5 th Edition Global Marketing seeks to develop the different skills a marketing manager needs to be successful when taking on the three-part tasks of foreign entry, local marketing, and global management Excellent examples and cases, many of which are drawn from the author’s rich international experience, help you move from concept to application Updated and New Features in the 5th Edition: The Effect of Technology and the Internet on Global Commerce Coverage is introduced early in the text and then integrated throughout the text where appropriate so students experience how technology affects global marketing Revised coverage of e-commerce in Chapter 17 recognizes the amazing developments after the emergence of Web 2.0 Revised Chapter 11: The Global Marketing Strategy The new Global Branding chapter extends the branding discussion in the previous edition, and adds new material on brand equity and on the added value that globality confers upon a brand This chapter also introduces the concept of country branding For more information and student resources, please visit the text Online Learning Center: www.mhhe.com/johansson5e ISBN 978-0-07-338101-5 MHID 0-07-338101-2 90000 780073 381015 www.mhhe.com Johny K Johansson New Chapter 13: Global Branding t h Edition global marketing Foreign Entr y, Local Marketing & Global Management Johny K Johansson MD DALIM #983087 09/12/08 CYAN MAG YEL BLK This revised chapter is an extended version of the Global Segmentation and Positioning chapter in the fourth edition The chapter still covers new research on global segmentation and positioning, but also adds new material on resource allocation across products and markets global marketing Focus on marketing decisions in the global environment joh81012_fm_i-xix 9/17/08 04:19am Page i ntt 201:MHBR058:mhjoh4:joh4fm: Global Marketing joh81012_fm_i-xix 9/17/08 04:19am Page ii ntt 201:MHBR058:mhjoh4:joh4fm: joh81012_fm_i-xix 9/17/08 04:19am Page iii ntt 201:MHBR058:mhjoh4:joh4fm: Global Marketing Foreign Entry, Local Marketing, & Global Management Fifth Edition Johny K Johansson Georgetown University Boston Burr Ridge, IL Dubuque, IA Madison, WI New York San Francisco St Louis Bangkok Bogotá Caracas Kuala Lumpur Lisbon London Madrid Mexico City Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto joh81012_fm_i-xix 9/18/08 02:18am Page iv ntt 201:MHBR058:mhjoh4:joh4fm: GLOBAL MARKETING: FOREIGN ENTRY, LOCAL MARKETING, AND GLOBAL MANAGEMENT Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020 Copyright © 2009, 2006, 2003, 2000, 1997 by The McGraw-Hill Companies, Inc All rights reserved No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning Some ancillaries, including electronic and print components, may not be available to customers outside the United States This book is printed on acid-free paper QPD/QPD ISBN 978-0-07-338101-5 MHID 0-07-338101-2 Vice president and editor-in-chief: Brent Gordon Publisher: Paul Ducham Managing developmental editor: Laura Hurst Spell Editorial assistant: Jane Beck Associate marketing manager: Dean Karampelas Lead project manager: Pat Frederickson Full service project manager: Meenakshi Venkat, Aptara, Inc Lead production supervisor: Carol A Bielski Designer: Matt Diamond Senior photo research coordinator: Jeremy Cheshareck Photo researcher: Ira C Roberts Media project manager: Suresh Babu, Hurix Systems Pvt Ltd Typeface: 10.5/12 Times New Roman Compositor: Aptara, Inc Printer: Quebecor World Dubuque Inc Library of Congress Cataloging-in-Publication Data Johansson, Johny K Global marketing : foreign entry, local marketing, & global management / Johny K Johansson.—5th ed p cm Includes bibliographical references and index ISBN-13: 978-0-07-338101-5 (alk paper) ISBN-10: 0-07-338101-2 (alk paper) Export marketing Export marketing—Management I Title HF1416.J63 2009 658.8'4—dc22 2008039034 www.mhhe.com joh81012_fm_i-xix 9/17/08 04:20am Page v ntt 201:MHBR058:mhjoh4:joh4fm: To my parents, Ruth and Nils Johansson joh81012_fm_i-xix 9/17/08 04:20am Page vi ntt 201:MHBR058:mhjoh4:joh4fm: joh81012_fm_i-xix 9/17/08 04:20am Page vii ntt 201:MHBR058:mhjoh4:joh4fm: About the Author Johny K Johansson is the McCrane/Shaker Chairholder in International Business and Marketing in the McDonough School of Business at Georgetown University An expert in the areas of international marketing strategy and consumer decision making, especially as applied to Japanese and European companies and markets, Johansson has published over 70 academic articles and chapters in books He is the author of In Your face: How American Marketing Excess Fuels Anti-Americanism, Financial Times/Prentice Hall, 2004, and (with Ikujiro Nonaka) of Relentless: The Japanese Way of Marketing, HarperBusiness, 1996 He has conducted numerous executive seminars in many countries, including Japan, Germany, Sweden, Hong Kong, Thailand, and India He has also been a consultant to companies in many countries, including General Electric, Marriott, and Xerox in the United States; Beiersdorft and Ford Werke AG in Germany; Volvo and Electrolux in Sweden; and Honda, Dentsu, and Fuji Film in Japan Before joining Georgetown’s faculty, Professor Johansson held faculty positions at the University of Washington and the University of Illinois He also has held many visiting appointments in several countries He was the first Isetan Distinguished Visiting Professor at Keio Business School (Japan) and the first Ford Distinguished Visiting Professor at University of Cologne in Germany He also has been a visiting professor at New York University, Dalhousie University (Canada), Stockholm School of Economics, the Catholic University of Leuven (Belgium), the National Defense Academy (Japan), and the International University of Japan In 1988 he was a Phelps scholar at the University of Michigan Professor Johansson earned Ph.D and M.B.A degrees from the University of California, Berkeley, and his undergraduate degree (Civilekonom) from the Stockholm School of Economics A Swedish citizen, he lives in Georgetown, Washington, DC, with his