CONTENTS Preface ... xv Introduction ... 1 1 Introduction to Global Marketing ... 2 The Development of Global Marketing ... 3 Domestic Marketing ... 3 Export Marketing ... 3 International Marketing ... 4 Multinational Marketing ... 4 Pan-Regional Marketing ... 5 Global Marketing ... 5 The Scope of Global Marketing ... 6 Defining Global Marketing Management ... 7 Relationships with Other Fields of Study ... 9 Exploring the Challenge of Global Marketing ... 10 Factors Limiting Standardization of Global Marketing Strategies ... 11 Market Characteristics ... 12 Industry Conditions ... 14 Marketing Infrastructure ... 15 Regulatory Environment ... 16 Participants in Global Marketing ... 17 Multinational Corporations' Role in Global Marketing ... 17 Global Companies' Role in Global Marketing ... 18 Finns Based in Emerging Economies Participate in Global Marketing ... 19 Service Companies as Participants in Global Marketing ... 23 Exporters as Global Marketers ... 24 Importers as Participants in Global Marketing ... 26 Start-Up Firms and Entrepreneurial Ventures in Global Marketing ... 26 E-Commerce Companies Enter Global Marketing ... 27 The Importance of Global Marketing ... 27 The Logic for Companies to Become Involved Involvement Global Marketing ... 29 Why Study Global Marketing? ... 31 A Need for More Global Marketers ... 31 A Need for Global Mindsets ... 33 Organization of This Book ... 34 Competencies ... 35 Decision Areas ... 35 Chapter Organization ... 36 Conclusions ... 37 Questions for Discussion ... 38 For Further Reading ... 39 Part Ⅰ Understanding the Global Marketing Environment ... 40 2 The Global Economy ... 42 International Trade : An Overview ... 43 The Growth in World Trade ... 45 The Basis for Trade : Absolute Versus Comparative Advantage ... 47 Absolute Advantage ... 47 Comparative Advantage ... 49 Balance of Payments ... 51 Balance of Payments Measures ... 53 Exchange Rates ... 54 International Agencies for Promoting Economic and Monetary Stability ... 59 International Monetary Fund ... 59 World Bank(International Bank for Reconstruction and Development) ... 61 Group of Seven ... 61 European Monetary System ... 62 International Trade : Does It Deserve Special Treatment? ... 63 Protectionism and Trade Restrictions ... 64 Tariffs ... 65 Quotas ... 66 Orderly Marketing Arrangements and Voluntary Export Restrictions ... 67 Formal and Administrative Nontariff Trade Baniers ... 68 General Agreement on Tariffs and Trade(GATT) ... 69 World Trade Organization ... 70 Economic Integration as a Means of Promoting Trade ... 71 Free Trade Areas ... 72 Customs Unions ... 72 Common Markets ... 72 Monetary Unions ... 73 The Global Economy ... 73 Conclusions ... 75 Questions for Discussion ... 75 For Further Reading ... 76 3 Cultural and Social Forces ... 77 A Definition of Culture ... 78 Cultural Influences on Marketing ... 79 Isolating Cultural Influences ... 79 Language ... 80 Forms of Address ... 80 Overcoming the Language Barrier ... 81 Religion ... 83 Christian Traditions ... 84 Islam ... 84 Education ... 90 Levels of Participation ... 90 Literacy and Economic Development ... 93 The Family ... 94 Work and Leisure ... 98 Reference Groups ... 102 Role Models ... 102 Country Image ... 102 The Challenge of Cultural Change ... 104 Cultural Challenges to Marketing in Eastern Europe ... 106 Adapting to Cultural Differences ... 107 Cultural Analysis for International Marketing ... 109 Cultural Dimensions ... 110 Conclusions ... 112 Questions for Discussion ... 113 For Further Reading ... 113 4 Political and Legal Forces ... 115 Host Country Political Forces ... 117 Political Climate ... 117 Governments ... 118 National Sovereignty and the Goal of Self-Preservation ... 120 The Need for National Security ... 121 Fostering National Prosperity ... 122 Enhancing Prestige ... 