CHAPTER 5

PRODUCT DECISION

VU THN
ngocvth@uel.edu.vn
 Content

1. Product policy
2. Standardization vs adaptation
3. Packaging
4. Brand image
 Introduction
• Options across product mix
• Global v local branding a major decision

• Rationalisation in MNEs – reducing number of brands

• Global brands - transcend countries and culture to create strong

relationships with consumers in multiple countries.

• Rise of emerging market brands

• Complex decision-making
 1. Product policy
1.1 product planning and development
1.2 product strategy.

Should the company keep a commitment to its existing product mix as the
products reach maturity?

How strongly should the firm follow a strategy of new product

acquisition/innovation?

What are the organizational requirements for following each of the above
approaches?
 1.1 Product planning and development
Product Component Model

1. The physical product core;

2. The product package;
3. Support services.
trade name: tên thương hiệu (có pháp lý)

thành phần sản phẩm

dạng túi dạng gói chứng chỉ chất lượng

tỉnh ngủ,... chất kiệu, thân thiện môi trg

A product (or service) is “the sum of all the physical

and psychological satisfactions that the buyer (or
user) receives as a result of the purchase and/or use
of a product”.
 1.2 Product planning and development

Forms of product development:

1. new product development or addition;

2. changes in existing products;
3. finding new uses for existing products;
4. product elimination.
 1.2 Product planning and development

1.2.1 New product

• export domestic products (is easy to implement, at least initially, and may represent a
relatively low-cost approach) (mới ở thị trường nc ngoài)

• acquire a firm (has products for which there are potential or existing overseas
markets) thâu tóm công ty khác

• copying products (developed successfully by others) bắt chước sản phẩm đang thành công

• internal product development (an evolutionary process consisting of a number of

stages) phát triện sản phẩm hiện tại
 Internal development of new products

• location of R&D facilities of

firms;
• the process of screening new
product ideas;
• the diffusion of new product
khuếch tán

innovations;
• quality management.

New product decision process

1.2.1.1 Location of R&D
Home market firms
Important criteria 1. Proximity to operations
for considering an 2. Availability of universities
overseas R&D có nhiều skilled worker
location
Important criteria 1. Products sold in the
for not considering developing countries are not
overseas R&D sophisticated
locations 2. Lack of qualified scientists
and engineers
3. Economics of centralized R&D
Important criteria for considering overseas R&D locations
Host market firms Worldwide market firms
1. Proximity to markets 1. Availability of pockets of skills
2. Concept of overseas in particular technical areas
operations as full-scale 2. Access to foreign scientific and
business entities technical communities
3. Availability of adequate
infrastructure and universities
1. Increasing costs of 1. Economics of centralized R&D
doing R&D overseas 2. Difficulties in assembling R&D
2. Economics of teams
centralized R&D
“Fashion is more and more global. It doesn’t belong anymore to the French. Or even to
the Italians. I’m a global person: I spend two months in Como [in the Italian Alps], one
month in Milan, two months in Miami. I just don’t think any longer in terms of nationality.
Calvin Klein is American, [but he] makes things in Italy. The French houses all have
English designers now, and women are going global”
1.2.1.2 Screening ideas

Conjunctive model uses all evaluative criteria. The product, in order to proceed for further
consideration, must meet or exceed a minimum value for each of the criteria used.

Disjunctive model based on accepting a product that exceeds specified levels on one or a few key
criteria, regardless of its score on the others.

Lexicographic model based on ranking the evaluation criteria in terms of their perceived importance.
New product ideas are compared criterion by criterion until there is a superior idea. This may occur after
the first criterion or after many criteria.

Linear compensatory model assigns differential importance weights to each criterion and then
determines a summated evaluation score for each product. Further analysis is conducted either on all
products exceeding a minimum score or the one product scoring highest. This is perhaps the most widely
used approach.
1.2.1.3 Innovation and diffusion of products
đổi mới trung tâm cho toàn cầu
The center-for-global
innovation process
The parent company/
a central facility (the
corporate R&D
laboratory) – creates
a new product for
worldwide use
sản phẩm mới cho toàn cầu
The local-for-local The local-for-global The global-for-global
innovation process innovation process innovation process
- created and - emerge as local-for- - created by pooling
implemented by a local innovations, are the resources and
national subsidiary subsequently found to capabilities of many
entirely at the local be applicable in different
level multiple locations, and organizational units to
- all tasks are all are diffused to other an emerging global
carried out within the organizational units opportunity.
nhiều thị trường cùng ptrien 1 sp cho
toàn cầu
subsidiary within the multinational
1 thị trg có sản phẩm phù hợp với nhiều thị trg
mỗi thị trường sẽ có sản phẩm phù hợp
corporation
1.2.1.2 Quality management

9000
● the customer’s quality requirements;
● applicable regulatory requirements,
● minimize harmful effects on the
while aiming to
environment caused by its activities,
● enhance customer satisfaction;
● achieve continual improvement of its
● continual improvement of its
performance in pursuit of these
environmental performance.
objectives.
1.2.2 Changes in existing products
thay đổi sản phẩm hiện có (cho phù hợp với thị trường mới)

Extend PLC by making modifications (standardization or adaptation)

