TENTH EDITION

GLOBAL EDITION

GLOBAL
MARKETING
Mark C. Green
Simpson College

Warren J. Keegan
Late, Pace University

Harlow, England • London • New York • Boston • San Francisco • Toronto • Sydney • Dubai • Singapore • Hong Kong
Tokyo • Seoul • Taipei • New Delhi • Cape Town • Sao Paulo • Mexico City • Madrid • Amsterdam • Munich • Paris • Milan
 Brief Contents
Preface 17
Acknowledgments 21

PART ONE INTRODUCTION 24

Chapter 1 Introduction to Global Marketing 24

PART TWO THE GLOBAL MARKETING ENVIRONMENT 62

Chapter 2 The Global Economic Environment 62
Chapter 3 The Global Trade Environment 94
Chapter 4 Social and Cultural Environments 128
Chapter 5 The Political, Legal, and Regulatory Environments 160

PART THREE APPROACHING GLOBAL MARKETS 196

Chapter 6 Global Information Systems and Market Research 196
Chapter 7 Segmentation, Targeting, and Positioning 232
Chapter 8 Importing, Exporting, and Sourcing 266
Chapter 9 Global Market-Entry Strategies: Licensing, Investment, and
Strategic Alliances 296

PART FOUR THE GLOBAL MARKETING MIX 324

Chapter 10 Brand and Product Decisions in Global Marketing 324
Chapter 11 Pricing Decisions 358
Chapter 12 Global Marketing Channels and Physical Distribution 392
Chapter 13 Global Marketing Communications Decisions I 428
Chapter 14 Global Marketing Communications Decisions II 460
Chapter 15 Global Marketing and the Digital Revolution 492

PART FIVE STRATEGY AND LEADERSHIP IN THE TWENTY-FIRST

CENTURY 522
Chapter 16 Strategic Elements of Competitive Advantage 522
Chapter 17 Leadership, Organization, and Corporate Social
Responsibility 552

Glossary 583
Author/Name Index 597
Subject/Organization Index 607

5
 Contents

Preface 17
Acknowledgments 21

PART ONE INTRODUCTION 24

Chapter 1 Introduction to Global Marketing 24
Case 1-1 The Global Marketplace Is Also Local 24
1-1 Introduction and Overview 25
1-2 Principles of Marketing: A Review 27
Competitive Advantage, Globalization, and Global Industries 28
1-3 Global Marketing: What it is and What it isn’t 31
1-4 The Importance of Global Marketing 38
1-5 Management Orientations 39
Ethnocentric Orientation 39
Polycentric Orientation 40
Regiocentric Orientation 40
Geocentric Orientation 40
1-6 Forces Affecting Global Integration and Global Marketing 43
Driving Forces 43
MULTILATERAL TRADE AGREEMENTS 43
CONVERGING MARKET NEEDS AND WANTS AND THE INFORMATION REVOLUTION 43
TRANSPORTATION AND COMMUNICATION IMPROVEMENTS 44
PRODUCT DEVELOPMENT COSTS 44
QUALITY 45
WORLD ECONOMIC TRENDS 45
LEVERAGE 46
Experience Transfers 46
Scale Economies 46
RESOURCE UTILIZATION 47
GLOBAL STRATEGY 47
INNOVATION AND ENTREPRENEURSHIP 47
Restraining Forces 48
MANAGEMENT MYOPIA AND ORGANIZATIONAL CULTURE 48
NATIONAL CONTROLS 48
OPPOSITION TO GLOBALIZATION 48
1-7 Outline of This Book 49
Summary 50
Discussion Questions 51
Case 1-1 The Global Marketplace (continued) 52
Case 1-2 McDonald’s Expands Globally While Adjusting Its Local Recipe 53
Case 1-3 Apple versus Samsung: The Battle for Smartphone
Supremacy Heats Up 56

