Chapter 19 - Managing Marketing in the New World
I. Learning Objectives
After reading this chapter, students should:
q Know what factors a company should review before deciding to go abroad and how companies evaluate and select specific foreign markets to enter
q Know the major ways of entering a foreign market and how a company should manage and organize its international activities
q Know the key issues about hi-tech marketing and how companies manage e-commerce marketing, Internet marketing and m-marketing   
q Know the keys of effective internal marketing and effective modern marketing organizations
q Know how companies can be responsible social marketers

II. Chapter Summary
In deciding to go abroad, a company needs to define its international marketing objectives and policies. The company must determine which countries are suitable. In general, the candidate countries should be rated on three criteria: market attractiveness, risk, and competitive advantage. Developing countries offer a unique set of opportunities and risks.
Secondly, a company must determine the best mode of entry: indirect exporting, direct exporting, licensing, joint ventures, or direct investment. Each succeeding strategy involves more commitment, risk, control, and profit potential. Depending on the level of international involvement, companies manage their international marketing activities in three ways: through export departments, international divisions, or a global organization.
Next, a company must decide how much to adapt its marketing program. At the product level, firms can pursue a strategy of straight extension, product adaptation, or product invention. At the communication level, firms may choose communication adaptation or dual adaptation. At the price level, firms may encounter price escalation, dumping, gray markets, and discounted counterfeit products. At the distribution level, firms need to take a whole-channel view of the challenge of distributing products to the final users. In creating all elements of the marketing program, firms must be aware of the cultural, social, political, technological, environmental, and legal limitations they face in other countries. Country-of-origin perceptions can affect consumers and businesses alike. Managing those perceptions in the most advantageous way possible is an important marketing priority.
Hi-technologies have changed today’s marketing practice. An emerging new area is m-marketing through mobile phones and PDAs. Internet marketing and e-commerce grow in importance as companies have adopted one-to-one marketing and “brick-and-click” channel systems. Channel integration must recognize the distinctive strengths of online and offline selling, and maximize their joint contributions.
The modern marketing department has evolved through the years from a simple sales department to an organizational structure where marketing personnel work mainly on cross-disciplinary teams. Some companies are organized by functional specialization, while others focus on geography and regionalization. Still others emphasize product and brand management or market-segment management. Some companies establish a matrix organization consisting of both product and market managers. Finally, several companies have strong corporate marketing, a number have limited corporate marketing, while others place marketing only in the divisions.
Companies must practice social responsibility through their legal, ethical, and social words and actions. Cause marketing can be a means for companies to productively link social responsibility to consumer marketing programs. Social marketing is done by a nonprofit or government organization to directly address a social problem or cause.

III. Chapter Outline
I. Managing Global Marketing
A. Deciding Whether to Go Abroad
1. Higher profit opportunities than domestically
2. Need larger customer base to establish economies of scale
3. Counterattack competition abroad
4. Risks include failure to understand the consumer, business culture, and regulations and laws as well as inability to staff experienced personnel
B. Deciding Which Markets to Enter
1. Determine proportion of foreign to domestic sales
2. Large or small markets - Ayal and Zif say to enter fewer countries when:
a) Market entry and control costs are high
b) Product and communication costs are high
c) Population, income size, and growth are high in initial countries chosen
d) Dominant foreign firms have erected high entry barriers 
3. Types of countries to consider influenced by product, geography, income, population, and political climate 
C. Deciding How to Enter the Market - modes of entry
1. Indirect and direct exporting (usually start with indirect exporting to minimize investment and risk)
2. Licensing
3. Joint ventures
4. Direct investment - buy all or part of foreign-based entity or build own
D. Deciding on the Marketing Program - standardized or adapted to market
1. Product
a) Straight extension - no change to product
b) Product adaptation - to meet local conditions and preferences
c) Product invention - two forms
(1) Backward invention - reintroduce earlier product form
(2) Forward invention - create new product
2. Communications
a) Communication adaptation - use same communication program as old market or adapt old program to new market
b) Dual adaptation - adapt both the communication and the product
3. Price
a) Added costs tied to cost of transportation, tariffs, importer margins, wholesaler margins, and retailer margins
b) “Gray market” - branded products diverted from normal or authorized distribution channels in the country of product origin or across international borders
4. Distribution channels
a) Vary widely across countries
b) Small retail operations in most countries drive costs higher
E. Deciding on the Marketing Organization
1. Management has to recognize the potential quickly
2. Marketing - “meeting needs profitably”

