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Chapter 5: Product in international marketing

• Definition of Product
International Marketing • Analyzing product components for adaptation
• Marketing Services Globally
• Brands in International Markets

Lecturer: Pham Thi Minh Chau (Ms.) | MSc.  Basic branding concepts
School of Economics and International Business  Local products and brands
Phone: 094.202.4060  International products and brands
Email: minhchaupham@ftu.edu.vn  Global products and brands
 Country-of-Origin Effect and Global Brands

• Branding decisions

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Definition of product
A product is anything that can be offered to a market for attention, acquisition,
use, or consumption that might satisfy a want or need, including physical goods,
services, experience, events, persons, places, properties, organizations,
information, and ideas or a mixture of these.

 Customers do not seek products; they seek satisfaction.

E.g: For instance, when customers purchase new software for their computer,
they may get a tangible product (CDs) to take home and install on their computer.
However, what they are truly buying is the ability to perform a new task or an
existing task in a new way.

The product decision is among the first decisions that a marketing

manager makes in order to develop a global marketing mix.

This chapter examines product-related issues and suggests conceptual

approaches for handling them. Also discussed are international brand
(labelling) strategies and service policies. 3 4

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Analyzing product components for adaptation Analyzing product components for adaptation

 A product is multidimensional, and the sum of The Product Component

all its features determines the bundle of Model can be a useful
satisfactions (utilities) received by the guide for examining the
consumer. adaptation requirements of
products destined for
foreign markets.
 To identify all the possible ways a product may
A product should be
be adapted to a new market, it helps to
carefully evaluated on
separate its many dimensions into three
each of the 03
distinct components: core component,
components to determine
packaging component, and support
any mandatory and
services component as illustrated by the
discretionary changes that
Product Component Model
may be needed

5 Product Component Model 6

Analyzing product components for adaptation Core Component Adaptations

 In Japan, Nestlé originally sold the same kind of corn flakes it sells in the U..S, but
Japanese children ate them mostly as snacks instead of for breakfast. To move the
1. Core Component
product into the larger breakfast market, Nestlé reformulated its cereals to more closely
fit Japanese taste. The Japanese traditionally eat fish and rice for breakfast, so Nestlé
developed cereals with familiar tastes—seaweed, carrots and zucchini, and coconut and
 On the product platform: product variations papaya. The result was a 12 percent share of the growing breakfast cereal market.
can be added or deleted to satisfy local
differences. Major adjustments in the  For the Brazilian market, where fresh orange juice is plentiful, General Foods changed
platform aspect of the core component may Product platform the flavor of its presweetened powdered juice substitute, Tang, from the traditional
be costly, because a change in the platform orange to passion fruit and other flavors.
can affect product processes and thus
Design features  Household cleansers with the traditional pine odor and hints of ammonia or chlorine
require additional capital investment.
popular in U.S. markets were not successful when introduced in Japan. Many Japanese
sleep on the floor on futons with their heads close to the surface they have cleaned, so
 Alterations in design, functional features, Functional features a citrus fragrance is more pleasing.
flavors, color, and other aspects can be
made to adapt the product to cultural  In markets where hot water is not commonly available, washing machines have
variations. Functional features can be added heaters as a functional feature. In other markets, automatic soap and bleach dispensers
or eliminated depending on the market. may be eliminated to cut costs or to minimize repair problems. Additional changes may
be necessary to meet safety and electrical standards or other mandatory
(homologation) requirements.

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Analyzing product components for adaptation
 Packaging components frequently require both discretionary and mandatory
changes.
2. Packaging Component  Some countries require labels to be printed in more
than one language, while others forbid the use of any foreign language.
Includes style features, packaging, labeling, Meanwhile, one study has found that consumers in the U.S. respond
trademarks, brand name, quality, price, and all negatively to bilingual packaging. At Hong Kong Disneyland, the jungle
other aspects of a product’s package. cruise ride commentary is delivered in Cantonese, Mandarin, and English.

