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Chapter 8 Global Marketing 203
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CHAPTER 8
GLOBAL MARKETING
CHAPTER OVERVIEW
Global trade now accounts for roughly 25 percent of the U.S. gross domestic product (GDP), compared
with 10 percent 30 years ago. It takes the form of exporting (selling domestic goods and services abroad)
as well as importing (purchasing foreign goods and services).
This chapter examines the global dimensions of marketing. Global marketing is now vital to a nation and
to many businesses that want to expand and survive in a competitive marketplace. It expands markets,
makes distribution economies possible, gives companies the opportunity to explore growth in other
nations, and allows them to be less dependent on conditions at home.
Global trade also builds employment. The United Nations estimates that 82,000 transnational
corporations are operating today, employing about 77 million workers directly and through subsidiaries.
Many of these companies and their subsidiaries represent related party trade, which includes trade by
U.S. companies with their subsidiaries overseas as well as trade by U.S. subsidiaries of foreign-owned
firms with their parent companies.
To succeed in the global marketplace, today’s marketers must answer questions such as: How do our
products fit into a foreign market? How can we turn potential threats into opportunities? Which strategic
alternatives will work in global markets? The answers can be found by studying techniques used by
successful global marketers. This chapter considers the importance and characteristics of foreign
markets. It then examines the international marketing environment, the trend toward multinational
economic integration, and the steps that firms take to enter the global marketplace. The importance of
developing a global marketing mix is discussed in the background of increased buying power of foreign
consumers. The chapter closes with a look at the U.S. as a target market for foreign marketers.
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204 Part 2 Understanding Buyers and Markets
Changes in the Updated Edition
The chapter has been updated and revised in several ways.

• The Opening Vignette and Evolution of a Brand highlights Hyundai that ranks in the top five
among global automaker. The Korean company’s U.S. sales could soon top 700,000 units a year,
coming on the heels of a recent 20 percent increase over preceding years. But the company is
hoping to do better than merely ride out what some observers predict could be a shrinking auto
market worldwide in the next few years. Having already established a solid record of value and
fuel economy, Hyundai is often a car buyer’s “left brain choice,” says its vice president of
marketing. So now the firm has planned a vigorous new marketing campaign designed to
strengthen its appeal to buyers’ emotions. Hyundai’s chief financial officer expects price
competition in Europe to heat up in the near future, perhaps shaking up the market for European
automakers and providing an opportunity for the company to grow its market share there, in the
same way it is doing in the United States and Canada. Some of Hyundai’s recent success came
at the expense of Japanese automakers, whose production capacity was hurt by the recent
disastrous earthquake and tsunami, which interrupted their parts supply lines for months. See
“Hyundai Thinks Big.”
• Solving an Ethical Controversy highlights a front-page story published by The New York Times
about abusive, unsafe working and living conditions endured by poorly paid employees building
iPads and iPhones in Chinese factories operated by Foxconn. The important question “Should
foreign companies be responsible for unsafe working conditions in China?”, and more is
discussed in “Taking Responsibility for Working Conditions Abroad.”
• Marketing Success talks about McDonald’s, the world’s largest restaurant chain, operating in
more than 120 countries and opening hundreds of new locations every year. McDonald’s opened
its first French restaurant in 1979, followed by a franchise expansion where for many years what it
did above all was offer people a slice of America. But the French love quality in their cuisine,
mostly eat at home, rarely snack, and like to take their time at the table. In order to better satisfy
preferences in France, it changed its recipes, incorporated French-style ingredients and dishes,
introduced the McBaguette, installed order kiosks, provided table service, etc. France is now
McDonald’s second-largest market (after the United States), with more than 1,200 restaurants
and a 30-unit annual growth rate. The company’s success in France is discussed in “McDonald’s
Succeeds in France.”
• Career Readiness highlights how savvy international business travelers learn as much as
possible in advance about local customs and etiquette in their destination, including key phrases
in the local language. More in “Tips for International Travel.”
• Chapter Case 8.1 “Starbucks Takes Coffee to India” profiles the late debut of the coffee giant in
the Indian market after outlasting the government’s reluctance to upset local firms by allowing
foreign business ownership. Starbucks is focusing initially on retail stores and hopes to open 50
cafés in Mumbai and New Delhi in its first year. Challenges Starbucks faces in India include the
success of a home-grown competitor: Café Coffee Day recently expanded to 1,200 stores in 175
cities. Starbucks is pinning its hopes on the 25% growth recently observed in India’s coffee-
drinking market.
• Collaborative Learning Exercises are provided in several areas related to global marketing—
Bribery, Global Marketing Strategy, and Globalization and Cultural Exchanges.
• Video Case 8.2 Synopsis includes an overview of how theater company Nederlander’s activities
target different markets across the world.
LECTURE OUTLINE
The Opening Vignette and Evolution of a Brand—Hyundai Thinks Big illustrates Hyundai’s plans
of implementing a vigorous new marketing campaign that is designed to strengthen its appeal to
buyers’ emotions. What can the company do to ride out the shrinking auto market worldwide in
the next few years?
Chapter Objective 1: Describe the importance of global marketing from the perspectives
of the individual firm and the nation.
Key Terms: exporting, importing, related party trade
PowerPoint Basic: 4
PowerPoint Expanded: 4-9
1. Global trade
a. Global trade now accounts for 25 percent of the U.S. gross
domestic product (GDP) compared with 10 percent 30
years ago
b. The top ten nations that trade with the U.S. account for 63
percent of U.S. imports and 62 percent of exports
c. Global trade can be divided into two categories:
Figure 8.1—Top
i. Exporting refers to the marketing of domestically
U.S. Trading
produced goods and services abroad
Partners—Total
Trade Including ii. Importing refers to the purchasing of foreign goods
Exports and and services
Imports—How many d. Global trade is vital to a nation and its marketers for
of the top ten trading several reasons
nations did you i. It expands markets and builds employment
expect to be in the
ii. It makes production and distribution economies
list? Which nations
possible
are noticeably
absent from this list? iii. It allows companies to explore growth opportunities
Why do you think in other nations and makes them less dependent
that is? on economic conditions in their home nations
iv. It can help meet customer demand, reduce costs,
and provide information on potential markets
around the world
v. For North American marketers, trade with foreign
markets is especially important because the U.S.
and Canadian economies represent a mature
market for many products
vi. Outside North America, it opens up new markets
for U.S. products as consumers in sub-Saharan
Africa, Asia, Latin America, central Europe, and the
Middle East have more money to spend
vii. It also builds employment
viii. Many of the transnational corporations represent
related party trade, which includes trade by U.S.
companies with their subsidiaries overseas as well
as trade by U.S. subsidiaries of foreign-owned
firms with their parent companies; according to the
U.S. Department of Commerce, related party trade

in a recent year accounted for over 40 percent of
total goods traded
e. Transactions that cross national borders involve additional
considerations—different laws, varying levels of
technological capability, economic conditions, cultural and
business norms, and consumer preferences
f. Companies that want to market their products worldwide
must reconsider each of the marketing variables—product,
distribution, promotion, and price—in terms of the global
marketplace
g. To succeed in global marketing, today’s marketers
answers questions such as:
i. How do our products fit into a foreign market?
ii. How can we turn potential threats into
opportunities?
iii. Which strategic alternatives will work in global
markets?
2. The importance of global marketing
a. Nearly half of the world’s ten largest corporations are
Table 8.1—World’s headquartered in the U.S.
Ten Largest b. For most U.S. companies global marketing is rapidly
Marketers (Ranked becoming a necessity
by Annual Sales)— c. Over the past decade, U.S. goods and service exports
What industries have nearly doubled
dominate this list? d. Walmart currently ranks as the world’s largest private
What industries are employer
noticeably missing?
e. The globalization of business and the boundless nature of
the Internet have made it possible for every marketer to
become an international marketer
Note: Ask students f. Some firms rely on purchasing raw materials abroad as
to name the top input for their domestic manufacturing operations
profitable U.S. g. Among the top U.S. imports are crude oil, computers and
service exports and computer accessories, consumer electronics, and
then let them passenger cars
compare it with the
list you have. 3. Service and retail exports
Students might not a. Despite the U.S. work population moving away from
be surprised to see farming, and manufacturing goods, the U.S. continues to
financial and produce record volumes of agricultural and manufactured
computing but would goods
be surprised to see b. Nearly four of every five dollars in the nation’s gross
legal services domestic product (GDP) comes from services such as
featured in the list. banking, entertainment, business and technical services,
retailing, and communications
c. The U.S. is the world’s largest exporter of services and
retailing; of the more than $607 billion in annual U.S.
service exports, about one-fifth of it comes from travel and
tourism
d. Profitable U.S. service exports include business and
technical services such as engineering, financial,