II. Managing High Technologies Marketing     
A. Internet Marketing  
1. The benefits of interactive marketing
a) Allows for easier measurement
b) Individualized messages optimize investment
c) Increases reach in a cost-effective way
2. Designing an attractive website
a) Objective should be to get consumer to return after first visit
b) Ease of use
(1) Quick downloads
(2) Main page informative and easy to read
(3) Ease of navigation across pages
c) Physical attractiveness
(1) Lean, not overcrowded content display
(2) Font and typeface make it easy to read
(3) Good use of color and sound
d) Content functions may include depth of information with related links, maintaining new information, and interactive strategies
3. Placing ads and promotions online
a) Banner ads - small rectangular boxes containing text or pictures placed on related websites for a fee
b) Sponsorships of nonproduct information such as special events, news, sports, etc.
c) Search-related ads - links provided along with consumer search results; fee paid only when link is clicked on by consumer (cost per click correlated with click rank and popularity of keyword searched) 
4. E-marketing guidelines
a) Give customer a reason to respond
b) Personalize the email content
c) Offer something the consumer could not get through direct mail
d) Make it easy to unsubscribe

B. E-Commerce Marketing Practices   
1. Pure-click companies
a) Types
(1) Search engines (e.g. Google)
(2) Internet service providers (ISPs) (e.g. cable companies, telecommunication companies, individual employers, stand-alones such as Earthlink and NetZero)
(3) Commerce sites (e.g. Amazon, eBay, Expedia, buy.com)
(4) Transaction sites
(5) Content sites (e.g. news, blogs)
(6) Enabler sites
b) Business to business (B2B)
(1) Supplier websites
(2) Infomediaries
(3) Market makers - organizations that link buyers and sellers
(4) Customer communities - (e.g. blogs, organization-sponsored chat rooms)
2. Brick-and-click companies
a) Original brick entity incorporating click
(1) Offer different brands
(2) Offer online partners higher commissions to cushion the negative impact on sales
(3) Take order online but have retailer deliver and collect payment
b) Original click entity incorporating brick 
(1) Provide consumer with channel option
(2) Facilitate building and growth of brand awareness

C. M-Marketing 
Consumers and businesspeople no longer need to be near a computer to send and receive information 

1. A whole field called telematics places wireless Internet-connected computers in the dashboards of cars and trucks, and makes home appliances wireless so they can be used anywhere in or near the home
2. Many see a big future in m-commerce (m for mobile)
3. The potential market opportunities for location-based services are enormous

III. Managing Holistic Marketing Organization
A. Internal Marketing   
1. Internal marketing requires that everyone in the organization buy into the concepts and goals of marketing and engage in choosing, providing, and communicating customer value.
a) A company can have an excellent marketing department, yet fail at marketing
b) Much depends upon how the other company departments view customers
c) Only when all employees realize that their jobs are to create, serve, and satisfy customers does the company become an effective marketer
d) Many companies are now focusing on key processes rather than departments to serve the customer
e) To achieve customer-related outcomes, companies appoint process leaders who manage cross-disciplinary teams
B. Organizing the Marketing Department     
1. Organizing the marketing department
a) Functional organization - most common form, easy to administer but less effective from a marketing perspective due to “silo-based” mentality
b) Geographic organization - supports optimal use of sales representatives and enhanced when area market specialists are also used
c) Product or brand-management organization - optimal when producing many products and different brands
d) Market management organization - usually adopted when products are sold to diverse markets
e) Matrix management organization - can create competitive advantage but costly and difficult to manage
f) Corporate-divisional organization
2. Relations with other departments
a) Chief marketing officer (CMO) has two tasks
(1) Coordinate organization’s internal marketing activities
(2) Coordinate marketing with other operational functional areas 
b) Determine optimal mix of marketing and nonmarketing activity
C. Socially Responsible Marketing  
1. Corporate Social Responsibility
a) Legal Behavior - ensure that every employee knows and observes all relevant laws
b) Ethical Behavior - adopt and disseminate a written code of ethics, build a company tradition of ethical behavior, and hold its people fully responsible for observing ethical and legal guidelines
c) Social Responsibility Behavior - practice a “social conscience” in specific dealings with customers and stakeholders
2. Socially Responsible Business Models
D. Cause-Related Marketing
1. Cause Marketing Benefits and Costs
a) Building brand awareness
b) Enhancing brand image
c) Establishing brand credibility
d) Evoking brand feelings
e) Creating a sense of brand community
f) Eliciting brand engagement
2. Choosing a Cause
a) Focus on one or a few main causes to simplify execution and maximize impact
b) Limiting support to a single cause may limit the pool of consumers or other stakeholders who could transfer positive feelings from the cause to the firm
c) Most firms tend to choose causes that fit their corporate or brand image and matter to their employees and shareholders
IV. Summary
IV. Opening Thought
In today’s multicultural world, students will have been exposed to products marketed across geographic or national boundaries, so this concept should be straightforward to grasp. What could present a challenge is the extent of marketing planning and detail needed by the firm in making their marketing decisions nationally and internationally.

