Creating Products for Consumers in Global

Markets

Developing an international marketing strategy

Segmenting Targeting Positioning

Properties of a Market Segment

Properties– Measurable– Sizable– Accessible– Actionable– Competitive Intensity– Growth Potential

Bases for Global Segments

Geographic Demographic Psychographic Behavior Benefits

Average Monthly Expenditures for Chinese Households National and Urban Areas - 1994

Food (includes eating out) $22.10 $38.00

Savings 11.40 17.00

Clothing 5.60 9.00

Child's Education 4.70 7.00

Home (includes Rent & Utilities) 4.30 8.20

Daily Goods other than Food 3.50 4.80

Medical Expenses & Drugs 2.30 4.00

Entertainment 1.30 3.20

National Urban Areas

SOURCE: Gallup China.

Group Attitudes Work Lifestyle Purchase Behavior

Resigned Poor Unhappy Labor Shut-in StaplesDistrustful Unskilled Television Price

Struggling Poor Unhappy Labor Sports PriceDissatisfied Craftsmen Television Discount Stores

Mainstreamers Happy Craftsmen Family HabitBelong Teaching Gardening Brand Loyal

Aspirers Unhappy Sales Trendy Sports Conspicuous Consumption

Ambitious White Collar Fashion magazines CreditSucceeders Happy Managerial Travel Luxury

Industrious Professional Dining out QualityTransitionals Rebellious Student Arts/crafts Impulse

Liberial Health field Special Interest Unique products magazines

Reformers Inner growth Professional Reading EcologyImprove world Entrepreneur Cultural events Homemade/grown

Y&R’s Cross-Cultural Consumer Characterizations (4Cs)

Global Scan Segmentation Study

0%

20%

40%

60%

80%

100%

Japan USA UK

Strivers

Achievers

Pressured

Traditionals

Adapters

Life Style

Exhibit : Typology of European Car Market

Roper Starch Worldwide Global Study

Shopping Styles– Deal Makers (29%) - love the buying process– Price Seekers (27%) - place primary value on the

product that they are buying– Brand Loyalists (23%) - purchase name brands and

remain true to them– Luxury Innovators (21%) - seek new, prestigious

brands

40,000 consumers in 40 countries

How the World Shops

Source: “How the World Shops,” Advertising Age, June 5, 1995, p.3.

Price Brand Luxury Deal Seekers Loyalists Innovators Makers

India 7.4 34.6 35.8 22.2Saudi Arabia 8.9 14.8 34.4 40.3Mexico 23.4 19.1 19.9 35.0China 23.4 27.9 19.1 35.0Czech Republic 26.9 23.9 25.7 22.6U.K. 27.2 28.7 17.5 25.5Spain 34.4 27.0 18.1 19.6U.S. 36.0 11.3 17.0 37.0Japan 41.0 23.5 7.9 27.1Germany 43.7 16.9 15.7 21.9France 45.5 19.5 8.5 26.6

How the World Shops

Source: “How the World Shops,” Advertising Age, June 5, 1995, p.3.

Luxury Brand Price Deal Innovators Loyalists Seekers Makers

Japan 7.9 23.5 41.0 27.1France 8.5 19.5 45.5 26.6Germany 15.7 16.9 43.7 21.9U.S. 17.0 11.3 36.0 37.0U.K. 17.5 28.7 27.2 25.5Spain 18.1 27.0 34.4 19.6China 19.1 27.9 23.4 35.0Mexico 19.9 19.1 23.4 35.0Czech Republic 25.7 23.9 26.9 22.6Saudi Arabia 34.4 14.8 8.9 40.3India 35.8 34.6 7.4 22.2

How the World Shops

Source: “How the World Shops,” Advertising Age, June 5, 1995, p.3.

Deal Luxury Brand PriceMakers Innovators Loyalists Seekers

Spain 19.6 18.1 27.0 34.4Germany 21.9 15.7 16.9 43.7India 22.2 35.8 34.6 7.4Czech Republic 22.6 25.7 23.9 26.9U.K. 25.5 17.5 28.7 27.2France 26.6 8.5 19.5 45.5Japan 27.1 7.9 23.5 41.0China 35.0 19.1 27.9 23.4Mexico 35.0 19.9 19.1 23.4U.S. 37.0 17.0 11.3 36.0Saudi Arabia 40.3 34.4 14.8 8.9

International Positioning Strategies

Global Positioning and Segmentation Strategies– Universal Segment / Uniform Positioning