PART TWO THE GLOBAL MARKETING ENVIRONMENT 62

Chapter 2 The Global Economic Environment 62
Case 2-1 India’s Economy at the Crossroads: Can Prime Minister Narendra Modi Deliver
Acche Din? 62
2-1 The World Economy—Overview of Major Changes 63
2-2 Economic Systems 65

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8 CONTENTS

Market Capitalism 66
Centrally Planned Socialism 66
Centrally Planned Capitalism and Market Socialism 67
2-3 Stages of Market Development 70
Low-Income Countries 71
Lower-Middle-Income Countries 72
Upper-Middle-Income Countries 73
Marketing Opportunities in LDCs and Developing Countries 76
High-Income Countries 79
Marketing Implications of the Stages of Development 80
2-4 Balance of Payments 81
2-5 Trade in Merchandise and Services 83
Overview of International Finance 84
Economic Exposure 86
Managing Exchange Rate Exposure 86
Summary 87
Discussion Questions 88
Case 2-1 India’s Economy at the Crossroads: Can Prime Minister Narendra Modi Deliver
Acche Din? (continued) 89
Case 2-2 A Day in the Life of a Contracts Analyst at Cargill 90

Chapter 3 The Global Trade Environment 94

Case 3-1 Breaking Up Is Hard to Do: Britons Contemplate “Brexit” 94
3-1 The World Trade Organization and GATT 95
3-2 Preferential Trade Agreements 96
Free Trade Area 97
Customs Union 98
Common Market 98
Economic Union 98
3-3 North America 99
3-4 Latin America: SICA, Andean Community, Mercosur, and CARICOM 102
Central American Integration System 102
Andean Community 104
Common Market of the South (Mercosur) 106
Caribbean Community and Common Market (CARICOM) 107
3-5 Asia-Pacific: The Association of Southeast Asian Nations 109
Marketing Issues in the Asia-Pacific Region 110
3-6 Western, Central, and Eastern Europe 111
The European Union 111
Marketing Issues in the EU 115
Central and Eastern Europe 116
3-7 The Middle East 116
Cooperation Council for the Arab States of the Gulf 117
Marketing Issues in the Middle East 118
3-8 Africa 119
Economic Community of West African States 119
East African Community 119
Southern African Development Community 120
Marketing Issues in Africa 120
Summary 121
Discussion Questions 121
Case 3-1 Breaking Up Is Hard to Do: Britons Contemplate “Brexit” (continued) 122
Case 3-2 Can Global Trade Talks Survive in an Era of Populism and
Protectionism? 124
 CONTENTS 9

Chapter 4 Social and Cultural Environments 128

Case 4-1 Cotton, Clothing Consumption, Culture: From Small Beginnings to a Global
Cultural System 128
4-1 Society, Culture, and Global Consumer Culture 129
Attitudes, Beliefs, and Values 130
Religion 131
Aesthetics 132
Dietary Preferences 133
Language and Communication 134
Marketing’s Impact on Culture 139
4-2 High- and Low-Context Cultures 140
4-3 Hofstede’s Cultural Typology 141
4-4 The Self-Reference Criterion and Perception 143
4-5 Diffusion Theory 146
The Adoption Process 146
Characteristics of Innovations 146
Adopter Categories 147
Diffusion of Innovations in Pacific Rim Countries 148
4-6 Marketing Implications of Social and Cultural Environments 148
Summary 150
Discussion Questions 151
Case 4-1 Cotton, Clothing Consumption, Culture: From Small Beginnings to a Global
Cultural System (continued) 151
Case 4-2 Dubai’s Evolution from a Fishing Village to the Host of Expo 2020 154