The instructor is encouraged to open up the class discussions to students from other countries present, and to ask these students to describe the shopping experiences in their homeland. Students with international business or international marketing experiences should be especially encouraged to present to the class descriptions of what marketing is like away from the local domestic market.

Students should be very familiar with the marketing systems described in this chapter, especially Internet shopping. The challenge to the instructor in this chapter is ensuring that the students understand that Internet marketing (e-marketing) is just one of the many different avenues available to marketers trying to reach their target markets. Students may be predisposed to believe that all marketing or the future of marketing is via the electronic channels. The instructor should encourage in-class discussions on this position and he/she is encouraged to take the “defensive” position to help the students understand the many varied levels of business and consumer marketing.

This chapter sums up the concepts of marketing today—marketing must be involved in all elements of the company’s operations, and the company should work closely with its suppliers, channel partners, with the understanding that each element or function provides an opportunity to market the product to the ultimate consumer. In many ways, this chapter focuses on the “management” of marketing in terms of the ability of the marketing personnel to work cooperatively and to encourage customer focus by each discipline. Marketers today must also be concerned for the welfare of society as a whole. Finally, marketers must focus their attention to the implementation process of solving marketing opportunities.
Students engaged in disciplines outside of marketing may present differing opinions of the value of their discipline to the overall health of the organization. The instructor’s challenge is to demonstrate how a holistic approach is preferable or even necessary in today’s (and more so for the future) competitive environment. Companies that do not/will not adopt such a view are likely to find that they are not competitive in the future.

V. Teaching Strategy and Class Organization
PROJECTS
1. If the project is to be exported to another country, then student’s submissions regarding how the product is to be distributed should be included here, otherwise this begins the presentation phase of the project, and student groups should begin their presentations to the class.

2. The instructor is encouraged to challenge the students by assigning them to find their favorite product’s corporate offices. Examples may include Nestle, Nike, Suzuki, Nokia, Ben & Jerry’s, and others. Beyond just discovering examples of global or international firms, students should uncover via financial information, the origin of sales by country. Such an exercise will provoke interesting classroom discussions as students begin to realize the global nature of business today.
 
3. At this point in the semester-long marketing plan project, this chapter is the second of two parts of oral presentations of students’ projects. Students should emphasize here how specifically, their marketing plans contain a holistic view of the marketing process.

4. The concept of “internal marketing” is prevalent now in popular books and magazines. Students should read and review at least four sources from the Internet and comment on what additional information, techniques, and formulas for success they have discovered. How does this information compare, contrast, or add to the information contained in the chapter? What is the future of internal marketing and why are companies so intent on succeeding in it?
ASSIGNMENTS
Small Group Assignments
1. Successful holistic marketers have integrated relationship marketing, internal marketing, and social marketing into their organizations. Students should chose three companies that they believe practice holistic marketing and then defend their choices by outlining marketing programs of the selected companies.

2. Many Asian companies have built their business models on social responsibility. Students should find three examples of such socially responsible Asian-based marketing firms and comment on whether they see social responsibility as a need component for marketing in the future. Specifically, knowing what we now know about consumer-buying behavior, is “socially responsible” a determinant for future success—is it a megatrend? Or just a “trend”?

3. Major marketers are using the power of the Internet to engage in global e-commerce. Visit a foreign website for a multinational company and evaluate the similarities and differences between its domestic market website and its foreign market website. What differences/similarities strike you as significant? Could the differences be readily adapted to other foreign countries?

Individual Assignments
1. Some scholars like Professor Stephen Brown of Ulster University criticize marketers that make too much of researching and satisfying consumers. Knowing what you know now about marketing and marketing management, and citing material from all the chapters of the text, defend and then refute these scholars’ criticisms.

2. Research known companies and identify one in particular that you feel presents a strong corporate social responsibility message. Discuss how you feel this firm is fulfilling the criteria presented in the Marketing Memo.

