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Chapter 19

Global Marketing and

the Internet
 Chapter Overview
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1. Barriers to Global Internet Marketing

2. Competitive Advantage and Cyberspace
3. Global Internet Consumers
4. Globally Integrated versus Locally Responsive
Internet Marketing Strategies
5. The Internet and Global Product Policy
6. Global Pricing and the Web
7. Global Distribution Strategies and the Internet
8. The Role of the Internet for Global
Communication Strategies
 Introduction
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 The Internet has revolutionized the

international business arena and global
marketing in particular.
 Roughly speaking, the Internet is a network
of computers interconnected throughout
the world operating on a standard protocol
that allows data to be transmitted.
 Until the early 1990s, the Internet was
primarily the preserve of the military and
academic researchers.
 Introduction
4

 The Web provides a unique distribution

and communication channel to marketers
across the globe.
 The development of new software and
other technologies during the early 1990s
turned the Internet into a commercial
medium that has transformed businesses
worldwide.
 This chapter looks at the impact of the
World Wide Web (WWW) on global
marketing activities.
 Global Internet Use
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 Internet usage worldwide is growing

rapidly The internet population in China
ranks first in the world and by 2010 is
expected to equal the entire U.S.
population.
 The worldwide internet population
surpassed 1 billion in 2005—up from
only 45 million 10 years ago and 420
million in 2000.
 Top 15 Countries in Internet
Usage
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 Global Internet Use—Asia-Pacific
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 Asia-Pacific
 The Asia-Pacific region is quickly catching
up. Most of the action in the region is
business-to-business.
 Internet penetration in Japan and South
Korea is higher now than in the US. With
high broadband penetration, online
shopping is more attractive in South Korea
than in the rest of the region.
 In China, web surfers apparently have a
positive attitude toward online shopping.
 Global Internet Use—Asia-Pacific
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 Asia-Pacific (cont.)
 Several obstacles hinder the spread of
e-commerce in Asia:
 prefer to do business face-to-face instead of via
anonymous channels
 relationships and networking
 problems of secrecy and family-owned
businesses
 knowledge barriers.
 Global Internet Use—Europe
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 Europe
 Consumer spending on e-commerce in
Europe is growing at a very fast pace.
 Small and medium-sized European
companies are finding the Internet a cheap
way to broaden their geographic scope.
 Challenges to e-commerce in Europe persist
 government red tape and regulations
 knowledge barriers
 reluctance to reveal credit card numbers.
 Global Internet Use—Latin
America
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 Latin America
 Net fever is also spreading in Latin America.
 Brazil has been one of the strongest e-
commerce markets in the region, although
internet penetration is still fairly low.
 Brazil also has the largest number of online
retailers in the region.
 E-commerce in Latin America is spurred by
opportunities for transparency, cost-cutting,
and supply chain productivity increases.
 Global Internet Use—Latin
America
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 Latin America (cont.)

 Obstacles to growth:
 high cost of Internet access
 customs regulations and import duties
 consumers’ reluctance to release their
credit card numbers.
 1. Barriers to Global Internet
Marketing
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 Language Barriers:
 Much of the content on the Web is in
English
 Business users on the Web are three times
more likely to purchase when the Web site
“speaks” their language.
 The demand for Web site localization
services has boosted a new Web-oriented
translation industry.
 1. Barriers to Global Internet
Marketing
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 Cultural Barriers:
 Cultural norms and traditions can hinder the
spread of the Internet.
 In Confucian-based cultures like most East
Asian nations, business is conducted on a
personal basis.
 In many countries, credit card penetration is
low.
 To become familiar with local markets as
well as local cultures is not possible through
the Internet.
 1. Barriers to Global Internet
Marketing
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 Infrastructure:
 In many emerging market countries, e-
readiness rank very low. E-readiness measures
the extent of internet connectivity and
infrastructure in the country (Exhibit 19-2)

