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Chapter 2

Marketing Foundations: Global, Ethical, Sustainable

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LEARNING OBJECTIVES

LO 2-2 Learn the essential information components for assessing a global market

opportunity.

LO 2-4 Describe the strategies for entering new global markets.

LO 2-6 Learn the importance of ethics in marketing strategy, the value proposition, and the

elements of the marketing mix.

LO 2-7 Recognize the significance of sustainability as part of the marketing strategy and the

use of the triple bottom line as a metric for evaluating corporate performance.

CHAPTER OUTLINE

I. MARKETING IS NOT LIMITED BY BORDERS

II. THE GLOBAL EXPERIENCE LEARNING CURVE

A. Companies with No Foreign Marketing

B. Companies with Foreign Marketing

C. International Marketing

D. Global Marketing

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E. Essential Information

i. Economic

ii. Culture, Societal Trends

iii. Business Environment

iv. Political and Legal

v. Specific Market Conditions

F. Emerging Markets

G. Multinational Regional Market Zones

i. Europe

ii. Americas

iii. Asia

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III. SELECT THE GLOBAL MARKET

A. Identify Selection criteria

B. Company review

IV. DEVELOP GLOBAL MARKET STRATEGIES

A. Market Entry Strategies

b. Exporter and Distributor

ii. Distributors

a. Direct Sales Force

iii. Contractual Agreements

b. Franchising

iv. Strategic Alliances

a. International Joint Venture

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v. Direct Foreign Investment

B. Organizational Structure

C. Product

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D. Consumers

i. Quality

iv. Country of Origin

E. Market Channels

i. Channel Structures

ii. Channel Factors

a. Cost

b. Capital

c. Coverage

d. Character

F. Marketing Communications

i. Advertising

ii. Personal Selling

iv. Public Relations

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G. Pricing

i. One World Price

ii. Local Market Conditions Price

iii. Cost-Based Price

iv. Price Escalation

a. Product export costs

b. Tariffs, import fees, taxes

v. Global Pricing Issues

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V. ETHICS: AT THE CORE OF SUCCESSFUL

MARKETING MANAGEMENT

A. Ethics and the Value Proposition

B. Ethics and the Elements of the Marketing Mix

i. Product

ii. Price

iv. Promotion

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C. Code of Marketing Ethics

VI. SUSTAINABILITY: NOT JUST THE RIGHT THING

TO DO BUT A GOOD MARKETING STRATEGY

A. Triple Bottom Line: The Link between Doing Well

and Doing Good

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VII. SUMMARY

KEY TERMS

developed economies Specific economies that have fueled world economic growth for much of

the 20th century, including Western Europe, the United States, and Japan.

emerging markets Growing economies that have developed over the last 25 years that are

projected to contribute toward 75 percent of world economic growth over the next 20 years.

regional market zones A group of countries that create formal relationships for mutual

economic benefit through lower tariffs and reduced trade barriers.

European Union A successful regional marketing zone founded more than 50 years ago by six

European countries (Belgium, France, Italy, Luxembourg, The Netherlands, and West Germany)

with the Treaty of Rome that now includes 25 countries.

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contractual agreements Enduring, nonequity relationships with another company that allow a

company to expand its participation in a foreign market.

in which every partner holds an equity position.

direct foreign investment A strategic alliance with long-term implications in which a company

moves

decision-making authority An issue that arises when companies grow internationally and lines

of authority become longer and more complicated resulting in difficulty in defining decision-

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basket of global marketing themes Global advertising strategy in which distinct ads built

around several marketing messages are created that local marketers can select from to best fit

their specific market situation

local market ad generation Global marketing strategy in which a firm allows local marketers to

create local ads that do not necessarily coordinate with its global marketing messages.

transfer pricing The cost companies charge internally to move products between subsidiaries or

divisions.

APPLICATION QUESTIONS

1. You are the marketing manager for a small company located in the United States that

manufactures specialized parts for high-end ink-jet printers. The company’s largest customer

(Hewlett Packard) has asked your company to supply parts to 10 of its distribution and repair

sites around the world. The company has never sold products outside the United States, so

this represents a significant step for the company. What stage in the global experience

learning curve is the company likely entering and why? Identify the activities the company

should undertake at this stage.

Companies with No Foreign Marketing – the company has no formal international channel

relationship or global marketing strategy targeted at international customers. The company

should begin to develop local distribution and service representation in the foreign market.

2. You are the market research director for a consumer product company. You have been asked

to evaluate China as a potential market for your company’s products and begin a search of

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secondary data. What types of information would you consider in assessing China? How

would you find information on these issues?