Chapter 5 The Political, Legal, and Regulatory Environments 160

Case 5-1 Travis Kalanick and Uber 160
5-1 The Political Environment 161
Nation-States and Sovereignty 162
Political Risk 164
Taxes 165
Seizure of Assets 167
5-2 International Law 167
Common Law versus Civil Law 169
Islamic Law 170
5-3 Sidestepping Legal Problems: Important Business Issues 170
Jurisdiction 171
Intellectual Property: Patents, Trademarks, and Copyrights 171
Antitrust 177
Licensing and Trade Secrets 181
Bribery and Corruption: Legal and Ethical Issues 182
5-4 Conflict Resolution, Dispute Settlement, and Litigation 184
Alternatives to Litigation for Dispute Settlement 185
5-5 The Regulatory Environment 186
Regional Economic Organizations: The EU Example 187
Summary 189
Discussion Questions 189
Case 5-1 Travis Kalanick and Uber (continued) 190
Case 5-2 Putin’s Russia versus the West: Cold War 2.0? 192

PART THREE APPROACHING GLOBAL MARKETS 196

Chapter 6 Global Information Systems and Market Research 196
Case 6-1 Nestlé Middle East’s Investment in Market Research 196
10 CONTENTS

6-1 Information Technology, Management Information Systems,

and Big Data for Global Marketing 198
6-2 Sources of Market Information 203
6-3 Formal Market Research 205
Step 1: Information Requirements 205
Step 2: Problem Definition 206
Step 3: Choosing the Unit of Analysis 207
Step 4: Examining Data Availability 207
Step 5: Assessing the Value of Research 209
Step 6: Research Design 209
ISSUES IN DATA COLLECTION 210
RESEARCH METHODOLOGIES 211
SCALE DEVELOPMENT 216
SAMPLING 216
Step 7: Data Analysis 216
COMPARATIVE ANALYSIS AND MARKET ESTIMATION BY ANALOGY 220
Step 8: Interpretation and Presentation 221
6-4 Headquarters’ Control of Market Research 222
6-5 The Marketing Information System as a Strategic Asset 223
Summary 224
Discussion Questions 224
Case 6-1 Nestlé Middle East’s Investment in Market Research (continued) 225
Case 6-2 A Day in the Life of a Business Systems and Analytics Manager 227

Chapter 7 Segmentation, Targeting, and Positioning 232

Case 7-1 Segmenting the Chinese Luxury Goods Market 232
7-1 Global Market Segmentation 233
Contrasting Views of Global Segmentation 234
Demographic Segmentation 235
SEGMENTING GLOBAL MARKETS BY INCOME AND POPULATION 236
AGE SEGMENTATION 240
GENDER SEGMENTATION 241
Psychographic Segmentation 241
Behavior Segmentation 244
Benefit Segmentation 244
Ethnic Segmentation 245
7-2 Assessing Market Potential and Choosing Target Markets or
Segments 246
Current Segment Size and Growth Potential 246
Potential Competition 248
Feasibility and Compatibility 249
A Framework for Selecting Target Markets 250
7-3 Product–Market Decisions 251
7-4 Targeting and Target Market Strategy Options 253
Standardized Global Marketing 253
Concentrated Global Marketing 254
Differentiated Global Marketing 255
7-5 Positioning 256
Attribute or Benefit 256
Quality and Price 256
Use or User 257
Competition 257
Global, Foreign, and Local Consumer Culture Positioning 257
Summary 260
Discussion Questions 260
 CONTENTS 11

Case 7-1 Segmenting the Chinese Luxury Goods Market (continued) 261
Case 7-2 The “Bubbling” Tea Market 262

