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
10-2
Basic Product Concepts
A product is a good, service, or idea
Tangible attributes
Intangible attributes
Product classification
Consumer goods
Industrial goods

10-3
Product Types
Buyer orientation
Amount of effort expended on purchase
Convenience
Preference
Shopping
Specialty

10-4
Brands
Bundle of images and experiences in the
customer’s 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
10-5
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

10-6
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
10-7
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.
10-8
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

10-9
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 advertising—in a
different language, of course.
—Alfred Zeien Former Gillette CEO
10-10
Global Brand Characteristics
Quality signal—allows a company to
charge a premium price in a highly
competitive market
Global myth—marketers can use global
consumer culture positioning to link the
brand identity to any part of the world
Social responsibility—shows how a
company addresses social problems
10-11
Global Products and Brands
Global brands are
not the same as
global products
iPod = brand
Mp3 player=
product

10-12
Branding Strategies
Combination or tiered branding allows
marketers to leverage a company’s 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
10-13
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
10-14
World’s Most Valuable Brands, 2006
1. Coca-Cola 9. McDonald’s 17. Louis Vuitton
2. Microsoft 10. Mercedes-Benz 18. Cisco
3. IBM 11. Citi 19. Honda
4. GE 12. Marlboro 20. Samsung
5. Intel 13. Hewlett-Packard 21. Merrill-Lynch
6. Nokia 14. American Express 22. Pepsi
7. Toyota 15. BMW 23. Nescafe
8. Disney 16. Gillette 24. Google
25. Dell

10-15
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?

10-16
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

10-17
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
10-18
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

10-19
 This Is Your Brain . . . .

Big brand requires less brain work (top) than weaker one.
10-20
Slide 11-90
Local versus Global Products and
Brands: A Needs-Based Approach
Self-actualization
External/Internal
Esteem
Social

Safety

Physiological
Maslow’s hierarchy of needs 10-21
Asian Hierarchy of Needs

10-22
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
French perfume
Japan
Germany
France
Italy
10-23
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
10-24
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
10-25
Aesthetics
Global marketers must understand the
importance of visual aesthetics
Aesthetic styles (degree of complexity
found on a label) differ around the
world

10-26
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

10-27
Extend, Adapt, Create: Strategic
Alternatives in Global Marketing
Extension—offering product virtually
unchanged in markets outside of home
country
Adaptation—changing elements of design,
function, and packaging according to needs
of different country markets
Creation—developing new products for the
world market

10-28
 Global Product Planning: Strategic
Alternatives Product
Same Different
Communication Strategy 2: Strategy 4:
Different Product extension Dual adaptation
communication
adaptation

Same Strategy 3:
Strategy 1: Product adaptation
Dual extension communication
extension
10-29
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

10-30
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
10-31
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

10-32
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

10-33
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
10-34
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

10-35
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

10-36
 Let’s 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 customer’s
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.

10-37
 Let’s 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-Cola’s 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.
10-38
 Let’s 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 person’s 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.

10-39
Brands

10-40
 Let’s 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, Europe’s 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.

10-41
 Let’s Discuss . . .
5. How can buyer attitudes about a product’s 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, Volkswagen’s
“Fahrvehrgnugen” campaign from the early 1990s proclaimed the company’s
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
 Let’s 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?

10-43
 Let’s 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 VCR’s 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.

10-44
 Let’s 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 wide-
screen DVD movies at home.

10-45
 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 substantial" amount of
time. 10-46
BMW Marketing Innovation

Consumer Target
Marketing

10-47
 BMW Marketing Innovation
The most effective, efficient, and cost-
effective 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 effective

way for BMW to minimize waste coverage and
concentrate on its target audience.

10-48
 BMW Marketing Innovation
Because the competition started to
imitate BMW’s advertising messages of
outstanding quality, BMW decided they
needed to come up with a unique way of
reaching their target audience.
 BMW’s agency developed the concept “The
Hire” series. Fallon’s responsibility also
included the way in which these movies
were to be delivered to their target
audience.
10-49
 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.
10-50
 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.

10-51
 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 80’s 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 more tim

paying attention to a product-related web site than
advertisement on television.
10-52
 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
markets of the world. 10-53
 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 for t
first time over a high-speed Internet connection;
would take the average consumer ten minutes to
download the segment - is this a concern?10-54
 BMW Marketing Innovation
It was known that the people who had high-speed 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.

10-55
 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 (post-testing).

 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

10-56
 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
10-59
 Powder Keg: Alejandro González Iñárritu
 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. 10-60
 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?

 BMW’s CMO, Jim McDowell: “I’m positive there

will always be traditional advertising,” he says,
“and new ways of communicating. It’s a
situation of horses for courses-you pick the one
that’s 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

10-62