2/28/2024

Session 5
Products and Services
for international
markets

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Learning Objectives
13‐1 The importance of offering a product suitable for
the intended market
13‐2 The importance of quality and how quality is
defined 13‐3 Physical, mandatory, and
cultural requirements for
product adaptation
13‐4 The need to view all attributes of a product
to overcome resistance to acceptance.
consider products
13‐5 Country‐of‐origin effects on product
image

PRODUCT DECISION
14‐2 How demand is affected by technology
Attributes
Denefits levels 14‐3 Characteristics of ex:
an halal quality
industrial
Labels Perceptions
Branding product
of quality
Support semices
Warranty/
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Quality 1 of 5

Product life cycles becoming shorter and focusing on:

• Importance of quality
• Competitive prices
• Innovative products

Power is shifting from seller to buyer

• Customer defines quality in terms of own needs
and resources
• Cost and quality among most important criteria
for purchases in most global markets

need to understand what is quality

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vision: base on consumerlittle changes

already here again like alternate like a
quality
Quality 2 of 5

Quality Defined
• Market‐perceived quality
• Consumer perceptions of quality

• Performance quality how a pro/ser do

• Firm’s perception of quality
• Expected as a given in competitive market
• Firms often misrepresent performance quality

• Customer satisfaction indexes

• “Fair trade” designation
• Malcolm Baldrige Quality Award

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Quality 3 of 5

Maintaining Quality
• Performance quality is critical
• May be damaged as product passes through distribution chain
• Challenge for global brands; long distribution chains, less control

• Market‐perceived quality matters

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Quality 4 of 5

Physical or Mandatory Requirements and Adaptation

• Product homologation
• Changes mandated by local product and service standards
• Most often reason for adaptation; not out of choice

• Other factors
• Less economically developed markets require greater degree of
adaptation for acceptance
• Climate differences must be accommodated
• Law, politics, technology

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Quality 5 of 5

Green Marketing and Product Development

• Impacts product development
• Control of packaging component of solid waste
• Consumer demand for environmentally‐friendly products

• Europe at the forefront

• Ecolabeling guidelines passed by European Commission in 1992
• EU law requires recycling or reuse of all packaging material

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Products and Culture 1 of 7

Product is more than physical item

• Bundle of satisfactions or utilities a buyer receives
• Sum of physical and psychological satisfactions, and
cultural influences

• Psychological aspects may require adaptation of

product
• Problems of adapting a product to sell abroad similar to
those associated with introducing new product
domestically

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Products and Culture 2 of 7

Innovative Products and Adaptation

• First step to adaptation: consider innovation
• Determine perceived newness of product in intended market
• Diffusion of innovation
• Goal is product acceptance by largest number of consumers in
the shortest span of time

• New products not always readily accepted by culture

• May ultimately be accepted, but takes time and effort
• Diffusion research shows that probable rate of acceptance can
be predicted and accelerated if necessary

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Products and Culture 5 of 7

Rate of acceptance or resistance can be

predicted Five characteristics of innovation basis
1. Relative advantage
2. Compatibility
3. Complexity
4. Trialability
5. Observability
Analyst’s self‐reference criterion may cause bias
when interpreting characteristics of product

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Analyzing Product Components for Adaptation 1 of 4

A product is multidimensional
• Sum of all its features determines the bundle of
satisfactions (utilities) received by consumer
• Product Component Model
• Helps to determine how product might be adapted to
market
• Separates many dimensions into three distinct components
• Support services, packaging, and core component
• Effects of cultural(liên quan đến các yếu tố vh(vd: vinamilk->qua cam đổi tên để
tránh bị ảnh hưởng bởi các yếu tố vh/ls)
• , physical requirements(liên quan đến những thay đổi về khí hậu thời tiết), and
mandatory(liên quan đến luật) factors can be focused on each
component

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Exhibit 13.3 Product Component Model

Jump to long description.