 Knowledge Barriers:
 Setting up an e-business requires certain
knowledge and skills.
 In emerging markets, scarcity of proper talent
and skills will restrain the development of a
digital economy.
 EIU e-Readiness Rankings by
Country, 2008
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 1. Barriers to Global Internet
Marketing
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 Access Charges:
 In numerous countries, high Internet access charges may
deter users.
 Rates vary a great deal across countries.
 Legal Constraints & Government Regulations:
 Red tape and government regulations stall e-commerce in
dozens of countries.
 E-commerce is global but the laws are mostly local.
 Fragmented government regulations and laws affect e-
commerce.
 Difference in value-added taxes, currencies, and culture may
pose problems for the companies.
 2. Competitive Advantage and
Cyberspace
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 The Internet offers two major benefits to

companies that use the tool as a gateway
to global marketing:
1. Cost/efficiency savings
2. Accessibility (connectivity)
 The Internet also offers access to customers
around the world.
 The value of some of the pre-Internet
sources of competitive advantage has been
deflated.
 2. Competitive Advantage and
Cyberspace
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 Some observers argue that small and

large firms are on an equal footing as
global competitors.

 Although size-related advantages will

probably lessen, claims that the Internet
provides a level playing field for all are
somewhat overblown.
 3. Global Internet Consumers
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 The following are some of the emerging

issues and questions facing global
marketers:
 To what extent do online customers differ
from offline ones?
 To what degree do Internet buyers differ
across cultures or countries?
 3. Global Internet Customers
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 Primary research possibilities created by

the Internet are stunning. Measurement
tools available include:
 Online surveys
 Bulletin boards and chat groups
 Web visitor tracking
 Virtual panels
 Focus groups
 3. Global Internet Customers
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 Shortcomings of Online research

 Sample representativeness
 Low Internet access
 Incorrect or out-dated e-mail addresses
 Problems with the Web sites
 Integrity of the respondents
 Problems in identity validation when the
same e-mail address is used by multiple
people
 4. Globally Integrated versus Locally
Responsive Internet Marketing
22 Strategies
 Higher purchase intentions and better
attitude are tied to locally adapted
websites
 U.S. firms have text and visuals usually
tailored to each country
 European firms vary
 BMW has general “international” site and
customized country sites
 Nivea localizes models, images and
language
 Global Internet Strategies According to
Nature of Good or Service Being Sold
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 International Website of the BMW
Brand
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 Websites of the Nivea Brand
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 5. The Internet and Global Product
Policy
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 Product Policy
 Global branding
 New product development
 Global product design
 New product ideas—consumer co-creation
 New product diffusion
 Services
 Easier standardization
 24/7 availability
 Example of Consumer Co-Creation
—Dell’s Ideastorm
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 6. Global Pricing and the Web
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 Global Pricing
 Price transparency hazards
 Reduces company’s ability to price discriminate
 Products can devolve to commodity goods
 Brand loyalties may vanish
 Consumer backlash about fairness of price
 Corporate responses to price transparency
 Align prices
 Localize products
 Refuse overseas orders
 7. Global Distribution Strategies
and the Internet
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 Distribution
 Role of Existing Channels
 Replacement effect/complementary
effect
 E-Tailing Landscape
 Click-and-retailing
model
 E-Tailing model depends on three
factors: Consumer behavior, cost
structure, and government policies
 8. The Role of the Internet for
Global Communication Strategies
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 Global Communication and the Web:

 By 2009, JupiterResearch forecasts online
advertising spending is expected to grow to
$16.1 billion in the US and $3.9 billion in
Europe.
 Overall, in almost all countries internet
advertising still is a tiny slice of the global
advertising pie, even in the developed
world
 8. The Role of the Internet for
Global Communication Strategies
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 Advantages of internet advertising:

 Global reach
 Lower cost
 Allows precision
 Interactivity
 Ability to customize
 Ability to instantly monitor
 8. The Role of the Internet for
Global Communication Strategies
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 Online advertising offers a wide spectrum of

techniques
 Banner ads
 Search engine advertising-keyword
search or website context
 Microsites
 8. The Role of the Internet for
Global Communication Strategies
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 A critical question—which metrics to

measure effectiveness?
 number of views?
 click-through rates?
 cost per acquisition?
 cost per sale?
 Measuring sentiment or “buzz”
 Nielsen Buzzmetrics
 CRMMetrix