Journal of General Management

/ol. 27 No. 4 Summer 2002

The Impact of
Information Technology
on Global Marketing
Strategies
by
T C Melewar and Caroline Stead

The Internet still has far to go as an aid to global marketing, but companies need clear
strategic thinking first.

It is argued that in this era of globalisation, business success or failure

depends on whether a firm can compete effectively in world markets [1],
[2], [3]. Global strategy, the way a business competes in the global
market, plays a vital role in determining the performance of a business
in the global market. It is a complex issue, as it requires obtaining and
processing of data about overseas markets' that are related to company
resources ,particularly finance, marketing and production. The complexity
arises because there are over 130 national country markets in the world
each with differing physical, cultural and commercial characteristics.
This creates a critical intelligence gap for many companies [4]. Marketing
is probably the most important component of global strategy as it
assumes the role of interacting directly with the customers and competitors
in the marketplace [5].

A major driver of globalisation is technological advances. Levitt

[6] and Hax [7] believe developments in communication, transportation
and technology increasingly facilitate integrated global operations.
Arguably, the most significant advancement in recent times is the
emergence of the Internet and the subsequent evolution of electronic
commerce. Many perceive e-commerce as being able to transform the
global business environment by creating a new market [8], [9], [ 10]. It
leads to the challenge of analysing how marketing in cyberspace will
change business systems [ 11]. Through establishing domains on theW eb,

T. C. Melewar is a Lecturer in Marketing and Strategic Management

at Warwick Business School, University of Warwick and Caroline
Stead is affiliated with the Norwich Union, UK.
Journal of General Management
Vol. 27 No. 4 Summer 2002

businesses can rapidly take advantage of significant cost efficiencies in

publishing information, advertising products and services, enhancing
corporate image and branding, promoting products and services, and
internal and external communications [12], [13] .

The Internet is clearly an example of a 'technology-push innovation'

[14] . As it has been developed, management teams have searched for
sales opportunities and numerous possible alternative uses for it. However,
the Internet is not a divine panacea to all marketing problems. Transferring
business content and policies onto a website 'is not sufficient to guarantee
a viable Internet based service' [15]. Firms undertaking global business
on the Internet are just as likely to face global barriers to trade as with
conventional approaches such as global television and billboard
advertising, and partnering/acquiring foreign firms.

This paper examines the challenge facing firms using the Internet,
and assesses whether or not this technology enhances the building and
maintaining of a global customer base. The ultimate aim is to identify the
extent to which developments in the Internet and e-commerce have
impacted on global marketing strategies.

Barriers to Global Trade and the Internet

E-commerce is a vital tool for helping firms globalise. The Web provides
a new sales channel, gives companies global reach and is far less
expensive than the alternatives. It is possible to reach people world-wide
at a fraction of what it would normally cost, largely because 'real time
immediacy' (access 24 hours a day, 7 days a week) allows businesses to
keep and update dynamically published information without incurring
the expense of printing and publication [16]. E-commerce also has the
potential to streamline processing, facilitate branding and lead to greater
customer satisfaction [f7] . Significantly, e-commerce is viable for
companies of all sizes , not just 'corporate powerhouses' with access to
vast resources [18]. These illustrate how the Internet allows businesses
to take advantage of an evolving global marketplace.

Ohmae [19] advocates that firms should conduct global business,

believing that the preferences and needs of customers are already
globalised. Significant evidence of uniformity in patterns of transnational
consumer behaviour is presented in recent studies [20], [21], [22]. More
importantly, Yip's study of 64 worldwide businesses illustrates a clear
trend towards making greater use of global marketing [23] . A recent
European research study by KPMG [24] indicates that more and more
firms are becoming increasingly confident about the proportion of sales
to be facilitated through Internet marketing or made directly through
online transactions. From observing :practice to date, it is generally
apparent that there is a high-perceived attractiveness of global growth
Journal of General Management
Vol. 27 No. 4 Summer 2002

opportunities fore-commerce business [25], In particular, firms may find

accessing a vulnerable European marketplace both easier and more
efficient through the use of the Internet. This is due to property prices,
planning restrictions, advertising regulations and rules on opening hours
that culminate to make the traditional approach less attractive [26].

However, several studies argue against the international potential

of the Internet. Forrester Research conducted a survey in 1998 of 80 key
players in the Internet market who believe that there are currently too
many barriers to global Internet growth [27]. The principal barriers
identified were regulatory, infrastructural and attitudinal constraints.
Despite the belief that by 2002 access to European markets will greatly
improve, following deregulation in telecommunication and infrastructure
advancements, pessimism remained about EC regulation and multi-
lingual cultural demands [28]. Many retailers have found going global
is hugely complex. A recent article by Armstrong [29] cited the
importance of acknowledging the existence of climatic, cultural and
physical differences. He suggests that the 'old' global approach of bland
uniformity is no longer plausible, rather marketing must seek to create a
sense of uniqueness . In other words, successful global e-commerce
requires more than just putting up a website.

