International Marketing Ch 13 - Products and Services for Consumers

Adaptation of nonphysical features of products

- may be necessary for maximum bundle of satisfactions and positive product attributes - may require changes of any one or all of the psychological aspects of a product.

Important things to know about COE

-Ethnocentrism can also have country-of-origin effects -involves stereotyping on their level of development -The more technical the product, the less positive is the perception of something manufactured in a less developed or newly industrializing country. -Foreign products fare not as well in developing countries because consumers have stereotypes about the quality of foreign-made products, even from industrialized countries -stereotypes can be overcome with experience

Trends to look out for

-New consumers are springing up in many emerging markets globally: they may have little purchasing power but promise to be huge markets -In mature markets, consumers' tastes are more sophisticated and complex as increases in purchasing power provide them with the means of satisfying new demands -distinction between products and services for some companies means little -Larger firms are becoming global in orientation and strategy

Green Marketing and Product Development

-No country's laws yet require products to carry an ecolabel to be sold - voluntary; laws that mandate systems to control solid waste carry penalties. -growing public and political pressure to control solid waste is a strong incentive for compliance -global marketer should not view green marketing as a European problem; concern for the environment is worldwide.

Important things to know about the Support Services Component

-Repair and maintenance are difficult problems in developing countries as these services may not even be available -So, products may have to be adjusted to require less frequent maintenance -Product instructions should be easy to read for everyone

Crucial elements in the diffusion of new ideas include (Everett Rogers)

-an innovation -which is communicated through certain channels -over time, -among the members of a social system

Physical or Mandatory Requirements and Adaptation

-can range from simple package changes to total redesign of the physical core product 1. Product homologation 2. Legal, economic, political, technological, and climatic requirements of the local marketplace 3. The less economically developed a market is, the greater degree of change a product may need for acceptance. 4. Laws that vary among countries usually set specific package sizes and safety and quality standards

Important things to know about Packaging

-countries are now requiring country-of-origin labeling for food products. -packaging and trademarks should be clear, not offensive or unacceptable, translate well, fit specific measurements

Utilities of products include

-form, taste, color, odor, and texture, functions, the package, the label, the warranty, the manufacturer's and retailer's servicing, the prestige enjoyed by the brand, the manufacturer's reputation, the country of origin, and any other symbolic utility received from the possession or use of the goods

Maintaining Quality

-performance quality is critical -the decision to standardize or adapt a product is crucial in delivering quality.

The four unique characteristics consumer services are distinguished by

1. Intangibility 2. Inseparability 3. heterogeneity 4. Perishability

The 3 components of the Product Component Model

1. core component 2. packaging component 3. support services component

U.S. exports target consumers, with the totals evenly split among the three major categories:

1. durable goods (such as cars and computers) 2. nondurable goods (mainly food, drugs, toys) 3. services (for example, tourism, telecommunication).

Two Dimensions of Quality

1. market perceived quality 2. performance quality -Consumer perceptions of a quality product often have more to do with market-perceived quality than performance quality.

Four types of Barriers to Entering Global Markets for Consumer Services

1. protectionism 2. controls on transborder data flows 3. protection of intellectual property 4. cultural requirements for adaptation

Diffusion Theory and acceleration

1. provides the foreign marketer with the ability to assess the time it takes for a product to diffuse—before a financial commitment is necessary. 2. focuses the marketer's attention on features of a product that provoke resistance. 3. provides an opportunity to minimize resistance and hasten product acceptance.

The Five Characteristics of Innovation

1. relative advantage 2. compatibility 3. complexity 4. trialability 5. observability -these are positively related to the rate of diffusion -perception of these characteristics are crucial to the evaluation

The two critical issues that affect product development

1. the control of the packaging component of solid waste 2. consumer demand for environmentally friendly products

3 variables that affect the rate of diffusion of an object

1. the degree of perceived newness 2. the perceived attributes of the innovation -can be changed if marketers know perceptual framework of consumers 3. the method used to communicate the idea

Product Component Model

A tool for characterizing how a product may be adapted to a new market -the impact of the cultural, physical, and mandatory factors that affect a market's acceptance of a product can be focused on

European Commission

Body responsible for proposing EU legislation, implementing it, and monitoring compliance -Commission issued guidelines for ecolabeling that became operational in 1992 (control on packaging waste) -products are evaluated on all significant environmental effects throughout its life cycle, from manufacturing to disposal.

