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In Memoriam:
Warren J. Keegan 19362014
MCG
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Mark C. Green
Simpson College
Warren J. Keegan
Late, Pace University
GLOBAL
MARKETING
TENTH EDITION
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ISBN 10: 0-13-489975-X
ISBN 13: 978-0-13-489975-6
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Library of Congress Cataloging-in-Publication Data
Library of Congress Cataloging-in-Publication Data
Names: Keegan, Warren J., author. | Green, Mark C., author.
Title: Global marketing / Warren J. Keegan, Lubin Graduate School of
Business, Pace University, New York City and Westchester, New York, Mark
C. Green, Department of Business Administration and Economics, Simpson
College, Indianola, Iowa.
Description: Tenth edition. | Hoboken : Pearson Education, [2020]
Identifiers: LCCN 2018045759| ISBN 9780134899756 | ISBN 013489975X
Subjects: LCSH: Export marketing.
Classification: LCC HF1416 .K443 2020 | DDC 658.8/4–dc23 LC record available at https://lccn.loc.gov/2018045759
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v
Brief Contents
Preface xvi
Acknowledgments xx
PART ONE INTRODUCTION 2
Chapter 1 Introduction to Global Marketing 2
PART TWO THE GLOBAL MARKETING ENVIRONMENT 40
Chapter 2 The Global Economic Environment 40
Chapter 3 The Global Trade Environment 72
Chapter 4 Social and Cultural Environments 106
Chapter 5 The Political, Legal, and Regulatory Environments 138
PART THREE APPROACHING GLOBAL MARKETS 174
Chapter 6 Global Information Systems and Market Research 174
Chapter 7 Segmentation, Targeting, and Positioning 212
Chapter 8 Importing, Exporting, and Sourcing 246
Chapter 9 Global Market-Entry Strategies: Licensing, Investment, and
Strategic Alliances 276
PART FOUR THE GLOBAL MARKETING MIX 306
Chapter 10 Brand and Product Decisions in Global Marketing 306
Chapter 11 Pricing Decisions 340
Chapter 12 Global Marketing Channels and Physical Distribution 376
Chapter 13 Global Marketing Communications Decisions I 412
Chapter 14 Global Marketing Communications Decisions II 444
Chapter 15 Global Marketing and the Digital Revolution 478
PART FIVE STRATEGY AND LEADERSHIP IN THE TWENTY-FIRST
CENTURY 510
Chapter 16 Strategic Elements of Competitive Advantage 510
Chapter 17 Leadership, Organization, and Corporate Social
Responsibility 542
Glossary 573
Author/Name Index 587
Subject/Organization Index 597
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vii
Preface xvi
Acknowledgments xx
PART ONE INTRODUCTION 2
Chapter 1 Introduction to Global Marketing 2
Case 1-1 The Global Marketplace Is Also Local 2
1-1 Introduction and Overview 3
1-2 Principles of Marketing: A Review 5
Competitive Advantage, Globalization, and Global Industries 6
1-3 Global Marketing: What it is and What it isnt 9
1-4 The Importance of Global Marketing 16
1-5 Management Orientations 17
Ethnocentric Orientation 17
Polycentric Orientation 18
Regiocentric Orientation 18
Geocentric Orientation 18
1-6 Forces Affecting Global Integration and Global Marketing 21
Driving Forces 21
MULTILATERAL TRADE AGREEMENTS 21
CONVERGING MARKET NEEDS AND WANTS AND THE INFORMATION REVOLUTION 21
TRANSPORTATION AND COMMUNICATION IMPROVEMENTS 22
PRODUCT DEVELOPMENT COSTS 22
QUALITY 23
WORLD ECONOMIC TRENDS 23
LEVERAGE 24
Experience Transfers 24
Scale Economies 24
RESOURCE UTILIZATION 25
GLOBAL STRATEGY 25
INNOVATION AND ENTREPRENEURSHIP 25
Restraining Forces 26
MANAGEMENT MYOPIA AND ORGANIZATIONAL CULTURE 26
NATIONAL CONTROLS 26
OPPOSITION TO GLOBALIZATION 26
1-7 Outline of This Book 27
Summary 28
Discussion Questions 29
Case 1-1 The Global Marketplace (continued) 30
Case 1-2 McDonalds Expands Globally While Adjusting Its Local Recipe 31
Case 1-3 Apple versus Samsung: The Battle for Smartphone
Supremacy Heats Up 35
PART TWO THE GLOBAL MARKETING ENVIRONMENT 40
Chapter 2 The Global Economic Environment 40
Case 2-1 Indias Economy at the Crossroads: Can Prime Minister Narendra Modi Deliver