computing, legal services, insurance, and entertainment
e. The financial services industry, already a major presence
outside North America, is expanding globally via the
Internet; today, even the most novice Web users visit
finance websites to pay bills, do their banking, or trade
stocks online
f. A glance at the increasing number of foreign companies
listed on the New York Stock Exchange illustrates the
importance of global financial services
g. The entertainment industry is another major service
exporter; almost a century of exposure to U.S.-made films,
television programs and, more recently, music video clips
has made international viewers more familiar with
American culture and geography than that of any other
nation on earth
h. Many U.S. retailers have opened stores around the world
4. Benefits of going global
a. Besides generating additional revenue, firms expand
operations outside their home country to gain other
benefits, including:
i. New insights into consumer behavior
ii. Alternative distribution strategies
iii. Advance notice of new products
iv. Exposure to new products, new approaches to
Career Readiness— distribution, or clever new promotions that they
Tips for International may apply successfully in their domestic market or
Travel in other international markets
b. Global marketers typically are well positioned to compete
effectively with foreign competitors
c. A major key to achieving success in foreign markets is the
ability to adapt products to local preferences and cultures
d. Marketers must understand the similarities and differences
that influence strategies for both domestic and global
marketing
Assessment check questions
1. Define importing and exporting. Importing involves purchasing foreign

goods and services. Exporting refers to marketing domestically
produced goods and services abroad.
2. What is the largest category of exports from the United States? The
largest category of exports from the United States is services.
3. What must global marketers do effectively to reach foreign markets?

Global marketers must adapt their goods and services to local
preferences.
Chapter Objective 2: Identify the major components of the environment for global
marketing.
Key Terms: infrastructure, exchange rate, political risk assessment (PRA), friendship commerce
and navigation (FCN) treaties, ISO (International Organization for Standardization) certification,
tariffs, revenue tariffs, protective tariffs, import quotas, embargo, subsidy, exchange control,
dumping
PowerPoint Basic: 5
1. The international marketing environment
a. Environmental factors have a powerful influence on the
development of a firm’s global marketing strategy
b. Marketers must play close attention to changing demand
patterns as well as competitive, economic, social-cultural,
political-legal, and technological influences when they
venture abroad
2. International economic environment
a. A nation’s size, per-capita income, and stage of economic
development determine its prospects as a host for
international business expansion
b. Nations with low per-capita incomes may be poor markets
for expensive industrial machinery but good ones for
agricultural hand tools
c. Wealthier countries may offer prime markets for many U.S.
industries, particularly those producing consumer goods
services and advanced industrial products
d. Infrastructure—the underlying foundation for modern life
and efficient marketing that includes transportation,
communications, banking, utilities, and public services—is
an important economic factor to consider when planning to
enter a foreign market
i. An inadequate infrastructure may constrain
marketers’ plans to manufacture, promote, and
distribute goods and services in a particular
country
ii. Often the population in rural areas begins to shift to
where the infrastructure is more developed
iii. Marketers expect developing economies to have
substandard utility and communications networks
e. Changes in exchange rates can complicate international
marketing
i. An exchange rate is the price of one nation’s
currency in terms of another country’s currency
ii. Fluctuations in exchange rates can make a nation’s
currency more or less valuable, compared to that
of other nations
iii. In today’s global economy, imbalances in trade,
dependence on fossil fuels, and other conditions
affect the currencies of many countries
iv. At the beginning of the 21st century, most

members of the European Union (EU) switched to
the euro as the replacement to their traditional
francs and liras
v. The long-range idea behind the new currency is
that switching to a single currency will strengthen
Europe’s competitiveness in the global
marketplace
vi. Russian and many eastern European currencies
are considered soft currencies that cannot be
readily converted into such hard currencies as the
dollar, euro, or Japanese yen
3. International social-cultural environment
a. Before entering a foreign country, marketers should study
all aspects of that nation’s culture, including language,
education, religious attitudes, and social values
b. Language plays an important role in global marketing
i. Marketers must make sure not only to use the
Table 8.2—The appropriate language or languages for a country
World’s Most but also to ensure the message is correctly
Frequently Spoken translated and conveys the intended meaning
Languages—Which ii. Firms that rely on call centers located in India and
languages did you staffed by Indian nationals have discovered an
expect to see on this occasional language gap
list? Which ones iii. But these employees do speak English, the
surprised you? What worldwide language of commerce
does the list tell you iv. Despite some glitches, the call centers, along with
about barriers to other outsourced operations, are booming—
global trade? creating jobs and a new middle class in India
4. International technological environment
a. More than any innovation since the telephone, Internet
technology has made it possible for both large and small
firms to connect to the entire world
b. The Internet transcends political, economic, and cultural
barriers, reaching every corner of the globe
c. It has made it possible for marketers to add new business
channels
d. It also helps developing nations compete with
industrialized nations
e. However, a huge gap still exists between the regions with
the greatest Internet usage and those with the least
f. Technology presents challenges for international
marketers that extend beyond the Internet and other
telecommunications innovations; a major issue involving
food marketers is genetic reengineering
5. International political-legal environment
a. Global marketers must continually stay abreast of laws
and trade regulations in each country in which they
compete
b. Political conditions often influence international marketing

