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Global Marketing

Management

A European Perspective

Warren J. KeeganBodo B. Schlegelmilch

Product and Service Decisions

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Overview

Basic Concepts of Products and Services

Positioning of Products and Services

Product Saturation Levels in Global MarketingProduct and Service Design Considerations

Attitudes towards Country of Origin

Geographic ExpansionNew Products and Services in Global Marketing

Summary

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Learning Objectives

Know the differences between services and products and

global brands

Learn several alternatives for positioning global brands

Appreciate the importance of saturation levels

Be aware of strategic alternatives for geographical

expansion

Know why development of new products are keys to

survival and global growth

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Basic Concept of Products

Products can be defined as a collection of physical,

psychological and symbolic attributes that can

collectively yield satisfaction, or benefit, to a buyer or

user.

Products can also be defined by intangible attributes

Products can be classified into consumer and industrial

goodsProducts can be classified by the way their are

purchased or their life-span

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Basic Concept of Services

Service can be defined as intangible benefits purchased

by customers that do not involve ownership

Characteristics:

Intangibility

Perishability

Variability

Simultaneous Production and Consumption

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Product-Service Continuum

Oil & Grease

Office Supplies

Machinery

ComputerTelecommunication Systems

Meeting or Convention Hotel

Advertising Agency

Plant janitorial and cleaning

Freight Forwarding

ManagementConsulting

University Class

Tangible

Dominant

Intangible

Dominant

Product-Related Equipment-Based People-Based

Source: Adopted from: G. Lynn Shostack, Breaking Free from Product Marketing; Journal of Marketing 41 (April1997): p.77

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National, International and Global

Products and Services

National products or services are offered in a single

national Market

International products or services are offered in

multinational, regional markets

Global products and services are offered in the global

market. They are international and multiregional

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Positioning of Products and Services

Attribute or Benefit

Quality/Price

Use/UserHigh-Tech Positioning

High-Touch Positioning

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Product Saturation Levels in Global

Markets

Many factors determine a product`s market potential

Product saturation level increases as national income per

capita increases

The presence or absence of a particular companion

product can be significant

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Product and Service Design

Considerations

Preferences

Costs

Laws and RegulationsCompatibility

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Attitude towards the Country of

Origin

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 asubstantial advantage because they are foreign

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Geographic Expansion-Strategic

Alternatives

Different

Same

Same DifferentProduct

Communications

Strategy 2:Product Extension,Communications

Adaptation

Example: Motorbikes

Strategy 1:Dual Expansion

Example: Applications Software

Strategy 4:Dual Adaptation

Example: Greeting Cards

Strategy 3:Product Adaptation,

CommunicationExtension

Example: Electrical products

Global Product Planning: Strategic Alternatives for Expanding into Global Markets

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Strategy 1: Product/Communication

Extension (Dual Expansion)

Company sells exactly the same product or service with

the same advertising as used in the home country

Company assumes that all markets are alike

Dual Extension does not work in all markets

Dual Extension is often used because it saves costs

Example: Campbell Soup

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Strategy 2: Product Extension,

Communications Adaptation

If the product serves different needs in various

countries, only marketing communication may have to

be adapted

Adaptation can happen by design or accident

Cheap implementation because product does not change

Example: Motorbikes

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Strategy 3: Product Adaptation,

Communication Extension

Product is adapted to the new market, but basic home

market communication strategy remains unchanged

Product is adapted to the environment and the

preferences of the consumers in the new market

Example: Mueslix

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Strategy 4: Product/Communication

Adaptation (Dual Adaptation)

Using Dual Adaptation the company must adapt the

product or service as well as the marketing

communication to the foreign market

Example: Colgate

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New Products and Services in

Global Marketing (1)

New to consumer and company ( Product or service

innovation)

New to consumer but not new to company

(Product/service or line extension)

Not new to consumer but new to company (New product

or service duplication)

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New Products and Services in

Global Marketing (2)

New-product development process

Permanent identification of new-product ideas

Screening of these ideas and identification of candidates for

further investigationStringent investigation and analysis of the selected new-

product ideas

Organisation of sufficient resources

The international new-product departmentTesting new products and services in national markets

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Summary

Product and services are the most important elements of

the marketing program

Important factors: preferences, costs, laws and

regulations, and compatibility

Five strategic alternatives for geographic expansion:

Product/communication extension, product

extension/communications adaptation, productadaptation/communications extension, dual adaptation and

product invention