Once global consumers have been targeted, the challenge becomes

turning them from prospects into paying customers. To form customer
relationships, it is crucial for marketers to understand how the Web fits
into a country's culture. At present, 75 per cent of all e-commerce takes
place in the US, highlighting the low Internet penetration in Europe's
three largest markets - UK, Germany and France [30]. However, by
2003 the level of European Internet access is expected to surpass that of
America, and Asia's Web population is predicted to reach 80 million
whilst Latin America should top 19 million [31]. It signifies that very
soon more non-English speaking countries will be accessing the Internet
and it will become increasingly important to acknowledge that everyone
cannot be treated the same [32].

The predominant barriers to globalisation identified earlier, namely

culture, regulation and organization/infrastructure, therefore require a
more in-depth analysis . This will allow clearer conclusions to be drawn
on the impact the Internet is having on marketing strategies and the
establishment of global customer bases.

Culture

It has so far been illustrated that it is important to reconcile international

marketing efforts with the cultural uniqueness of markets. The challenge
to globalise markets arises because, just as in the real world marketing,
the website design requires more than just translation. The message and
Journal of General Management
Vol. 27 No. 4 Summer 2002

the presentation must be tailored to the audience. Already, many

companies are capitalising on this need for website localisation and are
continually developing portals and software to assist translation, such as
Uniscape.com [33]. Some of these programmes are very advanced and
can provide global marketing campaigns at a much lower cost and far
quicker than traditional methods. Clear translation is highly important
as, a recent study by Forrester Research identified, shoppers are three
times 'more likely to buy from websites in their own language [34].

The translation process is closely related to understanding the

local culture as it enables the tailoring of effective messages. Bachelor
[35] identifies a wide range of strategies that can be adopted to assist
globalisation. These range from 'partnering with or acquiring foreign
companies, assembling sales and support operations overseas ,
understanding new laws, languages , cultures and implementing
technology that can sustain a global endeavour' . E-Steel, an exchange
for the steel industry, for example, partners with foreign firms to
penetrate international markets enabling them to 'think globally and act
locally' [36].

Taking into consideration cultural preferences requires

understanding how messages will be perceived, as this can vary greatly
between cultures. Different opinions can be instigated simply from the
colours used: for example, white in Europe signifies purity whereas in
Asia it represents death [37]. Even greater problems arise when encoding
and decoding messages, particularly because language can vary not only
between countries but also within countries where multiple languages
are used or dialects exist. One such example is a problem encountered
by Chevrolet, who discovered that their 'Nova' car name when translated
into Spanish means ' it does not go ' [38]. Equally when encouraging
consumers to buy online, cultural differences play apart. Rasmusson
[39] highlights that when selling to the French, goods offered online
should be limited to those less than $150, helping them feel more
comfortable purchasing from the Internet.

This suggests that even .with great advances in technology,

companies must still decide if a standardised global marketing campaign
is feasible. There is still a good deal of evidence suggesting that cultural
variance and different consumer behaviour are important considerations
[40] . Electrolux, for example, has not sought to segment on a worldwide
basis because major national markets for many household appliances
differ both in terms of consumer tastes and preferences and technical
standards [41] .

Yet, it does not mean that companies must choose between

standardisation and localisation. In global markets, similarities as well
as differences exist. This allows companies to standardise to an extent
Journal of General Management
Vol. 27 No. 4 Summer 2002

and then adapt when culturally required. This is illustrated by the strategy
undertaken by Chipshot.com, which has two distinct websites for Japan
and the US [42]. The Japanese website emphasises that customised clubs
are made to order appealing to their brand focus; whereas the US site
emphasises the 50 per cent discounts since Americans are more concerned.
about price [43]. The Internet makes this type of approach more efficient
as it is able to provide powerful and enduring brand campaigns, highly
targeted and informative messages right down to customised local content
[44].

Regulation

At present, too many governments and regulators, particularly in Europe

and Asia, oppose the Internet. They believe it undermines consumer
protection, jeopardises taxes and risks increasing inequality [45]. In
several EU countries, for example, the rate of value added tax can be as
high as 25 per cent and can account for an average of 40 per cent of
Europe's tax revenues. Goods and services sold over the Internet should
therefore not be allowed to avoid such an important tax [46]. It is not a
new issue as it applies equally to firms marketing globally through the
traditional approach and those using the Internet.

