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Global Marketing Management, 7th Edition

Global Marketing Management, 7th Edition

Masaaki (Mike) Kotabe, Kristiaan Helsen

ISBN: 978-1-119-29884-7

Dec 2016

698 pages

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The 7th Edition of Global Marketing Management prepares students to become effective managers overseeing global marketing activities in an increasingly competitive environment. The text’s guiding principle, as laid out concisely and methodically by authors Kotabe and Helsen, is that the realities of international marketing are more “multilateral.”

Suitable for all business majors, the text encourages students to learn how marketing managers work across business functions for effective corporate performance on a global basis and achievement of overall corporate goals. Global Marketing Management brings timely coverage in various economic and financial as well as marketing issues that arise from the acutely recessionary market environment.

Related Resources


Why Global Marketing Is Imperative 3

Globalization of Markets: Convergence and Divergence 10

International Trade versus International Business 13

Who Manages International Trade? 14

Evolution of Global Marketing 15

What Is Marketing? 15

Domestic Marketing 16

Export Marketing 18

International Marketing 18

Multinational Marketing 19

Global Marketing 20

The Impact of Economic Geography and Climate on Global Marketing 21

Summary 23

Key Terms 23

Review Questions 24

Discussion Questions 24

Further Reading 24

Appendix: Theories of International Trade and the Multinational Enterprise 25

Summary 31

Key Terms 31

Case 1-1: Understanding the Local Customs and Preferences: A Lesson Learned from Best Buy Pullout of the Chinese Market

Case 1-2: Keeping with the Times — McDonald’s, I’m Lovin’ It!

Available online at


Intertwined World Economy 34

Foreign Direct Investment 36

Portfolio Investment 37

Country Competitiveness 39

Changing Country Competitiveness 39

Human Resources and Technology 39

Emerging Economies 41

Evolution of Cooperative Global Trade Agreements 43

General Agreements on Tariffs and Trade 43

World Trade Organization 44

Information Technology and the Changing Nature of Competition 49

Value of Intellectual Property in Information Age 50

Proliferation of E-Commerce and Regulations 51

Regional Economic Arrangements 52

Free Trade Area 53

Customs Union 55

Common Market 55

Monetary Union 55

Political Union 56

Multinational Corporations 56

Summary 58

Key Terms 58

Review Questions 58

Discussion Questions 59

Further Reading 60

Case 2-1: Brazil, Mexico, and the Car War

Case 2-2: Boeing versus Airbus? Or the United States versus the EU? Let the WTO Decide!

Available online at


Historical Role of the U.S. Dollar 62

Development of Today’s International Monetary System 63

The Bretton Woods Conference 63

The International Monetary Fund 64

The International Bank for Reconstruction and Development 65

Fixed versus Floating Exchange Rates 66

Currency Blocs 66

Foreign Exchange and Foreign Exchange Rates 68

Purchasing Power Parity 68

Forecasting Exchange Rate Fluctuation 69

Coping with Exchange Rate Fluctuations 70

Spot versus Forward Foreign Exchange 72

Exchange Rate Pass-Through 73

Balance of Payments 75

The Internal and External Adjustments 78

Economic and Financial Turmoil around the World 79

Asian Financial Crisis and Its Aftermath 79

The South American Financial Crisis and Its Aftermath 80

The U.S. Subprime Mortgage Loan Crisis and the Subsequent Global Financial Crisis 80

