Chapter 10 Product and Brand Decisions

Introduction to Brands and Products

Brand and product concepts Local, international, and global brands Product design issues Attitudes toward foreign products Strategic alternatives New product issues
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Basic Product Concepts

A product is a good, service, or idea
Tangible attributes Intangible attributes

Product classification
Consumer goods Industrial goods

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Product Types
Buyer orientation
Amount of effort expended on purchase Convenience Preference Shopping Specialty

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Brands
Bundle of images and experiences in the customers mind A promise made by a particular company about a particular product A quality certification Differentiation between competing products The sum of impressions about a brand is the brand image
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Brand Equity
The added value that accrues to a product as a result of investments in the marketing of the brand An asset that represents the value created by the relationship between the brand and customer over time

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Local Products and Brands

Brands that have achieved success in a single national market Represent the lifeblood of domestic companies Entrenched local products/brands can be a significant competitive hurdle to global companies
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International Products and Brands

Offered in several markets in a particular region
Euro brands

The Smart car was developed by DaimlerChrysler for the European market.
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Global Products and Brands

Global products meet the wants and needs of a global market and are offered in all world regions Global brands have the same name and similar image and positioning throughout the world

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Global Products and Brands

A multinational has operations in different countries. A global company views the world as a single country. We know Argentina and France are different, but we treat them the same. We sell them the same products, we use the same production methods, we have the same corporate policies. We even use the same advertisingin a different language, of course. Alfred Zeien Former Gillette CEO
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Global Brand Characteristics

Quality signalallows a company to charge a premium price in a highly competitive market Global mythmarketers can use global consumer culture positioning to link the brand identity to any part of the world Social responsibilityshows how a company addresses social problems
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Global Products and Brands

Global brands are not the same as global products
iPod = brand Mp3 player= product

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Branding Strategies
Combination or tiered branding allows marketers to leverage a companys reputation while developing a distinctive identity for a line of products
Sony Walkman

Co-branding features two or more company or product brands

NutraSweet and Coca-Cola Intel Inside
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Brand Extension
Brand acts as an umbrella for new products
Ex: The Virgin Group
Virgin Entertainment: Virgin Mega-stores and MGM Cinemas Virgin Trading: Virgin Cola and Virgin Vodka Virgin Radio Virgin Media Group: Virgin Publishing, Virgin Television, Virgin Net Virgin Hotels Virgin Travel Group: Virgin Atlantic Airways, Virgin Holidays
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Worlds Most Valuable Brands, 2006

1. 2. 3. 4. 5. 6. 7. 8. Coca-Cola Microsoft IBM GE Intel Nokia Toyota Disney 9. McDonalds 10. Mercedes-Benz 11. Citi 12. Marlboro 13. Hewlett-Packard 14. American Express 15. BMW 16. Gillette 17. 18. 19. 20. 21. 22. 23. 24. 25. Louis Vuitton Cisco Honda Samsung Merrill-Lynch Pepsi Nescafe Google Dell

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Global Brand Development

Questions to ask when management seeks to build a global brand
Does this move fit the company and/or its markets? Will anticipated scale economies materialize? How difficult will it be to develop a global brand team? Can a single brand be imposed on all markets successfully?
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Global Brand Development

Global brand leadership
Using organizational structures, processes, and cultures to allocate brand-building resources globally, to create global synergies, and to develop a global brand strategy that coordinates and leverages country brand strategies

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Global Brand Development

Create a compelling value proposition Think about all elements of brand identity and select names, marks, and symbols that have the potential for globalization Research the alternatives of extending a national brand versus adopting a new brand identity globally Develop a company-wide communication system
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Global Brand Development

Develop a consistent planning process Assign specific responsibility for managing branding issues Execute brand-building strategies Harmonize, unravel confusion, and eliminate complexity
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This Is Your Brain . . . .

