Chapter 06 – Understanding and Reaching Global Consumers and Markets
6-21
a. One firm may not have the necessary financial, physical, or managerial
• Disadvantages of a joint venture:
D. Direct Investment
• Direct investment:
a. Is a global market-entry strategy that entails a domestic firm actually investing
• For many firms, it often follows one of the other three market-entry strategies.
• Advantages of direct investment:
a. Cost savings.
• Disadvantages of direct investment:
a. The financial commitments.
LEARNING REVIEW
6-8. What mode of entry could a company follow if it has no previous experience in
global marketing?
6-9. How does licensing differ from a joint venture?
Chapter 06 – Understanding and Reaching Global Consumers and Markets
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joint venture, a foreign company and a local firm invest together to create a local
V. CRAFTING A WORLDWIDE MARKETING PROGRAM [LO 6-5]
• A global marketer must plan, implement, and evaluate marketing programs
worldwide.
• Global marketers standardize global marketing programs whenever possible and
A. Product and Promotion Strategies
• [Figure 6-5] Global firms:
a. Have five strategies for matching products and promotion efforts to global
• A product may be sold globally in one of three ways:
1. Product extension.
2. Product adaptation. Involves changing a product to make it more appropriate
for a country’s climate or consumer preferences.
3. Product invention. Companies can invent totally new products designed to
satisfy common needs across countries.
• To promote its products globally, companies can:
a. Use an identical promotion message for product extension and product
Chapter 06 – Understanding and Reaching Global Consumers and Markets
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[Video 6-4: Nescafé China Video]
B. Distribution Strategy
• A country’s economic infrastructure determines:
• [Figure 6-6] The starting point is the seller, who is responsible for the successful
distribution to the ultimate consumer.
• Intermediaries then bring buyers and sellers together to distribute the product
C. Pricing Strategy
• Individual countries, even those with free trade agreements, may impose
considerable competitive, political, and legal constraints on a global company’s
a. Dumping occurs when a firm sells a product in a foreign country below its
domestic price or below its actual cost. This is because:
b. A gray market is a situation where products are sold through unauthorized
channels of distribution.
Chapter 06 – Understanding and Reaching Global Consumers and Markets
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• Occurs when companies price their products very high in some countries
but competitively in others.
• Occurs when individuals:
– Buy products in a lower-priced country from a manufacturer’s
• Parallel importing is legal in the U.S. but illegal in the EU.
LEARNING REVIEW
6-10. Products may be sold globally in three ways. What are they?
6-11. What is dumping?
Chapter 06 – Understanding and Reaching Global Consumers and Markets
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APPLYING MARKETING KNOWLEDGE
1. Explain what is meant by this statement: “Quotas are a hidden tax on consumers,
whereas tariffs are a more obvious one.”
2. How successful would a television commercial in Japan be if it featured a husband
surprising his wife in her dressing area on Valentine’s Day with a small box of
chocolates containing four candies? Explain.
(2) Japanese women give men chocolates on Valentine’s Day; and (3) the number four is
unlucky in Japan.
3. As a novice in global marketing, which alternative global market-entry strategy
would you be likely start with? Why? What other alternatives do you have for a
global market entry?
Answers: The best alternative for a novice firm is indirect exporting—selling its
domestically produced goods in a foreign country through an intermediary, such as a
Other alternatives in order of increasing level of risk and investment are:
a. Direct exporting. Selling the firm’s domestically produced goods in a foreign country
without intermediaries.
4. Coca-Cola is sold worldwide. In some countries, Coca-Cola owns the bottling
facilities; in others, it has signed contracts with licensees or relies on joint ventures.
When selecting a licensee in each country, what factors should Coca-Cola consider?
Chapter 06 – Understanding and Reaching Global Consumers and Markets
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the target country, reviewing regulations and business customs in the country to be sure its
Chapter 06 – Understanding and Reaching Global Consumers and Markets
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BUILDING YOUR MARKETING PLAN
Does your marketing plan involve reaching global customers outside the United
States? If the answer is no, read no further and do not include a global element in your
plan. If the answer is yes, try to identify the following:
1. What features of your product are especially important to potential customers?
2. In which countries do these potential customers live?
3. What special marketing issues are involved in trying to reach them?
Answers to these questions will help in developing more detailed marketing mix
strategies described in later chapters.
