Marketing The Core 7th Edition Kerin Solutions Manual

Marketing The Core 7th Edition Kerin
Solutions Manual
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Chapter 06 - Understanding and Reaching Global Consumers and Markets
CHAPTER CONTENTS
PAGE
POWERPOINT RESOURCES TO USE WITH LECTURES ........................................... 6-2
LEARNING OBJECTIVES (LO) ......................................................................................... 6-3
KEY TERMS ........................................................................................................................... 6-3
LECTURE NOTES
• Chapter Opener: Amazon Builds a Multi-Billion Dollar Operation in India ............... 6-4
• Dynamics of World Trade (LO 6-1) ............................................................................. 6-5
• Marketing in a Borderless Economic World (LO 6-2)................................................. 6-7
• A Global Environmental Scan (LO 6-3) ..................................................................... 6-13
• Comparing Global Market-Entry Strategies (LO 6-4) ................................................ 6-18
• Crafting a Worldwide Marketing Program (LO 6-5) .................................................. 6-21
APPLYING MARKETING KNOWLEDGE ...................................................................... 6-24
BUILDING YOUR MARKETING PLAN .......................................................................... 6-26
VIDEO CASE (VC)

• VC-6: Mary Kay, Inc.: Building a Brand in India ....................................................... 6-27
IN-CLASS ACTIVITY (ICA)

• ICA 6-1: Introducing Carmex Healing Cream to European Markets .......................... 6-30
CONNECT APPLICATION EXERCISES ……………………………………………… 6-35
• Protectionism Case Analysis
• Global Market Entry Click and Drag
• Global Marketing Program Click and Drag
• Mary Kay, Inc.: Building a Brand in India Video Case
• iSeeit! Video Case: Global Entry Strategies Video Case
6-1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
POWERPOINT RESOURCES TO USE WITH LECTURES

PowerPoint
Textbook Figures Slide
Figure 6-1 Leading countries in global merchandise trade in terms of imports (U.S.) and
exports (China) .............................................................................................................. 6-6
Figure 6-2 Protectionism hinders world trade through tariffs and quota policies ............................ 6-8
Figure 6-3 The European Union in early 2014 consists of 28 countries with more than 500
million consumers ........................................................................................................ 6-11
Figure 6-4 A firm’s profit potential and control over marketing activities increase as it moves
from exporting to direct investment ............................................................................. 6-28
Figure 6-5 Five product and promotion strategies for global marketing ........................................ 6-33
Figure 6-6 Channels of distribution in global marketing ................................................................ 6-35
Selected Textbook Images (Ads, People, Products, and Websites)

Chapter Opener: Amazon in India ...................................................................................................... 6-4
Video Case VC-6: Print ad for Mary Kay ......................................................................................... 6-37
Marketing Matters, Making Responsible Decisions, and/or Marketing inSite

Making Responsible Decisions—Ethics: Global Ethics and Global Economics—The Case of
Protectionism .................................................................................................................................... 6-9
Marketing Matters—Customer Value: The Global Teenager—A Market of 2 Billion Voracious
Consumers ......................................................................................................................................... 6-16
Marketing Matters—Creative Cosmetics and Creative Export Marketing in
Japan ................................................................................................................................................. 6-29
PowerPoint
Videos Slide
6-1: Nestlé Hungary Ad ..................................................................................................................... 6-17
6-2: Nestlé Japan Ad ......................................................................................................................... 6-22
6-3: Denizen Video ........................................................................................................................... 6-24
6-4: Nescafé China Video ................................................................................................................. 6-34
6-5: Mary Kay Video Case ............................................................................................................... 6-37
In-Class Activity (ICA)

ICA 6-1: Introducing Carmex Healing Cream to European Markets ................................................ 6-42
6-2
Education.
LEARNING OBJECTIVES (LO)

After reading this chapter students should be able to:
LO 6-1: Describe the nature and scope of world trade from a global perspective.
LO 6-2: Identify the major trends that have influenced world trade and global marketing.
LO 6-3: Identify the environmental forces that shape global marketing efforts.
LO 6-4: Name and describe the alternative approaches companies use to enter global markets.
LO 6-5: Explain the distinction between standardization and customization when companies
craft worldwide marketing programs.
KEY TERMS
back translation global competition

balance of trade global consumers
countertrade global marketing strategy
cross-cultural analysis joint venture
cultural symbols multidomestic marketing strategy
currency exchange rate protectionism
customs quota
economic espionage tariffs
exporting values
Foreign Corrupt Practices Act (1977) World Trade Organization (WTO)
global brand
6-3
Education.
LECTURE NOTES
TRANSFORMING THE WAY INDIA BUYS: AMAZON BUILDS A

MULTI-BILLION DOLLAR OPERATION FROM THE GROUP UP TO
THE CLOUD
• “The opportunity (in India) is so large it will be measured in trillions of U.S. dollars,”
according to Amazon executives
• In order to succeed in India, the company needs great people, great platform and
about $25 million per month to build business for Amazon. Why India?
a. India is the 2nd most populous country with more than 1.3 billion people.
b. India is the world’s 2nd largest English-speaking country.
c. India is the world’s fastest-growing major economy.
d. India’s per capita income is rising and total purchasing power of its economy
ranks 3rd behind China and the U.S.
e. India has 2nd largest Internet user base in the world and will have 790 million
users in 2020.
• What challenges does Amazon India face?
• Trade regulations – foreign companies are prohibited from selling products

directly to India consumers. Amazon must rely on local manufacturers and retailers
for products. Amazon stocks merchandise owned by Indian companies in its
warehouses and provides order fulfillment.
• Payment systems – Barely 60% of Indian consumers have bank accounts and only
12% have credit or debit cards. Roughly 50% of Indian buyers pay cash only when
purchases are delivered. Thousands of small shop owners act as pickup points in
exchange for a commission per package.
• Entrenched competition – Competitors in India already operate sizeable

distribution systems. Flipkart, India’s largest e-commerce company has 45% of
online sales, followed by Snapdeal with 26%.
• Cloud technology expansion – Amazon had to expand its cloud computing platform
in India in 2016 to improve service.
• India represents the last major e-commerce opportunity in the world with revenue
expected to reach $137 billion by 2020, more than 10 times the 2013 level of $13
billion.
6-4
Education.
I. DYNAMICS OF WORLD TRADE [LO 6-1]

• The dollar value of world trade more than doubled in the past decade.
• Manufactured products and commodities account for 80 percent of world trade;

service industries represent the other 20 percent.
• World trade reflects interdependencies among industries, countries, and regions.
• Manifest themselves in country, company, industry, and regional exports and imports.
• Are evolving. By 2015:
a. China is the biggest country measured by world trade.
b. Asia is the largest region measured by trade.
A. Global Perspective on World Trade.
a. The United States, China, Japan, Western Europe, and Canada together
account for more than two-thirds of world trade in manufactured products and
commodities.
b. [Figure 6-1] In terms of imports and exports:

• China is the world’s leading exporter, followed by the U.S. and Germany.
• The U.S. is the world’s leading importer, followed by China and
Germany.
• China, Germany, and the U.S. remain well ahead of other countries in
terms of imports and exports.
c. The trade feedback effect.