wife, Tamiko, and their two daughters, Anna and Sonja vii joh81012_fm_i-xix 9/17/08 04:20am Page viii ntt 201:MHBR058:mhjoh4:joh4fm: Preface Global marketing is one of the most exciting fields of business With the emergence of China, India, Vietnam, Dubai, and other unlikely candidates for global pre-eminence, many people and many companies around the globe now believe in the basic soundness of globalization and free trade Of course, there are clearly countries, companies, and people who have been shortchanged by the globalization process and who, not surprisingly, demand redress While terrorism cannot—and, fortunately, is not—condoned by anybody sane, at least the antiglobalization activists are raising issues that the global marketer needs to pay attention to But there are other challenges as well Global marketing is very demanding professionally This goes for managing it or learning about it, and also for teaching it It requires not only a good grasp of marketing principles and an understanding of the global environment, but also how the two interact—that is, how the environment impacts the applicability of the marketing principles Good marketing might be good marketing everywhere—but this does not mean it is necessarily the same The challenge when writing a text in global marketing is how to avoid being overwhelmed by all the curious and amazing differences in the marketing environment in foreign countries These differences make things fun and enjoyable—but also frustrating, since after a while it is difficult to see if any progress has been made It is hard to see the forest for the trees The key is to focus on the marketing decisions that have to be made—and then deal with those environmental factors that directly impact those decisions This is the approach taken in this text It discusses the complexities of global marketing and clarifies the managerial roles involved, without getting bogged down by the many environmental issues that are only marginally relevant Key Features When compared to other texts on the subject, Global Marketing still has three main distinguishing features: There are no introductory chapters on “the international environment” of politics, finance, legal issues, and economic regions With the exception of culture, the book covers the environmental variables on an “as needed” basis, in the various chapters As opposed to the traditional view of one “marketing manager,” the typical global marketing manager’s job consists of three separate tasks: foreign entry, local marketing, and global management Each requires different skills, as we will see Our metaphor is that the marketer wears “three hats,” sometimes successively In foreign entry, in global management, and to a large extent even as a local marketer in a foreign country, the global marketer needs skills that the home market experience—or the standard marketing text—has rarely taught The recognition of the three roles helps dispel the notion that “there is no such thing as international or global marketing, only marketing.” This sentiment has some truth to it, but mainly in the local marketing portion of the job The material is based on a foundation of strategy and the theory of the multinational firm—for the most practical of reasons, because the theory helps the marketing manager understand what drives the company expansion abroad and how and when to adapt the various marketing functions involved to local conditions At the same time, much of the excellent research and tried-and-true teaching material that global marketers in business and academe have contributed over the years is reflected in the chapters and in the several cases that can be found at the end of each major section My intent has been to retain and update much of the teaching and instructional material that has made global marketing such an exciting class in many business schools—and made for the start of an exciting managerial career—and to viii joh81012_fm_i-xix 9/17/08 04:20am Page ix ntt 201:MHBR058:mhjoh4:joh4fm: Preface ix fit the material into a structure that reflects the global marketing management tasks I have focused on material that is timely and up-to-date, and relevant to the global context Target Audience and Possible Courses Global Marketing is aimed at the executive, the MBA student, or the senior undergraduate, none of whom is completely new to marketing or to the global environment I have in mind a reader who is familiar with the basic marketing principles, and who has had some exposure to the international environment and the thrust toward a global economy I have avoided unnecessarily complicated jargon—the global marketing job is inherently complex, and any opportunity to “keep it simple” has been capitalized on The three-way partition of the book makes it possible to construct several alternative course outlines from the book • A complete course on “Global Marketing,” possibly using additional cases, is the “full-course” treatment • A shorter “Global Marketing Management” course, perhaps for executives, could go straight from the fundamentals in the first three chapters to Part Four, “Global Management,” starting with Chapter 11 This is one approach I have used at Georgetown • An “International Marketing” course could focus on local marketing and global management, Parts Three and Four • An “Export Marketing” course could select the foreign entry chapters from Part Two, and then the local marketing chapters in Part Three plus the pricing and distribution chapters in Part Four, “Global Management.” • At Georgetown I have also used the text in a second-year MBA class titled “Foreign Market Development,” for which I assign Parts Two and Three on foreign entry and local marketing, and then only the first three chapters of Part Four, “Global Management.” New to the Fifth Edition The fifth edition keeps the original structure (Foreign Entry, Local Marketing, Global Management) that has proved successful and popular among users But based upon user and reviewer feedback, several changes have been introduced