Marketing Management Chapter 8: Product and Service Decisions

For a complete list of all chapters so far, you can visit the Marketing Management Tab on the blog!

Chapter 8: Summary

The good or service as seen by the consumer constitutes much more than just a physical core product; all the intangibles that accompany the product form the package. The product audit is used to explore what this package comprises. The Ansoff Matrix looks at the four main growth strategies and demonstrates the increase in risk as a company moves from penetration of the known market to diversification into a totally unknown market.

The theory of the product life cycle says that the stages of introduction, growth, maturity, decline, and postmortem that a product goes through are to be reflected in the corresponding marketing mix. Even though most attention is focused on new-product launches, most products are in the maturity stage, where they need careful management attention to either prolong their life cycle or to lead to graceful retirement.

A popular theoretical tool for structuring product portfolios is the Boston Consulting Group Matrix. Its four quadrants are based on market share and market growth: problem children (or question marks), stars, cash cows, and dogs. Because of its assumption of a significant product life cycle and economies of scale, the Boston Matrix may have less relevance than its advocates suggest. In any event, the use of the matrix requires a sound understanding of the complex interrelationship between market growth rate and relative share.

The development of a product mix needs to consider both the width and depth of product lines and may require line stretching or line rationalization. In doing so, the firm must carefully consider the implications of such product policies on sales, profits, and relationships with customers and suppliers.

When using a strategy of market expansion, the firm must consider whether and how to standardize or adapt its products. In addition, attention must be devoted to packaging. No longer simply driven by product protection, packaging must reflect market requirements, promotional opportunities, and distribution considerations.

Services, whether related to goods or pure services, have distinctive features. In particular, they are more dependent on people, which necessitates more, and higher, standards of management. The intangibility of services means that the associated physical elements may be used for promotion, and strong branding is important. The lack of storage capacity may require new efforts at smoothing out demand fluctuations through personnel management or pricing strategies.

Overall, even though all elements of the marketing mix are equally important, the product is the most visible component and serves as the focal point for all marketing mix aspects.

Marketing innovation: A consequence of competitiveness

by Suraksha Gupta, Naresh K. Malhotra, Michael Czinkota, and Pantea Foroudi

A hopefully interesting read! Please find a brief excerpt of this published article along with the link to the full article below.

Abstract: This research uses complexity theory to probe the relationship between competiveness and innovation in the marketing practises of large manufacturing firms that offer their branded products in a foreign market by engaging a network of local small- and medium-sized enterprises (SMEs) as resellers of their brand. A deductive, quantitative research approach was employed and data were collected over a nine-month period from resellers of international IT firms in India using a questionnaire. A structural equation modelling technique and fuzzy-set qualitative comparative analysis (fsQCA) were employed on a sample of 649 respondents to find answers to the questions raised. This research indicates that a successful business relationship between a brand and its resellers can enable both parties to compete in a competitive market. This study finds that innovativeness in the marketing initiatives of the brand can be a function of the contributions made by the brand to its competitiveness. Nevertheless, the findings are also subject to some limitations and provide direction for future research on the topic.

