GLOBAL PRODUCT
POLICY AND STRATEGIES
CHAPTER OVERVIEW
Global Product Strategies Standardization
Versus Customization
Multinational Diffusion
Developing New Products for Global Markets
Truly Global Innovation Global Branding
Strategies
Managing Multinational Product Lines
Product Piracy
Country-of-Origin (COO) Effects
Global Marketing of Services
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Introduction
• A cornerstone of a global marketing mix program
is the set of product policy decisions that
multinational companies (MNCs) constantly need
to formulate.
• The range of product policy questions may
include:
• What new products should be developed for what markets?
• What products should be added, removed, or modified for the
product line in each of the countries in which the company
operates?
• What brand names should be used?
• How should the product be packaged and serviced?
Chapter 11
Copyright (c) 2007 John Wiley &
Sons, Inc.
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Introduction
• Examples of improper product policy
decisions in global marketing:
• Ikea in the United States
• Proctor & Gamble in Australia
• U.S. Car Makers in Japan
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1. Global Product Strategies
• Three global strategies to penetrate foreign
markets:
• Extension strategy
• Adaptation strategy
• Invention strategy
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1. Global Product Strategies
• Five strategic options for the global
marketplace:
• Strategic Option 1: Product and Communication
Extension -- Dual Extension
• Strategic Option 2: Product Extension -Communications Adaptation
• Strategic Option 3: Product Adaptation -Communications Extension
• Strategic Option 4: Product and Communications
Adaptation -- Dual Adaptation
• Strategic Option 5: Product Invention
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1. Global Product Strategies
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2. Standardization versus
Customization
• Five forces favoring a globalized product
strategy:
1. Common customer needs
2. Global customers
3. Scale economies
4. Time to market
5. Regional market agreements
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2. Standardization versus
Customization
• Degree of Standardization
• Modular Approach
• Core-Product (Common Platform) Approach
• Balancing act between standardization and
adaptation
• Overstandardization vs. overcustomization
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3. Multinational Diffusion
• Examples:
• Microsoft’s Xbox videogame
• NTT DoCoMo’s iMode
• The Adoption of new products is driven by three types of
factors:
• Individual Differences
• Personal Influences
• Product Characteristics
1. Relative advantage
2. Compatibility
3. Complexity
4. Trialability
5. Observability
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3. Multinational Diffusion
• Other country characteristics used to predict
new product penetration patterns include:
•
•
•
•
•
•
Homogeneous population
Lead countries
Lag countries
Cosmopolitanism
Mobility
Labor force profile, Developing vs. Developed
countries
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3.
Multinational
Diffusion
Time-to-Takeoff
- Most new products display a
distinct tradeoff-average 6
years from launch
- Varies a great deal across
product categories, between
countries, previous takeoff
experience
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4. Development of New Products
for Global Markets
• Identifying New Product Ideas
• 4 C’s:
• Company
• Customers
• Competition
• Collaborators
• New Product Development (NPD) Process
• Screening (see Exhibit 11-3 in your text)
• Concept Testing
• Conjoint Analysis
• To Standardize or not to Standardize
Chapter 11
Copyright (c) 2007 John Wiley &
Sons, Inc.
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4. Development of New Products
for Global Markets
• Test Marketing
• Timing of Entry: Waterfall versus Sprinkler
Strategies (see Exhibit 11-9)
• Waterfall Strategy: Global phased rollout where new
products trickle down in a cascade-like manner
• Sprinkler Strategy: Simultaneous worldwide entry
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4. Development of New
Products
for Global Markets
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5. Truly Global Innovation
• Scores of companies have research centers
spread across the world. Challenge is to
establish a truly global innovation process
that transcends local clusters, i.e., to become
a metanational innovator.
• To harvest the benefits of metanational
innovation:
• Prospecting- find valuable new pockets of knowledge
around the world.
• Assessing- decide on an optimal footprint (number and
dispersion of knowledge sources).
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5. Truly Global Innovation
• Mobilizing- to harness the benefits of global innovation,
companies must find ways to mobilize pockets of
knowledge (e.g., technical blueprints, patents,
equipment, market knowledge).
• The optimal strategy for mobilizing knowledge depends
on the type (simple vs. complex) and nature (technical
vs. market) of the knowledge involved.
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5. Truly Global Innovation
• 4 possible strategic scenarios for mobilizing
knowledge:
• Exchange information (arm’s length, digital transfer is
sufficient).
• Move information about the market where the technology is.
