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Global Business Today Eleventh Edition Chapter 16
16-1
Global Marketing and Business Analytics
Table of Contents
Learning Objectives
Chapter Summary
Chapter Opening Activity
Chapter Outline
Opening Case: Fake News and Alternative Facts
Introduction
Globalization of Markets and Brands
Market Segmentation
Business Analytics
Product Attributes
Distribution Strategy
Communication Strategy
Pricing Strategy
Configuring the Marketing Mix
Product Development and R&D
End-of-Chapter Resources
Critical Thinking and Discussion Questions
globalEDGE™ Research Task
Closing Case: ACSI and Satisfying Global Customers
Continuous Case Concept
Additional Readings and Sources of Information
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Learning Objectives
16-1 Understand the importance of business analytics and international market research.
16-2 Explain why it might make sense to vary the attributes of a product from country to
country.
16-3 Recognize why and how a firm’s distribution system might vary among countries.
16-4 Identify why and how advertising and promotional strategies might vary among countries.
16-5 Explain why and how a firm’s pricing strategy might vary among countries.
16-6 Understand how to configure the marketing mix globally.
16-7 Describe how globalization is affecting product development.
Chapter Summary
This chapter focuses on the marketing and R&D activities of global firms. The chapter begins
with a review of the four elements that constitute a firm’s marketing mix: product attributes,
distribution strategy, communication strategy, and pricing strategy. The chapter continues with a
discussion of the importance of business analytics and international marketing research. Many
firms vary their marketing mix from country to country depending on differences in cultures,
levels of economic development, product and technical standards, the availability of distribution
channels, and so forth. The chapter discusses the strategic implications of each element of the
marketing mix for an international firm. The link between marketing and R&D is also discussed.
This chapter stresses that selling a product on a global scale may require that a firm vary its
products from country to country to satisfy local preferences. This may require a firm to establish
R&D centers in different parts of the world and closely link R&D and marketing in each region
to ensure that the company is producing products that its overseas customers will buy.
Chapter Opening Activity
A good way to learn about distribution channels in other countries without traveling there is to
read the U.S. Commercial Service’s Country Commercial Guides. Visit globaledge.msu.edu,
search for a country, and find the quick links to these documents. Each Country Commercial
Guide has a section about distribution that serves as a starting point for any vendor wanting to
sell in another country.
What’s more, local experts at the U.S. Commercial Service in the U.S. Consulate Office in each
country are there to help U.S. vendors who are truly serious about selling internationally find
distributors and customers. At the end of many Country Commercial Guides, the names and
emails of these local experts are listed. Students might try contacting them to ask specific
questions about their projects for this class.
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Chapter Outline
Fake News and Alternative Facts
opening case
Summary
The opening case explores the use of targeted advertising and the prevalence of fake news and
alternative facts. Advances in technology have facilitated the collection of big data, allowing
businesses to abandon their reliance on mass advertising in favor of more targeted advertising.
Technology is also facilitating the rather disturbing trend of targeted fake news and alternative
facts via companies like Facebook.
Discussion Questions
1. Discuss the collection of big data and the associated use of targeted advertising. How is it
beneficial to businesses? How do you feel about it as a consumer?
2. Do companies like Facebook have an ethical responsibility to limit the dissemination of fake
news and alternative facts? Explain your position.
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facts-to-alternative-language and https://www.sciencemag.org/news/2018/02/fighting-back-
against-alternative-facts-experts-share-their-secrets.
Introduction
A) This chapter explores how an international business can perform marketing and R&D
activities to reduce the costs of value creation and add value by better serving customer needs.
B) The tension that exists in most international businesses between the need to reduce costs and
the need to be responsive to local conditions is particularly predominant in this chapter as we
look at the development and marketing of products
C) The four elements that constitute a firm’s marketing mix—the set of choices the firm offers
to its targeted markets—are product attributes, distribution strategy, communication strategy, and
pricing strategy.
Globalization of Markets and Brands
A) Theodore Levitt wrote lyrically about the globalization of world markets. Levitt’s arguments
are worth quoting at some length since they have become something of a lightning rod for the
debate about the extent of globalization.
B) The current consensus among academics is that although the world is moving towards global
markets, the continuing persistence of cultural and economic differences among nations acts as a
major brake on any trend toward global consumer tastes and preferences. In addition, trade
barriers and differences in product and technical standards also constrain a firm’s ability to sell a
standardized product to a global market.
