5 Cases

Case 1
What is the best global strategy for the Internet?
Doing business internationally online is more complex than initially thought. While the internet seems borderless,
national differences like regulations, consumer preferences, and languages make a one-size-fits-all approach
ineffective.

Theodore Levitt wrote an influential article on “The Globalization of Markets” (1983)

Theodore Levitt's argument: He believed companies should prioritize similarities over differences when entering
foreign markets. This would lead to a standardized approach.

Author's counterargument: The author argues that a global strategy might not always be the most profitable. Local
adaptation, considering factors like consumer preferences and regulations, could be more successful for certain
products and markets.

Geography matters
Infrastructure Matters:
Three Key Aspects:
1. Bandwidth: The speed of data transfer (bandwidth) between a company's website
and a local buyer can be limited by the international infrastructure in place.
 Slower speeds might necessitate redesigning the website for faster loading
times and potentially reducing the number of clicks required to complete a
purchase.
2. Device Usage: There are vast differences in how people access the internet across
countries.
 For instance, in some countries like Argentina, cable TV might be more
prevalent than personal computers, requiring companies to potentially adapt
their marketing strategies accordingly.
3. Mobile Penetration: Mobile internet access might be more dominant than fixed
internet connections in some European and Latin American countries.
 Companies might need to prioritize mobile-friendly website design and
marketing approaches for such regions.
Geographical distance
Distance and Costs:
 Despite globalization and the internet, physical distance remains a challenge.
 Shipping costs can significantly increase the final price of a product for international customers.
 The example of a CD costing nearly $200 due to shipping illustrates this point.
Logistics and Distribution:
 Efficient and cost-effective fulfillment of international orders for physical goods is crucial.
 Timely delivery is essential, but not the only concern.
Returns and Regulations:
 Processing and restocking returned products can be complex due to:
o Varying regulations across countries.
o Differences in customer preferences regarding return policies.
Limited Reach:
 The passage highlights a statistic: only 46% of direct marketing companies with e-commerce fulfill
international orders.
 This suggests many companies lack the capability to handle the complexities of international sales.

The Importance of Language in Global E-commerce

Language Matters for Customers:
 Customers prefer to purchase products and services in their native language, especially when
understanding complex terms is crucial.
Challenges of Automatic Translation:
 While technological solutions like translation tools exist, they can generate inaccurate translations,
potentially confusing customers and damaging a company's reputation.
Examples of Success:
 Major companies like Yahoo!, Lycos, Amazon, and Dell have adopted successful strategies:
o Creating country-specific websites in local languages.
o Dell translates its website into numerous languages, resulting in significant foreign sales.
 Language goes beyond website design. Customers need to be aware the website exists in the first
place.
Challenges of Search Engines and Directories:
 Search engines and directories are often localized, using keywords in specific languages.
 Customers in a particular country may not know how to search for a foreign website using their local
search engine.
Cost-effective Solutions:
 The passage suggests solutions like:
o Creating translated summaries of websites indexed with local search engines.
o Utilizing icons and images to reduce reliance on language for navigation (be mindful of
cultural connotations of colors).
Customer Service Considerations:
 Language can be a fundamental barrier unless addressed proactively.
 Companies may need to hire customer service representatives with diverse language skills to
handle inquiries.
Buyers’ behavior
Cultural Tastes and Preferences:
 Beyond language, cultural differences in tastes and preferences significantly impact online sales.
 This is especially true for "cultural" products like food, wine, and entertainment.
 Even seemingly universal products like consumer durables can have variations across cultures.
Product Selection and Stocking:
 Companies need to adapt their product selection and inventory based on customer preferences in
each market.
 The example of Terra-Lycos, a portal offering country-specific online stores with localized product
selections, illustrates this point.
Standardizing for Occasions:
 The concept of occasion-based sales can also be challenging to standardize globally.
 Holidays like Mother's Day may not be universally celebrated, or may fall on different dates in
different countries.
Price Sensitivity:
 Customers' price sensitivity can vary across countries.
 Factors like purchasing power, availability of alternative channels, and local competition all influence
price sensitivity.
 Companies may need to adopt country-specific pricing strategies to remain competitive.

