QUESTIONS
16-1. What international marketing strategies have been key to Kors’ success?
(LO 16.1; AACSB: Application of knowledge)
16-2. Describe the role of branding in the global luxury products market.
(LO 16.3; AACSB: Application of knowledge)
16-3. International markets account for a relatively small share of Kors’ sales. What can
Kors do to expand international sales?
(LO 16.3; LO 16.5; AACSB: Application of knowledge)
Asia
Emerging Markets
■ Emerging markets- affordable luxury appeals to the growing middle class.
16-4. Visit H&M’s website at www.hm.com. What are the characteristics of H&M’s global
market segment(s)? How does H&M position itself in the minds of target customers
around the world?
(LO 16.1; LO 16.2; AACSB: Application of knowledge; Diverse and multicultural work
environments)
■ Visiting the H&M website, the home page classifies different links for:
◘ Country selection
■ H&M Positioning conveys innovative styling for the fashion-minded.
16-5. How does management at H&M use global branding and global product
development to create and offer its fashions? How does the firm use marketing mix
elements to market its offerings around the world?
(LO 16.3; AACSB: Analytical Thinking)
MARKET SEGMENTS AND BRANDING
MARKETING
■ H&M has over 100 in-house designers who interpret apparel trends and create
fashions accessible to everyone.
■ H&M collaborates with well-known designers, o ering limited edition clothing lines
in some stores.
16-6. A key aspect of H&M’s strategy is to provide value to customers by maximizing
perceived product benefits, minimizing prices, or both. Given this, how can H&M further
increase the value of its offerings to customers? That is, what steps can management
take to increase the benefits and reduce the prices that its customers encounter when
shopping for H&M products?
(LO 16.3; LO 16.6; AACSB: Analytical Thinking)
■ Rapid response retailing means that H&M ensures the right product gets to the right stores
at the right time.
Style
■ H&M has over 100 in-house designers who interpret apparel trends and create
fashions accessible to everyone.
Speed
Cost
16-7. How does H&M strike a balance between standardization and adaptation of its
marketing program? What advantages does H&M gain from standardization? From
adaptation? What factors drive management to adapt offerings in particular markets?
(LO 16.2; AACSB: Analytical Thinking)
■ H&M management follows a global approach by emphasizing a uniform global brand and
similar apparel in all its stores.
■ Standardization Results in the Following Advantages:
■ Local Adaptation Results in the Following Advantages:
■ Adaptation Drivers- H&M offers smaller sizes in Asia, conservative apparel in Islamic
■ In a fickle industry, H&M has successfully balanced standardization with adaptation.
16-8. Increasingly, H&M targets emerging markets like China, Russia, and Saudi Arabia,
which are often characterized by distinctive cultures, lower incomes, and inexperience
with leading-edge fashion. In terms of marketing program elements, what can
management do to ensure H&M succeeds in these markets?
(LO 16.5; AACSB: Diverse and multicultural work environments)
■ The effectiveness of major media advertising may be determined by the country’s literacy rate,
V. END OF CHAPTER QUESTIONS
● TEST YOUR COMPREHENSION
16-9. Describe the marketing program elements and how each influences sales and
performance in international business.
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(LO 16.1; AACSB: Application of knowledge)
16-10. Audrey Corp. has historically adapted its offerings for all its foreign markets,
leading to a proliferation of product variations. Explain why Audrey Corp. might want to
consider a global marketing strategy. What are the benefits of a global marketing
strategy?
(LO 16.1; AACSB: Application of knowledge)
16-11. Distinguish between adaptation and standardization in international marketing.
(LO 16.2; AACSB: Application of knowledge)
16-12. Consider Toshiba’s laptop computer division. In terms of the marketing program
elements, what attributes of laptop computers does the firm need to adapt and which
attributes can it standardize for international markets?
(LO 16.2; AACSB: Application of knowledge)
16-13. What is the role of market segmentation and positioning in international
marketing? What is a global market segment?
(LO 16.2; AACSB: Application of knowledge)
16-14. What are the most important factors to consider when formulating international
pricing strategies? What steps would you follow in arriving at international prices?
(LO 16.4; AACSB: Application of knowledge)
■ Exhibit 16.4 summarizes the internal and external factors that influence international pricing.
◘ Internally, management accounts for its own objectives regarding profit and market
◘ Externally, management must account for customer characteristics, competitor prices,
16-15. Suppose export customers of a consumer product are highly sensitive to price.
However, the firm is experiencing substantial price escalation in the market. What factors
may be causing this situation? What can management do to reduce the harmful impact of
international price escalation?
(LO 16.4; AACSB: Analytical Thinking)
■ International price escalation is the problem of exorbitantly high prices in export markets
caused by multi-layered distribution channels, high intermediary margins, tariffs, and
international customer costs.
■ There are five strategies that may reduce the detrimental impact of international price
escalation:
◘ Shorten the distribution channel, bypassing some intermediaries
◘ Redesign product to remove costly features
16-16. Describe the role of distribution in international business.