1. Introduction

Various studies recommend that managers aiming to venture into the challenging field of internationalisation should create a competitive edge that helps them to demonstrate the superior abilities of their firm (Barney, Wright, & Ketchen, 2001; Porter, 2011; Samli, Wirth, & Wills, 1994). But, fear of the unknown deters managers from stepping out of their home country and benefiting from internationalisation because growth markets tend to be very complex as they foster competition (Knight, 1995; Thai & Chong, 2013). A business-to-business model of distribution allows managers of international firms to successfully deal with entry barriers and enter smoothly into a foreign market and effectively address the complexity of a place that offers high potential of growth to their businesses (Yan, 2012). A distributor simultaneously facilitates the entry of multiple firms with competing products into the market and engages micro level small and medium firms in the local market for selling (Chen, 2003). Since distributors offer multiple similar and competing products to resellers, markets being served through resellers become very competitive for international brands. Competition in a market encourages competing firms to demonstrate their ability to innovatively serve customers (Freeman, Edwards, & Schroder, 2006). Lack of in-depth native knowledge in such markets is a major shortcoming for firms aiming to internationalise because it decreases their capability to innovate their marketing related business practises by predicting the business environment and trends in the consumption patterns of the foreign market (Bell, 1995; Johanson & Vahlne, 2009). Distributors and resellers have an important role to play in the successful penetration of a foreign market showing that an international firm develops its capability to innovatively market its products through reseller networks that needs to be understood. The resource advantage theory recognises the creation of a competitive edge as a function of marketing and identifies the role of branding in creating the capability of a firm to demonstrate its superior abilities (Hunt & Morgan, 1995, 1996; Srivastava, Fahey, & Christensen, 2001). Simultaneously, the industrial practises of industrial brands particularly in the IT and telecom sector indicate that the managers of strong brands can compete in foreign markets based on their brand leadership and brand relationships in the local market. It has also been noticed and reported in the literature of local firms by studies like Gupta and Malhotra (2013) that a brand that contributes to the competitiveness of the reseller is able to compete at the local level using innovative marketing initiatives. These observations of various researchers indicate that the relationship between an international brand and its resellers in foreign markets becomes very important for brands in a market that poses strong competition (Anderson & Weitz, 1992). This study examines the relationship between competitiveness and innovation in the marketing practises of large manufacturing firms that offer their branded products in different countries through a network of local small- and medium-sized enterprises (SMEs) as resellers of their brand. It builds on both the resource-based view and complexity theory to understand what features of the brand and the reseller enable them to adopt innovative marketing practises in an international setting. We aim to bridge the gap in the existing marketing literature by reviewing current academic knowledge surrounding competitiveness and marketing innovation. Thus, the study addresses the following research question: What configurations of brand and the reseller enable the adoption of innovative marketing practises by two firms in an international setting? This study addresses the research question by first developing a suitable theoretical framework which is then used to investigate the question by means of empirical data. This study addresses this question in four phases. The first phase underpins the arguments about competitiveness and marketing innovation with the current academic knowledge about theory of competitive advantage and resource-advantage theory. The second phase explores the concept and assumptions using expert insights. During the third phase, this study conducts a field survey to collect data from resellers of international brands and use structure equation modelling (SEM) and fuzzy set qualitative comparative analysis (fsQCA) (Ragin, 2006, 2008). fsQCA has received increased attention as it gives an opportunity to the researchers to gain a deeper and richer perspective on the data, particularly when applied together with complexity theory (Leischnig & Kasper-Brauer, 2015; Mikalef, Pateli, Batenburg, & Wetering, 2015; Ordanini, Parasuraman, & Rubera, 2013; Woodside, 2014; Wu, Yeh, & Woodside, 2014). The fourth phase leads to interpret the results in order to make recommendations and consider future avenues for the research. This research contributes to the literature on business-to-business and international marketing. Finally, the study advances the current understanding about the interdependence of brand and reseller firms for developing their competitiveness and adopting innovative approaches to marketing

https://cyberleninka.org/article/n/529841/viewer

A SUMMER IN CANTERBURY

Canterbury-Cathedral-460x306Scholars typically spend their summers at interesting and learn-worthy organizations. For my summer this year such destination will be the University of Kent in Canterbury, UK. There I will participate in several events. I will be help coordinate a university-wide international business seminar: Global Business in a Dynamic Environment. In addition, I will be chairing the scientific council of the 1st International Doctoral Conference “Socializing Business Research: Connecting and Advancing Knowledge” at Kent Business School.

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OECD proposals to have impact on transfer pricing in India

NEW DELHI: Once implemented, the measures proposed by OECD to curb tax avoidance activities would have “far reaching implications” in India’s transfer pricing landscape as well as a significant impact on US multinationals with overseas operations, according to experts.

Paris-based Organisation for Economic Cooperation and Development (OECD), which sets the global tax standards, published a seven-point BEPS ( Base Erosion and Profit Sharing) recommendations on Tuesday.

Companies having international operations would have to work towards not only adhering to compliance obligations but also review the operating structures in various jurisdictions, he said in a statement.
The proposals, which have been prepared after extensive consultations with various stakeholders including G20 nations.

Read Full Article in The Economic Times

World Bank: THE SMALL ENTREPRENEUR IN FRAGILE AND CONFLICT-AFFECTED SITUATIONS

The new report by World Bank is part of a broader effort by the World Bank Group to understand the motives and challenges of small entrepreneurs in fragile and conflict-affected situations (FCS). The report’s key finding is that, compared to entrepreneurs elsewhere, entrepreneurs in FCS have different characteristics, face significantly different challenges, and thus may be subject to different incentives and have different motives.

Therefore, it is recommended that both the current analytical approach and the operational strategy of the World Bank be informed by the findings that follow. The publication is organized in the following manner: (i)

Overview of the Entrepreneur’s Challenges in FCS; (ii) Observations of FCS Firms, Sectors, and Business

Environments; (iii) Implications of findings; and (iv) Conclusions and Recommendations. Included are also appendices, boxes, figures, and tables.

FCS Firm Characteristics

The report summarizes findings of recent World Bank Enterprise Surveys (ES) conducted across Sub-Saharan Africa (SSA), Asia, and the Eastern Europe and Central Asia (ECA) Region as well as Doing Business indicators and additional World Bank Group studies and field observations. The report finds that the majority of entrepreneurs in FCS countries are small, informal, and concentrated in the trade/services sectors. According to the ES, and after controlling for the level of development (that is, GDP per capita),

1. The average FCS firm in SSA and the ECA Region2 produces less output than non-FCS firms.

2. The average FCS firm in ECA is by 20 percent less likely to innovate (that is, to introduce/upgrade new products and services) than its non-FCS counterpart.

3. FCS firms start smaller and grow significantly more slowly, or even shrink (in the number of employees) over time, compared to non-FCS firms in the Regions analyzed.

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