Principles of Marketing

Nineteenth Edition

Chapter 19
The Global Marketplace

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Learning Objectives
19.1 Define global marketing and the questions companies
must ask in deciding whether and how to go global.
19.2. Understand how global political, economic,
sociocultural, technological, legal, and environmental
factors affect a company’s global marketing decisions.
19.3 Discuss how companies decide whether to go global
and, if so, which markets to enter.
19.4 Describe three key approaches to entering global
markets.
19.5 Explain how companies adapt their marketing
strategies and marketing mixes for global markets.
19.6 Identify the three major forms of global marketing
organization.

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7-Eleven: Making Life a Little Easier
for People around the Globe
At first glance, a 7-Eleven in
Tokyo looks pretty much like
one in Teaneck, New Jersey.
However, 7-Eleven skillfully
adapts its global operations
and offerings market by
market to match local needs
and wants. Sakarin Sawasdinaka/Shutterstock

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Learning Objective 1
Define global marketing and the questions companies must
ask in deciding whether and how to go global.

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Global Marketing Today (1 of 3)
A global company:
• operates in more than one
country
• gains marketing, production,
R&D, and financial
advantages not available to
purely domestic competitors
• sees the world as a potential
market
Many American companies have
Gary Armstrong
now made the world their
market. KF C’s Colonel Sanders
is almost as familiar in Shanghai,
China (above), or Tokyo, Japan,
as he is in Boise, Idaho.
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Global Marketing Today (2 of 3)
Global firms ask a number of basic questions:
• What market position should we try to establish in our own
country, in our economic region, and globally?
• Who will our global competitors be, and what are their
strategies and resources?
• Where should we produce or source our product?
• What strategic alliances should we form with other firms
around the world?

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Global Marketing Today (3 of 3)
Figure 19.1 The Five-Step Global Marketing Process

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Learning Objective 2
Understand how the international trade system and the
economic, political-legal, and cultural environments affect a
company’s international marketing decisions.

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Understanding the Global Marketing
Context (1 of 10)
• Political context
• Economic context
• Sociocultural context
• Technological context
• Legal and institutional context
• Environmental and ecological context

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Understanding the Global Marketing
Context (2 of 10)
Elements of the Global Marketing Environment
Political Environment
• Country’s attitude toward international buying
• Government bureaucracy
• Political stability
• Monetary regulations
Understanding the global
political context: British telecom
company Vodafone’s fortunes in
India seem to rise and fall with
the sometimes-unpredictable
policies of the Indian
government.
Peter Horree/Alamy Stock Photo
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Understanding the Global Marketing
Context (3 of 10)
Economic Environment
Industrial Structure:
• Subsistence economies
• Raw material exporting
economies
• Emerging economies
(industrializing economies)
• Industrial economies
Selling to the world’s poor: At only
$88, Godrej’s ChotuKool (“little
cool”) did a better job of meeting
the needs of low-end Indian
consumers at half the price of even
the most basic conventional
refrigerator. Courtesy of Soumik Kar Photography

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Understanding the Global Marketing
Context (4 of 10)
Economic Environment
Income Distribution:
• Low-income households
• Middle-income households
• High-income households

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Understanding the Global Marketing
Context (5 of 10)
Sociocultural Context:
Impact of culture on
marketing strategy
• Impact of marketing
strategy on cultures
Culture and marketing
strategy: Italian luxury fashion
brand Dolce & Gabbana’s Sorbis/Shutterstock

insensitive “Eating with

Chopsticks” videos in China
proved to be a costly and
expensive mistake.

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Dimensions of National Culture
Figure 19.2 A Comparison of the United States and China
on Hofstede’s Six Cultural Dimensions

SOURCE: Country scores obtained from Hofstede Insights, Country Comparison tool,
www.hofstede-insights.com/countrycompasion , accessed February 2022.
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Understanding the Global Marketing
Context (6 of 10)
Technological Context
Technological context: Global
marketing has been
energized by the rapid rise in
electronic networks, smart
devices, and global digital
commerce networks, such as
Amazon, China’s Alibaba, BigTunaOnline/Shutterstock

and others. When entering

new global markets,
companies must evaluate the
technological context in those
markets.
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Discussion Question (1 of 2)
How have technological advances energized global
marketing?