Special issues for students to consider if marketing a product to another country include:
1. Regulations dealing with imports, including tariffs and quotas.
While the global customers are important to food chains like McDonald’s or
Chapter 06 – Understanding and Reaching Global Consumers and Markets
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TEACHING NOTE FOR VIDEO CASE VC-6
Mary Kay, Inc.: Building a Brand in India
Synopsis
This case describes the market entry into India by Mary Kay, Inc. At the time of the
case, Mary Kay, Inc. was one of the largest direct sellers of skin care and color cosmetics in the
Teaching Suggestions
This case addresses global marketing organizations, global market-entry strategies, and
global branding. As such, the case provides a basis for review and possible synthesis of these
topics. Instructors might emphasize this benefit when discussing the case.
1. A useful opening question to students is: “Are any of you familiar with Mary Kay, Inc.
and its products?”
[Video 6-5: Mary Kay Video Case (kerin.tv/cr8e/v6-5)]
Answers to Questions
1. Is Mary Kay an international firm, a multinational firm, or a transnational firm
based on its marketing strategy?
Answer: On one level, Mary Kay evidences the structural characteristics of an international
firm, like that described for Avon in Chapter 7. Specifically, Mary Kay distributes its
Chapter 06 – Understanding and Reaching Global Consumers and Markets
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2. What global market-entry strategy did Mary Kay use when it entered India?
3. Is Mary Kay a global brand? Why or why not?
Answer: Yes, Mary Kay is a global brand. Why? The Mary Kay brand is marketed under
the same name in multiple countries (35 markets on five continents) with similar and
Epilogue
Mary Kay has enjoyed success in India. Since 2009, the company posted year-on-year
growth of 45 percent in India. According to K. K. Chua, President of Asia-Pacific, for Mary Kay
in 2012:
On February 18, 2013, Mary Kay, Inc. announced that it would discontinue its operations
in India. In December 2012, the government of India proposed a ban on multi-level marketing in
India. When Mary Kay, Inc. announced its decision to depart India, the company president said:
“We have seen the regulatory environment in India for both direct selling and cosmetics
Chapter 06 – Understanding and Reaching Global Consumers and Markets
Mary Kay recently celebrated its 50th anniversary. According to David Holl, President
and CEO for Mary Kay, “Our 50th anniversary has been a record-setting year.” In the past year,
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ICA 6-1: IN-CLASS ACTIVITY
Introducing Carmex Healing Cream to European Markets1
Learning Objectives. To have students: (1) identify the problems U.S. global marketers
typically face when adapting a U.S. product to sell to foreign consumers and (2) suggest
marketing mix actions that Carma Labs might make for its Carmex healing cream to appeal to
European consumers.
Nature of the Activity. To have students:
Estimated Class Time and Teaching Suggestions. About 20 minutes, taught in class in 4-
person teams.
Materials Needed.
• Copies for each student of the of the “Marketing Actions to Improve Carmex’s
Chances of Successfully Targeting the European Market” handout.
Steps to Teach this ICA.
1. OPTIONAL: Bookmark the following websites on your classroom computer:
2. Form students into 4-person teams.
4. Pass out copies of the Marketing Actions to Improve Carmex’s Chances of
Successfully Targeting the European Market Handout to each student.
Chapter 06 – Understanding and Reaching Global Consumers and Markets
5. Carmex Healing Cream (U.S. to European Markets). Click on the Internet icon to
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10. Ask students to classify Carma Labs, the firm that markets the Carmex Healing
Cream in the U.S., either as an international firm, a multinational firm, or a
transnational firm.
Answer: The Carmex brand should be classified as a transnational firm because it
Chapter 06 – Understanding and Reaching Global Consumers and Markets
MARKETING ACTIONS TO IMPROVE CARMEX’S CHANCES OF
SUCCESSFULLY TARGETING THE EUROPEAN MARKET ANSWERS
Marketing Mix
Element
Issue/Problem
Action/Solution
Product
Improvements
• Flavors
• Packaging (tube; jar?)
• Labeling
• Amount of product: 4 ounces
• Others as identified
• Make more flavors (fruit,
natural, mint, etc.)
