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©Paul Hilton/ EPA/ Landov

Chapter 17
DEVELOPING GOODS
AND SERVICES FOR
GLOBAL MARKETS
17-1 Global Product Planning
17-2 Developing and Researching
Products

17-3 An International Product Strategy

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Global Strategy for Barbie

The Barbie doll was introduced in the United States in 1959, and 351,000
were sold at $3 each. Since then, over 1 billion Barbies have been sold.
While Mattel is assured of new young U.S. consumers each year, the com-
pany also looks to markets in other countries for Barbie sales.
The first Barbie dolls were manufactured in Japan in the late 1950s. In
the late 1970s, Mattel started distributing the dolls in Japan by creating a
limited joint venture with the Bandai Company. The first Barbies sold in
Japan had dark eyes. Later, the company began marketing its blue-eyed
Barbie throughout Asia.
When Barbie was introduced in the Czech Republic, she wore traditional
Czech clothing of a black vest and red tights under a yellow and black
skirt. When first available, more than 1,000 dolls were sold a day. People in
Prague stood in line for hours to pay from $5 to $20 for dolls and acces-
sories. The average monthly salary of a skilled worker was about $130.
Today Barbie dolls and related items are sold in over 150 countries. In
recent years, about 35 percent of Mattel’s sales were outside of the United
States. In addition to the company’s global success, Mattel is using tech-
nology to expand its product line and marketing efforts. Mattel allows girls
to go online to design a friend for Barbie. In addition to choosing skin tone,
eye color, hair color, clothes, accessories, and name, customers receive a
computer-generated paragraph about the doll’s “personality.”

Think Critically
1. What factors may have influenced Mattel’s decision to sell Barbie dolls
in other countries?
2. What factors may have influenced Mattel’s decision to introduce a dif-
ferent style of Barbie doll in Japan initially?
3. Go to the Mattel web site to obtain additional information about the
company’s international operations. Prepare a one-page summary of
your findings.

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Chapter 17 DEVELOPING GOODS AND SERVICES FOR GLOBAL MARKETS

GLOBAL PRODUCT
17-1 PLANNING
GOALS

Describe sources of
product opportunities
for international mar-
keting.

Identify categories of
consumer products
and the importance of
product lines.

Explain how services
are marketed.

©Getty Images/PhotoDisc
INTERNATIONAL PRODUCT
OPPORTUNITIES
very day you see advertisements for clothing, food, motor vehicles, finan-
E cial services, Internet sites, and other consumer goods and services. It
sometimes seems as though everyone has something to sell. When you apply
for a job, you also are selling your talents and abilities. The product offerings
of global companies are the foundation of international business and foreign
trade.
A product is a marketplace offering (good or service) that satisfies a need
or want. Marketing’s major goal is to satisfy needs that have not been met.
This can be accomplished in one of four ways: a new product, an improved
product, an existing product with a new use, or an existing product sold in a
new market.
New Product An organization’s marketing activities may start with a
marketplace offering that did not previously exist. For example, Federal
Express pioneered overnight delivery services. Now, several companies are
involved in this industry.
Improved Product Sometimes a product is on the market for several
years, but it may no longer be as popular with consumers. When this hap-
pens, a company may introduce variations, such as new flavors of a food
product. Also, technology may result in improved versions of an item.

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17-1 GLOBAL PRODUCT PLANNING

Existing Product with a New Use When a company wants to

expand its sales, it may attempt to find new uses for a product that has been
on the market for years. Various kitchen storage containers have been adapt- WORK AS
ed to store tools and supplies for a home workshop or office.
Existing Product Sold in a New Market In the late 1970s and
A GROUP
early 1980s, when fewer babies were born in the U.S., Johnson Baby
Shampoo was advertised as being mild for adults who wanted to shampoo Suggest ways to use an
every day. Selling existing products in new markets is a significant part of existing product in different
international business. Soft drinks, fast foods, and hundreds of other prod- ways.
ucts that originated in one country are now sold in the global marketplace.

What are four ways a company can satisfy the consumer’s needs that have
not been met?

MARKETING PRODUCTS AROUND

THE WORLD
ach day people around the world buy and use thousands of different
E products. A student in Brazil buys a home computer, while a person in
Egypt purchases a bottled soft drink.

❙ CONSUMER PRODUCT CATEGORIES

The many items sold in the global market can be classified as convenience
goods, shopping goods, or specialty goods, as shown in Figure 17-1.
Convenience Goods You probably buy low-cost items on a regular basis
without thinking much about them. Convenience goods are inexpensive items
that require little shopping effort. Examples include snacks, soft drinks, personal
care products, and school supplies. Marketing for convenience goods involves
offering an item in many locations. For example, candy bars are sold in food
stores, movie theaters, gas stations, and vending machines.
Shopping Goods Some products (such as clothing, furniture, cameras,
Figure 17-1 The items bought
televisions, and home appliances) are purchased only after consumers take
by people around the world can
be classified as convenience
goods, shopping goods, or spe-
TYPES OF CONSUMER PRODUCTS
cialty goods.

