END OF CHAPTER MATERIAL
Discussion Questions
19-1 What environmental factors must international marketers consider when entering foreign
markets? (AACSB: Communication)
Answer: Student answers will vary based on their personal response. Refer to the MyLab for
19-2 Name and explain a company’s market entry options for international markets. (AACSB:
Communication)
Answer: Student answers will vary based on their personal response. Refer to the MyLab for
19-3 Explain how licensing might work for a business wanting to break into a new global
market. How does licensing differ from other types of joint venture? (AACSB:
Communication; Reflective Thinking)
Answer:
Licensing is a comparatively risk-free way in which a business can utilize their resources and
property in an overseas market. Under the agreement, the licensor (the owner of the property
19-4 When should a business use a standardized or an adapted marketing strategy in an overseas
market? (AASCB: Communication)
Answer:
It will depend on the type of product or service being sold in the overseas market together
with the real and perceived differences in the market itself. Both approaches have their
advantages and disadvantages. Standardization offers economies of scale, faster set-up times,
19-5 Outline the specific challenges a global business faces in establishing itself in an
emerging market. (AACSB: Communication; Reflective Thinking)
Answer: Students can suggest several key challenges, the most important being distribution
infrastructure and supply issues. To a large extent, global business is reliant on the gradual
Critical Thinking Exercises
19-6 Visit www.transparency.org and find the most recent Corruption Perceptions Index (CPI)
report. What is the most recent CPI for the following countries: Argentina, Denmark,
Jamaica, Myanmar, New Zealand, Somalia, and the United States? What are the implications
of this index for U.S.-based companies doing business in these countries? (AACSB:
Communication; Use of IT; Reflective Thinking)
Answer: Student answers will vary based on their personal response. Refer to the MyLab for
19-7 In a small group, identify and research an environmental threat—such as a regulatory threat,
a cultural threat, or and economic threat—posed to global marketers. Analyze the issues
related to this threat, discuss how affected companies are reacting, and make
recommendations regarding how these companies should address the threat. (AACSB:
Communication; Reflective Thinking)
Answer:
Students’ answers will vary. Instructors may want to assign students specific threats to
research. One example is the threat U.S. technology companies such as Google, Apple,
Microsoft, and Facebook are facing in the European Union. For information see the sources
below (search “Europe against US tech firms”):
David Grossman, “Why Europe Is Defending Itself from Big US Tech Firms,” BBC
News, February 6, 2015, www.bbc.com/news/business-31164639. The author states that
Another author coined the term “Eurotechnopanic” to describe the fight against Google
and other Silicon Valley-based technology companies (see
Sam Schechner “Europe Targets U.S. Web Firms,” Wall Street Journal, November 28,
2014, A1, A10,
Mark Bergen, “What to Expect from the EU’s Move to Regulate U.S. Tech Companies,”
re/code, May 5, 2015,
Tom Fairless, “U.S. Tech Firms Increase EU Lobbying Efforts,” Wall Street Journal,
April 29, 2015,
19-8 Lush is a quintessentially British brand. Formed in 1994, it has a revolutionary approach to
the creation and ethical sourcing of fresh beauty products, all made by hand. Lush could not
be more different than the mass-produced cosmetics most consumers buy today. Lush is
enjoying rapid global expansion. Research how this is being achieved and how they go about
adapting their key messages to each new market while retaining their core message.
(AACSB: Communication; Use of IT; Reflective Thinking)
Answer:
Students will discover that this is a process that has been followed since 2014 as part of a
major the brand transformation programme. Lush launched Lush.co.uk, Lush Times (a
MINICASES AND APPLICATIONS
Online, Mobile, and Social Media Marketing: China’s Great Firewall
China has emerged as an enormous social media market. With more than 1.35 billion people and
635 million internet users, internet usage in China is growing explosively at about 30 percent
annually. That makes it an extremely attractive market for Western social media companies such
as Facebook, Google, Twitter, and YouTube. However, under what has come to be called the
“Great Firewall of China”—an extensive level of control and censorship of websites and internet
activities by the Chinese government—many such Western social media and other online
marketers have been largely blocked from operating in China. According to The Diplomat, eight
of the top 25 most-visited global sites are now blocked in China. However, even with constant
government monitoring of internet activities, China has become one of the world’s most active
social media environments. Chinese consumers can connect though carefully controlled local
social networking platforms such as Renren (everyone’s website), Baidu (Google-like search
engine), Youku (China’s answer to YouTube), Weixin (instant messaging), Jiepang (similar to
Foursquare), microblogging sites such as Sina Weibo (like Twitter), and Dianping (similar to
Yelp),
As more marketers enter the social media landscape in China, strategies to reach consumers must
be carefully shaped to the country’s culture, consumers, content, platforms, and regulations.
