Global Marketing Management Global Product Decisions B2B & B2C

1. Global Marketing ManagementGlobal Product DecisionsB2B & B2C MKTG 3231-001 Spring 2014 Mrs. Tamara L. Cohen Class # 18

2. B2B

3. B2B is ‘big time’ The US government is the biggest single purchaser of products & services in the country, spending > $300 billion annually. B2B accounts for > half business activity in developed countries¹ More marketing majors begin their careers in B2B than in consumer marketing.

4. KEY TERMS B 2 B : Business Business • Industrial products • Derived demand • ISO 9000 certification • Relationship marketing • Content marketing

5. KEY CONCEPTS B 2 B : Business Business • Effect of technology on demand • Trade shows & relationship marketing

6. B2B interactions

7. DEMAND is different in Global B2B Markets • Demand in industrial markets is more volatile. • Stages of industrial & economic development affect demand for industrial products. • Level of technology of products & services make sales more appropriate in some countries than others.

8. 1. VOLATILITY of Industrial Demand • Cyclical swings in demand increased • professional buyers tend to act ‘in concert’ • derived demand accelerates changes in markets • Minor changes in consumer demand mean major changes in related industrial demand e.g. Boeing • worldwide demand for travel services related to demand for new airplanes • commercial aircraft industry one of most volatile

9. 2.Degree of INDUSTRIALIZATION 5-stage model of economic development: • Traditional society- most important B2B demand associated with extraction of natural resources; e.g. many countries in Africa & Middle East • Preconditions for takeoff- manufacturing is starting. Primary needs typically related to infrastructure development, like construction, telecommunications, power generation equipment; e.g. Vietnam • Takeoff- manufacturing of consumer goods has begun. B2B needs focus on equipment & supplies to support manufacturing; e.g. Russian & Eastern European countries • Drive to maturity- industrialized economies. Focus on low-cost manufacturing of various consumer goods & some industrial goods; need all categories of B2B goods & services; e.g. Korea; Czech Republic • Age of mass consumption- mostly service economies. High-tech products & services sought mostly from other stage 5 suppliers + consumer products from stage 3 & 4 countries; e.g. Germany; Japan

10. 3.TECHNOLOGY & Market Demand • Trends spurring demand for technologically advanced products • expanding economic & industrial growth in Asia • disintegration of Soviet empire • privatization of government-owned industries worldwide • Companies with competitive edge will be those whose products are: • technologically advanced • highest quality • accompanied by world-class service

11. B2B Promotional Activity • Internet/Electronic Media • Trade Shows/Events • Print Advertising • Promotion/Market Support • Publicity/Public Relations • Dealer/Distributor Materials • Market Research • Telemarketing • Directories Interactive marketing is the future for B2B marketing

12. Social Media is Changing Business

13. Content Marketing “Content marketing (custom media) is the creation and distribution of educational and/or compelling content in multiple formats to attract and/or retain customers.” e.g. white papers case studies videos articles

14. Trade Shows:Crucial in B2B Marketing • Trade shows • manufacturer can exhibit & demonstrate products to potential users • manufacturers can view competitors’ products • opportunity to create sales & establish relationships with agents, distributors, franchisees & suppliers • Online trade shows • useful in difficult economic / political circumstances • poor substitute for live trade shows • Secondary marketing methods - print advertising, catalogs, web sites, direct mail • Total annual media budget on trade events: Europeans 22% Americans 5%

15. Trade shows

18. Relationship Marketing in B2B Contexts • sell continuously over time • Objective of relationship marketing • make relationship an important attribute of transaction + differentiate from competitors • Use Internet to facilitate relationship building and maintenance

19. Quality is Defined by the Buyer • lack of universal standards • country-specific standards • metric system • ISO 9000 Certification = International Standard of Quality ISO 9001 certification of a fish wholesaler in Tsukiji

20. Global Project Team • Customer – initiate inquiry • Sales engineer – initial customer contact • Application engineer – find best product match • Engineering & control systems – design • Project manager – manage project & liaise • Manufacturing technicians – produce, assemble, test • Customer services – installation & start-up • Suppliers – provide materials & components • Service engineer – after-sales service & maintenance

21. B2B SERVICES

22. Support Services • Deliveries • Warranty • Spare parts • Repair and maintenance • Installation • Instructions • Other related services

23. Business Services • For many industrial products, revenues from associates services > revenues from products • cell phones • printers • Leasing capital equipment • Services not associated with products • Boeing at-sea-satellite-launch services • Ukrainian cargo company rents space on giant jets • professional services (advertising, banking, healthcare, etc.)

