SESSION:7 Marketing in a Global Environment7.4 Marketing in a Global Environment

Session:7 Marketing in a Global Environment

7.4 Marketing in a Global Environment

Principles of Marketing | Leadership Development – Micro-Learning Session

Rice University 2020 | Michael Laverty, Colorado State University Global Chris Littel, North Carolina State University| https://openstax.org/details/books/principles-marketing

LEARNING OUTCOMES

By the end of this section, you will be able to:

1 Describe how marketing strategies are adapted for a global marketplace.
2 Summarize how global strategies affect the 4Ps of marketing.

Adapting Marketing Strategies for the Global Marketplace

Until this point, we’ve mostly been learning about the bigger-picture decisions that a company must make when deciding whether to enter the global marketplace. Once these company-wide decisions are made, marketing managers must determine the most effective way to market their products in the new markets. They must determine if completely new products or existing products will be offered in the new market. Additionally, they must determine if the other marketing mix variables must be adapted to the local market.

Standardized Global Marketing

A standardized global marketing strategy is one in which a company uses the same marketing strategy in all markets. Coca-Cola primarily uses a standardized marketing strategy in all markets. The brand, brand name, and iconic cursive writing in white on red background can be seen all over the world. The advantage that Coca-Cola has in this strategy is that the company can spread the cost of marketing over all the regions in which it operates.⁷¹

Adapted Global Marketing

Conversely, a company may not find success in a one-size-fits-all marketing strategy. In this case, the company may choose an adapted global marketing strategy, one in which marketing strategies differ among global markets. If a company chose an adapted global marketing strategy, there would be high marketing costs associated with each of the markets in which the company conducted business. Netflix, for example, offers different content (movies and shows) in each of its markets based on the customer demands in each country.⁷²

The 4Ps of Marketing in a Global Environment

Now that the company has chosen either a standardized or adapted marketing strategy for its global operations, it’s time to consider each of the 4Ps of global marketing—product, price, place, and promotion.

Product

Companies entering new foreign markets have three choices surrounding the product. They include straight product extension, product adaptation, and product invention. Each has its own advantages and disadvantages and levels of risk. Let’s take a look:

Straight Product Extension
A straight product extension is a strategy that entails maintaining the same product for both home and foreign markets. As you can imagine, this is the easiest product strategy and has the same advantages as a standardized marketing strategy. Some products are globally known and need no modifications in order to sell them.
Product Adaptation
Product adaptation is when companies modify products to align with the local culture. For example, Nike manufactures different styles of shoes based on the local culture’s preferences, such as the Nike Air Zoom, a high-intensity interval training (HIIT) shoe that was released in Australia.⁷³ This particular shoe is not available in the United States and looks quite different than other performance shoes offered in the United States.⁷⁴

Consider another well-known company: McDonald’s has around 38,000 franchises globally. However, not all global markets have the same tastes as what you might expect in the United States. In fact, it often goes beyond taste preferences and into religious and cultural norms. For example, there are over 160 of the Golden Arches in India, but none of them sell pork or beef, and they even keep separate kitchens for vegetarian and meat preparations. The company announced it would be opening vegetarian-only restaurants to better serve the Indian markets.⁷⁵
Product Invention
The most involved product strategy used in global marketing is that of product invention. Product invention consists of creating entirely new products for a global market. Consider the earlier example of the Ugandan market. Because less than half of the population has access to electricity, there is a potential for companies to invent new products, such as cooling systems, that do not require electricity.⁷⁶

LINK TO LEARNING

7-Eleven and Product Adaptation

There a numerous examples of product adaptation across markets. Check out this video on how 7-Eleven differs between American and Japanese markets.

Price

When pricing a product in a foreign market, there are other factors to evaluate in addition to home country considerations. Tariffs, the local economy, shipping, and other factors need to be considered because these will all have an impact on earnings and profit.

