tauno kekäle nitra slovak agricultural university november, 2009
TRANSCRIPT
Tauno KekäleNitra Slovak Agricultural University
November, 2009
WHAT DOES “INTERNATIONAL” MEAN ?=>WHAT IS THE MAIN POINT HERE ?
WHAT DOES “INTERNATIONAL” MEAN ?=>WHAT IS THE MAIN POINT HERE ?
…distances…mental and geographical
Profitability is good for your business……SALES
(minus) PROFITCOSTS
ROI (%)
IN-STOCKEQUIPMENT CAPITALBUILDINGS
ProblemProblemidentificationidentification
InformationInformationsearchsearch
Evaluation ofEvaluation ofalternativesalternatives
PurchasePurchase
PostpurchasePostpurchaseevaluationevaluation
FeedbackFeedback
CONSTRUCTIVE VIEW TO “CULTURE”:Surface-level matters have deeper-level
causes and reasonsThe “culture”, paintings architectures,
habitsetc we observe are products of the deep shared, subconscious beliefs and assumptions on how the world works and how we should live in it
EVENT
EVENT
observation (by many)
discussion
sensemaking
“oh, this is why that thing happened twice - this is how the world works”
forgetting subconscious, shared
BELIEFS (e.g.):RELATIONSHIP TO ENVIRONMENT
(dominant / submissive)NATURE OF REALITY, TIME AND SPACENATURE OF HUMAN BEINGS (X/Y/Z) AND
HUMAN MUTABILITY (yes/no)NATURE OF HUMAN ACTIVITY (doing / being)NATURE OF HUMAN RELATIONSHIPS
(status, power, sex, collective/individual)
FOUR DIMENSIONS(Hofstede):
collectivism vs individualism power distance (high vs low) uncertainty-avoidance (high vs low) “achievement-orientation”
(masculinity vs. femininity)
(later addition, to make “5D” model: time orientation long vs short)
Culture types“Macho” (hit & run)/ ”work-hard-play-
hard” (fun in teams)/ ”bet-your-life” (long-term investment)/ ”process” (bureaucracy)
(Deal and Kennedy)
Management/specialist/worker (Schein)
Academic tribes (Becher)
Deciphering cultureValue questionnaires and other quick tests: help to
compare and typologize cultures, but don’t give an understanding (e.g. Ashkanasy’s measurement tool) - because shared cultural beliefs are subconscious.
Interviews of the people. What are their beliefs ? What do they think the management should be doing ? These give again hints, but are just a way to collect data to a constructive approach.
Construction/ethnographic method: should be able to get to the understanding but only if deep enough studies have been conducted, and if the observer has no blind spots
typically this means an external/internal observer pair
Deciphering culture (2)It may help to understand one’s own culture if one knows what
kind of cultures there generally are !
After that:1) Look around you. Sentences and slogans that are often
repeated, furniture, pictures, books in bookshelves, dress code…..
2) Observe, participate. Parties, meetings, rituals and traditions….
3) Listen. Topics discussed, stories of important events and organizational heroes, remunerations and punishments………
Cultural Factors on Consumer Behavior
Culture: Captured by Values, Beliefs & Customs/Habits, regulates societal behavior.
Subculture: Add/delete some VBC’s, but accept the majority of society’s VBC’s.
Social Class: An ascribed indicator of status.Beliefs that indicate and connect to Wealth,
Power and Prestige. (Marketing Analogies e.g. Income, Occupation, Education….)
Social Factors (2)
Family (and friends): The most influential group(s) in most peoples’ lives relative to consumption behavior.
Roles & Statuses: The hats we wear. This creates expectations that we may comply with.
Personal Factors of Consumer Behavior: “Who We Are”
Age & Lifecycle Stage: Indicates consumption needs.
Occupation: Indicates ambitions /accomplishments and provides insights into consumption wants.
Economic Circumstances and Lifestyle: Indicates ability to consume and levels of consumption.
Psychological Factors of Consumer Behavior
Personality: The Self, that which makes us who we are; distinguishes us from others.
Motivation: That which impels us to act. Tension Drive Response, model.
Unfilled needs create tension, when the tension is sufficiently high it triggers a response that is directed at satisfying the need. The need remains in stasis until the tension again builds, e.g., you get hungry and eat every 5 or 6 hours.
Psychological Factors (2)
Perception: Our point of contact with the environment. Relates to the process of attention. Which
sense do we attend to?Organizes sensory stimuli. What is figure and
what is background?Involves interpretation of sensory stimuli. What
was that sound?
Psychological Factors (3)
Learning: How we gather and store information about our environment. Basis for how we act.
Learning theoriesClassical Conditioning: Pavlov
StimulusResponse method based on conditioned and unconditioned elements.
Behavioral Conditioning: Skinner StimulusResponseReinforcement view based on types of reinforcement and their schedules.
