7.01Discuss standardization-versus-adaptation

decisions, and how companies create global brand positions & equity

Something offered to an international market that satisfies a want or a need. Products can contain both tangible and intangible parts◦ Tangible: Parts of a product that can be seen

and felt i.e. packaging, brand name, quality, design

◦ Intangible: Parts of a product that cannot be seen or felt.

i.e. warranty, delivery, credit, installation; services are mostly intangible

International products

Four choices for marketers when moving products into new markets

◦ keep their home country products the same◦ adapt an existing product for new markets◦ design new products for new markets◦ design one product for a global marketplace

Standardization versus adaptation

◦ Standardized products can create economies of scale in research & development, production, and marketing

◦ A global product with a global brand image allows companies to compete against other global marketers

Why design a standardized global product?

◦ Products may be used in different political & legal environments

◦ Consumers may have different cultural needs ◦ Local competition in foreign markets may be

different than domestic◦ Product customization may be necessary

Why adapt instead of standardize?

Companies need to evaluate the following in order to make choice between standardization-verses-adaptation◦ market characteristics:

political and legal regulations, customer characteristics and preferences, purchasing patterns, and distribution systems

◦ product characteristics: nature of the product, the ability to create a global brand, and

the purpose for which the product is used, perception of product quality, perception of the product’s country of origin, and required after-sale service.

◦ company characteristics: financial resources, international orientation of management

Standardization-verses-adaptation

◦ Brand: name, word, or design that identifies a product, service, or company

◦ Creates a certain expectation in the minds of customers

◦ Global brands need a competitive advantage when competing with local brands in local markets

◦ Can be subject to country-of-origin effect i.e., in the 1950’s “Made in Japan” meant low-

quality to consumers Today “Made in China” can mean low quality,

while Japanese products signal high quality

Global brands

Using a brand to create an image BMW usually signifies quality engineering, and a

fast, sporty automobile Disney suggests wholesome family entertainment Companies used to rely on TV advertising to

create brand image Today they are shifting to the Internet, live

events, cell phones, and movies http://www.bmwusa.com/Standard/Content/uniqu

ely/TVAndNewMedia/BMWfilms.aspx http://www.youtube.com/watch?v=tEfqB-d3QJo http://www.youtube.com/watch?v=e-BHzHAmCCk

The Ambush and Devil

Product positioning

The additional value that a brand name brings to a product or company

Coca-cola estimated at over $67 billion Counterfeits, forgeries, and grey markets can

diminish brand equity—may cause product to be viewed as cheap/poor quality

Grey markets exist when products are sold outside an authorized distribution system

http://www.interbrand.com/en/BestRetailBrands/2013/Best-Retail-Brands.aspx

Interbrand top 50 brands http://www.youtube.com/watch?v=BBlAe8yuGvk http://www.youtube.com/watch?v=gAlFiPw9H18 Brand Equity defined

Brand equity

Can have a strong impact on product image

◦ Logos and trademarks are intangible assets with a dollar value or brand equity Should translate well across cultures

Packaging and Design

Must be unique to the product and its market May not be used by any other product or

company Should not have undesirable meaning across

languages Family brand: typically the brand name of a

company that also have individual product brands Ford Motor Company (family) sells Mustang

(individual) Kelloggs (family) sells Rice Krispies (individual)

Global brand names