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(LO 16.6; AACSB: Application of knowledge)
● APPLY YOUR UNDERSTANDING
16.17. Products must be adapted to accommodate national differences arising from
customer preferences and each market’s economic conditions, climate, culture, and
language. Think about the following products: packaged flour, swimsuits, textbooks, and
automobiles. Describe how a firm would need to adapt the marketing for each of these
products to suit conditions in China, Germany, and Saudi Arabia. In particular, think
about the nature of the product, its pricing and distribution, and the marketing
communications associated with it. China is an emerging market with low per-capita
income, Saudi Arabia is an emerging market with a conservative culture rooted in Islam,
and Germany is an advanced economy with a liberal culture. You may wish to consult
globalEDGE™ (www.globalEDGE.msu.edu) to learn more about these specific markets.
(LO 16.2; LO 16.3; AACSB: Diverse and multicultural work environments)
■ You might suggest that students create a chart with five columns and four rows.
■ List the countries China, Germany, and Saudi Arabia in the rows, and list the products:
packaged flour, swimming suits, textbooks, and automobiles in the columns.
■ For example, packaged flour may be easy to sell in Germany, but less so in China and Saudi
■ For example, perhaps the burquini, a women’s swimming suit that covers her from head to toe
■ Automobiles may appeal to a global market segment of people with much disposable income
■ Finally, any advertising or promotion activities would require translation into the local
16.18. Office Depot (www.officedepot.com) is a North America-based supplier of office
equipment and supplies. It has stores in Japan, Mexico, and Poland. Suppose Office
Depot decides to launch a line of notebook computers and wants to know how to price
them in each of these markets. What factors should Office Depot consider in setting
prices in each market? Should the firm standardize its pricing, or should prices be
adapted to each country? Suppose Office Depot’s final prices proved to be too high for
Mexico; what steps could management take to lower the price and still generate profits
from selling notebooks there? Suggest a step-by-step approach to international pricing.
(LO 16.4; AACSB: Analytical Thinking; Diverse and multicultural work environments)
Students would consider the steps outlined in the Exhibit 16.5 in the text:
Step 1. Estimate the “landed” price of the notebook in the foreign market by totaling
Step 2. Estimate the price distributors will charge after adding their profit margin to the
Step 3. End users in each market may possess different “willingness to pay” leading to
Step 4. Determine the notebook’s sales potential, at the price the firm is most likely to
Step 5. Choose the best pricing strategy (among rigid cost-plus pricing, flexible cost-plus
Step 6. Confirm how consistent these prices are across product lines, key customers,
Step 7. Implement the pricing strategy; and set intermediary and end-user prices.
16-19. Ethical Dilemma:
You just assumed a senior management position with Philip Morris (PM), a major
manufacturer of cigarettes. As cigarette sales have declined in the advanced economies,
PM has increased its marketing efforts in developing economies and emerging markets,
where demand for smoking tobacco remains strong. Because of the enormous
population in such countries, PM expects to generate huge sales. However, many of the
countries have high illiteracy rates, and people are not very aware of the harmful health
effects of smoking cigarettes. Many people become addicted to smoking. Given these
factors, is it ethical to target such countries with cigarettes? Using the ethical framework
in Chapter 4, analyze the arguments for and against marketing cigarettes to developing
economies and emerging markets. As a senior manager, what steps should you take, if
any, to address the dilemma?
■ As most ethical dilemmas illustrate, stakeholders have differing priorities.
Ethical Framework
1. Identify the problem
2. Examine the facts
3. Create alternatives
Evaluate each proposed action to assess its consistency with accepted ethical
standards, using the approaches described earlier:
■ Utilitarian—which action results in the most good and least harm?
■ Rights—which action respects the rights of everyone involved?
■ Fairness—which action treats people most fairly?
■ Common good—which action contributes most to the overall quality of
life of the people affected?
■ Virtue—which action embodies the character strengths you value?
4. Implement course of action
5. Evaluate results
1. Identify the problem
■ Managers must learn to recognize and manage ethical problems – proactively anticipate,
confront and scan for ethical challenges.
This Dilemma:
Philip Morris (PM) has increased its marketing efforts in developing economies and
emerging markets, where demand for smoking tobacco is strong, yielding burgeoning
sales. However, illiteracy is high; ignorance of detrimental health consequences is
widespread; and tobacco addiction is unpublicized in these markets. Is it ethical to target
such countries with cigarettes?
2. Examine the facts
■ Managers must systematically explore the ethical aspects of each decision the firm may
This Dilemma:
In order remain globally competitive; PM has targeted high demand markets with their
tobacco products. When cigarettes were initially introduced in advanced markets, the
detrimental health effects had not been scientifically established. Marketing tobacco
products today is a far different milieu, where medical studies have established the
hazardous effects of cigarettes and other tobacco products. Do PM shareholders or
developing economy/emerging market consumers have a greater stake? What steps
should PM take to align stakeholder interests and address this dilemma?
3. Create alternatives
■ Consistent with the pyramid of ethical behavior, actions should be legal, i.e. it should not
This Dilemma:
PM:
Whether to market in developing economies and emerging markets, where demand for
smoking tobacco remains strong, yet mass illiteracy prevails as does a common naiveté
regarding harmful health effects and tobacco addiction.
