5th Edition Focus on marketing decisions in the global environment g 5th Edition l o Global Marketing seeks to develop the different skills a marketing manager needs to b be successful when taking on the three-part tasks of foreign entry, local marketing, and global management. a global l Excellent examples and cases, many of which are drawn from the author’s rich international marketing experience, help you move from concept to application. m Updated and New Features in the 5th Edition: a The Effect of Technology and the Internet on Global Commerce r Coverage is introduced early in the text and then integrated throughout the k Foreign Entry, text where appropriate so students experience how technology affects global e Local Marketing & marketing. Revised coverage of e-commerce in Chapter 17 recognizes the amazing developments after the emergence of Web 2.0. t Global Management i The Global Marketing Strategy Revised Chapter 11: n This revised chapter is an extended version of the Global Segmentation and Positioning chapter in the fourth edition. The chapter still covers new research g M on global segmentation and positioning, but also adds new material on resource D allocation across products and markets. D A L I New Chapter 13: Global Branding Jo M h # The new Global Branding chapter extends the branding discussion in the previous n 98 y 3 edition, and adds new material on brand equity and on the added value that K 08 7 globality confers upon a brand. This chapter also introduces the concept of . 0 J 9 country branding. oh /12 a /0 ns 8 C s Y For more information and student resources, please visit the text Online Learning Center: o A n Johny K. Johansson N www.mhhe.com/johansson5e M A G Y E L B L K ISBN 978-0-07-338101-5 MHID 0-07-338101-2 90000 9 780073 381015 www.mhhe.com joh81012_fm_i-xix 9/17/08 04:19am Page i ntt 201:MHBR058:mhjoh4:joh4fm: Global Marketing joh81012_fm_i-xix 9/17/08 04:19am Page ii ntt 201:MHBR058:mhjoh4:joh4fm: joh81012_fm_i-xix 9/17/08 04:19am Page iii ntt 201:MHBR058:mhjoh4:joh4fm: Global Marketing Foreign Entry, Local Marketing, Fifth Edition & Global Management Johny K. Johansson Georgetown University Boston Burr Ridge, IL Dubuque, IA Madison, WI New York San Francisco St. Louis Bangkok Bogotá Caracas Kuala Lumpur Lisbon London Madrid Mexico City Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto joh81012_fm_i-xix 9/18/08 02:18am Page iv ntt 201:MHBR058:mhjoh4:joh4fm: GLOBAL MARKETING: FOREIGN ENTRY, LOCAL MARKETING, AND GLOBAL MANAGEMENT Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright © 2009, 2006, 2003, 2000, 1997 by The McGraw-Hill Companies, Inc. All rights reserved. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 QPD/QPD 0 9 8 ISBN 978-0-07-338101-5 MHID 0-07-338101-2 Vice president and editor-in-chief:Brent Gordon Publisher:Paul Ducham Managing developmental editor:Laura Hurst Spell Editorial assistant:Jane Beck Associate marketing manager:Dean Karampelas Lead project manager:Pat Frederickson Full service project manager:Meenakshi Venkat, Aptara, Inc. Lead production supervisor:Carol A. Bielski Designer:Matt Diamond Senior photo research coordinator:Jeremy Cheshareck Photo researcher:Ira C. Roberts Media project manager:Suresh Babu, Hurix Systems Pvt. Ltd. Typeface:10.5/12 Times New Roman Compositor:Aptara, Inc. Printer:Quebecor World Dubuque Inc. Library of Congress Cataloging-in-Publication Data Johansson, Johny K. Global marketing : foreign entry, local marketing, & global management / Johny K. Johansson.—5th ed. p. cm. Includes bibliographical references and index. ISBN-13: 978-0-07-338101-5 (alk. paper) ISBN-10: 0-07-338101-2 (alk. paper) 1. Export marketing. 2. Export marketing—Management. I. Title. HF1416.J63 2009 658.8'4—dc22 2008039034 www.mhhe.com joh81012_fm_i-xix 9/17/08 04:20am Page v ntt 201:MHBR058:mhjoh4:joh4fm: To my parents, Ruth and Nils Johansson joh81012_fm_i-xix 9/17/08 04:20am Page vi ntt 201:MHBR058:mhjoh4:joh4fm: joh81012_fm_i-xix 9/17/08 04:20am Page vii ntt 201:MHBR058:mhjoh4:joh4fm: About the Author Johny K. Johansson is the McCrane/Shaker Chairholder in International Business and Marketing in the McDonough School of Business at Georgetown University. An expert in the areas of international marketing strategy and consumer decision making, espe- cially as applied to Japanese and European companies and markets, Johansson has pub- lished over 70 academic articles and chapters in books. He is the author of In Your face: How American