in order to make the text more relevant, useful, and up-to-date The five major changes are: There is a new chapter on “Global Branding” (Chapter 13) This chapter extends the branding discussion in the previous edition, and adds new material on brand equity and on the added value that “globality” confers upon a brand It also introduces the concept of country branding The “Global Marketing Strategy” chapter (Chapter 11), leading off Part Four on “Global Management,” is a revised and updated version of the “Global Segmentation and Positioning” chapter in the fourth edition The chapter still covers new research on global segmentation and positioning, but adds new material on resource allocation across products and markets The “Global Product” and “Global Services” chapters have been consolidated into Chapter 12, made possible by breaking out “Global Brands” into its own chapter This means the fifth edition has the same number of chapters as the fourth The region-specific chapters in Part Three on “Local Marketing”—mature markets in Chapter 8, new growth markets in Chapter 9, and emerging markets in Chapter 10—have been updated, taking into account not only economic developments such as China’s and India’s emergence as major players, but also the new Russia, Vietnam, and the Middle East joh81012_ondx_652-655.qxd 9/22/08 07:23 PM Page 655 ntt 201:MHBR058:mhjoh4:joh4ind: Organization Index Virginia Slims, 551 Visa, 62, 433, 551, 552, 558 Vizir, 403 VNU NV, 223 Volkswagen, 6, 34, 43, 136, 137, 153, 164, 175, 240, 280, 284, 286, 441, 460, 530, 533 Volvo, 165, 170, 179, 375, 393, 551, 556, 589 Volvo Trucks, 6, 247 Vuitton, 294 Wal-Mart, 10, 185, 187, 238, 251, 281, 294, 300, 497, 498, 499, 593 Warner Brothers, 58 Warsteiner Brauerei, 158 Web TV, 199 Wellcome, 294 Wendy’s, 161 Westat, 223 Westinghouse, 124 Whirlpool, 90–95, 158, 583 Wibe, 451 Wipro, 298 World Bank, 110 WorldCom, 198 WPP, 532, 539 Wrangler Japan, 352 Wuhan, 446 Xerox, 247, 405, 517, 536, 556 Yahoo!, 199, 552, 562 Yamaha, 296, 453 Yonex, 570 Young & Rubicam, 532, 534 Yves Saint-Laurent, 527 Zara, 488, 490, 496, 501, 583 Zeneca, 247 655 joh81012_sndx_656_662.qxd 9/22/08 07:24 PM Page 656 ntt 201:MHBR058:mhjoh4:joh4ind: Subject Index Absolute advantage, 34 Achievement vs ascription, 72 Acquisition, 168 Adaptation, 407 Adequate service, 424 Administrative distance, 13 Advertising See Global advertising Advertising volume, 518–520 Affluent Society, The (Galbraith), 266 Africa Briefings, 113 AFTA, 289 After-sales support, 151–152 Agent, 151 Agreements across cultures, 66 Air express, 501–502 Altruists, 225 AMU, 336 Analysis for Marketing Planning (Lehmann/Winer), 394 ANCOM, 279 Anti-Americanism, Antiglobalization, 6–8 APEC, 289 Arab Maghreb Union (AMU), 336 Arbitrage, 478 ARF, 289 Argentina, 283–284 Argentine peso devaluation, 466 Arm’s-length prices, 469 Armstrong’s regression model, 123 ASEAN, 288 Attitude research, 220–221 Attitude scaling, 220 Attitudes toward the environment, 72 Attitudes toward the free market system, 315 Attitudes toward time, 72 Augmented service, 418 Australia and New Zealand, 258–262 competition, 259 distribution, 261 foreign trade agreements, 259 market environment, 258–259 market segmentation, 259–260 pricing, 261 product policies, 261 product positioning, 260 promotion, 261–262 Authoritarian political regimes, 273 Back translations, 221 Banner ads, 523 Barter, 471 Basic service package, 418 Bates Worldwide, 113, 114 BCG growth-share matrix, 376–377 BERI, 113 Big Mac index, 477 Bill of lading, 143 Body language, 61 Bollywood, 226 Bollywood film industry, 382 Born global, 178 656 Boston Consulting Group portfolio matrix, 376–377 Brand changeover, 449 Brand equity, 440–442 Brand evaluation, 441–442 Brand extensions, 435 Brand fit, 448 Brand hierarchy, 447 Brand image, 529 Brand manager, 24 Brand names, 274 Brand New Justice: The Upside of Global Branding (Anholt), 436 Brand portfolio, 446–447 Branding See Global branding Brazil, 129–130, 284 Build-up method, 118 Business Environment Risk Intelligence (BERI), 113 Business International Market Report, 114 Buyer action, 530 Buyer decision making, 210–215 choice, 213–214 evaluation of alternatives, 212–213 outcomes, 214–215 problem recognition, 211–212 search, 212 Buyer power, 50–51 CAGE, 13 Calibration equivalence, 220 Cases AOL, 196–203 Banyan Tree Hotels and Resorts, 603–615 Benetton, 621–632 Cathay Pacific Airways, 632–640 Colgate-Palmolive, 357–367 Hewlett-Packard, 640–645 IKEA, 85–90 Illycaffe, 189–196 Levi Strauss Japan K.K., 348–357 Procter & Gamble, 343–348 Starbucks, 193–196 Texas Instruments, 615–621 Toys “R” Us, 185–189 Whirlpool, 90–95 Cause marketing, 552–553 CESSDA, 113 CFR, 143 Channel captains, 500 Channel design, 509–510 Channel tie-up, 510–511 Chasm, 20 Chile, 284–285 China, 288, 323–333 continuous change, 332–333 distribution, 330–331 foreign entry, 325–327 foreign exchange control, 325–326 Hong Kong, 327–328 import license controls, 325 market environment, 323 market segmentation, 328 pricing, 329–330 product policies, 329 product positioning, 328–329 promotion, 332 protective tariffs, 325 special economic zones (SEZs), 326 WTO effect, 326–327 CIA World Factbook 2008, 113 CIF, 143 Cinema advertising, 520 Clearing through customs, 142–143 Closing tactics, 559 Cluster analysis, 382 COCOM, 315 Colonial domination, 273 Comparative advantage, 34 Compensation deals, 472 Competitive advantage, 33 Competitive analysis, 387–388 Competitive drivers, 21 Competitive parity, 531 Competitive repertoire, 51–52 Competitive signaling, 116–117 Competitive strength, 51 Concept research, 412–413 Concept testing, 412 Concessions and agreements, 74 Conflict resolution, 594–597 Confucianist dynamics, 68 Conspicuous consumption, 64 Construct equivalence, 220 Consumer decision process, 211 Consumer surveys, 217–218 Consumer tourism, 478 Contract manufacturing, 132 Control posture, 172 Converting funds, 150 Coordinated pricing strategies, 479 Coordinating committee, 588–589 Copyright infringement, 326 Core middle class, 274 Core product, 406 