Financial Crises in Perspective 81

Responses to the Regional Financial Crises 82

Marketing in the Euro Area 85

Historical Background 85

Ramifications of the Euro for Marketers 88

Summary 90

Key Terms 91

Review Questions 91

Discussion Questions 91

Further Reading 92

Case 3-1: Samsung’s Survival of the Asian Financial Crisis

Case 3-2: Manufacturing Location: The United States or China

Available online at


Meaning of Culture 95

Elements of Culture 96

Material Life 96

Language 96

Social Interactions 101

Aesthetics 102

Religion 104

Education 106

Value Systems 107

Cross-Cultural Comparisons 108

High- versus Low-Context Cultures 108

Hofstede’s Classification Scheme 109

GLOBE Project 112

World Value Survey (WVS) 114

Adapting to Cultures 115

Culture and the Marketing Mix 117

Product Policy 118

Pricing 119

Distribution 120

Promotion 120

Summary 122

Key Terms 123

Review Questions 123

Discussion Questions 123

Further Reading 124

Case 4-1: Mickey Mouse Educating China’s Children

Case 4-2: Harley-Davidson in China: Barriers of Entry for Two-Wheelers

Available online at


Political Environment — Individual Governments 126

Home Country versus Host Country 126

Structure of Government 128

Government Policies and Regulations 130

Political Environment — Social Pressures and Political Risk 138

Social Pressures and Special Interests 138

Managing the Political Environment 141

Terrorism and the World Economy 145

International Agreements 147

Group of Seven (G7), Group of Eight (G8), and Group of Twenty (G20) 148

Wassenaar Arrangement 150

International Law and Local Legal Environment 151

International Law 151

Local Legal Systems and Laws 152

Jurisdiction 155

Issues Transcending National Boundaries 155

ISO 9000 and 14000 155

Intellectual Property Protection 156

International Treaties for Intellectual Property Protection 162

Antitrust Laws of the United States 165

Antitrust Laws of the European Union 167

U.S. Foreign Corrupt Practices Act of 1977 167

Summary 170

Key Terms 170

Review Questions 170

Discussion Questions 171

Further Reading 172

Case 5-1: Wal-Mart Bribery Case in Mexico

Case 5-2: Trademark Lawsuit in China: Proview’s IPAD versus Apple’s iPad

Available online at


Research Problem Formulation 177

Secondary Global Marketing Research 178

Secondary Data Sources 179

Problems with Secondary Data Research 181

Primary Global Marketing Research 183

Focus Groups 183

Survey Methods for Cross-Cultural Marketing Research 184

Observational Research 189

Leveraging the Internet for Global Market Research Studies 190

Market Size Assessment 193

Method of Analogy 193

Trade Audit 194

Chain Ratio Method 195

Cross-Sectional Regression Analysis 196

New Market Information Technologies 197

Managing Global Marketing Research 199

Selecting a Research Agency 199

Coordination of Multicountry Research 200

Summary 201

Key Terms 202

Review Questions 202

Discussion Questions 202

Further Reading 203


Reasons for International Market Segmentation 205

Country Screening 205

Global Marketing Research 206

Entry Decisions 206

Positioning Strategy 206

Resource Allocation 207

Marketing Mix Policy 208

International Market Segmentation Approaches 209

Segmentation Scenarios 210

Bases for International Market Segmentation 212

Demographics 213

Socioeconomic Variables 214

Behavior-Based Segmentation 216

Lifestyle and Values 217

International Positioning Strategies 220

Uniform versus Localized Positioning Strategies 222

Universal Positioning Appeals 225

Global, Foreign, and Local Consumer Culture Positioning 226

Summary 228

Key Terms 229

Review Questions 229

Discussion Questions 229

Further Reading 229

Appendix 230

Case 7-1: Coach — Selling Handbags Overseas

Case 7-2: Hyundai Conquers Europe

Case 7-3: Lego Friends (A)

Available online at


Information Technology and Global Competition 234

Real-Time Management 234

Online Communication 235

Electronic Commerce (E-Commerce) 235

E-Company 237

Faster Product Diffusion 237

Global Citizenship 237

Global Strategy 238

Global Industry 238

Competitive Industry Structure 241

Competitive Advantage 243

Hypercompetition 248

Interdependency 248

Global Marketing Strategy 249

Benefits of Global Marketing 250

Limits to Global Marketing 252

R&D, Operations, and Marketing Interfaces 255

R&D/Operations Interface 255

Operations/Marketing Interface 257

Marketing/R&D Interface 259

Regionalization of Global Marketing Strategy 260

Cross-Subsidization of Markets 261

Identification of Weak Market Segments 261

Use of the “Lead Market” Concept 263

Marketing Strategies for Emerging Markets 264

Competitive Analysis 267

Summary 268

Key Terms 268

Review Questions 269

Discussion Questions 269

Further Reading 270

Case 8-1: GM and Ford’s Pursuit of Different Benefits from Global Marketing

Case 8-2: P&G: We’re also Chinese

Available online at


Country Selection 272

Scale of Entry 275

Choosing the Mode of Entry 276

Decision Criteria for Mode of Entry 276

Exporting 280

Licensing 282

Benefits 283

Caveats 283

Franchising 284

Benefits 285

Caveats 285

Expanding Through Joint Ventures and Alliances 286

Benefits 288

Caveats 288

Drivers behind Successful International Joint Ventures 290

Wholly Owned Subsidiaries 292

Benefits 292

Caveats 293

Acquisitions and Mergers 293

Greenfield Operations 296

Dynamics of Entry Strategies 296

Timing of Entry 298

Exit Strategies 300

Reasons for Exit 300

Risks of Exit 302

Guidelines 303

Summary 303

Key Terms 304

Review Questions 304

Discussion Questions 304

Further Reading 305

Appendix A: Alternative Country Screening Procedure 306

Appendix B: Mode of Entry Choice—Three Theoretical Perspectives 306

Case 9-1: The Home Depot Throws in the Towel in China

Case 9-2: Alfa Romeo—“Il Ritorno”

