Chapter 13

crucial elements in the diffusion of new ideas are

(1) an innovation, (2) which is communicated through certain channels, (3) over time, (4) among the members of a social system.

Local Brands disadvantages

1. Higher marketing cost2. Higher inventory cost3. Loss of economies of scale4. Diffused image

Global Brand Disadvantages

1. Market equality assumed 2. Problems with black and gray market 3. Possibility of negative connotation4. Quality and quantity consistency required 5. LDCs' opposition and resentment 6. Legal complications

global brand advantages

1. Maximum marketing efficiency 2. Reduction of advertising costs 3. Elimination of brand confusion 4. Advantage for culture-free product 5. Advantage for prestigious product 6. Easy identification/recognition for international travelers 7. Worldwide uniform image

Local Brands advantages

1. Meaningful names 2. Local identification3. Avoidance of taxation on international brand4. Quick market penetration by acquisition of local brand5. Variations of quantity and quality across markets allowed

private brand

A brand name owned by a wholesaler or a retailer. Also known as a private label or store brand.

Analyzing the five characteristics of an innovation can assist in determining the rate of acceptance or resistance of the market to a product.

A product's (1) relative advantage (the perceived marginal value of the new product relative to the old) (2) compatibility (its compatibility with acceptable behavior, norms, values, and so forth) (3) complexity (the degree of complexity associated with product use) (4) trialability (the degree of economic and/or social risk associated with product use), and (5) observability (the ease with which the product benefits can be communicated) affect the degree of its acceptance or resistance.

The success achieved by firms when they take their inventions to market is referred to as _____.

A. conversion-ability

Grengens, a European chocolate manufacturer, received several complaints from customers about the quality of its product when it began selling them in a tropical country. The firm had to repackage its chocolate bars in an extra plastic wrapper to protect it from the heat and dust. Which of the following factors in the local market is most likely to have dictated Grengens' product adaptation in this scenario?

Climatic requirements By adapting the packaging of its products to protect them from extreme heat and dust, Grengens has been influenced by the climatic requirements of the tropical country. Legal, economic, political, technological, and climatic requirements of the local marketplace often dictate product adaptation.

_____ is the process by which innovation spreads.

Diffusion

Booster Bar, a popular brand of energy bars in Canada, sold its bars singly or in packs of two in the South Asian markets, instead of their regular multiple-item packaging containing 10 or 20 bars to make it more affordable for the consumers. Which of the following requirements of the local market has most likely influenced Booster Bar's product adaptation in the form of reduction of bar units per package in this scenario

Economic requirements By reducing the number of units per package, Booster Bar has adapted its product based on the economic requirements of its South Asian market. The less economically developed a market is, the greater degree of change a product may need for acceptance. To make a purchase more affordable in low-income countries, the number of units per package may have to be reduced from the typical quantities offered in high-income countries

green marketing

Green marketing is a term used to identify concern with the environmental consequences of a variety of marketing activities.

true

Industrialized countries have the highest quality image, and products from developing countries generally encounter bias.

Insurance, dry cleaning, and hotel accommodations have intrinsic value resulting from a process, a performance, or an occurrence that only exists while it is being created. Which of the following characteristics of services is being referred to here?

Intangibility Insurance, dry cleaning, hotel accommodations, and airline passenger or freight service are intangible and have intrinsic value resulting from a process, a performance, or an occurrence that exists only while it is being created.

The intangibility of services results in characteristics unique to a service

It is inseparable in that its creation cannot be separated from its consumption; it is heterogeneous in that it is individually produced and is thus unique; and it is perishable in that once created it cannot be stored but must be consumed simultaneously with its creation.

GreatW, a wine company, had to market its products with a different name in a foreign market as it was mandatory to translate the name into the local language. Which of the following factors has most likely influenced the compulsory change of GreatW's product name in the foreign market in this scenario?

Legal requirement The mandatory laws of the foreign market led GreatW to change its name there. Legal, economic, political, technological, and climatic requirements of the local marketplace often dictate product adaptation. Laws that vary among countries usually set specific package sizes and safety and quality standards.

How does degree of industrialization affect COE

Less industrialized countries have a weaker CEO affect.Higher industrialized countries have a higher image of quality.

Dr. Townes is a dentist practicing in Denver. During a four-day stretch in March, it snowed so heavily that not a single patient was able to visit him. Since none of the appointments took place, he did not make any money in those four days, even though his normal expenses remained. In this scenario, which of the following characteristics of services is most likely affecting Dr. Townes' business?

Perishability Dr. Townes business is most likely affected by the perishable nature of the dental services rendered by him. A service is perishable in that once created it cannot be stored but must be consumed simultaneously with its creation. Services are distinguished by four unique characteristics—intangibility, inseparability, heterogeneity, and perishability— and thus require special consideration.

_____ is the term used to describe the changes mandated by local product and service standards.

Product homologation A product may have to change in a number of ways to meet the physical or mandatory requirements of a new market, ranging from simple package changes to total redesign of the physical core product. The term used to describe the changes mandated by local product and service standards is product homologation.

What are the two dimensions that help in defining the quality of a product of quality?

Quality can be defined on two dimensions: market-perceived quality and performance quality.

Tries to enter as many markets as possible. It is a high-risk and high-reward strategy. If successfully executed, it allows to collect profits from several markets while also being ahead of your competition. Best suited for companies whose products are with a short life cycle. STANDARDIZATION plays an important role in keeping the business expansion process coherent. Pros; Effective method of outrunning competition and utilizing the first-mover advantage. Raises brand awareness in more markets.Has more time to analyze the market and adjust. Cons: Requires a significant amount of initial investments. Includes both finances and staff. Losses are serious due to so many big initial investments.Uses standardization, so if the culture doesn't accept the product, then it loses a lot.