Do you know in which country it is the most expensive to purchase a car? You might be surprised to hear it is Singapore. The small island country doesn’t have a lot of room to accommodate everyone having an automobile, so the government has imposed high import taxes and yearly fees to keep the number of automobiles down.⁷⁷

Place: Distribution Channels

When marketers are considering distribution channels in foreign markets, they may find themselves with limited options compared to their home country. In the United States, for example, most companies find themselves with many choices of wholesalers, retailers, and supply chains. However, in more remote areas of the world and developing countries, those options can be limited. Consider again our Uganda example. Most retailers, particularly outside the capital city of Kampala, are “mom-and-pop” stores. Additionally, there are few transportation routes, and the ones that do exist consist mostly of dirt roads and a few highways. Unlike the United States, it is rare to see tractor trailers (semis) carrying containers of goods from one location to another. Instead, taxis, motorbikes, and foot traffic are the main modes for product transportation.

It is imperative that marketers consider the whole channel when making distribution decisions. The whole channel refers to the design of the international channels that incorporates all members, including the manufacturing, retailer, and wholesaler sites as well as transportation.⁷⁸

Have you seen the movie Captain Phillips starring Tom Hanks? The movie was loosely based on the true story of the Maersk Alabama container ship that was hijacked by Somali pirates off the coast of Somalia. Yes, pirates exist, and when they are able to capture large cargo ships, they can loot a lot of valuable cargo.⁷⁹ While many large vessels avoid pirate territory when considering the whole channel, pirates still exist today and are often waiting at sea to steal millions of dollars’ worth of goods.

Promotion

Just as marketing managers must determine whether to adapt their product to new markets, they must also determine the best course of action for the promotion strategy. Nearly all promotion strategies will need to adapt to some degree in different markets, even if it is a simple product expansion.

Consider Coca-Cola, whose brand name remains unchanged. However, in some countries, the slogan is slightly tweaked to have a more local meaning, but with the same underlying promotional message. Refer to Table 7.2 for some of the Coca-Cola slogans used around the world.⁸⁰

Country	Slogan
India	Always the Real Thing
United States	Real Magic
New Zealand	Real Magic
Spain	Siente El Sabor (Feel the Flavor)
Hungary	Kóstold meg az érzést (Taste the Flavor)
Indonesia	Rasakan Keajaiban (Real Magic or Feel the Magic)

Table 7.2 Coca-Cola Slogans

Knowledge Check

It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.

1. A company that uses the same marketing strategy in all markets is most likely utilizing which of the following?

Standardized
Adapted
Invention
Modified

2. Which of the following is correct regarding the promotion strategy of global markets?

All promotion strategies should remain the same across markets.
Promotion strategies of global markets should deviate only slightly from the home market.
Promotion strategies should reflect the market, some to different degrees.
Promotion strategies of global markets should always be completely different from the home market.

3. Which of the following Coca-Cola slogans is used in New Zealand?

“Real Magic”
“Always the Real Thing”
“Feel the Flavor”
“Feel the Magic”

4. Which of the following is part of the whole channel?

Promotions
Communications
Price
Distribution channel members

5. Which country has the highest automobile prices?

China
Singapore
United States
Canada

For example, in 2014, Delta Air Lines, a major US passenger airline carrier (see Figure 7.3), made a big stereotype blunder with its social media marketing. The company sent out a congratulatory tweet to the US team for its win over the Ghanaian team in the World Cup in which it used a photo of a giraffe to represent Ghana.³⁹ Unfortunately, Delta marketers failed to realize that there is not one wild giraffe in Ghana; this is a frequent stereotype about the entire continent of Africa. In fact, there are over 50 countries in Africa, but only around 20 have naturally wild giraffes.⁴⁰ The Twitter market caught on to this error quickly and proceeded to tease Delta for its stereotype mistake.

An airplane flies over a body of water while the sun is setting.