Case 9-3: Starbucks’ Foray in Tea-Loving India

Available online at


Standardization versus Customization 309

Drivers toward Standardization 310

Modular Product Design Strategies 312

Back-of-the-Envelope Calculations — Incremental Break-Even Analysis (IBEA) 314

Multinational Diffusion 316

Developing New Products in the Global Marketplace 319

Identifying New Product Ideas 320

Screening 320

Concept Testing 321

Test Marketing 321

Timing of Entry:Waterfall versus Sprinkler Strategies 323

Truly Global Product Development 326

Summary 328

Key Terms 328

Review Questions 329

Discussion Questions 329

Further Reading 329

Appendix: Using Conjoint Analysis for Concept Testing in Global New Product Development 330

Case 10-1: Tesla in China: an Uphill Battle?

Case 10-2: Estée Lauder’s Made-for-China Osiao Brand

Case 10-3: Rémy Martin Introduces Centaure to China

Available online at


Global Branding Strategies 335

Global Branding 335

Local Branding 338

Global or Local Branding? 340

Brand-Name Changeover Strategies 344

Management of Multinational Product Lines 347

Product Piracy 351

Strategic Options against Product Piracy 353

Country-of-Origin (COO) Effects 355

Country-of-Origin (COO) Influences on Consumers 356

Strategies to Cope with COO Stereotypes 358

Global Marketing of Services 360

Challenges in Marketing Services Internationally 360

Opportunities in the Global Service Industries 361

Global Service Marketing Strategies 362

Summary 363

Key Terms 363

Review Questions 363

Discussion Questions 364

Further Reading 364

Case 11-1: Tata Motors Acquires the Jaguar Icon Case 11-2: Budweiser: “The King of Beers” Eyes Brazil

Case 11-3: Veet in China: Selling Hair-Removal Cream to Chinese Women

Case 11-4: L’Oréal China — Nursing Mininurse Back to Health

Available online at


Drivers of Foreign Market Pricing 367

Company Goals 367

Company Costs 368

Customer Demand 369

Competition 370

Distribution Channels 372

Government Policies 373

Managing Price Escalation 374

Pricing in Inflationary Environments 376

Global Pricing and Currency Fluctuations 378

Currency Gain/Loss Pass Through 378

Currency Quotation 381

Transfer Pricing 381

Determinants of Transfer Prices 381

Setting Transfer Prices 382

Minimizing the Risk of Transfer Pricing Tax Audits 383

Global Pricing and Antidumping Regulation 384

Price Coordination 385

Global Pricing Contracts (GPCs) 386

Aligning Pan-Regional Prices 387

Implementing Price Coordination 388

Summary 389

Key Terms 389

Review Questions 389

Discussion Questions 389

Further Reading 390

Case 12-1: Starbucks in Hot Water in the United Kingdom after Tax-Related Customer Revolt

Case 12-2: Starbucks Under Fire in China Over Its Pricing Policies

Case 12-3: Carlsberg Malaysia — Selling Beer in a 60 Percent Muslim Nation

Available online at


Global Advertising and Culture 392

Language Barriers 392

Other Cultural Barriers 394

Communication and Cultural Values 394

Setting the Global Advertising Budget 395

Percentage of Sales Method 396

Competitive Parity 396

Objective-and-Task Method 397

Resource Allocation 397

Creative Strategy 398

The “Standardization” versus “Adaptation” Debate 398

Merits of Standardization 398

Barriers to Standardization 400

Approaches to Creating Advertising Copy 401

Global Media Decisions 403

Media Infrastructure 404

Media Limitations 404

Recent Trends in the Global Media Landscape 405

Advertising Regulations 406

Choosing an Advertising Agency 409

Other Communication Platforms 411

Sales Promotions 411

Direct Marketing 413

Global Sponsorships 414

Mobile (Brand-in-the-Hand) Marketing 416

Trade Shows 417

Product Placement 418

Branded Entertainment (Content) 418

Viral Marketing 420

Global Public Relations (PR) and Publicity 421

Globally Integrated Marketing Communications (GIMC) 422

Summary 423

Key Terms 423

Review Questions 423

Discussion Questions 424

Further Reading 424

Case 13-1: P&G China—A Legal Cloud over SK-II

Case 13-2: The Casting of Dove Soap in “UglyWudi”

