Lecture 9 Production Management of International Business

What Is a Product? △Product: Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. △Service: Any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything.

Levels of Product and Services Three levels of Product: ▲Core, actual, and augmented product: People who buy a HTC are buying more than a cell phone, e-mail device, or organizer. They are buying freedom and on-the-go connectivity to people and resources.

Product and Service Classifications Consumer products are products and services bought by final consumers for personal consumption. Industrial products are those purchased for further processing or for use in conducting a business.

Marketing Considerations for Consumer Products

1. Convenience products---consumer products and services that the customer usually buys frequently, immediately, and with a minimum of comparison and buying effort. E. g. laundry detergent, candy, magazines, and fast food 2. Shopping products---less frequently purchased consumer products and services that customers compare carefully on suitability, quality, price, and style. E. g. furniture, clothing, used cars, major appliances, and hotel and airline services.

3. Specialty products---consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort. E. g. specific brands of cars, high-priced photographic equipment, designer clothes, and the services of medical or legal specialists. 4. Unsought products---consumer products that the consumer either does not know about or knows about but does not normally think of buying. E. g. life insurance, preplanned funeral services, and blood donations to the Red Cross

Products and Services Decisions Individual Product Decisions Quality Name, term, Design and Identify and sign, symbol, produce the describe Features design that container or products, Style and identifies the wrapper for promote the Design products or a product brand services

Branding Strategy: Building Strong Brands Brand Equity: The differential effect that knowing the brand name has on customer response to the product or its marketing. It’s a measure of the brand’s ability to capture consumer preference and loyalty. Top Ten Breakaway Brands 1. TJ Maxx 6. Costco 2. Ipod 7. Propel 3. Black. Berry 8. Barnes & Noble 4. Stonyfield Farm 9. GE 5. Samsung 10. Microsoft

Building Strong Brands 1. Brand Positioning Attributes Benefits Beliefs and values ▲Brand positioning: The strongest brands go beyond attribute or benefit positioning. Each wristwatch embraces Fiyta’s knowledge of time-keeping; insistence on aesthetics and ideals for lifestyle.

Brand Name Selection Brand name selection Selection Protection A good name can add greatly to a product’s success. Naming a brand becomes part science, part art, and a measure of instinct.

Brand Sponsorship Brand sponsorship Manufacture’s brand Private brand Licensing Co-branding ▲ Store brands: Costco offers a staggering array of goods and services under its Kirkland Signature brand---anything from Kirkland Signature rotisserie chickens to a $3, 439 -person Kirkland Signature Tahitian cruise package.

▲Licensing: Most manufacturers take years and spend millions to create their own brand names. However, some companies license names or symbols previously created by other manufacturers, names of well-known celebrities, characters from popular movies and books. For a fee, any of these can provide an instant and proven brand name. Miffy ( Italy) Pleasant Sheep and Big Sponge. Bob Wolf (China) Square. Pants (U. S. )

Co-branding ▲ The practice of using the established brand names of two different companies on the same product. ▲ Co-branding offers many advantages. Because each brand dominates in a different category, the combined brands create broader consumer appeal and greater brand equity. Co-branding also allows a company to expand its existing brand. ★ Apple co-branded the Nike+i. Pod Sport Kit, which lets runners link their Nike shoes with their i. Pod Nanos to track and enhance running performance in real time. “Thanks to a unique partnership between Nike and Apple, your i. Pod nano becomes your coach. Your personal trainer. Your favorite workout companion. ”

Brand Development Brand development Line extension Brand extension Multibrands New brands

★Line Extensions Line extensions occur when a company extends existing brand names to new forms, colors, sizes ingredients, or flavors of an existing product category. A company might introduce line extensions as a low-cost, low-risk way to introduce new products. Or it might want to meet consumer desires for variety, to use excess capacity or simply to command more shelf space from resellers. But an overextended brand name might lose its specific meaning. ★Line extension: Hangzhou-based Wahaha, enjoyed initial success with an extension of the corporate brand name from children's' drinks to purified water for adults but then fell into the "stretch too far" trap with a further extension into children's' clothes.

