chapter 19copyright (c) 2007 john wiley & sons, inc.1 global marketing management, 4e chapter 19...

Chapter 19Chapter 19 Copyright (c) 2007 John Wiley & Sons, Inc.Copyright (c) 2007 John Wiley & Sons, Inc. 11

Global Marketing Management, 4eGlobal Marketing Management, 4e

Chapter 19

Global Marketing and Global Marketing and the Internetthe Internet


Chapter OverviewChapter Overview

1. The Internet and the Global Marketplace 1. The Internet and the Global Marketplace 2. Structural Barriers to Global E-Commerce2. Structural Barriers to Global E-Commerce3. Using the Internet for Understanding 3. Using the Internet for Understanding

Global BuyersGlobal Buyers4. Competitive Advantage and Cyberspace4. Competitive Advantage and Cyberspace5. Global Internet Consumers5. Global Internet Consumers6. Ramifications of the Internet for Global 6. Ramifications of the Internet for Global

Marketing StrategiesMarketing Strategies


IntroductionIntroduction

The Internet has revolutionized the international The Internet has revolutionized the international business arena and global marketing in particular.business arena and global marketing in particular.

Roughly speaking, the Internet is a network of Roughly speaking, the Internet is a network of computers interconnected throughout the world computers interconnected throughout the world operating on a standard protocol that allows data operating on a standard protocol that allows data to be transmitted.to be transmitted.

Until the early 1990s, the Internet was primarily Until the early 1990s, the Internet was primarily the preserve of the military and academic the preserve of the military and academic researchers.researchers.


IntroductionIntroduction

The Web clearly provides a unique distribution and The Web clearly provides a unique distribution and communication channel to marketers across the communication channel to marketers across the globe. globe.

The development of new software and other The development of new software and other technologies during the early 1990s turned the technologies during the early 1990s turned the Internet into a commercial medium that has Internet into a commercial medium that has transformed businesses worldwide.transformed businesses worldwide.

This chapter looks at the impact of the World Wide This chapter looks at the impact of the World Wide Web (WWW) on global marketing activities.Web (WWW) on global marketing activities.


1. The Internet and the Global 1. The Internet and the Global MarketplaceMarketplace

Internet usage worldwide is growing rapidly Internet usage worldwide is growing rapidly (see Exhibit 19-1). The internet population in (see Exhibit 19-1). The internet population in China ranks second now. By 2010, analysts China ranks second now. By 2010, analysts estimate it will equal the entire US population.estimate it will equal the entire US population.

The worldwide internet population surpassed The worldwide internet population surpassed 1 billion1 billion in 2005- up from only 45 million 10 in 2005- up from only 45 million 10 years ago and 420 million in 2000. years ago and 420 million in 2000.



Asia-PacificAsia-Pacific– Asia-Pacific region is quickly catching up. Most of the Asia-Pacific region is quickly catching up. Most of the

action in the region is business-to-business.action in the region is business-to-business.– Internet penetration in Japan and South Korea is higher Internet penetration in Japan and South Korea is higher

now than in the US. With high broadband penetration, now than in the US. With high broadband penetration, online shopping is more attractive in South Korea than in online shopping is more attractive in South Korea than in the rest of the region.the rest of the region.

– In China, web surfers apparently have a positive attitude In China, web surfers apparently have a positive attitude toward online shopping (see Global Perspective 19-1 for toward online shopping (see Global Perspective 19-1 for further information on China’s internet sector).further information on China’s internet sector).



Asia-Pacific (cont.)Asia-Pacific (cont.)– Several obstacles hinder the spread of e-Several obstacles hinder the spread of e-

commerce in Asia which include: commerce in Asia which include: prefer to do business face-to-face instead of via prefer to do business face-to-face instead of via

anonymous channels, relationships and networking, anonymous channels, relationships and networking, problems of secrecy and family-owned businesses, problems of secrecy and family-owned businesses, and knowledge barriers.and knowledge barriers.



EuropeEurope– Consumer spending on e-commerce in Europe Consumer spending on e-commerce in Europe

is growing at a very fast pace.is growing at a very fast pace.– Small and medium-sized European companies Small and medium-sized European companies

are finding the Internet a cheap way to broaden are finding the Internet a cheap way to broaden their geographic scope.their geographic scope.

– Several challenges to e-commerce in Europe Several challenges to e-commerce in Europe persist , including: government red tape and persist , including: government red tape and regulations, knowledge barriers, and reluctance regulations, knowledge barriers, and reluctance to reveal credit cards numbers.to reveal credit cards numbers.



Latin AmericaLatin America– Net fever is also spreading in Latin America.Net fever is also spreading in Latin America.– Brazil has been one of the strongest e-commerce Brazil has been one of the strongest e-commerce

markets in the region, although internet penetration is markets in the region, although internet penetration is still fairly low.still fairly low.