First step in product adaptation

Determining the degree of newness as perceived by the intended market

Intangible

Not a physical product

Quality Changes

Product life cycles are becoming shorter focusing on: -Importance of quality -Competitive prices -Innovative products The power is shifting from the seller to the buyer -People are more savvy and are knowledgeable about products and services -Customers have more choices with more companies competing for their attention. -More competition and more choices mean more power in the hands of the customer, driving the need for quality.

Inseparability

Simultaneous production and delivery Consumed when it is provided and cannot be separated from the provider Haircut

Controls on Transborder Data Flows

The European Commission is concerned that data about individuals are being collected, manipulated, and transferred between companies with little regard for the privacy of the affected individuals -used for competition

Protectionism

The European Union is making modest progress toward establishing a single market for services on the basis of Reciprocity and harmonization

What accelerates the pace of globalization of brands

The Internet and other technologies

Quality

The customer defines quality in terms of his or her needs and resources. -In most global markets, a product's cost and quality are among the most important criteria for purchases.

Products and Culture

The meaning and value imputed to the psychological attributes of a product can vary among cultures and are perceived as negative or positive -think about product use and perception, as well as culture in terms of norms, values, and behavior

global brand

The worldwide use of a name, term, sign, symbol (visual or auditory), design, or a combination thereof to identify goods or services of a seller and to differentiate them from those of competitors -A successful brand is the most valuable resource of a company

Examples of Services in Global Markets

Tourism Transportation Financial Services Education Telecommunication Entertainment Information Health Care

innovation

any idea perceived as new by a group of people -products new to a social system

Products that are perceived to be more innovative

are more difficult in gaining market acceptance.

Products that are more technical or complicated

are more difficult to move through the product life cycle

Country-of-origin effect (COE)

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.

National Brands

brands owned by manufacturers and distributed nationally -some companies like Nestle acquire well-established national brands for strength

Core component

consists of the physical product (product platform) and all its design and functional features. -Product variations can be added or deleted to satisfy local differences on the product platform

In terms of innovation, the goal of a foreign marketer is to

gain product acceptance by the largest number of consumers in the market in the shortest span of time

brand image

important and at the core of business identity and strategy -Importance and impact of brands although vary with cultures

Support Services Component

includes repair and maintenance, instructions, installation, warranties, deliveries, and the availability of spare parts

Packaging Component

includes style features, packaging, labeling, trademarks, brand name, quality, price, and all other aspects of a product's package -frequently require both discretionary and mandatory changes.

Product adaptation

is important for both small and larger global companies -As competition for world markets intensifies, selling what is produced for the domestic market in the same manner as it is sold at home is less effective. -Some products cannot be sold at all in foreign markets without modification. -Others may be sold as is, but their acceptance is greatly enhanced when tailored specifically to market needs

heterogeneity

it is individually produced and is thus unique Quality depends on who provides Taxi Drive

compatibility

its compatibility with acceptable behavior, norms, values, and so forth

Product

more than a physical item: It is a multidimensional bundle of satisfaction (or utilities) that the consumer receives -the sum of the physical and psychological satisfactions it provides the user; a product's physical attributes generally are required to create its primary function

Perishability

once created it cannot be saved, stored, or resold but must be consumed simultaneously with its creation Airplane Tickets

diffusion

process by which an innovation spreads -knowledge about the diffusion of innovation is helpful in developing a successful product strategy

Goal of any marketing firm in a competitive struggle

produce quality products and services that meet the needs and wants of consumers at an affordable price

Diffusion research

research on the process by which innovations spread to the members of a social system -helps in predicting the probable rate of acceptance and its acceleration

private brands

store brands -have a big share of European market and are big competition to manufactures

complexity

the degree of complexity associated with product use

Trialability

the degree of economic and/or social risk associated with product use

Observability

the ease with which the product benefits can be communicated

Consumer products are

the final products for consumption, they are the end user. Consumers seek quality and price - provides satisfaction (high level utility)

The less economically developed a market is...

the greater degree of change a product may need for acceptance

relative advantage

the perceived marginal value of the new product relative to the old

conversion-ability

the success firms have when they take inventions to the market

Brand name includes

the years of advertising, goodwill, quality evaluations, product experience, and other beneficial attributes the market associates with the product.

The goals of the diffusion researcher and the marketer are

to shorten the time lag between introduction of an idea or product and its widespread adoption.

Product homologation

used to describe the changes mandated by local product and service standards

green marketing

used to identify concern with the environmental consequences of a variety of marketing activities