Transcript ORGANIZING GLOBAL MARKETING EFFORTS Chapter

Global Marketing Management, 4e
Chapter 19
Global Marketing and
the Internet
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
1
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
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
2
Introduction
 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.
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
3
Introduction
 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.
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
4
1. The Internet and the Global
Marketplace
 Internet usage worldwide is growing rapidly
(see Exhibit 19-1). The internet population in
China ranks second now. By 2010, analysts
estimate it will equal the entire US population.
 The worldwide internet population surpassed
1 billion in 2005- up from only 45 million 10
years ago and 420 million in 2000.
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
5
1. The Internet and the Global
Marketplace
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
6
1. The Internet and the Global
Marketplace
 Asia-Pacific
– Asia-Pacific region is quickly catching up. Most of the
action in the region is business-to-business.
– Internet penetration in Japan and South Korea is higher
now than in the US. With high broadband penetration,
online shopping is more attractive in South Korea than in
the rest of the region.
– In China, web surfers apparently have a positive attitude
toward online shopping (see Global Perspective 19-1 for
further information on China’s internet sector).
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
7
1. The Internet and the Global
Marketplace
 Asia-Pacific (cont.)
– Several obstacles hinder the spread of ecommerce in Asia which include:
 prefer to do business face-to-face instead of via
anonymous channels, relationships and networking,
problems of secrecy and family-owned businesses,
and knowledge barriers.
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
8
1. The Internet and the Global
Marketplace
 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.
– Several challenges to e-commerce in Europe
persist , including: government red tape and
regulations, knowledge barriers, and reluctance
to reveal credit cards numbers.
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
9
1. The Internet and the Global
Marketplace
 Latin America
– Net fever is also spreading in Latin America.
– Brazil has been one of the strongest e-commerce
markets in the region, although internet penetration is
still fairly low.
– Brazil also has the largest number of online retailers in
the region.
– E-commerce in Latin America is spurred by
opportunities for transparency, cost-cutting, and supply
chain productivity increases.
– 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.
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
10
2. Structural Barriers to Global
E-Commerce
 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.
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
11
2. Structural Barriers to Global
E-Commerce
 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.
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
12
2. Structural Barriers to Global
E-Commerce
 Infrastructure:
– In many emerging market countries, ereadiness rank very low. E-readiness measures
the extent of internet connectivity and
infrastructure in the country (see Exhibit 19-2
and 19-2B).
 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.
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
13
2. Structural Barriers to Global
E-Commerce
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
14
2. Structural Barriers to Global
E-Commerce
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
15
2. Structural Barriers to Global
E-Commerce
 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 e-commerce
in dozens of countries.
– E-commerce is global but the laws are mostly local.
– Fragmented government regulations and laws affect ecommerce.
– Difference in value-added taxes, currencies, and culture
may pose problems for the companies.
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
16
3. Use of the Internet for Understanding
Global Buyers
 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
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
17
3. Use of the Internet for
Understanding Global Buyers
 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
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
18
4. Competitive Advantage and
Cyberspace
 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.
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
19
4. Competitive Advantage and
Cyberspace
 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.
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
20
4. Competitive Advantage and
Cyberspace
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
21
5. Global Internet Consumers
 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 or countries?
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
22
6. Internet Ramifications for Global
Marketing Strategies
 Companies can use the web to contact internal
users (staff, salespeople) or external users
(customers, suppliers, distributors) around the
globe.
 Regardless of the target, the medium can be
effectively used as a business model to generate
revenues and/or cut costs (see Global Perspective
19-3).
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
23
6. Internet Ramifications for Global
Marketing Strategies
 Globally Integrated Versus Locally Responsive
Web Marketing Strategies (see Exhibit 19-4):
– 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 product development (see
Global Perspective 19-4)
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
24
6. Internet Ramifications for Global
Marketing Strategies
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
25
6. Internet Ramifications for Global
Marketing Strategies
 Marketing of Services
– Features of Services:
 Intangibility
 Simultaneity
 Heterogeneity
 Perishability
 Global Pricing
– Cost transparency
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
26
6. Internet Ramifications for Global
Marketing Strategies
 Distribution
– Role of Existing Channels
 Replacement effect/complementary effect
(see Exhibit 19-5)
– E-Tailing Landscape
 Click-and-retailing model
–E-Tailing model depends on three factors:
Consumer behavior, cost structure, and
government policies
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
27
6. Internet Ramifications for Global
Marketing Strategies
 Global Communication and the Web:
– By 2009, JupiterResearch forecasts online
advertising spending is expected to grow to
$16.1 billion in the US and $3.9 billion in
Europe.
– Overall, in almost all countries internet
advertising still is a tiny slice of the global
advertising pie, even in the developed
world (see Exhibit 19-6)
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
28
6. Internet Ramifications for Global
Marketing Strategies
 Advantages of internet advertising:
– Global reach
– Lower cost
– Allows precision
– Interactivity
– Ability to customize
– Ability to instantly monitor
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
29
6. Internet Ramifications for Global
Marketing Strategies
– Online advertising: Wide spectrum of
techniques
 Banner ads
 Search engine advertising-keyword search or
website context
 Microsites
 Audience measurement is still a major issuemetrics to monitor the effectiveness of an online campaign- number of views? click-through
rates? cost per acquisition? cost per sale?
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
30
6. Internet Ramifications for Global
Marketing Strategies
– 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.
Chapter 19
Copyright (c) 2007 John Wiley & Sons, Inc.
31