Chapter 8 Importing, Exporting, and Sourcing 266

Case 8-1 East-Asian Countries: Export-Led Growth for Economic Success 266
8-1 Export Selling and Export Marketing: A Comparison 267
8-2 Organizational Export Activities 269
8-3 National Policies Governing Exports and Imports 270
Government Programs That Support Exports 270
Governmental Actions to Discourage Imports and Block Market Access 272
8-4 Tariff Systems 277
Customs Duties 279
Other Duties and Import Charges 279
8-5 Key Export Participants 280
8-6 Organizing for Exporting in the Manufacturer’s Country 281
8-7 Organizing for Exporting in the Market Country 282
8-8 Trade Financing and Methods of Payment 282
Letters of Credit 283
Documentary Collections (Sight or Time Drafts) 284
Navigating the Real World: A Brief Case Study 284
Navigating the Real World: Another Brief Case Study 285
Additional Export and Import Issues 285
8-9 Sourcing 286
Management Vision 287
Factor Costs and Conditions 288
Customer Needs 289
Logistics 289
Country Infrastructure 289
Political Factors 290
Foreign Exchange Rates 290
Summary 290
Discussion Questions 291
Case 8-1 The Hong Kong Trade and Investment Hub (continued) 291
Case 8-2 Turkish Cars: The Big Picture 292

Chapter 9 Global Market-Entry Strategies: Licensing, Investment,

and Strategic Alliances 296
Case 9-1 AB InBev and SABMiller: A Match Made in (Beer) Heaven? 296
9-1 Licensing 298
Special Licensing Arrangements 300
9-2 Investment 301
Joint Ventures 303
Investment via Equity Stake or Full Ownership 304
9-3 Global Strategic Partnerships 308
The Nature of Global Strategic Partnerships 308
Success Factors 311
Alliances with Asian Competitors 311
CFM International, GE, and Snecma: A Success Story 312
Boeing and Japan: A Controversy 312
9-4 International Partnerships in Developing Countries 313
9-5 Cooperative Strategies in Asia 314
Cooperative Strategies in Japan: Keiretsu 314
HOW KEIRETSU AFFECT AMERICAN BUSINESS: TWO EXAMPLES 315
12 CONTENTS

Cooperative Strategies in South Korea: Chaebol 316

9-6 Twenty-First-Century Cooperative Strategies 317
9-7 Market Expansion Strategies 318
Summary 318
Discussion Questions 319
Case 9-1 AB InBev and SABMiller: A Match Made in (Beer) Heaven? (continued) 319
Case 9-2 Jaguar’s Passage to India 321

PART FOUR THE GLOBAL MARKETING MIX 324

Chapter 10 Brand and Product Decisions in Global Marketing 324
Case 10-1 Alphabet 324
10-1 Basic Product Concepts 325
Product Types 326
Product Warranties 326
Packaging 326
Labeling 327
Aesthetics 328
10-2 Basic Branding Concepts 328
Local Products and Brands 329
International Products and Brands 330
Global Products and Brands 330
Global Brand Development 333
10-3 A Needs-Based Approach to Product Planning 337
10-4 “Country of Origin” as a Brand Element 340
10-5 Extend, Adapt, Create: Strategic Alternatives in Global Marketing 342
Strategy 1: Product-Communication Extension (Dual Extension) 343
Strategy 2: Product Extension–Communication Adaptation 344
Strategy 3: Product Adaptation–Communication Extension 345
Strategy 4: Product-Communication Adaptation (Dual Adaptation) 346
Strategy 5: Innovation 347
How to Choose a Strategy 347
10-6 New Products in Global Marketing 348
Identifying New-Product Ideas 348
New-Product Development 349
The International New-Product Department 351
Testing New Products 351
Summary 352
Discussion Questions 352
Case 10-1 Google (continued) 353

Chapter 11 Pricing Decisions 358

Case 11-1 Global Automakers Target Low-Income Consumers 358
11-1 Basic Pricing Concepts 359
11-2 Global Pricing Objectives and Strategies 360
Market Skimming and Financial Objectives 360
Penetration Pricing and Nonfinancial Objectives 362
Companion Products: Captive (“Razors and Blades”) Pricing 362
Target Costing 363
Calculating Prices: Cost-Plus Pricing and Export Price Escalation 364
11-3 Incoterms 365
11-4 Environmental Influences on Pricing Decisions 369
 CONTENTS 13

