Chapter 19Kotabe & Helsen's Global Marketing Management, Second Edition 1 Global Marketing Management Masaaki Kotabe & Kristiaan Helsen Second Edition.

Chapter 19 Kotabe & Helsen's Global Marketing Management, Second Edition

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Global Marketing ManagementGlobal Marketing Management

Masaaki Kotabe & Kristiaan HelsenMasaaki Kotabe & Kristiaan HelsenSecond EditionSecond Edition

John Wiley & Sons, Inc., 2001John Wiley & Sons, Inc., 2001


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Chapter 19Chapter 19

Global Marketing and the InternetGlobal Marketing and the Internet


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Chapter OverviewChapter Overview

1. The Internet and the Global Marketplace 1. The Internet and the Global Marketplace

2. Structural Barriers to Global E-Commerce2. Structural Barriers to Global E-Commerce

3. Using the Internet for Understanding 3. Using the Internet for Understanding Global BuyersGlobal Buyers

4. Competitive Advantage and Cyberspace4. Competitive Advantage and Cyberspace

5. Ramifications of the Internet for Global 5. Ramifications of the Internet for Global Marketing StrategiesMarketing Strategies


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IntroductionIntroduction

The Internet has revolutionized the international The Internet has revolutionized the international business arena and global marketing in particular.business arena and global marketing in particular.

Roughly speaking, the Internet is a network of Roughly speaking, the Internet is a network of computers interconnected throughout the world computers interconnected throughout the world operating on a standard protocol that allows data operating on a standard protocol that allows data to be transmitted.to be transmitted.

Until the early 1990s, the Internet was primarily Until the early 1990s, the Internet was primarily the preserve of the military and academic the preserve of the military and academic researchers.researchers.


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Introduction (contd.)Introduction (contd.)

The development of new software and other The development of new software and other technologies during the early 1990s turned the technologies during the early 1990s turned the Internet into a commercial medium that has Internet into a commercial medium that has transformed businesses worldwide.transformed businesses worldwide.

This chapter looks at the impact of the World This chapter looks at the impact of the World Wide Web (WWW) on global marketing Wide Web (WWW) on global marketing activities.activities.


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1. The Internet and the Global 1. The Internet and the Global MarketplaceMarketplace

Internet usage worldwide is growing rapidly (see Internet usage worldwide is growing rapidly (see Exhibit 19-1).Exhibit 19-1).

The global e-commerce market is predicted to The global e-commerce market is predicted to reach $1.2 trillion by 2001.reach $1.2 trillion by 2001.

Asia-PacificAsia-Pacific– Asia-Pacific region is quickly catching up in Asia-Pacific region is quickly catching up in

the Internet.the Internet.– Most of the action in the region is business-to-Most of the action in the region is business-to-

business.business.


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1. The Internet and the Global 1. The Internet and the Global Marketplace (contd.)Marketplace (contd.)

– Online e-commerce revenues are expected to Online e-commerce revenues are expected to grow from $2 billion in 1999 to $32 billion in grow from $2 billion in 1999 to $32 billion in 2003.2003.

– To boost e-commerce and Internet-related To boost e-commerce and Internet-related activities, Hong Kong has planned a activities, Hong Kong has planned a CyberportCyberport and Singapore a and Singapore a wired Islandwired Island..

– Several obstacles hinder the spread of e-Several obstacles hinder the spread of e-commerce in Asia which include: face-to-face commerce in Asia which include: face-to-face business instead of via anonymous channels, business instead of via anonymous channels,


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relationships and networking, problems of relationships and networking, problems of secrecy and family-owned businesses, and secrecy and family-owned businesses, and knowledge barriers.knowledge barriers.

EuropeEurope– Consumer spending on e-commerce in Europe Consumer spending on e-commerce in Europe

is expected to surpass U.S. spending by the is expected to surpass U.S. spending by the year 2002.year 2002.