Convenience Goods Shopping Goods Specialty Goods

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Chapter 17 DEVELOPING GOODS AND SERVICES FOR GLOBAL MARKETS

some time to compare buying alternatives. Shopping goods are products

purchased after consumers compare brands and stores. Shopping goods
require a marketing effort that communicates differences in price, quality,
and features of various brands.
Stores selling shopping goods may offer several brands and models of the
same item to prevent a customer from going to another store to compare
products. You will commonly see stores and online retailers with many
makes and models of video recorders or digital cameras.
Products that are convenience goods in one culture may be shopping
goods in another. Toothpaste for U.S. consumers is usually bought quickly
without much thought. This same purchase in some South American nations
may require comparison shopping and some consideration. Consumers in
these countries may not be as familiar with the item, or the toothpaste may
be an expensive purchase compared to their income.
Specialty Goods When buying certain products, you would probably
take a lot of time and effort. Specialty goods are unique products that con-
sumers make a special effort to obtain. Buyers of these items refuse to accept
substitutes. Marketing of specialty goods requires high brand recognition. In
Europe, for example, various types of designer clothing, jewelry from well-
known firms, and customized automobiles would only be available at select
stores.

❙ THE PRODUCT LINE

Manufacturing companies and stores usually produce and offer a variety of
items. A product line is an assortment of closely related products designed to
meet the varied needs of target
both cost and performance, to the customers. Shoe stores commonly
new products of competitors. include socks, shoelaces, and shoe
GLOBAL BUSINESS ● The new product should be able to
survive exhaustive product testing
polish in their product lines.
Procter & Gamble makes differ-
at all stages before going on the ent shampoos for people with dif-
A JAPANESE APPROACH FOR market. ferent wants and needs. There are
PRODUCT DEVELOPMENT ● The item should be able to deliver shampoos for dandruff problems,
its own message of usefulness shampoos for easy-to-manage
The Kao Corporation of Tokyo is
and quality at every level of distri- hair, and shampoos for dry
Japan’s largest producer of personal
bution.
care, laundry, and cleaning products. hair.
The company also makes cooking
oils and chemicals. Kao sells items
Think Critically
❙ ORGANIZATIONAL
in over 40 countries in Asia, North
1. How could other companies use
Kao’s product development prin- ❙ PRODUCTS
America, and Europe and uses five Organizational products are items
ciples to plan their international
principles when planning new prod- used to produce other goods and
marketing activities?
ucts.
2. Go to Kao’s web site to obtain services. Companies buy facto-
● The new product should be useful
to society now and in the future.
additional information about the ries, machinery, office equip-
company’s research and develop- ment, components, and raw
● The product should be based on
ment activities. Write an outline materials for their daily business
Kao’s creative technology.
describing your findings. activities.
● The item should be superior, in
Most organizational products
require less adaptation than do
consumer goods before they are

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17-1 GLOBAL PRODUCT PLANNING

sold in different countries. This situation arises because cultural factors and
personal taste influence production activities less than consumer purchases.
For example, the same forklift truck used on a loading dock can be sold in
most places around the world. However, laundry detergent might require
adaptation due to clothes-washing habits and water hardness.

How do organizational products differ from consumer goods?

CONSUMER SERVICES
variety of services also are used by organizations. Commercial services
A may include security systems, information processing, equipment main-
tenance, and overnight package delivery. How does buying a haircut differ
from buying a can of green beans? One is an intangible service, and one is a
tangible good.

❙ CHARACTERISTICS OF SERVICES
Services cannot be touched like a physical product. In other words, services
are intangible. Most purchases are a combination of both tangible and intan-
gible items. While you can touch the reel from which a movie is shown, the
movie you have seen becomes a memory that is intangible. Since services are
intangible, it is more difficult to judge the quality of these purchases. Com-
mon measures of service quality are company reputation, comments from
customers, and training qualifications of employees.
Increased use of computers and technology for services contributes to
more consistent quality. For example, automatic teller machines, when oper-
ating properly, will make fewer errors than humans do.
Services are consumed as they are produced. Mass production of services
is often not possible. Each haircut, oil change, or income tax preparation is
produced separately. However, businesses are using technology to provide
fast, individualized services. Financial companies, for example, offer invest-
ment advice based on a person’s income, age, and household situation.
Services have no inventory. Empty airline seats, for example, cannot be
saved and sold later. They are simply lost revenue opportunities.

❙ TYPES OF SERVICES
Services available to consumers may be viewed in three categories.
1. Rented-goods services involve a payment for temporary use of items, such
as an automobile, an apartment, a video, or cleaning equipment.
2. Owned-goods services are fees for service to the consumer’s property, such
as auto repair, dry cleaning, or landscaping.
3. Non-goods services are personal or professional services for a fee, such as
health care, overnight delivery, tax return preparation, real estate sales,
legal assistance, and baby-sitting.

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Chapter 17 DEVELOPING GOODS AND SERVICES FOR GLOBAL MARKETS

Every major world language speaking customers. They need to

exists in a number of culture-specific use the same form of Spanish as
forms that vary in terms of some of the targeted group of customers.
the language details. The differences Some of the details of communica-
often involve pronunciation, word tions with customers in Honduras
choice, and word meaning. will be different from those of com-
Sometimes they involve spelling and munications with customers in
grammar, too. Although such differ- Colombia and Argentina.
ences are small, they are important
COMMUNICATE WITH
CUSTOMERS IN THEIR in terms of the acceptability of the Think Critically
message. Communications are bet- 1. Why should speakers of a lan-
OWN LANGUAGE
ter received when they are cus- guage receive communications
When a multinational organization tomized to reflect the culturally sanc- in their own culture-specific
develops a strategy for communicat- tioned language of a distinct group form?
ing with customers, selection of the of customers. 2. What other major languages
correct language is not good Throughout Latin America, for besides Spanish have a number
enough. It must also choose the example, multinational businesses of culture-specific versions that
right form of that language to reach need to do more than use Spanish are used for international com-
the targeted customers successfully. to communicate with Spanish- munication purposes?