Teaching Tip: Some firms are in the business of helping firms “go global.” One example is
GeoTrade Global Marketing http://www.geotradeglobalmarketing.com, which focuses on
international Internet marketing.
CONNECT
Video Case
Starbucks Opens First Café in Sub Saharan Africa
Summary
This activity focuses on international marketing and how international businesses choose which
elements of the marketing mix to standardize and which elements to customize to better fit the
local market. The trade-off between standardization and customization has significant
implications for other parts of the organization.
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Activity
Students are asked to watch a video on international marketing and then respond to a series of
questions related to the video.
Class Discussion
Understanding the elements of the marketing mix and whether they can be standardized or
whether they should be localized is important for international managers. Discuss experiences at
Starbucks around the world. Which elements of the marketing mix have been standardized and
which have been customized. Does this differ by country?
Market Segmentation
A) Market segmentation refers to identifying distinct groups of consumers whose purchasing
behavior differs from others in important ways. Firms must adjust their marketing mix from
segment to segment. The goal is to optimize the fit between the purchasing behavior of
consumers in a given segment and the marketing mix.
B) International managers need to consider the existence of intermarket segments that
transcend national borders and understand differences across countries in the structure of
segments.
C) For a segment to transcend national borders, consumers in that segment must have some
compelling similarities that lead to similarities in purchasing behavior. Where such similarities
do not exist, there must be some customization if the firm is to maximize performance in the
market. This customization may be in the product, the packaging, or simply the way in which the
product is marketed.
D) Global market segments are much more likely to exist in industrial products (e.g., memory
chips, chemical products, and corporate bonds) than in consumer products. An emerging
segment that is attracting the attention of international consumer product marketers is the global
youth segment.
management FOCUS: Global Branding, Marvel Studios, and
Walt Disney Company
Summary
This feature explores how Marvel Studios has successfully created global brands with its
Avengers series and the Iron Man movies. Iron Man debuted in international markets a few days
before it was premiered in the United States. Marvel Studios was able to capitalize on the global
marketing power of its parent company. The Walt Disney Company continued the strategies
implemented by Bravo and in addition, worked to reacquire licensing rights and bring greater
unity to the brand.
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1. Comment on Marvel Studios’ success at global branding. In your opinion, is its success related
to the superhero theme of its movies, or could it have had the same level of success with other
storylines?
2. Reflect on the role of Marvel Studios parent company, the Walt Disney Company, as a factor
in the success of Marvel Studios. Do you think Marvel Studios would have had the same level of
success without Disney?
Responses to this question will vary by student. Many will agree that while Disney probably
people involved in their creation.
Teaching Tip: To learn more about Marvel Studios and The Walt Disney Company go to
https://www.marvel.com/movies and https://www.disney.com.
Lecture Note: To extend this discussion, consider https://www.entrepreneur.com/article/312635
and https://www.forbes.com/sites/scottmendelson/2018/05/02/marvels-avengers-4-marketing-
strategy-should-be-denial-distraction-deception/#18805b49310e.
Business Analytics
A) Business analytics is defined as the knowledge, skills, and technology that allow for the
exploration, as well as deeper investigation, of a company’s international business strategies and
activities to gain insight and drive future strategy development and implementation.
B) The process of using business analytics starts with a data set that has been collected to address
a specific issue. Big data refers to massive volume of both structured and unstructured data that
are so large they may be difficult to process using traditional database and software techniques.
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C) Business analytics can be focused on one of three core applications: descriptive, predictive,
and prescriptive. Descriptive analytics refers to the use of relatively simple statistical techniques
to describe what is contained in a dataset. Predictive analytics can be defined as the use of
advanced statistical techniques (and software) to identify and build predictive models that can
help to identify trends and relationships not readily observed in descriptive analyses. Prescriptive
analytics can be defined as the use of management science methodologies to guide a company in
its endeavors to best use allocable resources.
INTERNATIONAL MARKET RESEARCH
A) To effectively configure the marketing mix, global companies conduct marketing research.
International marketing research is defined as the systematic collection, recording, analysis,
and interpretation of data to provide knowledge that is useful for decision making in a global
company.
B) Compared with market research that is focused on the domestic market, international market
research involves additional issues such as translation of questionnaires into appropriate foreign
languages and accounting for cultural and environmental differences in data collection.
C) The basic data that companies want collected include (1) data on the country and potential
market segments; (2) data to forecast customer demands within a specific country or world
region; and (3) data to make marketing mix decisions.