24. After-Sale Services • Installation • Training • Spare and replacement parts • delivery time • cost of parts • Service personnel • Almost always more profitable than actual sale of machinery / product • Crucial in building strong customer loyalty

25. Services Opportunities in Global Markets • Tourism – int’l tourism largest US services export • Transportation • Financial services • Education – 2007: >600,000 foreign students, tuition $11 billion • Communications – phone services • Entertainment – sporting events sold all over the world • Information – Internet, etc. • Health care – foreigners come here; US facilities abroad too

26. B2C

27. Product suitable for market ? Quality - importance & definition ? Country-of-origin effects on product image ? Physical, mandatory, and cultural requirements for product adaptation ? Overcome resistance to acceptance ? B 2 C :Business Consumers KEY CONCEPTS

28. Is the product SUITABLE for the market? • Product = sum of physical + psychological satisfactions provided to user • primary function • psychological attributes • Cultural adaptation often necessary; affected by how product conforms • norms • values • behavior patterns

29. Primary function moving passengers from A to B+ how it functions in use = product satisfaction

30. Who defines Q U A L I T Y ? • customer • increased customer knowledge • cost + quality of product • among most important criteria to make purchases QUALITY defined in 2 dimensions: • Market-perceived quality • Performance quality • most consumers expect performance quality In some industries quality measured by 3rd parties e.g. JD Power and Associates but in restaurant, don’t ask server for her/his favorite dish! Quality standards vary with country’s industrialization.

31. Maintaining Q U A L I T Y • damage in distribution chain e.g. Russian chocolate • QUALITY essential for success in today’s competitive global market • decision to standardize or adapt product is crucial in delivering quality • manage expectations

32. What do YOU think of chocolate Q U A L I T Y ? • Swiss Milka • American Hershey • English Cadbury

33. Q U A L I T Y = managing expectations

34. Country-of-Origin Effects • Country-of-Origin effect • influences country of manufacture, assembly, or design has on consumer’s perception of product • broad but vague stereotypes about specific countries and specific product categories consumers judge to be “best” • ethnocentrism

35. Country-of-origin stereotypes?

36. more Country-of-Origin Effects • Countries stereotyped - on basis of whether industrialized / in process of industrializing / in process of developing • Technical products • perception of manufacturing in LDCs less positive • Fadsoften surround products from particular countries or regions

37. Physical or Mandatory Requirements and Adaptation • Product homologation = changes mandated by local standards • Product adaptation requirements • legal e.g. package size/weight • economic e.g. units per package • political e.g. censorship issues • technological e.g. data products; different electrical current • climate e.g. perishables

38. Product Adaptation • Labels & packaging • Literacy • Trademark & brand name • Standard measurement • Specific words

39. cans canscans smaller cans in Japan clear cans in France “standard” can in USA thick can in South Africa

40. Global Brands = worldwide use of a name, term, sign, symbol, design, or combination • identify goods / services of seller • differentiate from competitors • worldwide image • importance is unquestionable • most valuable company resource • Internet facilitates

41. Brand Ranking Interbrand, the brand consulting agency, ranks 100 brands most valuable based on criteria that include financial performance and the role the brand plays in influencing customer choices.

42. National Brands • acquiring national brand names • using global brand names • nationalistic pride impact on brands • use global brands where possible and national brands where necessary

43. Private Brands • Growing as challengers to manufacturers’ brands • Private labels • provide retailer with high margins • receive preferential shelf space & in-store promotion • quality products at low prices • Manufacturers’ brands must be competitively priced & provide real consumer value

44. Barriers to Entering Global Markets for Consumer SERVICES • Protectionism • Restrictions on transborder data flows • Protection of intellectual property • Cultural barriers & adaptation Barriers to Exit • Threats to national security

45. Keys to success in Global Product Decisions • In spite of homogenization, consumers also see world of global symbols, company images, & product choice through lens of their own local culture & its stage of development & market sophistication • Each product must be viewed in light of how it is perceived by each culture with which it comes in contact • Analyzing a product as an innovation & using Product Component Model may provide marketer with important leads for adaptation

46. Next class: Global Pricing Decisions