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CHAPTER 10
BRAND AND PRODUCT DECISIONS IN GLOBAL MARKETING
SUMMARY
A. The product is the most important element of a company’s marketing program. Global
marketers face the challenge of formulating coherent product and brand strategies on a
worldwide basis. A product can be viewed as a collection of tangible and intangible
attributes that collectively provide benefits to a buyer or user. A brand is a complex
bundle of images and experiences in the mind of the customer. In most countries, local
brands compete with international brands and global brands. A local product is
available in a single country; an international product is available in several countries;
a global product meets the wants and needs of a global market.
B. A global brand has the same name and a similar image and positioning in most parts of
the world. Many global companies leverage favorable brand images and high brand
equity by employing combination (tiered) branding, co-branding, and brand
extension strategies. Companies can create strong brands in all markets through global
brand leadership. Maslow’s needs hierarchy is a needs-based framework that offers a
way of understanding opportunities to develop local and global products in different parts
of the world. Some products and brands benefit from the country-of-origin effect.
Product decisions must also address packaging issues such as labeling and aesthetics.
Also, express warranty policies must be appropriate for each country market.
C. Product and communications strategies can be viewed within a framework that allows for
combinations of three strategies: extension strategy, adaptation strategy, and creation
strategy. Five strategic alternatives are open to companies pursuing geographic
expansion: product-communication extension; product extension-communication
adaptation; product adaptation-communication extension; product-communication
adaptation (dual adaptation); and product invention (innovation). The strategic
alternative(s) that a particular company chooses will depend on the product and the need
it serves, customer preferences and purchasing power, and the costs of adaptation versus
standardization. Product transformation occurs when a product that has been
introduced into new country markets serves a different function or is used differently than
originally intended. When choosing a strategy, management should consciously strive to
avoid the “not invented here” syndrome.
D. Global competition has put pressure on companies to excel at developing standardized
product platforms that can serve as a foundation for cost-efficient adaptation. New
products can be classified as discontinuous, dynamically continuous, or continuous
innovations such as line extensions. A successful product launch requires an
understanding of how markets develop: sequentially over time or simultaneously. Today,
many new products are launched in multiple national markets as product development
cycles shorten and product development costs soar.
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LEARNING OBJECTIVES
1 Review the basic product concepts that underlie a successful global marketing product strategy
2 Compare and contrast local products and brands, international products and brands, and global
products and brands
3 Explain how Maslow’s needs hierarchy helps global marketers understand the benefits sought
by buyers in different parts of the world
4 Outline the importance of “country of origin” as a brand element
5 List the five strategic alternatives that marketers can utilize during the global product planning
process
6 Explain the new-product continuum and compare and contrast the different types of innovation
OVERVIEW
Products – and the companies and brands associated with them - are arguable the most crucial
element of a company’s marketing program; they are integral to the company’s value
proposition. Every aspect of a firm’s marketing program, including pricing, distribution, and
communication policies, must fit the product.
This chapter examines the major dimensions of global product and brand decisions. First is a
review of basic product and brand concepts, followed by a discussion of local, international, and
global products and brands. Product design criteria are identified, and attitudes toward foreign
products are explored. The next section outlines strategic alternatives available to global
marketers.
ANNOTATED LECTURE/OUTLINE
BASIC PRODUCT CONCEPTS
(Learning Objective #1)
The product P of the marketing mix is at the heart of the challenges and opportunities facing
global companies today: Management must develop product and brand policies and strategies
that are sensitive to market needs, competition, and company ambitions and resources on a
global scale. Effective global marketing often entails finding a balance between the payoff from
extensively adapting products and brands to local market preferences and the benefits that come
from concentrating company resources on relatively standardized global products and brands.
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A product is a good, service, or idea with both tangible and intangible attributes that collectively
create value for a buyer or user.
A product’s tangible attributes can be assessed in physical terms such as weight, dimensions, or
materials used.