 Packaging components frequently require

both discretionary and mandatory changes.  Elements in the packaging component may incorporate symbols that convey an
Elements in the packaging component may unintended meaning and thus must be changed.
incorporate symbols that convey an
 One company’s red-circle trademark was popular in
unintended meaning and thus must be
some countries but was rejected in parts of Asia, where it conjured up
changed.
images of the Japanese flag.
 Particular attention should be given to
 Yellow flowers used in another company
translations of brand names and colors used
trademark were rejected in
in packaging.
Mexico, where a yellow flower symbolizes death or disrespect.

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 In low-literacy countries, pictures and symbols  Particular attention should be given to translations of brand names and colors
are taken literally as instructions and information. used in packaging.
 Care must be taken to ensure that corporate
trademarks and other parts of the packaging  When Ford tried to sell its Pinto automobile in Brazil, it quickly found out that
component do not have unacceptable symbolic the car model’s name translated to “tiny male genitals.”
meanings.
 White, the color symbolizing purity in Western countries, is the color for
 A well-known baby-food producer that introduced mourning in others.
small jars of baby food in Africa, complete with
labels featuring a picture of a baby, experienced  In China, P&G packaged
the classic example of misinterpreted symbols:
diapers in a pink wrapper.
The company was absolutely horrified to find that
consumers thought the jars contained ground-up
Consumers avoived the pink
babies. package because pink
symbolized a girl, and in a
 In China, though not a problem of low literacy, country with a one-child-
Brugel, a German children’s cereal brand that per-family rule where boys
features cartoon drawings of dogs, cats, birds, are preferred, you do not
monkeys, and other animals on the package, was want anyone to think you
located in the pet foods section of a supermarket. have a girl, even if you do.
The label had no Chinese, and store personnel
were unfamiliar with the product.
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 Labeling laws vary from country to country and do not seem to follow any
predictable pattern.
Analyzing product components for adaptation
 In some countries, laws stipulate specific bottle, can, and package sizes and
measurement units. 3. Support Services Component
• If a country uses the metric system, it will probably require that weights and
measurements conform to the metric system. Such descriptive words as “giant”
or “jumbo” on a package or label may be illegal.
 Repair and maintenance
 In Saudi Arabia: product names must be specific. “Hot Chili” will not do; it must be
“Spiced Hot Chili.”  Installation

 Prices are required to be printed on the labels in Venezuela, but in Chile putting prices  Instructions
on labels or in any way suggesting retail prices is illegal.
 Deliveries
 Coca-Cola ran into a legal problem in Brazil with its Diet Coke. Brazilian law interprets
diet to have medicinal qualities. Under the law, producers must give the daily
recommended consumption on the labels of all medicines. Coca-Cola had to get
 Warranty
special approval to get around this restriction.
 Availability of spare parts
 Until recently in China, Western products could be labeled in a foreign language with
only a small temporary Chinese label affixed somewhere on the package. Under the  Other related service
new Chinese labeling law, however, food products must have their name, contents,
and other specifics listed clearly in Chinese printed directly on the package—no
temporary labels are allowed. Many otherwise successful marketing programs have ultimately failed because
13 little attention was given to this product component. 14

 The literacy rates and educational levels of a country may require a firm to change
 Repair and maintenance practices vary in different a product’s instructions. A simple term in one country may be incomprehensible in
countries: another.

 In the U.S, a consumer has the option of obtaining  In rural Africa: consumers had trouble understanding that Vaseline Intensive
service from the company or from service retailers Care lotion is absorbed into the skin. ‘Absorbed’ was changed to ‘soaks into’,
ready to repair and maintain anything from and the confusion was eliminated.
automobiles to lawn mowers.
 Brazilian companies have successfully overcome the low literacy and
 In developing countries: Repair and maintenance are technical skills of users of the sophisticated military tanks it sells to Third
especially difficult problems. Consumers in these World countries. The manufacturers include videocassette players and
countries may not have even one of the possibilities videotapes with detailed repair instructions as part of the standard instruction
for repair and maintenance available in the U.S. package. They also minimize spare parts problems by using standardized,
off-the-shelf parts available throughout the world.
 In some countries, the concept of routine
maintenance or preventive maintenance is not a part
of the culture.  Products may have to be adjusted to
require less frequent maintenance, and special
attention must be given to features that may be taken
for granted in the United States.

