Global Marketing Management, 5e
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Chapter 19
Global Marketing and
the Internet
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
Chapter Overview
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1. Barriers to Global Internet Marketing
2. Competitive Advantage and Cyberspace
3. Global Internet Consumers
4. Globally Integrated versus Locally Responsive Internet
Marketing Strategies
5. The Internet and Global Product Policy
6. Global Pricing and the Web
7. Global Distribution Strategies and the Internet
8. The Role of the Internet for Global Communication
Strategies
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
Introduction
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
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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.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
Introduction
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

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The Web 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.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
Global Internet Use
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
Internet usage worldwide is growing rapidly
(Exhibit 19-1). The internet population in China
ranks first in the world and by 2010 is expected to
equal the entire U.S. population.
The worldwide internet population surpassed 1
billion in 2005—up from only 45 million 10 years
ago and 420 million in 2000.
Copyright (c) 2009 John Wiley & Sons, Inc.
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Exhibit 19-1: Top 15 Countries in Internet
Usage
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Chapter 19
Global Internet Use—Asia-Pacific
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
Asia-Pacific
 The
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.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
Global Internet Use—Asia-Pacific
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
Asia-Pacific (cont.)
 Several
obstacles hinder the spread of
e-commerce in Asia:
 prefer
to do business face-to-face instead of via anonymous
channels
 relationships and networking
 problems of secrecy and family-owned businesses
 knowledge barriers.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
Global Internet Use—Europe
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
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.
 Challenges to e-commerce in Europe persist
 government
red tape and regulations
 knowledge barriers
 reluctance to reveal credit card numbers.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
Global Internet Use—Latin America
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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.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
Global Internet Use—Latin America
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
Latin America (cont.)
 Obstacles
to growth:
 high
cost of Internet access
 customs regulations and import duties
 consumers’ reluctance to release their credit card
numbers.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
1. Barriers to Global Internet Marketing
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Language Barriers:
 Much
of the content on the Web is in English
 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.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
1. Barriers to Global Internet Marketing
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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.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
1. Barriers to Global Internet Marketing
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
Infrastructure:
 In
many emerging market countries, e-readiness rank
very low. E-readiness measures the extent of internet
connectivity and infrastructure in the country (Exhibit 192)

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.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
Exhibit 19-2: EIU e-Readiness Rankings by
Country, 2008
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Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
1. Barriers to Global Internet Marketing
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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 & Government Regulations:
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

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 e-commerce.
Difference in value-added taxes, currencies, and culture may pose
problems for the companies.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
2. 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)

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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.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
2. Competitive Advantage and Cyberspace
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Some observers argue that small and large firms are
on an equal footing as global competitors.
Although size-related advantages will probably
lessen, claims that the Internet provides a level
playing field for all are somewhat overblown.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
3. 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
or countries?
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
3. Global Internet Customers
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
Primary research possibilities created by the Internet
are stunning. Measurement tools available include:
 Online
surveys
 Bulletin boards and chat groups
 Web visitor tracking
 Virtual panels
 Focus groups
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
3. Global Internet Customers
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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
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
4. Globally Integrated versus Locally Responsive
Internet Marketing Strategies
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
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Higher purchase intentions and better attitude are
tied to locally adapted websites
U.S. firms have text and visuals usually tailored to
each country
European firms vary
 BMW
has general “international” site and customized
country sites
 Nivea localizes models, images and language
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
Exhibit 19-3: Global Internet Strategies According
to Nature of Good or Service Being Sold
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Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
Exhibit 19-4: International Website of the
BMW Brand
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Copyright (c) 2007 John Wiley & Sons, Inc.
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Exhibit 19-5: Websites of the Nivea Brand
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Copyright (c) 2007 John Wiley & Sons, Inc.
Chapter 19
5. The Internet and Global Product Policy
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
Product Policy
 Global
branding
 New product development
 Global
product design
 New product ideas—consumer co-creation
(See Exhibit 19-6.)
 New product diffusion
 Services
 Easier
standardization
 24/7 availability
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
Exhibit 19-6: Example of Consumer CoCreation—Dell’s Ideastorm
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Copyright (c) 2007 John Wiley & Sons, Inc.
Chapter 19
6. Global Pricing and the Web
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
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
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
7. Global Distribution Strategies and the
Internet
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
Distribution
 Role
of Existing Channels
 Replacement
 E-Tailing
effect/complementary effect
Landscape
 Click-and-retailing
model
 E-Tailing model depends on three factors:
Consumer behavior, cost structure, and
government policies
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
8. The Role of the Internet for Global
Communication Strategies
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
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
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
8. The Role of the Internet for Global
Communication Strategies
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
Advantages of internet advertising:
 Global
reach
 Lower cost
 Allows precision
 Interactivity
 Ability to customize
 Ability to instantly monitor
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
8. The Role of the Internet for Global
Communication Strategies
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 Online
advertising offers a wide spectrum of techniques
Banner ads
 Search engine advertising-keyword search or
website context
 Microsites

Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19
8. The Role of the Internet for Global
Communication Strategies
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A critical question—which metrics to measure
effectiveness?
 number of views?
 click-through rates?
 cost per acquisition?
 cost per sale?
 Measuring sentiment or “buzz”
 Nielsen Buzzmetrics
 CRMMetrix

Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 19