Core service, 418 Corporate brand, 434 Corporate culture, 591 Corruption research, 110 Cost, Insurance and Freight (CIF), 143 Cost and Freight (CFR), 143 Cost drivers, 22 Cost-plus pricing, 463 Council of European Social Science Data Archives (CESSDA), 113 Counterfeit products, 452–455 Counterfeits and pirated copies, 326 Counterpurchases, 472 Countertrade, 471–474 Countervailing duty, 146 Country attractiveness, 99–127 competitive intensity, 109 corruption research, 110 country data sources, 112–116 joh81012_sndx_656_662.qxd 9/22/08 07:24 PM Page 657 ntt 201:MHBR058:mhjoh4:joh4ind: Subject Index economic environment, 106 environmental research, 104–106 forecasting country sales, 117–123 forecasting market share, 123–124 general measure of, 102 market growth, 108–109 market size, 108 personal experience, 111 physical environment, 105 political risk research, 102–104 regulatory environment, 106 researching competitors, 116–117 sociocultural environment, 105 systematic entry screen, 106–111 trade barriers and regulations, 109 trade blocs, 106 Country attractiveness scale weights, 378 Country data sources, 112–116 Country identification, 106–107 Country markets, 233 Country-of-origin effect, 38, 240 Country-specific advantage (CSA), 34, 38–39, 45, 48 Creatives, 225 Credibility of advertising, 322 Creditworthiness, 149 Critical incident, 424 Cross-marketing, 553 CSA, 34, 38–39, 45, 48 Cultural adaptation, 60 Cultural dilemmas, 72 Cultural distance, 13, 176 Cultural foundations, 57–84 buyer behavior, 61–62 core benefit, 63–64 culture, defined, 60 foreign entry, 78–79 Gannon’s metaphors, 70 global branding, 439–440 global management, 80–81 high vs low context cultures, 65–66 Hofstede’s cultural dimensions, 66–68 industrial buyers, 75–77 local marketing, 79–80 managerial styles, 70–71 managing subordinates, 71 materialism, 62–63 negotiations, 72–75 nonadaptation, 78 Rapaille’s archetypes, 69 silent languages, 66 Cultural idiosyncrasies, 63 Culture, 60 Customer satisfaction, 215, 242–243 Damage control, 556 DDP, 143 Decoding cultures, 69 Delivery Duty Paid (DDP), 143 Delphi method, 120–121 Demand characteristics, 218 Demand spillover, 443 Demonstration effect, 476 Descriptive market research, 217 Desired service, 424 Devaluation, 465 Developing countries, 309 See also Emerging markets Devouts, 225 Diamond of national advantage, 35–37 Diffusion process, 19 Digitization of advertising, 539–540 Direct buying, 508 Direct experience, 111 Direct exporting, 131, 141 Direct marketing, 558–559 Direct observation, 219 Direct response television (DRTV), 558 Disintermediation, 540 Dissipation, 44, 159 Distributed headquarters, 247 Distribution See also Global distribution Australia and New Zealand, 261 China, 330–331 emerging markets, 312 India, 301–302 Japan, 257 Latin America, 282 mature markets, 241–242 Middle East, 337 new Asian growth markets, 292 new growth markets, 276 North America, 266 pan-European marketing, 251–252 Russia, 319–322 Distribution access, 136–137 Distribution alliance, 139, 164 Distribution center, 503 Distributors, 147 Diversification strategies, 385 Diversity, 66 Doing Business 2008, 113 “Doing business” annual reports, 115 Double-branding, 449 DRTV, 558 Dual adaptation, 392 Dual branding, 434 Dual distribution, 491 Dubai phenomenon, 11–12 Dumping, 146–147 Duty-free shopping, 508 E-commerce, 559–565 E-procurement, 501 E-tailing, 560–563 Eastern European customer, 106 Economic distance, 13 Economic environment, 106 Economist Intelligence Unit (EIU), 113 Economy of scale, 22, 404, 444 Economy of scope, 22, 404 Educating of middlemen, 321 EIU, 113 EIU Country Commerce, 113 EIU Country Data, 113 EIU Country Reports, 113 Electronic commerce, 559–565 EMC, 140 Emerging markets, 307–341 China See China distribution, 312 market segmentation, 310 Middle East See Middle East 657 pricing, 311 product positioning, 311 promotion, 312 Russia and the NDCs See Russia and the NDCs Vietnam, 333 Endorsement brand, 434, 449 Entry barriers, 133–139 Entry mode matrix, 171–172 Environmental dimensions, 105 Environmental research, 104–106 Ethnic market segmentation, 316 Ethnocentric pricing, 481–482 EU, 244–245 See also Pan–European marketing Euro-brands, 250 Euro currency, 250 Euro-teens, 250 European Union (EU), 244–245 See also Pan–European marketing Eurostat, 113 Event, 552 Event marketing, 552 Evoked set, 211 Ex-works (EXW), 143 Exchange rate, 465–467 Exchange rate fluctuations, 465 Exit barriers, 138 Expatriate, 591 Expatriate manager, 591–592 Expectations, 215 Expected service, 424 Experience curve, 463 Experience curve pricing, 463–464 Experiential brand, 438 Expert pooling, 120 Explanatory (causal) research, 219–220 Explanatory marketing research, 219 Exploratory research, 217 Export controls, 315 Export department structure, 578, 579 Export expansion, 129–155 advanced vs developing nations, 138 after-sales support, 151–152 clearing through customs, 142–143 direct exporting, 141 distribution access, 136–137 distribution alliance, 139 documents used, 142 dumping, 146–147 entry barriers, 133–139 exit barriers, 138 government regulations, 136 importers as trade partners, 152–153 indirect exporting, 140 legal issues, 151 local distribution, 147–148 natural barriers, 137–138 nontariff barriers, 135–136 payment, 148–150 pricing, 143–147 product shipment, 141–143 tariff barriers, 135–136 trade credit, 143–144 unbundling, 138 warehousing, 143 Export license, 151 joh81012_sndx_656_662.qxd 9/22/08 07:24 PM Page 658 ntt 201:MHBR058:mhjoh4:joh4ind: 658 Subject Index Export management company (EMC), 140 Export manager, 26 Export pricing, 143–147 Extended Fishbein model, 213 Extrapolation, 121 EXW, 143 Fade-in/fade-out, 449 Fair trade, 8–9 Family brand, 434 FAS, 143 FDI, 44, 45 FDI in wholly owned manufacturing, 166 Fieldwork, 222–224 Final selection, 110–111 Firm-specific advantage (FSA), 34, 40–48 internalization, 44 knowledge-based, 41 marketing-related, 41–42 regionalization, 47–48 transaction costs, 44–46 transferability, 42–43 value chain, 46–47 First-mover advantages, 18–19 Fishbein