1. International Marketing Mix: Using the example
of any one country (USA / UK any other)
Product Decisions
Product Decisions –
Concepts, positioning, design, geographic
expansion, strategic alternatives, new products;
Statutory Compliance; Product Customization

2. When launching a product into foreign markets firms can use
a standard marketing mix or adapt the marketing mix, to suit
the country they are carrying out their business activities in.

4. Product: The P, that carries your substance

5. Product Why Crucial???
• Basic marketing concepts tell us that we will sell more of
a product if we aim to meet the needs of our target
market.
• Product decisions are probably the most crucial as the
product is the very epitome of marketing planning.
• The decision whether to sell globally standardized or
adapted products is too simplistic for today's market
place. Many product decisions lie between these two
extremes.

6. Product??
• A product can be defined as a collection of physical,
service and symbolic attributes which yield satisfaction
or benefits to a user or buyer. A product is a combination
of physical attributes say, size and shape; and subjective
attributes say image or "quality".

7. Product???
A product's physical properties are characterized the same the world
over. They can be convenience or shopping goods or durables and
nondurables; however, one can classify products according to their
degree of potential for global marketing:
i) local products - seen as only suitable in one single market.
ii) international products - seen as having extension potential into other
markets.
iii) multinational products - products adapted to the perceived unique
characteristics of national markets.
iv) global products - products designed to meet global segments.

8. Basic Product Concepts
Products can also be
• A product is a good, classified as:
service, or idea Based on users
– Tangible Attributes Consumer Goods
Industrial Goods
– Intangible Attributes
Based on purchase
Convenience
• Product classification Preference
Shopping
– Consumer goods Specialty goods
– Industrial goods
Based on life span
Durable,
Non-durable
Disposable

9. Product & brands categories:
• Local products
• National products
• International
products
• Global products

10. Product: What to Sell ?
• The international marketer needs to
determine what the market offering should
be in a foreign market :
– Defining the product offering
– Products versus Services/Rights

11. The Product Offering
Potential Product
Augmented Product
Expected Product
Generic Product
Core Benefit
Source : Adapted from: P. Kotler, Marketing Management, 1994

12. International Product
Strategies
Straight Product Product
Extension Adaptation Innovation
The firm adopts the The company caters The firm designs a
same policy used in to the needs and wants product from scratch
its home market. of its foreign customers. for foreign customers.
Source: W.J. Keegan, Multinational Product Planning: Strategic Alternatives,
Journal of Marketing, 33, 1969, pp.58-62

13. Extend, Adapt, Create: Strategic
Alternatives in Global Marketing
• Extension – offering product virtually unchanged
in markets outside of home country
• Adaptation – changing elements of design,
function, and packaging according to needs of
different country markets
• Creation – developing new products for the
world market

14. International strategic
alternatives
Product Communications Product/functions Conditions of product Examples
strategy strategy Met use
1 Extension Extension Same Same Pepsi
2 Extension Adaptation Different Same Soups
3 Adaptation Extension Same Different Agriculture chemicals
4 Adaptation Adaptation Different Different Farm implements
5 Invention New Same - Tyson turbine water
pump
Thailand tuna

15. Product Warranty and Service
• Product Warranty :
– Should a company keep the same warranty for all
markets or adapt it country by country ?
– Should the firm use warranty as a competitive
weapon ?
• Product Service :
– Service capability to accredit the firm with foreign
suppliers
– high investment in facilities, staffing, training, and
distribution network

16. Goods versus Services/Rights
• Instead of marketing a product abroad, the
company may also sell rights or services in a
foreign market:
- rights : brand / trademark / patent
- services : management skills (hotel chain)

17. Sales of Rights - Examples
• Franchising business :
- Coca-Cola : use of its name to licensed
bottlers around the world.
- Pilkington: licensing of the process of
float glass.
- Other : Manpower, McDonald's, etc.

18. Sales of Rights - Examples
• Management Contracts :
- Sheraton Hotels :
• Management contract for hotels abroad
• Sale of consulting and management contracts
• Little equity invested : Sheraton manages almost
400 hotels worldwide but has equity in only 40 of
them.
• Advantages : minimum risk & strong competitive
position.

