International Marketing - Lecture 7

LECTURE 7
CONSUMER PRODUCTS FOR

GLOBAL MARKETS
GLOBAL MARKETS
Companies go Global through the following three routes:
GLOBAL MARKETS
1. Domestic Market Extension

2. Multi Domestic Marketing
3. Global Marketing
GLOBAL MARKETS

3. Global Marketing
Implicit in the development of any marketing program is the

question: “Which products should we sell in this market?”
GLOBAL MARKETS

3. Global Marketing
Implicit in the development of any marketing program is the question: “Which

products should we sell in this market?”
1. Answers with “Whatever we sell locally, of course!”

2. Develops a different product to fit the uniqueness of each market
3. Ignores frontiers and seeks commonalities in needs among sets of
country markets and responds with a Global Product
GLOBAL MARKETS
There is a recurring debate relative to product planning and
development that focuses on the question of standardized or
global products marketed worldwide, versus differentiated
products adapted, even redesigned, for each culturally unique
market.
GLOBAL MARKETS
There is a recurring debate relative to product planning and
development that focuses on the question of standardized or
global products marketed worldwide, versus differentiated
products adapted, even redesigned, for each culturally unique
market.
Standardized products can utilize economies of scale to the

fullest extent permitting more attractive prices to the global
market. Cultural variations and specific needs of different markets
would feel that products they do not need are being thrust upon
them through standardization. There is no clear yes/no solution to
this problem.
GLOBAL MARKETS
Hand in hand with global products go global brands. Coca Cola,
for instance, means the same to all persons around the world.
When the Coca Cola Company came out with “Diet Coke” it was
easily accepted by Western clients. But “Diet” in Japan is closely
identified with illnesses, and so its name was changed worldwide
to “Coke Light” to get away from the negative image, yet convey
the same message.
GLOBAL MARKETS
Hand in hand with global products go global brands. Coca Cola,
for instance, means the same to all persons around the world.
When the Coca Cola Company came out with “Diet Coke” it was
easily accepted by Western clients. But “Diet” in Japan is closely
identified with illnesses, and so its name was changed worldwide
to “Coke Light” to get away from the negative image, yet convey
the same message.
Products need to be differentiated with cultural differences. A

product is the sum of the physical and psycologcal satisfaction
given to the customer. This is ably demonstrated in the case of
the breakfast cereal case as described in the next slide.
GLOBAL MARKETS
Innovation
An important first step in adapting a product to a foreign

market is to determine the degree of newness perceived
by the intended market. How people react to newness
and how new the product is in a market must be clearly
understood. Products may be in the mature stage or even
declining in the home market, while new in the host
market. It has to be placed in the appropriate slot.
GLOBAL MARKETS
Innovation
An important first step in adapting a product to a foreign market is to

determine the degree of newness perceived by the intended market.
How people react to newness and how new the product is in a market
must be clearly understood. Products may be in the mature stage or
even declining in the home market, while new in the host market. It
has to be placed in the appropriate slot.
In this context, Innovations can be of four types:

– Congruent Innovation – an exact duplicate of an existing product
– Continuous Innovation – an alteration of an existing product
– Dynamically continuous Innovation – creation of a new product or a major
alteration of an existing product to fulfill needs of the new market
– Discontinuous Innovation – establishment of a completely new product
previously unknown
GLOBAL MARKETS
Crucial elements in the diffusion of new ideas are:
GLOBAL MARKETS
An Innovation…
GLOBAL MARKETS
An Innovation…
… which is communicated through certain channels…
GLOBAL MARKETS
An Innovation…
… over time ...
GLOBAL MARKETS
An Innovation…
… over time ...
… among the members of a social system
GLOBAL MARKETS
An Innovation…
… over time ...
Resistance to accept Innovations

GLOBAL MARKETS
An Innovation…
… over time ...
Attributes of a product which cause market resistance to

its acceptance can be determined if a product is analyzed
by the following characteristics of an innovation:
GLOBAL MARKETS
An Innovation…
… over time ...
Attributes of a product which cause market resistance to its

acceptance can be determined if a product is analyzed by the
following characteristics of an innovation:
– The perceived marginal value of the new product as compared to
the old
– Its compatibility with the accepted norms, values etc.
– The degree of complexity associated with the product use
– The ease with which product benefits can be communicated to the
consumer
GLOBAL MARKETS
A product is multidimensional, and the sum of all its features
determines the bundle of satisfaction received or perceived to be
received by the consumer. To identify all possible ways a product
may be adapted to a new market, it helps to separate the many
dimensions of the product into three distinct components:
GLOBAL MARKETS
A product is multidimensional, and the sum of all its features
determines the bundle of satisfaction received or perceived to be
received by the consumer. To identify all possible ways a product
may be adapted to a new market, it helps to separate the many
dimensions of the product into three distinct components:
– The core component
– The packaging component
– The support services component