Of greater concern is the variation in regulation that applies in

different countries. Land's End, a clothes retailer, for example, was
deemed to be breaching German consumer law by offering its normall 00
per cent replacement guarantee for any clothing that wore out [4 7]. Even
online advertising can be hugely complicated, with great variation in the
application of laws. For example, Denmark bans advertising to children,
Germany bans comparative advertising and France bans advertising in
English [48].

Further problems arise the moment physical goods have to be

delivered, with legislation starting to apply that exists in the real world.
As the Internet eliminates physical barriers and permits international
commercial transactions, it dissolves the traditional methods for
determining jurisdiction and which country's law applies [49]. This can
cause huge problems if simple precautions are not taken. Companies
need to incorporate strategies to increase certainty, such as 'click wrap'
agreements, that define geographical jurisdiction and law to be applied
should litigation arise [50].

This highlights that although the Internet can remove physical

barriers to trade, facilitating access to a global customer base, different
countries' laws and regulations still require careful consideration. It is
just as important as taking into account different currencies, taxes and
payment options. As more and more countries access the Web, diminishing
the previous US domination, companies need to recognise differing
Journal of General Management
Vol. 27 No. 4 Summer 2002

preferences for payment methods. Few non-Americans rely on credit

cards, preferring instead to pay by money orders or cash on deli very [51].

Organization

Many firms that attempt to reach other markets via the Web experience
huge infrastructure problems [52]. A survey of 50 companies conducted
by Fon'ester Research [53] on their global Web presence highlighted that
the main problems faced include managing different marketing strategies,
securing adequate resources and managing channel conflicts. On the one
hand, this could seriously threaten the viability of global Internet marketing
but, on the other hand, it can be seen to be fairly easily resolved. Several
product and service offerings are being developed, such as Global Sight
and Idiom Technologies, aimed at helping firms globalise their e-
business sites [54]. They enable firms to create localised versions that
can handle Local currencies, contracts and customer support, thus
overcoming to a large extent the initial problems in conducting business
online.

A number of alternative solutions exist to help firms. Procter and

Gamble, for example, have created a joint venture with Internet application
company Magnifi to develop application software that allows managers
and their agencies to collaborate on marketing projects across functions
and geographies [55]. 'Enterprise Marketing Management' (EMM)
enables managers and their agencies in different locations to collaborate
and exchange ideas via the Web, rather than call meetings that are time
consuming, expensive and tiring. It further assists in enabling rapid
responses to competition [56].

These IT developments clearly enhance global marketing strategies

as at present visibility, availability and convenience means more than
just being on the high street and on paper. A strong brand name has an
online as well as a physical presence. Increasingly, customers expect
integrated systems where they can order online or by phone and collect
the goods from the store or have them delivered [57]. Multimedia,
adding audio and visual flair to presentations of products greatly assists
in facing one of the major challenges of globalisation - gaining and
keeping customers interest. In addition, with the Web's ability to
provide virtual infinite space, firms can post as much information as
needed to fully explain a product. It improves customer service and
support by providing interactive communication and robust information
[58].

Customer relationship management

Brands have to _c onvey the fundamentals of trust, convenience and

. reliability. They have to compete in a global market where customers can
Journal of General Management
Vol. 27 No. 4 Summer 2002

now use technology to acquire the latest products with the best value [59].
A key requirement for success is, therefore, worldwide customer service.
Land's End, for example, allows consumers to identify their body type and
then mix and match clothes to suit [60]. The company generates trust as
consumers genuinely believe their needs and wants are understood and,
more importantly, it serves as a universal approach to branding [61]. This
has been made possible through database evolution and technology
allowing more one-to-one communication, resembling personal intimate
communication as well as message tailoring [62]. By building virtual,
personal, one-to-one marketing relationships with buyers on the Web,
companies can 'access a fundamentally new marketing channel, gain new
revenue streams and make more sales to motivated loyal customers
world-wide' [63].

The increasing technological advances enable a more personalised

marketing strategy, largely overcoming the cultural and regulatory
barriers which standardised marketing fails to address fully . Some firms
benefiting from the adoption of such comprehensive global marketing
strategies are 'born globals' [64]. These are small, technology oriented
firms that operate in international markets from the earliest days of their
establishment. They have begun to appear on the world business scene
in large numbers, with some 25 per cent of Australia's newly emerging
exporters being 'born globals ' . They compete on product quality , high
technology and differentiated product design . The key element of their
success appears to be a genuine customer o'rientation and value, coupled
with a commitment to selling in international markets by firm's
management [65].