model, 213 Flat world, 10 FOB, 143 Focus group, 217, 412 Focus strategy, 386 Ford’s country matrix, 377–378 Forecasting by analogy, 118–119 Forecasting country sales, 117–123 Forecasting market share, 123–124 Foreign direct investment (FDI), 44, 45, 132 Foreign entry of services, 420–423 Foreign entry phase, 53 Foreign entry role, 26 Foreign trade agreements Australia and New Zealand, 259 Japan, 254 Latin America, 278–279 new Asian growth markets, 288–289 North America, 264 Pan-European marketing, 245–246 Foreign trade in services, 420 Forewarning, 449 Forward contract, 467 Franchising, 132, 161–162 Free Alongside Ship (FAS), 143 Free on Board (FOB), 143 Fresh fruit in Japan, 65 Friendship patterns, 66 Frost & Sullivan, 113 FSA See Firm-specific advantage (FSA) FTAA, 279 Full-line policies, 290 Full-service wholesalers, 493 Fun seekers, 225 Functional analysis, 470 Gannon’s metaphors, 70 Gatekeeper, 134 GCC, 335 GE/McKinsey matrix, 377 Geocentric pricing, 481 Geographic distance, 13 Geographical/regional structure, 579–580 Global account manager, 593 Global advertising, 515–545 advertising volume, 518–520 budgeting and organization, 531 cinema advertising, 520 defined, 518 digitization of advertising, 539–540 example (Goodyear in Latin America), 540–543 global advertising agency, 532–539 global media, 521–524 identical ads, 535–536 media selection, 537–539 media usage, 520–521 message translation, 535 online advertising, 521, 525 outdoor advertising, 521, 525 pattern standardization, 536–537 print media advertising, 520, 521–522, 525 promotion as competitive advantage, 516–518 pros/cons, 525–528 prototype advertising, 536 radio advertising, 520, 525 strategy, 529–530 TV advertising, 520, 521, 524 Web advertisements, 522–524, 525 Global advertising agency, 532–539 Global brand, 17, 403, 435 Global brand management, 433 Global branding, 431–458 advantages of global brands, 442–444 advantages of local brands, 450–451 brand equity, 440–442 brand evaluation, 441–442 brand portfolio, 446–447 counterfeit products, 452–455 cultural differences, 439–440 defending local brands, 449–450 disadvantages of global brands, 444–447 global, regional and local brands, 435 globalizing a local brand, 448–449 iconic and experiential, 438–439 Internet, building brands on, 443 longevity and familiarity, 438 market drives, 439 nation branding, 436–437 place branding, 437 product name, 448 risk avoidance and trust, 438 types of brands, 434–435 Global carrier alliances, 502 Global channel design, 509–510 Global channels, 21 Global communications, Global customers, 21, 592–594, 444 Global diffusion, 414 Global distribution, 487–513 air express, 501–502 changing distributors, 490–491 channel tie-up, 510–511 competitive advantage, 489–490 creating new channels, 496–497 dual distribution, 491 e-procurement, 501 global channel design, 509–510 global logistics, 500–504 gray trade, 504–508 multiple distribution channels, 508 ocean carriers, 502–503 overland transportation, 503 parallel distribution, 504–508 rationalizing local channels, 490–492 retailing, 494–500 transportation costs, 491 vertical integration, 492–493 warehousing, 503 wholesaling, 491–494 Global identification, 290 Global localization, 23–24 Global logistics, 500–504 Global management role, 27 Global market planning, 375–381 Global market segmentation, 381–387 Global marketing, 14 Global marketing alliance, 157–183 born global, 178 cultural distance, 176 entry mode/marketing control, 169–171 entry mode matrix, 171–172 franchising, 161–162 international learning curve, 176–177 internationalization stages, 177 joint venture (JV), 166 licensing, 159–163 manufacturing subsidiaries, 166–169 optimal entry strategy, 171–176 original equipment manufacturing (OEM), 162–163 sprinkler strategy, 179–180 strategic alliance (SA), 164–166 waterfall strategy, 179 Global marketing objectives, 25–26 Global marketing planning, 393–398 Global marketing strategy, 371–400 centralization, 375 competitive analysis, 387–388 coordination, 374–375 diversification vs focus, 385–386 factors affecting choice of market portfolio, 386 global market planning, 375–381 global market segmentation, 381–387 global marketing planning, 393–398 global product positioning, 389–391 global resource allocation, 378–380 global STP strategies, 391–393 macrosegmentation, 382–385 new global mindset, 375 profitability analysis, 388–389 selling orientation, 373–374 standardization, 374 targeting segments, 387–389 Global markets, 14–16 Global network as an asset, 584–585 Global personal selling, 565–570 closing tactics, 559 handling objections, 559 managing a sales force, 565–566 personal salesmanship, 566–567 preparation, 568 presentation, 567 Global pricing, 459–486 competition, 464 joh81012_sndx_656_662.qxd 9/22/08 07:24 PM Page 659 ntt 201:MHBR058:mhjoh4:joh4ind: Subject Index costs, 463 countertrade, 471–474 demand, 464–465 ethnocentric pricing, 481–482 exchange rate, 465–467 experience curve pricing, 463–464 framework, 461–463 geocentric pricing, 481 global coordination, 476–480 global services, 482 government intervention, 468 gray trade, 476–480 hedging, 467 managerial trade-offs, 482–483 PLC impact, 476 polycentric pricing, 481 price-quality relationship, 475–476 systems pricing, 474–475 transfer pricing, 468–471 Global product division, 580 Global product lines, 409–410 Global product positioning, 389–391 Global products, 16, 403 Global products and services, 401–430 concept research, 412–413 foreign entry of services, 420–423 foreign trade in services, 420 global product lines, 409–410 global services, 416–419 globalizing successful new products, 414–415 idea generation, 411 localization vs adaptation, 406–407 new product success factors, 414 preliminary screening, 411 pricing in global services, 482 sales forecast, 413 service entry modes, 421–422 service globalization potential, 419–420 service quality, 424–425 standardization, 403–406, 408–409 test marketing, 413 Global Prospectus LLC, 113 Global prototype, 536 Global public relations, 555–556 Global resource