19. Sales of Rights - Examples
•Turn-Key operations :
– The firm is selling technical and engineering
skills.
– The firm is training foreign nationals to run a
plant.
– The firm is supplying material and equipment.

20. Product design
• Changes in design are largely dictated by
whether they would improve the prospects
of greater sales, and this, over the
accompanying costs. Changes in design
are also subject to cultural pressures. The
more culture-bound the product is, for
example food, the more adaptation is
necessary. Most products fall in between
the spectrum of "standardisation" to
"adaptation" extremes.

21. Standardization versus Customization
• Although the products sold abroad
generally are not identical to their
domestic counterparts, there is always
a core of expertise that the firm can
carry abroad.
• Principle " All Business is local."

22. Reasons for Product Standardization
• Economies of scale : Production, R&D, Marketing
• Common Consumer
needs : Drinking patterns, car sizes
• Consumer Mobility : Customer retention & Loyalty
American Express, Kodak, ...
• Home Country Image : US jeans, French Perfumes,...
• Impact of technology : B to B Markets

23. Reasons for Product Adaptation
• Climate: US Air-conditioning equipment
• Skill level of users : Computers in Africa
• National consumer habits :
- front-loading/top-loading washing machines
- car models : four-door (F) - two-door (Germ.)
• Government regulations on products, packaging, and
labels.
• Company history and operations (subsidiaries)

24. Example:
European Toothpaste Market
• Market Size in France:
FF 1,8 Bill. (1996) • Competitors in France :
• Trends: – Unilever 33%
– Multiple number of – Colgate 22,5%
toothpastes/family – Henkel 19%
– Therapeutic / – Smithkline B. 12%
sophisticated products – P&G 0%
– Cosmetic products
– Volume
– Price

25. Drivers of Product Adaptation
Example COLGATE Toothpaste
• (1) Differences in National Regulations
– Triclosan forbidden in Germany
– High fluorine content in local water (UK)
– Obligation to sell high fluorine content toothpaste
in pharmacy (France)
– Stringent clinical tests in France

26. Drivers of Product Adaptation
Example COLGATE Toothpaste
• Packaging:
– Ecological Stand-up tubes in Germany
– Failure in France (Carrefour)
• Distribution:
– Role of pharmacy in Italy and Spain
– Role of drugstore in UK
• Communication:
– Medical in Italy and Spain (recommended by dentist)
– Non-medical in UK

27. Factors behind Standardization
• Factors encouraging standardisation are:
• i) economies of scale in production and
marketing
ii) consumer mobility - the more consumers
travel the more is the demand
iii) technology
iv) image, for example "Japanese", "made in".

28. Factors encouraging adaptation
i) Differing usage conditions. These may be due to climate, skills, level
of literacy, culture or physical conditions.
ii) General market factors - incomes, tastes etc.
iii) Government - taxation, import quotas, non tariff barriers, labelling,
health requirements. Non tariff barriers are an attempt, despite their
supposed impartiality, at restricting or eliminating competition.
iv) History. Sometimes, as a result of colonialism, production facilities
have been established overseas.
v) Financial considerations. In order to maximise sales or profits the
organisation may have no choice but to adapt its products to local
conditions.
vi) Pressure. Sometimes, as in the case of the EU, suppliers are forced
to adapt to the rules and regulations imposed on them if they wish to
enter into the market.

29. Production decisions
• In decisions on producing or providing products
and services in the international market it is
essential that the production of the product or
service is well planned and coordinated, both
within and with other functional area of the firm,
particularly marketing.
• The main elements to consider are the
production process itself, specifications, culture,
the physical product, packaging, labelling,
branding, warranty and service

30. Aesthetics
• Global marketers must understand the
importance of visual aesthetics
• Aesthetic Styles (degree of complexity
found on a label) differ around the world

31. Product Warranties
• Express Warranty is a written guarantee
that assures the buyer is getting what they
paid for or provides a remedy in case of a
product failure
• Warranties can be used as a competitive
tool

32. New Products in Global Marketing
• Pursue opportunities in competitive
arenas of global marketplace
• Focus on one or only a few businesses
• Active involvement from senior
management
• Ability to recruit and retain best employees
• Understand the importance of speed in
bringing product to market