• Is a phenomenon where:
– Exports and imports are viewed as complementary economic flows.
– A country’s imports affect exports and vice versa.
• Every nation’s imports arise from the exports of other nations:
– As the exports of one country increase…
– Its national output and income rise, which…
– In turn leads to an increase in the demand for imports.
• This nation’s greater demand for imports stimulates the exports of other
countries.
• Increased demand for exports of other nations:
– Energizes their economic activity, resulting in higher national income,
which…
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Education.
– Stimulates their demand for imports.

• This trade feedback effect is one argument for free trade among nations.
d. Countertrade.
• Is the practice of using barter rather than money for making global sales.
• Occurs because:
– 70 percent of all countries do not have convertible currencies.
– Government-owned enterprises lack sufficient cash or credit for
imports.
• Involves an estimated 10 to 15 percent of world trade.
• Is popular with many Eastern European, Russian, and Asian countries.
B. United States Perspective on World Trade.
a. Gross domestic product (GDP).

• Is the monetary value of all products and services produced in a country
during one year.
• The U.S. is the world’s perennial GDP leader.
b. The U.S. is among the world’s leaders in exports.
c. But over the past 30 years, its percentage share of world imports has increased
while its percentage share of exports has decreased.
d. Balance of trade is the difference between the monetary value of a nation’s

exports and imports.
• When exports exceed imports, a nation incurs a balance of trade surplus.
• A deficit results when imports exceed exports.
e. Over the past 30 years, two things have happened regarding U.S trade:
• The U.S. has had a continuing balance of trade deficit (imports have
significantly exceeded exports each year).
• The volume of both exports and imports has increased dramatically, which
impacts every American.
f. The four largest importers of U.S. products and services are Canada, Mexico,
China, and Japan, purchasing approximately 67% of U.S. exports.
g. The four largest exporters to the U.S. are China, Canada, Mexico, and Japan.
6-6
Education.
LEARNING REVIEW
6-1. What country is the biggest as measured by world trade?
Answer: China.
6-2. What is the trade feedback effect?
Answer: The phenomenon in which one country’s imports affect the exports of other
countries and vice versa, thus stimulating economic activity in all the nations involved.
II. MARKETING IN A BORDERLESS ECONOMIC WORLD [LO 6-2]

Four trends in the past decade have significantly influenced global marketing:
1. Gradual decline of economic protectionism by individual countries.
2. Formal economic integration and free trade among nations.
3. Global competition among global companies for global consumers.
4. Emergence of a networked global marketspace.
5. Growing prevalence of economic espionage.
A. Decline of Economic Protectionism
• Protectionism is the practice of shielding one or more industries within a

country’s economy from foreign competition through the use of tariffs or quotas.
a. The economic argument for protectionism is that it:

• Limits the outsourcing of jobs.
• Protects a nation’s political security.
• Discourages economic dependency on other countries.
• Promotes the development of domestic industries.
6-7
Education.
MAKING RESPONSIBLE DECISIONS

Ethics: Global Ethics and Global Economics—The Case of Protectionism
World trade benefits from free and fair trade among nations. Nevertheless,
governments of many countries continue to use tariffs and quotas to protect their various
domestic industries. Why? Protectionism earns profits for domestic producers and tariff
revenue for the government. There is a cost, however. Protectionist policies cost consumers
who pay higher prices because of tariffs and other protective restrictions.
Regional trade agreements, such as those found in the provisions of the European
Union and the North American Free Trade Agreement, may also pose a situation whereby
member nations can obtain preferential treatment in quotas and tariffs but nonmember
nations cannot. Protectionism, in its many forms, raises an interesting global ethical
question. Is protectionism, no matter how applied an ethical practice?
b. [Figure 6-2] Tariffs and quotas discourage world trade.

• Tariffs.
– Tariffs are government taxes on products or services entering a
country that primarily serve to raise prices on imports.
– The average tariff on manufactured products in industrialized countries
is 4 percent, but wide differences exist across nations.
– Tariffs cost consumers in the form of higher prices on imported goods.
– Tariffs give a price advantage to domestic products competing in the
same market.
• Quotas.
– A quota is a restriction placed on the amount of a product allowed to
enter or leave a country.
– Quotas can be mandated or voluntary.
– Quotas may be legislated or negotiated by governments.
– Import quotas seek to guarantee domestic industries access to a certain
percentage of their domestic market.
– Quotas also result in higher prices for consumers.
• The World Trade Organization (WTO).
a. Is a permanent institution that…
6-8
Education.
b. Sets rules governing trade between its members through panels of trade
experts who…
c. Decide on trade disputes between members and issue binding decisions.
• The WTO:
a. Was formed in 1995 by the major industrial nations of the world.
b. Has 162 member countries, including the U.S., which account for more than
90 percent of world trade.
c. Reviews more than 200 trade disputes each year.
B. Rise of Economic Integration
A number of countries with similar economic goals:
• Have formed transnational trade groups or signed trade agreements to…
• Promote free trade among member nations and…
• Enhance their individual economies.
1. European Union (EU).
a. [Figure 6-3] As of early 2016, the EU consists of 28 member countries that

have eliminated most trade barriers across their borders.
b. As a single market, the EU has more than 500 million consumers, with a
combined GDP larger than the U.S.
c. The euro.
• Has been adopted as a common currency by 16 EU countries.
• Has been a boon to electronic commerce in the EU by eliminating the
need to continually monitor currency exchange rates.
d. Pan-European marketing strategies are possible due to:

• Greater uniformity in product and packaging standards.
• Fewer regulatory restrictions on transportation, advertising, and promotion
imposed by individual countries.
• Removal of most tariffs that affect pricing practices.
• Fewer locations for European-wide distribution due to open borders.
2. North American Free Trade Agreement (NAFTA).
a. NAFTA lifted many trade barriers between Canada, Mexico, and the U.S. to
create a marketplace with more than 475 million consumers.
6-9
Education.
b. NAFTA has stimulated trade among member nations as well as cross-border

retailing, manufacturing, and investment.
c. NAFTA helped Walmart to move to Mexico, and Mexican supermarket

Gigante to move to the U.S. Ford invested $60 million in its Mexico City
plant to produce smaller cars and light trucks for global sales.
C. A New Reality: Global Competition among Global Companies for Global

Consumers
The borderless economic world has created a new reality for marketers.
1. Global competition.
a. Exists when firms originate, produce, and market their products and services
worldwide.
b. Broadens the competitive landscape for marketers.
c. To meet the demands of global competition:

• Collaborative relationships are developing to meet global competition.
• Strategic alliances:
– Are agreements among two or more independent firms to…
– Cooperate for the purpose of achieving common goals, such as a
competitive advantage or customer value creation.
• Example: General Mills and Nestlé of Switzerland:
– Created Cereal Partners Worldwide to market General Mills cereals
worldwide.
– Produces $3 billion in annual sales from more than 140 countries.
2. Global Companies. [Figure 6-A]
a. Consists of three types of companies that:

• Employ people in different countries.
• Have global administrative, marketing, and manufacturing operations,
often called divisions or subsidiaries.
b. International firms.
• Market their existing products and services in other countries the same
way they do in their home country.
• Example: Avon.
c. Multinational firms.
6-10
Education.
• View the world as consisting of unique parts and markets to each part
differently.
• Use a multidomestic marketing strategy, which means they have as
many different product variations, brand names, and advertising programs
as countries in which they do business.
• Example: P&G’s Mr. Clean, Mastro Limpio, and Mr. Proper.
d. Transnational firms.
• View the world as one market and emphasize cultural similarities across
countries or universal consumer needs and wants more than differences.
• Employ a global marketing strategy, which:
– Is the practice of standardizing marketing activities when there are
cultural similarities and adapting them when cultures differ.
– Allows marketers to realize economies of scale from their production
and marketing activities.
– Is popular among many business-to-business marketers.
• Market a global brand—a brand marketed under the same name in
multiple countries with similar and centrally coordinated marketing
programs.
– Global brands:
* Have the same product formulation or service concept.
* Deliver the same benefits to consumers.
* Use consistent advertising across multiple countries and cultures.
– Adaptation occurs only when necessary to better connect the brand to
consumers in different markets.
[ICA 6-1: Introducing Carmex Healing Cream to Foreign Markets]

3. Global Consumers. Global competition often focuses on the identification and
pursuit of global consumers.
a. Global consumers:
• Consist of consumer groups living in many countries or regions of the
world who…
• Have similar needs or seek similar features and benefits from products or
services.
b. Evidence suggests:
• The presence of a global middle-income class, a youth market, and a
global elite segment…
6-11
Education.
• Each consuming or using a common assortment of products and services

regardless of geographic location.
MARKETING MATTERS
Customer Value: The Global Teenager—A Market of 2 Billion Voracious Consumers
The global “teenager market” consists of 2 billion 13- to 19-year-olds who live in
Europe, North and South America, and industrialized nations of Asia and the Pacific Rim.
The similarities among these teens are greater than their differences in terms of clothes,
shoes, cosmetics, video games, and music. They spend $820 billion annually for these
products. Global teenagers are influenced by the fashion and culture exhibited by U.S. teens.
D. Emergence of a Networked Global Marketspace
Internet-based technology is a growing tool for exchanging products, services, and

information on a global scale.
• Almost 3 billion businesses, educational institutions, government agencies, and

households worldwide are expected to have Internet access by 2017.
• It enables the exchange of products, services, and information from companies

anywhere to customers anywhere at any time and at a lower cost.
• 90% of global electronic commerce revenue arises from business-to-business

transactions among a dozen countries in North America, Western Europe, and the
Asia/Pacific Rim region.
• Marketers recognize that the networked global marketspace offers unheard of

access to prospective buyers on every continent.
• Companies manage multiple country and language websites that customize

content and communicate with consumers in their native tongue.
[Video 6-1: Nestlé Hungary Ad]

E. Growing Prevalence of Economic Espionage
Borderless economic world has a dark side of economic espionage.
• Economic espionage is the clandestine collection of trade secrets or proprietary
information about competitors.
• Practice is common in high-tech industries: electronics, specialty chemicals,
industrial equipment, aerospace, and pharmaceuticals.
• Costs U.S. firms $250+ billion a year in lost sales.
• 23 nations routinely target U.S. firms for information about R&D, manufacturing,
marketing plans, and customer lists.
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Education.
• The Economic Espionage Act (1996) makes this a federal crime in the U.S.;
prison sentences up to 15 years and fines up to $500,000 for individuals.
• Agents of foreign governments guilty of economic espionage face 25 years in
prison and $10 million fine.
LEARNING REVIEW
6-3. What is protectionism?
Answer: Protectionism is the practice of shielding one or more industries within a

country’s economy from foreign competition through the use of (1) tariffs, which are a
government tax on products or services entering a country that primarily serve to raise
prices on imports and (2) quotas, which are restrictions on the amount of product
allowed to enter or leave a country.
6-4. The North American Free Trade Agreement was designed to promote free trade
among which countries?
Answer: United States, Canada, and Mexico
6-5. What is the difference between a multidomestic marketing strategy and a global
marketing strategy?
Answer: Multinational firms view the world as consisting of unique markets. As a

result, they use a multidomestic marketing strategy because they have as many different
product variations, brand names, and advertising programs as countries in which they
do business. Transnational firms view the world as one market. As a result, they use a
global marketing strategy to standardize marketing activities when there are cultural
similarities and adapt it when cultures differ.
III. A GLOBAL ENVIRONMENTAL SCAN [LO 6-3]

• Global companies conduct continuous scans of the five environmental forces (social,
economic, technological, competitive and regulatory).
• Three of the environmental forces—cultural, economic, and regulatory—affect global

marketing practices differently than those in domestic markets.
A. Cultural Diversity
• Marketers must be sensitive to the cultures of different societies to create

successful exchange relationships with global consumers.
• Marketers conduct a cross-cultural analysis, which involves the study of

similarities and differences among consumers in two or more nations or societies.
6-13
Education.
• [Figure 6-B] A thorough cross-cultural analysis involves an understanding of and

an appreciation for the values, customs, symbols, and language of other societies.
1. Values.
a. Represent a society’s personally or socially preferable modes of conduct or

states of existence that tend to persist over time.
b. Cultural values are apparent in the personal values of individuals and affect
their attitudes and beliefs toward specific behaviors and attributes of offerings.
2. Customs are what is considered normal and expected about the way people do
things in a specific country.
a. Customs can vary from country to country (Example: French men wear more
than twice the number of cosmetics than women do. Japanese women give
Japanese men chocolates on Valentine’s Day).
b. The custom of giving token business gifts is popular in many countries where
they are expected and accepted.
c. Bribes, kickbacks, and payoffs:

• Entice someone to commit an illegal or improper act on behalf of the giver
for economic gain.
• Are considered corrupt in any culture.
d. The Foreign Corrupt Practices Act (1977).