allocation, 378–380 Global retailing, 497–500 Global Risk Assessment, Inc., 113 Global rivalry, 52 Global sales promotion, 549–554 cause marketing, 552–553 cross-marketing, 553 event marketing, 552 in-store promotions, 550 product placement, 554 sponsorships, 551–552 trade promotions, 550–551 Global services, 416–419 Global STP strategies, 391–393 Global teams, 587 Global warming, Globalization drivers, 20 Globalization potential, 419 Globalizing management, 586–588 Goal oriented, 210 Good global marketer, 597–598 Government globalization drivers, 23 Government regulations, 136 Gray trade, 452, 476–480, 504–508 Green trade, 10 Greenfield investment, 168 Growth-share matrix, 376–377 Gulf Cooperation Council (GCC), 335 Handling objections, 559 Harmonious whole, 290 Harry Potter series of books, 57–59 Hedging, 150, 467 Heterogeneity, 416 Hidden motivators, 210 Hierarchy of effects, 524 High context cultures, 65, 66 High vs low power distance, 66 Hire, The, 443 Hofstede’s cultural dimensions, 66–68 Hong Kong, 294, 295, 327–328 Hong Kong trading companies, 327 Horizontal networks, 581 Iconic brand, 438 Ideal points, 229 Identical ads, 535–536 IMC, 570 IMF, 309 In-depth screening, 108 In-store promotions, 550 India, 295–302 consumers, 299 distribution, 301–302 FDI effect, 296–298 market environment, 296 market segmentation, 298–299 outsourcing entrepreneurs, 298 pricing, 301 product policies, 300–301 product positioning, 299–300 promotion, 302 software industry, 297 Indirect exporting, 131, 140 Individualism vs collectivism, 66 Individualism vs communitarianism, 72 Infrastructure, 419 Ingredient brand, 435 Inseparability, 416 Insurance, 151 Intangibility, 416 Intangibles, 42 Integrated marketing communications (IMC), 570 Internalization, 44 International agencies, 313 International division structure, 579 International learning curve, 176–177 International Monetary Fund (IMF), 309 International price escalation, 145 International product cycle (IPC), 35 International trade fairs, 557 Internationalization stages, 177 Internet, 22–23 Internet aggregators, 99–100 Internet Center for Corruption Research, 113 Interstitial ads, 523 Intimates, 225 Intrabrand competition, 266 Intranet, 585 Inventory management, 503 IPC, 35 iPod, 4–5, 263 iPod index, 478 Iraq, 104 ISO 9001, 23 ISO certification, 130 Japan competition, 254–255 distribution, 257 foreign trade agreements, 254 market environment, 253–254 market segmentation, 255 pricing, 256 product policies, 256 product positioning, 256 promotion, 258 Japanese distribution, 257 Japan’s giant traders, 140 Joint venture (JV), 132, 166 Judgmental forecasts, 120–121 Jury technique, 120 JV (joint venture), 132, 166 Knockdown (KD), 144 Knockoffs, 452 Knowledge assets, 24 Knowledge-based FSAs, 41 Knowledge-based organization, 41 Kodak-Fuji battle, 53 Korea, 293–294 Labor costs, 273 LAIA, 278 Latin America, 276–286 Argentina, 283–284 Brazil, 284 Chile, 284–285 distribution, 282 foreign trade agreements, 278–279 market environment, 277–278 market segmentation, 279 Mexico, 285 pan-regional marketing, 286 pricing, 281 product policies, 280–281 product positioning, 279–280 promotion, 283 Lead markets, 17–18 Leading markets, 17–18, 291 Learned behavior, 60 Learning curve, 176 Letter of credit, 149–150 Liberalization in India, 297 Licensing, 132, 159–163 Local brand, 17, 435, 449–451 Local customers, 207–236 attitude research, 220–221 buyer decision making, 210–215 consumer surveys, 217–218 country markets, 233 explanatory (causal) research, 219–220 fieldwork, 222–224 local market segmentation, 224–227 659 joh81012_sndx_656_662.qxd 9/22/08 07:24 PM Page 660 ntt 201:MHBR058:mhjoh4:joh4ind: 660 Subject Index Local customers—Cont local product positioning, 227–231 marketing environment, 231 marketing tasks, 232 measurement and scaling, 220–221 observational studies, 219 problem definition, 215–217 qualitative research, 217 questionnaire construction, 221 sampling, 222 trade surveys, 218–219 Local distribution, 147–148 Local market segmentation, 224–227 Local marketing phase, 53 Local marketing role, 26–27 Local product positioning, 227–231 Localization, 407 Localized advertising, 518 Logistics, 500–504 Long tail theory, 20 Low context cultures, 65–66 M-Net system, 379–380 Macrosegmentation, 382–385 Made-in labels, 38–39 Mail order, 558 Management systems, 588 Manufacturing alliances, 165 Manufacturing subsidiaries, 166–169 Market development, 232 Market drivers, 21 Market orientation, 41 Market-oriented clustering of world markets, 384 Market potential, 108 Market segmentation, 19 Australia and New Zealand, 259–260 China, 328 emerging markets, 310 global, 381–387 Japan, 255 Latin America, 279 macrosegmentation, 382–385 mature markets, 239 microsegmentation, 381 Middle East, 336 new Asian growth markets, 289 North America, 265 Pan-European marketing, 247–248 Russia, 316–318 Market share, 232 Market share forecasts, 123 Marketing environment, 231 Marketing infrastructure, 232, 309 Marketing-related FSAs, 41–42 Marketing strategy See Global marketing strategy Marketing tasks, 232 Masculine vs feminine, 67 Master brand, 434 Master foreign agency appointment checklist, 152 Master foreign distributorship agreement checklist, 149 Material possessions, 66 Matrix organization, 581 Mature markets, 237–269 Australia See Australia and New Zealand customer satisfaction, 242–243 distribution, 241–242 Japan See Japan market segmentation, 239 North America See North America pan-European marketing See PanEuropean marketing pricing, 241 product policies, 240–241 product positioning, 239–240 promotion, 242 Me-too product, 240 Measurement equivalence, 220 Measurement errors, 220 Media selection, 537–539 Megaports, 503 MENA, 334 Mercosur, 279 Message translation, 535 Mexico, 285 Microsegmentation, 381 Middle East, 333–338 distribution, 337 GDP per capita, 336 governing structures, 334 Islam, 334–335 market environment, 335 market segmentation, 336 product positioning, 336–337 promotion, 338 trade blocs, 335–336 Mispositioned, 229 Modes of entry, 131–133 Modular design, 