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Marketing Services Globally Spending by
foreign tourists
visiting American
destinations such
as Orlando or
Anaheim is
roughly double
that spent by
foreign airlines on
Boeing’s
commercial jets.

International tourism is by far the largest services export of the United States,
Much of the advice regarding adapting products for international consumer markets also ranking behind only capital goods and industrial supplies when all exports are
applies to adapting services. Moreover, some services are closely associated with products. counted.
Good examples are customer services associated with the delivery of a Big Mac to a
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consumer in Moscow.

Marketing Services Globally

Almost 1 million
foreign students Characteristics of services
(103,000 from
India and 98,000
from China) Services are characterized by the following features:
spent more than
$20 billion in
tuition to attend Intangibility
American
universities and
colleges in
2013–2014. Perishability

Heterogeneity
Other top consumer services exports of the United States include transportation,
financial services, education, telecommunications, entertainment, information, and
healthcare, in that order. Inseparability

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Marketing Services Globally Marketing Services Globally
Characteristics of services Characteristics of services

 Intangibility.  Perishability.

 Services cannot be touched or tested  Once created, it cannot be stored but must be
 The buyers of services cannot claim consumed simultaneously with its creation.
ownership
 Payment is for use or performance.  Causes considerable problems in planning
 Tangible elements of the service, and promotion in order to match supply and
such as food or drink on airlines, are demand. To maintain service capacity
used as part of the service in order to constantly at levels necessary to satisfy peak
confirm the benefit provided and to demand is very expensive. The marketer must
enhance its perceived value. therefore attempt to estimate demand levels in
order to optimize the use of capacity. Unfilled airline seats are lost
once the aircraft takes off
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Marketing Services Globally Marketing Services Globally

Characteristics of services Characteristics of services

 Heterogeneity.  Inseparability.
 Services are rarely the same because they involve interactions between The time of production is very close to or even simultaneous with the time of
people. consumption. The service is provided at the point of sale.

 There is high customer involvement in the production of services. This can  Supplying the service to scattered markets can be expensive, particularly in
cause problems of maintaining quality, particularly in international markets the initial setting-up phase.
where there are quite different attitudes towards customer service.
 Economies are difficult to achieve

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Marketing Services Globally Marketing Services Globally
Categories of service Categories of service

 All products, both goods and services consist of a core element that is  People-processing services and possession-processing services both suffer from
surrounded by a variety of optional supplementary elements their inability to transfer competitive advantages across borders.

 If we look first at the core element of service, we can assign every service to one  Information-based services offer the best opportunities of global standardization.
of 03 broad categories depending on:
 the tangibility of the service

 the extent to which customers need to be physically present during service production.

People-processing services
When Euro Disneyland in Paris
Possession-processing services opened, Disney suffered from not being
able to transfer the highly motivated
staff of its US parks to Europe.
Information-based services

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Marketing Services Globally

Barriers to Entering Global Markets for Consumer Services

 Most other services are inseparable and require production and consumption
to occur almost simultaneously

 Exporting is not a viable entry method for them.

 The vast majority of services (some 85 percent) enter foreign markets by

licensing, franchising, or direct investment.

 04 kinds of barriers face marketers in this growing sector of the global

marketplace:
 Protectionism
 Controls on trans-border data flows
 Protection of intellectual property
 Cultural requirements for adaptation.