• Is a law, amended by the International Anti-Dumping and Fair
Competition Act (1998).
• Makes it a crime for U.S. corporations to:
– Bribe an official of a foreign government or political party to…
– Obtain or retain business in a foreign country.
3. Cultural symbols are things that represent ideas and concepts.
a. Symbols play a role in cross-cultural analysis because different cultures attach

different meanings to things.
b. Semiotics is a field of study that examines the correspondence between

symbols and their role in the assignment of meaning for people.
c. Global marketers can tie positive symbolism to their products, services, and
brands to enhance their attractiveness to consumers.
d. Global marketers must be aware that cultural symbols evoke deep feelings;
improper use of symbols can spell disaster. Examples:
• #13 in the U.S. • Thumbs up in the U.S.
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Education.
• #4 Japan. • Open palm in Russia and Poland.
e. Cultural symbols evoke deep feelings. Example: Coca-Cola.
f. Global marketers must also sensitive to the fact that the country of origin or
manufacture of products and services can symbolize superior or poor quality
in some countries.
4. Language.
a. Global marketers should know:

• The native tongues of countries in which they market.
• The nuances and idioms of a language.
b. English, French, and Spanish are the principal languages used in global
diplomacy and commerce.
c. The best language to communicate with consumers is their own.
d. Back translation is the practice where a translated word or phrase is

retranslated into the original language by a different interpreter to catch errors.
[Video 6-2: Nestlé Japan Ad]
B. Economic Considerations
Global marketing is also affected by economic considerations. Therefore, a scan of

the global marketplace should include assessments of:
1. Economic Infrastructure.
a. Consists of a country’s communications, transportation, financial, and

distribution systems.
b. Is a critical consideration in determining whether to try to market to a

country’s consumers and organizations.
c. Wholesale and retail institutions:

• Tend to be small.
• Many are operated by new owner–managers, who are still learning the
ways of a free market system.
d. The communication infrastructures in many developing countries are limited

or antiquated compared to those of developed countries.
e. The lack of formal financial and legal systems in some countries can cause
problems when:
6-15
Education.
• Dealing with financial institutions.

• Engaging in private property transactions.
• Using nonmonetary forms of payment for products and services.
2. Consumer Income and Purchasing Power.
a. Global marketers must consider:

• What the average per capita or household income is among a country’s
consumers.
• How the income is distributed to determine a nation’s purchasing power.
b. Per capita incomes vary widely between nations (EU countries = $35,000;
Liberia = $700).
c. A country’s income distribution is important because it gives a more reliable

picture of a country’s purchasing power.
d. Generally speaking, the greater the proportion of middle-class households, the

greater a nation’s purchasing power tends to be.
e. People in developing countries who have government subsidies for food,

housing, and health care are promising customers for a variety of products.
[Video 6-3: Denizen video]

f. Microfinance:
• Is the practice of offering small, collateral-free loans to individuals who…
• Otherwise would not have access to the capital necessary to begin small
businesses or other income-generating activities.
g. Income growth in developing countries of Asia, Latin America, and Eastern

Europe is expected to stimulate world trade well into the twenty-first century.
4. Currency Exchanges Rates.
a. A currency exchange rate is the price of one country’s currency expressed in

terms of another country’s currency. Example: $  ₤  € ¥.
b. Failure to consider exchange rates when pricing products for global markets
can have dire consequences with respect to sales and profits.
c. Exchange rate fluctuations have a direct impact on global companies.

• When foreign currencies can buy more U.S. dollars, U.S. products are
less expensive for the foreign customer.
• Short-term fluctuations in exchange rates can have a significant effect on
the profits of global companies.
6-16
Education.
C. Political-Regulatory Climate
• Marketers must not only identify a country’s current political and regulatory
climate, but also assess how long a favorable or unfavorable climate may last.
• This assessment includes an analysis of a country’s political stability and trade

regulations.
1. Political Stability.
a. Billions of dollars in trade have been lost as a result of internal political strife,
terrorism, and war among and within countries.
b. Political stability is affected by numerous factors that combine to create a

favorable or unfavorable political climate for marketing in a country based on:
• A government’s orientation toward foreign companies.
• Trade with other countries.
c. Marketing managers track country risk ratings to monitor political stability.
2. Trade Regulations.
a. Countries have rules that govern business practices within their borders,
which often serve as trade barriers.
b. Japan has some 11,000 trade regulations.
c. Trade regulations also appear in free trade agreements among countries.
d. EU nations abide by some 10,000 rules that specify how products are to be
made and marketed.
e. Many European companies require suppliers to be ISO 9000 certified.
LEARNING REVIEW
6-6. Cross-cultural analysis involves the study of __________.
Answer: similarities and differences among consumers in two or more nations or

societies.
6-7. When foreign currencies can buy more U.S. dollars, are U.S. products more or less
expensive for a foreign consumer?
Answer: less expensive
6-17
Education.
IV. COMPARING GLOBAL MARKET-ENTRY STRATEGIES [LO 6-4]

• [Figure 6-4] Once a company enters the global marketplace, it selects a means of
market entry: (1) exporting, (2) licensing, (3) joint venture, and (4) direct investment.
• The amount of financial commitment, risk, marketing control, and potential profit
increases as the firm moves from exporting to direct investment.
A. Exporting
• Is a global market-entry strategy in which a company produces products in one

country and sells them in another country.
• Allows a company to make the least number of changes in its product,

organization, and corporate goals.
• Consists of two forms:
a. Indirect exporting is when a firm sells its domestically produced products in a

foreign country through an intermediary.
• It has the least amount of commitment and risk.
• It will probably return the least profit.
• Is ideal for the firm that has no overseas contacts but wants to sell abroad.
• The intermediary is often a distributor that has the marketing know-how
and resources necessary for the effort to succeed.
MARKETING MATTERS
Entrepreneurship: Creative Cosmetics and Creative Export Marketing in Japan
A medium-sized U.S. cosmetics firm has had marketing success in Japan because of
its top-quality product, effective advertising, and export marketing program relying on savvy
Japanese distributors. Fran Wilson Creative Cosmetics does not sell to department stores,
which are supplied by two leading Japanese cosmetics firms. Rather, the company sells its
Moodmatcher lipstick through Japanese distributors that reach Japan’s 40,000 beauty salons.
The company accounts for 20 percent of the lipsticks exported annually to Japan by U.S.
cosmetic companies.
b. Direct exporting is when a firm sells its domestically produced products in a

foreign country without intermediaries.
• Is used when companies believe sales will be sufficiently large and easy to
obtain so that they do not require intermediaries.
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Education.
• Involves more risk than indirect exporting for a firm but can provide
increased profits.
• Is commonly employed by large firms and is the prominent strategy among small-
and medium-sized companies.
B. Licensing
• Under licensing, a company offers the right to a trademark, patent, trade secret, or
other similarly valued items of intellectual property in return for a royalty or a fee.
a. Advantages of licensing:
• Low risk.
• Capital-free entry into a foreign country.
• Gain information that allows it to start with a competitive advantage.
• Foreign country gains employment since the product is made locally.
b. Disadvantages of licensing:
• Licensor gives up control of its product.
• Licensor reduces the potential profits gained from it.
• The licensor may create its own competition because some licensees are:
– Able to modify the product and enter the market themselves with…
– The product and marketing knowledge gained from the licensor.
• If the licensee is a poor choice, the name or reputation of the company
may be harmed.
• Two variations of licensing represent alternative ways to produce a product within

the foreign country:
a. With contract manufacturing:

• A U.S. company may contract with a foreign firm to manufacture products
according to stated specifications.
• The product is then sold in the foreign country or exported back to the
United States.
b. With contract assembly, the U.S. company may contract with a foreign firm to
assemble (not manufacture) parts and components that have been shipped to
that country.
c. In both cases:
• The advantage to the foreign country is the employment of its people.
• The U.S. firm benefits from the lower wage rates in the foreign country.
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• There is some controversy in certain industries because of documented

poor working conditions, low pay, and child labor.
• A third variation of licensing is franchising.
a. Is when a company contracts with an individual to set up an operation to

provide products or services under the company’s established brand name.
b. Franchising is one of the fastest-growing market-entry strategies.
c. Over 75,000 franchises of U.S. firms are located in countries globally.
C. Joint Venture
• A joint venture:
a. Is a global market-entry strategy in which a foreign and a local firm invest

together.
b. Creates a local business in order to share the ownership, control, and profits of
the new company.
• Advantages of a joint venture:
a. One firm may not have the necessary financial, physical, or managerial
resources to enter a foreign market alone.
b. A government may require or encourage a joint venture before it allows a

foreign company to enter its market.
• Disadvantages of a joint venture:
a. The two companies may disagree about policies or courses of action.
b. Government bureaucracy may bog down the effort.
D. Direct Investment
• Direct investment:
a. Is a global market-entry strategy that entails a domestic firm actually investing

in and owning a foreign subsidiary or division.
b. Is the biggest commitment a firm can make when entering the global market.
• For many firms, it often follows one of the other three market-entry strategies.
• Advantages of direct investment:
a. Cost savings.
b. Better understanding of local market conditions.

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c. Fewer local restrictions.
• Disadvantages of direct investment:
a. The financial commitments.
b. The risks involved (political, currency, etc.).
LEARNING REVIEW
6-8. What mode of entry could a company follow if it has no previous experience in
global marketing?
Answer: indirect exporting through intermediaries
6-9. How does licensing differ from a joint venture?
Answer: Under licensing, a company (licensor) offers the right to a trademark, patent,
trade secret, or other similarly valued items of intellectual property in return for a fee or
royalty. It is a low-risk, capital-free strategy to enter a foreign country. However, the
licensor forgoes control of its offerings and potential profits are reduced while the
licensee gains information that may give it a competitive advantage in the future. In a
joint venture, a foreign company and a local firm invest together to create a local
business to produce some product or service. The two companies share ownership,
control, and profits of the new entity. Neither firm may have the resources necessary to
enter the foreign market on its own. However, the two companies may disagree about
policies or courses of action or when government bureaucracy bogs down the efforts.
V. CRAFTING A WORLDWIDE MARKETING PROGRAM [LO 6-5]

• A global marketer must plan, implement, and evaluate marketing programs
worldwide.
• Global marketers standardize global marketing programs whenever possible and

customize them wherever necessary.
• The extent of standardization and customization is based on a global environment

scan, experienced judgment, and marketing research.
A. Product and Promotion Strategies
• [Figure 6-5] Global firms:
a. Have five strategies for matching products and promotion efforts to global
markets, which are…
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b. Based on whether they extend or adapt their product and promotion message
for consumers in different countries and cultures.
• A product may be sold globally in one of three ways:
1. Product extension.
a. Involves selling virtually the same product in other countries.
b. Works best when the target markets share the same desires, needs, and
uses for the product.
2. Product adaptation. Involves changing a product to make it more appropriate

for a country’s climate or consumer preferences.
3. Product invention. Companies can invent totally new products designed to

satisfy common needs across countries.
• To promote its products globally, companies can:
a. Use an identical promotion message for product extension and product

adaptation strategies.
b. Use a communication adaptation strategy, in which the firm:

• Sells the same product in many countries but…
• Adapts its promotion messages by advertising the product differently in
different countries.
[Video 6-4: Nescafé China Video]

c. Use a dual adaptation strategy, modifying both their products and
promotional message.
B. Distribution Strategy
• A country’s economic infrastructure determines:
a. The availability and quality of retailers and wholesalers.
b. The transportation, communication, and warehousing facilities.
• [Figure 6-6] The starting point is the seller, who is responsible for the successful
distribution to the ultimate consumer.
• Intermediaries then bring buyers and sellers together to distribute the product
from one country to another.
• Once the product is in the foreign nation, that country’s distribution channels take
over.
• These channels can be very long or surprisingly short, depending on the product.
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C. Pricing Strategy
• Individual countries, even those with free trade agreements, may impose
considerable competitive, political, and legal constraints on a global company’s
pricing strategy.
• Economic factors, such as the costs of production, selling, and tariffs, plus
transportation and storage costs, also affect global pricing decisions.
• Pricing too low or too high can have dire consequences:
a. Dumping occurs when a firm sells a product in a foreign country below its
domestic price or below its actual cost. This is because:
• A company wants to build its market by pricing at a competitive level.
• The products being sold may be surplus or cannot be sold domestically
and, therefore, are already a burden to the company.
b. A gray market is a situation where products are sold through unauthorized

channels of distribution.
• Also known as parallel importing.
• Occurs when companies price their products very high in some countries
but competitively in others.
• Occurs when individuals:
– Buy products in a lower-priced country from a manufacturer’s
authorized retailer.
– Ship them to higher-priced countries.
– Sell them below the manufacturer’s suggested retail price through
unauthorized retailers.
• Parallel importing is legal in the U.S. but illegal in the EU.
LEARNING REVIEW
6-10. Products may be sold globally in three ways. What are they?
Answers: Products can be sold: (1) in the same form as in their home market (product
extension); (2) with some adaptations to make them more appealing to local consumers
(product adaptation); and (3) as a totally new product to satisfy consumers’ needs
across countries (product invention).
6-11. What is dumping?
Answer: Dumping is when a firm sells a product in a foreign country below its
domestic price or below its actual cost to produce to build a company’s market share or
a surplus exists because the company cannot sell it domestically.
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APPLYING MARKETING KNOWLEDGE
1. Explain what is meant by this statement: “Quotas are a hidden tax on consumers,
whereas tariffs are a more obvious one.”
Answer: Quotas represent a hidden tax on consumers because they limit supply of
products, which in turn increases prices. Tariffs are literally a government tax imposed on
imported goods.
2. How successful would a television commercial in Japan be if it featured a husband

surprising his wife in her dressing area on Valentine’s Day with a small box of
chocolates containing four candies? Explain.
Answer: This commercial would be a failure. It violates a number of cultural norms in

Japan: (1) The Japanese consider it inappropriate for a husband to intrude on his wife;
(2) Japanese women give men chocolates on Valentine’s Day; and (3) the number four is
unlucky in Japan.
3. As a novice in global marketing, which alternative global market-entry strategy

would you be likely start with? Why? What other alternatives do you have for a
global market entry?
Answers: The best alternative for a novice firm is indirect exporting—selling its
domestically produced goods in a foreign country through an intermediary, such as a
distributor, that has the marketing know-how and the resources necessary for the effort to
succeed. This will allow consumers in the target country to try the firm’s products and to
begin to recognize its name. It also entails the lowest risk and investment from the firm.
Other alternatives in order of increasing level of risk and investment are:
a. Direct exporting. Selling the firm’s domestically produced goods in a foreign country
without intermediaries.
b. Licensing. Offering the right to a trademark, patent, trade secret, or other intellectual
property in return for a royalty or fee.
c. Joint venture. Occurs when a firm and local firm invest together in a foreign country
to create a local business.
d. Direct investment. Entails a domestic firm actually investing in and owning a foreign
subsidiary or division.
4. Coca-Cola is sold worldwide. In some countries, Coca-Cola owns the bottling