Online marketers must understand Chinese culture, translations, and etiquette to help craft better
messages and marketing content that will resonate with Chinese consumers. At the same time,
they must navigate under the watchful eye of the Chinese government.
19-9 Research the Great Firewall of China. How will such government control affect social
media marketing in China? Report on a Western online company now operating in China.
How is it able to work within and around Chinese regulations? (AACSB: Communication;
Reflective Thinking)
Answer:
According to The Diplomat, outright blocking of websites by Chinese officials appears to
have worsened over the past year. Online stores such as Amazon, with branches in China, are
Government control is a real challenge that marketers will face as a part of doing business in
China. If a company wants to reach Chinese consumers and avoid being banned, it will have
19-10 Suppose that your company is preparing to enter the Chinese market with a product line
that you believe will have great success. What is the best mode of entry for your company?
Review the economic and political climates. Is the timing right for entering China? (AACSB:
Communication; Use of IT; Reflective Thinking)
Answer:
Once a decision has been made to sell in a foreign country, the company must determine the
best mode of entry. Its choices are exporting, joint venturing, and direct investment.
Students can search the internet to determine the current economic and political climate in
China. For example, see
www.wsj.com/articles/american-companies-say-doing-business-in-china-is-getting-tougher-1
453260461.
Marketing Ethics: Cleaning Up the Chinese Pharmaceutical Market
By 2020, the Chinese pharmaceutical market will be worth $1.3 trillion per year. Pharmaceutical
businesses from around the world have recognized the potential of the market and, at the same
time, existing Chinese businesses have realized the potential threats to their market share. In
order to grab some market share and profit, some pharmaceutical companies have been less than
honest in their dealings and have subsequently found themselves under intense scrutiny from
China’s National Development and Reform Commission (NDRC). In 2016, the NDRC fined 5
domestic pharmaceutical companies over $600,000 for fixing their prices. This was part of the
continuing battle to keep medicine prices at affordable levels. The 5 companies had colluded
between April 2014 and September 2015 to raise the price of a drug used to treat kidney diseases.
China has 1.4 billion potential customers, and the drug market was growing at 20 percent a year;
it has now slowed to 5 percent.
The Chinese government is keen to stamp out corruption, but corruption is ingrained and
persistent. China ranks 79th out of 175 countries on the Transparency International Index 2016,
which tracks corruption across a variety of business markets. In one corruption case, the
corruption took place outside of the normal parameters of business dealings; the individuals
made deals outside the company’s systems. In this particular case, there was a 30 percent drop in
sales as the company scaled back in order to ensure it had oversight of all aspects of business
operations in China. If foreign companies are found by the NDRC to be giving out bribes, then it
is not just a question of business as usual after paying the fine; they must also repair their
reputations.
19-11 Should pharmaceutical companies learn to adapt to paying bribes in China? Debate
both sides of this issue. (AACSB: Communication; Ethical Reasoning)
Answer: Student answers will vary. It would seem that many pharmaceutical companies are
doing this as many are being investigated by the NDRC. It is thus clear that the Chinese
government wants to stamp out corruption. There have been some very high profile court
19-12 Discuss whether multinational companies have difficulties breaking into the market in
your country.