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Marketing Services Globally Marketing Services Globally
Barriers to Entering Global Markets for Consumer Services Barriers to Entering Global Markets for Consumer Services

 Protectionism:  Controls on trans-border data flows:

The use by nations of legal barriers, exchange barriers, and psychological There is intense concern about how to deal with the relatively new “problem” of
barriers to restrain entry of goods from other countries. trans-border data transfers. Hidden in all the laws and directives are the unstated
motives of most countries: a desire to inhibit the activities of multinationals and to
A directive regarding trans-frontier television protect local industry.
broadcasting created a quota for European
E.g: The European Commission is concerned that data about individuals (e.g., income,
programs, requiring EU member states to
spending preferences, debt repayment histories, medical conditions, employment) are being
ensure that at least 50 percent of collected, manipulated, and transferred between companies with little regard for the privacy of
entertainment air time is devoted to the affected individuals. A proposed directive by the Commission would require the consent of
“European works.” The European Union the individual before data are collected or processed.
argues that this set-aside for domestic  A wide range of U.S. service companies would be affected by such a directive—insurance
programming is necessary to preserve underwriters, banks, credit reporting firms, direct marketing companies, and tour operators
Europe’s cultural identity. The consequences are a few examples.
for the U.S. film industry are significant,  The directive would have broad effects on data processing and data analysis firms,
because it would prevent a firm from electronically transferring information about individual
because more than 40 percent of U.S. film
European consumers to the United States for computer processing.
industry profits come from foreign revenues.
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Marketing Services Globally

Barriers to Entering Global Markets for Consumer Services

 Protection of intellectual property

An important form of competition that is difficult to combat arises from pirated

trademarks, processes, copyrights, and patents.

Companies spend millions of dollars establishing brand names or trademarks to

symbolize quality and design a host of other product features meant to entice • Lost sales from the unauthorized use of U.S. patents, trademarks, and
customers to buy their brands to the exclusion of all others. Millions more are copyrights amount to more than $300 billion annually. That translates into more
spent on research to develop products, processes, designs, and formulas that than two million lost jobs.
provide companies with advantages over their competitors. Such intellectual or
industrial properties are among the more valuable assets a company may • Software, music, and movies are especially attractive targets for pirates because
possess. they are costly to develop but cheap to reproduce and distribute over the
Internet. Pirated music sales are estimated to exceed $5 billion annually and are
growing at 6 percent per year. And unauthorized U.S. software that sells for
$500 in this country can be purchased for less than $10 in East Asia.

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Marketing Services Globally Brands in International Markets
Barriers to Entering Global Markets for Consumer Services Basic branding concepts

 Cultural requirements for adaptation

A brand is a complex bundle of images and
Because trade in services frequently involves people-to-people contact, culture experiences in the customer’s mind.
plays a much bigger role in services than in merchandise trade.

Brands perform two important functions:

Notice if the Japanese student
sitting next to you in class ever  A brand represents a promise by a
verbally disagrees with your particular company regarding a particular
instructor. product; it is a type of quality certification.

Classroom interactions vary  Brands enable customers to better organize

substantially around the world. their shopping experience by helping them
Students in Japan listen to seek out and find a particular product. Thus,
lectures, take notes, and ask an important brand function is to
questions only after class, if then. differentiate a particular company’s offering
In Japan the idea of grading class from all other companies’ offerings
participation is nonsense.
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Brands in International Markets Brands in International Markets

Basic branding concepts Basic branding concepts
 Companies develop logos, distinctive packaging, and other communication
Brand image: perceptions about a brand as reflected by brand
devices to provide visual representations of their brands.
associations that consumers hold in their memories
 A logo can take a variety of forms:
 Customers integrate all their experiences of  The brand name itself.
observing, using, or consuming a product  Non-word mark logo, sometimes known as a brand symbol.
with everything they hear and read about it.
 To protect the substantial investment of time and money required to build and
 Information about products and brands sustain brands, companies register brand names, logos, and other brand
comes from a variety of sources and cues, elements as trademarks or service marks.
including advertising, publicity, word of
mouth, sales personnel, and packaging.

 Perceptions of service after the sale, price,

and distribution are also taken into account.

The sum of these impressions is a brand

image
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Brands in International Markets
Basic branding concepts

Brand equity represents the total value that accrues to a product as a result of
a company’s cumulative investments in the marketing of the brand

 Brand equity can also be thought

of as an asset representing the
value created by the relationship
between the brand and its
customers over time. The
stronger the relationship, the
greater the equity.