Case 13-3: Kiwi Schoolgirls Find Almost No Vitamin C in Ribena Drink

Available online at


Market Entry Options and Salesforce Strategy 428

Role of Foreign Governments 431

Cultural Considerations 432

Personal Selling 432

Cultural Generalization 433

Corporate (Organizational) Culture 433

Relationship Marketing 434

Myers–Briggs Type Indicator 435

Impact of Culture on Sales Management and Personal Selling Process 437

Salesforce Objectives 438

Salesforce Strategy 439

Recruitment and Selection 440

Training 441

Supervision 441

Evaluation 443

Cross-Cultural Negotiations 444

Stages of Negotiation Process 444

Cross-Cultural Negotiation Strategies 444

Expatriates 448

Advantages of Expatriates 448

Difficulties of Sending Expatriates Abroad 449

The Return of the Expatriate — Repatriation 452

Generalizations about When Using Expatriates Is Positive or Negative 453

Summary 454

Key Terms 454

Review Questions 454

Discussion Questions 455

Further Reading 455

Case 14-1: Hilton University—For Employees Only!

Case 14-2: Let’s Have Some Swedish Flavor around theWorld!

Available online at


Definition of Global Logistics 459

Managing Physical Distribution 461

Modes of Transportation 462

Warehousing and Inventory Management 464

Third-Party Logistics (3PL) Management 467

Logistical Revolution with the Internet 468

Managing Sourcing Strategy 470

Procurement: Types of Sourcing Strategy 471

Outsourcing of Service Activities 474

Free Trade Zones 479

International Distribution Channel 482

Channel Configurations 482

Channel Management 483

International Retailing 484

E-Commerce and Retailing 486

Private-Label Branding (Store Brands) 487

“Push” versus “Pull” 488

On-Time Retail Information Management 489

Retailing Differences across the World 491

Summary 493

Key Terms 494

Review Questions 494

Discussion Questions 494

Further Reading 495

Case 15-1: Past, Current, and Future Journey of Tesco in the U.S. Market

Case 15-2: French Retailer Carrefour: Loses in Japan but Wins in China?

Case 15-3: Which Distributor to Choose in Costa Rica?

Available online at


Organizing for Exports 498

Research for Exports 498

Export Market Segments 500

Indirect Exporting 501

Direct Exporting 502

Mechanics of Exporting 502

Legality of Exports 503

Export Transactions 504

Terms of Shipment and Sale 505

Payment Terms 505

Currency Hedging 507

Role of the Government in Promoting Exports 508

Export–Import Bank 510

Tariff Concessions 511

Export Regulations 512

Managing Imports — The Other Side of the Coin 513

Mechanics of Importing 515

Import Documents and Delivery 516

Import Duties 516

Gray Markets 517

Summary 525

Key Terms 525

Review Questions 526

Discussion Questions 526

Further Reading 527

Case 16-1: BrewDog: Establishing a Beachhead in Japan, but Where Do We Go from There for Further Expansion?

Case 16-2: An Upset Merck

Available online at


Global Strategic Marketing Planning 529

Bottom-Up versus Top-Down Strategic Planning 529

Pitfalls 529

Key Criteria in Global Organizational Design 530

Environmental Factors 530

Firm-Specific Factors 531

Organizational Design Options 531

International Division Structure 532

Global Product Division Structure 532

Geographic Structure 533

Matrix Structure 536

The Global Network Solution 538

Organizing for Global Brand Management 539

Global Branding Committee 539

Brand Champion 540

Global Brand Manager 540

Informal, Ad Hoc Branding Meetings 540

Life Cycle of Organizational Structures 540

Control of Global Marketing Efforts 542

Formal (“Bureaucratic”) Control Systems 543

Informal Control Methods 544

“Soft” versus “Hard” Levers 545

Summary 545

Key Terms 546

Review Questions 546

Discussion Questions 547

Further Reading 547

Case 17-1: Revamping Procter & Gamble: “Organization 2005”

Available online at


Emerging Markets 549

Definition 549

Characteristics of Emerging Markets 550

Competing with the New Champions 553

The New Champions 554

Competing against the Newcomers 558

Targeting/Positioning Strategies in Emerging Markets — BOP or no BOP? 560

Entry Strategies for Emerging Markets 562

Timing of Entry 562

Entry Mode 563

Product Policy 564

Product Innovation 564

Branding 565

Packaging 567

Pricing Strategy 567

The Distribution Challenge 568

Creating Distribution Systems 569

Managing Distributor Relationships 570

Communication Strategies for Emerging Markets 572

Push versus Pull Activities 572

Mass Media versus Nontraditional Marketing Approaches 573

Summary 574

Key Terms 575

Review Questions 575

Discussion Questions 575

Further Reading 575

Case 18-1: Heineken Re-enters Myanmar Case 18-2: Jollibee Foods — A Bee Stinging McDonald’s

Case 18-3: Nissan’s Revived Datsun — The Model T for the Twenty-First Century?

