Chapter 11: Product Management Flashcards
1
Q
Standardization vs. Adaptation: Factors affecting product-adaptation decisions
A
- Regional, country, or local characteristics
- Product characteristics
- Company considerations
2
Q
Regional, country, or local characteristics
A
- Government Regulations
- Nontariff barriers
- Customer characteristics, expectations, and preferences
- Purchase Patterns
- Culture
- Economic status of potential users
- Stage of economic development
- Competitive offerings
- Climate and geography
3
Q
Product Characteristics
A
- Product constituents
- Brand
- Packaging
- Physical form or appearance (e.g. size, styling, color)
- Function, attributes, features
- Method of operation or usage
- Durability or quality
- Service
- Country of origin
4
Q
Company Consideration
A
- Profitability
- Market opportunity (market potential, product-market fit)
- Cost of adapting
- Policies (e.g. commonality, consistency)
- Organization
- Resources
5
Q
The market environment: Government regulations
A
The most important factor contributing to product adaptation.
- E.g., Some governments require returnable containers for all beer and soft drinks, which seriously restricts foreign brewers whose businesses are not large enough to justify the logistics system necessary to handle returnables.
6
Q
The market environment: Nontariff barriers
A
Include product standards, testing or approval procedures, subsidies for local products, etc.
- E.g., Japan requires testing of all pharmaceutical products in Japanese labs, maintaining that these tests are needed because Japanese may be physiologically different from Americans.
7
Q
Another nontariff barrier example
A
Canadian content - the Canadian Radio-television and Telecommunications Commission (CRTC) requirements, derived from the Broadcasting Act of Canada, that radio and television broadcasters (including cable and satellite specialty channels) must air a certain percentage of content that was at least partly written, produced, presented, or otherwise contributed to by persons from Canada. It also refers to that content itself, and, more generally, to cultural and creative content that is Canadian in nature.
8
Q
The market environment: Customer characteristics, expectations, and preferences
A
- Even when the benefits sought are similar, the physical characteristics of customers may dictate product adaptation.
- E.g., Oreo cookie: too sweet, and too large package for Chinese consumers.
- Solution: reformation and re-redesign of packaging.
9
Q
The market environment: Economic development
A
As a country’s economy advances, buyers demand better products
10
Q
The market environment: Reverse innovation
A
To meet demands of different countries.
- E.g., 10 – 20 USD cellphone in Africa
- Solar powered TV sets
11
Q
The market environment: Climate and geography
A
- E.g., marketing chocolate products is challenging in hot climates
- Product has to be protected against longer transit times and longer shelf life
- Care must be taken to ensure that no nonallowed preservatives are used
12
Q
Product Characteristics: Product standardization or adaptation caries by product categories:
A
- Consumer nondurables (e.g., food products) show high amount of sensitivity toward differences in national tastes and habits
- Consumer durables (e.g., cameras and home electronics) are more homogeneous, but with some adaptations (e.g., TV technical system)
- Industrial products tend to be more shielded from cultural influences.
13
Q
Product Characteristics: Product constituents and content
A
- Should not be in violation of legal requirements or religious or social customs
- E.g., in deference to Hindu and Muslim beliefs, McDonald’s burgers are made with mutton in India
14
Q
Product Characteristics: Translations of brand names
A
- Translation
- Transliteration – phonetic translation: same sound but likely different meaning
- Transparency (e.g., Sony)
- Trans-culture (e.g., Vodkas)
15
Q
Product Characteristics: Packaging
A
- Product category requires packaging materials and transportation mode (e.g., seafood product)
- Packaging size
16
Q
Product Characteristics: Appearance
A
- Color plays an important role in the way consumers perceive a product
- E.g., African nations prefer bold colors
17
Q
Product Characteristics: Method of operation
A
- The product as it is offered in the domestic market may not be operable in the foreign markets
- E.g., electric power systems
- E.g., software in local language (proven to be weapon in fight against software piracy)
18
Q
Product Characteristics: Quality
A
- Western exporters must emphasize quality in their strategies because they cannot compete on price alone
- Marketers may seek endorsement of their efforts from governmental or consumer organizations (e.g., Korean cars become more popular because of high J.D. Power car rankings)
19
Q
Product Characteristics: Service
A
Obtaining, training, and holding a sophisticated engineering or repair staff overseas is not easy
20
Q
Product Characteristics: Country-of-origin effects
A
- Has considerable influence on the quality perception of a product
- Can be positive or negative
- E.g., many consumers around the world perceive Nokia as a Japanese brand
21
Q
Company considerations
A
- Product adaptation
- Decision to adapt
22
Q
Product adaptation depends on the firm’s ability to:
A
- Control costs (i.e., “Is it worth it?”)