 For example, the value of global

megabrands such as Coca-Cola
and Marlboro runs in the tens of
billions of dollars.

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Brands in International Markets Brands in International Markets

Local products and brands

Local products and brands A local product or local brand is one that has achieved success
in a single national market.

International products and  Sometimes a global company creates local

brands products and brands in an effort to cater to
the needs and preferences of particular
country markets.
Coca-Cola has developed several
 Local products and brands also represent
Global products and brands the lifeblood of domestic companies.
branded drink products for sale
only in Japan, including a
Entrenched local products and brands can noncarbonated, ginseng-flavored
represent significant competitive hurdles to beverage; a blended tea known as
global companies entering new country Sokenbicha; and the Lactia-brand
markets. fermented milk drink.
In India, Coca-Cola markets Kinely
brand bottled water.
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Brands in International Markets
International products and brands
Local products and brands
can represent significant
International products and international brands are offered in several
competitive hurdles to
markets in a particular region.
global companies entering
new country markets
The experience of GM with its Corsa
model in the early 1990s provides a case
In China, a sporting goods study in how an international product or
company started by brand can be taken global.
Olympic gold medalist Li
Ning sells more sneakers The Opel Corsa was a new model
than global powerhouse originally introduced in Europe. GM then
Nike. decided to build different versions of the
Corsa for China, Mexico, and Brazil. As
David Herman, chairman of Adam Opel
AG, noted, “The original concept was not
that we planned to sell this car from the
tip of Tierra del Fuego to the outer
regions of Siberia. But we see its
possibilities are limitless.”
GM calls the Corsa its “accidental world
41 car.” 42

Brands in International Markets Brands in International Markets

Global products and brands Global products and brands

A global product meets the wants and needs of a global market. A true  Naturally, companies with strong brands strive to use those brands globally. The
global product is offered in all world regions, in all countries at every stage of Internet and other technologies accelerate the pace of the globalization of
development. brands.

A global brand has the same name and, in some instances, a similar image  Even for products that must be adapted to local market conditions, a global brand
and positioning throughout the world. can be successfully used with careful consideration.

E.g: Heinz produces a multitude of products that are sold under the Heinz brand all
over the world. Many are also adapted to local tastes. In the United Kingdom, for
example, Heinz Baked Beans Pizza (available with cheese or sausage) was a
runaway hit, selling over 2.5 million pizzas in the first six months after its
introduction. In the British market, Heinz’s brand of baked beans is one of the more
popular products. The British consumer eats an average of 16 cans annually, for a
sales total of $1.5 billion a year. The company realizes that consumers in other
countries are unlikely to rush to stores for bean pizzas, but the idea could lead to the
creation of products more suited to other cultures and markets.

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The strategy of a mix of local and global brands of Unilever
Brands in International Markets
In those markets where the global brand is unknown, many companies are buying
Global brand (cont.)
local brands of products that consumers want and then revamping, repackaging,
 Ideally a global brand gives a company uniformly positive worldwide brand and finally relaunching them with a new image. Unilever purchased a local brand
associations that enhance efficiency and cost savings when introducing other of washing powder, Biopan, which had a 9 percent share of the market in Hungary;
products with the brand name after relaunching, market share rose to about 25 percent.

 But not all companies believe a single global approach is the best. Among In Poland, Unilever introduced its Omo brand detergent, but it also purchased a
companies that have faced the question of whether to make all their brands local brand, Pollena 2000. Despite a strong introduction of two competing brands,
global, not all have followed the same path. Omo by Unilever and Ariel by Procter & Gamble, a refurbished Pollena 2000
had the largest market share a year later. Unilever’s explanation was that eastern
European consumers are leery of new brands; they want brands that are affordable
and in keeping with their own tastes and values. Pollena 2000 is successful not
just because it is cheaper but because it is consistent with local values.