Economic

An accurate understanding of the current economic environment is essential. At the same

time additional economic data on consumer spending per capita are also needed to facilitate

decision making. A wide array of data is available online on the subject of “doing business

in China”; some is available at no cost and other data is available for a fee.

Culture, Societal Trends

Understanding a global market’s culture and social trends is fundamental for consumer

products. Cultural values, symbols and rituals, and cultural differences affect people’s

3. You are the marketing manager for Oxymoron Detergent and have been tasked with

introducing this product into Argentina. What six factors would you need to consider in

determining the proper channel of distribution for the introduction of Oxymoron detergent?

4. The marketing manager for McDonald’s has been asked to develop a code of marketing

ethics for the company. Develop a marketing code of ethics for McDonald’s, keeping in

mind that the company has stores all over the world.

The marketing mix (“4 Ps”) is a good framework for considering different categories of

behavior specific to marketing that should be addressed in a code of marketing ethics.

Particular attention should be given to standards regarding marketing communications

(truthful, clear) and product (safety, quality, green packaging).

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After creating their own version, students will benefit from reviewing the several codes of

conduct (for Directors, Suppliers, and Employees) that is shown on the McDonald’s website.

While much broader than just marketing, these documents will give students a sense of how

seriously large corporations like McDonald’s take the subject of ethics.

http://corporate.mcdonalds.com/mcd/investors/corporate-governance/codes-of-conduct.html

5. The CEO of Timberland has called and asked you to develop a triple bottom line report for

the company. What might be included in a TBL report for Timberland?

Here, students should focus not on developing a code of behavior, but rather a progress

report on how well Timberland is doing in the key areas of the Triple Bottom Line. Exhibit

2.14 can be used as an outline for the report.

• Profit

o Shareholder returns (e.g., earnings per share)

o Growth rates (revenues, earnings, market share)

o Risk management (key areas of risk such as regulation or lawsuits)

MANAGEMENT DECISION CASE

Selling to the Bottom of the Pyramid

Marketing Unilever Products in Rural Villages Around the World

Instructors leading a discussion about this case will find a review of the two HBR articles by

Simanis & Duke and Mahajan to be very helpful*. One way to introduce the case is to ask

students why a company would even bother marketing to a target market made up of consumers

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This case provides another opportunity to reinforce the definition of value and to emphasize that

value should be considered from the perspective of the consumer. A concluding point that

should become clear is that marketing to BOPMs is a more complex proposition than marketing

in traditional markets. Consequently, it is probably only the largest consumer products

companies and ones with sophisticated marketing organizations that should take on this

interesting challenge.

Questions for Consideration:

1. Is Unilever providing value to their Indian customers? In what ways? Consider the four

types of utility when forming your answer.

Value is defined in this chapter as a ratio of the bundle of benefits a customer receives from

an offering compared to the costs incurred by the customer in acquiring that bundle of

benefits. In light of that definition, the very small unit size of the Wheel detergent product

2. Considering the competition Unilever is receiving from Procter & Gamble and other

companies, in what creative ways could Unilever change their Wheel detergent product

offering to differentiate it from competitors’ offerings?

Differentiation comes with increasing the relative perceived value. Assuming that Unilever

has lowered their prices as much as possible, they would need to focus on expanding the

3. What principles should be used to determine if a product is a good fit for a BOPM market?

Are there products that should not be offered to BOPM consumers? Should this issue be

decided by marketers, governments or consumers?

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• Product is able to be produced and packaged in units small enough that the costs to

product and distribute can lead to a price that is affordable by BOPM consumers.

• The resulting package size needs to be meaningful/practical.

The question of what products are appropriate for BOPM markets should lead to interesting

discussions about whether consumers in BOPM markets require different kinds of

consideration in this regard. If it is acceptable to sell candy to middle class American

families, are BOPM families not also entitled to the benefits of enjoying candy? There are

4. Is it ethical for marketers to try to make money off people who are living at a subsistence

level? Should companies only market their products to people in certain income classes?

What factors should a marketer take into consideration when trying to answer these

questions?

The ethics of selling certain kinds of products is a fair question for marketers to consider

regardless of the income level of their target markets. Students will be able to list products

that could fit into this category: those that hurt customers’ health (e.g., cigarettes, sugary

* E. Simanis & D. Duke, “Profits at the Bottom of The Pyramid,” Harvard Business Review, 92(10), (2014), pp. 86-

93.

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V. Mahajan, “How Unilever Reaches Rural Consumers in Emerging Markets,” Harvard Business Review Digital

Articles, (2016), pp. 2-6.