Intangible product attributes, including status associated with product ownership, a
manufacturer's service commitment, and a brand’s overall reputation or mystique, are also
important.
Product Types
A frequently used framework for classifying products distinguishes between consumer and
industrial goods.
Consumer and industrial goods can be further classified on the basis of buyer orientation.
Buyer orientation is a composite measure of the amount of effort a customer expends, the level
of risk associated with a purchase, and buyer involvement in the purchase.
The buyer orientation framework includes such categories as convenience, preference, shopping,
and specialty goods.
Product Warranties
A warranty can be an important element of a product’s value proposition.
An express warranty is a written guarantee that assures the buyer that he or
she is getting what he or she has paid for or that provides recourse in case a
product’s performance falls short of expectations.
In global marketing, warranties can be used as a competitive tool to position
a company in a positive way.
Packaging
Oftentimes, packaging is an integral element of product-related decisions.
Packaging is an important consideration for products that are shipped to
markets in far-!ung corners of the world.
The term consumer packaged goods applies to a wide variety of products
whose packaging is designed to protect or contain the product during
shipping, at retail locations, and at the point of use or consumption.
“Eco-packaging” is a key issue today, and package designers must address
environmental issues such as recycling, biodegradability, and sustainable
forestry.
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Packaging also serves important communication functions: Packages (and
labels attached to them) offer communication cues that provide consumers
with a basis for making a purchase decision.
Today, many industry experts agree that packaging must engage the senses,
make an emotional connection, and enhance a consumer’s brand
experience.
Labeling
One hallmark of the modern global marketplace is the abundance of multi
language labeling that appears on many products.
In today’s self-service retail environments, product labels may be designed
to attract attention, to support a product’s positioning, and to help persuade
consumers to buy.
Labels can also provide consumers with various types of information.
Obviously, care must be taken that all ingredient information and use and
care instructions are properly translated.
The content of product labels may also be dictated by country - or region -
specific regulations. Regulations regarding mandatory label content vary in
di)erent parts of the world.
Aesthetics
In Chapter 4, the discussion of aesthetics included perceptions of color in
di)erent parts of the world.
Global marketers must understand the importance of visual aesthetics
embodied in the color or shape of a product, label, or package. Likewise,
aesthetic styles, such as the degree of complexity found on a label, are
perceived di)erently in different parts of the world.
Aesthetic elements that are deemed appropriate, attractive, and appealing in
one’s home country may be perceived di)erently elsewhere. In some cases,
a standardized color can be used in all countries.
BASIC BRANDING CONCEPTS
(Learning Objective #2)
A brand is a complex bundle of images and experiences in the customer’s mind.
Brands perform two important functions:
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1. A brand represents a promise by a particular company about a particular product; it is a
type of quality certification.
2. Brands enable customers to better organize their shopping experience by helping them
seek out and find a particular product.
The sum of a consumer’s impressions is a brand image, defined as perceptions about a brand as
reflected by brand associations that consumers hold in their memories.
Brand image is one way that competitors in the same industry sector differentiate themselves.
Brand equity represents the total value that accrues to a product as a result of a company’s
cumulative investments in the marketing of the brand.
Brand equity can also be thought of as an asset representing the value created by the relationship
between the brand and customers over time—the stronger the relationship, the greater the equity.
Companies develop logos, distinctive packaging, and other communication devices to provide
visual representations of their brands.
A logo can take a variety of forms, starting with the brand name itself, a word mark consisting of
words like “Coke” or a non-word mark such as the Nike swoosh.
Local Products and Brands
A local product or local brand is one that has achieved success in a single national market.
Sometimes a global company creates local products and brands in an effort to cater to the needs
and preferences of particular country markets.
Local products and brands also represent the lifeblood of domestic companies.
Entrenched local products and brands can represent significant competitive hurdles to global
companies entering new country markets (In China, a sporting goods company started by
Olympic gold medalist Li Ning sells more sneakers than Nike).
