? Communication and transportation may be highly limited in untapped markets and highly
developed in successful countries.
? The amount of capital, banks, and exchange-rate systems will vary according to the market’s
development.
? Finally, the degree and amount of competition will vary accordingly. To this list, endless
factors could be added such as cost of entering the market, social customs, laws, etc.
8. Why do companies change their organizations when they go from being an international to a global company?
? An international marketing plan should optimize the resources committed to stated company
objectives. The organizational plan includes the type of organizational arrangements to be used, and the scope and location of responsibility. Many ambitious multinational plans meet with less than full success because of confused lines of authority, poor communications, and lack of cooperation between headquarters and subsidiary organizations.
? Companies are usually structured around one of three alternatives: global product divisions
responsible for product sales throughout the world; geographical divisions responsible for all products and functions within a given geographical area; and a matrix organization consisting of either of these arrangements with centralized sales and marketing run by a centralized functional staff, or a combination of area operations and global product management.
9. Formulate a generate rule for deciding where international business decisions should be made.
International business decisions should reflect the culture of the country in which they will be implemented. Thus the decision should be as close to the country where it is to be implemented as possible.
10. Explain the popularity of joint ventures.
? One important marketing reason is to gain access to markets. Nearly all of the developing
countries, and many developed countries, require some degree of local participation for operating in their country. Mergers with distributor companies or companies which already have well-established local distribution may provide rapid market access and distribution to foreign companies entering a country. Sometimes companies join forces in order to broaden the line of merchandise that they have available, thereby gaining marketing efficiency and better public image.
? Another market reason for joining ventures is that local firms possess market information and
the marketing know-how which would take years for a foreign company to acquire. Such participation minimizes the risk of market failure and speeds the marketing effort. Joint ventures may also arise for financial and manpower reasons. Financially it is sometimes desirable to merge with foreign companies because the merger provides access to local capital markets and combines the resources and fund raising capabilities the companies have. It may also give access to a higher quality and more capable managerial manpower.
11. Compare the organizational implications of joint ventures versus licensing.
? Joint ventures involve the partners in a new venture and usually require significant inputs of
both capital and management.
? In licensing, the companies retain separate identity. Usually the licensor is little affected by
his licensing actions.
Chapter 10 Products and Services for Consumers
Product diffusion
The process by which a new idea or new product is accepted by the market
Product Component Model Core Components
? Product platform Design features Functional features Packaging Component
? Price Quality Packages Styling Trademark Brand name Support Services Component
? Deliveries Warranty Spare parts Repair and maintenance ? Installation Instructions Other related services
Quality Market-perceived quality Performance quality
Global brands
? The Internet and other technologies accelerate the pace of the globalization of brands ? Ideally gives the company a uniform worldwide image ? Balance
? Ability to translate
Innovation
Green marketingconcerns the environmental consequences of a variety of marketing activities.
Homologationaccreditation or certified, is used to describe the changes mandated by local product and service standards.
A Low-Carbon Economy (LCE)
an economy which has a minimal output of greenhouse gas (GHG) emissions into the biosphere, but specifically refers to the greenhouse gas carbon dioxide.
1. Define the country-of-origin effect and give examples.
? Country of Origin Effect (COE) can be defined as any influence that
country-of-manufacturer has on a consumer’s positive or negative perception of a product.
? Today a company competing in global markets will manufacture products worldwide and,
when the customer is aware of the country of origin, there is the possibility that the place of manufacture will affect product/brand image.
? Some examples are French wines, German beer, Swiss watches, Cuban cigars, and Irish
woolens are some positive COEs. A negative COE is an automobile from Yugoslavia (the Yugo).
2. The text discusses stereotypes, ethnocentrism, degree of economic development, and fads
as the basis for generalizations about country-of-origin effect on product perception. Explain each and give an example.
? The country, the type of product, and the image of the company and its brands all
influence whether or not the country of origin will engender a positive or negative
reaction. There are a variety of generalizations that can be made about country of origin effects on products and brands. Consumers tend to have stereotypes about products and countries that have been formed by experience, hearsay, and myth. Following are some of the more frequently cited generalizations.
? Consumers have broad but somewhat vague stereotypes about specific countries and
specific product categories that they judge ―best‖: English tea, French perfume, Chinese silk, Italian leather, Japanese electronics, Jamaican rum, and, so on. Stereotyping of this nature is typically product specific and may not extend to other categories of products from these countries. ? Ethnocentrism can also have country of origin effect; feelings of national pride, the ―buy
American‖ effect among members, for example, can influence attitudes toward foreign products. Honda, which manufactures one of their models almost entirely in the United States, recognizes this phenomenon and points out how many component parts are made in America in some of their advertisements. On the other hand, others have a stereotype of Japan as producing the ―best‖ automobiles. A recent study found that U.S. automobile producers may suffer comparatively tarnished in-country images regardless of whether they actually produce superior products. ? Countries are also stereotyped on the basis of whether they are industrialized, in the
process of industrializing or less-developed. These stereotypes are less country-product specific; they are more a perception of the quality of goods in general produced within the country. Industrialized countries have the highest quality image, and there is
generally a bias against products from developing countries. Within groups of countries grouped by economic development there are variations of image.
