Global Marketing Management

A European Perspective

Product and Service Decisions

Warren J. Keegan Bodo B. Schlegelmilch

Overview
Basic Concepts of Products and Services Positioning of Products and Services Product Saturation Levels in Global Marketing Product and Service Design Considerations Attitudes towards Country of Origin Geographic Expansion New 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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Product and Services: Important Concepts

Product Service Characteristics of Services National, International, Global Products and Services Global Brand Positioning Country of Origin Effects

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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 goods Products 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

Tangible Dominant

Oil & Grease Office Supplies Machinery Computer Telecommunication Systems Meeting or Convention Hotel Advertising Agency Plant janitorial and cleaning Freight Forwarding ManagementConsulting University Class

Intangible Dominant

Product-Related

Equipment-Based

People-Based

Source: Adopted from: G. Lynn Shostack, Breaking Free from Product Marketing; Journal of Marketing 41 (April 1997): 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/User High-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 Regulations Compatibility

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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 a substantial advantage because they are foreign
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Geographic Expansion-Strategic Alternatives

Different Strategy 2: Product Extension, Communications Adaptation Example: Motorbikes Strategy 4: Dual Adaptation Example: Greeting Cards

Communications

Strategy 1: Dual Expansion Example: Applications Software

Strategy 3: Product Adaptation, Communication Extension Example: Electrical products

Same Same

Product

Different edlich

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 investigation Stringent investigation and analysis of the selected newproduct ideas Organisation of sufficient resources

The international new-product department Testing 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, product adaptation/communications extension, dual adaptation and product invention
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