• Design unique packaging for
each European country
• Determine optimal product
package forms, quantities,
and sizes
• Others as identified
Pricing
Improvements
• Currency exchange risks
since Carmex is produced in
the U.S. ($) and exported to
England (£) and other
European countries that use
the euro (€)
• Price ($) of $5.49 – $5.99
• Others as identified
• Determine uniform euro price
for each country
• Show comparison prices for
selected competitive creams
• Others as identified
Promotion
Improvements
• No TV ads; Europeans like
TV
• Carmex ads, promotions, etc.
may not be seen/acted upon
• Use of social media like
Facebook and YouTube in
Europe
• Non traditional use of
traditional media may not
appeal to target customers
• If used, humor may not be
fully appreciated by the
French, British, etc.
• Others as identified
• Use creative alternative
media to inform potential
target customers, such as
magazine ads, billboards,
public relations, etc.
• Use country-specific
Facebook Pages for each
country in the EU
• Use multiple product
placement situations that are
consistent with brand image
• Use humor that is culturally
accepted
• Others as identified
Place (Distribution)
Improvements
• Different channels to reach
England and continental
Europe
• Eastern Europe distribution
channel structure and
sophistication compared to
Western Europe
• Others as identified
• Sell through the websites of
pharmacies and other
distribution partners
• Gain access to larger
Eastern European countries
(Poland, Czech Republic,
etc.)
• Others as identified
Chapter 06 – Understanding and Reaching Global Consumers and Markets
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MARKETING ACTIONS TO IMPROVE CARMEX’S CHANCES OF
SUCCESSFULLY TARGETING THE EUROPEAN MARKET HANDOUT
MARKETING
MIX ELEMENT
ACTION/SOLUTION
Product
Improvements
Pricing
Improvements
Promotion
Improvements
Place
(Distribution)
Improvements
6-37
Exercise 1: Protectionism
Activity Summary: In this case analysis activity, students read a brief scenario in which they are
asked to think like a global marketing consultant working to increase exports and decrease
imports into the United States. Students are asked five follow-up questions related to the effect of
tariffs and quotas on international trade.
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topic: Global Marketing
Learning Objective: LO 06-02 Identify the major developments that have influenced world
trade and global marketing
AACSB: Knowledge Application
Blooms: Apply
Difficulty Level: 2 Medium
Exercise 2: Global Market Entry
Activity Summary: In this click and drag activity, students are given six global market entry
strategies; indirect exporting, direct exporting, licensing, franchising, joint venture and direct
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topic: Market Entry Strategies
Learning Objective: LO 06-04 Name and describe the alternative approaches companies use to
enter global markets.
AACSB: Analytical thinking
Blooms: Apply
Difficulty Level: 2 Medium
Exercise 3: Global Marketing Program
Chapter 06 – Understanding and Reaching Global Consumers and Markets
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Breathe Right, Gasoline Producer) onto the correct global marketing program (product
extension, product adaptation, product invention, communication adaptation, and or dual
adaptation strategy). As students mouse over the company name, they are provided with a
description of that firm’s marketing program.
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topic: Global Marketing
Learning Objective: LO 06-05 Explain the distinction between standardization and
customization when companies craft worldwide marketing programs.
AACSB: Knowledge Application
Blooms: Apply
Difficulty Level: 2 Medium
Exercise 4: Mary Kay, Inc.: Building a Brand in India
Activity Summary: In this 6-minute video, students learn the history of Mary Kay Cosmetics
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topics: Global Marketing, Global Environmental Forces
Learning Objectives: LO 06-02 Identify the major developments that have influenced world
trade and global marketing
LO 06-03 Identify the environmental forces that shape global marketing
efforts.
LO 06-05 Explain the distinction between standardization and
customization when companies craft worldwide marketing programs.
AACSB: Knowledge Application
Blooms: Apply
Difficulty Level: 2 Medium
Follow-Up Activity: Instructors could facilitate a discussion on how the world defines beauty
Application Exercise 5: iSeeit! Video Case: Global Entry Strategies
Chapter 06 – Understanding and Reaching Global Consumers and Markets
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Activity Summary: In this straightforward whiteboard animation video, global entry strategies
are explored in the context of coffee retailers 5 Bucks and Joe to Go. After watching the 3-
minute video, students are asked four follow-up questions related to global entry strategies.
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topic: Market Entry Strategies
Learning Objectives: LO 06-04 Name and describe the alternative approaches companies use to
enter global markets.
AACSB: Knowledge Application
Blooms: Understand
Difficulty Level: 1 Easy
Follow-Up Activity: Instructors can introduce Geert Hofstede’s theory on cultural dimensions