Multinationals must also consider increases in nationalistic pride that occur in some
countries and their impact on brands. In India, Unilever considers it critical that its
Companies such as Apple, Kellogg, Coca-Cola, Caterpillar, and Levi’s, which brands, such as Surf detergent and Lux and Lifebuoy soaps, are viewed as
use the same brands worldwide, while other multinationals such as Nestlé, Indian brands. Just as is the case with products, the answer to the question of
Mars, Procter & Gamble, and Gillette have some brands that are promoted when to go global with a brand is, “It depends—the market dictates.” Use global
worldwide and others that are country specific. brands where possible and national brands where necessary.
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Nestlé Company has a stable of global

Brands in International Markets
and country-specific national brands in its
Country-of-Origin Effect and Global Brands
product line.

The Nestlé name itself is promoted  Brands are used as external cues to taste, design, performance, quality, value,
globally, but its global brand expansion prestige, and so forth. In other words, the consumer associates the value of the
strategy is two-pronged. In some markets, product with the brand.
it acquires well-established national
brands when it can and builds on their  Many factors affect brand image. One factor of great concern to multinational
strengths—there are 7,000 local brands in companies is the country-of-origin effect on the market’s perception of the
its family of brands. In other markets product.
where there are no strong brands it can
acquire, it uses global brand names.
Country-of-origin effect (COE ) can be defined as any influence that the
The company is described as preferring country of manufacture, assembly, or design has on a consumer’s positive
brands to be local, people to be regional, or negative perception of a product. A company competing in global markets
and technology to be global. It does, today manufactures products worldwide; when the customer becomes
however, own some of the world’s largest aware of the country of origin, there is the possibility that the place of
global brands; Nescafé is but one. manufacture will affect product or brand images

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Brands in International Markets Brands in International Markets
Country-of-Origin Effect and Global Brands (cont.) Country-of-Origin Effect and Global Brands (cont.)

Consumers tend to have stereotypes about products and countries that have been
formed by experience, hearsay, myth, and limited information. Following are some  Ethnocentrism can also have
of the more frequently cited generalizations: country-of-origin effects; feelings
of national pride—the “buy local”
effect, for example—can influence
 Consumers have broad but somewhat attitudes toward foreign products.
vague stereotypes about specific
countries and specific product E.g: Honda, which manufactures one
categories that they judge “best”: of its models almost entirely in the
English tea, French perfume, Chinese United States, recognizes this
silk, Italian leather, Japanese phenomenon and points out how
electronics, Jamaican rum, and so on. many component parts are made in
Stereotyping of this nature is typically America in some of its
product specific and may not extend to advertisements.
other categories of products from these
countries.

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Brands in International Markets Brands in International Markets

Country-of-Origin Effect and Global Brands (cont.) Country-of-Origin Effect and Global Brands (cont.)

 Countries are also stereotyped on the basis of whether they are industrialized,  Consumers have stereotypes about the quality of foreign-made products, even
in the process of industrializing, or developing. Industrialized countries have the from industrialized countries.
highest quality image, and products from developing countries generally E.g: A survey of consumers in the Czech Republic found that 72 percent of
encounter bias. Japanese products were considered to be of the highest quality; German goods
followed with 51 percent, Swiss goods with 48 percent, Czech goods with 32
percent, and, last, the United States with 29 percent.
E.g: In Russia, the world is divided into two kinds of
products: “ours” and “imported.” Russians prefer
fresh, homegrown food products but imported
clothing and manufactured items. Companies
hoping to win loyalty by producing in Russia have
been unhappily surprised. Consumers remain cool
toward locally produced Polaroid cameras and
Philips irons. Yet computers produced across the
border in Finland are considered high quality. For
Russians, country of origin is more important than
brand name as an indicator of quality.

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Brands in International Markets
Country-of-Origin Effect and Global Brands
Country-of-Origin Effect and Global Brands (cont.)