Marketing Excess Fuels Anti-Americanism, Financial Times/Prentice Hall, 2004, and (with Ikujiro Nonaka) of Relentless: The Japanese Way of Marketing, HarperBusiness, 1996. He has conducted numerous executive seminars in many coun- tries, including Japan, Germany, Sweden, Hong Kong, Thailand, and India. He has also been a consultant to companies in many countries, including General Electric, Marriott, and Xerox in the United States; Beiersdorft and Ford Werke AG in Germany; Volvo and Electrolux in Sweden; and Honda, Dentsu, and Fuji Film in Japan. Before joining Georgetown’s faculty, Professor Johansson held faculty positions at the University of Washington and the University of Illinois. He also has held many vis- iting appointments in several countries. He was the first Isetan Distinguished Visiting Professor at Keio Business School (Japan) and the first Ford Distinguished Visiting Professor at University of Cologne in Germany. He also has been a visiting professor at New York University, Dalhousie University (Canada), Stockholm School of Eco- nomics, the Catholic University of Leuven (Belgium), the National Defense Academy (Japan), and the International University of Japan. In 1988 he was a Phelps scholar at the University of Michigan. Professor Johansson earned Ph.D. and M.B.A. degrees from the University of Cali- fornia, Berkeley, and his undergraduate degree (Civilekonom) from the Stockholm School of Economics. A Swedish citizen, he lives in Georgetown, Washington, DC, with his wife, Tamiko, and their two daughters, Anna and Sonja. vii joh81012_fm_i-xix 9/17/08 04:20am Page viii ntt 201:MHBR058:mhjoh4:joh4fm: Preface Global marketing is one of the most exciting fields of business. With the emergence of China, India, Vietnam, Dubai, and other unlikely candidates for global pre-eminence, many people and many companies around the globe now believe in the basic soundness of globalization and free trade. Of course, there are clearly countries, companies, and people who have been shortchanged by the globalization process and who, not surpris- ingly, demand redress. While terrorism cannot—and, fortunately, is not—condoned by anybody sane, at least the antiglobalization activists are raising issues that the global marketer needs to pay attention to. But there are other challenges as well. Global marketing is very demanding profes- sionally. This goes for managing it or learning about it, and also for teaching it. It re- quires not only a good grasp of marketing principles and an understanding of the global environment, but also how the two interact—that is, how the environment im- pacts the applicability of the marketing principles. Good marketing might be good marketing everywhere—but this does not mean it is necessarily the same. The challenge when writing a text in global marketing is how to avoid being over- whelmed by all the curious and amazing differences in the marketing environment in foreign countries. These differences make things fun and enjoyable—but also frustrat- ing, since after a while it is difficult to see if any progress has been made. It is hard to see the forest for the trees. The key is to focus on the marketing decisions that have to be made—and then deal with those environmental factors that directly impact those de- cisions. This is the approach taken in this text. It discusses the complexities of global marketing and clarifies the managerial roles involved, without getting bogged down by the many environmental issues that are only marginally relevant. Key Features When compared to other texts on the subject, Global Marketing still has three main distinguishing features: 1. There are no introductory chapters on “the international environment” of politics, finance, legal issues, and economic regions. With the exception of culture, the book covers the environmental variables on an “as needed” basis, in the various chapters. 