Figure 7.3 Marketing based on stereotypes can lead to big mistakes, such as when a social media post by Delta Air Lines incorrectly assumed that Ghana was home to wild giraffes, resulting in the market openly teasing the company on Twitter for its blunder. (credit: “Phuket 2018” by un.cloned/flickr, CC BY 2.0)

Law and Politics

Laws and politics have a large impact on a country’s economy and, in turn, how products will (or even can) be marketed. Political and legal decisions made within a country’s system surrounding tariffs, labor laws, the environment, and even an expectation of bribery can impact a business’s decisions. Even politics between two countries can have a big impact on decisions made by marketers.

In 2019, President Donald Trump increased the tariffs on Chinese goods to 25 percent. Several companies subsequently opted to pull their production facilities out of China. For example, Apple and Dell moved some of their production to Vietnam and other parts of Asia to avoid these tariffs.⁴¹

Education

Education impacts a consumer’s product and service choices. Generally speaking, the more educated an individual is, the more discretion they use when purchasing products.⁴² In other words, that person will spend more time researching various products before deciding which to purchase. Levels of education also effect an individual’s choices in magazines, television shows, and other entertainment.⁴³ Therefore, platforms, messages, and even specific words marketers choose for the promotion mix will depend on the level of education that the target market holds. Is the market tech savvy? If not, using technical words and messages may confuse a consumer who doesn’t understand the message.

Technology

The availability of technology within an international market will have several impacts on marketing efforts. First, the ability for consumers to access and use technology will directly impact the goods and services that are being marketed. Second, the company’s access to technology to produce goods and services within the country will also be impacted.

For example, Uganda has the second-youngest population in the world.⁴⁴ It is also ranks among the poorest countries in the world.⁴⁵ Because of this, someone may make the mistake of thinking that Uganda would not be a market to enter with technology, but this is far from true. While many citizens of Uganda live without electricity or running water, the country’s population of 45.74 million is estimated to own around 16 million cell phones, but only around 1 million homes have electric lights.⁴⁶ Due to the young population seeking to be more connected with others, the people of Uganda prioritize and are heavily reliant on their cell phones (see Figure 7.4).

But if there is limited electricity, how do Ugandans charge their cell phones? It has certainly been a challenge for many who have to share solar power with neighbors or travel to a nearby village that has electricity. However, the use of portable charging solutions has become more widespread. One company, Charge Ko Technologies, has turned this into an opportunity and created various portable charging solutions, including solar backpacks and energy generation through bicycle usage.⁴⁷ While some impoverished Ugandan consumers may not be able to afford these products, the company is hopeful that the wealthier will purchase enough to help bring the price down over time.

An advertisement above a building reads “Switch to Airtel 4 G“. The building is on a dirt road.

Figure 7.4 Cell phone use is widespread in Uganda because people prioritize connecting with other people, resulting in portable charging stations because electricity is a limited resource. (credit: Sarah Shepler, photographer)

Conducting a Cross-Cultural Analysis

When the Walt Disney Company decided to open Disneyland Hong Kong in 2005, the company struggled to gain momentum with its Chinese target market. Among other blunders, such as its high admission price, the company assumed that its Chinese market would love the Disney brand as much as Americans do. The company failed to realize that, unlike Americans, the Chinese did not grow up with the Disney brands and characters. Imagine walking into a fantasy theme park with characters you had never heard of or seen before. Unlike Americans, the Chinese do not view Disney characters as cultural icons. The fantasy aspect of the brand and park was another issue Disney faced. Its closest competitor, Ocean Park, provided visitors with real animals, educational material, and thrilling rides. The Asian market, which values education, found Disney’s high ticket prices with little educational value to be wasteful when the park initially opened.⁴⁸

Values

Cultural values are often unspoken. They include the aesthetics, socialization, and religious aspects woven throughout a culture. Consider the Disney example. Marketers stumbled with truly understanding the Chinese consumer culture when opening Disney Hong Kong by assuming that Chinese values were similar to those of Americans.