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Understanding the Global Marketing
Context (7 of 10)
Global Trade Perspective
Global Trade Agreements and Organizations
World Trade Organization
• Enforces GAT T rules
• Mediates disputes
• Imposes trade sanctions
General Agreement on Tariffs and Trade (GAT T):
A 61-year-old treaty
Designed to promote world trade
Reduces tariffs and other international trade barriers

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Understanding the Global Marketing
Context (8 of 10)
Regional Free-Trade Zones
• Certain countries have formed free trade zones or economic
communities.
• European Union (E U)
• North American Free Trade Agreement (NAF T A)
• Comprehensive and Progressive Agreement for Trans-Pacific
Partnership (C PTP P)
Economic communities: The
European Union represents one of
the world’s largest single markets.
Its 27 member countries are home
to more than 440 million
consumers.

KarczmarskiDesign/Shutterstock
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Understanding the Global Marketing
Context (9 of 10)
The Legal and Institutional Context
The Internal Legal Perspective
Nontariff trade barriers: New
restrictions on non-Indian-
owned online sellers has
caused major obstacles for
Amazon in India’s huge e-
commerce market.

Rebecca Conway/The New York Times/Redux

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Understanding the Global Marketing
Context (10 of 10)
The Environmental and Ecological Context
• Pressure from customers, employees, policymakers, and
citizens at large to do the right thing by society and the
environment.
• Governments and companies across the globe have
rapidly increased regulations and voluntary initiatives that
promote socially and environmentally sustainable
business practices.

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Discussion Question (2 of 2)
Why do international companies adopt environmentally
friendly policies?

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Learning Objective 3
Discuss how companies decide whether to go global and, if
so, which markets to enter.

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Deciding Whether to Go Global (1 of 2)
• Factors to consider:
– Does it have an open and global managerial mindset?
– Does it have the resources available to fund global
expansion?
– Can it quickly gain global customer and market
insights and find a pathway to build the global brand?
– Can it find good global sourcing and distribution
partners?

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Deciding Whether to Go Global (2 of 2)
• Factors to consider:
– Can company deal with foreign nationals?
– Do the company’s managers have the necessary
international experience?
– Has management considered regulation and political
environment of other countries?

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Deciding Which Markets to Enter (1 of 2)
• Define international marketing
objectives and policies
• Foreign sales volume
• How many countries to enter
• Types of countries to enter
based on:
– Geography CeltStudio/Shutterstock; akedesign/Shutterstock

– Income and population

– Political climate
Entering new global markets:
Netflix’s decision to enter India
seems like an obvious one. But
it is also a large and complex
undertaking.
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Deciding Which Markets to Enter (2 of 2)

Table 19.1 Indicators of Market Potential (PE STL E Factors)

Political Context Technological Context
National priorities Presence of robust electronic networks
Political stability and compatibility Adoption of smart devices
Government attitudes toward global trade Presence of digital commerce platforms
Blank

Monetary and trade regulations

Economic Context Legal Context
Country size Membership in global trade organizations
GDP and growth rate Currency controls
Income distribution Labor restrictions
Market accessibility Non-trade tariff barriers
Blank

Natural, financial, and human resources

Sociocultural Context Environmental Context
Cultural and social norms Corporate social responsibility regulations
Corporate social responsibility regulations Environmental regulations
Business norms and approaches Expected voluntary sustainability
initiatives
Blank

Languages
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Learning Objective 4
Describe three key approaches to entering global markets.

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Deciding How to Enter Global
Markets (1 of 8)
Exporting
Exporting occurs when the company produces its goods in
the home country and sells them in a foreign market. It is the
simplest means involving the least change in the company’s
product lines, organization, investments, or mission.
• Indirect exporting
• Direct exporting

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Deciding How to Enter Global
Markets (2 of 8)
Figure 19.3 Market Entry Strategies

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Deciding How to Enter Global
Markets (3 of 8)
Joint-Venturing
Joint venturing takes place when a firm joins with foreign
companies to produce or market products or services.
• Licensing
• Contract manufacturing
• Management contracting
• Joint ownership

Joint venturing differs from exporting in that the company

joins with a host country partner to sell or market abroad.

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Deciding How to Enter Global
Markets (4 of 8)
Joint-Venturing
Licensing: when a firm enters into an agreement with a
licensee in a foreign market. For a fee or royalty, the licensee
buys the right to use the company’s process, trademark,
patent, trade secret, or other item of value.
Global licensing: The Tokyo
Disney Resort is owned and
operated by Oriental Land
Company (a Japanese
development company) under
license from The Walt Disney
Company.
Kyodo via AP Images

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Deciding How to Enter Global
Markets (5 of 8)
Joint-Venturing
Contract manufacturing is when a firm contracts with
manufacturers in the foreign market to produce its product or
provide its service. Benefits include faster startup, less risk,
and the opportunity to form a partnership or to buy out the
local manufacturer.

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Deciding How to Enter Global
Markets (6 of 8)
Joint-Venturing
Management contracting: when the domestic firm supplies
management skill to a foreign company that supplies capital.
The domestic firm is exporting management services rather
than products.

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Deciding How to Enter Global
Markets (7 of 8)
Joint-Venturing
Joint ownership: when one company joins forces with
foreign investors to create a local business in which they
share joint ownership and control. Joint ownership is
sometimes required for economic or political reasons.
Joint ownership: Walmart’s
joint ownership stake in
Flipkart, India’s leading
online marketplace, helps
the retailer to navigate
India’s strict foreign
investment restrictions.
grzegorz knec/Alamy Stock Photo (Walmart); Farbentek/123R F
(Flipkart)

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Deciding How to Enter Global
Markets (8 of 8)
Direct Investment
Direct investment: the development of foreign-based
assembly or manufacturing facilities. It offers a number of
advantages including:
• Labor
• Logistics
• Control
• Government incentives
• Lower costs
• Raw materials

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Learning Objective 5
• Explain how companies adapt their marketing strategies
and mixes for global markets.

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Deciding on the Global Marketing
Program (1 of 6)
Standardized global marketing: a global
marketing strategy that basically uses the
same marketing strategy and mix in all of the
company’s global markets.
Adapted global marketing: a global
marketing approach that adjusts the
marketing strategy and mix elements to each
global target market, which increases costs
but hopefully yields larger market shares and
financial returns.
Think globally, act locally: Starbucks’s
success in China results from building on its
global “Starbucks Experience” brand identity
while at the same time adapting its marketing
strategy to the unique characteristics of
Chris Willson/Alamy Stock Photo
Chinese consumers.
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Deciding on the Global Marketing
Program (2 of 6)
Product
Straight product extension means marketing a product in a
foreign market without any change.
Product adaptation involves changing the product to meet
local conditions or wants.
Product invention consists of creating something new for a
specific country market.
• Maintain or reintroduce earlier products
• Create new products

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Deciding on the Global Marketing
Program (3 of 6)
Figure 19.4 Five Global Product and Communications
Strategies

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Deciding on the Global Marketing
Program (4 of 6)
Promotion
Companies can either adopt the same communication strategy they use
at home or change it for each market.
Even in standardized communications campaigns, adjustments may be
required for language or cultural differences.
Brand names in China take on deep
significance. Coca-Cola’s Chinese
name sounds much like the English
name, and the Chinese symbols
convey “happiness in the mouth,” a
close fit to Coca-Cola’s long-running
“Taste the Feeling” positioning.

Imaginechina Limited/Alamy Stock Photo

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Deciding on the Global Marketing
Program (5 of 6)
Price
Uniform pricing charges the same price in all markets but does not
consider income or wealth where the price may be too high in some or
not high enough in other markets.
Standard markup pricing is a price based on a percentage of cost but
can cause problems in countries with high costs.
Global pricing: To compete with low-
end competitors in emerging
economies, Samsung developed its
low-priced Galaxy A line, which
carries the Galaxy name and style
but with few high-end features.

rawpixel/123RF
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Deciding on the Global Marketing
Program (6 of 6)
Figure 19.5 Whole-Channel Concept for global Marketing

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Learning Objective 6
Explain how companies adapt their marketing strategies and
mixes for global markets.

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Deciding on the Global Marketing
Organization (1 of 2)
Distribution Channels
Seller’s headquarters organization supervises the channel and is also
a part of the channel.
Channels between nations move the products to the borders of the
foreign nations.
Channels within nations move the products from their foreign point of
entry to the final customers.
McDelivery: In big cities in Asia and
Africa, where crowded streets and
high real estate costs make drive-
thru arrangements impractical,
legions of McDonald’s motorbike
delivery drivers dispense Big Macs
and fries to customers who call in or
order through its app.
Sorbis/Shutterstock
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Deciding on the Global Marketing
Organization (2 of 2)
Typical management of international marketing activities
include:
• Establishing an exporting department with a sales
manager and staff
• Creating a global division organized by geography,
products, or global subsidiaries
• Becoming a complete global organization

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