as well
c. Political unrest sometimes results in acts of violence
Solving an Ethical d. Many Western firms have set up internal political risk
Controversy— assessment (PRA) units or turned to outside consulting
Taking services to evaluate the political risks of the marketplaces
Responsibility for in which they operate
Working Conditions e. The legal environment for U.S. firms operating abroad
Abroad results from three forces:
i. International law
ii. U.S. law
iii. Legal requirements of host nations
f. International law emerges from treaties, conventions, and
agreements among nations
i. The U.S. has many friendship, commerce, and
navigation (FCN) treaties with other governments;
these agreements set terms for various aspects of
commercial relations with other countries
ii. International business agreements concern
worldwide standards for various products, patents,
trademarks, reciprocal tax treaties, export control,
international air travel, and international
communications
iii. Since the 1990s, Europe has pushed for
mandatory ISO (International Organization for
Standardization) certification—internationally
recognized standards that ensure a company’s
goods, services, and operations meet established
quality levels
iv. The organization has two sets of standards: the
ISO 9000 series of standards sets requirements for
quality in goods and services, and the ISO 14000
series sets standards for operations that minimize
harm to the environment
v. Currently, organizations in 163 countries
participate in both series
vi. The International Monetary Fund (IMF), another
major player in the international legal environment,
lends foreign exchange to nations that require it to
conduct international trade
vii. These agreements facilitate the entire process of
world marketing
g. The second dimension of the international legal
environment, U.S. law, includes various trade regulations,
tax laws, and import and export requirements affecting
international marketing
i. The Export Trading Company Act (1982) exempts
companies from antitrust regulations so they can
form export groups that offer a variety of products
to foreign buyers
ii. The Foreign Corrupt Practices Act makes it illegal
to bribe a foreign official in an attempt to solicit new
or repeat sales abroad
iii. Legal requirements of host nations affect foreign
marketers
6. Trade barriers
a. Assorted trade barriers affect global marketing
b. These barriers fall into two major categories
i. Tariffs refer to taxes levied on imported products;
some tariffs impose set taxes per pound, gallon, or
unit; others are calculated according to the value of
the imported item
ii. Administrative, or nontariff, barriers are more
subtle than tariffs and take a variety of forms such
as customs barriers, quotas on imports,
unnecessarily restrictive standards for imports, and
export subsidies
iii. Because the GATT and WTO agreements
eliminated tariffs on many products, countries
frequently use nontariff barriers to boost exports
and control the flows of imported products
c. Tariffs
i. Tariffs can be classified as either revenue or
protective tariffs
ii. Revenue tariffs are designed to raise funds for the
importing government
iii. Protective tariffs, usually higher than revenue
tariffs, are designed to raise the retail price of an
imported product to match or exceed that of a
similar domestic product
iv. Under the Super 301 provisions of the Omnibus
Trade and Competitiveness Act, the United States
can single out countries that unfairly impede trade
with U.S. domestic businesses
v. Governments sometimes use tariffs to retaliate for
real or perceived threats by a trading partner
d. Other trade barriers
i. Governments may erect a number of other
barriers, ranging from special permits and detailed
inspection requirements to quotas on foreign-made
items in an effort to stem the flow of imported
goods—or halt them altogether
Note: What are the ii. Import quotas limit the number of units of products
disadvantages of in certain categories that cross a country’s border
import quota? How for resale
does it affect product iii. The quota is supposed to protect domestic industry
choice? Price? and employment and preserve foreign exchange,
Overall but it does not always work that way
competitiveness? iv. The ultimate quota is the embargo—a complete

ban on the import of a product
v. In 1960, the United States instituted an embargo
against Cuba in protest of Fidel Castro’s
dictatorship and the expropriation of property and
disregard for human rights
vi. The subsidy is a type of trade barrier in which
governments financially support a private industry
vii. Some nations limit foreign ownership in the
business sectors; others create so many regulatory
barriers that it is almost impossible to reach target
markets
viii. Foreign trade can also be regulated by exchange
control through a central bank or government
agency
ix. Exchange control means that firms that gain
foreign exchange by exporting must sell foreign
currencies to the central bank or other foreign
agency, and importers must buy foreign currencies
from the same organization
e. Dumping
i. The practice of selling a product in a foreign market
at a price lower than it commands in the producer’s
domestic market is called dumping
ii. Critics of free trade often argue that foreign
governments give substantial support to their own
exporting companies
iii. Government support may permit these firms to
extend their export markets by offering lower prices
abroad
iv. In retaliation for this interference with free trade,
the United States adds import tariffs to products
that foreign firms dump on U.S. markets to bring
their prices in line with those of domestically
produced products
1. What are the three criteria that determine a nation’s prospects as a

host for international business expansion? A nation’s size, per-capita
income, and stage of economic development determine its prospects as
a host for international business expansion.
2. What is an FCN treaty? FCN stands for friendship, commerce, and

navigation. These treaties set terms for various aspects of commercial
relations with other countries.
3. What are the two major categories of trade barriers? The two
categories of trade barriers are tariffs and nontariffs.
Chapter Objective 3: Outline the basic functions of GATT, WTO, NAFTA, FTAA, CAFTA-
DR, and the European Union.
Key Terms: free-trade area, customs union, common market, General Agreement on Tariffs and
Trade (GATT), World Trade Organization (WTO), North American Free Trade Agreement
(NAFTA), Free Trade Area of the Americas (FTAA), Central American Free Trade Agreement-
DR (CAFTA-DR), European Union (EU)
PowerPoint Basic: 6-7
1. Multinational economic integration
a. A noticeable trend toward multinational economic
integration has developed over the nearly seven decades
since the end of World War II
b. Multinational economic integration can be set up in several
ways:
i. The simplest approach is to establish a free-trade
area in which participating nations agree to the free
trade of goods among themselves, abolishing
tariffs and trade restrictions
ii. A customs union establishes a free-trade area plus
a uniform tariff for trade with nonmember nations
iii. A common market extends a customs union by
seeking to reconcile all government regulations
affecting trade
c. Not everyone is enthusiastic about free trade
i. For more than a decade, Americans have lost jobs
when employers outsourced their work to countries
like Mexico, where wages are lower
ii. Although productivity and innovation are said to
grow more quickly with free trade, workers often
find themselves working longer and for reduced
pay as operations move overseas
iii. But many firms view the change as a way to offer
superior service
2. GATT and the World Trade Organization
a. The General Agreement on Tariffs and Trade (GATT), a
trade accord that has sponsored several rounds of major
tariff negotiations, substantially reducing worldwide tariff
levels, has existed for six decades
b. In 1994, a seven-year series of GATT conferences, the
Uruguay Round, culminated in one of the biggest victories
for free trade in decades
c. The Uruguay Round reduced average tariffs by one-third,
or more than $700 billion
d. Among its major victories, it:
i. Reduced farm subsidies, which opened vast new
markets for U.S. exports
ii. Increased protection for patents, copyrights, and
trademarks
iii. Included services under international trading rules,
creating opportunities for U.S. financial, legal, and
accounting firms
iv. Phased-out import quotas on textiles and clothing
from developing nations, a move that cost textile
workers thousands of jobs when their employers
moved many of these domestic jobs to lower-wage
countries, but benefited U.S. retailers and
consumers
e. A key outcome of the GATT talks was establishment of the
World Trade Organization (WTO), a 153-member
organization that succeeds GATT
f. The WTO oversees GATT agreements, serves as a forum
for trade negotiations, and mediates trade disputes
g. It also monitors national trade policies and works to reduce
trade barriers throughout the world
i. Unlike GATT, WTO decisions are binding
ii. Countries that seek to become members of the
WTO must participate in rigorous rounds of
negotiations that can last several years
iii. To date, the WTO has made slow progress toward
its major policy initiatives: liberalizing world
financial services, telecommunications, and
maritime markets
iv. Trade officials have not agreed on the direction for
the WTO
v. Big differences between developed and developing
nations create a major roadblock to its progress
vi. Its activities thus far have focused more on dispute
resolution through its Dispute Settlement Body
than on reducing trade barriers
vii. But the WTO also provides important technical
assistance and training for the governments of
developing countries
3. The NAFTA Accord
a. More than a decade after the passage of the North
American Free Trade Agreement (NAFTA), an agreement
between the United States, Canada, and Mexico that
removes trade restrictions among the three nations,
negotiations among the nations continue
b. NAFTA is a complex issue, and from time to time groups
in one or more of the three countries chafe under the
agreement
c. In Mexico, farm workers have charged that NAFTA puts
their industry at a disadvantage
d. In Canada, some observers claim NAFTA has
compromised their country’s oil reserves
e. in the United States, critics argue that U.S. workers lose
jobs to cheap labor south of the border