123 Protecting Cultural Identity ... 124 Host Country Pressure Groups ... 125 Host Government Actions ... 126 Jawboning ... 126 "Buy Local" Restrictions ... 127 Nontariff Barriers ... 128 Subsidies ... 129 Operating Conditions ... 130 Local Content ... 131 Ownership Conditions ... 132 Boycotts ... 133 Takeovers ... 134 Home Country Political Forces ... 136 Home Country Actions ... 136 Home Country Pressure Groups ... 138 Sudden Changes in the Political Climate ... 140 Political Risk Assessment ... 144 Objectives of Political Risk Assessment ... 142 Organization of Political Risk Assessment ... 142 Information Needs ... 143 Risk Reduction Strategies ... 148 Local Partners ... 149 Invaluable Status ... 149 Vertical Integration ... 149 Local Borrowing ... 150 Minimizing Fixed investments ... 150 Political Risk Insurance ... 150 International and Global Legal Forces ... 151 Laws Against Bribery and Corrupt Practices ... 151 Laws Regulating Competitive Behavior ... 154 Product Liability ... 155 Bankruptcy Laws ... 156 Patents, Trademarks, and Copyrights ... 157 Regulatory Trends Affecting Global Marketing ... 159 Conclusions ... 163 Questions for Discussion ... 163 For Further Reading ... 164 Part Ⅱ Analyzing Global Marketing Opportunities ... 166 5 Global Markets and Buyers ... 168 Screening International Marketing Opportunities ... 170 Selection Stages ... 170 Criteria for Selecting Target Countries ... 172 Techniques of Making Market Selection Decisions ... 180 Listing of Selection Criteria ... 180 Market Indexes for Country Selection ... 184 Ongoing Market Screening ... 184 Grouping Global Markets ... 186 Rationale for Grouping Markets ... 186 Marketing Activities Influenced by Country Groupings ... 186 Growth of Formal Market Groups ... 188 Economic Factors ... 189 Political Factors ... 189 Geographic Factors ... 189 Types of Market Groups ... 190 Major Market Groups ... 190 Global Buyers ... 200 The Consumer Market ... 201 Ability to Buy ... 202 Consumer Needs ... 203 Buyer Motivation ... 203 Buying Process ... 206 Business Markets ... 208 Buying Motives ... 208 Factors Influencing Global Purchasing ... 209 Government Markets ... 210 The Buying Process ... 211 Economic and Political Needs of Governments ... 212 Conclusions ... 212 Questions for Discussion ... 214 For Further Reading ... 214 6 International and Global Marketing Research ... 216 The Scope of Global Marketing Research ... 217 The Importance of Global Marketing Research ... 218 Challenges in Planning Global Research ... 221 Conceptual Framework : The Comparative Analytic Approach ... 222 Marketing as a Function of the Environment ... 222 Understanding the Marketing Environment ... 224 Analyzing Environmental Variables ... 227 The Research Process ... 228 Problem Definition and Development of Research Objectives ... 229 Determination of Data Sources ... 229 Data Collection ... 230 Research Techniques ... 239 Demand Analysis ... 239 Analysis by Inference ... 242 Multiple-Factor Indexes ... 244 Competitive Studies ... 244 Environmental Studies ... 249 Developing a Global Information System ... 250 Conclusions ... 254 Questions for Discussion ... 255 For Further Reading ... 255 Part Ⅲ Developing Global Marketing Strategies ... 258 7 Developing a Global Mindset ... 260 Different Types of Marketing Mindsets ... 261 Domestic Mindset ... 261 International Mindset ... 263 Multinational Mindset ... 264 Panregional Mindset ... 264 Global Mindset ... 265 Knowledge Components for the Global Mindset ... 266 Key Market Knowledge ... 266 Economic Knowledge ... 268 Political Knowledge ... 268 Cultural Knowledge ... 269 Historic Knowledge ... 269 Geographic Knowledge ... 270 Understanding Global Market Facts ... 270 The Importance of Acquiring Global Key Market Knowledge ... 271 Analytical Global Marketing Skills ... 