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Copyright Atomic Dog Publishing, 2008Copyright Atomic Dog Publishing,

Products and Services: Branding Decisions in International MarketsDana-Nicoleta Lascu

Chapter 9

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Chapter Objectives

• Describe the drivers for international standardization and offer and overview of the international standardization – local adaptation continuum and related strategies.

• Examine country-of-origins effects on brand evaluations in relation to product stereotypes and consumer ethnocentrism.

• Examine the challenges faced by service providers in international markets.

• Address issues related to brand-name protection and reasons behind international counterfeiting.

• Address the marketing of industrial products and services and related product and service standards.


Global Standardization

• Standardization of products across markets and of the marketing mix worldwide.

Advantages: Allows for economies of scale Encourages global branding

Global branding involves using the same brand name, logo, image, and positioning everywhere in the world

Global brands are more prestigious, signaling that the company has the resources to back the brand

Effective in meeting the needs of global consumers Effective in meeting consumer needs of higher quality

and lower price Facilitated by international travel

Disadvantage: Cannot perfectly meet the needs of all target consumers


Regional Standardization

• Standardization of products across regions and of the marketing mix within the region.

Advantages: Allows for economies of scale. Addresses consumer preferences for higher quality and

lower price. Facilitated by international travel within the region.

Disadvantage: Cannot perfectly meet the needs of all target consumers in

the region.


Global LocalizationGlobal branding with localized marketing adaptation to differences in local culture, production capabilities, governmental restrictions, etc.

Types: Modular Adaptation:

Offer parts (modules) that can be assembled worldwide in different configurations, depending on market needs.

Core Product Strategy: Involves using a standardized strategy for the core

product worldwide, but varying certain aspects of the offering (product ingredients, advertising, for example) from market to market.


Mandatory Adaptation

• Involves adapting products to local requirements so that they can legally and physically operate in the respective countries.

Examples: Left-hand driving in the United Kingdom 220 volt appliances in Europe, 110 volt appliances in

the U.S. NTSC analog television in some countries in the

Americas including the U.S.; SECAM analog color television used in francophone countries and Russia.


Non-Mandatory Adaptation

• Adapting a product to better meet the needs of the local market, or developing new brands for individual local markets, even though such adaptation is not required. Examples:

Fast-food traditional hamburger places selling vegetarian burgers in India and falafel sandwiches in the Middle East.

Disneyland Resort Paris offering rides that emphasize European storybook characters.


Adaptation: Non-Mandatory Example

The Smart car, developed by Mercedes for the narrow European streets. This automobile can easily fit up on narrow sidewalks and allow sufficient room for passers-by.


Private Label (Retailer) Brands

• Compete effectively with multinational brands.• Often, premium store brands are perceived by local

markets as high-quality, on par with multinational brand.

• Retailer brands are also innovative and high quality.• They appeal to consumers during economic

downturns.• They have greater appeal as consumers today

demand high quality at lower prices.


Global Branding

• Country of Origin Country with which good/service is associated.

• Country of Manufacture Country where the product is manufactured (for

products). Country where the headquarters are located (for

services).

• In the absence of other product information, country of origin impacts consumers’ product evaluations.


Product Stereotypes

• Product-specific stereotypes that associate the country of origin as a certification of quality.

• Examples product-country stereotypes:• French perfume• Kenyan coffee• Chinese silk• Italian couture


Service Stereotypes

• Example of service-country stereotype:

French waiters have been unfairly associated with poor service; in this photograph, a French waiter delivers beer with a smile on the Champs Elysées.


Ethnocentrism

• The belief that purchasing foreign products hurts the local economy by causing loss of jobs, and that it is morally wrong and unpatriotic.

• Leads to the rejection of foreign products.

To market to ethnocentric consumers, companies may present the product as a local offering.


Service Entry Barriers• Represent a manifestation of protectionism at the

Firm level. Government level. Consumer level.

• Examples: Requirement to use national service providers. Prohibition against employment of foreign

nationals. Direct competition from government providers. Restrictions on movement. Tariffs on international services.

These barriers are aimed at favoring local over international service providers.


Products, Services, Culture

It is important for international service providers to understand the factors that affect customer considerations in service evaluations and to then emphasize the various dimensions of service quality accordingly.

Culture also influences the perception and evaluation of a brand in a particular country, along with determining the degree of brand loyalty.


Protecting Brand Names• Companies pay millions to protect brand names from

dilution. Counterfeiting involves the unauthorized copying of brands and selling them as originals.

