LEARNING OB JECT IV ES
As you read through this chapter, you should develop an understand-
ing of the following key points related to global marketing activities:
Global marketing is very broad in scope.
•
There are many reasons why firms
to engage in global
marketing.
•
The elements of the environment of g l oba l marketing are differ-
ent than those for domestic markets.
•
Firms can enter foreign markets through a variety of strategies,
each of which has advantages and disadvantages.
•
In planning marketing mix strategies, firms cannot simply copy
domest i c marketing mix strategies.
GOOD LUCK GETTING INTO C HIN A
It'sa wet morning in Old Shanghai, and Dell salesman Peter Chan is selling hard. As
the Yangtze River flows by the
district a few floors below, Chan is getting into a
flow of his own. His subject: computers and the unique benefits of Dell's direct-selling
model. His customer: Xiao Jian Yi,
general Manager of China Pacific Insurance,
a fast-growing state-owned insurance company. The audience: three of Xiao 's
subordinates.
Dell's aggressiveness is beginning to payoff. Not only did Dell reel in the China
Pacific account,
it is also becoming a
player in China. In 1998, 36-year-old
Michael Dell opened the fourth
PC factory in the world in Zi amen , a
windswept city halfway between Hong Kong and Shanghai in China's southeastern
coast. The point of Dell's push into China seems so obvious as to be a
China is
becoming too big a PC market for Dell, or anyone, to ignore. "If we're not in what will
soon be the second biggest PC market in the world," asks John Legere, president of
Asia-Pacific, "then how can Dell possibly be a global player')"
Though the competition is intense, Dell is confident it has a strategy that will pay
off. First, it has decided not to target retail buyers, who account for only aoout 10% of
Dell's China sales. That way Dell avoids going head-to-head against
local
market leaders like Legend . "It takes nearly two years of a person 's savings to buy a PC
in China," notes Mary Ma,
chief financial officer of Legend. "And when two years of
savings is at stake, the whole fam ily wants to come out to a store to touch and try the
machine." Dell just isn 't set up to make that kind of sale yet.
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DEFINING INTERNATIONAL MARKETING
127
One thing's for sure: the Dell model is working in China. And as long as China's
PC market continues to grow, Dell is ready to grow with it.
Sources: Nell Chowdury, "Dell Cracks China,"
June 21,1999, pp. [20-1 29; Normandy Madden, "OM's Buick Rides
Luxury into China," Advertising Age, June 24,1999, p.
Carolyn Edy, "The Olympics of Marketing," Americon Demogroph.
ics, June 1999, p. 47 .
INTRODUCTION
Companies throughout the world have discovered that they have saturated their local mar-
ket and are seeking opportunities for growth elsewhere. Ford Motors, Campbell Soup, Nestle,
Nike, and McDonald's are just a few of the companies that have had an international pres-
ence for many years. Thanks to the opening of Eastern Europe and China, the international
marketplace has grown dramatically. Still, moving into other markets is tricky business and
many companies have failed miserably. One thing is for sure: it requires more than taking
an existing domestic marketing strategy and transplanting it in another culture.
The purpose of this chapter is to introduce you to the scope and complexity of going
global with a marketing effort. In the following sections, we define global marketing and
examine various aspects of the global marketing environment. Against this background, we
then look at the ways in which companies typically become involved in global markets,
and introduce you to the global marketing management process.
DEFINING INTERNATIONAL MARKETING
Now that the world has entered the next millennium, we are seeing the emergence of an
interdependent global economy that is characterized by faster communication , transporta-
tion, and financial flows, all of which are creating new marketing opportunities and chal-
lenges. Given these circumstances, it could be argued that companies face a deceptively
straightforward and stark choice: they must either respond to the challenges posed by this
new environment, or recognize and accept the long-term consequences of failing to do so.
This need to respond is not confined to firms of a certain size or particular industries. It is
a change that to a greater or lesser extent will ultimately affect companies of all sizes in
virtually all markets. The pressures of the international environment are now so great, and
the bases of competition within many markets are changing so fundamentally, that the oppor-
tunities to survive with a purely domestic strategy are increasingly limited to small- and
medium-sized companies in local niche markets.
Perhaps partly because of the rapid evolution of international marketing, a vast array
of terms have emerged that suggest various facets of international marketing. Clarification
of these terms is a necessary first step before we can discuss this topic more thoroughly.
Let's begin with the assumption that the marketing process outlined and discussed
in Chapters 1-4 is just as applicable to domestic marketing as to international marketing.
In both markets, we are goal-driven, do necessary marketing research, select target mar-
kets, employ the various tools of marketing (i.e., product, pricing, distribution, communi-
cation), develop a budget, and check our results. However, the uncontrollable factors such
as culture, social, legal, and economic factors, along with the political and competitive envi-
ronment, all create the need for a myriad of adjustments in the marketing management process .
At its simplest level, international marketing involves the firm in making one or more
marketing decisions across national boundaries. At its most complex, it involves the firm
in establishing manufacturing and marketing facilities overseas and coordinating marketing
128