[PDF]GLOBAL MARKETING MANAGEMENT

GLOBAL MARKETING MANAGEMENT ... The Global Marketing Plan 160 ... Currency Fluctuations 320 Exchange-Rate Clauses 321...

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Eighth Edition

GLOBAL MARKETING MANAGEMENT Warren J. Keegan Professor Emeritus, Lubin School of Business, Pace University, New York City and Westchester Fellow, Academy of International Business

With Elyse Arnow Brill International Editions contributions by

Sandeep Puri Institute of Management Technology Ghaziabad

PEARSON Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo

CONTENTS Preface 17 Acknowledgements 19

Part I Introduction and Overview

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Chapter 1 INTRODUCTION TO GLOBAL MARKETING 23 Introduction

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Marketing: A Universal Discipline 25 The Marketing Concept 25 The Three Principles of Marketing

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Customer-Value and the Value Equation 28 Competitive or Differential Advantage 29 Focus 29 Global Marketing: What It Is and What It Is Not The Standardization Debate 30 Globalization and Global Marketing Management Orientations 37

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Ethnocentric Orientation 38 Polycentric Orientation 39 Regiocentric and Geocentric Orientations Driving and Restraining Forces 40

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Driving Forces 41 Restraining Forces 48 Outline of This Book 49 Chapter Summary 49 • Discussion Questions 50 • Suggested Readings 50 Appendix: The 18 Guiding Principles of Legacy Marketing

Part II The Global Marketing Environment

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Chapter 2 THE GLOBAL ECONOMIC ENVIRONMENT 58 Introduction

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The World Economy—An Overview

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The World Economy: Important Trends 61 Economic Activity Will Shift from West to East 62 Aging Worldwide Population Will Demand Increasing Levels of Productivity and Efficiency 63 Shifts and Growth in Consumer Segments Will Result in Changes in the Global Consumer Marketplace 63 Changing Industry Structures and Emerging New Models of Corporate Organization Will be Characteristic of Growing Global Competition 64

Contents The Demand for Natural Resources Will Continue to Grow, Resulting in Growing Pressure on an Already Strained Global, Natural Environment 64 Scrutiny of Global Firms' Worldwide Practices Will Increase as the Reach and Scale of Global Firms Expand; Increasing Regulation Will Shape the Structure and Conduct of Whole Industries 65 The Economics of Information Will Be Transformed as the Ubquitous Nature of Information Expands 66 Talent Pools Have Become Global in Nature; Assimilating Talent into the Leadership Structure of a Global Company Will Be a Competitive Advantage 67 The Market State: Varying Degrees of Economic Freedom 68 Stages Of Market Development 71 Low-Income Countries 75 Lower-Middle-lncome Countries 76 Upper-Middle-Income Countries 77 High-Income Countries 78 Income And Purchasing Power Parity Around The Globe 79 International Comparison Program (ICP) of the World Bank 83 Actual Individual Consumption 84 The Location of Population 85 Global Trade And Investment 86 The Balance of Payments 86 Global Trade Patterns 87 Exchange Rates 89 Degrees of Economic Cooperation 91 A Free Trade Area 91 A Customs Union 91 A Common Market 92 Chapter Summary 94 • Suggested Readings 95

Discussion Questions

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Chapter 3 THE POLITICAL, LEGAL, AND REGULATORY ENVIRONMENTS OF GLOBAL MARKETING 97 Introduction 97 The Political Environment 98 Nation-States and Sovereignty 98 Political Risk 99 Taxes 100 Dilution of Equity Control 101 Expropriation 102 International Law 102 Common Versus Code Law 103 Sidestepping Legal Problems: Important Business Issues 104 Establishment 105 Jurisdiction 106

Contents Intellectual Property: Patents and Trademarks International Trademark Filings 107 Antitrust 110

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Licensing and Trade Secrets 111 Bribery and Corruption 113 Forms of Corruption 114 Estimating the Pervasiveness and Magnitude of Corruption

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Characteristics of Countries with High Perceived Levels of Corruption 116 Anticorruption Laws and Regulations 117 Conflict Resolution, Dispute Settlement, and Litigation Alternatives to Litigation for Dispute Settlement The Regulatory Environment 120 The European Union

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The World Trade Organization and Its Role in International Trade 121 Ethical Issues ,;

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Summary 123 • Discussion Questions Suggested Readings 124

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Chapter 4 THE GLOBAL CULTURAL ENVIRONMENT Introduction



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Basic Aspects of Society and Culture

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The Search for Cultural Universal

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Communication'and Negotiation

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Social Behavior 132 Analytical Approaches to Cultural Factors 133 Maslow's Hierarchy of Needs

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Standardized Cultural Classifications

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Hofstede's National Culture Dimensions Project Globe 137 Inglehart's World Values Survey

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Schwartz's Cultural Value Orientations Leung and Bond's Social Axioms

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Ethnographic and Other Nonsurvey Approaches 144 Living, Working, and Thriving in Different Cultures 145 Understanding the Complexity of Identity The Self-Reference Criterion and Perception

