Introduction

• The Internet has revolutionized the international business arena and global marketing in particular.
• Roughly speaking, the Internet is a network of computers interconnected throughout the world operating on a standard protocol that allows data to be transmitted.
• Until the early 1990s, the Internet was primarily the preserve of the military and academic researchers.

• The development of new software and other technologies during the early 1990s turned the Internet into a commercial medium that has transformed businesses worldwide.
• This chapter looks at the impact of the World Wide Web (WWW) on global marketing activities.

The Internet and the Global Marketplace

• Internet usage worldwide is growing rapidly
• E-Commerce Times:  http://www.ecommercetimes.com/
• Jupiter Media Metrix:  http://www.jmm.com/
• Forrester:  http://www.forrester.com/
• The global e-commerce market is predicted to reach $1.2 trillion by 2001.
• Asia-Pacific
• Asia-Pacific region is quickly catching up in the Internet.
• Most of the action in the region is business-to-business.
• http://www.nua.com/surveys/how_many_online/asia.html

The Ernst and Young Global Retailing Study
http://www.ey.com/global/content.nsf/International/Industries_-_RCP_-_Global_Supply_Chain_Survey
"Global Online Retailing" gives a broad overview of current global e-tailing trends. It also presents portraits of the online retailing climates in each of the 12 countries participating in the study: Australia, Brazil, Canada, France, Germany, Israel, the Netherlands, South Africa, Spain, Switzerland, the United Kingdom, and the United States. Data was gathered in October and November 2000.

Fundamental Issues

• Do not begin with web design issues - instead think through the channel of distribution - this is your basic system
• Legal system:  what are e-commerce laws in your target markets? Do certain countries place restrictions?
• Infrastructural system:  Are telephone or dialup lines available throughout your target countries?
• Political restrictions on web commerce? Religious bans on prohibited products

• What is the availability of computers to persons in your target markets? Who owns computers? Internet availability in kiosks, stores? Costs to use? Is browsing behavior the same or vastly different?
• What are fundamental consumer purchase limitations: possession and trust of acceptable methods of payment, such as credit cards.
• Pricing Options: cash on delivery (Germany, India)

Web Design Issues:

• Language, products, guarantees, warranties, images, use, terms, etc. etc. etc!
• How many languages, how many specific countries should be featured? Should country groups be featured instead?
• Local contacts and repairs
• Payment and currencies/ credit cards
• Delivery- how does it add to the shoppers’ costs?

The Internet and the European Marketplace

•  Europe
• Consumer spending on e-commerce in Europe is expected to surpass U.S. spending by the year 2002.
• Small and medium-sized European companies are finding the Internet a cheap way to broaden their geographic scope.
• Several challenges to e-commerce in Europe persist which include: government red tape and regulations, knowledge barriers, and reluctance to reveal credit cards numbers.

• Net fever is also spreading in Latin America.
• Brazil with 88 percent of Latin America’s online sales in 1999, has been one of the strongest e-commerce markets in the region.
• The Internet and the Global Marketplace
• Like other regions, e-commerce faces a number of obstacles which include: high cost of Internet access, customs regulations and import duties, and consumers’ reluctance to release their credit card numbers.
• These topics are studied in depth in Ernst and Young

Structural Barriers to Global E-Commerce

• Language Barriers
• Much of the content on the Web is in the English language.
• A recent study found that business users on the Web are three times more likely to purchase when the Web site “speaks” their language.
• The demand for Web site localization services has boosted a new Web-oriented translation industry.

• Cultural Barriers
• Cultural norms and traditions can hinder the spread of the Internet.
• In Confucian-based cultures like most East Asian nations, business is conducted on a personal basis.
• In many countries, credit card penetration is low.
• To become familiar with local markets as well as local cultures is not possible through the Internet.

• Personal Computer Ownership
• In many emerging markets, ownership of personal computers is still very low.
• Slow Internet access remains a major problem in many countries.
• Knowledge Barriers
• Setting up an e-business requires certain knowledge and skills.
• In emerging markets, scarcity of proper talent and skills will restrain the development of a digital economy.

• Access Charges
• In numerous countries, high Internet access charges may deter users.
• Rates vary a great deal across countries.
• Legal Constraints and Government Regulations
• Red tape and government regulations stall e-commerce in dozens of countries.
• E-commerce is global but the laws are mostly local.

Structural Barriers to Global E-Commerce (contd.)

• Fragmented government regulations and laws affect e-commerce.
• Difference in value-added taxes, currencies, and culture may pose problems for the companies.

• In terms of primary research, the possibilities created by the Internet are stunning. There are many measurement tools available which include:
• Online surveys
• Bulletin boards and chat groups
• Web visitor tracking
• Virtual panels
• Focus groups

3. Using the Internet for Understanding Global Buyers (contd.)

• Shortcomings of Online research:
• Sample representativeness
• Low Internet access
• Incorrect or out-dated e-mail addresses
• Problems with the Web sites
• Integrity of the respondents
• Problems in identity validation when the same e-mail address is used by multiple people

Competitive Advantage and Cyberspace

• The Internet offers two major benefits to companies that use the tool as a gateway to global marketing:
•  1. Cost/efficiency savings
•  2. Accessibility (connectivity)
• The Internet also offers access to customers around the world.
• The value of some of the pre-Internet sources of competitive advantage has been deflated.

 Competitive Advantage and Cyberspace (contd.)

• Some observers have argued that one of the major consequences of the Internet is that small and large firms are on an equal footings now as far as global competition is concerned.
• Although size-related advantages will probably lessen, claims that the Internet provides a level playing field to small and large global players alike are somewhat overblown.

 Ramifications of the Internet for Global Marketing Strategies

• One-to-One Marketing
• Product Policy
• Global branding
• Internet-based new products
• Marketing of Services
• Global Pricing
• Cost transparency
• Distribution
• Role of Existing Channels

 Ramifications of the Internet for Global Marketing Strategies (contd.)

• Replacement effect/complementary effect (see Exhibit 19-4)
• Retailing Landscape
• Brick-and-mortar retailers
• Click-and-mortar retailers
• Global Promotion and the Web
• According to Forrester Research, worldwide advertising on the Internet will rise from $3.3 billion in 1999 to $15 billion by 2003.

• Online advertising techniques include the following (see Global Perspective 19-3):
• Banners
• Permanent buttons
• Affiliate programs
• Sponsorships
• E-mailing lists
• Rich-media expanding banners

 

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