In developing countries, global brands are sometimes perceived as overpowering local ones.
Growing national pride can result in a social backlash that favors local products and brands.
International Products and Brands
International products and international brands are offered in several markets in a particular
region. For example, for many years the two-seat Smart car developed by DaimlerChrysler was
offered for sale in Europe only, it recently launched in the U.S. as well (see Case 10-2).
Global Products and Brands
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Globalization is putting pressure on companies to develop global products and to leverage brand
equity on a worldwide basis. A global product meets the wants and needs of a global market. A
true global product is offered in all world regions, including the Triad and in countries at every
stage of development.
A global brand has the same name and, in some instances, a similar image and positioning
throughout the world.
Some companies are well established as global brands. For example, Gillette (“The best a man
can get”), BMW (“The ultimate driving machine”), GE (“Imagination at work”), and Harley-
Davidson (“An American legend”).
In the twenty-first century, global brands are becoming increasingly important.
Worldwide, consumers, corporate buyers, governments, activists, and other groups associate
global brands with three characteristics as a guide when making purchase decisions:
1. Quality signal. Global brands compete fiercely with each other to provide world-
class quality. A global brand name differentiates product offerings and allows
marketers to charge premium prices.
2. Global myth. Global brands are symbols of cultural ideals.
3. Social responsibility. Customers evaluate companies and brands in terms of how
they address social problems and how they conduct business.
A global brand is not the same thing as a global product.
The Sony Walkman is an example of combination or tiered branding, whereby a corporate
name (Sony) is combined with a product brand name (Walkman).
By using combination branding, marketers can leverage a company’s reputation while
developing a distinctive brand identity for a line of products.
Co-branding is a variation on combination branding in which two or more different company or
product brands are featured prominently on product packaging or in advertising. Properly
implemented, co-branding can engender customer loyalty and allow companies to achieve
synergy.
Global companies can also leverage strong brands by creating brand extensions. This strategy
which entails using an established brand name as an umbrella when entering new businesses or
developing new product lines that represent new categories to the company. (The Virgin brand is
one example.)
Table 10-1 shows the four combinations of local and global products and brands in matrix form.
Each represents a different strategy a global company can use one or more strategies as
appropriate.
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Global Brand Development
Table 10-2 shows global brands ranked in terms of their economic value as determined by
analysts at the Interbrand consultancy and Citigroup.
Developing a global brand is not always an appropriate goal.
Managers contemplating the development of a global brand must be aware of three points:
1. Managers must assess whether anticipated scale economies will materialize.
2. Managers must recognize the difficulty of building a successful global brand team.
3. Managers must be alert to instances in which a single brand cannot be imposed on all
markets successfully.
Aaker and Joachimsthaler recommend that companies place a priority on creating strong brands
in all markets through global brand leadership.
The following six guidelines can assist marketing managers in their efforts to establish global
brand leadership
1. Create a compelling value proposition for customers in every market entered,
beginning with the home country market.
2. Think about all elements of brand identity and select names, marks, and symbols
that have the potential for globalization. Give special attention to the Triad and
BRICS nations.
3. Develop a company-wide communication system to share and leverage
knowledge and information about marketing programs and customers in different
countries.
4. Develop a consistent planning process across markets and products.
5. Assign specific responsibility for managing branding issues to ensure that local
brand managers accept global best practices.
6. Execute brand-building strategies that leverage global strengths and respond to
relevant local differences.
Coke is arguable the quintessential global product and global brand. Coke relies on similar
positioning and marketing in all countries. The basic underlying strategic principle that guide the
management of the brand are the same worldwide: are we offering essentially the same product
and brand promise?
EMERGING MARKETS BRIEFING BOOK
China Gives Buick a New Lease on Life
General Motors’ experience at home and abroad provides a good example of
how a company’s brand strategy must be adapted to cultural realities as well
as the changing needs of the market.