Acche Din? 40
2-1 The World EconomyOverview of Major Changes 41
2-2 Economic Systems 43
Contents
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viii CONTENTS
Market Capitalism 44
Centrally Planned Socialism 44
Centrally Planned Capitalism and Market Socialism 45
2-3 Stages of Market Development 48
Low-Income Countries 49
Lower-Middle-Income Countries 50
Upper-Middle-Income Countries 51
Marketing Opportunities in LDCs and Developing Countries 54
High-Income Countries 57
Marketing Implications of the Stages of Development 58
2-4 Balance of Payments 59
2-5 Trade in Merchandise and Services 61
Overview of International Finance 62
Economic Exposure 64
Managing Exchange Rate Exposure 64
Summary 65
Discussion Questions 66
Case 2-1 Indias Economy at the Crossroads: Can Prime Minister Narendra Modi Deliver
Acche Din? (continued) 67
Case 2-2 A Day in the Life of a Contracts Analyst at Cargill 69
Chapter 3 The Global Trade Environment 72
Case 3-1 Breaking Up Is Hard to Do: Britons Contemplate Brexit 72
3-1 The World Trade Organization and Gatt 73
3-2 Preferential Trade Agreements 74
Free Trade Area 75
Customs Union 76
Common Market 76
Economic Union 76
3-3 North America 77
3-4 Latin America: Sica, Andean Community, Mercosur, and Caricom 80
Central American Integration System 80
Andean Community 82
Common Market of the South (Mercosur) 84
Caribbean Community and Common Market (CARICOM) 85
3-5 Asia-Pacific: The Association of Southeast Asian Nations 87
Marketing Issues in the Asia-Pacific Region 88
3-6 Western, Central, and Eastern Europe 89
The European Union 89
Marketing Issues in the EU 93
Central and Eastern Europe 94
3-7 The Middle East 94
Cooperation Council for the Arab States of the Gulf 95
Marketing Issues in the Middle East 96
3-8 Africa 97
Economic Community of West African States 97
East African Community 97
Southern African Development Community 98
Marketing Issues in Africa 98
Summary 99
Discussion Questions 99
Case 3-1 Breaking Up Is Hard to Do: Britons Contemplate Brexit (continued) 101
Case 3-2 Can Global Trade Talks Survive in an Era of Populism and Protectionism? 103
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CONTENTS ix
Chapter 4 Social and Cultural Environments 106
Case 4-1 Strange Brew: Coffee Culture Around the World 106
4-1 Society, Culture, and Global Consumer Culture 107
Attitudes, Beliefs, and Values 108
Religion 109
Aesthetics 110
Dietary Preferences 111
Language and Communication 112
Marketings Impact on Culture 117
4-2 High- and Low-Context Cultures 118
4-3 Hofstedes Cultural Typology 119
4-4 The Self-Reference Criterion and Perception 121
4-5 Diffusion Theory 124
The Adoption Process 124
Characteristics of Innovations 124
Adopter Categories 125
Diffusion of Innovations in Pacific Rim Countries 126
4-6 Marketing Implications of Social and Cultural Environments 126
Summary 128
Discussion Questions 129
Case 4-1 Coffee Culture Around the World (continued) 129
Case 4-2 Is Tourism the Savior or the Scourge of Venice? 133
Chapter 5 The Political, Legal, and Regulatory Environments 138
Case 5-1 Travis Kalanick and Uber 138
5-1 The Political Environment 139
Nation-States and Sovereignty 140
Political Risk 142
Taxes 143
Seizure of Assets 145
5-2 International Law 145
Common Law versus Civil Law 147
Islamic Law 148
5-3 Sidestepping Legal Problems: Important Business Issues 148
Jurisdiction 149
Intellectual Property: Patents, Trademarks, and Copyrights 149
Antitrust 155
Licensing and Trade Secrets 159
Bribery and Corruption: Legal and Ethical Issues 160
5-4 Conflict Resolution, Dispute Settlement, and Litigation 162
Alternatives to Litigation for Dispute Settlement 163
5-5 The Regulatory Environment 164
Regional Economic Organizations: The EU Example 165
Summary 167
Discussion Questions 167
Case 5-1 Travis Kalanick and Uber (continued) 168
Case 5-2 Putins Russia versus the West: Cold War 2.0? 170
PART THREE APPROACHING GLOBAL MARKETS 174