Currency Fluctuations 369

Inflationary Environment 372
Government Controls, Subsidies, and Regulations 373
Competitive Behavior 374
Using Sourcing as a Strategic Pricing Tool 375
11-5 Global Pricing: Three Policy Alternatives 375
Extension or Ethnocentric Pricing 375
Adaptation or Polycentric Pricing 376
Geocentric Pricing 376
11-6 Gray Market Goods 377
11-7 Dumping 378
11-8 Price Fixing 379
11-9 Transfer Pricing 380
Tax Regulations and Transfer Prices 380
Sales of Tangible and Intangible Property 381
11-10 Countertrade 382
Barter 382
Counterpurchase 383
Offset 383
Compensation Trading 383
Switch Trading 384
Summary 384
Discussion Questions 385
Case 11-1 Global Automakers Target Low-Income Consumers (continued) 385
Case 11-2 Global Consumer-Products Companies Target Low-Income Consumers 386
Case 11-3 LVMH and Luxury Goods Marketing 388

Chapter 12 Global Marketing Channels and Physical Distribution 392

Case 12-1 Welcome to the World of Fast Fashion 392
12-1 Distribution Channels: Objectives, Terminology, and
Structure 393
Consumer Products and Services 394
Industrial Products 398
12-2 Establishing Channels and Working With Channel
Intermediaries 399
12-3 Global Retailing 402
Types of Retail Operations 403
Trends in Global Retailing 407
Global Retailing Market Expansion Strategies 410
12-4 Physical Distribution, Supply Chains, and Logistics
Management 413
Order Processing 415
Warehousing 416
Inventory Management 416
Transportation 416
Logistics Management: A Brief Case Study 419
Summary 419
Discussion Questions 420
Case 12-1 Welcome to the World of Fast Fashion (continued) 420
Case 12-2 Can Walmart Crack the Retail Code in India? 423

Chapter 13 Global Marketing Communications Decisions I 428

Case 13-1 Volkswagen’s “Dieselgate” Nightmare 428
14 CONTENTS

13-1 Global Advertising 429

Global Advertising Content: Standardization versus Adaptation 431
13-2 Advertising Agencies: Organizations and Brands 435
Selecting an Advertising Agency in the Era of Digital Disruption 436
13-3 Creating Global Advertising 440
Art Direction and Art Directors 441
Copy and Copywriters 442
Additional Cultural Considerations 442
13-4 Global Media Decisions 445
Global Advertising Expenditures and Media Vehicles 446
Media Decisions 446
13-5 Public Relations and Publicity 447
The Growing Role of PR in Global Marketing Communications 451
How PR Practices Differ Around the World 452
Summary 453
Discussion Questions 453
Case 13-1 Volkswagen’s “Dieselgate” Nightmare (continued) 454
Case 13-2 Coca-Cola: Using Advertising and Public Relations to Respond to a Changing
World 455

Chapter 14 Global Marketing Communications Decisions II 460

Case 14-1 Milan Expo 2015 460
14-1 Sales Promotion 462
Sampling 464
Couponing 465
Sales Promotion: Issues and Problems 466
14-2 Personal Selling 467
The Strategic/Consultative Selling Model 469
14-3 Sales Force Nationality 473
14-4 Special Forms of Marketing Communications: Direct Marketing 476
Direct Mail 477
Catalogs 477
Infomercials, Teleshopping, and Interactive Television 479
14-5 Special Forms of Marketing Communications: Support Media,
Sponsorship, and Product Placement 480
Support Media 480
Sponsorship 482
Product Placement: Motion Pictures, Television Shows, and Public Figures 484
Summary 486
Discussion Questions 487
Case 14-1 Milan Expo 2015 (continued) 487
Case 14-2 Red Bull 489

Chapter 15 Global Marketing and the Digital Revolution 492

Case 15-1 How Do You Like Your Reality? Virtual? Augmented? Mixed? 492
15-1 The Digital Revolution: A Brief History 493
15-2 Convergence 497
15-3 Value Networks and Disruptive Technologies 498
15-4 Global E-Commerce 501
15-5 Web Site Design and Implementation 504
15-6 New Products and Services 506
Broadband 506
Cloud Computing 508
 CONTENTS 15