272 The Global Logic Concept ... 272 Customer-Based Global Logics ... 273 Global Customer Logic ... 273 Global Information Logic ... 276 Global Purchasing Logic ... 277 Industry-Based Global Logics ... 279 Global Competitor Logic ... 279 Global Industry Logic ... 282 Global Size Logic ... 283 Global Regulatory Logic ... 284 Integrating Global Logics into a Composite View ... 286 Global Market and Opportunity Assessment ... 288 The World Market as a Global Chessboard ... 288 Understanding Lead Markets ... 292 Individual Skills for a Global Mindset ... 294 Global Language Communications Skills ... 294 Global Telecommunications Skills ... 296 Conclusions ... 298 Questions for Discussion ... 299 For Further Reading ... 300 8 Global Marketing Strategies ... 301 Patterns of Globalizing Marketing Operations ... 302 Opportunistic Global Market Development ... 303 Following Customers Abroad ... 303 Pursuing Geographic Diversification ... 304 Exploiting Different Economic Growth Rates ... 305 Exploiting Product Life Cycle Differences ... 305 Pursuing Potential Abroad ... 306 Globalizing for Defensive Reasons ... 307 Pursuing a Global Logic or Imperative ... 307 Pathways to Global Expansion ... 308 Domestic Marketing Strategies ... 308 Regional and Multiregional Marketing Strategies ... 310 Asset Globalization Versus Market Globalization ... 310 Stages of Global Market Development Pathways ... 312 Geographic Market Choices ... 314 Emphasizing Developed Economies ... 314 Emphasizing Emerging Markets ... 316 Expanding in Eastern Europe ... 317 Country Selection ... 321 Targeting Lead Markets ... 322 Targeting "Must Win" Markets ... 325 Identifying Generic Global Marketing Strategies ... 327 Multidomestic Marketing Strategies ... 330 Regional and Multiregional Strategies ... 331 Global Marketing Strategies ... 334 Integrated Global Business Strategies ... 340 Competitive Global Marketing Strategies ... 344 Global Firm Versus Global Firm ... 344 Local Company Versus Global Firm ... 346 Global Strategies for Companies Originating from Emerging Economies ... 348 Conclusions ... 350 Questions for Discussion ... 351 For Further Reading ... 351 9 Global Market Entry Strategies ... 353 Exporting as an Entry Strategy ... 355 Indirect Exporting ... 355 Direct Exporting ... 356 Foreign Production as an Entry Strategy ... 359 Licensing ... 359 Franchising ... 362 Local Manufacturing ... 362 Ownership Strategies ... 367 Joint Ventures ... 367 Strategic Alliances ... 373 Entering Markets Through Mergers and Acquisitions ... 378 Preparing an Entry Strategy Analysis ... 380 Estimating Sales ... 380 Estimating Costs ... 383 Estimating Asset Levels ... 383 Forecasting Profitability ... 384 Entry Strategy Configuration ... 385 Portal or E-Business Entry Strategies ... 386 Exit Strategies ... 388 Consolidation ... 389 Political Reasons ... 389 Reentry Strategies ... 390 Conclusions ... 391 Questions for Discussion ... 392 For Further Reading ... 392 Part Ⅳ Designing Global Marketing Programs ... 394 10 Pricing for Global Markets ... 396 Company Internal Factors ... 398 Profit and Cost Factors ... 398 Transportation Costs ... 400 Tariffs ... 401 Taxes ... 402 Local Production Costs ... 402 Channel Costs ... 402 Market Factors Affecting Pricing ... 404 Income Levels ... 404 Competition ... 405 Environmental Factors Affecting Price ... 406 Exchange Rate Fluctuations ... 406 Inflation Rates ... 407 Price Controls ... 409 Regulatory Factors : Dumping Regulations ... 410 Managerial Issues in Global Pricing ... 411 Determining Transfer Prices ... 411 Quoting Price in a Foreign Currency ... 414 Dealing with Parallel Imports or Gray Markets ... 417 Managing Export Price Escalation ... 419 Global Pricing Strategies ... 420 Financing Global Marketing Transactions ... 424 Risks ... 