– Brazil also has the largest number of online retailers in Brazil also has the largest number of online retailers in the region.the region.

– E-commerce in Latin America is spurred by E-commerce in Latin America is spurred by opportunities for transparency, cost-cutting, and supply opportunities for transparency, cost-cutting, and supply chain productivity increases. chain productivity increases.

– Like other regions, e-commerce faces a number of Like other regions, e-commerce faces a number of obstacles which include: high cost of Internet access, obstacles which include: high cost of Internet access, customs regulations and import duties, and consumers’ customs regulations and import duties, and consumers’ reluctance to release their credit card numbers.reluctance to release their credit card numbers.


2. Structural Barriers to Global2. Structural Barriers to GlobalE-CommerceE-Commerce

Language Barriers:Language Barriers:– Much of the content on the Web is in the Much of the content on the Web is in the

English language.English language.– A recent study found that business users on the A recent study found that business users on the

Web are three times more likely to purchase Web are three times more likely to purchase when the Web site “speaks” their language.when the Web site “speaks” their language.

– The demand for Web site localization services The demand for Web site localization services has boosted a new Web-oriented translation has boosted a new Web-oriented translation industry.industry.



Cultural Barriers:Cultural Barriers:– Cultural norms and traditions can hinder the Cultural norms and traditions can hinder the

spread of the Internet.spread of the Internet.– In Confucian-based cultures like most East Asian In Confucian-based cultures like most East Asian

nations, business is conducted on a personal nations, business is conducted on a personal basis.basis.

– In many countries, credit card penetration is low.In many countries, credit card penetration is low.– To become familiar with local markets as well as To become familiar with local markets as well as

local cultures is not possible through the Internet.local cultures is not possible through the Internet.



Infrastructure:Infrastructure:– In many emerging market countries, e-readiness In many emerging market countries, e-readiness

rank very low. E-readiness measures the extent rank very low. E-readiness measures the extent of internet connectivity and infrastructure in the of internet connectivity and infrastructure in the country (see Exhibit 19-2 and 19-2B). country (see Exhibit 19-2 and 19-2B).

Knowledge Barriers:Knowledge Barriers:– Setting up an e-business requires certain Setting up an e-business requires certain

knowledge and skills.knowledge and skills.– In emerging markets, scarcity of proper talent In emerging markets, scarcity of proper talent

and skills will restrain the development of a and skills will restrain the development of a digital economy.digital economy.



Access Charges:Access Charges:– In numerous countries, high Internet access charges may In numerous countries, high Internet access charges may

deter users.deter users.– Rates vary a great deal across countries.Rates vary a great deal across countries.

Legal Constraints and Government Regulations:Legal Constraints and Government Regulations:– Red tape and government regulations stall e-commerce in Red tape and government regulations stall e-commerce in

dozens of countries.dozens of countries.– E-commerce is global but the laws are mostly local.E-commerce is global but the laws are mostly local.– Fragmented government regulations and laws affect e-Fragmented government regulations and laws affect e-

commerce.commerce.– Difference in value-added taxes, currencies, and culture may Difference in value-added taxes, currencies, and culture may

pose problems for the companies.pose problems for the companies.


3. Use of the Internet for Understanding 3. Use of the Internet for Understanding Global BuyersGlobal Buyers

In terms of primary research, the possibilities In terms of primary research, the possibilities created by the Internet are stunning. There are created by the Internet are stunning. There are many many measurement toolsmeasurement tools available which include: available which include:– Online surveysOnline surveys– Bulletin boards and chat groupsBulletin boards and chat groups– Web visitor trackingWeb visitor tracking– Virtual panelsVirtual panels– Focus groupsFocus groups


3. Use of the Internet for 3. Use of the Internet for Understanding Global BuyersUnderstanding Global Buyers

Shortcomings of Online researchShortcomings of Online research::– Sample representativenessSample representativeness– Low Internet accessLow Internet access– Incorrect or out-dated e-mail addressesIncorrect or out-dated e-mail addresses– Problems with the Web sitesProblems with the Web sites– Integrity of the respondentsIntegrity of the respondents– Problems in identity validation when the same Problems in identity validation when the same

e-mail address is used by multiple peoplee-mail address is used by multiple people


4. Competitive Advantage and 4. Competitive Advantage and CyberspaceCyberspace

The Internet offers two major benefits to The Internet offers two major benefits to companies that use the tool as a gateway to global companies that use the tool as a gateway to global marketing:marketing:

1. Cost/efficiency savings1. Cost/efficiency savings

2. Accessibility (2. Accessibility (connectivityconnectivity)) The Internet also offers access to customers The Internet also offers access to customers

around the world.around the world. The value of some of the pre-Internet sources of The value of some of the pre-Internet sources of

competitive advantage has been deflated.competitive advantage has been deflated.