Users Demographics
Diversity Within Online Populations:
 The passage warns against assuming online populations are homogenous across countries.
 There can be significant variations in demographics like gender and location.
Example: Gender Distribution:
 The text uses the example of a large gender gap in internet users in Latin America compared to the
US and Europe.
 This can impact marketing strategies for products like healthcare, where women might be the
primary decision-makers.
Example: User Location:
 User location within a country can also be a factor.
 In some countries, internet users might be concentrated in major cities, simplifying logistics.
 In others, rural users might be a significant portion of the online population, requiring different
considerations.
Currency
Challenge: Choosing a Currency:
 Companies struggle to decide on a single currency to display prices on their websites when
targeting international customers.
 The example of eBay's initial approach of using only US dollars alienated customers in other
countries.
Impact on Competition:
 This can lead to a competitive disadvantage against local players who offer prices in familiar
currencies.
Potential Solutions:
 The passage explores various approaches:
o Currency-specific websites: Creating separate websites with prices in local currencies.
o Currency conversion engines: While these exist, they might add confusion due to potential
variations in exchange rates based on payment methods.
Currency Fluctuation Risks:
 Companies need to consider the risk of exchange rate fluctuations between order placement and
payment.

Reputation
 Customer Perception:
o Customers often associate a product's or company's reputation with its national origin.
o Examples like Swiss watches, French champagne, and Japanese cars illustrate this point,
where customers are willing to pay more for certain products based on their perceived
quality associated with the country of origin.
 The "Country of Origin" Effect Online:
o Even in the digital age, the "country of origin" effect persists.
o The perceived national origin of a website (not necessarily the server location) and the
products it sells can significantly impact customer perception of quality and value.
 Variations by Product Type:
o The impact of perceived country of origin can differ based on the product type:
 For informational products, financial services, and online auctions, the country
associated with the website itself might be more important.
 For branded goods, the country of origin of the product itself likely remains more
important than the website's origin.
 For commodities, the reputation and origin of the e-seller might be most influential in
shaping customer expectations.
What strategy is the best?

MNC Strategies: MNCs have developed successful strategies for adapting to national differences, such as:
o Price discrimination: Setting different prices in different markets based on local factors.
o Cross-border arbitrage: Taking advantage of price discrepancies between markets to buy
low and sell high.
o Global resource allocation: Deploying assets and personnel strategically to leverage the
best resources globally.
Examples:
 The passage provides examples for each cell:
o Cell 1 (National Differentiation): Branded consumer goods (e.g., packaged food, beer) that
benefit from local marketing and potentially require product variations for different markets.
o Cell 3 (Global Integration): Consumer electronics where cost reduction and economies of
scale through global integration are crucial.
Balancing Act Challenges (Cell 4):
 Cell 4 represents the most complex scenario where both local responsiveness and global
integration are important for competitive advantage.
 The telecom equipment industry is mentioned as an example.
 Achieving success in this cell requires a highly flexible and adaptable organizational structure to
balance both integration and responsiveness.
Limited Advantage (Cells 2):
 Cells 2 represent situations where neither local responsiveness nor global integration is a significant
source of competitive advantage.
International strategies for the Net:

"Look and Feel" Goods (Cell 1):

 These products benefit from a high degree of local responsiveness:
o Website design in local languages.
o Local currency and payment options.
o Examination and return policies tailored to local expectations.
o Investment in customer service for local needs.
 Examples include clothing, used cars, collectibles, and online auction items.
 Companies selling such goods need to carefully choose markets with sufficient growth potential to
justify this localized approach (Cell 1)
Global Commodities (Cell 3):
 Products like books, CDs, and videos (despite cultural aspects) and industrial components are
considered global commodities.
 The opposite strategy of "look and feel" goods is recommended here (Cell 3)
 Focus on cost-effectiveness to offer competitive prices and a wide selection.
 Achieve economies of scale and scope through global integration.
 Examples: Amazon, Dell - leverage global presence for a competitive edge over local, customized
sellers.
 Standardization is key, with some adaptation for local peculiarities without sacrificing efficiency.
Local Commodities (Cell 2):
 Certain products might be local due to barriers or distance hindering global integration (Cell 2 )
 Examples: perishable goods, local internet services.
Truly Cultural/Regulated Goods (Cell 4):
 Examples: wine, financial products, information services.
 Need to adapt to national tastes, regulations, and preferences while offering a wide selection
through global scale.
  Balancing act: Requires a "transnational cost adaptive strategy" - expensive due to customization
across multiple markets while maintaining a broad product range and competitive pricing.
 This strategy allows companies to outperform purely local players.

