Films On Demand - Embedded Content - Selling Products Globally: Business Without Borders

Selling Products Globally: Business Without Borders

[MUSIC PLAYING] WOMAN: Global products, in some cases, they're identical throughout the world.

But in others, they're altered to appeal to different local markets.

Coca Cola, for example, varies its sweetness and carbonation according to what consumers in different [POPPING] parts of the world prefer.

I'm wanting to market a product globally.

But do I standardize it for all markets, or customize it for different markets?

And what about just pricing and competitive position?

Let's talk with Kathleen Griffiths, lecturer in global marketing at Royal Melbourne Institute of Technology, and Simon Kanat from the successful UK fashion label, Ted Baker, about global products and pricing.

So the big question, to standardize or customize?

KATHLEEN GRIFFITHS: You should know already before you enter that country which things are going to be the most important things that you've got to change.

So the number one change will usually be in the language.

And then it might be in the usage or the lifestyle of the particular usage of the product.

You also have the big number one showstopper, which is government regulations.

And when the government says you can't do something, or you must do something, well, then you must change that.

And if that means that you must change your labeling, or your packaging, or your contents of the product, or some sort of labeling, you must do that.

Otherwise, your product will be pulled from the shelves.

If you can run your product in countries where the lifestyle is the same, or where there are people behaving the same way, then fantastic.

You could group those countries.

And so people try to do regional grouping.

So we might have the same product for everybody in Asia.

WOMAN: Regional grouping makes it possible to standardize or sell identical products to large numbers of people.

So what are the advantages of standardization?

KATHLEEN GRIFFITHS: Well, the advantages of standardization really are the big one, economies of scale.

If I don't have to change it, it's quick to market.

I can just send it the way it is.

I do nothing.

WOMAN: There are other reasons for standardizing products.

Ted Baker believes strongly in maintaining a standard and level of quality in all markets.

SIMON KANAT: So you've got to stick to your [INAUDIBLE].

And you say, hey, be confident.

Say, oh, we're going to go with what our brand stands for.

And over time, the consumer will say, that's a great brand.

They're original.

And there's something that's unique.

KATHLEEN GRIFFITHS: There is a downside to that.

And it still comes back to that cultural idea.

If you don't understand what people want to buy, you don't give them at least that minimum change, then they think that you don't understand them, or their culture, or their needs, or their wants.

[MUSIC PLAYING] WOMAN: It's important to understand the market, and whether a standardized product aligns with cultural expectations.

If it doesn't, we look at customization.

What are the advantages there?

KATHLEEN GRIFFITHS: Well, the advantage of customization is, obviously, the more you customize, the more the person in that country is going to want your product.

That's why you're making those changes, so that you can appeal to them closer.

Disadvantages of customization, OK, it might be you just rejected because they think it's a global product.

We've got a local product that satisfies us.

Once you customize a product right the way down to what people think that they want, then you've lost sort of like the fact that [INAUDIBLE] is French.

And so therefore, Louis Vuitton, or Burberry from UK, or Ted Baker, all the companies that say, well, I am English.

I am French.

[MUSIC PLAYING] WOMAN: Maintaining brand identity is a key consideration, particularly for exclusive labels.

What about factors that influence pricing?

KATHLEEN GRIFFITHS: We'd love it if we would have the same price for everything all around the [DINGING] world.

But that's not going to happen, because governments like to charge different countries different things based on whatever arrangements they have with that country.

WOMAN: Tariffs are duties imposed by governments on imported goods.

They can have a significant impact on pricing.

KATHLEEN GRIFFITHS: So we have tariffs.

We have subsidies.

It's the opposite of tariffs, where the government says, yes, come in.

We want more of your stuff coming in.

And we will subsidize you.

We will get you to come into our country.

And you won't have to pay tax, or you can pay a reduced tax.

WOMAN: Then there are interest rates, exchange rates, and laws that also affect pricing.

KATHLEEN GRIFFITHS: We also have anti-dumping laws, and the other trade practices laws that we have in most westernized countries.

And all of these put together make it very, very hard for anyone to have a global price for their product.

WOMAN: Despite all this, many global brands-- Apple, for instance-- would like to have a global price for their products.

KATHLEEN GRIFFITHS: They try really hard to have a global price.

That would be ideal for them.

But even they sometimes have to look at the price and the affordability of their product depending on if they want to get market share.

But 20 years ago, if they head into China, they might have tried to enter China with a cheaper phone.

Now they are actually entering China and other developing countries with the same thing that you can get everywhere else.

And it becomes an aspirational product.

WOMAN: That's an example of a standardized product being positioned differently in various global markets, rather than offering a cheap, poorer quality version.

[MUSIC PLAYING] Competitive positioning is important, that is, choosing the right strategy to establish a particular position for a brand in relation to its competitors.

[MUSIC PLAYING] A business will look at existing brands in the market to find the median price point.

From there, they can determine where to position their product.

They may decide to price it higher.

KATHLEEN GRIFFITHS: Whether they have looked at their product in comparison to everybody else's, and decide that, therefore, our product is better quality, and the people can afford more, and, therefore, we're going to price it higher.

Then there'll be other companies that will say, OK, we're going to price it lower.

Because we won't make it quite as good as everybody else's.

But you really won't be able to see the difference.

So we will get some volume by pricing it cheaper.

WOMAN: But the business needs to be mindful of customer perceptions about what is the right price.

SIMON KANAT: Again, if you're going too far under that price point, then people say, oh, what's wrong with that?

Why is it so cheap?

If you go too far the other way, and you're at 899, they say, well, I love the product.

But I just don't see that the value is right.

KATHLEEN GRIFFITHS: And then there's the other people that basically say, we want to just compete with everybody else on a level playing field.

People will then try ours, and realize that ours is better.

It's possible to have a product in one country that is thought of as being a very high-quality product, and when, in actuality, in another country it's just like an entry-level product.

And that is often done in Asia, where an entry level or beer, Heineken, You know all those sorts of ones, lots of them are thought of as being entry-level products in their own country.

But they enter a new country, and they enter with a higher price.

People go, ooh, wow.

They think all these must be good quality.

So price is definitely the thing that we use to illustrate to people the position in their mind that we want to have.

WOMAN: When a business needs to change prices to suit the market, there are various strategies they can employ.

KATHLEEN GRIFFITHS: Smaller quantity of a product is a popular way of doing things.

Oreos does this in China.

They basically have smaller packs, because most people in China can't afford a big pack.

WOMAN: Reducing quantities is one method of [BEEPING] changing price.

Another is to leave the product the same, but reduce the price.

[BEEPING] This is easier for some businesses than others.

KATHLEEN GRIFFITHS: Most garments around the world will have an actual tag attached to the actual garment.

And so therefore, it becomes very hard on very labor intensive if you then decide to reduce your prices.

SIMON KANAT: It's a delicate area.

Because you can't deviate too much from your strategy, and from where your positioned, your price position.

Because otherwise, the consumer is confused.

They say, well, hang on.

They're known for this price point.

Why all the sudden they're down here, or what out there?

WOMAN: Advantages of standardization include economies of scale and brand integrity.

But it can also result in a cultural mismatch.

An advantage of customization is increased appeal to local markets.

But products could be perceived as too similar to preferred local ones.

And brand identity can be lost.

Factors that influence pricing include tariffs, subsidies, interest rates, and exchange rates.

Competitive positioning is important.

And in some cases, strategies to change prices may be required.

Standardizing my product or customizing it, all those things that affect pricing, tariffs, subsidies, interest, and exchange rates, and how best to position it in a competitive global market-- I've got a bit to think about before covering global.

Length: 09:41