❙ MARKETING OF SERVICES
Services require special marketing efforts. Since the consumer must often be
where the service is produced, convenience of location is important. Some
hospitals have created urgent-care facilities in several locations. Banks may
bring their services to customers, such as when a bank sets up a temporary
cash machine at a sporting event or concert.
The packaging of services is done through the image created by the busi-
ness. Furniture, decorations, and even the appearance of employees can cre-
ate a reputation of quality.
Services are also personalized. Each transaction for a hairstylist, tax
accountant, or health-care worker will be slightly different. An organization’s
ability to meet the individual needs of customers is vital for success.

❙ SERVICES AND INTERNATIONAL TRADE

In recent years, services have played an increasing role for the United States
in its foreign trade activities. About 70 percent of GDP in the United States
results from service industries. While our nation has a total trade deficit,
exported services exceed imported services. Companies in other countries
have a strong demand for health care, delivery services, information systems,
processing, management consulting, financial services, education and train-
ing, hospitality (hotels, food service), and entertainment (movies, television
production, and amusement parks).
As in most industrialized countries, services in the United States are
becoming a greater economic influence. Today, more people work in service
industries than in manufacturing companies.

What are the three categories of services?

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17-1 GLOBAL PRODUCT PLANNING

REVIEW GLOBAL BUSINESS TERMS

Define each of the following terms.
1. convenience goods 3. specialty goods
[Link]
2. shopping goods 4. product line

REVIEW GLOBAL BUSINESS CONCEPTS

5. How can marketing satisfy a need that has not been met?
6. How does a shopping good differ from a specialty good?
7. In what ways are services different from goods?

SOLVE GLOBAL BUSINESS PROBLEMS

For each of the following situations, list a possible problem that could be encoun-
tered if a company planned to sell its service in other countries.
8. Childcare centers aimed at households with two working parents.
9. Repair service for home and office computers.
10. Carpet cleaning service for homes and businesses.
11. Trash collection and recycling service.

THINK CRITICALLY
12. Describe an example of how a convenience good in one culture may be a
shopping good or specialty good in another society.
13. What tangible factors could be measured to determine the quality of servic-
es offered by a company?
14. Choose a service company in your community. Describe attributes that con-
tribute to the company’s image.

MAKE CONNECTIONS
15. TECHNOLOGY Describe how technology has created new product
opportunities for existing goods and services.
16. TECHNOLOGY Use the Internet to identify three products that are avail-
able around the world. Describe any differences the products might have
from country to country.
17. TECHNOLOGY Use the Internet to find examples of companies that pro-
vide services internationally. What type of services are offered? Are there
any differences from country to country?
18. GEOGRAPHY Explain how the climate, terrain, and other geographic fac-
tors in a country could expand or limit the availability of services.

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Chapter 17 DEVELOPING GOODS AND SERVICES FOR GLOBAL MARKETS

DEVELOPING AND
17-2 RESEARCHING
GOALS PRODUCTS

Discuss the steps in
the new product
development process
and the marketing
research process.

Describe data collec-
tion methods used in
international market-
ing research.

©Getty Images/PhotoDisc
CREATING NEW PRODUCTS
ach year over 25,000 new products are introduced in the United States.
E However, within a year, about 75 percent of them are no longer on the
market. Why do most new products fail? Some say it is because too many
new products are introduced into an already saturated marketplace. Others
believe it is because of poor planning. Either way, new products are a high
risk for companies.

❙ NEW PRODUCTS
Companies introduce new products for two reasons. First, as old products are
no longer popular with customers, sales revenue must come from other sources.
Second, competitors’ actions result in lower sales revenue. New products must
match or exceed the marketplace offerings of other companies.
Customer Needs The needs of customers is one of the main sources
of new product ideas. For example, “call waiting” was the answer for people
who didn’t want to miss a phone call while talking to someone else. Caller
ID allowed customers to see the telephone number of incoming calls and
select which calls to answer. These services were created in direct response to
customer needs. Other products developed to fill customer needs include
carbon monoxide detectors for in-home use and electronic invisible fences
for pet containment.

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17-2 DEVELOPING AND RESEARCHING PRODUCTS

Technology Technology is another major source of new products. Fax

machines, cellular phones, and video games would never have been possible
without technological breakthroughs.

❙ NEW PRODUCT DEVELOPMENT PROCESS

Companies use a logical procedure to create successful new products. The
new product development process involves the four steps shown in Figure
17-2. This procedure is used to help a business select products that will likely
succeed.
NEW PRODUCT DEVELOPMENT PROCESS

Step 1

Generating
Product Ideas

Step 4 Step 2

Marketing Evaluating
Product Ideas Product Ideas

Step 3

Researching
Product Ideas
Figure 17-2 Four main steps
are used by companies to cre-
ate and market new products.