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Environmental Sensitivity 148 Cross-Cultural Complications and Suggested Solutions 151 Training in Cross-Cultural Competency

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Summary 153 • Discussion Questions Suggested Readings 155

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Contents

Part III Analyzing and Targeting Global Market Opportunities 157 Chapter 5 GLOBAL CUSTOMERS 157 Introduction 157 The Global Marketing Plan 160 Regional Market Characteristics 160 European Union 161 Russia

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North America 164 Asia-Pacific 168 Latin America and the Carribean

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Middle East and Africa 177 Marketing In Low-Income Countries 180 Global Buyers 181 Customer Value and the Value Equation Diffusion Theory

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Summary 186 • Discussion Questions 186 • Experiential Exercise: The Global Marketing Plan 187 • Application Exercises 187 • Suggested Readings 187

Chapter 6 GLOBAL MARKETING INFORMATION SYSTEMS AND RESEARCH 188 Introduction

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Overview of Global Marketing Information Systems 190 Information Subject Agenda 191 Scanning Modes: Surveillance and Search Sources of Market Information 194

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Human Sources 194 Documentary Sources 195 Internet Sources 195 Web Analytics: Clouds, Big Data, and Smart Assets Direct Perception 198 Formal Marketing Research 199

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Step 1: Identify the Research Problem 199 Step 2: Develop a Research Plan 202 Step 3: Collecting Data 202 Primary Data and Survey Research 204 Step 4: Analyze Research Data 207 Step 5: Present the Findings 209 Linking Global Marketing Research to The Decision-Making Process 210 Current Issues in Global Marketing Research 211

Contents Headquarters Control of Global Marketing Research 213 The Marketing Information System as a Strategic Asset 213 An Integrated Approach to Information Collection 214 Summary 215 • Discussion Questions 215 • Application Exercises 216 • Suggested Readings 238

Chapter 7 SEGMENTATION, TARGETING, AND POSITIONING Introduction

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Global Market Segmentation

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Geographic Segmentation

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Demographic Segmentation

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Psychographic Segmentation 222 Behavior Segmentation 226 Benefit Segmentation 226 Vertical Versus Horizontal Segmentation Global Targeting 227 Criteria for Targeting

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Selecting a Global Target Market Strategy Global Product Positioning 229

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High-Tech Positioning 231 High-Touch Positioning 231 Summary 232 • Discussion Questions Suggested Readings 233

Part IV Global Marketing Strategy

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Chapter 8 GLOBAL ENTRY AND EXPANSION STRATEGIES 234 Introduction

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Decision Criteria for International Business 236 Political Risk 236 Market Access 237 Factor Costs and Conditions 237 Country Infrastructure 238 Foreign Exchange

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Creating a Product-Market Profile

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Market Selection Criteria 240 Visits to the Potential Market 241 Entry and Expansion Decisions and Alterna tives 241 "Going Global" Decision Criteria 242 Exporting and Export Sourcing 244 Organizing for Export Sourcing 245 Licensing 248 Franchising 249 Product Sourcing 251

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Contents Investment: Joint Venture and FDI 251 Ownership/Investment 254 Market Expansion Strategies 254 Alternative Strategies: Stages of Development Model 256 Summary 259 • Discussion Questions 260 • Suggested Readings 260

Chapter 9 COMPETITIVE ANALYSIS AND STRATEGY Introduction 263 Strategy Defined 265 Industry Analysis Forces Influencing Competition Five Forces

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Global Competition and National Competitive Advantage 270 Factor Conditions 271 Basic Versus Advanced Factors 273 Generalized Versus Specialized Factors 273 Demand Conditions 273 Related and Supporting Industries 274 Firm Strategy, Structure, and Rivalry 275 Other Forces Acting on the Diamond 276 Other Nonmarket Factors 277 Single or Double Diamond? 278 Competitive Advantage and Strategic Models 278 Generic Strategies for Creating Competitive Advantage 279 Broad Market Strategies 281 Narrow Target Strategies 282 Strategic Positions 283 Variety-Based Positioning 283 Needs-Based Positioning 284 Access-Based Positioning 284 Which Position to Take? 285 Competitive Innovation and Strategic Intent 285 Layers of Advantage 286 Changing the Rules 286 Collaborating 287 _ Hypercompetition? 288 Summary 289 • Discussion Questions Suggested Readings 289

Part V Creating Global Marketing Programs Chapter 10 PRODUCT DECISIONS 291 Introduction 293 Basic Concepts 293

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Contents Products: Definition and Classification 293 Products: Local, National, International, and Global 294 Product Positioning 299 Attribute or Benefit 299 Quality/Price 300 Use/User 300 High-Tech Positioning 300 High-Touch Positioning 301 Product Saturation Levels in Global Markets 301 Product Design Considerations 302 Preferences 302 Cost 303 Laws and Regulations 303 Compatibility 303 Attitudes Toward Country of Origin 304 Global Product Positioning: Strategic Alternatives 305 Strategy 1: Product/Communication Extension (Dual Extension) 306 Strategy 2: Product Extension/Communication Adaptation Strategy 3: Product Adaptation/Communication Extension Strategy 4: Dual Adaptation 308 Strategy 5: Product Invention 308 New Products in Global Marketing 310 Identifying New-Product Ideas 311 New-Product,Development Location 311 Testing New Products in National Markets 313 Summary 313 • Discussion Questions 313 • Application Exercises 313 • Experiential Exercises 314 Suggested Readings 314