Chapter 6 Global Information Systems and Market Research 174
Case 6-1 Big Data: Number One with a Bullet in the Music Industry 174
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x CONTENTS
6-1 Information Technology, Management Information Systems,
and Big Data for Global Marketing 176
6-2 Sources of Market Information 181
6-3 Formal Market Research 183
Step 1: Information Requirements 183
Step 2: Problem Definition 184
Step 3: Choosing the Unit of Analysis 185
Step 4: Examining Data Availability 185
Step 5: Assessing the Value of Research 187
Step 6: Research Design 187
ISSUES IN DATA COLLECTION 188
RESEARCH METHODOLOGIES 189
SCALE DEVELOPMENT 194
SAMPLING 194
Step 7: Data Analysis 194
COMPARATIVE ANALYSIS AND MARKET ESTIMATION BY ANALOGY 198
Step 8: Interpretation and Presentation 199
6-4 Headquarters Control of Market Research 200
6-5 The Marketing Information System as a Strategic Asset 201
Summary 202
Discussion Questions 202
Case 6-1 Big Data Transforms the Music Business and Artist Careers (continued) 203
Case 6-2 A Day in the Life of a Business Systems and Analytics Manager 207
Chapter 7 Segmentation, Targeting, and Positioning 212
Case 7-1 Segmenting the Chinese Luxury Goods Market 212
7-1 Global Market Segmentation 213
Contrasting Views of Global Segmentation 214
Demographic Segmentation 215
SEGMENTING GLOBAL MARKETS BY INCOME AND POPULATION 216
AGE SEGMENTATION 220
GENDER SEGMENTATION 221
Psychographic Segmentation 221
Behavior Segmentation 224
Benefit Segmentation 224
Ethnic Segmentation 225
7-2 Assessing Market Potential and Choosing Target Markets or
Segments 226
Current Segment Size and Growth Potential 226
Potential Competition 228
Feasibility and Compatibility 229
A Framework for Selecting Target Markets 230
7-3 ProductMarket Decisions 231
7-4 Targeting and Target Market Strategy Options 233
Standardized Global Marketing 233
Concentrated Global Marketing 234
Differentiated Global Marketing 235
7-5 Positioning 236
Attribute or Benefit 236
Quality and Price 236
Use or User 237
Competition 237
Global, Foreign, and Local Consumer Culture Positioning 237
Summary 240
Discussion Questions 240
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CONTENTS xi
Case 7-1 Segmenting the Chinese Luxury Goods Market (continued) 241
Case 7-2 Cosmetics Giants Segment the Global Health and Beauty Market 243
Chapter 8 Importing, Exporting, and Sourcing 246
Case 8-1 The Games Afoot: Exports Revive Britains Shoe Industry 246
8-1 Export Selling and Export Marketing: A Comparison 247
8-2 Organizational Export Activities 249
8-3 National Policies Governing Exports and Imports 250
Government Programs That Support Exports 250
Governmental Actions to Discourage Imports and Block Market Access 252
8-4 Tariff Systems 257
Customs Duties 259
Other Duties and Import Charges 259
8-5 Key Export Participants 260
8-6 Organizing for Exporting in the Manufacturers Country 261
8-7 Organizing for Exporting in the Market Country 262
8-8 Trade Financing and Methods of Payment 262
Letters of Credit 263
Documentary Collections (Sight or Time Drafts) 264
Navigating the Real World: A Brief Case Study 264
Navigating the Real World: Another Brief Case Study 265
Additional Export and Import Issues 265
8-9 Sourcing 266
Management Vision 267
Factor Costs and Conditions 268
Customer Needs 269
Logistics 269
Country Infrastructure 269
Political Factors 270
Foreign Exchange Rates 270
Summary 270
Discussion Questions 271
Case 8-1 Great Britains Shoe Export Boom (continued) 271
Case 8-2 A Day in the Life of an Export Coordinator 273
Chapter 9 Global Market-Entry Strategies: Licensing, Investment,
and Strategic Alliances 276
Case 9-1 AB InBev and SABMiller: A Match Made in (Beer) Heaven? 276
9-1 Licensing 278
Special Licensing Arrangements 280
9-2 Investment 281
Joint Ventures 283
Investment via Equity Stake or Full Ownership 284
9-3 Global Strategic Partnerships 288
The Nature of Global Strategic Partnerships 288
Success Factors 291