Generating Product
Ideas In the first stage, ideas
for possible products are based on
comments from customers, prod-
uct ideas other companies have
developed, and new technology.
At this stage, products planned
for international markets are
viewed from a global perspective.
Evaluating Product Ideas
Next, ideas are evaluated based
on cost, production possibility,
and marketplace acceptance. Can
the new item be offered to poten-
tial customers at an acceptable
price? Are the facilities available
to produce the item in needed
quantities? Can the product be
adapted to meet the cultural and
economic needs of customers in
various countries?
©Getty Images/PhotoDisc

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Chapter 17 DEVELOPING GOODS AND SERVICES FOR GLOBAL MARKETS

Researching Product Ideas In the

third stage, research is conducted on the
WORK AS proposed product to measure customer atti-
A GROUP tudes and potential sales.
Marketing Product Ideas The final
phase of the new product development
Brainstorm a list of possible process involves putting the item on the
new products or services market. After research shows a strong prob-
that might be developed to ability of success, the item is produced, dis-
sell in other countries. tributed, and sold in one or more countries.

❙ ADAPTING PRODUCTS TO
❙
FOREIGN MARKETS
Products will frequently need to be adapted
to social, cultural, and political factors.
When refrigerators produced by manufac-
turers in Western nations were first sold in
Japan, Japanese consumers considered them
too noisy. The motors needed to operate the
cooling unit could easily be heard through
the very thin walls of most Japanese homes
©Getty Images/PhotoDisc
and apartments. This situation resulted in
companies developing a quieter refrigerator designed specifically to meet
Japanese market needs.

foreign trade barriers and regulations

affecting business in Venezuela.
GLOBAL BUSINESS Combining information from these
various sources can provide man-
agers with a better understanding of
COLLECTING MARKETING the marketing opportunities in
RESEARCH DATA IN VENEZUELA nations with limited research data.
How can marketing information be Think Critically
obtained in countries without exten- 1. What things might be observed in
sive information systems? While vis- another country that could help a
iting Caracas, a researcher may manager plan to do business in
observe to see what items con- that country?
sumers commonly buy. These obser- 2. When interviewing a person
vations can help managers decide if about another country’s business
a certain product might be success- environment, what questions
ful in Venezuela. might be asked?
Next, researchers might interview 3. Conduct an Internet search on
selected business owners about their international marketing research.
product line. Owners would answer Locate a web site that would be
questions about what items sold well useful for companies planning to
in the past, current consumer tastes, do business in another country.
and common complaints from cus- Write an explanation about what
tomers. this web site has that would be
Finally, talking with government useful.
officials can provide details about

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17-2 DEVELOPING AND RESEARCHING PRODUCTS

❙ THE MARKETING RESEARCH PROCESS

When developing and marketing new products, companies must find out
what consumers need, want, and are willing to buy. Marketing research is
the orderly collection and analysis of data that is used to obtain information
about a specific marketing concern. While some companies have investigated
consumer buying patterns in over 150 countries, marketing research is done
regularly in only about 60 or 70 nations.
Marketing research may be conducted to determine the television viewing
habits of Australian college students. Also, a company may measure the
potential sales for a Brazilian soft drink company in the United States. Figure
17-3 provides an overview of the marketing research process with an interna-
tional example.
THE MARKETING RESEARCH PROCESS

Example

Is there a market demand for microwave

Phase 1—Identify Problem
popcorn in major cities in South America?

Example
A survey of consumer preferences and
Phase 2—Collect Data buying habits for microwave popcorn in
major South American cities is conducted.

y results

Example

Survey results are tallied to show potential

Phase 3—Analyze Data
demand for the product.

Example
A report is prepared with the survey
Phase 4—Report Results and recommendations for expansion into Figure 17-3 The steps of the
selected cities. marketing research process are
designed to help a company
collect consumer behavior data.

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Chapter 17 DEVELOPING GOODS AND SERVICES FOR GLOBAL MARKETS

Every research study starts with a research problem. The word “problem”
does not necessarily mean that something is wrong—such as declining sales.
A research problem provides the basis for studying some aspect of a compa-
ny’s marketing mix. For example, a computer company may conduct a
marketing research study to determine the information needs of manufactur-
ing companies in Chile, or a soup company may study consumer taste
preferences in Jamaica. In each situation, the business seeks information to
better plan and carry out its marketing activities.

What are the steps of the new product development process?

DATA COLLECTION AND ANALYSIS

FOR MARKETING RESEARCH
SOURCES OF MARKETING RESEARCH DATA Collecting data is the second major phase of market-
ing research. Data can be put into two major cate-
gories—secondary data and primary data—as illus-
trated in Figure 17-4.
Secondary Data Sources Primary Data Sources ❙ SECONDARY DATA
Secondary data are data that have already been collect-
• Government reports • Surveys
ed and published. Sources include government
• Business documents • Interviews reports, company documents, library indexes, refer-
• Indexes • Observations ence books, business directories, and computerized
• Reference books • Experiments databases. The federal government offers many useful
databases for market research through the Bureau of
• Computerized databases
the Census ([Link]) and the Bureau of
Labor Statistics ([Link]).
In countries with modern information systems,
such as the United States, secondary data sources can
be very helpful. In contrast, access to secondary data
Figure 17-4 Secondary may be limited in countries with
data and primary data help few computer systems.
marketing managers make
international business deci- ❙ PRIMARY DATA
sions. Marketers collect primary
data to solve a specific
research problem. In
other words, primary
data collection involves a
study to obtain specific
marketing information. The
three major types of primary
data are surveys, observations,
and experiments.
©Getty Images/PhotoDisc