406 Moment of truth, 424 Motivation to comply, 214 Multiattributed evaluations, 212 Multicultural, 65 Multidomestic advertising, 518 Multidomestic markets, 14, 16 Multiple distribution channels, 508 NAFTA, 279 Nation branding, 436–437 National competitive advantages, 35–37 Natural barriers, 137–138 NDCs, 312 See also Russia and the NDCs Negotiations, 72–75 Neocolonial, 275 Network theory, 585 Neutral vs emotional, 72 New Asian growth markets, 287–295 distribution, 292 foreign trade agreements, 288–289 Hong Kong, 294 market environment, 287 market segmentation, 289 pan-regional marketing, 294–295 pricing, 291–292 product policies, 290–291 product positioning, 289–290 promotion, 292–293 South Korea, 293–294 Taiwan, 294 New entrants, 50 New growth markets, 271–305 distribution, 276 India See India Latin America See Latin America market segmentation, 274 new Asian growth markets See New Asian growth markets pricing, 276 product positioning, 274–275 promotion, 276 trade blocs, 274 two kinds of markets, 273 New product success factors, 414 New trade theory, 37 New Zealand See Australia and New Zealand Newly democratized countries (NDCs), 312 See also Russia and the NDCs Newly industrialized economy (NIE), 273 NIE, 273 No Logo (Klein), Nonadaptation, 78 Nontariff barriers, 133, 135–136 Nontask sounding, 74 Nonverbal communication, 73 North America competition, 264–265 decentralization, 263 distribution, 266 ethnic diversity, 262–263 foreign trade agreements, 264 market environment, 262–264 market segmentation, 265 pricing, 265–266 product policies, 265 product positioning, 265 promotion, 266–267 regulations, 264 religion, 263 Objective-task method, 531 Observational studies, 219 Ocean carriers, 502–503 OEM, 162–163 Off-shoring, 167 Offset, 473 Online advertising, 521, 525 Online marketing, 559–565 Open skies bilateral agreement, 134 OPIC, 309 Optimal entry mode, 159 Organizational culture, 591 Organizational design, 578 Organizational structure, 578–583 Original equipment manufacturing (OEM), 162–163 Outdoor advertising, 521, 525 Outsourcing, 167–168 Overland transportation, 503 Overseas Private Investment Corporation (OPIC), 309 Pan-European marketing, 243–252 competition, 246–247 distribution, 251–252 foreign trade agreements, 245–246 market environment, 244–245 market segmentation, 247–248 pricing, 250–251 product policies, 250 joh81012_sndx_656_662.qxd 9/22/08 07:24 PM Page 661 ntt 201:MHBR058:mhjoh4:joh4ind: Subject Index product postioning, 248–249 promotion, 252 Pan-European structure, 582 Pan-regional, 286, 294 Pan-regional advertising, 535 Panel consensus, 120 Parallel distribution, 504–508 Parallel imports, 476 Pattern standardization, 536–537 Penetration price, 291, 311, 476 People skills, 589 Perceived risk, 212 Perceived service, 424 Percentage-of-sales, 531 Perceptual maps, 227 Perceptual space, 229 Perishability, 416 Personal experience, 111, 122 Personal salesmanship, 566–567 Personal selling See Global personal selling Persuasion, 74 Physical environment, 105 Piggybacking, 242 Place branding, 437 Point-of-purchase information technology, 497 Political risk, 315 Political risk in India, 297 Political risk research, 102–104 Political Risk Yearbook, 114 Polycentric pricing, 481 Pop-up ads, 523 Porter’s five forces model buyer power, 50–51 new entrants, 50 rivalry, 48–49 substitutes, 50 supplier power, 51 Porter’s related industries, 38 Portfolio approach, 376 Power distance, 66 Preferences, 210 Preliminary screening, 107 Premium price differential, 464 Press release, 555 Price controls, 468 Price corridors, 478 Price discrimination, 468 Price elasticities, 464 Price escalation, 143–144 Price-quality relationship, 475–476 Pricing See also Global pricing Australia and New Zealand, 261 China, 329–330 emerging markets, 311 India, 301 Japan, 256 Latin America, 281 mature markets, 241 new Asian growth markets, 291–292 new growth markets, 276 North America, 265–266 pan-European marketing, 250–251 Russia, 318 Pricing coordination, 476–480 Pringle syndrome, 24 Print media advertising, 520, 521–522, 525 Problem definition, 215–217 Product adaptation-communications extension, 392 Product brand, 434 Product buy-backs, 473 Product-communications extension, 392 Product extension-communications adaptation, 392 Product life cycle (PLC), 19–20 Product line pricing, 481 Product name, 448 Product placement, 554 Product policies Australia and New Zealand, 261 China, 329 India, 300–301 Japan, 256 Latin America, 280–281 mature markets, 240–241 new Asian growth markets, 290–291 North America, 265 Pan-European marketing, 250 Product positioning, 20, 227 Australia and New Zealand, 260 China, 328–329 emerging markets, 311 global, 389–391 India, 299–300 Japan, 256 Latin America, 279–280 mature markets, 239–240 Middle East, 336–337 new Asian growth markets, 289–290 new growth markets, 274–275 North America, 265 Pan-European marketing, 248–249 Russia, 318 Product shipment, 141–143 Product space, 228 Product space maps, 227 Profitability analysis, 388–389 Promotion Australia and New Zealand, 261–262 China, 332 emerging markets, 312 India, 302 Japan, 258 Latin America, 283 mature markets, 242 Middle East, 338 new Asian growth markets, 292–293 new growth markets, 276 North America, 266–267 pan-European marketing, 252 Russia, 322–323 Protected know-how, 174–175 Prototype advertising, 536 PRS Group, 113 Public relations, 555–556 Publicity, 554–555 Qualitative research, 217 Questionnaire, 218 Questionnaire construction, 221 Radio advertising, 520, 525 Rapaille’s archetypes, 69 661 Raw materials, 273 R&D alliances, 165 Regional brand, 435 Regional organization, 580 Regional products, 403 Regional structure, 583–584 Regional trade blocs, 106 Regionalization, 13 Regression-based forecasts, 121–123 Regulatory environment, 106 Relationship marketing, 77, 593 Relative income hypothesis, 64 Religious influence, 278 Repatriating funds, 150 Researching competitors, 116–117 Resource-based strategy, 41 Retail trade marketing groups, 594 Retailing, 494–500 Rich media ads, 523 Rivalry, 48–49 Roadblocks, 