Available online at


Barriers to Global Internet Marketing 578

Language Barriers 578

Cultural Barriers 580

Infrastructure 581

Knowledge Barriers 582

Legal Environment and Government Regulations 584

Global Internet Consumers 585

Globally Integrated versus Locally Responsive Internet Marketing Strategies 585

The Internet and Global Product Policy 589

Global Branding and the Internet 589

Web-Based Global New Product Development 589

Web-Based Marketing of Services 590

Global Pricing and the Web 591

Price Transparency 591

Group Buying 592

Global Distribution Strategies and the Internet 593

Role of Existing Channels 593

E-Tailing Landscape 595

The Role of the Internet for Global Communication Strategies 596

Online Advertising 597

Nontraditional (NT) Web-Based Communication 599

Online Monitoring 600

Summary 601

Key Terms 601

Review Questions 601

Discussion Questions 602

Further Reading 602

Case 19-1: Yahoo! and Alibaba: Seeking Dominance in Chinese Cyberspace

Case 19-2: VWPolo—Hoax ad Spreads Like a Wildfire

Case 19-3: eBay’s Forays into China

Available online at


Global Corporate Citizenship 604

Scope of CSR 605

Major Areas of CSR 606

Corruption/Graft 606

Environmental Concerns 607

Supply Chain Accountability 609

Commitment toward Customers 611

Community Support (Cause-Related Marketing) 612

The Case for Sustainability 613

Challenges for Sustainability Strategies 615

Cultural Tensions 615

Sustainability Image 617

Poor Infrastructure 618

Sustainable Marketing and Global Consumers 618

Developing and Implementing a Sustainable Strategy 620

Step 1: Set Objectives and Targets 621

Step 2: Understand the Operating Environment 621

Step 3: Specify Strategic Sustainability Initiatives 621

Step 4: Implement 623

Step 5: Develop Metrics for Monitoring and Reporting 625

Global Stakeholder Engagement Programs 626

Sustainable Marketing Mix Policy for the Global Marketplace 628

Developing Sustainable Products and Services 628

Sustainable Pricing 630

Communication and Sustainability 631

Sustainability and Distribution Channels 633

Crisis Management and Consumer Boycotts 633

Crisis Management 634

Consumer Boycotts 635

Summary 636

Key Terms 637

Review Questions 637

Discussion Questions 637

Further Reading 638

Case 20-1: Greenpeace Asks Kit Kat to give Orangutans a Break

Case 20-2: KFC Faces a Food Safety Crisis in China Case 20-3: Nestlé Faces a Storm in a Cup of Maggi Noodles in India

Available online at


New cases in the 7th edition:

Honda in Europe (2016 Update)

Airbnb: Going for Gold 2020

Nintendo: I am on journey…a mission to save Mario!

Target Corporation: Canadian Disaster Techtronic Industries: Tooling Up for Asia Chow Tai Fook: Fulfilling the Chinese Dream

And many more cases available on the textbook’s website.




  • Thoroughly updated, contemporary examples throughout the book
  • The last few years have seen various uncertainties in the world, caused by the deceleration of the Chinese economy, Greek financial crisis, and wars in the Middle East.  We will expand on how those uncertainties affect global marketing activities.
  • Emphasizes more clearly, wherever necessary, that successful global marketing strategy is a confluence of pursuing economies of scale (in some aspects of the value adding activities) on the supply side and cultural sensitivities on the demand side.  In other words, global marketing is far from selling the same thing the same way around the world.
  • Three chapters on new topics (emerging markets; the internet marketing; and corporate social responsibility).  These topics have become all the more important.  As such, they will be expanded on significantly.
  • A number of new long cases have been added. 
  • Over 40 case studies, both long and short, cover a range of global businesses to support the development of global strategic thinking.
  • Stimulating, real-life Discussion and Review Questions listed at the end of each chapter.
  • Authors’ pedagogical orientation embraces useful, well known marketing methods but also sets itself apart through its focus on the following areas: Global Orientation, Cultural Sensitivity, Research Orientation, Interdisciplinary Perspective, Proactive Orientation, Practical Orientation, and Internet Implications.
  • “Global Perspectives” Inserts serve as “Mini-Cases” for class discussion, or as controversial issues that students should be aware of.