Big brand requires less brain work (top) than weaker one.
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Slide 11-90

Local versus Global Products and Brands: A Needs-Based Approach

Self-actualization External/Internal Esteem Social Safety Physiological
Maslows hierarchy of needs
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Asian Hierarchy of Needs

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Country of Origin as Brand Element

Perceptions about and attitudes toward particular countries often extend to products and brands known to originate in those countries
Japan Germany France Italy
French perfume

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Packaging
Consumer packaged goods refers to products
whose packaging is designed to protect or contain the product during shipping, at retail, or point of use Eco-packaging is key because package designers must address environmental issues Offers communication cues that provide consumers with a basis for making a purchase decision

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Labeling
Provides consumers with various types of information Regulations differ by country regarding various products
Health warnings on tobacco products American Automobile Labeling Act clarifies the country of origin and final assembly point European Union requires labels on all food products that include ingredients from genetically modified crops
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Aesthetics
Global marketers must understand the importance of visual aesthetics Aesthetic styles (degree of complexity found on a label) differ around the world

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Product Warranties
Express warranty is a written guarantee that assures the buyer is getting what he or she paid for or provides a remedy in case of a product failure Warranties can be used as a competitive tool

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Extend, Adapt, Create: Strategic Alternatives in Global Marketing

Extensionoffering product virtually unchanged in markets outside of home country Adaptationchanging elements of design, function, and packaging according to needs of different country markets Creationdeveloping new products for the world market
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Global Product Planning: Strategic Alternatives Product

Same Different

Communication
Different

Strategy 2: Product extension communication adaptation

Strategy 4: Dual adaptation

Same

Strategy 1: Dual extension

Strategy 3: Product adaptation communication extension

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Product Invention
Strategy 5
Important for reaching mass markets in less industrialized nations and certain segments industrialized countries
Hand-cranked radios for areas with no electricity Total toothpaste by Colgate uses global benefit segmentation
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How to Choose a Strategy

Two errors that management makes in choosing a strategy
NIH (not invented here) syndrome means managers ignore the advancements of subsidiaries overseas Managers impose policies upon subsidiaries because they assume what is right for customers in one market is right in every market
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How to Choose a Strategy

The product itself, defined in terms of the function or need it serves The market, defined in terms of the conditions under which the product is used, preferences of potential customers, and ability to buy the product Adaptation and manufacturing costs the company will incur
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New Products in Global Marketing

Pursue opportunities in competitive arenas of global marketplace Focus on one or only a few businesses Active involvement from senior management Ability to recruit and retain best employees Understand the importance of speed in bringing product to market
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Identifying New Product Ideas

What is a new product?

New to those who use it or buy it New to the organization New to a market
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The International New Product Department

How big is the market for this product at various prices? What are the likely competitive moves in response to our activity? Can we market the product through existing structure? Can we source the product at a cost that will yield an adequate profit? Does product fit our strategic development plan
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Testing New Products

When do you test a new product?
Whenever a product interacts with human, mechanical, or chemical elements because there is the potential for a surprising and unexpected incompatibility

Test could simply be observing the product being used within the market
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Lets Discuss . . .
1. What is the difference between a product and a brand?
A product can be defined as a collection of tangible and intangible attributes. The former include physical features, design attributes, and packaging. The chrome on a Harley-Davidson motorcycle is a physical attribute, as are cup holders in a minivan. Intangible product attributes include such things as reputation, mystique, or a distinguished heritage. A brand is defined in the text as a symbol about which consumers have beliefs or perceptions. A more complete definition would describe a brand as a complex bundle of images, promises, and experiences in the customers mind that represent a promise by a particular company about a particular product. In other words, brand represents the relationship that marketing has established with a customer.

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Lets Discuss . . .
2. How do local, international, and global products differ? Cite examples.
A local product or brand is perceived to have potential in a single national or regional market. Coca-Colas Georgia-brand canned coffee is an example cited in the text. Vegemite is a vegetable food spread popular only in Australia. I

International products or brands are those originally intended for a single

home-country market or a specific geographic region; however, marketers are aware of extension possibilities. For example, GE recently experienced success in exporting full-sized refrigerators to Japan where consumers have responded favorably to the simple designs. A typical Japanese refrigerator from Matsushita has three doors and a special chilling compartment for fish. The Smart car is an example of an international product; it was specifically designed for the needs of the European market. Once the European launch was successful, Smart was exported to the U.S. and other markets.
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Lets Discuss . . .
3. What are some of the elements that make up a brand? Are these elements tangible or intangible?
The components of a brand image are shown in Figure 10-1. At the heart of the brand is a persons expertise with it. In addition, the brand name and logo, company name, packaging, after-sales service, and attitudes of family and friends help define the brand. These elements are intangible; however, many brands include tangible aspects. Examples include the contoured Coke bottle, the three-pronged Mercedes hood ornament.