f. Yet since NAFTA’s passage, these three countries daily
conduct more than $2 billion in trade with each other and
have experienced GDP growth as a result
4. The Free Trade Area of the Americas and CAFTA-DR
a. NAFTA was the first step in creating a Free Trade Area of
the Americas (FTAA), stretching the length of the entire
Western Hemisphere, from Alaska’s Bering Strait to Cape
Horn at South America’s southern tip, encompassing 34
countries, a population of 800 million, and a combined
gross domestic product of more than $11 trillion
i. It would be the world’s largest free-trade zone on
earth and would offer low or nonexistent tariffs;
streamlined customs; and no quota, subsidies, or
other barriers of trade
ii. The U.S. is a staunch supporter of the FTAA,
which still has many hurdles to overcome as
countries wrangle for conditions most favorable to
them
b. As FTAA negotiations continue, the United States entered
into an agreement with the Dominican Republic and
Central American nations known as the Central American
Free Trade Agreement-DR (CAFTA-DR)
i. Supporters of the agreement say it will help
American workers, farmers, and small businesses
thrive and grow
ii. Critics worry that more American agricultural and
manufacturing jobs will be lost
iii. However, both sides agree that CAFTA’s economic
impact is likely to be relatively small compared with
NAFTA
5. The European Union
a. The best-known example of a multinational economic
community is the European Union (EU)
Figure 8.2—The 27 i. 27 countries make up the EU
Members of the ii. Five countries—Croatia, Iceland, Macedonia,
European Union— Montenegro, and Turkey—are candidates for
How many EU membership
nations can you iii. With a total population of more than 503 million
name without people, the EU forms a huge common market
looking at the map?
b. The goal of the EU is eventually:
Which have most
recently applied? i. To remove all barriers to free trade among its
Which have not yet members
joined? ii. To standardize currencies and regulations that
businesses must meet
iii. To simplify transactions
Note: The Euro is iv. To strengthen its position in the world as a political
the currency used by and economic power
most members of c. In some ways, the EU is making definite progress toward
EU. Which countries its economic goals

have not yet i. It is drafting standardized eco-labels to certify that
accepted the Euro? products are manufactured according to certain
environmental standards
ii. It is creating guidelines governing marketers’ uses
of customer information
iii. Marketers can also protect some trademarks
throughout the entire EU with a single application
and registration process through the Community
Trademark (CTM), which simplifies doing business
and eliminates having to register with each
member-country
iv. Yet marketers still face challenges when selling
their products in the EU
v. Customs taxes differ, and no uniform postal system
exists. Using one toll-free phone number for
several countries will not work, either, because
each country has its own telephone system for
codes and numbers
vi. Mexico negotiated a trade agreement with the EU
that makes it easier for European companies to set
up operations in Mexico
1. What is the World Trade Organization? The World Trade Organization

(WTO) oversees GATT agreements and mediates disputes. It also
continues efforts to reduce trade barriers around the world.
2. What countries are parties to the NAFTA accord? The United States,
Canada, and Mexico are members of NAFTA.
3. What is the goal of the European Union? The European Union (EU)
seeks to remove all barriers to free trade among its members and
strengthen its position in the world as an economic and political power.
Chapter Objective 4: Identify the alternative strategies for entering foreign markets.
Key Terms: franchise, foreign licensing, subcontracting
1. Going global
a. Globalization affects almost every industry and individual
throughout the world, at least in some way
b. Traditional marketers who take their firms global may do
so because they already have strong domestic market
shares or their target market is too saturated to offer any
substantial growth
c. Virtually every domestic marketer recognizes the need to
investigate whether to market its products overseas
d. Common reasons that marketers cite for going global

include:
i. Globalization of customers
ii. New customers in emerging markets
iii. Globalization of competitors
iv. Reduced trade barriers
v. Advances in technology
vi. Enhanced customer responsiveness
2. Strategies for entering foreign markets
a. Successful global marketing starts at the top
b. Once marketers have researched and identified markets
for expansion and won the support of leadership, they may
choose from three basic strategies for entering foreign
markets:
i. Importing and exporting
ii. Contractual agreements such as franchising,
licensing, and subcontracting
iii. International direct investment
Figure 8.3—Levels c. The level of risk and the firm’s degree of control over
of Involvement in international marketing increase with greater involvement
Global Marketing— 3. Importing and exporting
Which level offers
a. An importer is a firm that brings in goods produced abroad
the most control?
to sell domestically or to be used as components in its
The least? Which
products
offers the highest
and lowest risk? b. In making import decisions, the marketer must assess
local demand for the product, taking into consideration
factors such as:
i. Ability of the supplier to maintain agreed-to quality
Note: Discuss the levels
advantages and
ii. Flexibility in filling orders that might vary
disadvantages of the
considerably from one order to the next
alternatives
available for first- iii. Response time in filling orders
time exporters. iv. Total costs—including import fees, packaging, and
transportation—in comparison with costs of
domestic suppliers
c. Exporting involves a continuous effort in marketing a firm’s
merchandise to customers in other countries
d. Many firms export their products as the first step in
reaching foreign markets
e. First-time exporters can reach foreign customers through
one or more of three alternatives:
i. An export-trading company (ETC) buys products
from domestic producers and resells them abroad
ii. An export-management company (EMC) provides
the first-time exporter with expertise in locating
foreign buyers, handling necessary paperwork, and
ensuring that its goods meet local labeling and
testing laws
iii. An offset agreement teams a small firm with a
major international corporation; the smaller firm
essentially serves as a subcontractor on a large
foreign project
4. Contractual agreements
a. As a firm gains sophistication in global marketing, it may
enter contractual agreements that provide several flexible
Note: Franchising alternatives to exporting
has worked well with b. Franchising
fast-food countries
i. A franchise is a contractual arrangement in which a
across the globe.
wholesaler or retailer (the franchisee) agrees to
Which other industry
meet the operating requirements of a manufacturer
has used franchising
or other franchiser
to a large extent?
Why do you think it ii. The franchisee receives the right to sell the
will work? products and use the franchiser’s name as well as
a variety of marketing, management, and other
services
iii. One advantage of franchising is risk reduction by
Marketing offering a proven concept
Success—
iv. However, the success of an international franchise
McDonald’s
depends on its willingness to balance standard
Succeeds in France
practices with local customer preferences
c. Foreign licensing
i. Foreign licensing is a contractual agreement that
grants foreign marketers the right to distribute a
firm’s merchandise or to use its trademarks,
patents, or process in a certain geographic area
ii. It offers several advantages over exporting,
including access to local partners’ marketing
information and distribution channels and
protection from various legal barriers
iii. Because it does not require capital outlays, many
firms, both small and large, regard it as an
attractive entry strategy
iv. It allows a firm to quickly enter a foreign market
with a known product
v. It may also provide entry into a market that is
closed to imports due to government restrictions or
international direct investment
d. Subcontracting
i. Subcontracting is a contractual agreement in which
the production of goods or services is assigned to
local companies
ii. Using local subcontractors can prevent mistakes
involving local culture and regulations
iii. Manufacturing within the country can provide
protection from import duties and may be a lower-
cost alternative that makes it possible for the
product to compete with local offerings

5. International direct investment
a. Another strategy for entering global markets is
international direct investment in foreign firms, production,
and marketing facilities
b. The U.S. direct investment abroad is over $3.8 trillion
c. Foreign direct investment in the U.S. is originated through
investors in Europe, United Kingdom, and Japan
d. Although high levels of involvement and high risk potential
are characteristics of investments in foreign countries,
firms choosing this method often have a competitive
advantage
e. Direct investment can take several forms:
i. A company can acquire an existing firm in a
country where it wants to do business
ii. A company can set up an independent division
outside its own borders with responsibility for
production and marketing in a country or
geographic region
iii. Companies may also engage in international
marketing by forming joint ventures in which they
share the risks, costs, and management of the
foreign operation with one or more partners
iv. Although joint ventures offer many advantages,
foreign investors have encountered problems in
several areas throughout the world, especially in
developing economies
1. What are the three basic strategies for entering foreign markets? The
three basic strategies are importing and exporting, contractual
agreements, and international direct investment.
2. What is a franchise? A franchise is a contractual agreement in which a

wholesaler or retailer (the franchisee) agrees to meet the operating
requirements of a manufacturer or other franchiser.
3. What is international direct investment? International direct investment

is direct investment in foreign firms, production, and marketing facilities.
Chapter Objective 5: Differentiate between a global marketing strategy and a