Chapter 11 PRICING DECISIONS

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Introduction 317 Basic Pricing Concepts 317 Cost 317 The Experience Curve Competition

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Demand 319 Environmental Influences on Pricing Decisions 320 Currency Fluctuations

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Exchange-Rate Clauses 321 Pricing in an Inflationary Environment 322 Government Controls and Subsidies 322 Competitive Behavior

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Price and Quality Relationships

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Contents Global Pricing Objectives and Strategies 323 Market Skimming 323 Penetration Pricing Market Holding

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Cost Plus/Price Escalation 325 Using Sourcing as a Strategic Pricing Tool Gray Market Goods 327 Dumping 328 Transfer Pricing 330 Cost-Based Transfer Pricing

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Market-Based Transfer Price 331 Negotiated Transfer Prices 331 Tax Regulations and Transfer Prices 331 Duty and Tariff Constraints 334 Joint Ventures 334 Global Pricing—Three Policy Alternatives 335 Extension/Ethnocentric 335 Adaptation/Polycentric Invention/Geocentric

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Actual Pricing Practices

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Summary 338 • Discussion Questions Suggested Readings 338

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Appendix 1: Section 482, US Internal Revenue Code Appendix 2: Trade Terms

Appendix 3: Trade Documentation and Getting Paid

Chapter 12 GLOBAL MARKETING CHANNELS

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Introduction 345 Global Marketing Channels—Historical Development and Current Trends 346 Channel Strategy 348 Customer Characteristics

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Product Characteristics 353 Middleman Characteristics 354 Environmental Characteristics 357 Distribution Channels: Terminology and Structure Consumer Products 357 Industrial Products 361 Global Retailing 362 Global Channel Innovation 363 Channel Strategy for New Market Entry 364 Physical Distribution and Logistics 365

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Contents Order Processing 366 Warehousing and Inventory Management Transportation 366 Case Example: Japan 368

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Devising a Japanese Distribution Strategy 369 Summary 370 • Discussion Questions 370 Suggested Readings 370



Chapter 13 GLOBAL INTEGRATED MARKETING COMMUNICATIONS 372 Introduction

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Global Integrated Marketing Communications 374 The Extension Versus Adaptation Debate 377 Customer Engagement 380

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Encouraging Social Engagement 382 Online Reputation Management 384 Social Media Content and Targeting 385 Using Data to Drive Business Value 391 Advertising Strategy 393 Advertising Appeals Art 396 Copy 396

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Cultural Considerations 398 Summary 399 • Discussion Questions 399 Suggested Readings 400



Part VI Managing the Global Marketing Program 401 Chapter 14 GLOBAL ORGANIZATION AND LEADERSHIP: MANAGING THE GLOBAL MARKETING EFFORT 401 Introduction

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Great Companies Think Differently Organization 404

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International Division Structure 407 Regional Management Centers 408 Geographic Structure

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Global Product Division Structure The Integrated Structure 411

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Relationship Among Structure, Foreign Product Diversification, and Size 415 Organizational Structure and National Origin

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The Myth of the Ideal Organization Structure 417 Impact of Emerging Markets on Global Structure 418

Global Marketing Audit 418

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Contents The Global Marketing Audit Defined Planning and Budgeting

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Evaluating Performance

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Influences on Marketing Plans and Budgets Summary 425 • Discussion Questions Suggested Readings 425

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Chapter 15 GLOBAL CORPORATE SOCIAL RESPONSIBILITY AND ENVIRONMENTAL SUSTAINABILITY 427 Introduction

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Historical Context 428 Shared Value: The Big New Idea in Marketing Great Companies Think Differently 432 Environmental Sustainability 434 Can CSR Be Measured? 436 Sustainability and Innovation Stakeholders 437

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Management 438 Shareholders 438 Employees 439 Customers 440 Suppliers 441 Society

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Summary 441 • Discussion Questions Suggested Readings 442

Chapter 16 THE FUTURE OF GLOBAL MARKETING

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Introduction 445 Eight Major Trends 446 Globalization and Information Technology 447 Marketing and the Web: The End of Distance 447 Technological Convergence and Connecting to the Customer World Economic Growth and the Rise of the Rest 450 Population Changes

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Trade-Cycle Model Clarified

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Shared Value: The Big New Idea in Marketing 456 The Cs of Marketing: Three Times Four = Twelve 456 Sustainability 456 Careers in Global Marketing 458 Summary 458 • Discussion Questions 459 • Suggested Readings 459 Appendix: The Twelve Cs of New Wave Marketing Name Index 465 Subject Index 471

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