• The Uruguay round of the General Agreement on Tariffs and Trade addressed standardizing global trademark legislation that is now incorporated under the World Trade Organization umbrella.

• Types of Counterfeiting: • Design counterfeiting:

Copying designs or scents, which is very common and risk free since companies cannot be prosecuted.

• Brand-name counterfeiting: Selling counterfeit products as original products bearing the respective brand name.


Counterfeiting Factors

• Consumer Factors: Willingness to purchase counterfeit goods because

risk is low and prestige gains are high. Willingness to purchase counterfeit goods products

that are consumed publicly. Consumers and retailers might not notice the

difference.

• Technology factors Affordable, quality copying technology. Local partners of multinational firm have access to

know-how.


Counterfeiting Factors (contd.)

• Distribution factors

Supply chains are not adequately controlled. Traders may use Internet chat rooms and

unauthorized dealerships.

• Local government factors

Governments may not interfere; even the government may run counterfeiting operations.

Cracking down would lead to loss of jobs and unrest.

Customs representative and other enforcement officials may not be familiar with authentic brands.


Combating Counterfeiting

• Multinational companies have used several strategies to fight counterfeiting:

• Lobbying the U.S. government.• Lobbying other governments involved.• Change product’s appearance to differentiate the

authentic brands from copies.• Better control of distribution chain operations.• Key: Cooperation with the local government.


How Are Industrial Products and Services Different from Consumer Products and Services?

• Culture does not play as important a role for industrial products.

• The decision to purchase industrial products rests with management, often with top management at the company’s headquarters.

• The purchase process often takes several months.

• In many countries, local government has substantial input in the supplier decision, favoring national suppliers.

• For professional services, the local government can directly restrict the company to local suppliers, or require local licenses/credentials.


Industrial vs. Consumer Products and Services (contd.)

• Industrial consumers are businesses.

• Business-to-business markets are characterized by fewer buyers and a larger purchase volume.

• The business-to-business market is geographically concentrated.

• Demand for industrial products is derived from demand for consumer products and thus is much more volatile.

• Decision processes are different and involve many decision makers and influencers in the country of operation and in the home country.


Product Standards: ISO 9000

• Quality standards for each industry set by the International Organization for Standardization (ISO).

• ISO 9000 certification: quality in product features that are required by the customer:

• Implies that the firm ensures that its offerings satisfy customer requirements and comply with regulations.

• Specifies that the firm meets customer and regulatory requirements and follows its policies and procedures while advancing quality through continuous improvement.

• Addresses the phases of product development and requires performance measurement throughout the process through internal audits, monitoring customer satisfaction, and corrective action.


Product Standards: ISO 14000

• Environmental management system standards that help business reduce its environmental impact, facilitate sustainable development, and foster international trade.

• Discourage firms from engaging in hazardous practices in countries where policies are lax.

• Promote efficient environmentally sound policies that have innovative technologies and processes.

• To receive this certification…• Firms must develop EMS similar to the ISO 9000 standards and

a policy stressing commitment to continual improvement and prevention of pollution.

• Firms provide assurances of compliance, and provide a framework for setting and reviewing objectives and targets.


Standards for Production, Rather Than Product

• Both ISO 9000 and ISO 14000 address the production process, rather than the product. But it is implied that the process affects the product

• In the context of both, certification refers to the issuing of a certificate by an independent external body that has audited the organization’s management system and verified that it conforms to the requirements of the standards.

• The auditing body then registers the certification in the client’s register.

• ISO 9000 and ISO 14000 are implemented by about 610,000 organizations in 160 countries.


Top 10 Countries with ISO 9001-2002 Certificates

China 143,823

Italy 98,028

Japan 53,771

Spain 47,445

United Kingdom 45,612

United States 44,270

Germany 39,816

India 24,660

France 24,441

Australia 16,922

Source: www.iso.ch, 2005 Annual Report, May 2006.


ISO 9000 Certifications Worldwide

Region Total Percent Share Number of Countries

Africa and West Asia

48,327 6.22 58

Central and South America

22,498 2.90 27

North America 59,663 7.68 3

Europe 379,937 48.92 48

Far East 247,091 31.82 23

Australia and New Zealand

19,092 5.20 2


Chapter Summary

• Addressed the drivers for international standardization.

• Examined the standardization-adaptation continuum. and the related strategies of international companies

• Examined country-of-origin effects on brand evaluations.

• Examined entry barriers faced by service providers. • Addressed issues related to brand name protection.• Addressed International Standards Organization

certifications.

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