Theme

– Universal Segment / Different Positioning Themes

– Different Segment / Different Positioning Themes

Global Positioning & Segmentation Strategies

International Product Trade Cycle Model

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

1 3 4 5 6 7 8 9 10 11 12 13 14 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

High Income Countries

Medium Income Countries

Low Income Countries

Time

Stages of Production Development

New Product Standardized ProductMaturing Product

Quantity

production

consumption

2

Products and Culture

Cultural Influences

Innovative Products and Adaptation

Diffusion of Innovations

Degree of Newness

Characteristics of Innovations

Adopter Categories in Diffusion Process

Degree of Newness

Congruent InnovationsCongruent Innovations

Continuous InnovationContinuous Innovation

Dynamically Continuous InnovationDynamically Continuous Innovation

Discontinuous InnovationDiscontinuous Innovation

Characteristics of Innovations

Relative Advantage

Compatibility

Complexity

Trialability

Observability

Product Components

Core ComponentCore Component

Packaging ComponentPackaging Component

Support Services ComponentSupport Services Component

Product Component Model

Repair and maintenance

SUPPORT SERVICESCOMPONENT

CORECOMPONENT

Installation

Instructions

Other related services

Deliveries

Warranty

Spare parts

Legal

Trademark

Brand name

Legal

Product platform

Design features

Functional features

Legal

PACKAGINGCOMPONENT

Price

Quality

Package

Styling

4 Ps - Product Product decisions are all decision which relate to the physical product and/or

service offering, including its name, packaging, warranty, and availability. Product dimensions include:– Size of the product– Color(s) of product– Scent of the product– Materials/ composition of the product– Design of the product– Packaging materials– Package colors and package design– Brand name– Warranty– Availability of options– Customizing services– After-sale service offerings– Inventory levels

Factors Influencing Product Adaptation vs. Standardization

Stage in Product Life CycleStage in Product Life Cycle

Legal/Standards ConstraintsLegal/Standards Constraints

Product InnovativenessProduct Innovativeness

Cultural DifferencesCultural Differences

Standardization versus Adaptation

Factors Encouraging Standardization

– Economies of scale in production

– Economies in product R&D

– Economies in marketing

– “Shrinking” of the world marketplace/

economic integration

Standardization versus Adaptation

Factors Encouraging Adaptation

– Differing use conditions

– Government and regulatory influences

– Differing consumer behavior patterns

– Local Competition

– True to marketing concept

Strategic Adaptation to Foreign Markets

High

Low

Degree ofCulturalGrounding

Need forAdaptation

Industrial/ Technology Intensive

Consumer

Nature of Product

Global v. Local branding In 1989, Mars changed the name of Kal Kan cat food to

Whiskas. Why?

– Sharing of ideas in global corporation

– Pet owners travel and might switch if their familiar brand was not available somewhere.

– Two years earlier, Mars had created to other global brands Kal Kan dog food Pedigree in U.S. Mealtime dry dog food Pedigree Mealtime

– High market share in U.S.

– Brand associations

What is a brand?

A name, term, sign, symbol, or design, or combination of them which is intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors (Kotler, 1991)

What is brand equity?

A set of brand assets linked to a brand, its name and symbol, that add to or subtract from the value provided by a product or service to a firm and/or to that firm’s customers.

Brand Associations

What is customer-based brand equity?

The differential effect of brand knowledge on customer response to the marketing of the brand.

Developing A Framework For Generic Brands Based on Brand Knowledge

Brand Awareness– Recognition– Recall

Brand Image– Type– Strength– Favorability– Uniqueness

of Brand Associations

Components of Brand Knowledge (Keller, 1992)

Customer-Based Brand Equity

Recognition Recall Brand Image* Brand Equity

Dominant High High Strong High

Sustaining High Moderate Moderate Moderate

Graveyard High Low Weak Low

Decomposing Consumer Knowledge of Brands

* Brand Image = Strength, uniqueness, & favorability of associations

Brand Strategies

Global BrandsGlobal Brands

National BrandsNational Brands

Global/National Brand MixGlobal/National Brand Mix

Private BrandsPrivate Brands

Global v. Local Brands

Global brands provide:– Scale economies in the

Development of advertising, packaging, promotion, etc.

– Exploitation of: Media overlap Exposure to customers who

travel

– Associations of a global presence of the “home” country

Local brands provide:– Names, symbols, and

associations that can be: Developed locally Tailored to local market Selected without the constraints

of a global brand

– Reduced risk from “Buy Local” sentiments