Products and Services for Consumers

Chapter 12 and Chapter 13

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Chapter Learning Objectives

1. The importance of offering a product suitable for the intended market

1. The importance of offering a product suitable for the intended market

2. The relationship between product acceptance and the market into which it is introduced

2. The relationship between product acceptance and the market into which it is introduced

3. The importance of quality and how quality is defined

3. The importance of quality and how quality is defined

Chapter Learning Objectives

4. Country-of-origin effects on product image4. Country-of-origin effects on product image

5. Physical, mandatory, and cultural requirements for product adaptation

5. Physical, mandatory, and cultural requirements for product adaptation

6. The need to view all attributes of a product in order to overcome resistance to acceptance

6. The need to view all attributes of a product in order to overcome resistance to acceptance

Global Perspective

Disney’s experiences internationally– Tokyo Disney– Euro Disney– Hong Kong Disney (2006)

What Is a Product ?

Product: A bundle of attributes The Total Product

– Tangible attributes: materials, size, weight, design, packaging, performance, comfort

– Intangibles: brand image, styling, other benefits (installation, delivery, credit, warranty, after-sale service, return policy)

Quality

Defined in 2 ways: 1. “Market-perceived” quality

– How does the market (consumer) perceive the quality of the product or service

2. “Performance” quality– What is the overall “performance” of the

product or service (firm’s perspective)– Tends to be focused on attributes or

features or meeting certain “performance” criteria

Quality (Cont.) Physical or Mandatory Requirements and

Adaptation– Many countries require “homologation”

Requires changes to be made to products based on local product and service standards

– Mandatory adaptation vs. cultural adaptation Many believe adaptation occurs most often based upon

local laws, or policies that are economic, political or environmental

– Green Marketing and Product Development Quality is associated with customer satisfaction Customer satisfaction indexes developed are now

being used to measure satisfaction across a wide variety of consumer products and services

ISO 9000 Certification: An International Standard of Quality (Ch 13)

1. ISO 9000s, a series of five international industrial standards (ISO 9000–9004) originally designed by the International Organization for Standardization in Geneva to meet the need for product quality assurances in purchasing agreements

2. ISO 9000 concerns the registration and certification of a manufacturer’s quality system

3. It is a certification of the existence of a quality control system a company has in place to ensure it can meet published quality standards

4. ISO 9000 standards do not apply to specific products

5. It is a certification of the production process only, and does not guarantee that a manufacturer produces a “quality” product or service.

6. The series describes three quality system models, defines quality concepts, and gives guidelines for using international standards in quality system

Products and Culture

1. Facets of products include its form, taste, color, odor, and texture; how it functions in use; the package; the label; the warranty; manufacturer’s and retailer’s servicing; the confidence or prestige enjoyed by the brand; the manufacturer’s reputation;

2. The adoption of some products by consumers can be affected as much by how the product concept conforms with norms, values, and behavior patterns

3. Thus, many facets of products are influenced by culture, which markets must pay attention to

A product is more than a physical item: It is a bundle of satisfactions (or utilities) that the buyer receives

A product is more than a physical item: It is a bundle of satisfactions (or utilities) that the buyer receives

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Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Products and Culture

Cultural Influences

Innovative Products and Adaptation

Three Variables Affecting Diffusion of Innovations

▶ Degree of Perceived Newness

▶ Perceives attributes of Innovation

▶ Communication Methods

Characteristics of Innovations

Product of Innovation

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Innovative Products and Adaptation

Product Diffusion– 1. Defined:

“process by which innovation spreads”

– 2. “Crucial elements” of diffusion of new ideas are (Everett Rogers):

1) an innovation; 2) which is communicated thru certain channels 3) over time 4) among members of a social system

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Degree of Newness

Congruent InnovationsCongruent Innovations

Continuous InnovationContinuous Innovation

Dynamically Continuous InnovationDynamically Continuous Innovation

Discontinuous InnovationDiscontinuous Innovation

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The 5 Characteristics That Affect the “Rate of Acceptance”

• Relative Advantage (marginal value of new vs. old)

• Compatibility (to values, norms)

• Complexity (more complex, more time)

• Trialability (risk associated with product use)

• Observability (how easily benefits are communicated)

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Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Product Component Model

Repair and maintenance

SUPPORT SERVICESCOMPONENT

CORECOMPONENT

Installation

Instructions

Other related services

Deliveries

Warranty

Spare parts

Legal

Trademark

Brand name

Legal

Product platform

Design features

Functional features

Legal

PACKAGINGCOMPONENT

Price

Quality

Package

Styling

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Product Component Analysis for Adaptation