MARKETING INDUSTRIAL
PRODUCTS
The inherent nature of Industrial Goods and similarities in motives
among industrial customers worldwide create a market
environment where product and marketing mix are more
standardized than for consumer goods.
PRODUCTS
The inherent nature of Industrial Goods and similarities in motives
among industrial customers worldwide create a market
environment where product and marketing mix are more
standardized than for consumer goods.
Since an Industrial Product is purchased for business use and

thus sought, not as an entity in itself, but as a part of a total
process, the buyer values service, dependability, quality
performance and cost. In the international environment, these are
further complicated for the marketer by the cultural and
environmental differences of the countries.
PRODUCTS
Stages of Economic Development of a country
PRODUCTS
Perhaps the most significant economic factor affecting

the industrial goods market is the degree of
industrialization of a country. The degree of economic
development of a country is a good gauge of it being a
market for industrial goods.
PRODUCTS
Perhaps the most significant economic factor affecting

the industrial goods market is the degree of
industrialization of a country. The degree of economic
development of a country is a good gauge of it being a
market for industrial goods.
The stages of economic development of a country are:

PRODUCTS
Perhaps the most significant economic factor affecting the

industrial goods market is the degree of industrialization of a
country. The degree of economic development of a country is a
good gauge of it being a market for industrial goods.
The stages of economic development of a country are:
– Pre-industrial or commercial stage with little or no manufacturing

– Development of primary manufacturing or partial processing raw
materials
– Growth of manufacturing facilities for non durable and semi durable
consumer goods
– Well industrialized economy with small manufacturers having relative
mass appeal
– Complete industrialization with world leadership in production of the
latest generation of a large variety of goods.
PRODUCTS
Technology and Market Demand
Countries at a higher level of growth can supply goods

and services to those at lower echelons. The level of
technological assimilation increases with increase in the
stage of development. However, countries closer in stage
of development to the host country are in a better
position to transfer technology relevant to the host
country.
PRODUCTS
Countries at a higher level of growth can supply goods and

services to those at lower echelons. The level of technological
assimilation increases with increase in the stage of
development. However, countries closer in stage of
development to the host country are in a better position to
transfer technology relevant to the host country.
Factors governing Host Country “Demand”

PRODUCTS
Countries at a higher level of growth can supply goods and services

to those at lower echelons. The level of technological assimilation
increases with increase in the stage of development. However,
countries closer in stage of development to the host country are in a
better position to transfer technology relevant to the host country.
Factors governing Host Country “Demand”
– Technology and Markets

– Demand and Technology
– Attributes of Product Quality
– ISO 9000 Certification
PRODUCTS
Factors relevant to International Industrial
Buying
PRODUCTS
Buying
– Price Quality Leadership

PRODUCTS
Buying

– Product design
PRODUCTS
Buying

– Product design
– Local service and replacement part availability
PRODUCTS
Buying

– Product design
– Meeting Universal Standards
PRODUCTS
Factors relevant to International Industrial Buying

– Product design
Marketing Services Globally

PRODUCTS
Buying
– Product design
Marketing Services Globally

• Characteristics of Services
• Entering Global Markets
• Market Environment for Business Services
INDUSTRIAL DISTRIBUTION
There exists in each market a a distribution network with
a variety of channel choices whose structure is unique
and, in the short term, fixed. A global marketer is limited
by this existing structure within which to operate. In this
search of an effective and direct distribution system,
brand and product efficiencies achieved through a global
marketing strategy can be severely limited if they do not
reach the market because of ineffective distribution.
Criteria in International Channel Decisions

The following basic points need to be considered in

making International Channel decisions:
There exists in each market a a distribution network with a
variety of channel choices whose structure is unique and, in the
short term, fixed. A global marketer is limited by this existing
structure within which to operate. In this search of an effective
and direct distribution system, brand and product efficiencies
achieved through a global marketing strategy can be severely
limited if they do not reach the market because of ineffective
distribution.
The following basic points need to be considered in making

International Channel decisions:
– Channel Structures
– Available Alternative Middlemen
– Locating/Selecting/Motivating/Terminating Middlemen
– Controlling the Channel Process.
Channel Distribution Structures

Regardless of how well a product meets the target

market needs or how well it is promoted, it has to be
made accessible to the target market at a price it is
able/willing to pay to meet expected goals. An aggressive
and reliable channel of distribution may therefore be the
most critical task facing the international marketer.
Regardless of how well a product meets the target market

needs or how well it is promoted, it has to be made
accessible to the target market at a price it is able/willing to
pay to meet expected goals. An aggressive and reliable
channel of distribution may therefore be the most critical
task facing the international marketer.
Each country market has a channel structure through which

goods typically pass from the producer to the user. A variety
of middlemen with diverse functions and services operate
within this structure. Channel structures range from simple
channels of the LCDs to the highly complex multi-layered
system developed by Japan to give it a global edge.
Import Oriented Distribution Structure