Answer:
Student answers will vary. Student responses will depend on the nature of the market, its
size, and any potential barriers to entry. The barriers may include legislature, the nature of the
Marketing by the Numbers: Attracting Alternative Markets
Some 18 million tourists visited Greece during 2014—a figure approaching twice the population
of Greece. Only fifty years ago, the country was attracting around 33,000 tourists a year. Tourism
has wrought fundamental changes in Greece; it has had a massive social and financial impact on
the country. Yet Greece still struggles to manage and promote its tourism industry. According to
the Aristotle University in Thessaloniki, tourism in Greece peaked in 1990, about the same time
as tourism worldwide reached a peak. Over the years, Greece has welcomed tourists who have
been interested in very different things, culminating in mass tourism, which has been in decline
for the past decade. With a poor economic outlook, Greece needs to look for alternatives and
seize on them quickly before their competitors do.
19-13 Develop a relevant demographic profile of a potential new market for a country like
Greece that is looking to attract alternative tourist markets. (Objective 1) (AACSB: Written
and Oral Communication; Information Technology; Reflective Thinking)
Answer:
Given that until 1990, Greece’s development in the tourism sector was the fastest in Europe,
they suffered considerably from 1999 to 2012. The country had become over-reliant on
A good source of current data is http://news.gtp.gr/.
Current new markets being developed include (adapted from Enterprise Greece
http://www.enterprisegreece.gov.gr/en/investment-sectors/tourism):
• Thematic sun-and-beach tourism, incorporating wellness and luxury holidays
• Nautical tourism, including cruise liners, sailing and yachting
19-14 Is this an attractive market for the Greek tourism sector? Refer to Appendix 2: Marketing
by the Numbers to develop a market potential estimation of this market. (Objective 1)
(AACSB: Written and Oral Communication; Analytical Thinking; Reflective Thinking)
Answer:
Student answers will vary according to the target market they have identified. Greece saw
some 30 million tourist arrivals in 2016, according to figures released by the Greek Tourism
Company Case Notes
L’Oréal: The United Nations of Beauty
Synopsis
L’Oréal is a French company that successfully markets products all over the world, selling more
than $28 billion worth of cosmetics, hair care products, skin care concoctions, and fragrances
each year in 130 countries, making it the world’s biggest cosmetics marketer. L’Oréal’s success
is based on a concept it calls “universalisation.” The company sells its brands globally by
understanding how they appeal to varied cultural nuances of beauty in specific local markets.
Then it finds the best balance between standardizing its brands for global impact and adapting
them to meet local needs and desires. With so many brands not only being sold in numerous
markets but originating in many different markets, the master global marketer is the uncontested
world leader in makeup, skin care, and hair coloring and second only to P&G in hair care.
Teaching Objectives
The teaching objectives for this case are to:
1. Gain a solid understanding of the concepts of standardizing and adapting and the roles
each play in global marketing.
2. Become familiar with the five global product and communications strategies.
3. Acquire experience in making decisions for the four elements of the marketing mix in a
global context.
4. Know the relationship between global sourcing, distribution, and price.
Discussion Questions
19-17 Of the five global product and communications strategies, which best describes L’Oréal’s
approach?
We know from the case that L’Oréal’s global strategy is based on its concept of
“universalization” or “beauty for all.” That concept focuses on the universal notion that
When it comes to communications, the case also mentions that L’Oréal adapts brand
positioning and marketing to international needs and expectations. Because of the nature of
19-18 On a scale of one to five, to what degree does L’Oréal adapt its offering in each global
market? Support your answer.
Student answers will vary. Because there are so many different markets, the answer also
varies from one market to the next. But as a general approach, the level of adaptation is
19-19 What are the disadvantages to L’Oréal’s global approach?
The company has a very complex product and brand portfolio. While this serves as a deep
19-20 Which strategy does L’Oréal employ for entering a new market? How does the company
benefit from this approach?
L’Oréal has a global strategy that relies on a combination of developing new products and
brands and acquiring such from other firms. As it moves into new markets, the primary
method for L’Oréal seems to be direct exports—exporting its own products and brands into
19-21 Will L’Oréal continue to succeed at such a high level? Why or why not?
The evidence points to “yes.” As complex as its brand structure is, L’Oréal has mastered so
many elements of global marketing. In its industry, no other company even comes close to
Teaching Suggestions
Send students on a global scavenger hunt to L’Oréal’s different brand sites throughout the world.
Have them access five different L’Oréal sites in five different global markets, digging in to the
individual brand sites in each. Have them note all the differences and all the similarities they
find.