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Brands

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Lets Discuss . . .
4. What criteria should global marketers consider when making product design decisions?
A standardized global product platform can offer potential cost savings. Customer preferences, costs, country laws and regulations, and environmental compatibility are all noted in the text as factors affecting design decisions. For example, Europes Single Market means a common harmonized standard for many products. This creates an opportunity for many companies to design pan-European products, subject to remaining cultural differences between European countries. However, product safety provisions in Europe are still established on a country-by-country basis.

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Lets Discuss . . .
5. How can buyer attitudes about a products country of origin affect marketing strategy?
If buyers feel positive about a country, a company should consider playing up the country-of-origin in its marketing communications. For example, Volkswagens Fahrvehrgnugen campaign from the early 1990s proclaimed the companys German roots, even though many of the cars it sells are assembled in low-wage countries like Mexico.

Made in U.S.A. is part of the appeal of Harley-Davidson; similarly, Switzerland is synonymous with high-quality watches in various price ranges.
Russia and the South Africa are two countries in which policy makers and business leaders have an uphill battle in combating negative country-of-origin perceptions. While Russia is synonymous with high-quality vodka (a fact played up in ads for Stolichnaya), few other consumer products benefit from an association with the former Communist country. Similarly, South Africa produces very fine wines at attractive prices, but American consumers have been unresponsive even though apartheid has ended. 10-42

Lets Discuss . . .
6. Identify several global brands. What are some of the reasons for the global success of the brands you chose?
Coca-Cola, Kodak, Sony, Toyota, Adidas, Mercedes-Benz, or Nike. As discussed in the text, Nike has tremendous brand vitality, due in part to the use of celebrity athletes in its ads. Was there potential long-term damage to the Coke brand stemming from the product recalls in Europe during summer 1999?

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Lets Discuss . . .
7. Compare and contrast the three categories of innovation discussed in the chapter;
Products that create new markets and consumption patterns are called discontinuous innovations (e.g., the VCRs impact is explained by time shifting: it freed viewers from programming schedules). Dynamically continuous innovations refer to products that share certain features with earlier generations while incorporating new features (e.g., Sony's Walkman). Such products cause relatively smaller disruptions of previously existing consumption patterns. Continuous innovation refers to products that are new and improved versions of existing ones and require less R&D expenditure to develop than dynamically continuous innovations. Continuous innovations cause minimal disruption of existing consumption patterns and require the least amount of learning.
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Lets Discuss . . .
7. Which type of innovation do flat panel widescreen HDTVs represent?

The Flat-screen TV is a continuous innovation although it represents a departure from the cathode-ray tube (CRT) technology. Thanks to innovative liquid-crystal display (LCD) and plasma-gas technologies used to manufacture screens for personal computers, TV sets are sleek, sexy, and cool. With their sharper, brighter pictures, they enhance the enjoyment of viewing widescreen DVD movies at home.

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Headlines
U.S. Repels British Invasion
Immigration policy collides with surge of U.K. bands, scuttling fall concert plans
This fall, the British aren't coming. Immigration restrictions are stopping some popular United Kingdom acts from reaching U.S. borders. Part of the problem, immigration specialists say: The traditional visa system isn't set up to cope with the new face of popular music. To get into the U.S., many foreign music acts need to secure a document known as the "P-1"-class visa. This visa requires acts to prove that they have been "internationally recognized" for a "sustained and 10-46 substantial" amount of time.

BMW Marketing Innovation

Consumer Target Marketing

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BMW Marketing Innovation

The most effective, efficient, and costeffective way to reach the target audience is to eliminate waste coverage. The target audience is people with an average income of $100,000 and between the ages of 25 and 35. What is waste coverage?

A web-based campaign seemed the most effec way for BMW to minimize waste coverage and concentrate on its target audience.
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BMW Marketing Innovation

Because the competition started to imitate BMWs advertising messages of outstanding quality, BMW decided they needed to come up with a unique way of reaching their target audience. BMWs agency developed the concept The Hire series. Fallons responsibility also included the way in which these movies were to be delivered to their target audience.

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BMW Marketing Innovation

It was also questionable whether the campaign should be the same throughout the world, or if it should be localized to adapt to language and consumer taste differences. What do you think? In order to attract highly recognized directors, as well as actors, BMW was willing to spend large amounts of money; the company has not disclosed he specific amount.