424 Customer-Arranged Versus Supplier-Arranged Financing ... 427 Sources of Financing ... 427 Commercial Banks ... 428 Government-Sponsored Financing: The Export-Import Bank ... 429 Noncash Pricing: Countertrade ... 432 Conclusions ... 440 Questions for Discussion ... 441 For Further Reading ... 441 11 Global Promotion Strategies ... 44 The Single-Country Promotion Process ... 444 The Multicountry Communications Process ... 444 Global Promotion Strategies ... 446 Push-Oriented Strategy ... 447 Pull-Oriented Strategy ... 448 Push Versus Pull Strategies ... 449 Personal Selling ... 450 Global Selling(Multicountry Sales Force) ... 450 Local Selling(Single-Country Sales Force) ... 455 Industrial Selling ... 461 Global Trade Fairs ... 461 Selling Through a Bidding Process ... 463 Consortium Selling ... 464 Global Account Management ... 464 Other Forms of Promotion ... 466 Sales Promotion ... 466 Sports Promotions and Sponsorships ... 470 Direct Marketing ... 473 Direct Mail ... 474 Door-to-Door Sales ... 475 Telemarketing ... 476 Global Marketing via Internet and World Wide Web ... 477 Conclusions ... 478 Questions for Discussion ... 479 For Further Reading ... 479 12 Managing Global Advertising Challenges in Global Advertising ... 482 Overcoming the Language Barrier ... 483 Overcoming the Cultural Barrier ... 484 The Impact of Regulations on Global Advertising ... 486 Selecting an Advertising Theme ... 488 Standardization Versus Customization ... 488 Land of the Soft Sell : Advertising in the Japanese Market ... 493 The Impact of Recent Changes in Eastern Europe ... 496 Global Advertising ... 499 Global Media Strategy ... 503 Media Availability ... 503 Credibility of Advertising ... 505 Media Habits ... 506 Satellite Television ... 507 Scheduling Global Advertising ... 509 Organizing the Global Advertising Effort ... 510 Advertising Agency Selection ... 510 Coordinating Global Advertising ... 520 Generic Global Advertising Strategies ... 521 Conclusions ... 530 Questions for Discussion ... 530 For Further Reading ... 531 13 Global Product and Service Strategies ... 532 Product Design in a Global Environment ... 534 Product Dimensions ... 534 Design Features ... 536 Quality ... 540 Global Standards ... 540 Branding Decisions ... 541 Selection Procedures ... 542 Selection of Internet Domain Names ... 543 Single-Country Versus Global Brand Names ... 544 Private Branding Strategies ... 545 Global Brands ... 546 Panregional Brands ... 547 Trademarks ... 548 Trademark and Brand Protection ... 549 Packaging for Global Markets ... 551 Managing a Global Product Line ... 553 xploiting Product Life Cycles ... 554 Global Warranty and Service Policies ... 556 Product Warranties ... 556 Global Product Service ... 557 Marketing Services Globally ... 558 Business Services ... 559 Opportunities for New Service Firms ... 559 Services for Consumers and Individual Households ... 561 Conclusions ... 561 Questions for Discussion ... 562 For Further Reading ... 562 14 Developing New Products for Global Markets ... 564 Global Product Strategies ... 566 Analytic Issues : Standardization Versus Adaptation ... 566 Three Strategic Choices: Extension, Adaptation, Invention ... 568 Global Products ... 571 New-Product Development Processes for Global Market ... 575 The Organization of Head Office-Sponsored Research and Development ... 575 International Lead Markets and Research and Development ... 576 The Role of Foreign Subsidiaries in Research and Development ... 580 Purchasing Research and Development from Foreign Countries ... 581 Importing as a Source of New-Product Technology ... 582 Acquisitions as a Route to New Products ... 583 The Joint Venture Route to New-Product Development ... 583 Alliances for New-Product Development ... 584 The Consortium Approach ... 585 Globalization of the Product Development Process ... 