China’s ‘Big Four’ state-owned commercial banks Bank of China, BOC(1954) The most internationalized commercial bank The no. 2 lender in China overall, the no. 1 lender to non-institutions, and the no. 1 foreign exchange lender. Industrial and Commercial Bank of China, ICBC(1984) The largest state-owned commercial bank in China and the largest bank in the world by profit and market capitalization. Agricultural Bank of China, ABC(1951) In 2011, it ranked 8 th among the Top 1000 World Banks, meanwhile Forbes Global 2000 named it the 25 th-largest public company in the world. China Construction Bank (1954) It is ranked as the nation's second largest and the second largest bank in the world by market capitalization and 12 th largest company in the world.

Some shareholding commercial banks in China Merchants Bank, CMB Founded in 1987, it is the first share-holding commercial bank wholly owned by corporate legal entities. Shanghai Pudong Development Bank, SPDB A joint-stock commercial bank. The purpose of SPDB is to provide financial services for the development of Pudong, building Shanghai into one of the great international financial hubs, and to contribute to the national economic development and social progress. China Minsheng Banking Corporation Formally established on January 12, 1996 in Beijing, CMBC is the first national joint-stock commercial bank with shares mainly from non-public enterprise.

★Brand Extensions A brand extension extends a current brand name to new or modified products in a new category. It gives a new product instant recognition and faster acceptance. It also saves the high advertising costs. The Youngor Group was founded in 1979. Over the three decades’ development, the Group established businesses in sectors including property development and equity investment, in addition to its core business of branded garment manufacturing and marketing. The Youngor Group is now a major multinational corporation, employing over 50, 000 people. A French jeweler and watch manufacturer Cartier’s expansion into fine jewellery was consistent with its core portfolio of luxury watches. The product range of Cartier ranges from watches, jewellery, leather goods to accessories

Caterpillar moved into shoes and clothing reliable, resistant, masculine

Brand stretching risks Confuse the image of the main brand Distort/Dilute the values of the Brand Lose the original consumers Pierre Cardin brand dilution

Product Life-Cycle Strategies Sales and profits over the product's life from inception to decline

Product Life Cycle (PLC) Product life cycle: The course of a product’s sales and profits over its lifetime. It involves five distinct stages: product development, introduction, growth, maturity, and decline. The PLC concept can describe a product class (gasolinepowered automobiles), a product form (SUVs), or a brand (the Ford Escape). The PLC concept also can be applied to what are known as styles, fashions, and fads.

Introduction Stage ◆The product life-cycle stage in which the new product is first distributed and made available for purchase. In this stage, profits are negative or low because of the low sales and high distribution and promotion expenses. ◆ Well-known products such as instant coffee, frozen foods, and HDTVs lingered for many years before they entered a stage of rapid growth.

Growth Stage ◆ The product life-cycle stage in which a product’s sales start climbing quickly. Profits increase as promotion costs are spread over a large volume and as unit manufacturing costs fall. LED screen

Maturity Stage ◆ The product life-cycle stage in which sales growth slows or levels off. The slowdown in sales growth results in many producers with many products to sell. Household Appliances Dairy Products

Decline Stage ◆ The product life-cycle stage in which a product’s sales decline. The reasons vary from technological advances, shifts in consumer tastes to increased competition. DVD CD

Strategies for managing the product life cycle • • 1. 2. 3. 4. Knowledge of the life cycle can provide useful guidance for marketing strategy decisions. Marketers should: Anticipate that sales and profits will assume a predictable pattern throughout the life cycle stages Shift promotional emphasis from product information in the early stages to brand promotion in the later ones Different marketing emphasis: stimulate demand (stage 1) ----cultivate selective demand (stage 2) ---market segmentation (stage 3) ---increase primary demand (stage 4) Maximize sales and profits at each stage through appropriate promotional efforts.