffusion
Speed of Diffusion depends on: Relative Advantage Compatibility with existing systems Complexity – How easy is it to use? Trailability – How easy is it to try a new product Observability – Ability of potential customers to
observe the benefits of the new product Cosmopolitianism - Hetrogeneity slows down
product adaptation
Global Brand Management
Global Brands needs Global brand management Brand has Brand value and Brand Equity
Coca-Cola brand is worth $69 Billion Intel Brand is worth $35 Billion
Brand Equity is the present value of the net revenues the brand can be expected to generate over time
Brand Equity depends on intangibles like Awareness, Knowledge, attractiveness – Brand Stature Differentiation, Relevance – Brand Vitality
Brand Value is off-books but affects how Brands are managed
Advantages of Global Brand
Demand Spillover Marketing efforts in one country can create
demand on other countries. TV, Internet etc Global Customers
Global customers often demand a globally standardized products
Scale Economies Global Advertising, Standardized packaging
can cut costs
Brand Portfolio Consumer goods makers usually have a portfolio of
few global brands and several local Brands Less than 10% of brands are global In 2001, Study by ACNielson found only 43 global
brands in consumer packaged goods Typically Brands are managed in a Brand Hierarchy,
Global/Corporate brand at the top and local brand next E.g: Honda Accord, Intel Pentium, Sony Vega TV
Global Brands are managed by the parent. Local brands are managed by subsidiaries
Brand Extensions is done to introduce a new product
Brand Globalization Potential
Not all local brands can become global. Here’s a checklist to see the brand fit: Does the brand name make sense outside
the country? Does the brand suggest a country
association? Can the brand name registered abroad? Is there synergy with existing Global
Brands? Can a new Global Brand be Justified? Does the regional brand offer tough
competition to global brands in that region?
Implementing Global Brand
Implementing a globalization strategy raises few issues:
In the globalization product based involving product entry into new markets?
Is the product category unique to the company?
Can the local brand names be replaced with a global brand name?
E.g: Nokia brands all its telecom products as Nokia, even replacing brand names of acquired companies
Implementing Global Brand Can Local Brands be replaced without
affecting market share? E.g: Electrolux maintains a host of local
brands to retain its local customers Does replacing a local brand has a significant
impact on the product? E.g: Budweiser in Europe, Thumbs up in India
Does replacing a local brand affect the local competitiveness in the local market? Local Brands tend to be strongly associated with
local culture & offers a higher competitiveness than global brands
Top Global Brands1. Coca Cola2. Sony3. Mercedes-Benz4. Kodak5. Disney6. Nestle7. Toyota8. McDonald’s9. IBM10.Pepsi-Cola
11.Rolls-Royce
12.Honda
13.Panasonic
14.Levi’s
15.Kleenex
16.Ford
17.Volkswagen
18.Kellogg’s
19.Porsche
Replacing Local BrandsSeveral standard brand Changeover tactics are:
Fade-in/fade-out: Global brand is first associated with the local brand then the local brand is slowly faded out
Endorsement Branding: Use a strong local brand to introduce a global brand Eg: Acura by Honda
Double Branding: Local-Global brands or Old-New brand together
Summary Axing: Simply drop a local brand & introduce a Global Brand
Counterfeit Products
Strong & Successful Global brand names attracts counterfeiters.
Counterfeit product is more common in high end fashion products Eg: Gucci, Ray-Ban etc
Counterfeit or fake products are now seen in chemicals, computers etc
Extensive, sustained operation is needed to fight fake goods, often government help is needed
Closing Thoughts
Globalization involves global products and global brand names
Global products is standardized to an extent to gain economies of scale & scope but localized to meet local requirements
Global Brands are few in number and require global scale brand management
New Global brands can be developed with substantial effort & commitment
Changing local Brand names is not easy & requires extensive resources
Counterfeit products is a major threat to established Brand names