facilities; in others, it has signed contracts with licensees or relies on joint ventures.
When selecting a licensee in each country, what factors should Coca-Cola consider?
Answer: Among the risks of licensing are the licensor’s losing control of its products and
the licensor’s creating its own competition by the licensee’s somehow modifying the
product. Before selecting a licensee, Coca-Cola should perform a cross-cultural analysis of
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the target country, reviewing regulations and business customs in the country to be sure its
patents will be respected.
Selecting a licensee requires careful background checks into its values, past business
practices, and finances. The licensing agreement should set up a monitoring process over
the licensee’s production and over its marketing and distribution. All of these steps must
be taken with sensitivity in order to protect Coca-Cola’s brand without offending the
licensee and consumers in the country. The people at Coca-Cola that are monitoring
production, marketing, and distribution should be fluent in the language and customs of the
country and should be committed to developing a relationship over time with the licensee.
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BUILDING YOUR MARKETING PLAN
Does your marketing plan involve reaching global customers outside the United
States? If the answer is no, read no further and do not include a global element in your
plan. If the answer is yes, try to identify the following:
1. What features of your product are especially important to potential customers?
2. In which countries do these potential customers live?
3. What special marketing issues are involved in trying to reach them?
Answers to these questions will help in developing more detailed marketing mix
strategies described in later chapters.
Special issues for students to consider if marketing a product to another country include:
1. Regulations dealing with imports, including tariffs and quotas.

2. Assistance programs from the World Trade Organization, U.S. government, or state trade
office.
3. Whether a website will be developed in the language of the targeted country.
4. An assessment of the country’s values, customs, and symbols when developing the
marketing mix.
5. An assessment of any relevant economic (income, inflation, currency exchange rate, etc.)
and infrastructure issues (communication, transportation, energy, distribution, etc.).
6. Political stability.
7. Market-entry strategy to be used.
8. Whether the product will need to be adapted.
While the global customers are important to food chains like McDonald’s or
manufacturers like General Electric, most student marketing plans will not need to consider
global customers. Rare exceptions might be a small manufacturer or a retail shop located on or
near the border with Canada or Mexico.
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TEACHING NOTE FOR VIDEO CASE VC-7
Mary Kay, Inc.: Building a Brand in India
[Video 6-5: Mary Kay Video Case (kerin.tv/cr7e/v6-5)]

Synopsis
This case describes the market entry into India by Mary Kay, Inc. At the time of the
case, Mary Kay, Inc. was one of the largest direct sellers of skin care and color cosmetics in the
world. The company’s brands are sold in more than 35 markets on five continents.
This video case provides students with an opportunity to explore different aspects of its
global operations in the context of the entry into India. Specifically, students are asked to: (1)
define what type of global company it is; (2) describe the global market-entry strategy used by
the company to enter India; and (3) decrease whether or not Mary Kay is a global brand.
Teaching Suggestions
This case addresses global marketing organizations, global market-entry strategies, and
global branding. As such, the case provides a basis for review and possible synthesis of these
topics. Instructors might emphasize this benefit when discussing the case.
1. A useful opening question to students is: “Are any of you familiar with Mary Kay, Inc.
and its products?”
2. Assuming some students say “yes”, then these students might be asked: “Does Mary Kay
do business in India like it does in the United States?”
This question then leads to the questions posed in the case.
Answers to Questions
1. Is Mary Kay an international firm, a multinational firm, or a transnational firm

based on its marketing strategy?
Answer: On one level, Mary Kay evidences the structural characteristics of an international
firm, like that described for Avon in Chapter 7. Specifically, Mary Kay distributes its
product line through direct selling in India and its other 35 markets around the world. On
another level, a modest argument can be made that Mary Kay aspires to a transnational
firm. This argument is based on the Mary Kay corporate philosophy related to “enriching
women’s lives by helping women reach their full potential, find their inner beauty and
discover how truly great they are.”
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2. What global market-entry strategy did Mary Kay use when it entered India?
Answer: Mary Kay used an exporting global market-entry strategy. Specifically, the
company employed direct exporting since it used no intermediaries, relying instead on
company-owned distribution centers and a direct sales force. It appears that Mary Kay is
likely to adapt to a direct investment strategy given its plan to invest $20 million in India
over a five-year period.
3. Is Mary Kay a global brand? Why or why not?
Answer: Yes, Mary Kay is a global brand. Why? The Mary Kay brand is marketed under
the same name in multiple countries (35 markets on five continents) with similar and
centrally coordinated marketing programs. Except for minor product variations to reflect
skin care and cosmetic preferences and needs in different regions of the world, Mary Kay
centrally-coordinates its marketing program, as evidenced by the common direct selling
organization in different countries and Sheryl Adkins-Green’s responsibilities related to
global brand and product initiatives.
Epilogue
Mary Kay has enjoyed success in India. Since 2009, the company posted year-on-year
growth of 45 percent in India. According to K. K. Chua, President of Asia-Pacific, for Mary Kay
in 2012:
“We continue to attract aspirational consumers who seek value for money. As incomes
are fast growing in India, we hope to enlarge our consumer base. We will continue to
expand all our category portfolios with unique products for our Indian consumers.”
On February 18, 2013, Mary Kay, Inc. announced that it would discontinue its operations
in India. In December 2012, the government of India proposed a ban on multi-level marketing in
India. When Mary Kay, Inc. announced its decision to depart India, the company president said:
“We have seen the regulatory environment in India for both direct selling and cosmetics
companies dramatically change and change again at an alarming and inconsistent rate,
while the country’s infrastructure continues to create insurmountable obstacles.
Despite significant investments of time and money, our operation in India has not
performed as we had hoped and expected. So, we have made the decision to reallocate
the Company’s resources to other international markets.”
Other global direct selling companies such as Amway have also experienced difficulties due to
the regulatory issues. The World Federation of Direct Selling Associations (WFDSA) is now
trying to hold meetings with the many stakeholders to address the concerns.
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Mary Kay recently celebrated its 50th anniversary. According to David Holl, President
and CEO for Mary Kay, “Our 50th anniversary has been a record-setting year.” In the past year,
350,000 Mary Kay businesses were started by new independent sales force members around the
world. As a tribute to the company’s founder, Mary Kay Ash, Mary Kay Inc. launched the ‘One
Woman Can Makeover Contest.’ Participants received a personalized makeover, and winners
received a $5,000 grant to a charity of their choice that supports women and children. In
addition, Mary Kay sponsored the first-ever Mary Kay Global Makeover Day where more than
20 Mary Kay markets around the world hosted the most number of makeovers in 24 hours.
Sources: “Fifty and Fabulous—Mary Kay Continues to Experience Record-Breaking Growth During Golden
Anniversary Year,” Marketwired, July 25, 2013; “Changing Looks and Changing Lives with the Mary Kay ‘One
Woman Can’ Makeover Contest,” India Retail News, April 1, 2013; and “Mary Kay Quits India Citing Regulatory
Issues, Poor Sales,” The Hindu Business Line, July 24, 2013.
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ICA 6-1: IN-CLASS ACTIVITY
Introducing Carmex Healing Cream to European Markets1
Learning Objectives. To have students: (1) identify the problems U.S. global marketers
typically face when adapting a U.S. product to sell to foreign consumers and (2) suggest
marketing mix actions that Carma Labs might make for its Carmex healing cream to appeal to
European consumers.
Nature of the Activity. To have students:

• Identify marketing mix actions for Carmex to take in introducing one of its brands to
European consumers that reflects the typical problems that U.S. global marketers face
when targeting international consumers.
• Classify the type of global company Carma Labs is (an international firm, a
multinational firm, or a transnational firm).
Estimated Class Time and Teaching Suggestions. About 20 minutes, taught in class in
4-person teams.
Materials Needed.
• Copies for each student of the of the “Marketing Actions to Improve Carmex’s
Chances of Successfully Targeting the European Market” handout.
• OPTIONAL: Purchase several samples of the Carmex Healing Cream tubes at a local
supermarket or drugstore to pass around the class during this ICA.
Steps to Teach this ICA.
1. OPTIONAL: Bookmark the following websites on your classroom computer:
a. The Carmex website (www.mycarmex.com).

b. The YouTube Carmex Skin Care Products Introduction video clip
(www.youtube.com/watch?v=uwUTJvJ_DaA). [TRT = 0:50]
2. Form students into 4-person teams.
3. OPTIONAL: Pass around the Carmex Healing Cream tubes.
4. Pass out copies of the Marketing Actions to Improve Carmex’s Chances of

Successfully Targeting the European Market Handout to each student.
5. Carmex Healing Cream (U.S. to European Markets). Click on the Internet icon to
play the YouTube video clip about the introduction of the new Carmex Skin Care line
[TRT = 0:50].
1
The authors wish to Carma Labs and Jeff Gerst of Bolin Marketing, all of whom assisted in the development of this ICA.
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6. Give this background mini-lecture on the history of Carmex and global marketing
strategy alternatives:
“Alfred Woelbing created Carmex lip balm in the early 1930s. He made the product
by hand and sold it in glass jars out of the trunk of his car on the streets of
Milwaukee, WI. In late 2011, Carma Labs introduced the Carmex Healing Cream.
Carmex sells its products in the U.S., Canada, Mexico, Europe, Australia, and Asia.
Many U.S. companies like Carmex engage in global marketing and trade with
consumers in foreign countries. to expand sales and profits for U.S. companies.
Companies engaged in global commerce may be characterized as either:
a. An international firm, which engages in trade and marketing in different

countries as an extension of the marketing strategy it uses in its home country.
b. A multinational firm, which uses a multidomestic marketing strategy that
offers as many different product variations, brand names, and advertising
programs as countries in which they do business.
c. A transnational firm, which uses a global marketing strategy that standardizes
its marketing practices across all countries to the extent possible, modifying it
only when there are cultural differences.
When a U.S. firm seeks to market its products in foreign countries, it can encounter
problems—often because of a lack of understanding of the language, culture, and
habits of their consumers. Let’s assume you are marketing consultants to the Carma
Labs that wants to export its Carmex Healing Cream to European consumers.”
7. Marketing Actions to Improve Carmex’s Chances of Successfully Targeting the

European Market Handout. Give the students the following instructions:
“In your teams, spend 7 or 8 minutes to (1) identify the issues or problems in global
marketing and (2) recommend an action for each of four marketing mix elements that
your team thinks will improve Carmex’s chances of successfully targeting European
markets in terms of:
a. Product improvements. c. Promotion improvements.

b. Price improvements. d. Place (distribution/dealer network) improvements.
8. Ask student teams to share their ideas and discuss them.
9. Marketing Actions to Improve Carmex’s Chances of Successfully Targeting the

European Market Answers that identifies potential marketing mix problems and
resulting actions.
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10. Ask students to classify Carma Labs, the firm that markets the Carmex Healing
Cream in the U.S., either as an international firm, a multinational firm, or a
transnational firm.
Answer: The Carmex brand should be classified as a transnational firm because it

uses a global marketing strategy. Carma Labs have standardized the marketing
practices for its Carmex product line for European markets to the extent possible,
modifying the labeling on the package only when there are language differences.
Marketing Lesson. It is difficult to take a product from one country to another without
making changes in the marketing mix. There are potential pitfalls inherent in executing any kind
of marketing program across borders. So marketing, brand, and product managers should
conduct careful marketing research when seeking to enter new global markets.
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MARKETING ACTIONS TO IMPROVE CARMEX’S CHANCES OF

SUCCESSFULLY TARGETING THE EUROPEAN MARKET ANSWERS
Marketing Mix
Issue/Problem Action/Solution
Element
• Flavors • Make more flavors (fruit,
• Packaging (tube; jar?) natural, mint, etc.)
• Labeling • Design unique packaging for
Product each European country
• Amount of product: 4 ounces
Improvements • Determine optimal product
• Others as identified package forms, quantities,
and sizes
• Others as identified
• Currency exchange risks • Determine uniform euro price

since Carmex is produced in for each country
the U.S. ($) and exported to • Show comparison prices for
Pricing England (£) and other selected competitive creams
European countries that use
Improvements the euro (€) • Others as identified
• Price ($) of $5.49 – $5.99
• Others as identified
• No TV ads; Europeans like • Use creative alternative
TV media to inform potential
• Carmex ads, promotions, etc. target customers, such as
may not be seen/acted upon magazine ads, billboards,
public relations, etc.
• Use of social media like
Facebook and YouTube in • Use country-specific
Promotion Europe Facebook Pages for each
country in the EU
Improvements • Non traditional use of
traditional media may not • Use multiple product
appeal to target customers placement situations that are
consistent with brand image
• If used, humor may not be
fully appreciated by the • Use humor that is culturally
French, British, etc. accepted
• Others as identified • Others as identified
• Different channels to reach • Sell through the websites of

England and continental pharmacies and other
Europe distribution partners
Place (Distribution) • Eastern Europe distribution • Gain access to larger
Improvements channel structure and Eastern European countries
sophistication compared to (Poland, Czech Republic,
Western Europe etc.)
• Others as identified • Others as identified
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MARKETING ACTIONS TO IMPROVE CARMEX’S CHANCES OF

SUCCESSFULLY TARGETING THE EUROPEAN MARKET HANDOUT
MARKETING
ISSUE/PROBLEM ACTION/SOLUTION
MIX ELEMENT
Product
Improvements
Pricing
Improvements
Promotion
Improvements
Place
(Distribution)
Improvements
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Connect Application Exercises
Interactive 1: Protectionism
Activity Summary: In this case analysis activity, students read a brief scenario in which they are
asked to think like a global marketing consultant working to increase exports and decrease
imports into the United States. Students are asked five follow-up questions related to the effect of
tariffs and quotas on international trade.
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)

Topic: Global Marketing
Learning Objective: LO 6-2 Identify the major trends that have influenced world trade and
global marketing.
AACSB: Knowledge Application
Blooms: Apply
Difficulty Level: 2 Medium
Follow-Up Activity: Instructors could ask students to search for recent information on the trade
partners of the United States, identifying countries that have significant trade surplus and
deficits. As students share their findings, incorporate the trade agreements that exist between the
U.S. and its trading partners. Enhance the discussion by asking students to suggest how tariffs
and quotas could balance trade.
Interactive 2: Global Market Entry
Activity Summary: In this click and drag activity, students are given six global market entry
strategies; indirect exporting, direct exporting, licensing, franchising, joint venture and direct
investment. The draggable items (Moodmatcher lipstick, Boeing, Yoplait, McDonald’s, Ericsson
and CGCT, and Nissan) provide students with a description of a global market entry strategy
when clicked. Students match the firm to the appropriate global entry strategy.