3. Read Dana L. Alden, Jan-Benedict E. M. Steenkamp, and Rajeev Batra’s, “Brand Positioning Through Advertising in Asia, North America, and Europe: The Role of Global Consumer Culture,” Journal of Marketing, 63 (January), 1999, pp.75–87 and write up what you found to be their concepts of global consumer culture positioning. What does the concept of global consumer culture positioning mean to U.S. marketers? How can a through understanding of global consumers enhance marketing strategies?

Think-Pair-Share
1. There are some famous “blunders” in international marketing. Students should research these examples (and find others) and provide insight into why they think such blunders were allowed to occur. This can lead to a classroom discussion onto the complexity facing many firms in international and multicultural marketing.

2. International companies must decide on how much to adapt their marketing strategy to local conditions. Students should pick an international corporation and in researching the products it sells overseas, see if there are some significant differences in brand characteristics for each country. For example, Pringles, Always, and Toyota, have made some changes in product features, packaging, channels, and pricing in different global markets. This assignment is for students to provide additional examples of products changed to suit the country’s consumers while at the same time, maintaining the international brand name.

3. Students should research and find two examples of a successful cause-marketing program currently available in their area and evaluate whether they believe that this cause-marketing program is (a) building the firm’s brand awareness; (b) enhancing brand image; (c) establishing brand credibility; (d) evoking brand feelings; (e) creating a sense of brand community; and (f) eliciting brand engagement. Students should be able to defend their opinions citing financial, market share, stock price growth, and other definitive measures.

4. Drawing a clear line between normal marketing practices and unethical behavior is not easy. Identify two firms, in your area, that you feel are or have demonstrated unethical behavior (although not per se illegal). Why do you believe that such practices will not be successful for the firm in the future? Do the other students in the class agree with your assertion? On the other hand, do they believe that the examples offered are just “creative” marketing?

END-OF-CHAPTER SUPPORT
MARKETING DEBATE

 Is The World Coming Closer Together?
People are becoming more and more similar versus The differences between people of different cultures far outweigh their similarities.

VI. Case Study
1. Marketing in China: The Footprints of the Globalization of Chinese Enterprises
1) Compare the different ways of Chinese companies to enter international markets and their advantages and disadvantages.
2) “Easy ones first” or “difficult ones first”? Which is better for Chinese companies when they choose overseas markets?

2. Marketing in China: Chery Automobile
1) How can Chery, a small enterprise in the auto industry, become the largest auto exporter in China?
2) Analyze the international marketing strategy of Chery.

3. Chapter Case: Microsoft 
1) What have been the key success factors for Microsoft?
2) Where is Microsoft vulnerable? What should it watch out for?

4. To prepare case studies based on the following materials from Chapter 19 and to present these:
• Mini Case: Apple-iPod
• Mini Case: Red bull
• Innovative Marketing: Nokia
• Mini Case: Search Engines
• Mini Case: Cisco system
• Innovative Marketing: Starbucks

VII. Main Topic(s)
A.  “Managing Global Marketing”
The focus in this discussion is on the important role of understanding the options available to organizations as they embrace this invasive global market force. The word invasive is used as organizations must gain an understanding of the global forces that have impacted their business without their election to formally enter a global market.
Teaching Objectives 
· To provide students with a framework to address options in global market entry
· To explain the concepts related to understanding how global forces are impacting their business
 
Discussion
Marketing in China: The footprints of the Globalization of Chinese Enterprises
Marketing Insight: 4 Types and 3 Approaches for the Globalization of Chinese Enterprises

Introduction
Global firms plan, operate, and coordinate their activities on a worldwide basis. Small- and mid-size firms can practice global nichemanship. For an organization to go global, it must make key decisions at the onset.

deciding whether to go abroad
Reasons for contemplating going abroad may include: higher profit opportunities than the domestic market, larger customer base to achieve greater economies of scale, leverage international resources, and diversify its market. There are risks that must be assessed as well. A company may fail to understand customer preferences or behavior. For example, Japanese customers buy in less volume but more frequently as their storage space is smaller than that of consumers in the United States. Thus, they may pay more money for less. There are certain ethical and behavior modes that must be understood. Someone in the organization should own the process of monitoring government regulation, which includes a firm understanding of past trends, which may be indicative of future trends. Organizations must also ensure that they have personnel with experience in the respective geographic target area. This may include local talent. A country’s economic and political volatility must also be assessed in terms of probability and contingency plans, because a response to any negative economic or political impact should be defined and understood by all personnel who have an impact on or can be impacted by these forces.