Case 2
The mobile shopping revolution: Redefining the consumer decision process

Idea:
hypothetical future shopping experience using a technology called "queueless shopping" (QLS).
QLS utilizes mobile devices (smartphones) to scan and record grocery items as customers shop.

 Benefits for Customers:

o Skip checkout lines by paying directly through the phone.
o Receive personalized coupons and promotions.
o Access in-store product location guidance.
o Receive assistance from store associates who can track shopping activity through
the app.
o Dr. Gonzales also did same, use app for pay etc

The Impact of Mobile Technologies on Retailing

Three Key Areas of Impact:
1. Shift in Focus: Retailers need to move from just influencing purchase decisions to
influencing the entire decision-making process.
2. Pillars of the Mobile Revolution: key tools and strategies retailers can use with mobile
technologies to achieve this, such as:
o Interconnection: Seamless integration between online and physical stores.
o Empowerment: Providing customers with information and tools to make informed decisions.
o Engagement: Creating interactive and personalized experiences to keep customers
interested.
3. Strategic Areas for Retailers:
o Mobile marketing and promotions
o Personalized recommendations and offers
o Omnichannel shopping experiences (seamless integration across online, mobile, and
physical stores)
Decision outcome to decision process: A paradigm shift

 Traditional Shopping Model:

o Sequential steps: problem recognition, information search, evaluation, choice
decision, post-purchase evaluation (Figure 1 - not shown).
o Retailers influenced the choice decision stage with marketing mix (4Ps: product,
price, place, promotion).

Paradigm shift
mobile technology creates a more dynamic and continuous shopping experience for consumers. Retailers
need to adapt by using mobile tools to influence all stages of the shopping journey, not just the final
purchase decision.

our pillars of mobile shopping

1) Consumer-Retailer Interconnectedness: Seamless communication and interaction between

consumers and retailers through mobile channels.
  The Concierge Approach: Successful retailers use mobile data to
personalize the shopping experience, offering targeted recommendations,
promotions, and assistance.

2) Consumer Empowerment: Mobile tools and information that give consumers more control and
influence throughout the shopping journey.

Increased Consumer Empowerment:

a) Feeling of being "in control" of the shopping journey.

b) Ability to shop anytime, anywhere, often without entering a store.
c) Access to more product information than store associates (according to some
surveys).
d) Preference for using smartphones over interacting with store associates
(according to some surveys).

3) Proximity-Based Consumer Engagement: Using location-based services to engage with consumers

based on their physical location.

 Benefits for Retailers:

.1. Target consumers at key points during their shopping journey.
.2. Influence consumer decisions with location-specific messages.
 Example: Dr. Gonzales' Shopping Trip:
.1. Woodman's uses proximity-based marketing to:
.1.1. Greet her upon entering the parking lot.
.1.2. Remind her of forgotten items.
.1.3. Offer targeted promotions and coupons.
.1.4. Provide in-store directions for products.

4) Web-Based Consumer Engagement: Engaging with consumers through mobile web experiences and
online platforms.

The App Frenzy and Its Aftermath:

 Initially, many retailers launched poorly designed apps that didn't meet consumer
needs.
 Consumers downloaded these apps but then abandoned them.
 Retailers are now focusing on developing better apps that incorporate the four key
mobile shopping pillars.

Importance of the Pillars:

 These pillars are interconnected and work together to influence the shopping experience for both
consumers and retailers.
Strategic implications for retailers

The Three Strategic Areas:

1. Customer Analytics: Using customer data to gain insights into behavior and personalize the
shopping experience.
2. Employee Empowerment and Engagement: Equipping and motivating store associates to
effectively serve mobile shoppers.
3. Omnichannel Marketing: Creating a seamless shopping experience across all channels (online,
mobile, physical stores).

Case 3
In E-Commerce, More Is More

What Engages Online Shoppers Most

five e-commerce practices

How to Engage Customers:

 Provide information on related products and services that complement your core offerings.
 Examples:
o Ralph Lauren: Offers content on fashion, art, sports, etc. through "RL Magazine".
o Porsche: Offers adventure tours and travel information to reinforce its brand image.
pen_spark
Case 4