D) The process for conducting international market research involves six steps (Figure 16.1). (1)
Defining the research objectives. (2) Determining the data sources that will address specific
research problems: primary and secondary. (3) Assessing the costs and benefits of the research.
(4) Collecting the data. (5) Analyzing and interpreting the research. (6) Reporting the research
findings.
Product Attributes
A) Products sell well when their attributes match consumer needs. If consumer needs were the
same the world over, a firm could simply sell the same product worldwide. But consumer needs
vary from country to country depending on culture and the level of economic development. In
addition, firms are limited by countries differing product standards.
CULTURAL DIFFERENCES
B) Countries differ along a whole range of cultural dimensions, including tradition, social
structure, language, religion, and education. At the same time, there is some evidence of the
trends Levitt talked about. Tastes and preferences are becoming more cosmopolitan.
Lecture Note: To see how some companies have adapted their product to better suit local
markets, go to https://www.forbes.com/sites/sylviavorhausersmith/2012/06/22/cultural-
homogeneity-is-not-an-automatic-by-product-of-globalization/#55d0d3925034 and
http://www.cnn.com/2010/LIVING/homestyle/04/08/fast.food/index.html.
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ECONOMIC DEVELOPMENT
C) Just as important as differences in culture are differences in the level of economic
development. Firms based in highly developed countries tend to build a lot of extra performance
attributes into their products. Consumers in less developed nations do not usually demand these
extra attributes, instead the preference is for more basic products.
PRODUCT AND TECHNICAL STANDARDS
D) Notwithstanding the forces that are creating some convergence of consumer tastes and
preferences, Levitt’s vision of global markets may still be a long way off due to national
differences in product and technological standards.
Distribution Strategy
A) A critical element of a firm’s marketing mix is its distribution strategy, the means it chooses
for delivering the product to the consumer.
B) Figure 16.2 in the text illustrates a typical distribution system consisting of a channel that
includes a wholesale distributor and a retailer. If the firm manufactures its product in that
country, it can sell directly to the consumer, to the retailer, or to the wholesaler. The same
options are available to a firm that manufactures outside the country.
DIFFERENCES BETWEEN COUNTRIES
C) The four main differences between distribution systems are retail concentration, channel
length, channel exclusivity, and channel quality.
Retail Concentration
D) In some countries, the retail system is very concentrated, whereas in other countries it is
fragmented. In a concentrated retail system, a few retailers supply most of the market. A
fragmented retail system is one in which there are many retailers, no one of which has a major
share of the market.
Channel Length
E) Channel length refers to the number of intermediaries between the producer and the
consumer. If the producer sells directly to the consumer, the channel is very short. If the
producer sells through an import agent, a wholesaler, and a retailer, a longer channel exists.
Channel Exclusivity
F) An exclusive distribution channel is one that is difficult for outsiders to access. Japan’s
system is often held up as an example of a very exclusive system.
Channel Quality
G) Channel quality refers to the expertise, competencies, and skills of established retailers in a
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of retailers is good in most developed countries but is variable at best in emerging markets and
less developed countries.
CHOOSING A DISTRIBUTION STRATEGY
H) The choice of distribution strategy determines which channel the firm will use to reach
potential consumers. Since each intermediary in a channel adds its own markup to the product,
there is generally a critical link between channel length and the firm’s profit margin.
Communication Strategy
A) Another critical element in the marketing mix is communicating the attributes of the product
to prospective customers. Several communication channels are available to a firm, including
direct selling, sales promotion, direct marketing, and advertising.
B) A firm’s communications strategy is partly defined by its choice of channel.
management FOCUS: Burberry’s Social Media Marketing
Summary
This feature discusses the recent reinvigoration of Burberry’s brand from the late 1990s to 2018.
Initially begun by Rose Marie Bravo, she saw tremendous hidden value in the Burberry brand
that was not being leveraged when she joined the company in 1997. Through her work, as well
as that of Angela Ahrendts, Burberry was able to appeal to younger, well-heeled, fashion-
conscious consumers internationally and pursue a retail strategy that did not include licensing as
had been done previously. Instead, the company gained control of its brand and developed a
strategy both with brick-and-mortar stores and a considerable online presence.
Discussion Questions
1. The centralized brand management that happened under the watch of Angela Ahrendts was a
strategic move that resulted in a better brand equity. Is this a move that should remain a staple of
the company’s brand strategy, or what decisions/strategies should Burberry be making moving
forward?
2. With the leadership of Angela Ahrendts and Christopher Bailey, Burberry brand’s iconic
check pattern has become less of a marketing focus than before. What role in design and
marketing should the Burberry check pattern play in the future? Does the target market matter in
this decision?