multidomestic marketing strategy.
Key Terms: global marketing strategy, multidomestic marketing strategy
PowerPoint Basic: 11
1. Developing an international marketing strategy
a. In developing a marketing mix, international marketers

may choose between two alternative approaches: a global
marketing strategy or a multidomestic marketing strategy
b. A global marketing strategy defines a standard marketing
mix and implements it with minimal modifications in all
foreign markets
i. It brings the advantage of economies of scale to
production and marketing activities
ii. It saves money because it allows large-scale
production runs and reinforces the brand’s image
iii. It can foster collaborative innovation
iv. It can effectively market some goods and services
to segments in many nations that share cultures
and languages
v. It works especially well for products with strong,
universal appeal
vi. It can also be highly effective for luxury products
that target upscale consumers everywhere
vii. But it does not always work
viii. Its major benefit is its low implementation costs
Note: Would a c. A multidomestic marketing strategy assumes that
multidomestic differences between market characteristics and
strategy work well competitive situations in certain nations require firms to
with large customize their marketing decisions to effectively reach
companies with individual marketplaces
many product lines? i. Many marketing experts believe that most products
Why or why not? demand multidomestic marketing strategies to give
them a realistic global marketing appeal
ii. Cultural, geographic, language, and other
differences simply make it difficult to send the
same message to many countries
iii. Specific situations may allow marketers to
standardize some parts of the marketing process
but customize others
1. What is the difference between a global marketing strategy and a

multidomestic marketing strategy? A global marketing strategy defines a
marketing mix and implements it with minimal modifications in all foreign
markets. A multidomestic marketing strategy requires that firms
customize their marketing decisions to reach individual marketplaces.
Chapter Objective 6: Describe the alternative marketing mix strategies used in global
marketing.
Key Terms: countertrade
1. International product and promotional strategies

a. Global marketers can choose from among five strategies
for selecting the most appropriate product and promotion
strategy for a specific foreign market:
i. Straight extension
ii. Promotion adaptation
Figure 8.4—
Alternative iii. Product adaptation
International Product iv. Dual adaptation
and Promotional v. Product invention
Strategies—Think of
b. A firm may follow a one-product, one-message straight
other well-known
extension strategy; this permits economies of scale in
items that would
production and marketing; successful implementation of
benefit from each
this strategy creates universal recognition of a product for
product strategy and
consumers from country to country
each promotional
strategy. c. Other strategies call for product adaptation, promotion
adaptation, or both
d. A firm may select product invention to take advantage of
unique foreign market opportunities
2. International distribution strategy
a. Distribution is a vital aspect of overseas marketing
b. Marketers must set up proper channels and anticipate
extensive physical distribution problems
c. A distribution decision involves two steps:
i. The firm must decide on a method of entering the
foreign market
ii. The firm must determine how to distribute the
product within the foreign market through that entry
channel
3. Pricing strategy
a. Pricing can critically affect the success of an overall
marketing strategy for foreign markets
b. Considerable competitive, economic, political, and legal
constraints often limit pricing decisions
c. Companies must adapt their pricing strategies to local
markets and change them when conditions change
d. An important development in pricing strategy for
international marketing has been the emergence of
commodity marketing organizations that seek to control
prices through collective action; the Organization of
Petroleum Exporting Countries (OPEC) is a good example
of this kind of collective export organization
4. Countertrade
a. In a growing number of nations, the only way a marketer
can gain access to foreign markets is through
countertrade—a form of exporting in which a firm barters
products rather than selling them for cash
b. Less-developed nations sometimes impose countertrade
requirements when they lack sufficient foreign currency to
attain goods and services they want or need from

exporting countries
c. It became popular two decades ago when companies
wanted to conduct business in eastern European countries
and the former Soviet Union; those governments did not
allow exchanges of hard currency, so this form of barter
facilitated trade
1. What are the five strategies for selecting the most appropriate product
and promotion strategy for a specific foreign market? The five strategies
are straight extension, promotion adaptation, product adaptation, dual
adaptation, and product invention.
2. What is countertrade? Countertrade is a form of exporting in which a

firm barters products rather than selling them for cash.
Chapter Objective 7: Explain the attractiveness of the United States as a target market for
foreign marketers.
Key Terms: None
1. The United States as a target for international marketers
a. Foreign marketers regard America as an inviting target
b. It offers a large population of more than 308 million people
i. In addition, U.S. consumers have a high level of
discretionary income, with a GDP per capita
estimated at $48,100 and a median gross family
income of about $52,000
ii. Risks to foreign marketers are also low due to the
United States’ political stability, generally favorable
attitude toward foreign investment, and growing
Note: Identify the economy
foreign firms in your c. Among the best-known industries in which foreign
area. Did the entry manufacturers have established U.S. production facilities
of foreign firms is automobiles
affect the local i. Most of the world’s leading auto companies have
firms? Did the local invested heavily in assembly facilities in the United
firms reevaluate States
their marketing
2. Strategic Implications of Marketing in the 21st Century
strategies?
a. Marketers need to reevaluate the strengths and
weaknesses of their current marketing practices and
realign their plans to meet the new demands of this era
b. Actions of international marketers will influence every
component of the marketing environment
c. The greatest competitive advantages will belong to
marketers who capitalize on the similarities of their target
markets and adapt to the differences
d. Goods and services will likely become more customized

as they are introduced in foreign markets
e. New and better products in developing markets will create
and maintain relationships for the future
1. What characteristics of the United States make it an inviting target for

foreign marketers? The characteristics making the United States an
attractive target for foreign marketers are a large population to sell
products to and high levels of discretionary income that make purchases
possible. In addition, it has low risks to foreign marketers due to a stable
political environment, favorable attitude toward foreign investment, and a
growing economy.
2. Why would U.S. automobile manufacturing be a target for foreign

companies? Because the United States has a large population and high
income levels, foreign car manufacturers would find the country an
attractive and lucrative market. The size and weight of cars make them
bulky to transport long distances, so firms might find local manufacturing
a profitable alternative to exporting.
ANSWERS AND TEACHING NOTES TO CHAPTER EXERCISES
Chapter 8 Assurance of Learning Review
1. What are the benefits to firms that decide to engage in global marketing?
Answer: Besides generating additional revenue, firms expand operations outside their home country to
gain other benefits, including new insights into consumer behavior, alternative distribution strategies, and
advance notice of new products. By setting up foreign offices and production facilities, marketers may
encounter new products, new approaches to distribution, or clever new promotions that they may apply
successfully in their domestic market or in other international markets.
Point Value: 1
BUSPROG: Analytic
DISC: International Perspective
Learning Objective: 8-1
Topic: A-head: The Importance of Global Marketing
Bloom’s: Knowledge
Difficulty: Easy
2. Why is a nation’s infrastructure an important factor for global marketers to consider?
Answer: Infrastructure—the underlying foundation for modern life and efficient marketing that includes
transportation, communications, banking, utilities, and public services—is an important economic factor
to consider when planning to enter a foreign market. An inadequate infrastructure may constrain
marketers’ plans to manufacture, promote, and distribute goods and services in a particular country.
Point Value: 1
BUSPROG: Analytic