587 Introducing New Products to Global Markets ... 589 Concept Tests ... 589 Test Marketing ... 590 Timing of New-Product Introductions ... 591 Country Selection ... 592 Conclusions ... 593 Questions for Discussion ... 594 For Further Reading ... 594 15 Managing Global Distribution Channels ... 595 The Structure of the Global Distribution System ... 596 Home Market Channel Members ... 597 Foreign Market Channel Members ... 599 Developing a Global Distribution Strategy ... 600 Distribution Density ... 602 Channel Length ... 604 Channel Alignment ... 605 Distribution Logistics ... 606 Factors Influencing the Selection of Channel Members ... 606 Cost ... 607 Capital Requirement ... 607 Product and Product Line ... 608 Control ... 609 Coverage ... 609 Synergy ... 609 Locating and Selecting Channel Partners ... 610 Managing Global Distribution ... 611 Motivating Channel Participants ... 612 Controlling Channel Participants ... 613 Gaining Access to Distribution Channels ... 615 The "Locked-Up" Channel ... 615 Alternative Entry Approaches ... 617 Global Supply Chain Management ... 621 Logistics Decision Areas ... 621 Managing the Global Logistics System ... 624 Global Trends in Distribution ... 625 Larger-Scale Retailers ... 625 Globally Active Retailers ... 626 Direct Marketing ... 627 Online Retailing ... 629 Information Technology ... 630 Conclusions ... 631 Questions for Discussion ... 632 For Further Reading ... 632 Part Ⅴ Managing the Global Marketing Effort ... 634 16 Organizing for Global Marketing ... 636 Organizing : The Key to Strategy Implementation ... 637 Elements Affecting a Global Marketing Organization ... 637 External Forces ... 638 Internal Forces ... 640 Management Style ... 642 Corporate Goals ... 644 Types of Global Organizations ... 644 Companies Without International Specialists ... 645 International Specialists and Export Departments ... 641 International Division ... 646 Worldwide or Global Organizations ... 648 New Trends in Global Organizations ... 659 Global Product Divisions ... 660 Global Mandates ... 660 The Development Cycle of Global Marketing Organization ... 664 Export ... 664 Foreign Sales Office ... 664 Regional Market Center ... 665 Matrix Organizations ... 666 Global Integration - Strategic Business Units ... 666 Conclusions ... 666 Questions for Discussion ... 667 For Further Reading ... 667 17 Planning and Controlling Global Marketing ... 669 The Global Planning Process ... 670 Corporate Versus Business Planning ... 672 Traditional Corporate Planning Models ... 672 Limitations to Traditional Corporate Planning Approaches ... 678 Corporate Planning in the Global Age: Assigning Global Mandates ... 679 Global Business Strategy Planning ... 680 The Global Marketing Planning Process ... 682 Coordinating the Global Planning Process ... 683 Centralized Versus Localized Marketing ... 686 Controlling Global Marketing Operations ... 688 Variables That Affect Control ... 689 Elements of a Control Strategy ... 690 Conffict Between Headquarters and Subsidiaries ... 695 Creating a Global Learning Organization ... 696 Conclusions ... 696 Questions for Discussion ... 698 For Further Reading ... 698 18 The Export and Import Trade Process ... 699 Export Trade Mechanics ... 700 Pricing for Exports ... 701 Financing Export Operations ... 705 Exports Logistics ... 710 Export Documentation ... 713 Government Export Policies and Legislation ... 716 Import Trade Mechanics ... 720 Import Clearance Procedures ... 721 The Role of the Customs Agent ... 724 Free Trade Zones or Foreign Trade Zones ... 724 Obstacles to Foreign Imports ... 725 Global Import Barriers ... 725 Global Trade Negotiations ... 727 Conclusions ... 728 Questions for Discussion ... 728 For Further Reading ... 729 Name and Company Index ... 731 Subject Index ... 739