Some observers have argued that one of the Some observers have argued that one of the major consequences of the Internet is that small major consequences of the Internet is that small and large firms are on an equal footings now as and large firms are on an equal footings now as far as global competition is concerned.far as global competition is concerned.

Although size-related advantages will probably Although size-related advantages will probably lessen, claims that the Internet provides a level lessen, claims that the Internet provides a level playing field to small and large global players alike playing field to small and large global players alike are somewhat overblown.are somewhat overblown.


5. Global Internet Consumers5. Global Internet Consumers

The following are some of the emerging issues The following are some of the emerging issues and questions facing global marketers:and questions facing global marketers: – To what extent do online customers differ from To what extent do online customers differ from

offline ones?offline ones?– To what degree do Internet buyers differ across To what degree do Internet buyers differ across

cultures or countries? cultures or countries?


6. Internet Ramifications for Global 6. Internet Ramifications for Global Marketing StrategiesMarketing Strategies

Companies can use the web to contact internal Companies can use the web to contact internal users (staff, salespeople) or external users users (staff, salespeople) or external users (customers, suppliers, distributors) around the (customers, suppliers, distributors) around the globe. globe.

Regardless of the target, the medium can be Regardless of the target, the medium can be effectively used as a business model to generate effectively used as a business model to generate revenues and/or cut costs (see Global Perspective revenues and/or cut costs (see Global Perspective 19-3). 19-3).



Globally Integrated Versus Locally Responsive Globally Integrated Versus Locally Responsive Web Marketing StrategiesWeb Marketing Strategies (see Exhibit 19-4): (see Exhibit 19-4):– At the core of any global Web marketing At the core of any global Web marketing

strategy is the basic conflict between local strategy is the basic conflict between local responsiveness and global integration. responsiveness and global integration.

One-to-One MarketingOne-to-One Marketing Product PolicyProduct Policy

– Global brandingGlobal branding– Internet-based new product development (see Internet-based new product development (see

Global Perspective 19-4)Global Perspective 19-4)



Marketing of ServicesMarketing of Services– Features of Services:Features of Services:

IntangibilityIntangibility SimultaneitySimultaneity HeterogeneityHeterogeneity PerishabilityPerishability

Global PricingGlobal Pricing– Cost transparencyCost transparency



DistributionDistribution– Role of Existing ChannelsRole of Existing Channels

Replacement effect/complementary effect Replacement effect/complementary effect (see Exhibit 19-5)(see Exhibit 19-5)

– E-Tailing LandscapeE-Tailing Landscape Click-and-retailing modelClick-and-retailing model

–E-Tailing model depends on three factors: E-Tailing model depends on three factors: Consumer behavior, cost structure, and Consumer behavior, cost structure, and government policiesgovernment policies



Global Communication and the Web:Global Communication and the Web:– By 2009, JupiterResearch forecasts online By 2009, JupiterResearch forecasts online

advertising spending is expected to grow to advertising spending is expected to grow to $16.1 billion$16.1 billion in the US and in the US and $3.9 billion$3.9 billion in in Europe.Europe.

– Overall, in almost all countries internet Overall, in almost all countries internet advertising still is a tiny slice of the global advertising still is a tiny slice of the global advertising pie, even in the developed advertising pie, even in the developed world (see Exhibit 19-6)world (see Exhibit 19-6)



Advantages of internet advertising:Advantages of internet advertising:– Global reachGlobal reach– Lower costLower cost– Allows precisionAllows precision– InteractivityInteractivity– Ability to customizeAbility to customize– Ability to instantly monitorAbility to instantly monitor



– Online advertising: Wide spectrum of Online advertising: Wide spectrum of techniquestechniques Banner adsBanner ads Search engine advertising-keyword search or Search engine advertising-keyword search or website contextwebsite context MicrositesMicrosites Audience measurement is still a major issue- Audience measurement is still a major issue- metrics to monitor the effectiveness of an on-line metrics to monitor the effectiveness of an on-line campaign- number of views? click-through rates? campaign- number of views? click-through rates? cost per acquisition? cost per sale?cost per acquisition? cost per sale?



– The ultimate success of an The ultimate success of an online campaignonline campaign depends on the following four factors:depends on the following four factors: The nature of the productThe nature of the product The targetingThe targeting Choice of siteChoice of site Execution of the adExecution of the ad

– Direct E-MarketingDirect E-Marketing: More and more global : More and more global companies recognize the promise of the Web companies recognize the promise of the Web as a direct marketing tool to build ties with as a direct marketing tool to build ties with customers worldwide.customers worldwide.

chapter 19copyright (c) 2007 john wiley & sons, inc.1 global marketing management, 4e chapter 19...

Documents

global internet consumers6

introductionthe internet

internet penetration

john wiley sons

global marketplacecopyright

global perspective

global buyers4

worldwide internet population