Alliances with Asian Competitors 291
CFM International, GE, and Snecma: A Success Story 292
Boeing and Japan: A Controversy 292
9-4 International Partnerships in Developing Countries 293
9-5 Cooperative Strategies in Asia 294
Cooperative Strategies in Japan: Keiretsu 294
HOW KEIRETSU AFFECT AMERICAN BUSINESS: TWO EXAMPLES 295
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xii CONTENTS
Cooperative Strategies in South Korea: Chaebol 296
9-6 Twenty-First-Century Cooperative Strategies 297
9-7 Market Expansion Strategies 298
Summary 298
Discussion Questions 299
Case 9-1 AB InBev and SABMiller: A Match Made in (Beer) Heaven? (continued) 300
Case 9-2 Jaguars Passage to India 302
PART FOUR THE GLOBAL MARKETING MIX 306
Chapter 10 Brand and Product Decisions in Global Marketing 306
Case 10-1 Alphabet 306
10-1 Basic Product Concepts 307
Product Types 308
Product Warranties 308
Packaging 308
Labeling 309
Aesthetics 310
10-2 Basic Branding Concepts 310
Local Products and Brands 311
International Products and Brands 312
Global Products and Brands 312
Global Brand Development 315
10-3 A Needs-Based Approach To Product Planning 319
10-4 Country of Origin as a Brand Element 322
10-5 Extend, Adapt, Create: Strategic Alternatives in Global Marketing 324
Strategy 1: Product-Communication Extension (Dual Extension) 325
Strategy 2: Product ExtensionCommunication Adaptation 326
Strategy 3: Product AdaptationCommunication Extension 327
Strategy 4: Product-Communication Adaptation (Dual Adaptation) 328
Strategy 5: Innovation 329
How to Choose a Strategy 329
10-6 New Products in Global Marketing 330
Identifying New-Product Ideas 330
New-Product Development 331
The International New-Product Department 333
Testing New Products 333
Summary 334
Discussion Questions 335
Case 10-1 Google (continued) 335
Chapter 11 Pricing Decisions 340
Case 11-1 Global Automakers Target Low-Income Consumers 340
11-1 Basic Pricing Concepts 341
11-2 Global Pricing Objectives and Strategies 342
Market Skimming and Financial Objectives 342
Penetration Pricing and Nonfinancial Objectives 344
Companion Products: Captive (Razors and Blades) Pricing 344
Target Costing 345
Calculating Prices: Cost-Plus Pricing and Export Price Escalation 346
11-3 Incoterms 347
11-4 Environmental Influences on Pricing Decisions 351
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CONTENTS xiii
Currency Fluctuations 351
Inflationary Environment 354
Government Controls, Subsidies, and Regulations 355
Competitive Behavior 356
Using Sourcing as a Strategic Pricing Tool 357
11-5 Global Pricing: Three Policy Alternatives 357
Extension or Ethnocentric Pricing 357
Adaptation or Polycentric Pricing 358
Geocentric Pricing 358
11-6 Gray Market Goods 359
11-7 Dumping 360
11-8 Price Fixing 361
11-9 Transfer Pricing 362
Tax Regulations and Transfer Prices 362
Sales of Tangible and Intangible Property 363
11-10 Countertrade 364
Barter 364
Counterpurchase 365
Offset 365
Compensation Trading 365
Switch Trading 366
Summary 366
Discussion Questions 367
Case 11-1 Global Automakers Target Low-Income Consumers (continued) 367
Case 11-2 Global Consumer-Products Companies Target Low-Income Consumers 369
Case 11-3 LVMH and Luxury Goods Marketing 371
Chapter 12 Global Marketing Channels and Physical Distribution 376
Case 12-1 Welcome to the World of Fast Fashion 376
12-1 Distribution Channels: Objectives, Terminology, and
Structure 377
Consumer Products and Services 378
Industrial Products 382
12-2 Establishing Channels and Working With Channel
Intermediaries 383
12-3 Global Retailing 386
Types of Retail Operations 387
Trends in Global Retailing 391
Global Retailing Market Expansion Strategies 394
12-4 Physical Distribution, Supply Chains, and Logistics
Management 397
Order Processing 399
Warehousing 400
Inventory Management 400
Transportation 400
Logistics Management: A Brief Case Study 403
Summary 403
Discussion Questions 404
Case 12-1 Welcome to the World of Fast Fashion (continued) 405