Topic: A-head: The International Marketing Environment
Bloom’s: Comprehension
Difficulty: Moderate
3. What are the two different classifications of tariffs? What is each designed to do?
Answer: Tariffs refer to taxes levied on imported products. Some tariffs impose set taxes per pound,
gallon, or unit; others are calculated according to the value of the imported item. Tariffs can be classified
as either revenue or protective tariffs. Revenue tariffs are designed to raise funds for the importing
government. Protective tariffs, usually higher than revenue tariffs, are designed to raise the retail price of
an imported product to match or exceed that of a similar domestic product.
Point Value: 1
BUSPROG: Analytic
4. How does an import quota restrict trade?
Answer: Import quotas limit the number of units of products in certain categories that can cross a
country’s border for resale. The quota is supposed to protect domestic industry and employment and
preserve foreign exchange, but it doesn’t always work that way.
Point Value: 1
BUSPROG: Analytic
5. What are two major victories achieved by the Uruguay Round of GATT conferences?
Answer: In 1994, the Uruguay Round culminated in one of the biggest victories for free trade in decades.
The Uruguay Round reduced average tariffs by one-third, or more than $700 billion. Among its major
victories it:
• reduced farm subsidies, which opened vast new markets for U.S. exports.
• increased protection for patents, copyrights, and trademarks.
• included services under international trading rules, creating opportunities for U.S. financial, legal,
and accounting firms.
• phased-out import quotas on textiles and clothing from developing nations, a move that cost
textile workers thousands of jobs when their employers moved many of these domestic jobs to
lower-wage countries, but benefited U.S. retailers and consumers.
Point Value: 1
BUSPROG: Analytic
Topic: A-head: Multinational Economic Integration
6. Why has the progress of the WTO been slow?
Answer: To date, the WTO has made slow progress toward its major policy initiatives: liberalizing world
financial services, telecommunications, and maritime markets. Trade officials have not agreed on the
direction for the WTO. Big differences between developed and developing nations create a major
roadblock to its progress, and its activities thus far have focused more on dispute resolution through its
Dispute Settlement Body than on reducing trade barriers. But the WTO also provides important technical
assistance and training for the governments of developing countries.
Point Value: 1
BUSPROG: Analytic
7. What are the three alternatives for first-time exporters to reach foreign customers?
Answer: First-time exporters can reach foreign customers through one or more of three alternatives:
export-trading companies (ETC), export-management companies (EMC), or offset agreements.
An ETC buys products from domestic producers and resells them abroad. While manufacturers lose
control over marketing and distribution to an ETC, it helps them export through a relatively simple and
inexpensive channel, in the process providing feedback about the overseas market potential of their
products.
An EMC, provides the first-time exporter with expertise in locating foreign buyers, handling necessary
paperwork, and ensuring that its goods meet local labeling and testing laws. However, the manufacturer
retains more control over the export process when it deals with an EMC than if it were to sell the goods
outright to an export-trading company.
Entering a foreign market under an offset agreement teams a small firm with a major international
company. The smaller firm essentially serves as a subcontractor on a large foreign project.
Point Value: 1
BUSPROG: Analytic
Topic: A-head: Strategies for Entering Foreign Markets
Difficulty: Easy
8. Define and describe the different types of contractual agreements that provide flexible alternatives to
exporting.
Answer: As a firm gains sophistication in global marketing, it may enter contractual agreements that
provide several flexible alternatives to exporting. Both large and small firms can benefit from these
methods. Franchising and foreign licensing, for example, are good ways to take services abroad.
Subcontracting agreements may involve either production facilities or services.
A franchise is a contractual arrangement in which a wholesaler or retailer (the franchisee) agrees to meet
the operating requirements of a manufacturer or other franchiser. The franchisee receives the right to sell
the products and use the franchiser’s name as well as a variety of marketing, management, and other
services. One advantage of franchising is risk reduction by offering a proven concept. Standardized
operations typically reduce costs, increase operating efficiencies, and provide greater international
recognizability. However, the success of an international franchise depends on its willingness to balance
standard practices with local customer preferences.
A foreign licensing agreement grants foreign marketers the right to distribute a firm’s merchandise or to
use its trademark, patent, or process in a specified geographic area. These arrangements usually set
certain time limits, after which agreements are revised or renewed. Licensing offers several advantages
over exporting, including access to local partners’ marketing information and distribution channels and
protection from various legal barriers. Because licensing does not require capital outlays, many firms,
both small and large, regard it as an attractive entry strategy. Like franchising, licensing allows a firm to
quickly enter a foreign market with a known product. The arrangement may also provide entry into a
market that government restrictions close to imports or international direct investment.
In subcontracting, the production of goods or services is assigned to local companies. Using local
subcontractors can prevent mistakes involving local culture and regulations. Manufacturers might
subcontract with a local company to produce their goods or use a foreign distributor to handle their
products abroad or provide customer service. Manufacturing within the country can provide protection
from import duties and may be a lower-cost alternative that makes it possible for the product to compete
with local offerings. But it can also have a downside if local suppliers don’t make the grade or if a
manufacturer imposes an unrealistically tight timeframe on a supplier to deliver the product, leading to
long hours or sweatshop conditions in the factory.
Point Value: 1
BUSPROG: Analytic
9. In what conditions is a global marketing strategy generally most successful?
Answer: A global marketing strategy defines a standard marketing mix and implements it with minimal
modifications in all foreign markets. This approach works especially well for products with strong,
universal appeal. A global marketing strategy can also be highly effective for luxury products that target
upscale consumers everywhere.
Point Value: 1
BUSPROG: Analytic
Topic: A-head: Developing an International Marketing Strategy
10. What type of nation benefits most from countertrade? Why?
Answer: Countertrade is a form of exporting in which a firm barters products rather than selling them for
cash. Less-developed nations benefit most from countertrade. Such nations impose countertrade
requirements when they lack sufficient foreign currency to attain goods and services they want or need
from exporting countries. These nations allow sellers to exchange their products only for domestic
products as a way to control their balance-of-trade problems.
Point Value: 1
BUSPROG: Analytic
Topic: A-head: International Product and Promotional Strategies
Projects and Teamwork Exercises
1. Answer: Ask the students to name the company they decided on (Apple Computers, Burger King,
General Mills, or Mattel Toys) and the markets into which that company could expand (Mexico, India, or
China). Have them share what they discovered about the chosen nation’s infrastructure, technology,
social-cultural environment, political or governmental issues, and trade barriers that may be encountered.
What did they find out about infrastructure in other nations? How did this differ among the chosen
nations? What types of products might do better in nations with little infrastructure? Overall, would this
type of expansion be beneficial to the firms? To their workers? To the citizens of the countries? To U.S.
consumers? Were students surprised by any of their findings?
Point Value: 1
BUSPROG: Reflective Thinking
Bloom’s: Application
Difficulty: Challenging
2. Answer: Talk to the class about the countries they explored, beyond the 25 countries in which Weight
Watchers’ already has a presence. Ask students which country they chose. Why that country? How
would they plan on entering this foreign market? Can they use methods that have been effective for
Weight Watchers’ in other nations? What would those methods be? Have them share their print ads
targeting this market and incorporating Weight Watchers’ corporate information as stated on its site.
Point Value: 1
3. Answer: Which companies did students choose that might benefit from promoting goods or services at
the 2014 Winter Olympics that will be held in Sochi, Russia? Were they U.S. firms or foreign firms? What
strategy was used (straight extension, product or promotion adaptation, dual adaptation, or product
invention)? Why was that particular strategy chosen? Did it depend on the product or service? The
company?
Point Value: 1
4. Answer: Have pairs of students talk about the firm they imagined that is marketing an MP3 player in
China. Which strategies did they feel would be most effective for the firm? Why?
Point Value: 1
5. Answer: Ask for information found during research on the Chinese auto manufacturer Geely. Are there
any kinds of plans to launch its cars in the U.S.? What might this entail? What elements might be
important to American consumers, in order to be convinced to at least consider buying a car
manufactured in China? Have students share their ads and discuss the way they target U.S. consumers.
How is this Chinese auto manufacturer different from those American firms that they’re familiar with, such
as General Motors or Ford? How is it different from foreign auto manufacturers such as Toyota or
Volkswagen?
Point Value: 1
Critical-Thinking Exercises
1. Few elements in the global marketing environment are more difficult to overcome than the unexpected,
such as natural disasters or outbreaks of disease such as the avian flu. Travel may be curtailed or halted
by law, by a breakdown in infrastructure, or simply by fear on the part of consumers. Suppose you work
for a firm that has resorts on several continents. As a marketer, what kinds of contingency plans might
you recommend for your firm in the event of an unexpected disaster?
Answer: Have students review how Toronto, China, and Hong Kong dealt with the SARS—both the good
and the bad—or how other locations handled similar contingencies. You may need to review the purpose
of contingency planning, and how firms prepare contingency plans, prior to assigning the exercise.
Remember that disasters such as the one described can impact the supply chain in many places. Be
sure that students are considering both suppliers and customers in their thought processes.
Point Value: 1
2. Zippo lighters have been around for more than 80 years. But as the number of smokers in the United
States continues to decline, Zippo has spent the last half century scouting the world for new markets.
Today, Zippo is a status symbol among Chinese consumers, who prefer U.S. products. Recently, Zippo
also broadened its product line to include watches, writing instruments, and items for outdoor
enthusiasts. Can you think of other product lines that would be logical extensions for Zippo? And if Zippo
decided to introduce additional product lines, which would work better: a global marketing strategy or a
multidomestic strategy? Explain the reasons for your choice.
Answer: Student responses will vary. Those that select the global marketing strategy should emphasize
the relative ease and lower costs associated with this approach. Those that select the multidomestic
marketing strategy should emphasize the need to carefully consider (and take advantage of) local
differences. The benefits of this approach are clearly demonstrated by Zippo’s experience in China.
Point Value: 1