2. As opposed to the traditional view of one “marketing manager,” the typical global marketing manager’s job consists of three separate tasks: foreign entry, local mar- keting, and global management. Each requires different skills, as we will see. Our metaphor is that the marketer wears “three hats,” sometimes successively. In foreign entry, in global management, and to a large extent even as a local marketer in a for- eign country, the global marketer needs skills that the home market experience—or the standard marketing text—has rarely taught. The recognition of the three roles helps dispel the notion that “there is no such thing as international or global mar- keting, only marketing.” This sentiment has some truth to it, but mainly in the local marketing portion of the job. 3. The material is based on a foundation of strategy and the theory of the multinational firm—for the most practical of reasons, because the theory helps the marketing manager understand what drives the company expansion abroad and how and when to adapt the various marketing functions involved to local conditions. At the same time, much of the excellent research and tried-and-true teaching ma- terial that global marketers in business and academe have contributed over the years is reflected in the chapters and in the several cases that can be found at the end of each major section. My intent has been to retain and update much of the teaching and instructional material that has made global marketing such an exciting class in many business schools—and made for the start of an exciting managerial career—and to viii joh81012_fm_i-xix 9/17/08 04:20am Page ix ntt 201:MHBR058:mhjoh4:joh4fm: Preface ix fit the material into a structure that reflects the global marketing management tasks. I have focused on material that is timely and up-to-date, and relevant to the global context. Target Audience and Possible Courses Global Marketing is aimed at the executive, the MBA student, or the senior under- graduate, none of whom is completely new to marketing or to the global environment. I have in mind a reader who is familiar with the basic marketing principles, and who has had some exposure to the international environment and the thrust toward a global economy. I have avoided unnecessarily complicated jargon—the global marketing job is inherently complex, and any opportunity to “keep it simple” has been capitalized on. The three-way partition of the book makes it possible to construct several alterna- tive course outlines from the book. • A complete course on “Global Marketing,” possibly using additional cases, is the “full-course” treatment. • A shorter “Global Marketing Management” course, perhaps for executives, could go straight from the fundamentals in the first three chapters to Part Four, “Global Man- agement,” starting with Chapter 11. This is one approach I have used at Georgetown. • An “International Marketing” course could focus on local marketing and global management, Parts Three and Four. • An “Export Marketing” course could select the foreign entry chapters from Part Two, and then do the local marketing chapters in Part Three plus the pricing and dis- tribution chapters in Part Four, “Global Management.” • At Georgetown I have also used the text in a second-year MBA class titled “Foreign Market Development,” for which I assign Parts Two and Three on foreign entry and local marketing, and then only the first three chapters of Part Four, “Global Management.” New to the Fifth Edition The fifth edition keeps the original structure (Foreign Entry, Local Marketing, Global Management) that has proved successful and popular among users. But based upon user and reviewer feedback, several changes have been introduced in order to make the text more relevant, useful, and up-to-date. The five major changes are: 1. There is a new chapter on “Global Branding” (Chapter 13). This chapter extends the branding discussion in the previous edition, and adds new material on brand equity and on the added value that “globality” confers upon a brand. It also introduces the concept of country branding. 2. The “Global Marketing Strategy” chapter (Chapter 11), leading off Part Four on “Global Management,” is a revised and updated version of the “Global Segmenta- tion and Positioning” chapter in the fourth edition. The chapter still covers new re- search on global segmentation and positioning, but adds new material on resource allocation across products and markets. 3. The “Global Product” and “Global Services” chapters have been consolidated into Chapter 12, made possible by breaking out “Global Brands” into its own chapter. This means the fifth edition has the same number of chapters as the fourth. 4. The region-specific chapters in Part Three on “Local Marketing”—mature markets in Chapter 8, new growth markets in Chapter 9, and emerging markets in Chapter 10—have been updated, taking into account not only economic developments such as China’s and India’s emergence as major players, but also the new Russia, Vietnam, and the Middle East.