523 Roll-on-roll-off (RORO), 503 RORO, 503 Royalties, 160 Russia and the NDCs, 312–323 distribution, 319–322 market environment, 313–315 market segmentation, 316–318 marketing education, 321 political and legal risks, 315 pricing, 318 product positioning, 318 promotion, 322–323 service training, 321–322 SA, 132, 164–166 Sales force, 565 Sales forecast, 117, 413 Sales promotion See Global sales promotion Sales subsidiary, 133, 152 Salesman as a person, 566 Salesmanship, 565 Salient attributes, 229 Sampling, 222 Sampling equivalence, 222 Sampling frame, 217 SBU, 579 Scale economies, 404, 444 Scope economies, 404 Score equivalence, 220 Secondary data, 112 Segmentation criteria, 222 Service delivery system, 419 Service entry modes, 421–422 Service globalization potential, 419–420 Service industries, 416 Service “product,” 418 Service quality, 424–425 Service satisfaction, 424 Service standardization, 419 SEZs, 326 Shared manufacturing, 165 Shopping but not choosing, 62 Silent languages, 66 Skimming price, 291, 311, 476 Sky-high entry barriers, 134 Social norms, 213 joh81012_sndx_656_662.qxd 9/22/08 07:24 PM Page 662 ntt 201:MHBR058:mhjoh4:joh4ind: 662 Subject Index Sociocultural environment, 105 Sourcing advantages, 22 South Korea, 293–294 Space, 66 Special economic zones (SEZs), 326 Specific vs diffuse, 72 Sponsorships, 551–552 Sprinkler strategy, 179–180 Standardization, 403–406, 408–409 Standardized products, 14 Straight licensing, 160 Strategic alliance (SA), 132, 164–166 Strategic business unit (SBU), 579 Strategic intent, 51 Strategic posture, 171–172 Strivers, 225 Sub-brand, 434 Substitutes, 50 Summary axing, 449 Supplier power, 51 Supply chain management, 500 Survey, 217, 412 Swap, 467 Systematic entry screen, 106–111 Systems pricing, 474–475 Systems selling, 474 Taiwan, 294 Target research, 412 Tariff barriers, 133, 135–136 Task-related exchange of information, 74 Technology driver, 22 Technology transfer, 35 Technology transfer into India, 296 Telemarketing, 558 Telenovela, 226 Television advertising, 520, 521, 524 Terrorism, 103 Test marketing, 413 “Think” and “feel” country clusters, 385 Tickers, 523 Time, 66 Time series extrapolation, 121 Title, 151 Total Global Strategy (Yip), 394 Trade barriers and regulations, 109 Trade blocs, 106, 274 Trade credit, 143–144 Trade fairs, 147 Trade promotions, 550–551 Trade surveys, 218–219 Trading companies, 131 Transaction costs, 45 Transactional ads, 523 Transfer pricing, 468–471 Transferability, 42 Transferable marketing, 21 Translation equivalence, 220 Transnational organizations, 581 Transparency International, 113 Transportation costs, 491 Trust, 66 Turkey, 337 Turnkey contracts, 132 Turnkey sales, 474 TV advertising, 520, 521, 524 TV penetration, 119–120 Two-dimensional country clustering map, 383 Type A negotiator, 74 Type B negotiator, 74 Umbrella brand, 434 Unbundling, 138 Uncertainty avoidance, 67 Uniform positioning, 390 Universalism vs particularism, 72 Unrepresentative sample, 217 Urban versus rural population, 279 URL, 564 Value chain, 46 Vertical integration, 492–493 Vertical keiretsu, 77 Vietnam, 333 Warehousing, 143, 503 Waterfall strategy, 179 Web 2.0, 560 Web advertisements, 522–524, 525 Web home page, 564 Wholesaling, 491–494 Wholly owned manufacturing subsidiary, 132–133 World Bank, 110, 113–115, 309 World Bank Country Data, 113 World Is Flat, The (Friedman), 10 World Cup promotion, 552 joh81012_sndx_656_667.qxd 24-9-2008 08:54PM Page 663 joh81012_sndx_656_667.qxd 24-9-2008 08:54PM Page 664 joh81012_sndx_656_667.qxd 24-9-2008 08:54PM Page 665 joh81012_sndx_656_667.qxd 24-9-2008 08:54PM Page 666 joh81012_sndx_656_667.qxd 24-9-2008 08:54PM Page 667 joh81012_sndx_656_667.qxd 24-9-2008 08:54PM Page 668 th Edition Global Marketing seeks to develop the different skills a marketing manager needs to be successful when taking on the three-part tasks of foreign entry, local marketing, and global management Excellent examples and cases, many of which are drawn from the author’s rich international experience, help you move from concept to application Updated and New Features in the 5th Edition: The Effect of Technology and the Internet on Global Commerce Coverage is introduced early in the text and then integrated throughout the text where appropriate so students experience how technology affects global marketing Revised coverage of e-commerce in Chapter 17 recognizes the amazing developments after the emergence of Web 2.0 Revised Chapter 11: The Global Marketing Strategy The new Global Branding chapter extends the branding discussion in the previous edition, and adds new material on brand equity and on the added value that globality confers upon a brand This chapter also introduces the concept of country branding For more information and student resources, please visit the text Online Learning Center: www.mhhe.com/johansson5e ISBN 978-0-07-338101-5 MHID 0-07-338101-2 90000 780073 381015 www.mhhe.com Johny K Johansson New Chapter 13: Global Branding t h Edition global marketing Foreign Entr y, Local Marketing & Global Management Johny K Johansson MD DALIM #983087 09/12/08 CYAN MAG YEL BLK This revised chapter is an extended version of the Global Segmentation and Positioning chapter in the fourth edition The chapter still covers new research on global segmentation and positioning, but also adds new material on resource allocation across products and markets global marketing Focus on marketing decisions in the global environment ... ship to Notes global channels, 21 global communications, global customers, 21 global localization, 24 global marketing, 14 global markets, 14 global products, 16 global warming, globalization... Chapter 16 Chapter 17 Global Marketing Strategy 371 Global Products and Services 401 Global Branding 431 Global Pricing 459 Global Distribution 487 Global Advertising 515 Global Promotion, E-Commerce,... PART ONE FUNDAMENTALS Chapter The Global Marketing Task Going Global The New Global Environment Antiglobalization and Terrorism Anti-Americanism Fair Trade Global Warming and Green Trade The