Purely Internet based companies have also shown it is possible to

capitalise on the global market through the Internet. Yahoo offers so
much content and so many services that users spend a growing amount
of time with them. This gives them the opportunity to track behaviour
and preferences, allowing them to target their advertising [66]. At
present, however, they are the exception to the rule with the majority of
Internet-only companies failing to attract enough business to succeed. It
raises serious doubts over the future of Internet marketing even if it is
used alongside traditional methods .

Continuation of the traditional approach ?

Many Internet marketing campaigns have failed to attract demand

despite spending a fortune on global launches. Boo.com is one such
example: as an ambitious sports good retail website, it spent a vast
amount on maTketing its global launch in 18 countries around the world.
It went bankrupt just months later in a blaze of publicity, warning of the
dangers inherent in relying on the Internet [67] . Even strong brand names
are not sufficient to ensure success. This is shown by the failure of Levi
Journal of General Management
Vol. 27 No. 4 Summer 2002

Strauss to launch a profitable Web business [68].

Despite the vast technical advances increasing cost efficiencies,

one of the main hurdles to global e-commerce is the sheer cost involved.
Schneider Automation, a French multinational corporation, spent $2.4
million creating a website and extranet for its sales channels in England,
France, Germany and Spain [69]. This exemplifies the fact that websites
require more than just translation. It demands the company unifies its
channel and customer databases, and creates a window into a number of
backend systems [70]. In addition, the companies that assist this process
can charge extortionate amounts. Chipshot.com had total start-up costs
of $100,000 to enter the Japanese market, including $10,000 marketing
fees to Idiom (a website specialist) and a consultant [71].

Another major concern is that international communications can

be unreliable. At present, for most countries outside the US, Internet
access is expensive, access speeds are slower and many people are still
using old versions of popular browsers [72]. Also, as already discussed,
America dominates the Internet scene, deterring companies from targeting
other countries through such an approach.

McGoldrick and Davis [73] summarise the main environmental

and organizational barriers to 'retail internationalism'.

Table 1: Barriers to Retai1 Internationalism

Obstacle
Obstacles Inhibitors
(Environmental Sphere) (Organizational Sphere)
Cultmes and Languages Cost of Start Up

Tariffs, Quotas, Development Laws Risk of Losses

Costs of Logistics and Commtmications Fear of Shareholder Reaction

Reaction of Local Competition Lack of Expertise

Physical Distance

(Source: McGoldrick, P.J. and Davis, G., 1995.)

The above table illustrates that there are genuine obstacles to

effective implementation of global Internet and e-commerce marketing
solutions although this is just as applicable to firms following the
traditional approach. A lack of trading internationally, for example, may
well be as significant a problem for virtual companies as for companies
entering an overseas market in a more conventional fashion [74]. This
highlights that a vast majority of the factors impeding Internet
globalisation are not specific to this approach and, therefore, sign ifies
that the traditional method is not necessarily any better. ~n fact, with
Journal of General Management
Vol. 27 No. 4 Summer 2002

continuous IT developments and the ensuing cost reductions, the Internet

could soon become the preferred choice of global marketers .

Conclusions

It could be argued that the Internet simply provides another means for
companies to internationalise. Global marketing strategies of firms
continue to focus on addressing the cross-cultural dif(erences in values
and beliefs as well as the regulatory and organizational constraints.
However, this paper proposes that the Internet has far greater potential.
The Internet has the ability to breakdown conventional cultural barriers
partly because of its inherent placelessness but also because of its price
positioning strategies. It can effectively provide highly targeted and
informative messages that are customised to individual needs and provide
services that handle local currencies, contracts and customer support.

In short, IT developments, specifically in the Internet, have the

potential for great impact on the global marketing strategies of firms. At
present, these are not being fully realised as it is still a relatively new
concept and the marketplace is evolving rapidly. Companies will first
need to become more accustomed to reorganizing their businesses and
taking into account the regulation and taxation variations when using the
Internet. It will be a slow process, as a vast number of customers remain
'off-line ' and even with the increasing rates of usage, not all are
comfortable purchasing through the Internet.

It should be noted that because the Internet is still in relative

infancy, research regarding global Internet marketing is limited and
frequently updated as advancements are made. This suggests the need to
be alert to ongoing research as more trends start to emerge and, perhaps,
markets become even more globalised.

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Journal of General Management
Vol. 27 No. 4 Summer 2002

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Journal of General Management
Vol. 27 No. 4 Summer 2002

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 Journal of General Management
Vol. 27 No. 4 Summer 2002

[63] Brennar and Pearson, 1997, op. cit.

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