Traditional channels in developing countries evolve from

economies dependent on imported manufactured goods.
Typically, the “importer” controls a fixed supply of goods,
and the entire marketing system develops around the
philosophy of selling a limited supply of goods at high
prices to a few affluent customers.
Traditional channels in developing countries evolve from economies

dependent on imported manufactured goods. Typically, the
“importer” controls a fixed supply of goods, and the entire marketing
system develops around the philosophy of selling a limited supply of
goods at high prices to a few affluent customers.
The Import Oriented Distributed Structure thrives on the

market being throttled of the goods, resulting (artificially) in a strong
seller’s market, permeating all aspects activities and behaviour.
Economies of scale need not necessarily apply with a one-deal
mentality existing in the retail and wholesale levels, constantly
pressurizing price levels upwards. Foreign marketers trying to
bypass the system pose a threat to the local interest groups, and
therefore meet with a lot of resistance.
Japanese Distribution Structure

The industrialized nations’ consumption/distribution

philosophy, on the other hand, results in the supplies not
being dominated by one supplier, and profit maximization
occurs at near product capacity. A buyer’s market exists
and producers strive to penetrate the market and push
goods to the customer through a highly developed
channel structure. At the other extreme of the above is
the Japanese distribution structure, considered to be the
most effective non-tariff barrier to the Japanese market.
The industrialized nations’ consumption/distribution philosophy,

on the other hand, results in the supplies not being dominated
by one supplier, and profit maximization occurs at near product
capacity. A buyer’s market exists and producers strive to
penetrate the market and push goods to the customer through
a highly developed channel structure. At the other extreme of
the above is the Japanese distribution structure, considered to
be the most effective non-tariff barrier to the Japanese market.
Distinguishing Features of the Japanese Distribution

Structure
The industrialized nations’ consumption/distribution philosophy, on the

other hand, results in the supplies not being dominated by one supplier,
and profit maximization occurs at near product capacity. A buyer’s market
exists and producers strive to penetrate the market and push goods to the
customer through a highly developed channel structure. At the other
extreme of the above is the Japanese distribution structure, considered to
be the most effective non-tariff barrier to the Japanese market.
Distinguishing Features of the Japanese Distribution

Structure
– Channel structure dominated by many small wholesalers

– Channel controlled by manufacturers
– A business philosophy shaped by a unique culture
– Laws that protect the small retailer is the foundation of the system

International Marketing - Lecture 7

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LECTURE 7

CONSUMER PRODUCTS FOR

1. Domestic Market Extension

1. Domestic Market Extension

Implicit in the development of any marketing program is the

1. Domestic Market Extension

Implicit in the development of any marketing program is the question: “Which

1. Answers with “Whatever we sell locally, of course!”

Standardized products can utilize economies of scale to the

Products need to be differentiated with cultural differences. A

An important first step in adapting a product to a foreign

An important first step in adapting a product to a foreign market is to

In this context, Innovations can be of four types:

Resistance to accept Innovations

Resistance to accept Innovations

Attributes of a product which cause market resistance to

Resistance to accept Innovations

Attributes of a product which cause market resistance to its

– The core component

– The packaging component

– The support services component

Since an Industrial Product is purchased for business use and

Perhaps the most significant economic factor affecting

Perhaps the most significant economic factor affecting

The stages of economic development of a country are:

Perhaps the most significant economic factor affecting the

The stages of economic development of a country are:

– Pre-industrial or commercial stage with little or no manufacturing

Countries at a higher level of growth can supply goods

Countries at a higher level of growth can supply goods and

Factors governing Host Country “Demand”

Countries at a higher level of growth can supply goods and services

Factors governing Host Country “Demand”

– Technology and Markets

– Price Quality Leadership

– Price Quality Leadership

– Price Quality Leadership

– Price Quality Leadership

– Price Quality Leadership

Marketing Services Globally

Marketing Services Globally

Criteria in International Channel Decisions

Criteria in International Channel Decisions

The following basic points need to be considered in

Criteria in International Channel Decisions

The following basic points need to be considered in making

Channel Distribution Structures

Channel Distribution Structures

Regardless of how well a product meets the target

Regardless of how well a product meets the target market

Each country market has a channel structure through which

Import Oriented Distribution Structure

Import Oriented Distribution Structure

Traditional channels in developing countries evolve from

Traditional channels in developing countries evolve from economies

The Import Oriented Distributed Structure thrives on the

Japanese Distribution Structure

Japanese Distribution Structure

The industrialized nations’ consumption/distribution

The industrialized nations’ consumption/distribution philosophy,

Distinguishing Features of the Japanese Distribution

The industrialized nations’ consumption/distribution philosophy, on the

Distinguishing Features of the Japanese Distribution