33. Identifying New Product Ideas
• What is a new Product?
– New to those who use it or buy it
– New to the organization
– New to a market

34. The International New Product
Department
• How big is the market for this product at various
prices?
• What are the likely competitive moves in
response to our activity?
• Can we market the product through existing
structure?
• Can we source the product at a cost that will
yield an adequate profit?
• Does product fit our strategic development plan

35. Testing New Products
• When do you test a new product?
– Whenever a product interacts with human,
mechanical, or chemical elements because
there is the potential for a surprising and
unexpected incompatibility
• Test could simply be observing the
product being used within the market

36. Key terms and concepts
• Product
– It is everything (both favorable and unfavorable)
that a buyer receives in a transaction.
– It is not just the “thing” - it’s the need satisfying
offering of a firm
• Quality
– the ability of a product to satisfy a customer
– relative to competitors
– a moving target - changing expectations

37. Product Differentiation
• Defined: the degree to which competing
products are perceived to be different.
• Some products are difficult to differentiate.
• Product differentiation is a key to profitability –
Motorola had it – have they lost it?
• Consider the entry of a new product/service to
the market.

38. Classifications of Consumer Products
Products
Products
Consumer
Consumer Business
Business
Products
Products Products
Products
Convenience
Convenience Shopping
Shopping Specialty
Specialty Unsought
Unsought
Products
Products Products
Products Products
Products Products
Products

39. Classification of Consumer Products
• Convenience products
– Inexpensive, little shopping effort expended
– Location is paramount
• Shopping products
– More expensive and found in fewer stores than convenience
products. There are two types:
• Homogenous shopping products: difference is on price
• Heterogeneous shopping products: difference is on
style/features
– What are the implications of marketing each of these two
types?

40. Classification of Consumer Products
• Specialty products
– Products the consumer is willing to spend
considerable effort to locate
– Need to maintain image, limit outlets to those that
will provide specific attention to the product.
• Unsought products
– Products the consumer does not actively seek.
– Key is identification of buyers and targeted
promotions, including personal selling

41. The Product Life Cycle (typical)
Intro. Growth Maturity Decline
Total
Industry
Sales
Total
Industry
$0 Profit
Time

42. Introduction Stage
• Product category has recently been introduced into
the market - consumers are unaware of the product.
• Proper capitalization is important.
• Industry sales are low, but growing.
• Industry profits are negative.
• Advertising frequently includes an orientation toward
primary demand.
• Creating awareness and trial are common marketing
objectives.
• Sales promotion used to trigger product trial.

43. Growth Stage
• Sales are rising rapidly.
• Profits appear, peak, and begin to decline just before the
end of the period.
• Profit possibilities attract competitors, but many
competitors will be “shaken out” during this phase as
well. Why?
• Promotion shifts from primary to selective demand.
• Building market share is a common marketing objective.

44. Growth Stage (continued)
• Keys in the growth stage
– Maintain strong distribution networks (must be able to
get products to consumers)
– Control costs
– Product differentiation (better at meeting customer
needs)
– Incremental improvements in product
features/benefits and product quality are critical
(competitors are refining/improving marketing mixes)

45. Maturity Stage
• Sales rise to their peak, then level off.
• Industry profits are in a slow decline.
• Competition increases.
• Promotional costs increase (selective demand),
and sales promotion to trigger switching is more
common

46. Maturity Stage (continued)
• Products become more homogenous, triggering
price competition. Need to differentiate brand.
• Diversify brand and models.
• Can be difficult to enter the market in this phase
(capturing vs. retaining share)
• Efficiency is a key.

47. Decline Stage
• Sales decrease.
• Profits decrease and eventually disappear.
• Declining numbers of competitors.
• Spend enough on promotion to retain hard
core brand loyal customers.
• Eliminate unprofitable outlets.
• Marketing objective: reduce costs and milk
the brand, or drop it.

48. How to use the PLC
(or, how not to get used by the PLC)
• The PLC applies to product categories/ideas, not
individual brands.
• The PLC is market-specific.
• The PLC is not deterministic.
– Increase frequency of use by current customers
– Add new users to the product.
– Add new uses for the product.
– Packaging/quality improvements (industry-wide)
which add significant consumer benefits.