Case 12-2 Can Walmart Crack the Retail Code in India? 408
Chapter 13 Global Marketing Communications Decisions I 412
Case 13-1 Volkswagens Dieselgate Nightmare 412
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xiv CONTENTS
13-1 Global Advertising 413
Global Advertising Content: Standardization versus Adaptation 415
13-2 Advertising Agencies: Organizations and Brands 419
Selecting an Advertising Agency in the Era of Digital Disruption 420
13-3 Creating Global Advertising 424
Art Direction and Art Directors 425
Copy and Copywriters 426
Additional Cultural Considerations 426
13-4 Global Media Decisions 429
Global Advertising Expenditures and Media Vehicles 430
Media Decisions 430
13-5 Public Relations and Publicity 431
The Growing Role of PR in Global Marketing Communications 435
How PR Practices Differ Around the World 436
Summary 437
Discussion Questions 437
Case 13-1 Volkswagens Dieselgate Nightmare (continued) 438
Case 13-2 Coca-Cola: Using Advertising and Public Relations to Respond to a Changing
World 440
Chapter 14 Global Marketing Communications Decisions II 444
Case 14-1 Milan Expo 2015 444
14-1 Sales Promotion 446
Sampling 448
Couponing 449
Sales Promotion: Issues and Problems 450
14-2 Personal Selling 451
The Strategic/Consultative Selling Model 453
14-3 Sales Force Nationality 457
14-4 Special Forms of Marketing Communications: Direct Marketing 460
Direct Mail 461
Catalogs 461
Infomercials, Teleshopping, and Interactive Television 463
14-5 Special Forms of Marketing Communications: Support Media,
Sponsorship, and Product Placement 464
Support Media 464
Sponsorship 466
Product Placement: Motion Pictures, Television Shows, and Public Figures 468
Summary 470
Discussion Questions 471
Case 14-1 Milan Expo 2015 (continued) 472
Case 14-2 Red Bull 474
Chapter 15 Global Marketing and the Digital Revolution 478
Case 15-1 How Do You Like Your Reality? Virtual? Augmented? Mixed? 478
15-1 The Digital Revolution: A Brief History 479
15-2 Convergence 483
15-3 Value Networks and Disruptive Technologies 484
15-4 Global E-Commerce 487
15-5 Web Site Design and Implementation 490
15-6 New Products and Services 492
Broadband 492
Cloud Computing 494
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CONTENTS xv
Smartphones 494
Mobile Advertising and Mobile Commerce 494
Autonomous Mobility 497
Mobile Music 498
Mobile Gaming 498
Online Gaming and e-Sports 499
Mobile Payments 499
Streaming Video 500
Internet Phone Service 500
Digital Books and Electronic Reading Devices 500
Wearables 501
Summary 502
Discussion Questions 503
Case 15-1 How Do You Like Your Reality: Virtual? Augmented? Mixed? (continued) 504
Case 15-2 Africa 3.0 506
PART FIVE STRATEGY AND LEADERSHIP IN THE TWENTY-FIRST
CENTURY 510
Chapter 16 Strategic Elements of Competitive Advantage 510
Case 16-1 IKEA 510
16-1 Industry Analysis: Forces Influencing Competition 511
Threat of New Entrants 512
Threat of Substitute Products 513
Bargaining Power of Buyers 513
Bargaining Power of Suppliers 514
Rivalry among Competitors 514
16-2 Competitive Advantage 515
Generic Strategies for Creating Competitive Advantage 515
BROAD MARKET STRATEGIES: COST LEADERSHIP AND DIFFERENTIATION 515
NARROW TARGET STRATEGIES: COST FOCUS AND FOCUSED DIFFERENTIATION 517
Creating Competitive Advantage via Strategic Intent 519
LAYERS OF ADVANTAGE 519
LOOSE BRICKS 520
CHANGING THE RULES 520
COLLABORATING 521
16-3 Global Competition and National Competitive Advantage 521
Factor Conditions 522
HUMAN RESOURCES 522
PHYSICAL RESOURCES 522
KNOWLEDGE RESOURCES 522
CAPITAL RESOURCES 523
INFRASTRUCTURE RESOURCES 523
Demand Conditions 523
COMPOSITION OF HOME DEMAND 525
SIZE AND PATTERN OF GROWTH OF HOME DEMAND 525
RAPID HOME-MARKET GROWTH 525
MEANS BY WHICH A NATIONS PRODUCTS AND SERVICES ARE PUSHED OR PULLED INTO
FOREIGN COUNTRIES 525
Related and Supporting Industries 525
Firm Strategy, Structure, and Rivalry 526
Chance 526
Government 527
16-4 Current Issues in Competitive Advantage 527
