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Ch 10 Products and Services for Consumers Questions

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Chapter 10 – Products and Services for Consumers

Discussion Questions

Define the following terms and show their significance to international marketing:

Product diffusion

Innovation

Product Component Model

Green marketing

Quality

Homologation

Global brands

1. Debate the issue of global versus adapted products for the international market.

A recurring debate exists relative to product planning and focuses on the question of standardized

products marketed worldwide versus differentiated products adapted or even redesigned for each

culturally unique market. Those with a strong production and unit cost orientation advocate

standardization and others, perhaps more culturally sensitive, propose the policy of a different product

for each market. The issue cannot be resolved with a simple either/or decision. Cost revenue analyses

need to be done and decisions made in the hard, cold lights of profitability. There is no question that

significant cost savings can be realized from having standardized products, packages, brand names,

and promotional messages but this makes sense only if there is adequate demand for the standardized

products: costs must be balanced with demand. On the other hand, if the cost of an individualized

product when evaluated against price/demand characteristics within a market exceeds potential profit,

then it is ridiculous not to consider other alternatives including not marketing the product at all.

To differentiate for the sake of differentiation is no solution, and realistic business practice requires a

company to strive for uniformity in its marketing mix whenever and wherever possible. Economies of

production, better planning, more effective control, and better use of creative managerial personnel

are all advantages of standardization.

2. Define the country-of-origin effect and give examples.

Country of Origin Effect (COE) can be defined as any influence that country-of-manufacturer has on

a consumer’s positive or negative perception of a product. Today a company competing in global

markets will manufacture products worldwide and, when the customer is aware of the country of

origin, there is the possibility that the place of manufacture will affect product/brand image. Some

examples are French wines, German beer, Swiss watches, Cuban cigars, and Irish woolens are some

positive COEs. A negative COE is an automobile from Yugoslavia (the Yugo).

3. The text discusses stereotypes, ethnocentrism, degree of economic development, and fads as the basis

for generalizations about country-of-origin effect on product perception. Explain each and give an

example.

The country, the type of product, and the image of the company and its brands all influence whether

or not the country of origin will engender a positive or negative reaction. There are a variety of

generalizations that can be made about country of origin effects on products and brands. Consumers

tend to have stereotypes about products and countries that have been formed by experience, hearsay,

and myth. Following are some of the more frequently cited generalizations.

Consumers have broad but somewhat vague stereotypes about specific countries and specific product

categories that they judge “best”: English tea, French perfume, Chinese silk, Italian leather, Japanese

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electronics, Jamaican rum, and, so on. Stereotyping of this nature is typically product specific and

may not extend to other categories of products from these countries.

Ethnocentrism can also have country of origin effect; feelings of national pride, the “buy American”

effect among members, for example, can influence attitudes toward foreign products. Honda, which

manufactures one of their models almost entirely in the United States, recognizes this phenomenon

and points out how many component parts are made in America in some of their advertisements. On

the other hand, others have a stereotype of Japan as producing the “best” automobiles. A recent study

found that U.S. automobile producers may suffer comparatively tarnished in-country images

regardless of whether they actually produce superior products.

Countries are also stereotyped on the basis of whether they are industrialized, in the process of

industrializing or less-developed. These stereotypes are less country-product specific; they are more a

perception of the quality of goods in general produced within the country. Industrialized countries

have the highest quality image, and there is generally a bias against products from developing

countries. Within groups of countries grouped by economic development there are variations of

image. For example, one study of COE between Mexico and Taiwan found that a microwave oven

manufactured in Mexico was perceived as significantly more risky than an oven made in Taiwan.

However, for jeans there was no difference in perception between the two countries. One might

generalize that the more technical the product, the less positive is the perception of one manufactured

in a less-developed or newly industrializing country. There is also the tendency to favor foreign made

products over domestic made in less developed countries. Not all foreign products fare equally well

since consumers in developing countries have stereotypes about the quality of foreign made products

even from industrialized countries. A survey of consumers in the Czech Republic found that 72

percent of Japanese products were considered to be of the highest quality, German goods followed

with 51%, Swiss goods with 48%, Czech goods with 32% and, last, the United States with 29%.

One final generalization about COE involves fads that often surround products from particular

countries or regions in the world. These fads are more often product specific and generally involve

goods that are themselves faddish in nature. European consumers are apparently enamored with a host

of American made products ranging from Jeep Cherokees, Budweiser beer, and Jim Beam bourbon,

to Boise sound systems. In the 1970s and 80s there was a backlash against anything American, but, in

the 1990s, American is in. In China, anything Western seems to be the fad. If it is Western it is in

demand even at prices three and four times higher than domestic products. In most cases such fads

wane after a few years as some new fad takes over.

4. Discuss product alternatives and the three marketing strategies: domestic market extension,

multidomestic market, and global market strategies.

The marketer has at least three viable alternatives when entering a new market: (1) sell the same

product presently sold in the home market (Domestic Market Extension Strategy); (2) adapt existing

products to the tastes and specific needs in each new country market (Multi-Domestic Market

Strategy); or (3) develop a standardized product for all markets (Global Market Strategy.)

An important issue in choosing which alternative to use is whether or not a company is starting from

scratch (i.e., no existing products to market abroad), or whether it has products already established in

various country markets. For a company starting fresh, the prudent alternative is to develop a global

product. If the company has several products that have evolved over time in various foreign markets,

then the task is one of repositioning the existing products into a global product.

5. Discuss the different promotional/product strategies available to an international marketer.

The marketer has at least three viable alternatives when entering a new market: he can (1) sell the

same product he presently sells elsewhere, (2) individualize existing products to the tastes and

specific needs of the new country, or (3) develop a totally new product. These three basic alternatives,

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Chapter 10 – Products and Services for Consumers Discussion Questions 1. Define the following terms and show their significance to international marketing: Product diffusion Innovation Product Component Model Green marketing Quality Homologation Global brands 1. Debate the issue of global versus adapted products for the international market. A recurring debate exists relative to product planning and focuses on the question of standardized products marketed worldwide versus differentiated products adapted or even redesigned for each culturally unique market. Those with a strong production and unit cost orientation advocate standardization and others, perhaps more culturally sensitive, propose the policy of a different product for each market. The issue cannot be resolved with a simple either/or decision. Cost revenue analyses need to be done and decisions made in the hard, cold lights of profitability. There is no question that significant cost savings can be realized from having standardized products, packages, brand names, and promotional messages but this makes sense only if there is adequate demand for the standardized products: costs must be balanced with demand. On the other hand, if the cost of an individualized product when evaluated against price/demand characteristics within a market exceeds potential profit, then it is ridiculous not to consider other alternatives including not marketing the product at all. To differentiate for the sake of differentiation is no ...
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Tags: consumers Services for Consumers Products for Consumers Product diffusion Global Brands