Customs and Cultural Symbols

Like other cultural values, customs are often unspoken. Customs consist of mannerisms or behaviors that are considered characteristics within a social system.⁴⁹ For example, in Spain, the afternoon siesta is a cultural custom. The siesta is an afternoon nap taken after the midday meal. Businesses will close for extended lunch breaks to allow employees to take their afternoon siesta.⁵⁰ If you are considering opening a business in Barcelona, you should expect to do the same!

Cultural symbols are physical representations of a culture’s language, values, and traditions. They include items such as flags, gestures, holiday decorations, and many others. For example, in China, the national animal is the giant panda, and it has significant cultural importance as a symbol.⁵¹ Similarly, the maple leaf is symbolic of Canada⁵² (see Figure 7.5).

The Canadian flag has a red maple leaf in the center on a white background. Two red stripes are on the sides of the maple leaf.

Figure 7.5 Cultural symbols, like the Canadian maple leaf, are physical representations of a culture’s language(s), values, and traditions. (credit: “Vancouver B.C. – Canadian Flag ‘Maple Leaf’” by David Paul Ohmer/flickr, CC BY 2.0)

Language, Idioms, and Nuances

It may seem obvious, but even language differences play a large role in the marketer’s job as products and services are rolled out in international markets. Brands and product names may have one meaning in the home country and a completely different meaning in another language. For example, Nestlé had problems when rolling out its Gerber baby food in France because “Gerber” translates to “puke” in French. For obvious reasons, this didn’t appeal to French parents choosing food for their infants.⁵³

Nuances are words, phrases, or beliefs that vary slightly from one culture to another and can cause miscommunication in translation. For example, UK citizens use the word “jelly” to describe what people in the United States would call “Jell-O,” and they use the word “biscuit” for “cookie.”⁵⁴

Idioms are phrases used in a culture that mean something completely different. For example, if you hear someone say “break a leg” in the United States, it would mean “good luck.” However, using this idiom in another culture may leave the other person quite confused or even offended, thinking it was meant literally to go break their leg.⁵⁵ In Spanish-speaking cultures, the popular idiom “a lot of noise and no walnuts (mucho ruido y pocas nueces)” means “all talk and no action,” but it would have no meaning in the United States.⁵⁶

However, even idioms can become problematic within and across languages and cultures. In 2022, Lizzo, a world-renowned pop star, issued an apology and a rerelease of a song because she had used a culturally insensitive word that she was unaware of at the time of recording.⁵⁷

CAREERS IN MARKETING

Global Marketing Manager

With the increase in companies doing business internationally, global marketing managers’ job roles are becoming more important. Global marketing managers work to understand what international markets need, the competition, rules and regulations, and local cultures and values. They then use this information to develop global marketing strategies that appeal to the local market. Learn more about this role from these sources:

Noodle article: “How to Become a Global Marketing Manager”
Marketing Business Network video: “What Is Global Marketing?”
Learn.org: “What’s the Job Description of a Global Marketing Professional?”

Knowledge Check

It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.

During the Russian invasion of Ukraine in 2022, the Russian ruble’s value decreased to less than one United States penny. This conversion from ruble to dollar is known as the ________.

exchange rate
business landscape
purchasing power
consumer income

2. Generally speaking, when a country’s political stability improves, so does its ________.

international business
purchasing power
economy
consumer income

3. The assumption that all Chinese individuals are extremely gifted in mathematics is known as a ________.

stereotype
lifestyle
culture
sociocultural factor

4. During the Russian invasion of Ukraine in 2022, United States President Joe Biden halted all imports of Russian oil. This action is known as a(n) ________.

tariff
quota
trade bloc
embargo

5.The United States, Canada, and Mexico are part of a trade bloc known as ________.

ASEAN
USMCA
tariffs
embargoes