Hypercompetitive Industries 527
COST AND QUALITY 529
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xvi CONTENTS
TIMING AND KNOW-HOW 529
ENTRY BARRIERS 531
The Flagship Firm: The Business Network with Five Partners 532
Blue Ocean Strategy 533
Additional Research on Competitive Advantage 534
Summary 535
Discussion Questions 535
Case 16-1 IKEA (continued) 536
Case 16-2 Everything Is Awesome, Everything Is Cool at LEGO 538
Chapter 17 Leadership, Organization, and Corporate Social
Responsibility 542
Case 17-1 A Changing of the Guard at Unilever 542
17-1 Leadership 543
Top Management Nationality 544
Leadership and Core Competence 546
17-2 Organizing For Global Marketing 547
Patterns of International Organizational Development 550
INTERNATIONAL DIVISION STRUCTURE 550
REGIONAL MANAGEMENT CENTERS 552
GEOGRAPHIC AND PRODUCT DIVISION STRUCTURES 554
THE MATRIX DESIGN 555
17-3 Lean Production: Organizing The Japanese Way 558
Assembler Value Chains 558
Downstream Value Chains 559
17-4 Ethics, Corporate Social Responsibility, and Social Responsiveness in the
Globalization Era 560
Summary 566
Discussion Questions 567
Case 17-1 Unilever (continued) 567
Glossary 573
Author/Name Index 587
Subject/Organization Index 597
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xvii
We are proud that this Tenth Edition of Global Marketing marks more than two decades of pub-
lication success. In this new edition, as in prior editions, we take an environmental and strategic
approach to global marketing by outlining the major dimensions of the global business environ-
ment. We also provide a set of conceptual and analytical tools that prepare students to success-
fully apply the 4Ps when pursuing careers in global marketing or related areas.
Guided by our experience using the text in undergraduate and graduate classrooms and in
corporate training seminars, we have revised, updated, and expanded Global Marketing. One
of our challenges in developing a new edition of Global Marketing is the rate of change in the
global business environment. Yesterdays impossibility becomes todays reality; new companies
explode onto the scene; company leadership changes abruptly. In short, any book can be quickly
outdated by events. Even so, we set out to create a compelling narrative that captures the unfold-
ing drama that is in inherent in marketing in the globalization era.
When Principles of Global Marketing first appeared in 1996, we invited readers to look
ahead to such developments as the ending of Americas trade embargo with Vietnam, Europes
new single market, Daimler AGs Smart car, Volkswagens global ambitions, and Whirlpools
expansion into emerging markets. This newly revised edition also surveys important current
developments in the international arena, including Britains tortuous path towards Brexit,
Chinas ascendance on the world stage, evolving trade relations in the Trump era, achievements
by entrepreneurs such as Elon Musk, plus much more.
We are passionate about the subject of global marketing; if our readers detect a note of
enthusiasm in our writing, then we have been successful. Our goal for all ten editions has been
the same: to write a book that is authoritative in content yet relaxed and assured in style and
tone. One instructor using the Ninth Edition wrote us to say, I love the text, and really like
the way it engages students. That is invaluable. We believe that you will find latest edition of
Global Marketing to be the most engaging, up-to-date, relevant, useful text of its kind.
We recommend pairing the Tenth Edition with Pearsons MyLab Marketing. MyLab Mar-
keting is a teaching and learning platform that empowers you to reach every student. By combin-
ing content from Global Marketing with digital tools and a flexible platform, MyLab Marketing
personalizes the learning experience and will help your students learn and retain key course
concepts while developing skills that future employers are seeking in their candidates.