- Correctly estimate market potential
- Secure long-term profitability
23
Q
Decision to adapt should be preceded by…
A
a thorough analysis of the market.
24
Q
Stages of the product development process:
A
- Idea generation
- Screening
- Product and process development
- Test marketing
- Commercialization
25
Global product development: The location of R&D activities
- In truly global companies, the location of R&D is determined by the existence of specific skills.
- R&D centers are seen as highly desirable investments by host governments
- Developing countries are increasingly demanding R&D facilities as a condition of investment
26
Global product launch
Introducing the product into countries in three or more regions within a narrow time frame
27
Benefits of global product launch:
- It permits the company to showcase its technology in all major markets at the same time
- It solves the dilemma of having old models available in some markets while customers know of the existence of the new product
- With the product development costs increasing and product life cycles shortening, global product launch becomes even more beneficial
28
Characteristics of global brands
- Carry a strong quality signal
- Cater to the need of feeling cosmopolitan
- Reflect the professional and personal status of the user
- Use their monetary and human resources to benefit society
29
Counterfeit goods
Goods bearing an unauthorized representation of a trademark, patented invention, or copyrighted work that is legally protected in the country where it is marketed
30
What is the core of a firm's international operations?
A product or service
31
How can products be differentiated>
- Composition
- Country of origin
- Tangible features such as packaging or quality
- Augmented features such as warranties
32
What is an example of core product?
The component of a personal computer or the recipe for a soup
33
Elements of a product
- Core product
- Tangible product
- Intangible product
- Augmented product
34
Core product
Core benefit or service
35
Tangible product
- Packaging
- Brand Name
- Quality
- Aesthetics
36
Intangible Product
- Positioning
- Country of Origin
37
Augmented product
- Installation
- Delivery and Credit
- After-Sale Service
- Warranty
38
A firm has four basic alternatives in approaching international markets:
1) selling the product as is in the international marketplace
2) modifying products for different countries or regions
3) designing new products for foreign markets
4) incorporating all the differences into one flexible product design and introducing a global product.
39
In deciding the form in which the product is to be marketed abroad, the firm should consider three sets of factors:
1) the market(s) that have been targeted
2) the product and its characteristics
3) company characteristics, such as resources and policy.
40
For most firms, what is the key question linked to adaptation?
Whether the effort is worth the cost involved—in adjusting production runs, stock control, or servicing, for example—and the investigative research involved in determining, for example, features that would be most appealing.
41
What is the single most important factor contributing to product adaptation?
Government regulations
42
Why have nontariff forms of protection increased?
Because of a substantial decrease in tariff barriers.
43
ISO 9000
A set of technical standards designed to offer a uniform way of determining whether manufacturing plants and service organizations implement and document sound quality procedures.
44
ISO 14000
The standards, which basically require that a firm design an environmental management system, do provide benefits for the adopters such as substantial efficiencies in pollution control (e.g., packaging) and a better public image.
45
Product decisions of consumer-product marketers are especially affected by...
- Local behavior
- Tastes
- Attitudes
- Traditions
46
Three groups of factors determine cultural and psychological specificity in relation to products and services:
- Consumption patterns
- Psychosocial characteristics
- General cultural criteria
47
Positioning
refers to consumers’ perception of a brand as compared with competitors’ brands—the mental image that a brand, or the company as a whole, evokes.
48
What is the most important thing to focus on in a product when considering climate and geography?
Packaging
49
The international marketer must consider two sometimes contradictory aspects of packaging for the international market.
- On the one hand, the product itself has
to be protected against longer transit times and possibly for longer shelf life
- On the other hand, care has to be taken that no non-allowed preservatives are used.
50
What must the packaging be able to do?
The packaging must be able to withstand the longer distribution channels and the longer time required for distribution, so the product will not arrive in stores in poor condition and can be sold properly. If a product is exposed to a lot of sunshine and heat as a result of being sold on street corners, as may be the case in developing countries, marketers are advised to use special varnishing or to gloss the product wrappers. Without this, the coloring may fade and make the product unattractive to the customer.
51
What are product characteristics?
The inherent features of the product offering, whether actual or perceived.
52
Brand
The term brand refers to a name, term, symbol, sign, or design used by a firm to differentiate its offerings from those of its competitors.
53
What is the difference between brand name and brand mark?
The brand name is the vocalizable part of the brand, the brand mark the nonvocalizable part
54
Trademark
refers to the legally protected part of the brand, indicated by the symbol ®.
55
Where is the use of standardization in branding strongest?
In culturally similar markets
56
How is the standardization of products and brands different?
Standardization of product and brand do not necessarily move hand in hand; a regional brand may well have local features, or a highly standardized product may have local brand names.
57
Transliteration
This requires the testing of an existing brand name for connotative meaning in the language of the intended market.
