International Marketing Chapter 11

The meanings and word references in the languages of their target audiences - can it be pronounced easily and how important are visual logos

Brand name and symbol selection is critical. What must firms carefully evaluate?

Brand names that evoke similar emotions or images around the world. The name should not convey negative images in any market. International companies now devote considerable effort to the selection process. Although this process may be expensive, the cost is generally considered negligible compared with the advertising expenditures in the brand name over many years.

Selecting appropriate brand names on a global basis is substantially more complex than deciding on a brand name for just one country. Ideally, what do marketers look for?

1. They are intangible (cannot be sorted or readily displayed or communicated) 2. Production and consumption are simultaneous 3. Delivered services are heterogenous in nature (cannot be inventoried, and production lines do not exist to deliver standardized products) 4. They assume perishable nature (because they cannot be stored) - guaranteeing service quality worldwide is more difficult AND there are fewer opportunities to realize economies of scale

Services differ from physical products in 4 key ways:

Many consumers possibly became disenchanted with their higher prices and the sometimes monopolization of markets by such brands. Nostalgia for local brands has motivated MNCs to resurrect local brands

More recently, there appears to be a backlash against global brands. Why is that?

1. a firm must identify common customer needs worldwide and determine how the global brand can deliver both functional and emotional benefits to these customers 2. a process must be established to communicate the brands identity to consumers, channels and the firm's own employees 3. there should be a way to track the success of the global identity of the brand 4. the firm must determine whether it will follow a more capitalized, top-down approach to the global branding or a more gradual, bottom-up approach

Several steps are involved in developing and administering a global brand strategy (4):

Brand Champion - monitor the brand across markets, as well as authorize the use of the brand on other products or businesses (brand extension) - can be a senior manager, a product development group or the manager of a lead country or one with major market share for the brand

Should be given the responsibility for building and managing a global brand

May companies believe they should only choose brand names that can be used in all markets. However, using the same name worldwide is not always desirable. - sometimes a change of name reflects a change of brand position abroad

Should companies keep one brand name that is used in all markets? Or must it be different in different markets?

- despite a significant trend toward multinational brands, local brands will survive - consumers reports that local brands possessed the same quality as that of global brands. Local brands were also deemed more reliable and thought to deliver more value for money

Findings from the Global Brands Study rose questions as to the intrinsic value of global or regional brands compared with local brands, such as...

Describing global brands whose positioning, advertising strategy, personality, look and feel are in most respects the same in all countries

Firms that develop global brands with these characteristics are said to follow a global brand strategy:

Eurobrands - 81% indicated that they were aiming for standardization and homogenization of brands (strong presence for Eurobrand strategy) - Examples of Eurobrands - products marketed across Europe with the same brand name, formula and packaging, as well as the same positioning and advertising strategy

In Europe, regional brands are called...

Brand - global firms must manage and defend the value of their brands --> all brands must be global in nature - a brand that consumers know and trust helps them make choices faster and more easily. - A globally recognized brand can be a huge asset even when a firm enters new markets

Provide a name or symbol that gives a product (or service) credibility and helps the consumer identify the product

Interbrand Corporation - their methodology estimates the net present value of future sales of the brand taking into consideration factors such as market leadership, stability, and global reach - the brands ability to cross geographical and cultural borders - dominated by US brands - ex. McDonald's - top 10 listed

Ranks the top global brands annually

Pan-regional - pan-regional branding is increasing in importance ex. to create Asian brands, managers suggest employing a mix of cultural symbols from different Asian countries. A study of Asian branding concluded that firms seeking to create successful regional brands should capitalized on a newfound Asian pride and confidence. Asian consumers feel more affinity (liking towards) to brands

A geographic region or state's sphere of economic, political and cultural influence extending beyond that state's borders.

For specific product categories, global brands associated with a Western country of origin enjoy an additional benefit, as customers in delving countries relate their product with an enhanced social status

A well-known Western brand name increases perceived quality of the product and service in various developing countries. Why is that?

Yes

Are local brands competitive in developing and developed markets?

The value of services produced in the world today now exceeds that of physical goods. - international trade in services represents about 20% of total world trade

Are services greater than manufactured physical products, or vice versa?