Preface
ChAPTER 1 INTRODUCTION TO GlObAl MARkETING 35
Exhibit 1-14 Apple cofounder Steve Jobs wore many hats during his illustri-
ous career, including inventor, entrepreneur, CEO, and visionary technolo-
gist. He was also a master showman, a storyteller, and marketing genius.
His appearances at product launches are the stuff of legend, and under his
guidance Apples must-have productsincluding the iPod, the iPhone, and the
iPadwere, simply put, the epitome of cool.
Source: Paul Sakuma/AP Images.
CASE 1-3
Apple versus Samsung: The Battle for Smartphone
Supremacy Heats Up
When Steve Jobs died in October 2011, the world lost one of the towering figures of the modern business era (see Exhibit 1-14).
Apple, the company Jobs cofounded, was a pioneer in the consumer
electronics world; its key product introductions included the Apple II
(1977), the Macintosh (1984), the iPod and iTunes (2001), the Apple
Store (2001), the iPhone (2007), and the iPad (2009). At the time of
Jobss death, Apple was the most valuable tech company in the world.
By September 2012, Apple stock had soared to record levels, with
its price briefly rising above $700 per share. In addition, Apple had
amassed more than $100 billion in cash, most of it held abroad as
foreign earnings. Meanwhile, once-dominant tech industry giants such
as Nokia, Sony, Dell, and BlackBerry were struggling.
Despite strong 2012 sales for the iPhone 5, industry observers
began to wonder whether Apples hot streak of hit product introduc-
tions was starting to cool. Apples reputation was based on its proven
ability to disrupt existing markets (e.g., the music and telecommunica-
tions industries) and to create new markets through the introduction
of technical and design innovations. However, some viewed the 2012
launch of the iPhone 5 as an evolutionary step rather than a revolution-
ary breakthrough. In fact, many consumers opted to buy the slower,
cheaper iPhone 4 or 4S rather than upgrade to the iPhone 5. Without
Jobs, who was considered by many to be the heart and soul of the
company, were Apples best days behind it?
The Competitive Threat
As growth in the key smartphone sector began to slow, Apples most
formidable competitor was Samsung Electronics, a division of Korean
industrial giant Samsung Group, whose products range from semicon-
ductors to household appliances to smartphones. Samsungs popular
Galaxy series of phones are powered by Android, an operating system
developed by Google. Some Galaxy models, including the Galaxy Note
(also known as a phablet), have larger screens than the iPhonea
point of difference that has helped drive sales of those devices. The
rivalry between Apple and Samsung has been heated, with the two
sides squaring off in court over alleged patent infringement.
China and Europe are two of Samsungs key markets; in 2012,
the company launched the Galaxy S III in Europe. In 2013, however,
Samsung staged a lavish event at Radio City Music Hall in New York to
launch the Galaxy S4. Why the change? As J. K. Shin, the executive in
charge of Samsungs mobile business, noted, Were a global player in
the smartphone market and a global company, and the U.S. is an impor-
tant market for us. . . . Im not satisfied with our U.S. market share.
In many developing countries, there is strong demand for inexpen-
sive mobile phones. Some Android-based models from Samsung and
other companies sell for much less than Apples cheapest models. For
many years, Apple did not offer a lower-cost version of the iPhone. In
the United States, wireless carriers such as Verizon and AT&T subsidized
the price of the iPhone for consumers who signed multiyear service
contractsa factor that explained why an American iPhone 5 sold for
$199. By contrast, in other countries consumers paid the full, unsubsi-
dized price of the iPhone but were not tied to a contract. Moreover, the
iPhone 5 was the same in every world market. By contrast, Samsung
made several versions of the Galaxy S4using different processors, for
exampleto suit the needs of different regions.
Not surprisingly, smartphone makers are setting their sights on
China, India, and other emerging markets. For example, Greater China,
which includes China, Hong Kong, and Taiwan, is now Apples second-
largest market. In 2013, Cook announced that China Mobile, the larg-
est carrier in the region and the worlds largest carrier overall, would
begin selling the iPhone. Apple faces strong competition from local
competitors such as Oppo and Xiaomi; Oppos R9 bested the iPhone
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