Information Processing Models: Environmental info is received through the senses and processed. Learning occurs during conscious interaction with the environment and is stored in long-term memory. Computer analogy.
How We Learn
Psychological Factors (4)Attitudes: Learned predispositions to
respond in a consistently favorable or unfavorable way toward a given object
Simplify decision makingGood indicators of behavior..but:
Why don’t people always act in accord with their attitudes?Personal considerations, Impression
management.Unexpected circumstances.Social considerations.
Attitudes: Single ComponentThe simplest conceptualization is that Attitude = Affect, where affect reflects an individual’s feelings about an object.
Attitudes: Tri- ComponentThe Tri-component attitude model Belief Component: Attitudes are
based on Beliefs (that also reflect Knowledge)
Affect Component: Attitudes are built on Feelings (which reflect Value judgments)
Connative Component: Attitudes predict intended actions
Attitudes: Multi-attribute
The Attitude Toward Object Model (Fishbein & Azjen):
n
iii ebObjectAttitude
1
w here:
i ' s are attributes of the object. b' s are beliefs that the object has that attribute. e' s are the value of that attribute to me.
Theory of Reasoned ActionDeveloped to account for social influences.
.
k
jjj
n
iii msWebWBehaviorIntended
12
11
where: W's are relative weights summing to 1. i's are anticipated behavioral outcomes. b's are beliefs that I can obtain that outcome. e's are the importance of that outcome to me.
j's are the people who will judge my behavior. s's are the judgment standards they will apply. m's are my motivation to comply with their wishes
INTERNATIONAL PRODUCT POLICY: ANOTHER CULTURE IS A RISK FOR OUR BUSINESS
What if we do not sell ?What if it is difficult ?What if we make the wrong statement ?
The risk increases the more unknown worlds we are trying to explore……
(both concerning beliefs – religions, worldviews, history etc – and artifacts such as language, consumption habits, etc.)
THINKING CUSTOMER VALUE1. CUSTOMER SHOULD FEEL THE VALUE-the goal cannot be to sell once as expensively as
possible, but that the customer feels he gets something that is difficult to measure in monetary terms(and that nobody else gives)
2. THE PRODUCT IS NOT A “PRODUCT”-our product is the knowledge we sell to the
customer to improve value for them - or for their customers (physical product or service)
THINKING CUSTOMER VALUE (2)3. CUSTOMER SATISFACTION IS NOT THE FINAL
GOAL, REALLY-as producers we have a duty to serve the customer
throughout the life cycle of the product (or the customer’s process) and to improve the offering continuously
-despite the duty, this is also makes business sense: instead of selling/pushing we “open a connection” to the customer spending
VALUE (Melnyk & Denzler 1996)Value defined as
PERFORMANCECOST
Value thus involves four main elements:Speed / lead timeQualityFlexibilityCost
Levels of Problem SolvingRoutine: Evaluative criteria and
brand preference are known, effort is devoted to finding the item to purchase.
Limited: Evaluative criteria are known, but brand preference is not formed.
Extensive: Evaluative criteria are not known and brand preference is not formed.
The Role of Involvement
Involvement reflects the importance of making the best/right choice or decision.
It spans all levels of problem solving.
HELPING THE CUSTOMER TO HELP YOU: what do the people REALLY want/need ?
-Don't ask directly for requirements, ask for use cases
-Review together the typical use of existing products
-Let the customer review your documentation so that you speak same language and understand the product uses
-If you see opportunities to improve their processes, include them in sufficient detail so that you can see if they are really improvements
So, what to sell ?The international marketer needs to
determine what the market offering should be in a foreign market :
Defining the product offering Products versus Services? Cultural factors
What is a product ?Product: A bundle of attributesThe Total Product
Tangible attributes: materials, size, weight, design, packaging, performance, comfort
Intangibles: brand image, styling, other benefits (installation, delivery, credit, warranty, after-sale service, return policy)
Global Product Strategies
Local and International Environment
Competitive Situation
Firm’s Internal
Situation
Customer Needs &Price
Elasticity
ProductStrategies
Goods versus Services/Rights
Instead of marketing a product abroad, the company may also sell the rights to a product/brand or services in a foreign market:- rights : brand / trademark / patent- services :management skills (hotel chain)
often through concept franchising
Sales of Rights - Examples
Franchising business :
- Coca-Cola : use of its name to licensed bottlers around the world.
- Pilkington: licensing of the process of float glass.
- Other : Manpower, McDonald's, etc.
Sales of Rights - Examples
Management Contracts :- Sheraton Hotels :
Management contract for hotels abroad, sale of consulting and management contracts
Little equity invested : Sheraton manages almost 400 hotels worldwide but has equity in only 40 of them.
Advantages : minimum risk & strong competitive position.