Sprinkler Strategy:

An important first step in adapting a product to a foreign market is to determine the degree of newness as perceived by the intended market.

TRUE

At least three extraneous variables affect the rate of diffusion of an object: the degree of perceived newness, the perceived attributes of the innovation, and the method used to communicate the idea.

TRUE

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

TRUE

Effective advertising and proper positioning of products can help brands to ameliorate a less-than-positive country stereotype.

TRUE

The more congruent product perceptions are with current cultural values, the more rapid product diffusion or acceptance will be.

TRUE

The support services component of the product component model contains such items as repair and maintenance and availability of spare parts.

TRUE

Cultural barriers play a bigger role in services than in merchandise trade.

TRUE Because trade in services frequently involves people-to-people contact, culture plays a much bigger role in services than in merchandise trade.

According to Everett Rogers, the element of time differentiates diffusion from other types of communication research.

TRUE Everett Rogers noted that "crucial elements in the diffusion of new ideas are an innovation, which is communicated through certain channels, over time, among the members of a social system." Rogers continued with the statement that it is the element of time that differentiates diffusion from other types of communications research.

When there are alternative products in a market, all of which meet performance quality standards, the product chosen is the one that meets market-perceived quality attributes.

TRUE In a competitive marketplace in which the market provides choices, most consumers expect performance quality to be a given. When there are alternative products, all of which meet performance quality standards, the product chosen is the one that meets market-perceived quality attributes.

The term product homologation is used to describe the changes mandated by local product and service standards.

TRUE In many countries, the term product homologation is used to describe the changes mandated by local product and service standards.

The decision to standardize or adapt a product is crucial in delivering quality

TRUE Quality is not just desirable, but essential for success in today's competitive global market, and the decision to standardize or adapt a product is crucial in delivering quality.

One of the core components in the product component model is the product platform.

TRUE The core component of the product component model comprises the product platform that contains the essential technology and all its design and functional features.

A majority of services enter foreign markets by licensing, franchising, or direct investment.

TRUE The vast majority of services (some 85 percent) enter foreign markets by licensing, franchising, or direct investment.

TRUE

The core component consists of the physical product—the platform that contains the essential technology—and all its design and functional features. The packaging component includes style features, packaging, labeling, trademarks, brand name, quality, price, and all other aspects of a product's package

When analyzing a product for a second market, the extent of adaptation required depends on cultural differences

The greater these cultural differences between the two markets, the greater the extent of adaptation that may be necessary.

Which of the following is considered to be one of the extraneous variables that affect the rate of diffusion of an object?

The method used to communicate the idea

TRUE

The rate of diffusion of a product can be postulated as positively related to relative advantage, compatibility, trialability, and observability but negatively related to complexity.

Consumer perceptions of a quality product often have more to do with market-perceived quality than performance quality.

True

The cost and quality of the product are among the most important criteria by which purchases are made.

True

global brand

a brand marketed under the same name in multiple countries with similar and centrally coordinated marketing programs

Carolyn, who is interested in marketing her company's diet products in Asia, studies the acceptable behavior, norms, and values in Asian markets. In this scenario, Carolyn studies her product's _____ in the Asian markets.

compatibility

A company focusing its efforts on making its new innovation more user-friendly than before is working on the _____ of the product.

complexity

The _____ effect refers to the possibility that the place of manufacture may affect product or brand image.

country-of-origin 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. A company competing in global markets today manufactures products worldwide; when the customer becomes aware of the country of origin, there is the possibility that the place of manufacture will affect product or brand images.

A name, term, sign, symbol, design, or combination used worldwide to identify goods or services of one seller and to differentiate them from those of competitors is called a _____.

global brand 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.

Because a service is individually produced and is virtually unique, the service is said to have _____.

heterogeneity A service is heterogeneous in that it is individually produced and is thus unique. Services are distinguished by four unique characteristics—intangibility, inseparability, heterogeneity, and perishability— and thus require special consideration.

From a sociological viewpoint, any idea perceived as new by a group of people is considered as a(n) _____.

innovation

Bagel's Foods had to change the labeling on their products to meet the specifications regarding vegetarian and non-vegetarian foods set by the government in the Japanese market. They also had to mention the ingredients in Japanese to provide clarity to its local customers. The component of the product that is in focus in the given scenario is the _____.

packaging component

A characteristic of a service is that it is _____, since it cannot be stored and must be consumed simultaneously with its creation.

perishable

According to the product component model, installation, repair and maintenance, deliveries, and warranties are most likely to be part of the _____ component of the product.

support services

successful new product diffusion is dependent on

the ability to communicate relevant product information and new product attributes.

An important first step in adapting a product to a foreign market is to determine:

the degree of newness of the product as perceived by the intended market.

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

true

Buyers prefer to buy less expensive, "more local" private brands during recessions.

true

Private brands provide the retailer with high margins; they receive preferential shelf space and strong in-store promotions; and perhaps most important for consumer appeal, they are quality products at low prices.

true

Products are often classified as tangible, whereas services are intangible .

true

the perception of quality rests solely with the customer.

true

A company enters a foreign market, creates a client base, feels comfortable, and with the knowledge gained in this stage, moves on to another foreign country. Expands to foreign countries slowly. Best suited for companies with a long life cycle, whose products are in the matured phase. Pros; Maintains a stable position within the market. As only one market is entered at the time, it minimizes risks.Knowledge is gained in each stage.Makes it advantageous for the long run. Cons: Competitors can enter markets faster.If a company invests a lot of resources and fails, it loses a lot.Time consuming

waterfall strategy: