Chapter 9 Global Consumers Homogeneous Consumer Groups Worldwide That

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Chapter 9

Products and Services: Branding Decisions in International Markets

LEARNING OBJECTIVES

After studying this chapter students should be able to:

 Describe the drivers for international standardization and offer and overview of the

international standardization – local adaptation continuum and related company

strategies.

CHAPTER SPOTLIGHTS

 Standardization versus Adaptation: The five types of standardization strategies

are: global standardization, regional standardization, global localization,

mandatory adaptation, and local non-mandatory adaptation.

 Private-Label Brands: Retailer brands that pose a threat to manufacturers’ global or

local brands through the offering of high quality products at lower prices.

degree of brand loyalty in a country.

 Protecting Brand Names: Design and brand-name counterfeiting have become

pervasive due to several factors. There are several strategies used by multinational

companies to combat this problem.

CHAPTER OVERVIEW

Chapter examines forces behind the decision to standardize or to partially or fully adapt

the offerings to individual international markets. It examines country-of-origin effects on

CHAPTER OUTLINE

9-1 Standardization vs. Adaptation

9-1a Global Standardization:

Refers to the standardization of products across markets and the standardization

of the marketing mix worldwide. The term is often used interchangeably with

globalization, or adopting a global marketing strategy. Arguments in favor of

global standardization are:

1) Global consumers: As consumers’ interests and product-related needs are

becoming more similar worldwide, with product and brand preferences

gaining a common definition across countries, there is an emergence of global

9-1b Regional Standardization:

Refers to the use of a uniform marketing strategy within a particular region. This

9-1c Global Localization (glocalization):

Describes the practice of global branding and localized marketing adaptations and

involves adapting a product to the differences in local culture, legislation and

9-1d Mandatory Adaptation:

9-1e Local Non-mandatory Adaptation:

9-2 Private-Label (Retailer) Brands

Brands sold under the brand name of a retailer or some other distributor. These

9-3 Global Branding and Country-of-Origin Information

Country of origin is defined as the country with which a particular product or

9-3a Product-Country and Service-Country Stereotypes:

9-3b Country of Origin and Ethnocentrism:

Ethnocentrism is defined as consumers’ beliefs that purchasing foreign products is

9-4 The Service Side: Tariff and Nontariff Barriers to Entry

Service barriers encountered in international markets represent ethnocentrism at

9-5 Products, Services, and Culture

It is important for international service providers to understand the factors that

9-6 Protecting Brand Names

Companies pay millions to protect brand names from dilution. The Uruguay

9-6a Identifying Types of Counterfeiting:

Counterfeiting involves the unauthorized copying of brands and selling them as

originals. Examples of counterfeiting are:

1) Design counterfeiting: Copying designs or scents, which is very common and

risk free since companies cannot be prosecuted.

9-6b Combating Counterfeiting: Multinational companies have used several strategies

9-7 International Perspectives of Industrial Products and Services

Although cultural differences play an important role in marketing abroad, they are

9-7a Product Standards

With quality taking an important place in the competition for global markets,

businesses are adhering to the international quality standards set by the

International Organization for Standardization (ISO).

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KEY TERMS

Adaptation: The strategy of altering a product to better meet the needs of a local market

Brand Name Counterfeiting: Selling counterfeit products as brand name originals.

Core Product Strategy: The strategy of using the same standard core product/service

worldwide, but varying certain aspects of the offering (product ingredients, advertising)

from market to market.

Global Consumers: Homogeneous consumer groups worldwide that share similar

interests and product/brand preferences.

Global Localization: The practice of global branding and localized marketing adaptation

to differences in local culture, legislation, and even production capabilities.

Global Standardization: The standardization of products across markets and, ultimately,

to the standardization of the marketing mix worldwide; more commonly called

glocalization.

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Mandatory Adaptation: The adaptation of products to local requirements so that the

products can legally and physically function in the specific country environment.

Regional Standardization: The use of a uniform marketing strategy within a particular

region.

Service Barriers: Barriers encountered by services in different markets, such as

requirements for local certification, local providers, and other requirements that favor

local over international service providers.

DISCUSSION QUESTIONS:

1) Describe the global standardization–local adaptation debate. What are the

drivers for globalization and for adaptation? Explain.

Global standardization, also called globalization, is the strategy of standardization

of products across markets and of the marketing mix worldwide. Drivers for globalization

include the growth of global consumers, or a homogeneous consumer group worldwide

2) Give examples of mandatory and nonmandatory adaptations.

Mandatory adaptation: 110 volt appliances for U.S. and 220 for Europe; left-hand

driving automobiles in the U.S. market.

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3) How do private-label (retailer) brands compete with international and local

brands? Give examples.

Generally, as consumers worldwide are becoming more price conscious, retailer

brands compete primarily by providing discounted price. This price competition is very

4) Discuss the different barriers to entry that international service providers face

worldwide.

Service barriers include such challenges as the requirement to use national

services, where, to protect domestic firms, the company or the government makes

policies with a preference for a domestic supplier, making it difficult for international

5) What are the reasons behind counterfeiting, and what efforts are taking place to

combat it? Are they successful?

One of the basic reasons for counterfeiting is consumer willingness to purchase

such goods, if the price of the fake is lower than the original, as this allows prestige gains

while saving money. Consumers, as well as retailers themselves, might not even be able

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REVIEW QUESTIONS:

True/False

Multiple Choice

1. B

CASE 9-1

smart fortwo: One Car for Narrow European Alleys . . .

and for High U.S. Gasoline Prices

1. What strategies does the Smart use in the European market? Is the

automobile adapted to consumers’ driving needs in Europe?

The Smart is designed for city driving; it is a cute cobblestone negotiator capable of

finding a parking spot in the most crowed of European cities. Its size also makes it

environmentally friendly and gives it excellent gas mileage. However, in Europe, where

all cars are generally more gas-conscious than they are in the United States, this may not

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2. Why is the Smart not changing to adapt to the U.S. market, dominated by

large trucks and sports utility vehicles? Will the lack of adaptation hurt sales

in the United States?

The Smart is not changing to adapt to the U.S. market for similar reasons that it has not

tried to adapt to consumers driving needs in Europe. It will not change to accommodate

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