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Surveys Companies use surveys to collect data about opinions, behav-

iors, and knowledge of consumers. Large-scale surveys that collect numeric
data, called quantitative research, are often used to study consumers.
Companies such as ACNielsen conduct market research surveys in various
countries. Nielsen Media Research measures television viewing patterns and
other media habits.
In many countries, however, collection of quantitative data is difficult. A
country with only a few computers makes a Web survey almost impossible
and the results questionable. If a nation has a low literacy rate, the use of
mail surveys will have little value. These situations require other types of
research.
Qualitative research, using open-ended interview questions, allows
researchers to obtain comments from consumers about their attitudes and
behaviors. An example of qualitative research is the focus group, or group-
depth interview. A focus group is a directed discussion with 8 to 12 people.
This group interview obtains information from focus group members about
their opinions and buying habits and what they know about a product, a
package, or an advertisement.
Focus groups can offer insight into planned marketing activities. This infor-
mation, however, is based only on the opinions of a small group of consumers.
In addition, focus groups and
personal interviews may not
be appropriate in cultures in
which people do not talk
openly to strangers.
Observations What
people say they do is often
different from what they
actually do. Observation is
the best way to measure
consumer behavior.
Observational research
involves data collection by
watching and recording
shopping behaviors.
Common observations
involve watching shoppers in
stores or counting customers
during certain hours. Com-
©Getty Images/PhotoDisc

puterized cash registers with

scanners allow companies to
observe the purchases of cus-
tomers. These data are used to
determine the number of
employees needed at certain
hours and to set prices at a level for maximizing sales.
In some research settings, such as with children, observations are necessary.
These young consumers may not be able to express themselves well verbally.
However, observational research has a major weakness. It cannot provide

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Chapter 17 DEVELOPING GOODS AND SERVICES FOR GLOBAL MARKETS

information about the attitudes, opinions, or motivations of consumers.

Experiments The most complex type of data collection is the experi-
ment, which involves a statistical comparison of two or more very similar sit-
uations. For example, a company may introduce a package with a photo-
graph in one city and a package with a drawing in another city. The firm
wants to know how the different packages affect consumer preference and
sales. Experiments are expensive to conduct and are most helpful in industri-
alized countries with access to computerized data collection methods.
Experiments also can predict the success of a product before mass distri-
bution. A test market is an experimental research study that measures the
likely success of a new good or service. Companies often use one or two
cities to try out a new item. U.S. companies usually use cities in the United
States. Some firms, however, use foreign cities as test markets. KFC tested its
grilled chicken in Regina, Saskatchewan, Canada. Carewell Industries, a New
Jersey company, first sold its Dentax toothbrush in Malaysia and Singapore.

❙ ANALYZING AND USING RESEARCH DATA

For data to be useful for planning marketing activities, research results must be
analyzed after collection. Statistical tests are commonly used with quantitative
data. The results help managers make marketing decisions. By knowing which
consumers watch certain television programs or read certain magazines, a man-
ager can plan a company’s advertising. Information about customer opinions
and habits can help plan domestic and international marketing activities.

©Getty Images/PhotoDisc

What are the three main types of primary data collection?

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REVIEW GLOBAL BUSINESS TERMS

Define each of the following terms.
1. marketing research 4. focus group 6. experiment
[Link]
2. quantitative research 5. observational research 7. test market
3. qualitative research

REVIEW GLOBAL BUSINESS CONCEPTS

8. What causes a need for new products?
9. What are the sources for new products?
10. What is the difference between secondary data and primary data?
11. What is the purpose of a test market?

SOLVE GLOBAL BUSINESS PROBLEMS

For each of the following research situations, tell which data collection method
might be most appropriate.
12. A package food company wants to know the breakfast eating habits in
Chile.
13. A manufacturing company wants to determine computer needs of small
businesses in Panama.
14. A bank needs information about the satisfaction of checking account cus-
tomers in Argentina.
15. A company needs information on the number of companies in Guatemala
that use refrigerated food-storage areas.
16. A travel company is interested in knowing the attitudes and needs of
Brazilians who travel regularly on business.

THINK CRITICALLY
17. Describe a situation in our society that could be the basis for a new product
or service that does not currently exist.
18. Explain how the behavior of a shopper in a store might be interpreted differ-
ently by different observers.

MAKE CONNECTIONS
19. TECHNOLOGY Use software to prepare a flowchart presentation using
the steps of the new product development process to show the develop-
ment of an actual product.
20. LAW Why might a government in another country create a law to restrict
certain marketing research activities?

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AN INTERNATIONAL
17-3 PRODUCT STRATEGY
GOALS

Describe branding
and packaging tech-
niques used by global
business organiza-
tions.

Explain actions
involved in planning
a global product
strategy.

©Wally McNamee/CORBIS
BRANDING AND PACKAGING
ou are probably familiar with the names Coca-Cola, McDonald’s,
Y Kodak, and Disney. Millions of people around the world also know these
names.