Front-stage elements of services

Aspects of service encounters visible to the consumer

Firms may choose to change the name of the acquired brand in the local market or even worldwide. This is NOT an easy choice. Changing the name can confuse or even alienate consumers. - while many decisions to change a brand name are instigated by acquisitions, some name changes are undertaken to better reflect a company's growing International presence

Because many MNCs internationalize via acquisitions, they often acquire local brands. Is this an easy choice?

yes, counterfeits usually do not mimic the quality or safety of the original product and can fail to perform as expected

Can consumers be harmed from counterfeit products believing that they are buying the real product?

1. Social marketing is not concerned with profitability. Nonetheless, when people buy into a behavioral change being promoted by a social marketer, they must pay some kind of price. That price may involve a monetary payment or it may involve extra effort or the forgoing of something pleasurable. Social marketers might have to offer incentives 2. Despite a lack of profit focus, social marketers must still seek monetary compensation to cover expenses and consequently stay in business. Sources that fund them are govts and private donors. 3. Although NGOs may compete for funding, they often work together -formally or informally - to accomplish a common goal --> facilitate efficiency savings and more effective practices 4. Social marketers, especially in the international context, must consider how govts - both home and host - view the product they are marketing

Certain aspects of social marketing differentiate it from commercial marketing:

Bottom-Up strategy

Country strategies are grouped by similarities in such variables as the level of economic development and the competitive situation (whether the brand is dominant in the market)

- more collectivist cultures tend to self-sacrifice in order not to harm the relationships with the service provider - lack of complaining may be attributed to an attempt not to embarrass the service provider - HOWEVER, dissatisfied customers are more likely to voice dissatisfaction to other members in the reference group --> collectivist cultures may exhibit more loyalty and stay with poor service longer than customers in a more individualistic culture, but their loyalty is not absolute

Customers may exhibit different expectations concerning service levels. Asian cultures traditionally expect and deliver high levels of service. While an American saying purports that "the consumer is always right," a similar saying in Japan states that "the customer is God." Despite higher expectations, Asian customers complain less when they receive poor service than American customers. Why?

Interbrand

Defines a global brand as one with at least a third of sales outside the firm's domestic market

Since properly trained professionals may be difficult to find in some countries, multinational service firms may need to exert greater effort to recruit and train employees. However, many MNCs gain a recruiting advantage by offering salaries in excess of local competition

Ex. In the Middle East, working in a service occupation is often considered akin to being a servant. This can make it hard to recruit qualified personnel. Companies can experience difficulties in hiring employees that share core organizational values when they leave their home country. As a result, what do MNCs need to do?

combining the quality improvements and cost savings of backstage actives such as technology, production and organization with elements more tailored to local tastes ex. adapting product features, distribution, and promotion

For many MNCs, global branding offers a way to cut costs and present a consistent customer communication about the brand. Some of the original enthusiasm for global branding has abated (lessened) so MNCs have responded with more hybrid brand strategies by....

1. Push for Better Legislation Against Counterfeits: increase penalties for counterfeiting 2. Employ Coalitions: Global firms may achieve better results if they work together to lobby govts for improvements in laws and enforcement 3. Participate Directly in Investigation and Surveillance: govts cannot always be relied on to shut down counterfeiting. Increasingly, firms have begun to take over investigatory roles usually play by police (several software products help monitor company websites and identify sellers of counterfeits) 4. Change Aspects of the Product: firms can continuously change aspects of the product and employ high-tech labeling and packaging. However, many counterfeiters are very adept to countering these changes 5. Reconsider More Aggressive Pricing: brand owners may choose to forgo some brand equity and lower prices to address counterfeits 6. Exit or Avoid a Market

International firms continue to devise methods to stop counterfeits. What are a few examples?

Paris Convention of 1883

International treaties protect well-known international brands from being preempted in local markets go back to the....

1. Do Nothing: ignore counterfeits if they are not significantly threatening to the brand. Stopping them can be expensive and time consuming. This is no longer an option for most firms. 2. Co-Opt the Offenders: Distributors of counterfeits may be recruited to be legitimate distributors of the brand. However, many legitimate distributors participate in the counterfeit market as well still 3. Advertise: MNCs can attempt to communicate the advantages of buying the authentic product rather than counterfeits. Marketers may be devised to educate consumers about the ethical issues relating to counterfeits 4. Educate Govts: firms can take steps to educate govts about the social and political implications of counterfeits and solicit their assistance in shutting down counterfeits. Counterfeits often provide employment opportunities in developing countries, so some govts are unsympathetic to MNC pleas

MNCs can try to stop the counterfeiting of their products in a number of ways (4):

more difficult - consumer behavior and usage patterns usually differ more between countries than business usage patterns do, so many services have to be adapted even more to local conditions to make them successful. - services are considered more culture bound than physical products and they are usually located close to the consumer.