Smartphones 508
Mobile Advertising and Mobile Commerce 508
Autonomous Mobility 511
Mobile Music 512
Mobile Gaming 512
Online Gaming and e-Sports 513
Mobile Payments 513
Streaming Video 514
Internet Phone Service 514
Digital Books and Electronic Reading Devices 514
Wearables 515
Summary 516
Discussion Questions 517
Case 15-1 How Do You Like Your Reality: Virtual? Augmented? Mixed? (continued) 517
Case 15-2 Africa 3.0 518

PART FIVE STRATEGY AND LEADERSHIP IN THE TWENTY-FIRST

CENTURY 522
Chapter 16 Strategic Elements of Competitive Advantage 522
Case 16-1 IKEA 522
16-1 Industry Analysis: Forces Influencing Competition 523
Threat of New Entrants 524
Threat of Substitute Products 525
Bargaining Power of Buyers 525
Bargaining Power of Suppliers 526
Rivalry among Competitors 526
16-2 Competitive Advantage 527
Generic Strategies for Creating Competitive Advantage 527
BROAD MARKET STRATEGIES: COST LEADERSHIP AND DIFFERENTIATION 527
NARROW TARGET STRATEGIES: COST FOCUS AND FOCUSED DIFFERENTIATION 529
Creating Competitive Advantage via Strategic Intent 531
LAYERS OF ADVANTAGE 531
LOOSE BRICKS 532
CHANGING THE RULES 532
COLLABORATING 533
16-3 Global Competition and National Competitive Advantage 533
Factor Conditions 534
HUMAN RESOURCES 534
PHYSICAL RESOURCES 534
KNOWLEDGE RESOURCES 534
CAPITAL RESOURCES 535
INFRASTRUCTURE RESOURCES 535
Demand Conditions 535
COMPOSITION OF HOME DEMAND 537
SIZE AND PATTERN OF GROWTH OF HOME DEMAND 537
RAPID HOME-MARKET GROWTH 537
MEANS BY WHICH A NATION’S PRODUCTS AND SERVICES ARE PUSHED OR PULLED INTO
FOREIGN COUNTRIES 537
Related and Supporting Industries 537
Firm Strategy, Structure, and Rivalry 538
Chance 538
Government 539
16-4 Current Issues in Competitive Advantage 539
Hypercompetitive Industries 539
COST AND QUALITY 541
16 CONTENTS

TIMING AND KNOW-HOW 541

ENTRY BARRIERS 543
The Flagship Firm: The Business Network with Five Partners 544
Blue Ocean Strategy 545
Additional Research on Competitive Advantage 546
Summary 547
Discussion Questions 547
Case 16-1 IKEA (continued) 547
Case 16-2 “Everything Is Awesome, Everything Is Cool” at LEGO 549

Chapter 17 Leadership, Organization, and Corporate Social

Responsibility 552
Case 17-1 A Changing of the Guard at Unilever 552
17-1 Leadership 553
Top Management Nationality 554
Leadership and Core Competence 556
17-2 Organizing For Global Marketing 557
Patterns of International Organizational Development 560
INTERNATIONAL DIVISION STRUCTURE 560
REGIONAL MANAGEMENT CENTERS 562
GEOGRAPHIC AND PRODUCT DIVISION STRUCTURES 564
THE MATRIX DESIGN 565
17-3 Lean Production: Organizing The Japanese Way 568
Assembler Value Chains 568
Downstream Value Chains 569
17-4 Ethics, Corporate Social Responsibility, and Social Responsiveness in the
Globalization Era 570
Summary 576
Discussion Questions 577
Case 17-1 Unilever (continued) 577

Glossary 583
Author/Name Index 597
Subject/Organization Index 607