deciding how to enter the market
Modes of entry may include:
1. Indirect or direct exporting. Companies usually start with indirect exports to reduce risk and learn. Eventually they may decide to manage their own exports and invest in more global presence via trade shows and exhibitions.
2. Licensing a manufacturing process, trademark, patent, or trade secret for a fee or royalty is a way to minimize risk while gaining entry. Traditional risks of licensing, such as policing, quality, and reliability are present. Choice: marketers need to reassess the diversity and breadth of their offerings into a manageable good-better-best selection.
3. Joint ventures allow for risk and gain sharing. Organizations entering into this type of relationship should consider their respective approaches to decision making (e.g. quick or multilevel decision approval), long-term objectives, positions in their industry (e.g. new entrant or established). How organizations behave and motivate themselves can enhance or derail the venture. There is an old, 1980s’ Harvard business case, Laura Ashley and FedEx, which may provide a good background to the instructor on the issues of joint ventures.
4. Direct investment, where the organization invests capital and other resources into entities present in the target geography.
deciding on the marketing program
Several extreme approaches to choosing a marketing program approach can be discussed. Standardized marketing mix approach keeps costs low, allows for brand image consistency, and enables flexibility. However, this extreme may be the worst approach if market conditions dictate conditions that require a vastly different approach to brand positioning, pricing, distribution, types of products, and other mix variables. At the other extreme, an adapted or custom approach may be used. This ensures a more optimal alignment with market needs, however it may be extremely costly and perhaps unattainable. In conclusion, each organization must decide on the approach that provides acceptable risk and gains. The instructor may then wish to focus on one or more of the marketing mix variables.

Student exercises
Have students conduct an inventory of products in their home with respect to country of origin. They should tabulate the number of products by country. They may also wish to select one of the manufacturers and explore their partners via an online search.

Instruct students to select a major firm based in the United States. Have them research the ultimate corporate owner. They may be surprised to find out how many organizations that are considered traditional American companies are actually now foreign-owned.

B.  “Internal Marketing”
Focus: Gain a competitive advantage or maintain a competitive position by leveraging internal marketing initiatives

• Marketing Insight: New Views on Corporate Social Responsibility
• Marketing Insight: Business Ethic in Chinese Traditional Culture

Teaching Objectives
· To gain an understanding of how organization design can impact marketing.
· To understand the importance of communicating the marketing strategy to everyone who can be impacted or who has an impact on the marketing strategy (this entails basically every employee). 
· To understand the key role value chains play in the organization’s marketing strategy.

Discussion
Organization design
The text elaborates on different organization structures—functional, geographic, product, or brand management-based, matrix, marketing management corporate-divisional, and global. The key point to make is that there is no one correct organization design. Factors influencing the optimal design include: organization size, position in the marketplace, competitive activity, best practices, macroenvironmental forces, consumer buying patterns and changes to those patterns, complexity of the product or service, and degree of outsourcing (i.e. how many employees are under direct control of the organization as well as business functions).
Value chain partners
As organizations outsource noncore-competency functions in order to reduce cost and increase efficiencies, they become more reliant on their value chain partners. This is a good thing relative to cost and efficiency; however, it may be a liability relative to a marketing strategy. Here are several scenarios that may lead to interesting discussions:

Scenario 1. A consumer purchases an Internet service from a major communication company, the same company perhaps that has provided them good satisfaction for their home telephone service. Now this communication company has partnered with a firm that manufactures and supports the modem device used as part of the service. When service is interrupted, problem resolution may be an issue as the two organizations must be managed by the consumer. There is not a one-stop place for the consumer to go to for service. There is no sole owner of the customer.

Scenario 2. A consumer purchases an appliance form a major retailer. The retailer subcontracts the installation and maintenance service. The consumer takes off from work and the installer does not show or call. The bad experience is directed toward the retailer.
Scenario 3. A firm outsources its inbound telemarketing for customer service. They provide the telemarketing firm with hard standards to ensure compliance with procedures and consistency with consumer communication. However, the outsourcing employee has no buy-in to the organization’s marketing strategy of servicing the customer at all cost, i.e. “The customer is the king”.
Scenario 4. A software company that was about to release a new software product to its business customers arranged training for all of its employees. The training included an in-depth discussion of product features. A test was created and employees were required to take the test online via an intranet. Test scores of all employees, including all levels of management from executive on down, were posted on the intranet. This approach ensured complete employee participation as no one wanted to score low. The end result was that every employee had complete knowledge of the product and all human touch-points with the organization were well-versed when talking with the customer. The customer could call anyone within the organization and received the same qualified answers to his or her product questions.