– Small and medium-sized European companies Small and medium-sized European companies are finding the Internet a cheap way to broaden are finding the Internet a cheap way to broaden their geographic scope.their geographic scope.


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– Several challenges to e-commerce in Europe Several challenges to e-commerce in Europe persist which include: government red tape and persist which include: government red tape and regulations, knowledge barriers, and reluctance regulations, knowledge barriers, and reluctance to reveal credit cards numbers.to reveal credit cards numbers.

Latin AmericaLatin America– Net fever is also spreading in Latin America.Net fever is also spreading in Latin America.– Brazil with 88 percent of Latin America’s Brazil with 88 percent of Latin America’s

online sales in 1999, has been one of the online sales in 1999, has been one of the strongest e-commerce markets in the region.strongest e-commerce markets in the region.


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– Like other regions, e-commerce faces a number Like other regions, e-commerce faces a number of obstacles which include: high cost of Internet of obstacles which include: high cost of Internet access, customs regulations and import duties, access, customs regulations and import duties, and consumers’ reluctance to release their and consumers’ reluctance to release their credit card numbers.credit card numbers.


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2. Structural Barriers to Global2. Structural Barriers to GlobalE-CommerceE-Commerce

Language BarriersLanguage Barriers– Much of the content on the Web is in the Much of the content on the Web is in the

English language.English language.– A recent study found that business users on the A recent study found that business users on the

Web are three times more likely to purchase Web are three times more likely to purchase when the Web site “speaks” their language.when the Web site “speaks” their language.

– The demand for Web site localization services The demand for Web site localization services has boosted a new Web-oriented translation has boosted a new Web-oriented translation industry.industry.


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2. Structural Barriers to Global2. Structural Barriers to GlobalE-Commerce (contd.)E-Commerce (contd.)

Cultural BarriersCultural Barriers– Cultural norms and traditions can hinder the Cultural norms and traditions can hinder the

spread of the Internet.spread of the Internet.– In Confucian-based cultures like most East Asian In Confucian-based cultures like most East Asian

nations, business is conducted on a personal nations, business is conducted on a personal basis.basis.

– In many countries, credit card penetration is low.In many countries, credit card penetration is low.– To become familiar with local markets as well as To become familiar with local markets as well as

local cultures is not possible through the Internet.local cultures is not possible through the Internet.


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Personal Computer OwnershipPersonal Computer Ownership– In many emerging markets, ownership of In many emerging markets, ownership of

personal computers is still very low.personal computers is still very low.– Slow Internet access remains a major problem Slow Internet access remains a major problem

in many countries.in many countries. Knowledge BarriersKnowledge Barriers

– Setting up an e-business requires certain Setting up an e-business requires certain knowledge and skills.knowledge and skills.

– In emerging markets, scarcity of proper talent In emerging markets, scarcity of proper talent and skills will restrain the development of a and skills will restrain the development of a digital economy.digital economy.


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Access ChargesAccess Charges– In numerous countries, high Internet access In numerous countries, high Internet access

charges may deter users.charges may deter users.– Rates vary a great deal across countries.Rates vary a great deal across countries.

Legal Constraints and Government RegulationsLegal Constraints and Government Regulations– Red tape and government regulations stall e-Red tape and government regulations stall e-

commerce in dozens of countries.commerce in dozens of countries.– E-commerce is global but the laws are mostly E-commerce is global but the laws are mostly

local.local.


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– Fragmented government regulations and laws Fragmented government regulations and laws affect e-commerce.affect e-commerce.

– Difference in value-added taxes, currencies, Difference in value-added taxes, currencies, and culture may pose problems for the and culture may pose problems for the companies.companies.


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3. Using the Internet for Understanding 3. Using the Internet for Understanding Global BuyersGlobal Buyers

In terms of primary research, the possibilities In terms of primary research, the possibilities created by the Internet are stunning. There are created by the Internet are stunning. There are many measurement tools available which include:many measurement tools available which include:– Online surveysOnline surveys– Bulletin boards and chat groupsBulletin boards and chat groups– Web visitor trackingWeb visitor tracking– Virtual panelsVirtual panels– Focus groupsFocus groups


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3. Using the Internet for Understanding 3. Using the Internet for Understanding Global Buyers (contd.)Global Buyers (contd.)