1.2.3 Finding new uses for existing products tìm công dụng mới cho từng sản phẩm

● Is there a related application (e.g., an insecticide for ants may be used for bees in Latin
America)?
● A product sold to women may be sold to men and vice versa (such as deodorants).
● Can the product be used differently when used with another product (e.g., an after-shave lotion
used as a pre-shave lotion with an electric razor)?
● Consumer products may have an industrial market and vice versa (such as garden tractors).
● Does the nature of attributes and/or ingredients suggest new uses (e.g., the light weight and
strength of balsa wood)?
1.2.4 Product elimination loại bỏ sản phẩm

- deleting ‘old’ or weak products

(disproportionately greater or lesser
percentage of sales and profits)
- when to withdraw it from foreign
markets and, further, when to
eliminate it from the company’s
product line.
- the set of strategies for the
synchronization of old product deletion
with entry of a new product is known
as product phasing
The phasing continuity matrix
1.3 Product portfolio
giai đoạn phát triển giai đoạn mở đầu

giai đoạn suy thoái

giai đoạn trưởng thành
-> lựa chọn thích nghi hay chuẩn hoá

BCG portfolio matrix

2. Standardization vs adaptation
*nếu trong kiểm tra thì phải trả lời chuẩn hoá/thích nghi cho cả 4P
không trả lời k rõ ràng

Reasons for standardization or adaptation (research produced)

 Example
Product Adaptation

Sony TV Voltage, broadcast standard

McDonald’s Menu, décor of restaurant
Levi jeans Size mix, fabric, cut
Coca-Cola Brand name (China), package
KFC Menu

Market requirements and product characteristics

 3. Packaging

V – Visibility : the package must be easily distinguished from the visual competition.
I – Information : the package must quickly communicate the nature of its contents.
E – Emotional impact : the design must create favorable impressions in the mind of
the consumer.
W – Workability : the package must function as protection and must also be efficient
in home use.
3.1 The benefits of standardization in
packaging
01 Reduction of dimensions to a few standard sizes facilitates the machine packing of
merchandise

02 Standardized package sizes reduce inventory investment in packaging materials, and facilitate
mass production of the fewer types of packages and shipping boxes

03 Standardization permits full utilization of storage space at the factory and all levels of
distribution

04 Uniform package dimensions permit a balanced format for display and for self-service
selling

05 Standardized sizes simplify, expedite, and cut the cost of handling and shipping.
4. Brand image

“A brand is anything that identifies a seller’s goods or services and

distinguishes them from others”

“A trademark is a brand, or part of a brand, which is protected (in that

others may not use it) by law”

A brand indicates:
- the origin of the product
- the assurance of quality;
- warranty
4. Brand equity
4.1 Country of Origin Effect
Country-of-origin effect (COE ) can be defined as any influence that the country of
manufacture, assembly, or design has on a consumer’s positive or negative perception
of a product.

• Country of design and manufacture play a role

• Brand name can convey origin perceptions
• May communicate positive or negative perception of product based on cultural
stereotypes
• Can provide a cue when unfamiliar with brand
• Some countries associated with specific products

French Perfume/ Swiss Watches/ German cars/ Italian shoes/ French fashion/ etc.
4.2 Branding decisions
• selecting a good brand
• determining how many brands should be in the company’s product line.

Private label?
Factors bearing brands decisions
Single market, multiple brands?
• customer needs
Multiple markets & local brands?
• distribution and promotion methods to be used
• competitive market structure
• economies of scale in production and distribution
• legal constraints
• operational structures.
4.3 Local Branding
CULTURAL BARRIERS

- name has unfortunate meaning in linguistic or cultural context

- Pronunciation difficult e.g. Kellogg’s Frosted Flakes and Cocoa
Krispies difficult to say in Brazil’

ASPECTS

- In LDC’s domestic products may be viewed as inferior

- In developed countries domestic products have positive perception
- May enable international brands to compete successfully with cheaper local brands
- Problems of anti-western or anti-American feeling?
4.4 Global Branding
- Long term international brand (mostly US?) exploiting a universal heritage e.g.
McDonalds
- New products developed with a global consumer in mind
- World-wide recognition
- Consistent identity with consumers across world
- 1/3 revenue from foreign markets (Interbrand, 2015)
- Global nature and international concept (Business Week)
4.4 Global Branding TOP GLOBAL BRANDS 2021
4.4 Global Branding DRIVING FORCES

Economic developments
Media
- Universally available mass media
- Satellite offers limitless channel capacity for non-culture specific
programmes and advertisements
Internet
- Previously localised cultures receive images representing beliefs
and attitudes from all over the world
- Social Media
4.4 Global Branding
ADVANTAGES
“Most global brands have been invented by
Western companies for Western consumers.
Emerging-market consumers are very
different.” (Silvester, 2011)
• Economies of scale – development
costs over large volumes
• Higher level of visibility – easier to
build brand awareness
• Capitalise on media overlap
• Prestige factor
• NB Brand equity might vary from
country to country
4.5 Critical Issues

These values can be embodied in products or corporations or individuals

Brands must hold same values in whichever markets they are available

Consumers must feel that they are not dealing with an unapproachable big brother

“Consumers may feel more empathy toward a name they know,

rather than a faceless, sterile global brand.”
(Marketing, 2009)
 SUMMARY

- A wide range of product decisions - Can be applied to all or part of the

to be made product mix e.g. global brand and
- Standardisation vs adaptation a adapted product
major issue in product decisions - Relatively few, but growing number
- Continuum rather than 2 extremes of truly global brands
 ?
For export packaging and branding considerations, discuss
how language may be significant, particularly to the
multimarket exporters.