❙ BRANDING AND MARKETING

A brand is a name, symbol, or design that identifies a product. This market-
ing technique helps consumers remember and regularly buy a company’s
products. Common, well-known brand names (such as Kellogg’s, Kraft,
Ivory soap, and Crest toothpaste) may appear on several products or on a
single product.
Service companies and other organizations also use brands. American
Express, UPS, and [Link] are examples of brands not associated with
packaged products.
Brands may need to be revised for foreign sales. For example, Coca-Cola
had to change Diet Coke to Coke Light in Japan. The consumers in Japan did
not want to be reminded that it was a diet soft drink.

❙ TYPES OF BRANDS
Brands range from ones known worldwide to those known only in a small
region. A global brand is used worldwide and is recognized by people in

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17-3 AN INTERNATIONAL PRODUCT STRATEGY

many geographic areas. The Gerber

Products Company uses a “super-
brand” approach for global marketing
activities, with the company’s famous
GLOBAL BUSINESS
name appearing on baby food, child-
care products, and children’s clothing. THE WORLD’S MOST FAMOUS
A national brand is one that is well BRANDS
known within one country. For exam-
ple, before expanding to overseas mar- Of the world’s 20 most valuable
kets, Nike and Frito-Lay were consid- brands, 14 are from U.S. compa-
nies. These include Coca-Cola,
ered national brands. Microsoft, IBM, General Electric,
Regional brands are used on prod- Ford, Disney, McDonald’s, Gillette,
ucts sold only in one geographic and Kodak. Some of the most
region. Certain snack chips or soft famous brands of companies from
drinks may only be available in a few other countries are Nokia
states or regions of countries. (Finland), Mercedes and BMW
Stores and producers will sometimes (Germany), Nestlé (Switzerland),
put their own names on products. Store and Sony, Honda, and Toyota
or manufacturer brands are used on (Japan).
products sold only at certain stores or
distributed through certain sellers. Think Critically
1. Why are most well-known
Many drug stores and department
brands associated with U.S.
stores have a line of health and personal companies?
care products with their own names on 2. How might the Internet and
labels. Store and manufacturer brands other technology influence the
are also called private brands. best-known brands in the world?
Loblaw Companies, based in
Toronto, created the President’s Choice
label. This upscale, private brand of more than 1,000 food products is
exported from Canada to over 20 U.S. states and eight other countries.
Generics are non-name brand, plain wrapper products that can provide a
bargain in certain situations. As with store brands, many generics can pro-
vide low-cost alternatives for consumers. Certain generics, such as aspirin,
bleach, and sugar, are almost exactly the same as higher priced brands.

❙ PACKAGING
Have you ever noticed a new product because of the color, design, and shape
of its package? Companies spend millions of dollars to get the right package.

In early times people consumed their food where they found it. They were self-sufficient, only using what
they caught or made and using natural materials such as gourds for storage. Today we buy our food and other
products in a vast array of packaging. Access [Link] and click on the link for Chapter 17.
After reading the article, construct a timeline that demonstrates the development of packaging.

[Link]

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Chapter 17 DEVELOPING GOODS AND SERVICES FOR GLOBAL MARKETS

When Diet Coke was introduced, the company tested more than 30 combi-
nations of colors, lettering, and designs for its new soft drink can.
WORK AS Packaging serves three major purposes for companies and consumers.
A GROUP 1. A package protects the product from spoilage or damage during ship-
ping and storage.
2. A package attempts to capture the attention of both new and regular
Create a list of factors that users of the product.
would need to be consid-
3. The package should make the product easy to use. Easy-to-pour con-
ered when selling a prod-
uct or service in another
tainers and resealable packages add to consumer convenience.
country. In recent years, packaging has increased in importance as a result of envi-
ronmental concerns. Many companies now offer packages that are either
reusable, refillable, or recyclable.
In some countries, certain packaging regulations influence marketing activi-
ties. Food labeling laws in the United States require that certain ingredient and
nutrition information be presented in a clear format. While Coca Cola uses
the English version of its name in many countries, Korea and Thailand require
the name be presented in the national languages of those countries.

How does a global brand differ from a national brand?

PLANNING A GLOBAL PRODUCT

STRATEGY
very company must make decisions about what it will sell. These choices
E are influenced by the popularity of its product offerings and the ability of
the business to serve consumer needs throughout the world.

❙ THE PRODUCT LIFE CYCLE

The stages a good or service goes through from the time it is introduced
until it is taken off the market is the product life cycle (PLC). As you get
older, you act differently and have different needs. The same thing is true for
products. After a company’s product has been on the market for awhile, the
company will change its marketing approach. The PLC has four stages, as
shown in Figure 17-5.
THE PRODUCT LIFE CYCLE

Dollar
Value

Figure 17-5 All goods and 0

services go through steps

as they increase and Introduction Growth Maturity Decline
decrease in popularity.
Sales Profit

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17-3 AN INTERNATIONAL PRODUCT STRATEGY

E-Brands
companies that are web-based, creating a recognized
Y ou will usually see Kellogg’s, Campbell’s, Kraft,
Green Giant, Crest, Colgate, and Tide when shop-
ping in stores. However, you will not see eBay, Dell, or
brand name is even more important.

[Link] in stores. These are examples of online Think Critically

brands, or e-brands. 1. Prepare a list of traditional brands and web brands.
Establishing a brand identity on the Internet is a con- Survey other students to determine which brands are
cern for companies. Advertisers with “real-world” brands the best known.
developed using television are worried that they will be 2. Locate a web site of a company with a famous brand.
left out if they don’t create a presence on the Web. For Describe how the company is using the Internet for
expanding brand awareness.