Utilitarian – which action results in the most good and least harm?
◘ PM Marketing– Most good for capital market stakeholders- increase profits
◘ PM Non-Marketing– Most good for developing economy/emerging market consumers-
◘ PM Non-Marketing– Fair to developing economy/emerging market consumers-
Common Good – which action contributes most to the overall quality of life of the
◘ PM Marketing– Benefits domestic workers, suppliers, distributors, shareholders, and
◘ PM Non-Marketing– Benefits developing economy/emerging market community- minimizing
Virtue – which action embodies the character strengths that you value?
◘ PM Marketing– Economic goals dictate actions- no character strength demonstrated here
◘ PM Non-Marketing– Social goals dictate actions- character strength demonstrated here
4. Implement course of action
■ Implement your decision.
5. Evaluate results
■ Evaluate your decision to see how effective it was. How did it turn out? If you had it to do
again, would you do anything differently?
This Dilemma: Students may use the above-mentioned points as a springboard for
further discussion of what actions PM may employ to ensure its marketing is ethically
and socially responsible.
■ PM may launch a literacy campaign to educate target consumers in its developing
● GlobalEDGE™ INTERNET EXERCISES http://globaledge.msu.edu
16-20. Global branding is key to international marketing success. Each year Interbrand
(www.interbrand.com) publishes a ranking of the top 100 global brands. The ranking can
be accessed by searching at the Interbrand site, or by entering “Best Global Brands” in a
Google search. For this exercise, locate and retrieve the most current ranking and
answer the following questions:
(LO 16.3; AACSB: Analytical Thinking)
a. In your view, what are the strengths and weaknesses of the methodology Interbrand
uses to estimate brand equity?
■ Brand value is calculated as the net present value of the brand’s earnings. To be considered,
the brands must have a minimum brand value of US$2.7 billion, achieve about one-third of their
b. What patterns do you detect in terms of the countries and industries most represented
in the top 100 list?
■ The top-listed countries are the United States, Finland, Japan, Germany, France, South
Korea, Switzerland, Britain, Sweden, Italy, Netherlands, Bermuda and Spain. These countries
reflect firms that are mainly in the following industries: beverages, food, cigarettes,
telecommunications, financial services, and cars.
c. According to Interbrand, what managerial guidelines will help a company develop a
strong global brand?
■ Strong brands have the following characteristics:
• Have a single worldwide identity with a simple unified brand message consistent in every
16-21. Procter and Gamble (P&G) and Unilever are the two leading firms in the consumer
products industry for offerings such as soap, shampoo, and laundry detergent. P&G
(www.pg.com) is based in the United States, and Unilever (www.unilever.com) is based in
Europe. What are the major regional markets of each firm? What products does each firm
offer through a global marketing strategy? Structure your answer in terms of the
marketing-mix elements. That is, what global strategy approaches does each firm use for
the product, its pricing, communications, and distribution?
(LO 16.3; LO 16.4; LO 16.6; AACSB: Analytical Thinking)
Procter and Gamble (P&G)
■ P&G’s regional websites are Balkans and Western Europe, however PG employees work in
over 80 countries, selling its 80 brands to consumers in over 180 countries.
Global Strategy and Marketing Mix for Head & Shoulders
• Product: Head and Shoulders is the same product (shampoo for a healthy scalp) across all
borders.
Unilever
■ Unilever’s major regional markets are Europe, North America, Latin America, and Asia.
Unilever sells its 400 brands in over 190 countries, with more than 2 billion worldwide
consumers using a Unilever product per day.
16-22. A third-party logistics provider (3PL) provides outsourced or “third-party” logistics
services to companies for part or all of their distribution activities. Examples include C.H.
Robinson Worldwide, Maersk Logistics, and FedEx. Your firm needs to find a 3PL to
handle its distribution efforts abroad. Your task is to locate two 3PLs online and address
the following questions:
(LO 16.6; AACSB: Analytical Thinking)
a. What logistical services does each firm provide?
b. What types of customers does each 3PL serve?
■ FedEx: Business and individual customers
■ Maersk Logistics: Businesses
c. Where are their headquarters and branch offices located?
■ The FedEx corporation headquarters is in Memphis, Tennessee. The FedEx network is
divided into five international regions: (1) Asia – Pacific (Headquarters in Hong Kong); (2)
d. Based on the information provided, which of the two 3PLs would you most likely
choose? Why?
■ The optimal choice would depend on business needs. Maersk Logistics would be the optimal
CAREER TOOLBOX EXERCISE
DEVELOPING A DISTRIBUTION CHANNEL IN JAPAN
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MyManagementLab
Go to Mymanagementlab.com for Auto-graded writing questions as well as the following
Assisted-graded writing questions:
16-23. Firms frequently adapt their products to suit conditions abroad. What other
marketing program elements do firms adapt for international markets?
16-24. William Corporation is a manufacturer of high-quality men’s and women’s
fashions. What steps should you take to transform William into a well-recognized
global brand?
16-25. MyManagementLab Only– comprehensive writing assignment for this chapter.
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