58
Transparency
This can be used to develop a new, essentially meaningless brand name to minimize trademark complexities, transliteration problems, and translation complexities. “Sony” is an example.
59
Transculture
This means using a foreign-language name for a brand. Vodkas, regardless of where they originate, should have Russian-sounding names or at least Russian lettering, whereas perfumes should sound French.
60
Packaging serves three major functions:
- Protection
- Promotion
- User convenience
61
What do package aesthetics involve?
Prudent choice of colors and package shapes.
62
What are some examples of how colors are perceived?
Red is associated with death or witchcraft in some countries. White is losing popularity in industrialized countries because name brands do not want to be confused with generic products, usually packaged in white. Black, on the other hand, is increasingly popular and is now used to suggest quality, excellence, and “class.”
63
Package size varies according to...
Purchasing patterns and market conditions.
64
How do the four Rs affect packaging dimensions?
the consumer mandate for marketers to make products more environmentally friendly also affects the packaging dimension, especially in terms of the Four Rs: redesign, reduce, recycle, and reuse.
65
What kind of adaptations are more common in consumer marketing than in industrial marketing?
- Product styling
- Color
- Size
- Other appearance features
66
How does color play an important role?
Color plays an important role in the way consumers perceive a product, and marketers must be aware of the signal being sent by the product’s color. Color can be used for brand identification, colors communicate in a subtle way in developed societies and have more direct meaning in more traditional societies.
67
Why must many Western exporters emphasize quality?
Because they cannot compete on price alone.
68
How is the country of origin typically communicated in a product?
By the phrase "Made in (country)"
69
How does the country of origin affect the perception of quality?
The manufacture of products in certain countries is affected by a built-in positive or negative stereotype of product quality. These stereotypes become important when important dimensions of a product category are also associated with a country’s image.
70
Product characteristics
- Product constituents and content
- Branding
- Packaging
- Appearance
- Method of operation or usage
- Quality
- Service
- Country-of-origin effects
71
What is the main goal or the product development process?
It is not to develop a standard product or product line but to build adaptability into products and product lines that are being developed to achieve worldwide appeal.
72
Where does the product development process begin?
With idea generation
73
Where do ideas come for product development?
Ideas may come from within the company.
74
Who provides the best source for ideas of new products?
Customers
75
Lead users
Companies, organizations, or individuals who are ahead of trends or have needs that go beyond what is available at present.
76
Development phases
- Idea generation
- Screening
- Product and process development
- Scale-up
- Commercialization
77
What is CAD?
Computer-aided design
78
Global Program Management
Page 413 textbook
79
In Global Program Management, what is the managing unit responsible for accomplishing?
1) single-point worldwide technical development and design of a new product that conforms to the global design standard and global manufacturing and procurement standards, as well as transmittal of the completed design to each affected unit
2) all other activities necessary to plan, develop, originate, introduce, and support the product in the managing unit, as well as direction and support to affected units to ensure that concurrent introductions are achieved
3) integration and coordination of all global program activities.
80
In Global Program Management, what are the affected units responsible for achieving?
1) identification of unique requirements to be incorporated in the product goals and specifications as well as in the managing unit’s technical effort
2) all other activities necessary to plan, originate, introduce, and support products in affected units
3) identification of any nonconcurrence with the managing unit’s plans and activities.
81
Firms using worldwide product management are better able to develop products that can be quickly introduced into any market. Foreign-market introduction can take the form of either production or marketing abroad. In general, the length of the lag will depend on:
1) the product involved, with industrial products having shorter lags because of their more standardized general nature
2) degree of newness
3) customer characteristics—both demographics and psychographic
4) geographic proximity
5) firm-related variables—the number and type of foreign affiliations as well as overall experience in global marketing
6) degree of commitments of resources.
82
Investments for R&D abroad are made for four general reasons:
1) to aid technology transfer from parent to subsidiary
2) to develop new and improved products expressly for global markets
3) to develop new products and processes for simultaneous application in world markets of the firm
4) to generate new technology of a long-term, exploratory nature.
83
Center of excellence
an organizational unit that incorporates a set of capabilities that have been identified as an important source of value creation with the explicit intention that these capabilities be leveraged by and disseminated to other parts of the firm.
84
Depending on the product, testing procedures range from...
Reliability test in the pilot plant to mini launches, from which the product's performance in world markets will be estimated.
85
Reasons for product failure are:
- Lack of product distinctiveness
- Unexpected technical problems
- Mismatches between functions
86
Controlled market tests
allow companies to assess an item’s sales potential in a real-world environment with real consumers making real purchases. With a controlled market test design, the marketing plan can be replicated and year-one sales volume is forecasted from a robust sample of recognized food, drug, or mass merchandise retailers.
