Chapter 10 – Products and Services for Consumers
Define the following terms and show their significance to international marketing:
Product Component Model
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 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....
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