49. New Product Development Process
• Idea Generation
• Screening
– Strengths/weaknesses, compatible, ROI estimate
• Idea Evaluation
– Concept testing, cost/sales estimates
• Development
– Develop prototype, test marketing mix, revise ROI estimate
• Commercialization
– Finalize all plans, start production, final ROI estimate

50. Why New Products Sometimes Fail
• Inadequate marketing research
• Product deficiencies
• Cost overruns
• Unanticipated competitor reactions
• Poor timing

51. Case: Cotton Production/Marketing Interface
Spinners
Machines are highly flexible, that is they can usually switch to a variety of yarn requirements. The machines are geared to
high production, are automated and are of a precision for constant quality provision. There are strict process controls and
built - in quality control. Poor raw material, especially when contaminated with metal particles, damages opening mills, grid
knives, fans and card clothing. Previous devices employed to remove these (magnets) are becoming less effective. The
consequences are damage in the blowroom and carding and danger of fire. Quality is therefore defined as properties of the
end use (clothing etc.), efficiency of weaving and knitting and the efficient running of the spinning plant. Spinners require
raw cotton which is free of trash, dust, sugar and honey dew contamination, seed coats, bark and foreign fibres and, will
not nep the cloth. Further requirements are a certain length (could be short, medium or long), uniformity of length, strength,
fineness, maturity and a certain elongation and colour.
Suppliers
In order to meet these high quality demands, the growers have to ensure that the production, picking and ginning is of a
very high standard.
Cotton grading
The Liverpool Cotton exchange, for one, relied on the skills of its experts to manually classify raw fibre purchases for its
clients. It still holds the "standards" for length, colour and trash content. As well as the demands of modem machinery, the
lack of standardised measuring and cotton classification procedures has resulted in commercial conflict and legal disputes
about the true nature of traded cotton. Now, computer based high volume instrument listing systems of raw cotton (HVI
systems) are available. The system can handle large numbers of bales, reduce variation in classification and the need for
highly trained bate classifiers.
For cotton exporters the system offers the following advantages:
• enhanced objectivity in classification
• improve communication if similar systems are used by sellers or buyers
• reduced conflict and need for arbitration
• enhanced competitiveness against synthetic fibres
• improved integration with modern spinning machines
• reduced costs on training of experts and in measuring time.
The system can process 2000 bales per day and give a printout on the seven parameters of grading. These include length
and length uniformity, strength and elongation, micronaire or fineness, leaf and colour. Manufacturers include SPINLAR
INC. of Knoxville, USA.

52. managing
marketing International Marketing Mix Decisions
What aspects of Product can be modified?
from global headquarters  Attributes
 Brand (Global vs. Local)
 Packaging
 Quality
 Services (after-sale services, support)
 Positioning
.

53. managing
marketing International Marketing Mix Decisions
Strategic Alternatives in international and
global marketing mix decisions. Managerial issues
Advantages and Disadvantages of International Brands
 Strong customer recognition/reassurance
from global headquarters
 Economies of scale and scope
 Leverages power with retailers
 Consolidates efforts across countries
 Potential for extension
 Not locally responsive
 Demotivating for country managers
 Difficult to manage
 Need to maintain consistency across
countries and product-lines
.

54. Product Types
• Buyer orientation
– Amount of effort expended on purchase
– Convenience
– Preference
– Shopping
– Specialty

55. Brands
• Bundle of images and experiences in the
customer’s mind
• A promise made by a particular company
about a particular product
• A quality certification
• Differentiation between competing
products
• The sum of impressions about a brand is
the Brand Image

56. Brands

57. Brands
• The added value that accrues to a product
as a result of investments in the marketing
of the brand
• An asset that represents the value created
by the relationship between the brand and
customer over time

58. Brands
“We have to shift to high value-
added products, and to do that we
need to improve our brand.”
- Noboru Fujimoto, President Sharp Electronics
Corporation

59. Local Products and Brands
• Brands that have achieved success in a
single national market
• Represent the lifeblood of domestic
companies
• Entrenched local products/brands can be
a significant competitive hurdle to global
companies