Sales of Rights - ExamplesTurn-Key operations :
The firm is selling technical and engineering skills.
The firm is training foreign nationals to run a plant.
The firm is supplying material and equipment. (e.g. Wärtsilä Diesel; KWH Pipe)
Product Related Global Drivers
Demand DriversHigher expectationsMore informationHigher switching costsFull-service expectations
Product Related Global Drivers
Supply DriversFast-paced innovationsFrequent product modificationsManufacturing rationalizationOutsourcing coordinationStrategic Alliances
StraightExtension
Product ProductAdaptation Innovation
The firm adopts the same policy used in its home market.
The company caters to the needs and wants of its foreign customers.
The firm designs aproduct from scratchfor foreign customers.
Source: W.J. Keegan, Multinational Product Planning: Strategic Alternatives, Journal of Marketing, 33, 1969, pp.58-62
InternationalProduct Strategy
ProductExample
Consumer NeedSatisfied
Product Strategy Communication Strategy
Strategy 1 Product and
CommunicationExtension
GilletteRazor
Disposable, easy to useproduct
Extension Extension
Strategy 2 Product ExtensionCommunication
Adaptation
WrigleyChewing Gum
USA: Substitute forSmoking
Europe: Dental benefits
Extension Adaptation
Strategy 3 Product Adaptation
CommunicationExtension
McDonalds Fast-Food Adaptation:Adding local products to
range
Extension:Using global campaign
Strategy 4 Product and
CommunicationAdaptation
Slim Fast Identical:Lose Weight
Adaptation:Consumer preferences
for different flavors
Adaptation:Celebrity in Germany,
Teacher in UKStrategy 5
Product Invention Buckler Beer Non-alcoholic beer Invention Develop newcommunication
Source: W.J. Keegan
Global Product DecisionsExisting Products
Product phase-out Product modificationProduct introduction into new marketsProduct performance management
New ProductProduct developmentProduct introductionProduct performance management
Timing of Foreign EntryTo be the pioneer, or to follow ???Waterfall Strategy:
Brand Time Span US => Foreign LaunchMarlboro: 35 yearsMc Donald’s: 22 yearsCoca-Cola: 20 years
Sprinkler Strategy:Microsoft Windows 95 - Global roll out:
4-6 million customers worldwide bought the operating system in the first three weeks after the launch
RISKY BUSINESSNew markets: “always” s-curve, but how
steep ? starts to grow when ? how long can we afford to wait ?=> lead users=> customer clinics, Delphi=> observer strategy, scenarios=> product overlap strategy (BCG zoo)
RPV MODEL(Christensen et al. 2004)
WHO will be the incumbent to take up the competition with us upon entry:
Who has the RESOURCESWhose PROCESSES would be most flexibleWhose VALUES would support it
(Think Nokia. Should they be studying Apple… Samsung….Microsoft…Google ?)
Managing International Product LinesDeciding on the right individual product for
world markets is only one aspect of product policy.
The next step is to decide what family of products should be offered
International Product Line PlanningThe foreign product line is frequently
smaller than the domestic line because of financial and market limitations.
By introducing a limited product line into foreign markets the firm can test the market before taking a bigger plunge.
Reasons for Product Standardization
Economies of scale : Production, R&D, MarketingCommon Consumer
needs : Drinking patterns, car sizes
Consumer Mobility : Customer retention & Loyalty
American Express, Kodak, ...
Home Country Image : US jeans, French Perfumes,...
Impact of technology : B to B Markets
POSTPONEMENTSaves “bound capital”, diminishes stocks,
increases flexibility:
differentiating elements of the product must reside in relatively few “chunks”
product, as well as supply process, must be designed so that the differentiating elements can be added to the product near to the end of the chain
Mandatory product adaptationsGovernmental regulationsTechnological considerations (e.g., voltage,
infrastructure)Cultural imperatives - is it acceptable to
consumersMeasurement standards: volume, length,
weight, quantity
Brand PositioningPerceived fit between a particular product offering and the needs of target market
Positioning is defined relative to:competitive offerings
consumer needs
Positioning StrategyAttribute or BenefitQuality and PriceUse or User
Brand EquityBMW Best engineeredCoke Fun and excitementCartier Quality
Corporate Branding
CONCLUSION:All the products and markets that CAN be
developed should not necessarily be developed;
Strategic view is required to avoid mixing the fun of developing products and markets with the money-bringing response to real needs (means and ends)
In business companies, new products and markets should always make BETTER business sense than the old ones ! (ROI)
SOURCES:
E.Schein (1984) Organizational culture and leadershipG.Hofstede (1994) Cultures and organizations: Software of the mindC.Geertz: (1977) Interpretation of culturesLecture on Consumer Behavior, Dr. David ForlaniLecture on International Product Policy, Dr. Wolfgang UlagaProduct Detail Design lecture, Tauno Kekäle