GM ultimately won government approval of its proposal and was given the
opportunity to produce Buick sedans for government and business (see
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Exhibit 10-5). Why was the Buick nameplate chosen from among GM’s
various vehicle brands? In an interview with Fortune, former GM CEO Rick
Wagoner related the following story: There is a straightforwardness to the
way the Chinese negotiate things. What they are interested in becomes clear
quickly. When we were ready to go into the China market, they said, “Okay,
we will choose GM, and we want you to use Buick.”We said, “It is not really
one of our global brands. We’d probably rather use something else.” They
said, “We’d like you to use Buick.” We said, “We’ll use Buick.” And it has
worked great. Back at home, Buick’s image has been in decline for decades.
Today, Buick’s sales in China exceed those in the United States, and by a
good margin. This fact helps explain why the Buick nameplate is still in
production. When the U.S. government took control of General Motors, it
pressured GM chief Fritz Henderson to terminate Buick. Thanks to the
brand’s popularity in China, it was given a reprieve.
A NEEDS-BASED APPROACH TO PRODUCT PLANNING
(Learning Objective #3)
Maslow’s hierarchy of needs (see Figure 10-1), a staple of sociology and psychology, provided
a useful framework for understanding how and why local products and brands can be extended
beyond home-country borders.
Maslow proposed that people’s desires can be arranged into a hierarchy of five needs. An
individual fulfills needs at each level and progresses to higher levels (Figure 10-1).
At the most basic level of human existence, physiological and safety needs must be met.
People need food, clothing, and shelter, and a product that meets basic needs has the potential for
globalization.
However, the basic need to eat is not the same as wanting a Big Mac or a Coke.
Because Coca-Cola and McDonald’s fulfill basic human needs and market their products well,
they built global brand franchises.
Both know that some food and drink preferences are embedded in culture, both companies
created local products and brands for particular markets.
Mid-level needs in the hierarchy include self-respect, self-esteem, and the esteem of others.
These social needs which can create demand for status-oriented products and cut across the
various stages of country development (e.g., consumers in Malaysia buy the same upscale Parker
pen as Americans shopping at Neiman Marcus).
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Luxury goods marketers are especially skilled at catering to esteem needs on a global basis (e.g.
Rolex).
Some consumers flaunt their wealth: this behavior is called conspicuous consumption or luxury
badging.
Products fulfill different needs in different countries. The primary function of the refrigerator in
high-income countries relates to basic needs.
In developing countries, refrigerators have a secondary purpose related to higher-order needs –
prestige.
Hellmut Schütte proposed a modified hierarchy to explain the needs and wants of Asian
consumers.
The three highest levels emphasize the intricacy and importance of social needs.
Affiliation needs in Asia are satisfied when an individual feels accepted by a group; conformity
with group norms is a key force driving consumer behavior.
The next level is admiration, a higher-level need that can be satisfied through acts that command
respect within a group.
At the top of the Asian hierarchy is status, the esteem of society as a whole.
The quest for status leads to luxury badging (e.g., nearly half of Gucci’s sales revenues are
generated in Asia).
“COUNTRY OF ORIGIN” AS BRAND ELEMENT
(Learning Objective #4)
One of the facts of life in global marketing is that perceptions about and attitudes towards
particular countries often extend to products and brands known to originate in those countries.
Such perceptions contribute to the country-of-origin effect; they become part of a brand’s image
and contribute to brand equity.
Perceptions and attitudes can be positive or negative—“German” is synonymous with quality
engineering, “Italian” with style, and “French” with chic.
The manufacturing reputation of a particular country can change over time (e.g. Made in the
USA or Made in Japan and Finland’s Nokia rose in stature to a global brand).
Some foreign products have a substantial advantage over their domestic counterparts simply
because of their “foreign-ness”. Global marketers have an opportunity to capitalize on the
situation by charging premium prices. (e.g., foreign beers).
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