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Analyzing Product Components for Adaptation 2 of 4

Core Component
• Consists of physical product
• Its design and functional features

• Variations can be added or deleted for different markets

• Alteration in design and function to fit cultural tastes
• May affect product processes; requires additional costs
• Some alterations may be mandated by market

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Analyzing Product Components for Adaptation 3 of 4

Packaging Component
• Frequently requires mandatory adaptations
• Country‐of‐origin labeling for food, size stipulations
• Laws vary from country to country

• Discretionary adaptations should be considered

• Check trademark for unintended symbolic meaning
• Pay attention to translation of brand names and color use
• Consider climate of market

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Analyzing Product Components for Adaptation 4 of 4

Support Services Component

• Important not to neglect
• Many otherwise successful marketing programs fail here

• Repair and maintenance a challenging feature

• Not as accessible or common in other countries

• Instruction manuals may need to be adapted

• Countries have varying literacy and education levels

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Marketing Consumer Services Globally 1 of 3

Adaptation of Services
• Much of advice used for products can still be applied
• But, services are different because they are intangible
• Intangibility results in three other important characteristics
1. Inseparable: creation cannot be separated from consumption
2. Heterogeneous: individually produced and is thus unique
3. Perishable: must be consumed simultaneously with creation

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Marketing Consumer Services Globally 2 of 3

Services Opportunities in Global Markets
• Tourism
• Transportation
• Financial services
• Education
• Telecommunications
• Entertainment
• Information
• Healthcare

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Marketing Consumer Services Globally 3 of 3

Barriers to Entering Global Markets
• Services inseparable; exporting not an entry option
• Licensing, franchising, direct investment are main methods
• Four barriers:
1. Protectionism
2. Restrictions on transborder data flow
3. Protection of intellectual property
4. Cultural barriers and adaptation

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Brands in International Markets 1 of 5

Global Brand
• Worldwide use of name, term, sign, symbol, design
• Used to identify goods and services of one seller
• Differentiates seller from its competitors

• Brand most valuable resource a company has

• Name encompasses years of advertising, goodwill,
quality evaluations, product experience, and
other attributes
• Image at very core of business identity and strategy
• Importance and impact varies by culture

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Brands in International Markets 2 of 5

Global Brands
• Companies with strong brands try to globalize them
• Ideally gives company uniformly positive association worldwide
• Enhances efficiency and cost of introducing new products
• Internet and technology accelerates brand globalization

• Not all companies believe single global approach is best

• Those with already established country‐specific brands might
not want to abandon them; risky and costly
• Brand extensions in global markets are sometimes difficult

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Brands in International Markets 3 of 5

National Brands
• Country‐specific brands
• Multinationals must consider cultural factors
• Increased nationalism in some countries impacts brand
• Acceptance varies across regions, within countries, and
depending on knowledge of brand

Many companies mix national and global branding

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Brands in International Markets 4 of 5

Country‐of‐Origin Effect (COE) and Global Brands

• Influence that country of manufacture, assembly, or
design has on consumer’s perception of product
• Reaction influenced by country, product, and image of brands
• Ethnocentrism impacts attitudes toward foreign products
• Stereotypes against status of economy: industrial, developing
• Fads for attractiveness; “xenocentrism”

• Good marketing can overcome a negative COE

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Introduction
Products in International Markets
• Consumer goods (business‐to‐consumer)
• Industrial goods (business‐to‐business)
• Issues of standardization versus adaptation not as relevant
• Marketing across country markets more similar than different
• Industrial products are used in creating other goods and services
• Industrial consumers are seeking profit

• Business services highly competitive growth market

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Demand in Global Business‐to‐Business

(B2B) Markets 1 of 5
Industrial market demand
1. By nature more volatile
2. Affected by stages of industrial and
economic development in country
3. Level of technology of products and services makes
their sale more appropriate in some countries than
others

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Quality and Global Standards 1 of 3

Perception of quality includes many factors

• Level of technology reflected in product
• Compliance with standards that reflect customer needs
• Support services and follow‐through
• Price relative to competitive products

Industrial product quality can vary across cultures

• Even in most technologically developed countries
• B2B marketers frequently misinterpret concept of quality

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Quality and Global Standards 2 of 3

Quality Is Defined by the Buyer

• Assessed in terms of fulfilling specific expectations
• Product or service expectations vary by buyer and culture
• ‘Good quality’ different depending on stage of development
• Design to fit needs of market and withstand climate variations

• Price–quality relationship important to consider

• Meet basic expectations of specific market, but no more
• Don’t spend money producing features that aren’t needed

• Lack of universal standards a challenge in sales

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Business Services 1 of 2

After‐sales Services
• Prompt delivery, installation, part replacements/repairs
• Customer training: may be deciding factor for buyer
• Almost always more profitable than initial sale
• Builds company reputation; leads to sales with new businesses
• Creates customer loyalty; repeat sales with current clients

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Business Services 2 of 2

Other Business Services

• Trade creates demands for international services
• Most entail company entering international market to service
local clients abroad
• Some tangible and can be exported, but subject to barriers

• Client followers
• Global markets continuing to grow
• More demand for business services
• More service companies seeking international markets

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