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Global Marketing
Management
A European Perspective
Warren J. KeeganBodo B. Schlegelmilch
Product and Service Decisions
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Overview
Basic Concepts of Products and Services
Positioning of Products and Services
Product Saturation Levels in Global MarketingProduct and Service Design Considerations
Attitudes towards Country of Origin
Geographic ExpansionNew Products and Services in Global Marketing
Summary
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Learning Objectives
Know the differences between services and products and
global brands
Learn several alternatives for positioning global brands
Appreciate the importance of saturation levels
Be aware of strategic alternatives for geographical
expansion
Know why development of new products are keys to
survival and global growth
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Basic Concept of Products
Products can be defined as a collection of physical,
psychological and symbolic attributes that can
collectively yield satisfaction, or benefit, to a buyer or
user.
Products can also be defined by intangible attributes
Products can be classified into consumer and industrial
goodsProducts can be classified by the way their are
purchased or their life-span
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Basic Concept of Services
Service can be defined as intangible benefits purchased
by customers that do not involve ownership
Characteristics:
Intangibility
Perishability
Variability
Simultaneous Production and Consumption
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Product-Service Continuum
Oil & Grease
Office Supplies
Machinery
ComputerTelecommunication Systems
Meeting or Convention Hotel
Advertising Agency
Plant janitorial and cleaning
Freight Forwarding
ManagementConsulting
University Class
Tangible
Dominant
Intangible
Dominant
Product-Related Equipment-Based People-Based
Source: Adopted from: G. Lynn Shostack, Breaking Free from Product Marketing; Journal of Marketing 41 (April1997): p.77
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National, International and Global
Products and Services
National products or services are offered in a single
national Market
International products or services are offered in
multinational, regional markets
Global products and services are offered in the global
market. They are international and multiregional
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Positioning of Products and Services
Attribute or Benefit
Quality/Price
Use/UserHigh-Tech Positioning
High-Touch Positioning
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Product Saturation Levels in Global
Markets
Many factors determine a product`s market potential
Product saturation level increases as national income per
capita increases
The presence or absence of a particular companion
product can be significant
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Product and Service Design
Considerations
Preferences
Costs
Laws and RegulationsCompatibility
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Attitude towards the Country of
Origin
Stereotyped attitudes toward foreign products and
services can favour or hinder marketing efforts
If the quality is perceived to be low
Foreign origin of the product can be disguised
Foreign identification of the product can be continued and
consumer attitudes towards the product can be changed
In some market segments foreign products have asubstantial advantage because they are foreign
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Geographic Expansion-Strategic
Alternatives
Different
Same
Same DifferentProduct
Communications
Strategy 2:Product Extension,Communications
Adaptation
Example: Motorbikes
Strategy 1:Dual Expansion
Example: Applications Software
Strategy 4:Dual Adaptation
Example: Greeting Cards
Strategy 3:Product Adaptation,
CommunicationExtension
Example: Electrical products
Global Product Planning: Strategic Alternatives for Expanding into Global Markets
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Strategy 1: Product/Communication
Extension (Dual Expansion)
Company sells exactly the same product or service with
the same advertising as used in the home country
Company assumes that all markets are alike
Dual Extension does not work in all markets
Dual Extension is often used because it saves costs
Example: Campbell Soup
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Strategy 2: Product Extension,
Communications Adaptation
If the product serves different needs in various
countries, only marketing communication may have to
be adapted
Adaptation can happen by design or accident
Cheap implementation because product does not change
Example: Motorbikes
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Strategy 3: Product Adaptation,
Communication Extension
Product is adapted to the new market, but basic home
market communication strategy remains unchanged
Product is adapted to the environment and the
preferences of the consumers in the new market
Example: Mueslix
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Strategy 4: Product/Communication
Adaptation (Dual Adaptation)
Using Dual Adaptation the company must adapt the
product or service as well as the marketing
communication to the foreign market
Example: Colgate
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New Products and Services in
Global Marketing (1)
New to consumer and company ( Product or service
innovation)
New to consumer but not new to company
(Product/service or line extension)
Not new to consumer but new to company (New product
or service duplication)
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New Products and Services in
Global Marketing (2)
New-product development process
Permanent identification of new-product ideas
Screening of these ideas and identification of candidates for
further investigationStringent investigation and analysis of the selected new-
product ideas
Organisation of sufficient resources
The international new-product departmentTesting new products and services in national markets
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Summary
Product and services are the most important elements of
the marketing program
Important factors: preferences, costs, laws and
regulations, and compatibility
Five strategic alternatives for geographic expansion:
Product/communication extension, product
extension/communications adaptation, productadaptation/communications extension, dual adaptation and
product invention