global products
TRANSCRIPT
Global Products
DefinitionGlobal Products are standardized products with a
common brand name, with uniform features in all countries Eg: Gillette, Benetton Sweaters
Regional products & regional brands are unique to a particular region. E.g: P&G’s Ariel, Honda’s City etc
Regional products are latently global. They may become global as more customers know about itMarketing Global products is lot more complex
than selling Regional Products
Advantages of Standardization
For many products standardization is inevitable Uniform need for the product – Steel, Metals Economies of Scale & Scope. Benefit from a
large marketKey Benefits
Cost Reduction – Economies of scale & scope Improved Quality Enhanced Customer Preference Global Customers Global Market Segments
Drawbacks of StandardizationOff-Target or Wrong positioning in some
countries Customers may have different needs Market segmentation is not always identical across
cultures
Lack of Uniqueness – Customers want to differentiate themselves with unique thingsVulnerable to Trade Barriers – Global products
need free tradeStrong Local Competitors – Local competitors
are better at adapting to local needs, making a global products vulnerable
Extent of Standardization
In reality 100% standardization is rareSome features have to be localized
Packaging, pricing etc
Only the “Core Product” which acts as the foundation is standardizedAll additional features are standardized in varying
degrees to meet local tastes E.g : Coca-Cola
Standardization can involve use of Modular design
Factors Favoring Localization
Cultural Demands – Local Tastes & preferences Even a “Globally standardized” product needs
to be localized
Compatibility Requirements Government Rules Local Climate & weather Local Technology standards
Pitfalls of Standardization
Five Common Reasons why Standardized products fail
2. Insufficient Market Research
3. Over-Standardization
4. Rigid Implementation
5. Narrow Vision
6. Poor Follow-up
Insufficient Market Research
Insufficient Market Research leads to assumed market similarities, wrong demand estimationsLocal subsidiaries may become
disenchantedNon-Acceptance of the product in
local markets
Over-Standardization
A standard Product is assumed to be used in a standard way irrespective of the local preferences.This leads to:
Poor product positioning Wrong market segmentation
Standard product may need localized marketing efforts
Rigid Implementation
A standardized marketing program is not always beneficialOften Head-Quarters drives the
standardization of all efforts and fails to notice local tastes and ignores better ideas from subsidiariesStandardized strategies increases overall
sales growth but lowers ROI & ROA
Narrow Vision
Increased Standardization leads to a myopic view of the local marketsLocal subsidiaries fail to learn from other
subsidiaries of the parentKnowledge sharing and knowledge
transfer becomes limited, leading to duplication of efforts, lost opportunities & profits
Poor Follow-up
Launching Standard Global products world wide is a complex taskOften firms do a poor job on following up
on efforts and results from other subsidiariesLocal Subsidiaries may not have the
required resources to support the global product
Challenges of Global Products
Its difficult to maintain a global product line History : Existing local products M&A: Integration of product lines is tough Local Preferences differ Distribution Channels are different Manufacturing Capacity Constrains
Colgate has been quite successful in developing a long line of global products
Globalizing New Products
Successful New products can be Globalized if the factors for its success can be GlobalizedOften times factors for a products success
in not clearly understood More than 50% of global new products fail Market orientation & commitment of senior
management is a must Asian markets need a higher level of
technological sophistication, marketing synergies and longer commitment
New Product Success Factors
Some of the common success factors are: Relative Product Advantage – Advantage over
existing alternatives Synergy with the existing products Degree to with the new product is innovative Market orientation & Management Commitment Intensity of competitive reaction. If more number
of competitors react, lesser is the chance of success
Compatibility of the new product with existing infrastructure
Speed of DiffusionSpeed at which a new product is introduced
into other countries is termed Speed of DiffusionSpeed of Diffusion depends on:
Relative Advantage Compatibility with existing systems Complexity – How easy is it to use? Trailability – How easy is it to try a new product Observability – Ability of potential customers to
observe the benefits of the new product Cosmopolitianism - Hetrogeneity slows down
product adaptation
Global Brand Management
Global Brands needs Global brand managementBrand has Brand value and Brand Equity
Coca-Cola brand is worth $69 Billion
Intel Brand is worth $35 Billion
Brand Equity is the present value of the net revenues the brand can be expected to generate over time
Brand Equity depends on intangibles like Awareness, Knowledge, attractiveness – Brand Stature Differentiation, Relevance – Brand Vitality
Brand Value is off-books but affects how Brands are managed
Advantages of Global Brand
Demand Spillover Marketing efforts in one country can create
demand on other countries. TV, Internet etc
Global Customers Global customers often demand a globally
standardized products
Scale Economies Global Advertising, Standardized packaging
can cut costs
Brand PortfolioConsumer goods makers usually have a portfolio of few
global brands and several local BrandsLess than 10% of brands are globalIn 2001, Study by ACNielson found only 43 global brands
in consumer packaged goodsTypically Brands are managed in a Brand Hierarchy,
Global/Corporate brand at the top and local brand next E.g: Honda Accord, Intel Pentium, Sony Vega TV
Global Brands are managed by the parent. Local brands are managed by subsidiaries
Brand Extensions is done to introduce a new product
Brand Globalization Potential
Not all local brands can become global. Here’s a checklist to see the brand fit: Does the brand name make sense outside
the country? Does the brand suggest a country
association? Can the brand name registered abroad? Is there synergy with existing Global Brands? Can a new Global Brand be Justified? Does the regional brand offer tough
competition to global brands in that region?
Implementing Global Brand
Implementing a globalization strategy raises few issues:In the globalization product based involving
product entry into new markets?Is the product category unique to the
company?Can the local brand names be replaced with
a global brand name?E.g: Nokia brands all its telecom products as
Nokia, even replacing brand names of acquired companies
Implementing Global BrandCan Local Brands be replaced without affecting
market share?E.g: Electrolux maintains a host of local brands
to retain its local customersDoes replacing a local brand has a significant
impact on the product? E.g: Budweiser in Europe, Thumbs up in India
Does replacing a local brand affect the local competitiveness in the local market? Local Brands tend to be strongly associated with
local culture & offers a higher competitiveness than global brands
Top Global Brands1. Coca Cola2. Sony3. Mercedes-Benz4. Kodak5. Disney6. Nestle7. Toyota8. McDonald’s9. IBM10.Pepsi-Cola
1. Rolls-Royce
2. Honda
3. Panasonic
4. Levi’s
5. Kleenex
6. Ford
7. Volkswagen
8. Kellogg’s
9. Porsche
Replacing Local BrandsSeveral standard brand Changeover tactics are:
Fade-in/fade-out: Global brand is first associated with the local brand then the local brand is slowly faded out
Endorsement Branding: Use a strong local brand to introduce a global brand Eg: Acura by Honda
Double Branding: Local-Global brands or Old-New brand together
Summary Axing: Simply drop a local brand & introduce a Global Brand
Counterfeit Products
Strong & Successful Global brand names attracts counterfeiters. Counterfeit product is more common in high
end fashion products Eg: Gucci, Ray-Ban etc
Counterfeit or fake products are now seen in chemicals, computers etcExtensive, sustained operation is needed to
fight fake goods, often government help is needed
Closing Thoughts
Globalization involves global products and global brand names
Global products is standardized to an extent to gain economies of scale & scope but localized to meet local requirements
Global Brands are few in number and require global scale brand management
New Global brands can be developed with substantial effort & commitment
Changing local Brand names is not easy & requires extensive resources
Counterfeit products is a major threat to established Brand names