Introduction The first stage of the product life cycle is introduction,

when the product is new and few competitors exist. Marketing activities
should emphasize creation of awareness of the item among potential cus-
tomers. Sales are low, and a profit has not been realized.
Growth Next, the growth stage of the PLC finds increas-
ing sales and profits starting. New competitors with similar or
substitute products enter the market.
Maturity Then in the maturity stage, sales start to level off
as the market is saturated, more competitors appear, and new
products compete for the dollars of consumers.
Decline Finally, in the decline stage, sales and profits start
to decrease. The company must decide whether to attempt to
revive the product or stop production of it.
Competition and technology determine the speed at which
a product moves through the product life cycle. Years ago,
©Getty Images/PhotoDisc
radios and televisions would take years to move through the
PLC, as new models and features were rarely introduced. Today movement
through the product life cycle is measured in months for electronic equip-
ment such as video players, computers, and cellular phones.

❙ GLOBAL PRODUCT DECISIONS

A major marketing decision that many companies must make involves
whether to keep its products the same or adapt them to foreign customers. A
global product is a standardized item offered in the same form in all coun-
tries in which it is sold. Common examples of global products are cameras,
film, and many home appliances. Food products are usually difficult to mar-
ket as global products because of differences in tastes. Unilever, however, sells
tea, ice cream, and pasta in nearly identical forms worldwide.
In contrast to a global product, an international product is customized
or adapted to the culture, tastes, and social trends of a country. As a result of

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Chapter 17 DEVELOPING GOODS AND SERVICES FOR GLOBAL MARKETS

different laws and customs, health and personal care products must be adapted
to different settings. Food companies often add different seasonings to products
sold in various cultures.

❙ CEASING FOREIGN MARKET ACTIVITIES

Can you think of a product, such as a breakfast cereal based on a cartoon
character, that is no longer on the market? As the character declined in pop-
ularity, sales of the product probably declined also.
When sales of an item continue to decline, a company will probably
decide to stop making and selling it. Gerber no longer operates daycare serv-
ices and has eliminated its toy and furniture divisions. Such decisions allow
the company to concentrate on more profitable products.

CULTURE: THE GAUCHOS

OF ARGENTINA
Cattle production is one of the major industries of Argentina. A gaucho, similar
to a U.S. cowboy, helps to make beef and related products
available for consumers in South America and around the
world.
Between 1600 and 1750, early settlers in Argentina hunt-
ed wild cattle and horses for the hides. These were used to
make clothing and other products. Over the next 100 years,
herds of cattle were raised in the estancia system—large
ranches in the fertile plains of the Pampas region of east
and central Argentina that were worked by gauchos. Also
during this time, the fat and salted meat of the cattle were
processed, which made new products available to Argen-
tinean consumers. This period was followed by the creation
of far-reaching sheep ranches between 1830 and 1900.
Today gauchos continue to contribute to the economic pro-
duction of Argentina—as the country is one of the world’s
©Kit Houghton Photography/CORBIS
largest producers of livestock. Nearly 60 percent of
Argentina’s land is used for grazing and agriculture.

Think Critically
1. What factors may influence the future working environment of gauchos?
2. Conduct a web search for additional information about gauchos. Write a
short summary of your findings.

What is the product life cycle?

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17-3 AN INTERNATIONAL PRODUCT STRATEGY

REVIEW GLOBAL BUSINESS TERMS

Define each of the following terms.
1. brand 3. global product
[Link]
2. product life cycle (PLC) 4. international product

REVIEW GLOBAL BUSINESS CONCEPTS

5. What purpose does packaging serve?
6. What are the stages of the product life cycle?
7. How does a global product differ from an international product?

SOLVE GLOBAL BUSINESS PROBLEMS

Most packaged products sold in the United States and almost all products in
other countries use the metric system for weights and liquid measurements. The
following is an approximate reference for converting to metric measurements.
When you know: Multiply by: To find:
ounces (oz) 28.35 grams (g)
pounds (lb) 0.45 kilograms (kg)
pints (pt) 0.47 liters (l)
quarts (qt) 0.95 liters (l)
gallons (gal) 3.79 liters (l)
8. A 14-ounce package of spaghetti would weigh about grams.
9. Six pounds of cheese would weigh about kilograms.
10. Eight pints of fruit juice is equal to about liters.
11. Three quart bottles of soft drinks contain about liters.
12. Estimate how many gallons are equal to 12 liters. Then check your answer
with a calculator. How accurate was your estimate?

THINK CRITICALLY
13. Locate examples of famous brands not associated with packaged products.
14. Explain why different advertising would be needed in different stages of the
product life cycle.
15. Why do companies often take legal action against others who try to use the
same brand name?

MAKE CONNECTIONS
16. TECHNOLOGY What types of technology have improved packaging for
consumers and the environment?
17. CULTURAL STUDIES How might a nation’s customs or traditions affect
the brand names used in a country?

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Chapter 17 ASSESSMENT
CHAPTER SUMMARY

[Link] 17-1 GLOBAL PRODUCT PLANNING

A The sources of product opportunities for international marketing are new
products, improved products, new uses for existing products, and existing
products in new markets.

B The categories of consumer products are convenience goods, shopping

goods, and specialty goods. A product line provides an assortment of items
available for sale to varied target markets.

