Pe s e w a Pr e s e n t a t i o n s
Global Product Management and Branding
Defining a Product
A product is anything that can be
offered to a market for attention,
acquisition, use or consumption; it
includes physical objects, services,
personalities, places, organisations and
ideas.
Philip Kotler
Product Augmented
Warranty
Personnel
After Sales
Service
Actual Product
Features
Design
Pkg.
Core
Product
Capabilities
Brand
Delivery
& Credit
Quality
Styling
Customer Service
Installation
Global Product Development
• The heart of the global marketing process that
focuses on building adaptability into products to
achieve worldwide appeal.
• The product development process
– The main goal is to build adaptability into products and
product lines for worldwide appeal.
•
•
•
•
•
Step 1: Idea generation
Step 2: Screening
Step 3: Product/process development
Step 4: Scale up
Step 5: Commercialization
Standardisation
•
•
•
•
•
FACTORS ENCOURAGING
STANDARDIZATION
Economies of scale in production
Economies in product R&D
Economies in marketing
“Shrinking” of the world
marketplace/economic integration
Global competitions
Global Program Management
Initiator
Managing
Unit
Initiator Becomes
Managing Unit
Technical Development and
Design
Affected
Units(s)
Viable Concept
Yes
Does Initiator Have
Resources?
No
New Management
Unit Assigned
Unique Requirements to be
Incorporated in Product
Goals and Specifications
Review of Design
Activities to Plan, Develop,
Manufacture, Introduce,
and Support Product
Integration and
Coordination of All
Multinational Program
Activities
Activities to Plan, Develop,
Manufacture, Introduce,
and Support Product
Nonoccurrence with
Managing Unit
Guidelines for Program
Execution
The Location of R&D Activities
• Past tendency was to keep activities centrally located
with parent corporation headquarters.
• Using foreign-based resources improves ability to
compete successfully internationally.
• Outsourcing shortens product development cycle
time.
• Determined by the existence of specific skills.
Reasons for R&D Investments Abroad
• To aid technology transfer from parent to
subsidiary.
• To develop new and improved products
specifically for foreign markets.
• To develop new products and processes for
application in world markets of the firm.
• To generate new technology.
Global Product Development Organization
• Product development team that is functionally
and internationally representative.
• Focus on customer input to identify universal
and market-unique product features.
• R&D consortia allows companies to cooperate
in developing new products and technologies.
The Testing of New Product Concepts
• Testing for performance and customer acceptance
is the final stage of product development.
• Testing ranges from reliability tests to minilaunches.
• Reasons that new international products fail:
– Relying on instinct or hunch rather than testing and
research.
– Lack of product distinctiveness.
– Unexpected technical problems.
– Mismatch between functions.
International
Product
Testing
Techniques
• Limited product launch in one country market.
• Laboratory test markets to capture consumer
reactions in a controlled environment.
• Microtest marketing uses a permanent panel of
consumers and assesses their willingness to buy after
exposure to media and purchase incentives.
• Forced distribution tests rely on the continuous
report of consumer reactions to new products
already in the market.
The Global Product Launch
• Introducing the product into countries in three or
more regions within a narrow timeframe.
• Successful launches require:
– Involvement of country managers
– Pre-launch attention to localization
and translation requirements
– Increased education and
support of the sales channel
• Benefits of a global launch
– Showcases the product
– Removes old models at once
– Captures new product’s higher margins
Product and Brand Portfolio Management
• The marketer must have a balance of new, growing,
and mature products capable of creating
sustainable competitive advantage in the firm’s
efforts to expand geographically or add to existing
market operations.