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BMW Marketing Innovation

Here were the rules:
(1) each short will have a different, high-profile director, (2) each short will feature a BMW and events will take place in the car, (3) the fulcrum of the action will be a nameless British driver played by Clive Owen, and (4) anything else goes.

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BMW Marketing Innovation

BMW also wanted to change its image: one of the goals was to make BMW look not only cool, but also likeable, which the brand needs to do to combat negative perceptions some people have based on old associations with the 80s style yuppie arrogance.

They researched target consumers and discovered that the average time a potential customer pays attention to any given advertisement, and discovered WHAT?

Prospective BMW consumers would spend mor paying attention to a product-related web site advertisement on television.
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BMW Marketing Innovation

Ergo, BMW decided that the campaign for The Hire would be mostly web-based, shown only at BMWFilms.com. Thus, BMW decided that the campaign for The Hire would be mostly web-based, shown only at BMWFilms.com. The movies as well as the product information available at the site would only be available in English. What are thoughts on this language decision?

The site was to focus on targeting the global customer: one uniform campaign for all 10-53 markets of the world.

BMW Marketing Innovation

To raise awareness about the campaign, BMW placed advertisements in magazines, newspapers, and other forms of printed media. Short , teaser clips of the segments were aired on television, and special promotional CDs were handed out to potential customers at promotional vents.

The first segment The Ambush was shown f first time over a high-speed Internet connect would take the average consumer ten minute download the segment - is this a concern? 10-54

BMW Marketing Innovation

It was known that the people who had highspeed Internet connections were also the people who met at least one of the criteria for being a member of the target audience. The average income of a broadband surfer falls into the $75,000+ household income range. After The Ambush came four additional segments: Chosen, The Fellow, Star, and Powder Keg. Once all five segments had been released on the Internet, BMW purchased infomercial time on Bravo and Speedvision to show off the series.
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BMW Marketing Innovation

Success Measure
Because revenue growth cannot be attributed directly to the web-based campaign, figures produced by independent sources would be the only way to measure the success rate (posttesting).
According to Nielsen/NetRatings:

68% of the audience is male 33% of surfers fall between 35-49 years of age average time spent on the site: 6 minutes

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BMW Marketing Innovation

Success Measure
According to web tracker Jupiter Media Metrix:
During its first month, the site attracted 787,000 unique viewers Average time spent: seven minutes Second month, the site attracted 856,000 unique viewers; average time spent: 16 minutes Within the first three months of the launch, six million people downloaded the movies

Based on the above figures for the BMWFilms.com campaign, do you believe that the program was a 10-57 success or not?

BMW Marketing Innovation

BMW believes that the series not only showed off the product in a way that was not just the average commercial, it was done in a way that effectively minimized waste coverage. A lot of free publicity came in the form of many major magazines.
Free publicity came in the form of many major

periodicals writing about the campaign and its new form of product advertisement, which further sparked the curiosity of consumers.
Additionally, showroom traffic increased as present

owners and suspects visited dealerships to obtain their own copies of the DVD. 10-58

BMW Marketing Innovation

Many ad gurus think that by giving each director final cut and a seven-figure ( ! ) budget, BMW ended up spending less than the average marketing campaign and, in the same breath, probably created better public relations and consequent sales than any other car campaign ever has.

The Season One directors were:

Ambush: John Frankenheimer

Chosen: Ang Lee

The Follow: Wong Kar-Wai (aka WKW) Star: Guy Ritchie

Powder Keg: Alejandro Gonzlez Irritu

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BMW Marketing Innovation

Success Measure
BMW saw their 2001 sales numbers go up 12% from the previous year. The movies were viewed over 11 million times in four months and over 100 million times over the next 4 1/2 years until its end In 2005.

Two million people registered with the website and a large majority of users who registered to the site sent film links to their friends and family causing the site to go

viral.

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BMW Marketing Innovation

End Discussion
BMW came under criticism by some of the media for turning advertising into entertainment via product placement. Now that BMW is seen by some as playing Frankenstein with the DNA of marketing communications, what does BMW see as the future impact of the success of BMWFilms.com? BMWs CMO, Jim McDowell: Im positive there will always be traditional advertising, he says, and new ways of communicating. Its a situation of horses for courses-you pick the one thats best for the task at hand and you use it in a way that maximizes its strengths. 10-61

And, now . . .
where the rubber meets the road

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