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Students may either support or reject the use of the check pattern. Those that support its use will
3. Should Burberry be focused on new brick-and-mortar stores, as new CEO Christopher Bailey
did with the opening of Burberry’s largest store, 121 Regent Street in London, or should they
focus on more online sales worldwide? Are high-end products (clothing such as Burberry's)
better sold in stores or online, or both?
Teaching Tip: To learn more about Burberry, go to https://www.burberry.com.
Lecture Note: To extend the discussion of Burberry, its strategy, and its social media presence,
consider https://www.theguardian.com/business/2017/nov/09/burberry-to-reinvent-itself-as-a-
super-luxury-british-brand and
https://www.forbes.com/sites/bernardmarr/2017/09/25/the-amazing-ways-burberry-is-using-
artificial-intelligence-and-big-data-to-drive-success/#7c0e5fc64f63.
BARRIERS TO INTERNATIONAL COMMUNICATION
C) International communication occurs whenever a firm uses a marketing message to sell its
products in another country. The effectiveness of a firm’s international communication can be
jeopardized by three potentially critical variables: cultural barriers, source effects, and noise
levels.
Cultural Barriers
D) Cultural barriers can make it difficult to communicate messages across cultures. The best way
for a firm to overcome cultural barriers is to develop cross-cultural literacy.
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Source and Country of Origin Effects
E) Source effects occur when the receiver of the message (the potential consumer) evaluates the
message based upon the status or image of the sender. Source effects can be either positive or
negative. A subset of source effects is referred to as country of origin effects (the extent to
which the place of manufacturing influences product evaluations).
Lecture Note: The class can be stimulated to think of some positive and negative source effects
(German autos vs. German wine, Italian cuisine vs. British cuisine).
Noise Levels
F) Noise tends to reduce the chance of effective communication. In this context, noise refers to
the number of other messages that are competing for a potential consumer’s attention.
PUSH VERSUS PULL STRATEGIES
G) The main choice with regard to communication strategy is between a push strategy and a pull
strategy. A push strategy emphasizes personnel selling whereas a pull strategy emphasizes
mass media advertising. The choice between push and pull strategies depends upon product type
and consumer sophistication, channel length, and media availability.
Product Type and Consumer Sophistication
H) A pull strategy is generally favored by firms in consumer goods industries that are trying to
sell to a large segment of the market. In contrast, firms that sell industrial products or other
complex products favor a push strategy.
Channel Length
I) Using direct selling to push a product through many layers of a distribution channel can be
very expensive. In such circumstances, a firm may try to pull its product through the channels by
using mass advertising to create consumer demand.
Media Availability
J) A pull strategy relies on access to advertising media. A push strategy is more attractive when
access to mass media is limited.
The Push-Pull Mix
K) Push strategies tend to be emphasized more in the following circumstances:
• For industrial products and/or complex new products
• When distribution channels are short
• When few print or electronic media are available
L) Pull strategies tend to be emphasized more in the following circumstances:
• For consumer goods products
• When distribution channels are long
• When sufficient print and electronic media are available to carry the marketing message
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CONNECT
Case Analysis
Push or Pull Promotional Strategy
Summary
This activity focuses on international marketing and specifically on push or pull promotional
strategies. The choice of communication strategy includes direct selling, sales promotion, direct
marketing, and advertising. That choice may be influenced by the channel choice.
Activity
Students are asked to read a short case on push or pull promotional strategies and then respond to
a series of questions related to the case.
Class Discussion
International marketing managers have a variety of choices when it comes to international
marketing. Discuss the difference between a push promotional strategy and a pull promotional
strategy and when each is most appropriate.
CONNECT
Case Analysis
Overcoming Cultural Barriers to Selling Tampons
Summary
This activity focuses on international marketing and specifically on cross-cultural challenges in
international marketing. Cultural barriers can make it difficult to use a standardized message for
a product or service. What works well in one market may not work well in another.
Activity
Students are asked to read a short case on the cross-cultural challenges of international marketing
and then respond to a series of questions related to the case.
Class Discussion
International marketing managers need to develop cross-cultural literacy in order to better
understand customers in different parts of the world. Discuss how managers can develop this
essential ability.
GLOBAL ADVERTISING
M) In recent years there has been much discussion about the pros and cons of standardized
advertising worldwide.
For Standardized Advertising
N) The support for global advertising is threefold. 1) It has significant economic advantages. 2)
