Chapter global marketing and the internet. After studying this chapter you will be able to understand: Components of pricing as competitive tools in international marketing, how to control pricing in parallel import or gray markets, price escalation and how to minimize its effect, countertrading and its place in international marketing practices, the mechanics of price quotations, the mechanics of getting paid.
GLOBAL MARKETING MANAGEMENT Seventh Edition MASAAKI KOTABKE | KRISTIAAN HELSEN Chapter 19 PowerPoint Global Marketing and the Internet Chapter Overview Barriers to Global Internet Marketing Global Internet Consumers Globally Integrated versus Locally Responsive Internet Marketing Strategies The Internet and Global Product Policy Global Pricing and the Web Global Distribution Strategies and the Internet The Role of the Internet for Global Communication Strategies Chapter 19 Copyright © 2017 John Wiley & Sons, Inc Introduction • The internet has revolutionized the international business arena and global marketing in particular • Although the Internet originated in the United States, it has rapidly morphed into a global phenomenon • Nearly 88 percent of the Internet company’s business derives from outside the United States Chapter 19 Copyright © 2017 John Wiley & Sons, Inc Introduction • Household Internet penetration in the developed world is close to saturation • This chapter looks at challenges international marketing managers face and the impact of the web on global marketing strategies Chapter 19 Copyright © 2017 John Wiley & Sons, Inc Exhibit 19-1: Top 15 Countries in Internet Usage Chapter 19 Copyright © 2017 John Wiley & Sons, Inc Barriers to Global Marketing • Language Barriers – English is still the leading language on the internet, but the web is becoming increasingly multilingual – A study by Forrester research found that business users on the web are three times more likely to purchase when the website is in their native tongue • Cultural Barriers – Cultural norms and traditions can complicate global ecommerce – Credit card penetration in many countries is still very low, necessitating cash on delivery, wire transfers or e-cash Chapter 19 Copyright © 2017 John Wiley & Sons, Inc Exhibit 19-2: Number of Languages Used Chapter 19 Copyright © 2017 John Wiley & Sons, Inc Barriers to Global Internet Marketing – Culture sensitivity also matters in website design – Patriotism is another important consideration • Infrastructure – Hardware infrastructure, such as broadband penetration, Wi-Fi hotspots, security of internet connections, and the quality and coverage of the mobile phone grid play a role – Delivery of goods bought online is another challenge Chapter 19 Copyright © 2017 John Wiley & Sons, Inc Exhibit 19-3: Average Connection Speeds (Q3 2015) Chapter 19 Copyright © 2017 John Wiley & Sons, Inc Exhibit 19-4: Population without Access to Affordable Broadband (Millions) Chapter 19 Copyright © 2017 John Wiley & Sons, Inc 10 Barriers to Global Internet Marketing • Knowledge barriers – Digital literacy is the ability to locate, understand, and create information using digital information – Governments have launched initiatives to improve digital literacy within their society • Legal Environment and Government Regulations – The host country’s legal environment is another critical factor that affects international internet marketing – Government regulation is necessary to defend intellectual property rights and to stamp out cybercrime Chapter 19 Copyright © 2017 John Wiley & Sons, Inc 11 Barriers to Global Internet Marketing • Other barriers – Shipping costs – Delivery delays – Credit card fraud and low credit card penetration Chapter 19 Copyright © 2017 John Wiley & Sons, Inc 12 Global Internet Consumers • Tasks facing global marketers – Gaining a solid understanding of prospective customers – Finding to what degree internet users differ across cultures • The most important driver of perceived value is the utilitarian experience associated with the website • The effect of privacy/security protection on perceived value is strongest in countries high on individualism • Websites should be adapted to the symbols, culture, © 2017 John Wiley & Sons, Chapter 19 13 and language of Copyright the country Inc 3 Globally Integrated versus Locally Responsive Internet Marketing Strategies • At the core of any global web marketing strategy is the conflict between local responsiveness and global integration – Consumers have a higher purchase intention and better attitude toward highly adapted websites • Four possible types of internet marketing strategies: – – – – Nationally differentiated strategies Pure local adaptation Global cost leadership Transnational cost adaptation strategies Chapter 19 Copyright © 2017 John Wiley & Sons, Inc 14 Exhibit 19-5: Global Internet Strategies According to Nature of Good or Service Being Sold Chapter 19 Copyright © 2017 John Wiley & Sons, Inc 15 The Internet and Global Product Policy • Global Branding and the Internet – Many multinationals allow their local subsidiaries to set up their own websites – Some amount of coordination between sites is required • Web-Based Global New Product Development – The internet plays a role in global product design, generating new product ideas through consumer cocreation, and new product diffusion – Companies leverage social media to stimulate sales for new products Chapter 19 Copyright © 2017 John Wiley & Sons, Inc 16 The Internet and Global Product Policy • For Effective Consumer Co-creation: – – – – Signal credibility to potential contributors Create incentives to participate Establish a clear model of leadership Get the brand right before engaging in co-creation • Diffusion of new products within and across countries • Web-Based Marketing of Services – – – – Intangibility Simultaneity Heterogeneity Perishability Chapter 19 Copyright © 2017 John Wiley & Sons, Inc 17 Global Pricing and the Web • Global Pricing – Price transparency hazards • • • • Reduces company’s ability to price discriminate Products can devolve to commodity goods Brand loyalties may vanish Consumer backlash about fairness of price – Corporate responses to price transparency • Align prices • Localize products Refuse overseas orders Chapter 19 Copyright â 2017 John Wiley & Sons, Inc 18 Global Pricing and the Web • Group Buying – Price is heavily discounted under condition that a minimum number of buyers participate in the deal – Primarily used by smaller, service-oriented brands and businesses – Not advisable to launch a new product unless its whole positioning is value based Chapter 19 Copyright © 2017 John Wiley & Sons, Inc 19 Global Distribution Strategies and the Internet • Distribution – Role of Existing Channels • Replacement effect/complementary effect • Online-to-offline (O2O) business – E-Tailing Landscape • Click-and-mortar retailing model – Virtual shopping malls – E-Tailing model depends on three factors: Consumer behavior, cost structure, and government policies Chapter 19 Copyright © 2017 John Wiley & Sons, Inc 20 Exhibit 19-6: Complement ary versus Replacement Effect of the Internet Chapter 19 Copyright © 2017 John Wiley & Sons, Inc 21 The Role of the Internet for Global Communication Strategies • Global Communication and the Web: – Online advertising advantages • Internet’s global reach • Get precise information about website visitors • Instantly assess whether a particular advertisement is working – Banner ads and search engine advertising – Success of online campaign depends on • The nature of the product • The target market • Choice of site and platform Chapter 19 Copyright © 2017 John Wiley & Sons, Inc 22 The Role of the Internet for Global Communication Strategies • Nontraditional (NT) Web-Based Communication • Online monitoring – Counting page views – Measuring sentiment or “buzz” Chapter 19 Copyright © 2017 John Wiley & Sons, Inc 23 ... international marketing managers face and the impact of the web on global marketing strategies Chapter 19 Copyright © 2017 John Wiley & Sons, Inc Exhibit 1 9- 1: Top 15 Countries in Internet Usage Chapter 19. .. Exhibit 1 9- 3: Average Connection Speeds (Q3 2015) Chapter 19 Copyright © 2017 John Wiley & Sons, Inc Exhibit 1 9- 4: Population without Access to Affordable Broadband (Millions) Chapter 19 Copyright.. .Chapter Overview Barriers to Global Internet Marketing Global Internet Consumers Globally Integrated versus Locally Responsive Internet Marketing Strategies The Internet and Global Product