3. Discuss product alternatives and the three marketing strategies: domestic market
extension, multidomestic market, and global market strategies.
? The marketer has at least three viable alternatives when entering a new market: (1) sell
the same product presently sold in the home market (Domestic Market Extension
Strategy); (2) adapt existing products to the tastes and specific needs in each new country
market (Multi-Domestic Market Strategy); or (3) develop a standardized product for all markets (Global Market Strategy.)
? An important issue in choosing which alternative to use is whether or not a company is
starting from scratch (i.e., no existing products to market abroad), or whether it has products already established in various country markets. For a company starting fresh, the prudent alternative is to develop a global product. If the company has several
products that have evolved over time in various foreign markets, then the task is one of repositioning the existing products into a global product.
4. Discuss the different promotional/product strategies available to an international
marketer.
The marketer has at least three viable alternatives when entering a new market: he can (1) sell the same product he presently sells elsewhere, (2) individualize existing products to the tastes and specific needs of the new country, or (3) develop a totally new product. These three basic alternatives, when combined with promotional effort, can be developed into five different product strategies available to the international marketer.
? First, a company can sell the same product using the same promotional message
worldwide as Pepsi-Cola and the Coca-Cola company do. ? A second version is to sell the same product but with promotions featuring different use
patterns. ? A third strategy involves altering the basic physical features of the product to meet local
environmental needs but promoting the product to fill the same use patterns as are prevalent in the domestic market. ? The fourth strategy requires both a change in the product to meet different use patterns
and a change in the promotional message accompanying it. ? The fifth strategy is one of investing or developing a totally new product rather than
adapting an existing one.
5. What are the three major components of a product? Discuss their importance to product
adaptation.
? its core, the physical product and all its functional features
? the packaging component that includes the physical package in which the product is presented,
as well as the brand name, trademark, styling and design features, price and quality levels ? the support services component, which completes the product buyers receive and from which
the bundle of satisfactions received are derived.
6. How can the knowledge of the diffusion of innovations help a product manager plan his
international investments?
? Knowledge of the diffusion of innovation provides the international marketer with several
important pieces of information
? It can also give him insights into how to accelerate the rate of acceptance of his product and
the steps that he as a marketer can take to eliminate some of the ―newness‖ thereby gaining more rapid acceptance of his product.
? In preparing characteristics of innovations study of the new product, he or she might
determine a product profile which could be extremely useful as a model for planning product strategy.
? By analyzing the product in terms of those attributes which contribute to its newness (or
innovativeness) the marketer’s attention is focused on those factors which give rise to resistance; thus, the marketer can estimate the possible rate of adoption and perhaps effect the rate of adoption of an innovation by changing its characteristics through physical modifications, advertising, and/or sales promotion efforts.
7. Old products (that is, old to the U.S. market) may be innovations in a foreign market.
Discuss fully.
? It is important for the marketer to appreciate that a product which has gained acceptance and
is now at the top or perhaps even in the declining stage of the product life cycle, may be perceived in another culture as a new and, in fact, very innovative product.
? The marketer must guard against assuming that an ―old hat‖ in one market which has
achieved acceptance after many years of exposure and learning and adaptation on the part of the culture toward the product can be transferred to another culture with its learned acceptance intact. In fact, the ―old hat‖ may be so outside the experience of the new market that the marketer will have to start at the beginning of the assimilation process.
13. Discuss the four types of innovations. Give examples of the products which would be
considered by the U.S. market as one type of innovation but a different type in another market. Support your choice.
There are four types of innovations: (1) Congruent innovation, (2) continuous innovation, (3) dynamically continuous innovation, and (4) discontinuous innovation.
? A congruent innovation is actually no innovation at all because it causes absolutely no
disruption of established consumption patterns. Some products do fit this category; the best example would be an exact duplicate of an already existing product. ? A continuous innovation has the next least disruptive influence on established
consumption patterns. Alternative of a product is almost always involved, rather than the creation of a new product. An example may be fluoride toothpaste and menthol cigarettes, etc. ? A dynamically continuous innovation has more disruptive effects than a continuous
innovation, although it still does not generally involve new consumption patterns. It may mean the creation of a new product or considerable alternation of an existing one. ? A discontinuous innovation involves the establishment of a new consumption pattern and
the creation of previously unknown products.
14. Discuss the characteristics of an innovation which can account for differential diffusion
rates.
Relative advantage, Compatibility, Complexity, Trialability, Observability.
? Relative advantage is the degree to which an innovation is better than the products it
replaces or with which it competes.