This case can also be used with the segmentation chapter (Chapter 7), the product and brand
chapter (Chapter 8), and the competitive advantage chapter (Chapter 18).
Go to mymktlab.com for the answers to the following Assisted-graded writing questions:
19-22 Discuss the strategies used for adapting products to a global market. Which strategy is
best?
19-23 Name and describe the advantages and disadvantages of the different types of joint
venturing when entering a foreign market.
ADDITIONAL PROJECTS, ASSIGNMENTS, AND EXAMPLES
Projects
1. Read about the WTO (www.wto.org). What are the advantages and disadvantages of the
existence of this organization? Take a stand on its effectiveness and substantiate your
position. (Objective 1)
2. Describe the three key approaches to entering international markets. Which do you
believe would be the best for a company just beginning to work internationally?
(Objective 2)
3. Describe the five basic strategies for adapting products to new markets. (Objective 3)
4. Describe the whole-channel view of international distribution. (Objective 3)
Small Group Assignments
1. Divide students into groups of three to five and have them read the opening chapter
vignette on IKEA. Students should then answer the following questions and share their
answers with the class. (Objectives 2 and 3)
a. Why do international markets such as Asia, Eastern Europe, and South America
appear to be so promising to companies like IKEA?
b. What are some of the dangers and pitfalls that IKEA could encounter in marketing its
products in Asia?
c. What do you suppose so many Asians visit IKEA stores and buy products as they do?
What are the major appeals of this “very un-Asian” product?
2. Divide students into groups of three to five and have them read Real Marketing 19.2:
7-Eleven: Making Life a Little Easier for People around the Globe. Students should then
answer the following questions and share their answers with the class. (Objective 3)
a. 7-Eleven grants franchisees much flexibility in catering to local tastes in their stores.
How has that enabled 7-Eleven to succeed in places like Japan or Indonesia?
b. To sell convenience products in an international world, what adaptations must
7-Eleven make?
c. Can a company like 7-Eleven continue to successfully expand its product offerings
and expand even further internationally?
Individual Assignments
1. Read Thomas Friedman’s book, The Lexus and the Olive Tree. Write a five-page
summary of the major points he makes. (Objective 1)
2. The simplest way to enter a foreign market is through exporting. The two primary types
of exporting are direct exporting and indirect exporting. Define each term. Locate 10
companies that practice direct exporting and 10 companies that practice indirect
exporting. Justify your answers. (Objective 2)
Think-Pair-Share
Consider the following questions, formulate an answer, pair with the student on your right, share
your thoughts with one another, and respond to questions from the instructor.
1. How many countries are there in the world? (Objective 1)
2. What is the purpose of the World Trade Organization (WTO)? Do you believe it is doing
a good job? (Objective 1)
3. Discuss NAFTA and FTAA. In the long run, which do you believe has the greatest
probability of success? (Objective 1)
4. What is the fundamental difference between a tariff and a quota? (Objective 1)
5. What is countertrade and how does it work? (Objective 1)
6. What are some of the economic factors to consider when examining potential markets to
enter? (Objective 1)
7. What are some of the sociocultural factors to consider when examining potential markets
to enter? (Objective 1)
Outside Examples
1. Review the history of Disneyland Paris. Why was it initially such a failure? What lessons
can we take away from their experiences in France? (Objective 1)
Possible Solution:
The Disneyland Paris website (www.disneylandparis.com) provides information that will
be useful in answering this question.
The Disneyland Paris theme park was to be comprised of an updated, state of the art
Disney Magic Kingdom. It experienced numerous complications from its inception.
There were various errors made in the operations of Disneyland Paris that offended the
Disney had difficulty realizing Europeans were accustomed to eating at a set time every
day although Americans are content to wander around the parks with lunch in their hands.
A final example of a cultural error relates to the Europeans approach to vacation time.
Europeans are reluctant to take their children from school for a vacation in mid-session
2. Global organizations are companies that have stopped thinking of themselves as national
marketers who sell abroad and have started thinking of themselves as global marketers.
Name two global organizations and justify your answers. (Objective 4)
Possible Solution:
Obviously, there are a number of possible answers to this question. Ford Motor Company
and General Motors are two great examples. Both of these Detroit, Michigan-based auto