Marketing services to consumers abroad - such as gyms, cleaning services, restaurant chains and insurance policies - has expanded. Is marketing to consumers more difficult or easier than selling to businesses?

Piracy - because illegal production of these products is relatively simple and inexpensive, they become easy targets - piracy has gone small and mobile, making counterfeits harder for authorizes to locate and crack down on --> shut down retailers ex. music, DVDS

Often applied to the counterfeit production of copyrighted material such as books and computer software

the growth in counterfeit pharmaceuticals

One of the greatest consumer threats posed by global counterfeiting is...

- Financial services have been successfully marketed abroad --> advertising agencies and marketing research firms have expanded and international accounted services have experienced tremendous growth. - the legal profession is also doing well - trade in business services has traditionally taken place primarily among developed economies

One of the largest categories of service exports is business services. Give some examples...

Back-stage elements of services - easier than front-stage elements of services

Planning and implementation aspects of services invisible to the consumer

Private Branding - offers advantages to a company with strong manufacturing skills bu little access to or experience with foreign markets - the firm remains dependent and can only Indirectly influence marketing - For long-term profitability, companies often find that they need to spend the money to create brand equity, which requires promoting and selling products under their own brands

Supplying products to another party for sale under that party's brand name

counterfeiting

The biggest problem international markets face in trying to protect their brands is...

counterfeiting - copies a branded product, assign in on its brand equity - injure legitimate businesses by stealing their brand equity

The illegal use of a registered trademark

- A lack of resources undermined the ability to enforce the laws adequately - significant differences also persist in national trademark regimes despite moved to unify brand protection worldwide - when two companies from different countries have legitimately used the same brand independently for years

The norms established by the WTO are no doubt a step in the right direction, but problems still persist. Such as?

1. Global citizens - rely on the success of a global brand to identify products of quality and innovation. However, consumers expect MNCs to behave responsibly (largest segment) 2. Global dreamers - equate global brands with quality and are attracted by the lifestyle they portray. They are less concerned with social issues 3. Antiglobals - consumers are skeptical of the quality of global brands. They prefer to buy local and avoid global brands 4. Global agnostics - judges global brands and local brands by the same criteria and is neither impressed nor alienated by the fact that a brand is global - global brands tend to evoke positive feelings overall

The research team from the Global Brands Study went on to identify 4 global segments based on these three dimensions of global brands:

1. Quality signal - fierce competitive battles among global brands over quality 2. Global myth - global brands are symbols of cultural ideals relating to modernity and a cosmopolitan identity. They show what we want to be and make us feel like citizens of the world 3. Social responsibility - global brands are perceived to have extraordinary power and influence. Consumers expect these companies to address social problems - a demand that local firms can more easily dodge

The researchers from the Global Brands Study concluded that consumers evaluate global brands on 3 key dimensions:

McDonald's

The world's largest fast-food restaurant and operates in 119 countries. It is ranked among the top ten on Interbrand's list of the best global brands. But the positioning of the brand and how it is perceived varies across the globe

establishing a single line leading to multiple service points instead of having separate lines for each point. This invention addressed the common American complaint that one inevitably ended up standing in the slowest-moving line

Time is always an aspect of services, and attitudes toward the time it it takes to be served vary across cultures. What did Americans introduce the idea of?

Global Brands Study - qualitative AND quantitive

To better understand what consumer worldwide thought of global brands, Douglas Holt, John Quelch and Earl Taylor conducted the?

WTO - countries that join the WTO must establish national laws that protect global brands. Depending on a country's level of economic development, it may be allowed up to 11 years to bring its local laws into compliance

Today, the Paris Convention has been superseded (replaced) by trademark protection rules under the ___?___.

True - revenue is growing more rapidly abroad, and margins are also better for international operations

True or False: international revenue typically exceeds domestic revenue.

Emergence of e-business

What has contributed to the further growth of counterfeit global trade?

In countries where legal protection of such trademarks is weak ex. China and Vietnam

Where does counterfeiting trademark produced products flourish in?

top-down strategy

Wherein a global management team determines the global brand strategy and then country strategies are derived from it

Trademark Counterfeiting Act in 1984

Which makes counterfeiting punishable by fines of up to $250,000 and prison terms of up to five years