Shortcomings of Online research:Shortcomings of Online research:– Sample representativenessSample representativeness– Low Internet accessLow Internet access– Incorrect or out-dated e-mail addressesIncorrect or out-dated e-mail addresses– Problems with the Web sitesProblems with the Web sites– Integrity of the respondentsIntegrity of the respondents– Problems in identity validation when the same Problems in identity validation when the same

e-mail address is used by multiple peoplee-mail address is used by multiple people


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4. Competitive Advantage and 4. Competitive Advantage and CyberspaceCyberspace

The Internet offers two major benefits to The Internet offers two major benefits to companies that use the tool as a gateway to global companies that use the tool as a gateway to global marketing:marketing:

1. Cost/efficiency savings1. Cost/efficiency savings

2. Accessibility (2. Accessibility (connectivityconnectivity)) The Internet also offers access to customers The Internet also offers access to customers

around the world.around the world. The value of some of the pre-Internet sources of The value of some of the pre-Internet sources of

competitive advantage has been deflated.competitive advantage has been deflated.


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4. Competitive Advantage and 4. Competitive Advantage and Cyberspace (contd.)Cyberspace (contd.)

Some observers have argued that one of the major Some observers have argued that one of the major consequences of the Internet is that small and consequences of the Internet is that small and large firms are on an equal footings now as far as large firms are on an equal footings now as far as global competition is concerned.global competition is concerned.

Although size-related advantages will probably Although size-related advantages will probably lessen, claims that the Internet provides a level lessen, claims that the Internet provides a level playing field to small and large global players playing field to small and large global players alike are somewhat overblown.alike are somewhat overblown.


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5. Ramifications of the Internet for 5. Ramifications of the Internet for Global Marketing StrategiesGlobal Marketing Strategies

One-to-One MarketingOne-to-One Marketing Product PolicyProduct Policy

– Global brandingGlobal branding» Internet-based new productsInternet-based new products

Marketing of ServicesMarketing of Services Global PricingGlobal Pricing

– Cost transparencyCost transparency DistributionDistribution

– Role of Existing ChannelsRole of Existing Channels


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5. Ramifications of the Internet for 5. Ramifications of the Internet for Global Marketing Strategies (contd.)Global Marketing Strategies (contd.)

» Replacement effect/complementary effect Replacement effect/complementary effect (see Exhibit 19-4)(see Exhibit 19-4)

– Retailing LandscapeRetailing Landscape» Brick-and-mortar retailersBrick-and-mortar retailers» Click-and-mortar retailersClick-and-mortar retailers

Global Promotion and the WebGlobal Promotion and the Web– According to Forrester Research, worldwide According to Forrester Research, worldwide

advertising on the Internet will rise from $3.3 advertising on the Internet will rise from $3.3 billion in 1999 to $15 billion by 2003.billion in 1999 to $15 billion by 2003.


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5. Ramifications of the Internet for 5. Ramifications of the Internet for Global Marketing Strategies (contd.)Global Marketing Strategies (contd.)

– Online advertising techniques include the Online advertising techniques include the following (see Global Perspective 19-3):following (see Global Perspective 19-3):» BannersBanners» Permanent buttonsPermanent buttons» Affiliate programsAffiliate programs» SponsorshipsSponsorships» E-mailing listsE-mailing lists» Rich-media expanding bannersRich-media expanding banners» InterstitialsInterstitials


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Copyright © John Wiley & Sons, Inc., 2001Copyright © John Wiley & Sons, Inc., 2001

Chapter 19Kotabe & Helsen's Global Marketing Management, Second Edition 1 Global Marketing Management Masaaki Kotabe & Kristiaan Helsen Second Edition.

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