Topic: Market Entry Strategies
Learning Objective: LO 6-4 Name and describe the alternative approaches companies use to
enter global markets.
AACSB: Analytical thinking
Blooms: Apply
Follow-Up Activity: Instructors can ask students to look up American companies with
international operations, recording the number of international outlets and revenues. Ask
students to hypothesize which global market-entry strategy was likely used by the firm for its
first international expansion. Discuss the evolution of market-entry strategies as firms seek
higher international profit potential.
Interactive 3: Global Marketing Program
Activity Summary: In this click and drag activity, students enhance their understanding of
global marketing programs. Students match five companies (Gillette, Maybelline, Toyota,
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Breathe Right, Gasoline Producer) onto the correct global marketing program (product
extension, product adaptation, product invention, communication adaptation, and or dual
adaptation strategy). As students mouse over the company name, they are provided with a
description of that firm’s marketing program.

Topic: Global Marketing
Learning Objective: LO 6-5 Explain the distinction between standardization and customization
when companies craft worldwide marketing programs.
Blooms: Apply
Follow-Up Activity: Instructors could provide students with additional video and print examples
of global advertising with the domestic counterparts for sake of comparison. Ask the students to
identify the global marketing strategy utilized in the marketing program. An alternative activity
would be to suggest strategies for U.S. firms/products seeking international growth.
Interactive 4: Mary Kay, Inc.: Building a Brand in India
Activity Summary: In this 6-minute video, students learn the history of Mary Kay Cosmetics
and its expansion into the Asia-Pacific market. The focus of the video is Mary Kay’s expansion
into the Indian market with its infrastructure, growth, and cultural challenges. After viewing the
video, students are asked five questions covering global competition, trade restrictions,
macroenvironmental forces, and marketing tactics for Mary Kay.

Topics: Global Marketing, Global Environmental Forces
Learning Objectives: LO 6-2 Identify the major trends that have influenced world trade and
global marketing.
LO 6-3 Identify the environmental forces that shape global marketing
efforts.
LO 6-5 Explain the distinction between standardization and customization
when companies craft worldwide marketing programs.
Blooms: Apply
Follow-Up Activity: Instructors could facilitate a discussion on how the world defines beauty
and by extension, fashion. Online resources such as http://michellephan.com/different-cultures-
their-beauty-perceptions/ and https://mabelkwong.com/2015/05/14/differences-between-eastern-
and-western-fashion-and-why-we-dress-the-way-we-do/ provide interesting topics for
conversation starters. Allow students to share their experiences with cultural norms, beauty, and
fashion.
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Interactive 5: iSeeit! Video Case: Global Entry Strategies
Activity Summary: In this straightforward whiteboard animation video, global entry strategies
are explored in the context of coffee retailers 5 Bucks and Joe to Go. After watching the 3-
minute video, students are asked four follow-up questions related to global entry strategies.

Topic: Market Entry Strategies
Learning Objectives: LO 6-4 Name and describe the alternative approaches companies use to
enter global markets.
Blooms: Understand
Difficulty Level: 1 Easy
Follow-Up Activity: Instructors can introduce Geert Hofstede’s theory on cultural dimensions
https://geert-hofstede.com/national-culture.html and ask students to discuss how culture affects a
firm’s choice on which country to target for international expansion. Allow students to use the
country comparison tools found online and make a recommendation for the coffee retailers as
they expand internationally.
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Marketing The Core 7th Edition Kerin

LEARNING OBJECTIVES (LO) ......................................................................................... 6-3

KEY TERMS ........................................................................................................................... 6-3

APPLYING MARKETING KNOWLEDGE ...................................................................... 6-24

BUILDING YOUR MARKETING PLAN .......................................................................... 6-26

VIDEO CASE (VC)

IN-CLASS ACTIVITY (ICA)

POWERPOINT RESOURCES TO USE WITH LECTURES

Selected Textbook Images (Ads, People, Products, and Websites)

Marketing Matters, Making Responsible Decisions, and/or Marketing inSite

In-Class Activity (ICA)

LEARNING OBJECTIVES (LO)

back translation global competition

TRANSFORMING THE WAY INDIA BUYS: AMAZON BUILDS A

b. India is the world’s 2nd largest English-speaking country.

c. India is the world’s fastest-growing major economy.

• What challenges does Amazon India face?

• Trade regulations – foreign companies are prohibited from selling products

• Entrenched competition – Competitors in India already operate sizeable

I. DYNAMICS OF WORLD TRADE [LO 6-1]

• Manufactured products and commodities account for 80 percent of world trade;

• World trade reflects interdependencies among industries, countries, and regions.

• Are evolving. By 2015:

a. China is the biggest country measured by world trade.

b. Asia is the largest region measured by trade.

A. Global Perspective on World Trade.

b. [Figure 6-1] In terms of imports and exports:

c. The trade feedback effect.

– Stimulates their demand for imports.

B. United States Perspective on World Trade.

a. Gross domestic product (GDP).

b. The U.S. is among the world’s leaders in exports.

d. Balance of trade is the difference between the monetary value of a nation’s

6-2. What is the trade feedback effect?

II. MARKETING IN A BORDERLESS ECONOMIC WORLD [LO 6-2]

1. Gradual decline of economic protectionism by individual countries.

2. Formal economic integration and free trade among nations.

3. Global competition among global companies for global consumers.

4. Emergence of a networked global marketspace.

5. Growing prevalence of economic espionage.

A. Decline of Economic Protectionism

• Protectionism is the practice of shielding one or more industries within a

a. The economic argument for protectionism is that it:

MAKING RESPONSIBLE DECISIONS

b. [Figure 6-2] Tariffs and quotas discourage world trade.

• The World Trade Organization (WTO).

a. Is a permanent institution that…

c. Decide on trade disputes between members and issue binding decisions.

a. Was formed in 1995 by the major industrial nations of the world.

c. Reviews more than 200 trade disputes each year.

B. Rise of Economic Integration

A number of countries with similar economic goals:

• Have formed transnational trade groups or signed trade agreements to…

• Promote free trade among member nations and…

• Enhance their individual economies.

1. European Union (EU).

a. [Figure 6-3] As of early 2016, the EU consists of 28 member countries that

d. Pan-European marketing strategies are possible due to: