Transcript ORGANIZING GLOBAL MARKETING EFFORTS Chapter Eighteen

Global Marketing Management
Masaaki Kotabe & Kristiaan Helsen
Third Edition
John Wiley & Sons, Inc., 2004
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Kotabe & Helsen's Global Marketing
Management, Third Edition, 2004
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Chapter 19
Global Marketing and the Internet
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Management, Third Edition, 2004
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Chapter Overview
1. The Internet and the Global Marketplace
2. Structural Barriers to Global E-Commerce
3. Using the Internet for Understanding
Global Buyers
4. Competitive Advantage and Cyberspace
5. Global Internet Consumers
6. Ramifications of the Internet for Global
Marketing Strategies
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Introduction
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The Internet has revolutionized the international
business arena and global marketing in particular.
Roughly speaking, the Internet is a network of
computers interconnected throughout the world
operating on a standard protocol that allows data
to be transmitted.
Until the early 1990s, the Internet was primarily
the preserve of the military and academic
researchers.
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Introduction (contd.)
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The Web clearly provides a unique distribution
and communication channel to marketers across
the globe.
The development of new software and other
technologies during the early 1990s turned the
Internet into a commercial medium that has
transformed businesses worldwide.
This chapter looks at the impact of the World
Wide Web (WWW) on global marketing activities.
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1. The Internet and the Global
Marketplace
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Internet usage worldwide is growing rapidly (see
Exhibit 19-1A & 19-1B).
The global e-commerce market is expected to
grow to $3.2 trillion in 2004.
Asia-Pacific
– Asia-Pacific region is quickly catching up in
the Internet.
– Most of the action in the region is business-tobusiness.
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1. The Internet and the Global
Marketplace (contd.)
– Online e-commerce revenues are expected to
grow from $76 billion in 2001 to $338.5 billion
by the end of 2004.
– To boost e-commerce and Internet-related
activities, Hong Kong has planned a Cyberport
and Singapore a wired Island.
– Several obstacles hinder the spread of ecommerce in Asia which include: face-to-face
business instead of via anonymous channels,
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1. The Internet and the Global
Marketplace (contd.)
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relationships and networking, problems of
secrecy and family-owned businesses, and
knowledge barriers.
Europe
– Consumer spending on e-commerce in Europe
is growing at a very fast pace.
– Small and medium-sized European companies
are finding the Internet a cheap way to broaden
their geographic scope.
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1. The Internet and the Global
Marketplace (contd.)
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– Several challenges to e-commerce in Europe
persist , including: government red tape and
regulations, knowledge barriers, and reluctance
to reveal credit cards numbers.
Latin America
– Net fever is also spreading in Latin America.
– Latin America’s B2B market is expected to be
worth $9.3 billion by 2005.
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1. The Internet and the Global
Marketplace (contd.)
– Like other regions, e-commerce faces a number
of obstacles which include: high cost of Internet
access, customs regulations and import duties,
and consumers’ reluctance to release their credit
card numbers.
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2. Structural Barriers to Global
E-Commerce
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Language Barriers:
– Much of the content on the Web is in the
English language.
– A recent study found that business users on the
Web are three times more likely to purchase
when the Web site “speaks” their language.
– The demand for Web site localization services
has boosted a new Web-oriented translation
industry.
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2. Structural Barriers to Global
E-Commerce (contd.)
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Cultural Barriers:
– Cultural norms and traditions can hinder the
spread of the Internet.
– In Confucian-based cultures like most East
Asian nations, business is conducted on a
personal basis.
– In many countries, credit card penetration is
low.
– To become familiar with local markets as well
as local cultures is not possible through the
Internet.
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2. Structural Barriers to Global
E-Commerce (contd.)
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Infrastructure:
– In many emerging markets, ownership of
personal computers is still very low.
– Slow Internet access remains a major problem
in many countries.
Knowledge Barriers:
– Setting up an e-business requires certain
knowledge and skills.
– In emerging markets, scarcity of proper talent
and skills will restrain the development of a
digital economy.
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2. Structural Barriers to Global
E-Commerce (contd.)
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Access Charges:
– In numerous countries, high Internet access
charges may deter users.
– Rates vary a great deal across countries.
Legal Constraints and Government Regulations:
– Red tape and government regulations stall ecommerce in dozens of countries.
– E-commerce is global but the laws are mostly
local.
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2. Structural Barriers to Global
E-Commerce (contd.)
– Fragmented government regulations and laws
affect e-commerce.
– Difference in value-added taxes, currencies,
and culture may pose problems for the
companies.
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3. Using the Internet for Understanding
Global Buyers
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In terms of primary research, the possibilities
created by the Internet are stunning. There are
many measurement tools available which include:
– Online surveys
– Bulletin boards and chat groups
– Web visitor tracking
– Virtual panels
– Focus groups
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3. Using the Internet for Understanding
Global Buyers (contd.)
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Shortcomings of Online research:
– Sample representativeness
– Low Internet access
– Incorrect or out-dated e-mail addresses
– Problems with the Web sites
– Integrity of the respondents
– Problems in identity validation when the same
e-mail address is used by multiple people
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4. Competitive Advantage and
Cyberspace
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The Internet offers two major benefits to
companies that use the tool as a gateway to global
marketing:
1. Cost/efficiency savings
2. Accessibility (connectivity)
The Internet also offers access to customers
around the world.
The value of some of the pre-Internet sources of
competitive advantage has been deflated.
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4. Competitive Advantage and
Cyberspace (contd.)
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Some observers have argued that one of the major
consequences of the Internet is that small and
large firms are on an equal footings now as far as
global competition is concerned.
Although size-related advantages will probably
lessen, claims that the Internet provides a level
playing field to small and large global players
alike are somewhat overblown.
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5. Global Internet Consumers
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The following are some of the emerging issues
and questions facing global marketers:
– To what extent do online customers differ from
offline ones?
– To what degree do Internet buyers differ across
cultures?
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6. Ramifications of the Internet for
Global Marketing Strategies
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Globally Integrated Versus Locally Responsive
Web Marketing Strategies (see Exhibit 19-3):
– At the core of any global Web marketing
strategy is the basic conflict between local
responsiveness and global integration.
One-to-One Marketing
Product Policy
– Global branding
» Internet-based new products
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6. Ramifications of the Internet for
Global Marketing Strategies (contd.)
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Marketing of Services
– Features of Services:
» Intangibility
» Simultaneity
» Heterogeneity
» Perishability
Global Pricing
– Cost transparency
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6. Ramifications of the Internet for
Global Marketing Strategies (contd.)
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Distribution
– Role of Existing Channels
» Replacement effect/complementary effect
(see Exhibit 19-4)
– E-Tailing Landscape
» Click-and-retailing model
 E-Tailing model depends on three factors:
Consumer behavior, cost structure, and
government policies
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6. Ramifications of the Internet for
Global Marketing Strategies (contd.)
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Global Communication and the Web:
– According to Forrester Research, worldwide
advertising on the Internet is expected to grow
to $29 billion by 2006.
– Online advertising techniques include the
following (see Global Perspective 19-4):
» Banners
» Permanent buttons
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6. Ramifications of the Internet for
Global Marketing Strategies (contd.)
» Affiliate programs
» Sponsorships
» E-mailing lists
» Rich-media expanding banners
» Interstitials
» Superstitials
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6. Ramifications of the Internet for
Global Marketing Strategies (contd.)
– The ultimate success of an online campaign
depends on the following four factors:
» The nature of the product
» The targeting
» Choice of site
» Execution of the ad
– Direct E-Marketing: More and more global
companies recognize the promise of the Web as
a direct marketing tool to build ties with
customers worldwide.
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Copyright © John Wiley & Sons, Inc., 2004
Chapter 19
Kotabe & Helsen's Global Marketing
Management, Third Edition, 2004
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