International Business

Session 15 – Developing and Marketing Products

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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
https://www.economist.com/finance-and-
economics/2020/11/15/the-meaning-of-rcep-
the-worlds-biggest-trade-agreement

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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
International Business Framework
Globalization (Chapter 1)

National Business International International

Environment Environment Company

International Strategy
Politics & Law International Trade & Organization
in Business (Chapter 5) (Chapter 12-13)
(Chapter 2)
Entry Modes and Strat.
Political Economy & Alliances
‘Int Trade (Chapter 14)
Economic Systems
(Chapter 6)
& Development
(Chapter 2) Exporting/
FDI Importing/Counter Trade
(Chapter 7) (Chapter 15)
Ethics and CSR
(Chapter 4) Global Marketing
Regional Economic and R&D
Integration (Chapter 17)
(Chapter 8)
Cross-Cultural
Business Human Resource
(Chapter 3) International Financial Management
Markets (Chapter 18)
(Chapter 9-11)

International Monetary
Systems
(Chapter 9-11)

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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
Chapter Preview

• Explain why it might make sense to vary the attributes of a product from country to
country.
• Articulate why and how a firm’s distribution strategy might vary among countries.
• Identify why and how advertising and promotional strategies might vary among
countries.
• Discuss how the globalization of the world economy is affecting new product
development within the international business firm.
• Outline the Three Global Product Strategies
• Understand the Dimensions of a Product -Standardization vs. Adaptation?

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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
Institutions, Resources, Marketing

Institution-Based View
Formal rules of the game (such as
taboos in advertising & equity
limits in retail & 3PL sectors)
Informal cultures, values, and
norms (such as localization in
promotion)
Marketing (and Supply
Chain Management)
Resource-Based View
Value
Rarity
Imitability
Organization

Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann

Marketing Mix – the 4 P‘s

The major marketing management decisions can be classified in one of the following
four categories:

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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
Basic Idea: Product is a Service to serve user
values

Product Value

„Service“

Product Value
Service

Product E-Service Value

Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann

Attractive Vendor ...

... create the desired VALUE for the customer.

By:

• Localization approach

• Standardization and cost leadership

Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann

Country of Origin Effect and different
consumer preferences

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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
Culture and Consumer Behavior

Consumption values

Functional Values. Relate to needs and satisfaction from use and attributes

Social Values. Relate to perceived utility in association with one or

several social groups and self-building. Includes
symbolic values of products and brands.

Emotional Values. Relate to emotional arousal linked to contact with or

thinking of product/brand

Epistemic Values. Related to novelty seeking, curiosity arousal, knowledge

seeking, innovation drive, variety

Conditional Values. Related to capacity to provide temporary functional or

social values

Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann

America’s enduring values

• Freedom (political, free speech) • Patriotism (loyalty to the country)

• Equality before law • Democracy (belief that the judgment of
• Equality of opportunity (as the majority should rule)
expression of freedom + • American exceptionalism (moral mission
individualism in the market place) of America)
• Fairness (get what you deserve • Caring beyond self
as a consequence of your own • Religion (transcendental)
individual actions) • Luck (good fortune)
• Achievement (efficacy of • … family (?)
individual efforts)

Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann

Belgian Values (1992)
•Better world for fellow men
•Better Environment, love nature
•Having your own house •Self-esteem and self-respect
•Thrift, frugality •Being respected by others
•Progeny, having descendants •Being admired, prestigious, have satus
•Helathy & healthy life and success
•Safety, living in a safe world •Have leadership and power
•Security (count on people) •Ability to be oneself as one is
•Being painless, fearless with good fortune •Freedom, independance in choice
•Keeping all one has as it is •Develop one’s abilities & creativity
•Paying attention to one-self •Having one’s own lifestyle
•Romanticism (being in love) •Being stressless, inner harmony
•Erotic love, sensuality •Enjoy simple things in life
•Strong intimate partner relationship •Leading a prosperous, comfortable,
•Love for children luxurious life
•Strong friendship
•Strong family ties

Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann

Value Structure Map for Corona Extra- Spain

Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann

Convergence in Drinking Patterns

Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann

Convergence of Car Sizes

Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann

Obsticales:
Country of origin effect & LoF (see last section)
The country-of-origin effect (COE), also
known as the made-in image and the
nationality bias, is a psychological effect
describing how consumers' attitudes,
perceptions and purchasing decisions are
influenced by products' country of origin
labelling, which may refer to where a brand is
based, a product is designed or manufactured,
or other forms of value-creation aligned to a
country

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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
 Trade off: Local Responsiveness vs.
Economies of Scale

Nestle’s Branding Tree

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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
Are these really global products?