60. International Products and Brands
• Offered in several markets in a particular
region
– ‘Euro-brands’

61. Naming your product
Alu-Fanny: French Foil wrap Atum Bom: Portuguese tuna
Crapsy Fruit: French cereal Kack: Danish sweets
Kum Onit: German pencil sharpeners Mukk: Italian yogurt
Plopp: Scandinavian chocolate Pocari Sweat: Japanese sport drink
Pschitt: French lemonade Poo: Argentine curry powder

62. Naming your product
 Phonetic Problems with Brand Names
- Bardok (Sounds like Brothel in Russian)
- Misair (Sounds like Misery in French)
 Translations
Intent Translation
- Stepping Stone - Stumbling Block
- Car Wash - Car Enema
- Highly Rated - Over Rated
Symbols
- Owl - Bad Luck in India
 Other Countries make mistakes too
- Zit (Chocolate from Germany)
- Koff (Beer)

63. Global Products and Brands
• Global products meet the wants and
needs of a global market and is offered in
all world regions
• Global brands have the same name and
similar image and positioning throughout
the world

64. Global Products and Brands
A multinational has operations in different
countries. A global company views the world as
a single country. We know Argentina and France
are different, but we treat them the same. We
sell them the same products, we use the same
production methods, we have the same
corporate policies. We even use the same
advertising—in a different language, of course.
- Alfred Zeien Former Gillette CEO

65. Country of Origin effect
• Country-of-Origin (COO) Influences on Consumers
– For many products, the “made in” label matters a
great deal to consumers.
Key research findings of
COO effects:
•COO effects are not stable
•Consumers prefer domestic
products over imports
•Both the country of design
and the country of
manufacturing/assembly play
a role in consumer attraction.

66. Branding Strategies
• Combination or tiered branding: allows
marketers to leverage a company’s reputation
while developing a distinctive identity for a line of
products
– Sony Walkman
• Co-branding features two or more company or
product brands
– NutraSweet and Coca-Cola
– Intel Inside

67. Branding Strategies
• Brand acts as an umbrella for new products
– Example: The Virgin Group
• Virgin Entertainment: Virgin Mega-stores and MGM Cinemas
• Virgin Trading: Virgin Cola and Virgin Vodka
• Virgin Radio
• Virgin Media Group: Virgin Publishing, Virgin Television,
Virgin Net
• Virgin Hotels
• Virgin Travel Group: Virgin Atlantic Airways, Virgin Holidays

68. Global Brand Development
• Questions to ask when management
seeks to build a global brand:
– Will anticipated scale economies materialize?
– How difficult will it be to develop a global
brand team?
– Can a single brand be imposed on all markets
successfully?

69. Global Brand Development
• Global Brand Leadership
– Using organizational structures, processes,
and cultures to allocate brand-building
resources globally, to create global synergies,
and to develop a global brand strategy that
coordinates and leverages country brand
strategies

70. Global Brand Development
• Create a compelling value proposition
• Think about all elements of brand identity and
select names, marks, and symbols that have the
potential for globalization
• Research the alternatives of extending a
national brand versus adopting a new brand
identity globally
• Develop a company-wide communication
system

71. Global Brand Development
• Develop a consistent planning process
• Assign specific responsibility for managing
branding issues
• Execute brand-building strategies
• Harmonize, unravel confusion, and
eliminate complexity

72. Local versus Global Products and
Brands: A Needs-Based Approach
Self-actualization
External/Internal
Esteem
Social
Safety
Physiological

73. Country of Origin as Brand Element
• Perceptions about and attitudes toward
particular countries often extend to
products and brands known to originate in
those countries
– Japan
– Germany
– France
– Italy

74. Packaging
• Consumer Packaged Goods when the
packaging is designed to protect or
contain the product during shipping
• Eco-Packaging because package
designers must address environmental
issues
• Offers communication cues that provide
consumers with a basis for making a
purchase decision

75. Product Packaging and
Labeling
Protection
Climate
Transport & Handling
Buyer's slow usage rate
Lack of storage facilites
Promotion Legal Constraints
Merchandising ( income level, shopping habits) Recycling of Packaging
Minimum breakage / theft (Duales System, Eco-Emballage)
Ease of handling Regulations on consumer info.
Multilingual Labels to Convey an International (Origin, weight, ingredients)
Image (Zara, Hollywood Chewing Gum)