87
Simulated test markets
offer simulation under realistic conditions from a 360° marketing vantage point. Innovations need to establish themselves
against the competition in terms of advertising, shelf placement, price, and product experience.
88
Vitality lab
provides a directional gauge of the initiative’s potential in a real-world environment, with real consumers making real purchases. Sales rates and consumer responses to the initiative can determine if another, more precise level of in-store testing is warranted or if a particular issue needs to be addressed prior to rollout.
89
What is a global product launch?
The introduction of a product into a country in three or more regions within a narrow time frame.
90
What is the "lame duck" dilemma
having old models available in some markets while customers know of the existence of the new product.
91
Global Product Development
- The product development process
- The location of R&D activities
- The organization of global product development
- The testing of new product concepts
- The global product launch
92
Why are brands important?
Brands are important because they shape customer decisions and, ultimately, create economic value. The brand is a key factor behind the decision to purchase in both consumer and business-to-business situations
93
Strong brands are able to charge a price premium of...
19%
94
The BrandAsset Consulting model for valuing brands is based on four key pillars that measure consumer sentiment and usage
- “Energized differentiation” contributes to pricing power and consideration
- “relevance” builds consideration and trial
- “esteem” builds loyalty and, along with
- “knowledge,” moves sales.
95
Two dimensions to global brands
1) consistency of brand strength (differentiation, relevance) and brand stature (esteem and knowledge)
together
2) consistency of brand meaning.
96
Global marketers have three choices for branding within the global, regional, and local dimensions:
1) have brands that feature the corporate
name
2) have family brands for a wide range of products or product variations
3) have individual brands for each item in the product line.
97
Global brands
Global brands are those that reach the world’s megamarkets and are perceived as the same brand by consumers and internal constituents.
98
Consumers all over the world associate global brands with three characteristics and evaluate their performance on them when making purchase decisions
- Strong quality
- Compete on emotion, catering to aspirations that cut across cultural differences
- Involvement in solving social problems linked to what they are marketing and how they conduct their business
99
There are three main implications for the marketing manager to consider.
1. Dont hide globality
2. Tackle home country biases
3. Satisfy the basics. What is critical is creating differentiation and familiarity as well as the needed margins and growth.
100
Three approaches for purely local brands my work:
- a penetration price approach
- a cultural approach positioning the product as a true defender of local culture
- a “chameleon” approach in which the brand tries not to look local.
101
Private-brand goods
The intermediaries own branded products or "store brands."
102
Two general approaches to private brand goods:
- umbrella branding, where a number of products are covered using the same brand (often the intermediary’s name)
- separate brand names for individual products or product lines.
103
Private brand strategies
- No participation
- Capacity filling
- market control
- Competitive leverage
- Chief source of business
- Dedicated producer
Full char on page 424
104
Counterfeit goods
Any goods bearing an unauthorized representation of a trademark, patented invention, or copyrighted work that is legally protected in the country where it is marketed.
105
What is WIPO?
World Intellectual Property Organization
106
Four types of action against counterfeiting
- Legislative action
- Bilateral and multilateral negotiations
- Joint private-sector action
- Measures taken by individual companies
107
What is GSP?
Generalized System of Preferences
108
Measure to combat counterfeiting
Page 426
109
Purpose of the decision to alter the product model
The decision whether to have product adaptation or standardization
110
Two questions that the decision model asks
Should we adapt our product?
If yes, how should we adapt?
111
What is the macro environment analysis?
PESTD (political, economic, social, technological, demographic)
112
Nontariff barriers: local content
If you want to sell your products in our country make sure that the raw materials are from our country or that the products and parts are manufactured in our country.
113
How does the adaptation level change from consumer nondurables, to consumer durables, to industrial products
Adaptation is more for consumer nondurables, less for consumer durables, and much less for industrial products.
114
Translation
The meaning does not change, but the sound does
115
Transliteration
The meaning changes but same sound.
E.g. Subway translates the same in China but the word means something different.
116
Trans-culture
The name sounds like it is from another country but it is actually from our own country.
E.g. Haagen dazs sounds European but it is American
117
Transparency
There is not meaning to the word so there is no confusion or misunderstanding.
118
What does the method of operations look like between countries?
Even for the same product, the operating system must be different.
119
What should be emphasized more, quality or price?
We should emphasize quality and not price
120
What is a solution if COO effect is negative?
We should change our entry mode to FDI.
121
What is one way of paying attention to after-sale service?
You can send expats from Canada to the host country
122
What costs should we control in product adaptation?
Our average total costs (ATC)
123
What process are the stages of the product development process identical to?
NPD (new product development)
124
How many new products fail?
80% of new products fail
125
How can we be so confident that our new product will succeed even if most of new products fail?
Because among all 7 steps in the stages of the product development process, except for business analysis, we successfully get customers involved.
126