What can a „brand“ add to a product and how ?

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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
Global Product Strategies

• Don’t change. Marketing a product in a

Product Extension foreign market without any change (New
Market)

• Adapting a product to meet local

Product Adaptation conditions or wants in foreign markets

• Product Invention. Creating new

Develop products or services for existing or
New Product
foreign markets

Source: W.J. Keegan, Multinational Product Planning: Strategic Alternatives,

Journal of Marketing, 33, 1969, pp.58-62 18
Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
These Three Basic Strategies Can Be Further
Broken Down Into 5 Options –
Product/Communication

International Product Consumer Need Product Strategy Communication Strategy

Product Strategy Example Satisfied Promotion
Strategy 1
Product and Gillette Disposable, easy to use Extension Extension
Communication Razor product
Extension
Strategy 2
Product Extension Wrigley USA: Substitute for Extension Adaptation
Communication Chewing Gum Smoking
Adaptation Europe: Dental benefits

Strategy 3
Product Adaptation McDonalds Fast-Food Adaptation: Extension:
Communication Adding local products to Using global campaign
Extension range
Strategy 4
Product and Slim Fast Identical: Adaptation: Adaptation:
Communication Lose Weight Consumer preferences Celebrity in Germany,
Adaptation for different flavors Teacher in UK
Strategy 5
Product Invention Buckler Beer Non-alcoholic beer Invention Develop new
communication

Source: W.J. Keegan

Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann

Why NOT extend brands ?

• Unclear/no Brand Identity

• High brand switching pattern
• Unwatched Overhead Cost increase
• No sufficient resources for success
• No sufficient “Fit” and Relevance
• ….

Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann

CATEGORY EXTENSIONS – fail or succeed ?

Adidas cosmetics

Harley Davidson cosmetics

Colgate toothbrush

Campbell ketchup

Bic parfumes

Levi’s suits

Xerox computers

Clorox washing powder

Calgon washing powder

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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
CATEGORY EXTENSIONS

succeeded failed

Adidas cosmetics Campbell ketchup

Bic parfumes
Harley Davidson cosmetics
Levi’s suits
Colgate toothbrush
Xerox computers

Clorox washing powder

Calgon washing powder

Crystal Pepsi un-cola

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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
Caterpillar moved into shoes and clothing

reliable, resistant, masculine

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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
Swatch move into jewel

Modern, Quality/price, Variety, Innovative design

Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann

Adaptation: What to Adapt?

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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
Example of Product Adaptation

•• Coke:Sweetness, Language
Coke:

•• Infiniti:Left/right hand, Nissan

Infiniti:

•• Musketeer:Taste, Milky Way

Musketeer:

•• Dell:Keyboard, Software
Dell:

•• Nescafe:Taste, Language
Nescafe:

•• Haribo:Formula, Taste, Language

Haribo:

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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
Adaptation or not?

Why standardize? Why Adapt?

• Efficiency in R&D • Different language, culture,

• EOS in production manners, customs
• Lower marketing costs • Different customer
• Allows centralized control of preference
the marketing program • Maximize profit
• Reflects trend to a single world • Laws and Regulations
market

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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
Promotion: 10 RIDICULOUS MISTAKES MADE BY
INTERNATIONAL BRANDS

https://www.youtube.com/watch?v=wQ3pXp8PCRI&t=5s
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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
Adaptation: When to adapt?

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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
Creating Promotional Strategies

• Standardize or not promotional strategies?

• Promotional strategy get message across to buyer
• Push and Pull Strategies
• Pull Strategy (create demand/consumer => retail => producer)
• Push Strategy (producer => retail => consumer)
• This depends on:
• Distribution system (direct vs. indirect)
• Access to mass media (broad vs. narrow)
• Type of Product (low value vs. high value)

• International Advertising

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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
Place: Designing Distribution Strategies
(Supply Chain Management; In- and Outbound Logistics; Distribution
Channels)

• Distribution = physical flow from original to destination

• Designing Distribution Channels
• Degree of Exposure (exclusive vs. intensive)
• Channel Length and Costs (number of intermediaries)
• Influence on Product characteristics
• Value density (value relative to weight and volume)
• Transportation costs (%)
• Special Distribution Problems
• Lack of Market understanding (returns)
• Theft and Corruption (stealing)

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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann
Developing Pricing Strategies

• Worldwide Pricing
• Different production costs vs. same production costs
• Difficult take into account as:
• Cost of exportation
• Distribution costs
• Tax and Tariffs
• Exchange Rate
• Purchasing Power

• Dual Pricing
• Export price different than home market
• Risk of parallel import / arbitrage

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Jacobs University Bremen: International Business, Prof. Dr. Christoph Lattemann