Consumers have broad but somewhat vague stereotypes about specific countries
 A study suggests that more knowledgeable consumers are more sensitive to a
and specific product categories . The importance of these types of stereotypes
product’s COE than are those less knowledgeable and COE varies across
was emphasized recently as a result of a change in U.S. law that requires any
consumer groups;
cloth “substantially altered” (woven, for instance) in another country to identify that
E.g: Japanese were found to be more sensitive than American consumers.
country on its label.
 The multinational company needs to take these factors into consideration in its
Designer labels such as Ferragamo, Gucci, and Versace are affected in that they
product development and marketing strategy, because a negative country
now must include on the label “Made in China,” because the silk comes from
stereotype can be detrimental to a product’s success unless overcome with effective
China. The lure to pay $195 and up for scarves “Made in Italy” by Ferragamo
marketing.
loses some of its appeal when accompanied with a “Made in China” label. As one
buyer commented, “I don’t care if the scarves are made in China as long as it
 Once the market gains experience with a product, negative stereotypes can be
doesn’t say so on the label.”
overcome.
The irony is that 95 percent of all silk comes from China, which has the reputation
 Country stereotyping- some call it “nation equity”- can also be overcome with
for the finest silk but also a reputation of producing cheap scarves. The “best”
good marketing. Brands effectively advertised and products properly positioned
scarves are made in France or Italy by one of the haute couture designers.
can help ameliorate a less-than-positive country stereotype.

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COE negative stereotypes can be overcome

Once the market gains experience with a product, negative stereotypes can be Branding decisions
overcome.

 Nothing would seem less plausible than selling chopsticks made in Chile to  The basic purposes of branding are the same everywhere in the world. In
Japan, but it happened. It took years for a Chilean company to overcome general, the functions of branding are:
doubts about the quality of its product, but persistence, invitations to Japanese
to visit the Chilean poplar forests that provided the wood for the chopsticks,  to distinguish a company’s offering and differentiate one particular product
and a high-quality product finally overcame doubt; now the company cannot from its competitors;
meet the demand for its chopsticks.  to create identification and brand awareness;
 to guarantee a certain level of quality and satisfaction;
 The image of Korean electronics and autos improved substantially in the United  to help with promotion of the product.
States once the market gained positive experience with Korean brands. Most
recently in the United States, the quality/safety of Chinese made products has  All of these purposes have the same ultimate goals: to create new sales
been a source of problems for American branded toys, foods, and (market shares taken from competitors) or induce repeat sales (keep customers
pharmaceuticals. It will be interesting to watch how the new Chinese brands loyal).
themselves, such as Lenovo computers and Haier appliances, will work to
avoid the current negative “nation equity” to which they are suffering  Figure 14.15 demonstrates the four levels of branding decisions.
association. All of this stresses the importance of building strong global brands
like Sony, General Electric, and Levi’s. Brands effectively advertised and  Each alternative at the four levels has a number of advantages and
products properly positioned can help ameliorate a less-than-positive country disadvantages, which are presented in Table 14.2.
stereotype.
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Branding decisions Branding decisions
Brand versus no brand
Branding is associated with added costs in the form of marketing, labelling,
packaging and promotion. Commodities are ‘unbranded’ or undifferentiated
products. Examples of products with no brand are cement, metals, salt, beef and
other agricultural products.

Private label
Retailer’s own brand

Co-branding
Form of cooperation between two or more brands, which can create synergies
that create value for both participants, above the value they would expect to
generate on their own.

Ingredient branding
The supplier delivers an important key component to the final Original Equipment
Manufacturer (OEM) product, e.g. Intel delivers its processor to the major PC
manufacturers.

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During the Fall/Winter 2017

season Supreme collaborated
with fashion house Louis
Vuitton for a Menswear
Collection. It was ranked as the
best collaboration of 2017
by Vogue.

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Ingredient branding: Intel delivers its processor to the major PC manufacturers60.

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Branding decisions
Single brand versus multiple brands
(single market)
 A single brand or family brand (for a number
of products) may be helpful in convincing
consumers that each product is of the same
quality or meets certain standards. In other
words, when a single brand in a single
market is marketed by the manufacturer, the
brand is assured of receiving full attention
for maximum impact.
 The company may also choose to market
several (multiple) brands in a single market.
This is based on the assumption that the
market is heterogeneous and consists of
several segments.

Local brands versus a global brand (multiple markets)

A company has the option of using the same brand in most or all of its foreign
markets or of using individual, local brands.
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