• Analyzing the product portfolio
– Market growth rates
– Market share positions
Example of a Product-Market Portfolio
40
40
B
S
F
GB
D
C
10
US
0
10
1
0
Market Growth
B
S
J
F
GB
D
10
C
US
0
10
1
Relative Market Share
Relative Market Share
Company A
Company B
0
(B=Brazil, C=Canada, D=Germany, F=France, GB=Great Britain, J=Japan, S=Spain, US=United States)
SOURCE: Adapted from Jean-Claude Larreche, “The International Product-Market Portfolio,” in 1978 AMA Educators’ Proceedings (Chicago:American Marketing
Association, 1978), 276
Market-Product-Business Portfolio Example
Market Attractiveness
High
Canned Tea-US
Canned Tea-Asia
Ice Cream-US
Canned Tea-Europe
Frozen Main DishesEurope
Ice Cream-Asia
Ice Cream-Europe
Frozen VegetablesEurope
Frozen Vegetables-US
Low
Low
Competitive Strength
——— Market and Distribution Interconnectedness
………. Technology and Production Interconnectedness
High
SOURCE: Adapted from Susan P. Douglas and Samuel Craig, “Global Portfolio Planning
and Market Interconnectedness,” Journal of International Marketing 4 (no.I, 1996):93-110.
Product Portfolio Approach
ADVANTAGES
• A global view of
competitive structures.
• Global strategy based on
allocation of scarce
resources.
• Marketing objectives
based on product lines in
markets served .
• A convenient visual
communication goal.
DISADVANTAGES
• Foreign competition does not
follow the same rules as
domestic competition.
• Relationships between market
share and profitability may vary.
• Government regulations.
• Local content laws.
• Different production sites
impact perceptions of risk and
quality.
The Role of Brands
A brand is a distinguishing name and/or symbol (such as a
logo, trademark or package design) intended to identify
the goods or services of either one seller or a group of
sellers, and to differentiate those goods or services from
those of competitors. A brand thus signals to the
customer the source of the product, and protects both the
customer and the producer from competitors who would
attempt to provide products that appear to be identical.
The International Brand:
Four Approaches
• Translation.
• Transliteration testing existing brand name for
connotative meaning, e.g., “flic” pen.
• Transparency, i.e., meaningless brand name to
minimize complexities.
• Transculture. Foreign language name forms a
brand, e.g., vodka or perfume.
Managing the Brand Portfolio
• A strong brand is a global marketing asset.
• Co-branding
– A strategic alliance where two or more brands are
combined in an offer.
• Brand strategy decisions
– Use of the corporate name.
– Family brands for a wide product line.
– Individual brands for each item in the product line.
• Private (store) branding
– Umbrella branding with the intermediary’s name.
– Separate brand names.
Nestle’s Branding Tree
Examples
7,500 Local Brands
Responsibility of local
markets
140 Regional Strategic
Brands
Responsibility of strategic
business unit and regional
management
45 Worldwide Strategic
Brands
Responsibility of general
management at strategic
business unit level
10 Worldwide Corporate
Brands
•Wonka
•Chambinho
•Bona
•Fruitips
•Macintosh
•Vittel
•Stouffer’s
•Kit Kat
•Cerelac
•Baci
•Herta
•Alpo
•Mighty Dog
•Smarties
•After Eight
•Coffee-Mate
•Nestle
•Maggi
•Carnation
•Perrier
•Buitoni
SOURCE: Adapted from Andrew J. Parsons,”Nestle: The Visions of Local Managers,”The McKinsey Quarterly, no 2, 1996, 5-29;see also http://www.nestle.com; http://brand/index.asp.
Private Brand Strategy
Strategy
Rationale
Circumstance
No participation
Refusal to produce
private label
Heavily branded markets; high
distinctiveness; technological
advantage
Capacity filling
Market control
Opportunistic
High brand shares where
Influence category sales distinctiveness is less; more
switching by consumers
Competitive leverage
Stake in both markets
Chief source of business Major focus
Dedicated producer
Leading cost position
Little or no differentiation by
consumers
SOURCES:Adapted from Sabine Bonnot, Emma Carr and Michael J. Reyner, “Fighting Brawn with Brain,” The McKinsy Quarterly 40 (no 2. 2000): 85-92; and Francois
Glemet and Rafael Mira, “The Brand Leader’s Dilemma,” The Mckinsey Quarterly 33 (no 2. 1993):4.