• Move information about the technology to where the market
knowledge is
• Move knowledge by rotating people and by temporary colocation
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5. Truly Global Innovation
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6. Global Branding Strategies
• Companies that brand their products have various
options when they sell their goods in multiple
countries.
• More and more companies see global (or at least
regional) branding as a must.
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• Multinational product line management entails
issues such as:
• What product assortment should the company launch when it
first enters a new market?
• How should the firm expand its multinational product line
over time?
• What product lines should be added or dropped?
• Global marketers also face the issue of global
piracy.
• In global marketing, firms have to use a multitude
of strategies to handle the negative country-oforigin stereotypes.
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• Global Brands (see Exhibit 12-1)
• A truly global brand is one that has a consistent identity
with consumers across the world.
• The development costs for products launched under
the global brand name can be spread over large
volumes.
• A global brand has much more visibility than a local
brand.
• The fact of being global adds to the image of a brand
country.
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• Global brands are also able to leverage the country association
for the product.
• The value of a global brand (brand equity) usually varies a great
deal from country to country (three key value dimensions:
quality signal, global myth, and social responsibility).
• Inter-country gaps in brand equity may be due to any following
factors:
•
•
•
•
•
History
Competitive climate
Marketing support
Cultural receptivity to brands
Product category penetration
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• Local Branding
• Examples: Coca Cola owns numerous local and
regional brands across the globe; Mecca Cola from
France
• Global or Local Brands?
• Solo branding, hallmark branding, family branding, and
extension branding.
• A firm’s global brand is shaped by three types of factors:
• Firm-based drivers
• Product-market drivers
• Market dynamics
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•
Brand Name Changeover Strategies
•
•
•
•
•
Fade-in/fade-out
Co-branding
Umbrella branding
Transparent forewarning
Summary axing
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• Private Label Branding (“Store Brands”): Factors
explaining success of private labels:
1. Improved quality of private-label products
2. Development of premium private-label brands
• A system where a single banner brand is used
worldwide, often with a sub-brand name, for almost the
entire product mix of the company.
3. Shift in balance of power between retailers and
manufacturers
4. Expansion into new product categories
5. Internationalization of retail chains
6. Economic downturns
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• Umbrella (Corporate) Branding
• Umbrella branding facilitates brand-building efforts
over a range of products.
• Umbrella branding makes it easier to add or drop new
products.
• Protecting Brand Names
• Brands are vital assets to brand owners.
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• In the area of brand protection, the oldest treaty is the
Paris Convention for the Protection of Intellectual
Property.
• The difference in opinion held by industrialized and
developing countries on intellectual property (see
Exhibit 12-5)
• Many elements of the brand franchise may require
protection.
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7. Management of Multinational
Product Lines
• The product assortment is usually described on
two dimensions: the width and the length.
• Drivers affecting the composition of a firm’s
international product line:
•
•
•
•
•
Customer Preference
Price Spectrum
Competitive Climate
Organizational Structure
History
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• Categories of product lines:
•
•
•
•
Core products
Niche products
Seasonal products
Filler products
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8. Product Piracy
• Any aspect of the product is vulnerable to
piracy, including the brand name, the logo,
the design, and the package (see Exhibit 128).
• Strategic Options Against Product Piracy:
•
•
•
•
•
•
Lobbying Activities
Legal Action
Customs
Product Policy Options
Distribution
Communication Options
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9. Country-of-Origin (COO)
Stereotypes
• 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.
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• COO particularly influences the elderly,
less educated, and politically
conservative; consumer expertise also
makes a difference.
• Cultural orientation play a role.
• Consumers are likely to use the origin of
a product as a cue when they are
unfamiliar with the brand name carried
by the product.
• COO effects depend on the product
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category.
• Strategies to Cope with COO Stereotypes:
• Product Policy
• Pricing
• Distribution
• Communication
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10. Global Marketing of Services
• Challenges in Marketing Services Internationally:
• Protectionism
• Immediate Face to Face Contacts with Service Transactions
• Difficulties in Measuring Customer Satisfaction Overseas
• Opportunities in the Global Service Industries:
• Deregulation of Service Industries
• Increasing Demand for Premium Services
• Increased Value Consciousness
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• Global Service Marketing Strategies:
•
•
•
•
•
Capitalize on Cultural Forces in the Host Market
Standardize and Customize
Give Information Technologies (IT) a Central Role
Add Value by Differentiation
Establish Global Service Networks
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