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● Core Component

▶ Physical Product Features▶

▶ Design

● Packaging Component

▶ Style Brand Name▶

▶ Packaging Quality▶

▶ Labeling Price▶

▶ Trademarks

● Support Services Component

▶ Repair Warranties▶

▶ Maintenance Deliveries▶

▶ Instructions Spare Parts▶

▶ Installation

Managing a Global Product LineExploiting Product Life Cycles

Possible Product Life Cycle for a Product in Different Countries

TimeIntroduction Growth Maturity Saturation Decline

Un

it S

ale

s

Country A

Country B

Country C

Country DHome

Country

Marketing Consumer Services Globally

1. intangibility,

2. inseparability,

3. heterogeneity, and

4. perishability

Advice regarding adapting products for international consumer markets also applies to adapting services or intangible products

However, many consumer services are distinguished by four unique characteristics:

Advice regarding adapting products for international consumer markets also applies to adapting services or intangible products

However, many consumer services are distinguished by four unique characteristics:

• There are several services opportunities in global markets from travel and tourism, TV, movies, to financial services

• There are several services opportunities in global markets from travel and tourism, TV, movies, to financial services

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Top Consumer Services Exports -Service Opportunities in Global Markets

1. Tourism 5. Telecommunications

2. Transportation 6. Entertainment

3. Financial Services 7. Information

4. Education 8. Health Care

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12-10

Four Barriers That Face Consumer Services Marketers

1. Protectionism2. Restrictions on trans-border data

flows• Transferring personal data on

consumers over borders (income, spending preferences) conflict with rights to privacy.

3. Protection of intellectual property4. Cultural Barriers and Adaptation

• Foreign companies policies or “ways of conducting business” may be conflicting with host country values

Brands in International Markets

1. Global brands such as Kodak, Sony, Coca-Cola, McDonald’s, Toyota, and Marlboro play an important role in that process

2. Perceived brand “globalness” leads to increases in sales

A global brand is defined as the worldwide use of a name, term, sign, symbol (visual and/or auditory), design, or combination thereof intended to identify goods or services of one seller and to differentiate them from those of competitors

A successful brand is the most valuable resource of a company

Brand image is at the very core of business identity and strategy

A global brand is defined as the worldwide use of a name, term, sign, symbol (visual and/or auditory), design, or combination thereof intended to identify goods or services of one seller and to differentiate them from those of competitors

A successful brand is the most valuable resource of a company

Brand image is at the very core of business identity and strategy

Insert Photo of two cars

Branding Strategies

– 1. Global Brands Uniform worldwide

– 2. National Brands Country specific

– 3. Private Brands

– Note: Country-of-origin effect can create positive or negative impact on consumers’ perceptions

Country-of-Origin Effect and Global Brands

Brands are used as external cues to taste, design, performance, quality, value, and prestige

Many factors affect brand image, but one factor of great concern is the country-of-origin effect on the market’s perception of the product

Country-of-origin effect (COE) can be defined as any influence that the country of manufacture, assembly, or design has on a consumer’s positive or negative perception of a product

When the customer becomes aware of the country of origin, there is the possibility that the place of manufacture will affect product or brand image

The country, the type of product, and the image of the company and its brands all influence whether the country of origin will engender a positive or negative reaction

Global Warranty and Service Policies

Product Warranties Global Product Service

International Product

Decisions

Industrial and Consumer Product Elements

Features

Branding

Packaging

Warranty

Service

Quality

Industrial and Consumer Service Elements

Service Design

Service Name

Delivery Systems

Locations

Quality Levels

Generic International

Product Strategies

Managerial Issues

Product Line Decisions

Product Life Cycles

Standardized Products

Customized Products

Bar

rier

s to

Cu

sto

miz

atio

n

Bar

rier

s to

Sta

nd

ard

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Global Product Strategies

The View from Toyota

Our global strategy used to center on “world cars,” which we would modify slightly to accommodate demand in different markets. Today our focus is shifting to models that we develop and manufacture especially for selected regional markets.

The View from Honda

“We are the most international of the Japanese companies. At the moment we are the most diversified, and we will be more diversified in the future. Still, I think it would be very hard to build a one-type world car. In the end, I don’t think it would be very efficient.”

---Nobuhiko Kawamoto

President and CEO, Honda Motor Company

Ch 13--Trade Shows: A Crucial Part of Business-to-Business Marketing

Trade shows serve as the most important vehicles for selling products, reaching prospective customers, contacting and evaluating potential agents and distributors, and marketing in most countries

Trade shows serve a much more important role in other countries where most prospects are found

European trade shows attract high-level decision makers who are there to buy products

Trade shows provide the facilities for a manufacturer to exhibit and demonstrate products to potential users and to view competitors’ products

Trade shows create an opportunity to create sales and establish relationships with agents, distributors, franchisees, and suppliers that can lead to more-permanent distribution channels in foreign markets

Relationship Marketing in Business-to-Business Contexts

Building long-term relationships with customers is a viable strategy for business-to-business marketing

The objective of relationship marketing is to make the relationship an important attribute of the transaction, thus differentiating oneself from competitor

It shifts the focus away from price to service and long-term benefits

The reward is loyal customers that translate into substantial long-term profits

Focusing on long-term relationship building will be especially important in most international markets where culture dictates stronger ties between people and companies