3. Do you agree with the goals and ideas of the proposed FTAA? Why or why not?
Answer: Student responses will vary. You may want to provide students with a specific point of view to
consider here. Have them think like a business, like a consumer, like a job seeker, etc. This really
becomes a question of who benefits from free trade.
Point Value: 1
4. Do you agree with countertrade as a legitimate form of conducting business? Why or why not?
Describe a countertrade agreement that Microsoft might make in another country.
Answer: It would be hard for a student to argue that this is not a legitimate form of conducting business.
Microsoft would have many countertrade options. It could even follow the example of PepsiCo and trade
software for vodka. However, it is more likely that Microsoft would seek to trade some kind of information
technology product (i.e., something that they understand and have experience with).
Point Value: 1
5. Foreign investment continues to grow in the United States. Do you think this is a positive trend for U.S.
businesses and consumers? Why or why not?
Answer: Student responses will vary. Some may suggest that this leads to the creation of U.S. jobs and
that the added competition leads to better prices for consumers. Others will argue that the profits are
likely to be sent back to the home country and that the selling of U.S. assets (like land) is never a positive
thing.
Point Value: 1
Topic: A-head: The United States as a Target for International Marketers
Ethics Exercises
Cheap—and illegal—copies of pirated popular movies, video games, and music often are available for
sale in Asia within days of their worldwide release. The entertainment industry has so far had little
success in stopping the flow of these copies into consumers’ hands. Do you think multinational economic
communities should be more effective at combating piracy? Why or why not? What actions could they
take?
Answer: Student opinions will vary. They should be able to find lots of information on the topic. Some
argue that China and Taiwan’s entry into the WTO would reduce the amount of this type of piracy. Has it?
Will the threat of WTO sanctions force countries to crack down on piracy?
Point Value: 1
Internet Exercises
1. Chinese currency policy. Critics contend that the Chinese government pursues policies that keep the
value of the Chinese currency artificially low relative to other currencies such as the U.S. dollar and euro.
Using Google News and other online news sources, research the current state of Chinese currency
policy. Why would the Chinese government engage in such efforts? What impact do these efforts have
on global trade? Assume you work for a U.S. based firm that engages in extensive trading operations
with China. What impact would a major revaluation of the Chinese currency have on your firm?
http://news.google.com
Answer: Student responses will vary. They should make a note of the various reasons why countries
inflate or deflate the value of their currencies. They must be aware of the values of Chinese currency as
against USD or euro, and the changes in the past few weeks. Making a note of the changes over the past
5-6 quarters will help to project a trend. They should present their findings, expected impact on global
trade, and the consequences of revaluation of the Chinese currency.
Point Value: 1
Topic: A-head: The Importance of Global Marketing
2. Global marketing strategies. Samsung—the Korean-based electronics company—has been quite

successful over the past ten years at marketing its products worldwide. Visit the Samsung website and
note two or three elements of the firm’s global marketing strategy. Next visit the websites of two other
global electronics company such as Sony or Philips. Compare and contrast the marketing strategies used
by all three companies.
http://www.samsung.com
http://www.philips.com
http://www.sony.com
Answer: Student answers may vary. There are many ways to compare and contrast marketing strategies.
After all the students gather and present their data, a short discussion on the possible effects of
modifying their strategies will help the class to gain insights on global marketing. The pros and cons of
each company’s strategy have to be mentioned by each student in their analysis.

Point Value: 1
3. World statistics. The CIA World Factbook contains a wide range of information and statistics on
individual countries. Go to the website listed below. Click on “Guide to Country Comparisons.” Then click
on the relevant section to obtain the top five countries in each of the following:
a. Per-capita GDP
b. Real growth rate in GDP
c. Inflation rate
d. Exports
e. Population growth rate
https://www.cia.gov/library/publications/the-world-factbook/
Answer: The students are expected to visit the website and note down the relevant information.
Point Value: 1
Case 8.1 Starbucks Takes Coffee to India—Questions for Critical Thinking
1. How can Starbucks best adapt the U.S. model for its cafés and menus to a young and middle-class
Indian market?
Answer: Student answers may vary. They should discuss whether Starbucks should go for straight
extensions, promotion adaptations, product adaptation, dual adaptation, or product invention. They
should also discuss about Starbucks’ pricing strategy.
Point Value: 1
2. What can Starbucks do to compensate for competitors taking advantage of its late entry to the Indian
market?
Answer: Student answers may vary. They may say that Starbucks will need to correctly adapt its
business and customer strategies and its product offerings in a way that clearly proves how it is different
from a cup of coffee served at a Café Coffee Day, Lavarazza, or Coffee Bean & Tea Leaf outlet. They
should discuss about Starbucks’ promotion, product, and pricing strategy keeping its Indian competitors
in mind.
Point Value: 1