76. • POM brand
Pomegranate
juice used a
distinctively
shaped bottle to
gain attention on
the grocery shelf

77. Labeling
• Provides consumers with various types of
information
• Regulations differ by country regarding various
products
– Health warnings on tobacco products
– American Automobile Labeling Act clarifies the
country of origin, and final assembly point
– European Union requires labels on all food products
that include ingredients from genetically modified
crops

79. Labeling
As Americans become
increasingly concerned
about cholesterol, the
FDA (Food and Drug
Administration) has
responded by requiring
food manufacturers to
list trans fat (i.e., trans
fatty acids) on the
Nutrition Facts portion
of product labels,
effective 1/1/06.

81. Brands
• Brand: A name,sign, symbol intended to
identify/differentiate a product from others.
• A brand can imply many things to a consumer,
including quality and the image of the buyer/user.
• Key branding decisions:
– Name
– Brand sponsor
– Brand strategy

82. Major Branding Decisions
• Decision #1: Choosing a brand name
– Should suggest product benefits/qualities
• Sunkist, Spic and Span, DieHard, Easy-Off
– Easy to pronounce, recognize, remember
• Tide, Aim, Puffs, but “I Can’t Believe It’s Not
Butter” works too!
– Distinctive
• Taurus, Kodak, Exxon
– Translates easily into foreign languages
– Capable of registration and legal protection

83. Major Branding Decisions
• Decision #2: Brand Sponsor
– Manufacturer’s brand or private brand?
– Retailers like private brands
• Builds loyalty to the retailer
• Frequently better profit margins
• But they can be expensive to develop
– Family brand or individual brand?
• Do existing associations work for the new product?

84. Major Branding Decisions
Decision #3: Product Category
Brand Strategy
Existing New
Line Brand
Existing
Extension Extension
Brand
Name
New
New Multibrands
Brands
Source: Kotler and Armstrong (1999). Principles of Marketing, 8th edition. Upper Saddle River, NJ: Prentice Hall

85. International Branding Strategies
One brand name everywhere
One brand name everywhere
(greater identification of the
(greater identification of the
product worldwide, but are all
product worldwide, but are all
consumer needs the same?)
consumer needs the same?)
Different brand names
Different brand names
Adaptions and
Adaptions and in different markets
in different markets
modifications
modifications (new marketing mixes
(new marketing mixes
(modifying elements to
(modifying elements to for each market –
for each market –
fit each market – will
fit each market – will will this make you
will this make you
this help you achieve
this help you achieve more effective?)
more effective?)
economies of scale?)
economies of scale?)

86. Brand Equity
• A brand has value, called brand equity.
Brand equity is based on brand loyalty,
name awareness, perceived quality,
strong associations, patents, etc.
• What are the top brands worldwide for
brand equity?
• Brand equity makes brand and line
extensions easier.

87. Managing Brand Equity
• Brand equity is an asset, and needs to be
managed.
– maintain/improve top-of-mind awareness
– improve perceptions of quality
– create positive brand associations
• To manage brand equity, you should:
– continuous R & D investment
– skillful advertising
– avoid short-term actions which undermine the brand
in the long-term

88. Five levels of brand familiarity
• Brand rejection: won’t buy unless a relevant factor
changes
• Brand non-recognition: consumers don’t pay attention to
brands (commoditization)
• Brand recognition: consumers are aware of the brand
and recognize it with/without prompting
• Brand preference: consumers usually choose a specific
brand
• Brand insistence:consumers are willing to prolong
search to find the desired brand

89. Packaging
• Four primary functions
– Containing and protecting products
– Promoting products
• Persuasive labeling (critical for many products)
• Informational labeling (helps make wsie purchase,
lowers cognitive dissonance)
– Facilitating storage, use and convenience
– Facilitating recycling and reducing
environmental damage

90. Summary
• The marketing mix, which is the means by
which an organisation reaches its target
market, is made up of product, pricing,
distribution, promotion and people
decisions. These are usually shortened to
the acronym "5P's". Product decisions
revolve around decisions regarding the
physical product (size, style, specification,
etc.) and product line management.