C Services are marketed with an emphasis on personalization, as they are

usually produced as they are consumed.

17-2 DEVELOPING AND RESEARCHING PRODUCTS

A The steps in the new product development process are (1) generating prod-
uct ideas, (2) evaluating product ideas, (3) researching product ideas, and
(4) marketing product ideas. The steps in the marketing research process
are (1) identify problem, (2) collect data, (3) analyze data, and (4) report
results.

B Data collection methods used in international marketing research include

secondary data and primary data (surveys, observations, and experiments).

17-3 AN INTERNATIONAL PRODUCT STRATEGY

A Brands used by companies are names, symbols, or designs that identify a
product or service. Packaging is used to protect the product, to capture the
attention of customers, and to make the product easy to use.

B A global product strategy involves decisions about whether to offer a stan-

dardized version or an adapted version of a good or service.

Read the Global Focus at the beginning of this chapter, and answer the fol-
lowing questions.
1. In what ways does Mattel use both a global product approach and an
international product approach?
2. How might Mattel use technology and joint ventures for continued suc-
cess of its international operations?

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REVIEW GLOBAL BUSINESS TERMS

Match the terms listed with the definitions.
1. Data collected by watching and recording
shopping behaviors. a. brand

2. Large-scale surveys used to collect numer- b. convenience goods

ic data that are often used to study con- c. experiment
sumers.
d. focus group
3. Products purchased after consumers com-
pare brands and stores. e. global product

4. A standardized item that is offered in the f. international product

same form in all countries in which it is g. marketing research
sold.
h. observational
5. An assortment of closely related products research
designed to meet the varied needs of tar-
get customers. i. product life cycle
(PLC)
6. A directed discussion with 8 to 12 people.
j. product line
7. The stages a good or service goes through
from the time it is introduced until it is k. qualitative research
taken off the market. l. quantitative research
8. Inexpensive items that require little shop- m. shopping goods
ping effort.
n. speciality goods
9. A customized product adapted to the cul-
ture, tastes, and social trends of a country. o. test market

10. The type of data collection that involves a

statistical comparison of two or more very similar situations.
11. Open-ended interview questions that allow researchers to obtain comments
from consumers about their attitudes and behaviors.
12. The name, symbol, or design that identifies a product.
13. Unique products that consumers make a special effort to obtain.
14. An experimental research study that measures the likely success of a new
product or service.
15. The orderly collection and analysis of data that is used to obtain specific
marketing information.

MAKE GLOBAL BUSINESS DECISIONS

16. Why do stores and online retailers have larger product lines than in the
past?
17. Name some services that have increased in importance for our economy in
recent years.

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Chapter 17 ASSESSMENT
18. List some ideas that could be the basis for new products in our society.
19. Create some examples of topics for international marketing research stud-
ies that would be interesting to investigate.
20. When may qualitative research be preferred to quantitative research for a
marketing research study?
21. What makes certain brands popular and easy to remember?
22. Does packaging cost too much for certain products? Find examples of
products with packaging that could be made less expensive.
23. Why do some items go through the stages of the product life cycle faster
than others?
24. Create a list of products that may be sold anywhere in the world without
major changes being made. What determines whether an item is a global
product or an international product?

GLOBAL CONNECTIONS
25. GEOGRAPHY Describe geographic factors that might influence whether
a company could sell its product as it is in other countries or if they would
have to adapt it.
26. COMMUNICATIONS Conduct a survey of the products people buy with-
out extensive comparison shopping. How important is place of purchase,
price, and brand for these items?
27. HISTORY Talk to older people about products that are no longer on the
market. What factors might have influenced the decline of these items?
28. CULTURAL STUDIES Collect advertisements, labels, and packages
from products made in other countries. How would you describe the market-
ing approach for these items?
29. RESEARCH Find examples of secondary data in the library and on the
Internet that could help a company with its international marketing activities.
Describe how the information could be of value for preparing a global mar-
keting plan.
30. VISUAL ART Prepare a poster or bulletin board display with examples of
products or services in the various stages of the product life cycle. Suggest
marketing activities that would be appropriate for one item in each stage of
the cycle.
31. CAREER PLANNING Select a good or service. Describe the jobs that
would be required to make the product available to consumers in another
country.
32. TECHNOLOGY Use the Internet to locate online resources for data col-
lection and analysis. Prepare a description of each of the resources you
find.

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THE GLOBAL
ENTREPRENEUR
CREATING AN INTERNATIONAL BUSINESS PLAN
PRODUCT PLANNING FOR INTERNATIONAL MARKETING
Develop a marketing strategy based on the company and country you have
been using in this continuing project, or create a new idea for your business in
the same or a different country. Make use of previously collected information,
and do additional research. This phase of your business plan should include
the following components.
1. A description of the product (good or service), including characteristics and
benefits of the item.
2. A description of the target market. Who would be the main buyers and
users of the product? What are their demographic characteristics? What
are their social attitudes and cultural behaviors?
3. A description of how the product might need to be adapted to accommo-
date social, cultural, or legal differences.
4. A description of what research activities could the company do to better
understand its potential customers and the marketplace.
5. A description of branding and packaging ideas that could be used for this
item.
Prepare a written summary or present a short oral report (two or three min-
utes) to communicate your main findings.

©Getty Images/PhotoDisc

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