Video Case 8.2 Nederlander Productions Hoof It Around the World —Questions for Critical
Thinking
1. How might Nederlander benefit from expanding its business throughout the European Union (outside
the United Kingdom)? What might be the drawbacks?
Answer: Benefits to expanding farther into the European Union include the huge common market of
nearly 500 million people, the removal of trade barriers among these countries, and the standardization
of regulations and currencies. All of this means potential savings in marketing costs because many
factors are uniform. Drawbacks include the consequences of a downturn in interconnected currencies
and economies, along with differences in culture and languages among the different countries that might
make it necessary to differentiate marketing tactics as well as some features of a production or
performance.
2. Nederlander has already engaged in some product and promotional adaptations to bring shows from
London to New York and vice versa. What additional adaptations might the firm have to make for the
Turkish and Chinese markets?
Answer: Adaptations may include the choice of performance itself (for example, a theater hit in New York
or London might not be acceptable to audiences in Turkey or China); infrastructure factors such as
electricity and WiFi access might necessitate a change in lighting or special effects; language barriers
may require entirely rewriting a show; and cultural or class differences might require certain seating
arrangements. Promotional adaptations might include changing the pricing structure of a production, or
offering preferential seating to certain ticket buyers.
Part 2 Video Case Everyone Eats—Questions for Critical Thinking
1. Scripps identifies its core audience as upscale women who are decision makers. Give at least one
example each of cultural, social, and family influences that might sway their viewing and purchasing
choices as related to Food Network.
Answer: Possible cultural influences: any food customs or preferences stemming from an ethnic
background (or geographic area); convenience; family dining; local agriculture; vegetarianism or
veganism. Possible social influences: aspiring to become a cook or chef; the desire to entertain friends
and family; status in the community; opinion leaders (either celebrities or in the community). Possible
family influences: teenagers and children who have food allergies or preferences; multi-generations living
together; a spouse with a dominant decision-making role.
2. What marketing efforts might Scripps and Food Network make to change the attitude of men who are
not viewers, so that they become viewers of Food Network?
Answer: Through social media, Food Network marketers can learn more about what shows and products
male consumers would like to see—and then adjust their offerings. For example, a show might be linked
to NASCAR or one of the major sports leagues such as the NFL or NBA. Another show could focus on
teaching men how to cook the foods they prefer. Sweepstakes featuring tickets to events could be
successful promotions. These steps would not only modify offerings but also modify men’s attitudes by
making Food Network programming more appealing to men.
3. How would you segment Food Network’s business partners? Give an example of each segment you
cite.
Answer: Some of Food Network’s business partners can be segmented by demographic characteristics
(such as by sales volume or geographic location). Entwine Wine is based in California. Others, such as
Kohl’s or Buitoni, can be segmented by customer type (one is a manufacturer and the other is a retailer).
These customers could also be segmented by end-use application (for example, even though Kohl’s is a
retailer and Buitoni is a manufacturer, they both sell products to consumers who cook).
4. In addition to the free-pasta sweepstakes, describe how Buitoni might leverage its relationship with
Food Network via social media.
Answer: Buitoni could offer recipes tied to Food Network shows; have Food Network celebrities blog
about using its products; promote cooking contests on YouTube, Facebook, or Twitter featuring Food
Network recipes; hold a social media sweepstakes in which the winners would meet or cook with Food
Network celebrities; and have viewers post their favorite Food Network recipes using Buitoni products.
COLLABORATIVE LEARNING EXERCISES

Going Global
Purpose:
To help students understand the implications of globalization
Background:
Besides generating additional revenue, firms expand operations outside their home country to
gain other benefits, including new insights into consumer behavior, alternative distribution
strategies, and advance notice of new products. By setting up foreign offices and production
facilities, marketers may encounter new products, new approaches to distribution, or clever new
promotions that they may apply successfully in their domestic market or in other international
markets.
Relationship to Text:
The Importance of Global Marketing
Estimated Class Time:

About 15 minutes
Preparation/Materials:
None needed
Exercise:
Divide the class into groups of five. Ask each group to think of a company of their own choice.
This company would like to expand its operation in a foreign country. In order make this decision
what all factors would the company have to consider.
Questions for Reflection:

• What characteristics should a global company possess?
Global Marketing Strategy
Purpose:
To help students apply marketing strategy concepts to “real-world” situations
Background:
Global marketing strategies can seem a bit abstract to many students. This exercise is designed
to make the strategies seem more concrete, by giving students a chance to apply them to
companies that they know.
Going Global

About 20 to 25 minutes
Each group will need unlined paper and a pencil or pen.
Exercise*:
Divide your students into small groups, then direct each team to select a company—familiar to
everyone in the group—that could benefit from promoting its products to the U.K. market in
conjunction with the 2012 London Olympics. Which strategy would make the most sense: straight
extension, product or promotion adaptation, dual adaptation, or product invention? Why? Ask
each group to create a print ad that reflects their ideas. Reconvene as a class and ask the groups
to share their strategic recommendations and their print ads. Which does the class think would
work best? Why?

• What product categories are most likely to succeed in the U.K. market? Why?
• What are other issues to consider with regard to the U.K. market? (Possibilities span the
spectrum of the global marketing environment, with particular emphasis on social/cultural,
economic, and political/legal.)
*This exercise was adapted from the text.
Globalization and Cultural Exchanges
Purpose:
To highlight the cultural shifts that have resulted from economic globalization
Background:
During the past 25 years, the United States has been accused with increasing frequency of
cultural imperialism, visible in the ubiquitous presence of fast food, hip-hop music, and Hollywood
blockbusters. But the cultures of other countries have profoundly influenced the United States as
well. This discussion-based exercise is designed to explore the cultural exchanges that inevitably
result from economic globalization.
The U.S. as a Target for International Marketers

About 10 minutes
None needed
Exercise:
Discussion Questions:
• Ask your class for examples of how American culture has spread to other countries
around the world. American students who have traveled are a great source of information,
along with international students, if you have any.
• Ask them how U.S. products have been modified, if at all, to suit other cultures. One
interesting example is the film Pearl Harbor, marketed in the U.S. as a war movie and in
Japan (where it was also a hit) as a love story. If you have computer projection, you may
also want to take your students through the McDonald’s website
(http://www.mcdonalds.com), which shows how key foods have been modified in other
countries (e.g., seaweed fries and red-bean sundaes in Hong Kong).
• Now ask for examples of how other countries have influenced U.S. culture. You may need
to kick off the discussion with a few examples of your own, but once they get started, most
classes easily develop long (and interesting!) lists. Possibilities include: salsa dancing,
Pokémon, soccer, ultra-lightweight cell phones, import beers, U-2, sushi, etc.

• Does American culture help or hinder acceptance of foreign products? How?
• Given the cultural exchanges spurred by globalization, are we in danger of developing a
homogenous, “vanilla” world culture? Why or why not?

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Chapter 8 Global Marketing 203

Contemporary Marketing 16th Edition Boone

Download full test bank at :

Changes in the Updated Edition

The chapter has been updated and revised in several ways.

U.S. Department of Commerce, related party trade

technical services such as engineering, financial,

Assessment check questions

1. Define importing and exporting. Importing involves purchasing foreign

3. What must global marketers do effectively to reach foreign markets?

iv. At the beginning of the 21st century, most

b. Political conditions often influence international marketing

competitiveness? iv. The ultimate quota is the embargo—a complete

Assessment check questions

1. What are the three criteria that determine a nation’s prospects as a

2. What is an FCN treaty? FCN stands for friendship, commerce, and

jobs to cheap labor south of the border

EU. Which countries its economic goals

Assessment check questions

1. What is the World Trade Organization? The World Trade Organization

d. Common reasons that marketers cite for going global

product to compete with local offerings

Assessment check questions

2. What is a franchise? A franchise is a contractual agreement in which a

3. What is international direct investment? International direct investment

Chapter Objective 5: Differentiate between a global marketing strategy and a

a. In developing a marketing mix, international marketers

Assessment check questions

1. What is the difference between a global marketing strategy and a

1. International product and promotional strategies

attain goods and services they want or need from

Assessment check questions

2. What is countertrade? Countertrade is a form of exporting in which a

d. Goods and services will likely become more customized

Assessment check questions

1. What characteristics of the United States make it an inviting target for

2. Why would U.S. automobile manufacturing be a target for foreign

ANSWERS AND TEACHING NOTES TO CHAPTER EXERCISES

Chapter 8 Assurance of Learning Review

2. Why is a nation’s infrastructure an important factor for global marketers to consider?

DISC: International Perspective

4. How does an import quota restrict trade?

6. Why has the progress of the WTO been slow?

9. In what conditions is a global marketing strategy generally most successful?

10. What type of nation benefits most from countertrade? Why?

Projects and Teamwork Exercises

DISC: International Perspective

2. Global marketing strategies. Samsung—the Korean-based electronics company—has been quite

each company’s strategy have to be mentioned by each student in their analysis.

Case 8.1 Starbucks Takes Coffee to India—Questions for Critical Thinking

BUSPROG: Reflective Thinking

Part 2 Video Case Everyone Eats—Questions for Critical Thinking

COLLABORATIVE LEARNING EXERCISES

Estimated Class Time:

Questions for Reflection:

Global Marketing Strategy

Estimated Class Time:

Questions for Reflection:

*This exercise was adapted from the text.

Globalization and Cultural Exchanges

Estimated Class Time:

Questions for Reflection:

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