Products and Services for Consumers

1. Products and Services for Consumers Chapter 12

2. Learning Objectives Why offering a product suitable for the intended market? The relationship between product acceptance and the market into which it is introduced The importance of quality and how quality is defined Country-of-origin effects on product image Important product attributes to ensure acceptance

3. Product Acceptance and Adaptation • What is quality? Who defines the quality? • Quality can be defined on two dimensions • Market-perceived quality (consumer perceptions) • Performance quality • Adaptation requirements • Legal Economic • Political • Technological • Climate • Other includes culture, change in customer tastes and preferences

4. Products and Culture • A product is the sum of the physical and psychological satisfactions it provides the user • Primary function • Psychological attributes • The need for cultural adaptation is often necessary, affected by how the product conforms • Norms • Values • Behavior patterns

5. Product Adaptation Green Marketing – to identify concern with the environmental consequences of a variety of marketing activities. What are the critical issues in green marketing? -packaging ecolabelling (e.g., Hoover, Electrolux washing machine). Control solid waste (e.g., P&G, BodyShop)

6. Innovative Products and Adaptation • Determining the degree of newness as perceived by the intended market • Diffusion • Established patterns of consumption and behavior • Foreign marketing goal • Gaining the largest number of consumers in the market • In the shortest span of time • Probable rate of acceptance

7. Diffusion of Innovations • Crucial elements in the diffusion of new ideas • An innovation • Which is communicated through certain channels • Over time • Among the members of a social system • The element of time • Variables affecting the rate of diffusion of an object • Degree of perceived newness • Perceived attributes of the innovation • Method used to communicate the idea

8. Five Characteristics of an Innovation • Relative advantage • Compatibility • Complexity • Trialability • Observability

9. Analyzing Product Components for Adaptation • Product is multidimensional • Sum of its features determines the bundle of satisfactions (utilities) received by consumer • Three distinct components • Core • Packaging • Support services

10. Product Component Model Exhibit 12.1

11. Core Components • Product platform • Design features • Functional features

12. Packaging Component • Price • Quality • Packages • Styling • Trademark • Brand name

13. Top Twenty Brands Exhibit 12.2

14. Global Brands • The Internet and other technologies accelerate the pace of the globalization of brands • Ideally gives the company a uniform worldwide image • Balance • Ability to translate

15. National Brands • Acquiring national brand names • Using global brand names • Nationalistic pride impact on brands • Use global brands where possible and national brands where necessary

16. Country-of-Origin Effects and Global Brands • Country-of-Origin effect • Influences that the country of manufacture, assembly, or design • Has on a consumer’s positive or negative perception of a product • Consumers have broad but somewhat vague stereotypes about specific countries and specific product categories that they judge “best” • Ethnocentrism

17. Country-of-Origin Effects and Global Brands • Countries are stereotyped • On the basis of whether they are industrialized • In the process of industrializing • In process of developing • Technical products • Perception of one manufactured in a less-developed or newly industrializing country less positive • Fads often surround product from particular countries or regions

18. Private Brands • Growing as challengers to manufacturers’ brands • Private labels • Provide the retailer with high margins • Receive preferential shelf space and in-store promotion • Are quality products at low prices • Manufacturers brands must be competitively priced and provide real consumer value

19. Summary • The growing globalization of markets must be balanced with the continuing need to assess all markets for those differences that might require adaptation for successful acceptance • In spite of the forces of homogenization, consumers also see the world of global symbols, company images, and product choice through the lens of their own local culture and its stage of development and market sophistication

20. Summary • Each product must be viewed in light of how it is perceived by each culture with which it comes in contact • Analyzing a product as an innovation and using the Product Component Model may provide the marketer with important leads for adaptation