digital medium and global marketingVenkatesh ShankarIN.docx

digital medium and global marketing
Venkatesh Shankar
INTRODUCTION
The digital revolution is transforming the
business landscape and profoundly influencing
marketing in an increasingly global environ-
ment. From a demand perspective, the digital
medium or the Internet (e.g., World Wide Web,
email) has offered firms access to new customers,
markets, and business models across the globe.
From a supply standpoint, the digital medium
has enabled firms to cut costs of marketing and
operations by coordinating their value chains
around the globe. In this article, we focus on the
role of the digital medium or the Internet on the
global marketplace and global marketing.
The role of digital medium or the Internet
in global marketing decisions and the impact
of the Internet on firm performance in global
markets can be analyzed through an organizing
framework (Shankar and Meyer, 2009). This
framework addresses the following important
questions. How does the Internet affect a firm’s
global marketing decisions? What are the direct
and indirect effects of the Internet and Internet
marketing strategy on firm performance in global
markets?

Companies use the Internet in the global
marketing context in different ways. Firms
can use the Internet for gathering information,
providing customer support, and improving
customer relationships. Some firms use the
Internet as a primary information source and
information dissemination vehicle to perform
global market research and to identify customer
segments that span different countries. Others
use it as a medium for communicating a brand’s
value proposition or position to its target
audience across countries. Broadly speaking,
companies use the Internet to formulate and
implement global marketing mix decisions.
Shankar and Meyer’s (2009) organizing
framework relating to the Internet, global
marketing decisions and firm performance is
shown in Figure1. The global/international
marketing mix decisions include those on
product, brand, price, communication, promo-
tion, and distribution channels. The Internet
and Internet marketing strategy directly influ-
ence both the global marketing mix decisions
and the firm’s performance. The Internet and
the Internet marketing strategy of a firm also
have moderating effects on the impacts of
each global marketing mix decision on firm
performance. Because firm performance is
critical to firms, we focus on the direct and
moderating effects of the Internet and Internet
marketing strategy on firm performance.
In formulating their global digital marketing
strategy, firms can compare different countries

on dimensions such as infrastructure, geograph-
ical distance, language, buyer behavior, buyer
demographics, country image, payment systems,
and currency using a framework based on two
dimensions: global integration and local respon-
siveness (Guillen, 2002). Depending on the
combination of these dimensions, he recom-
mends four global Internet marketing strategies:
pure local adaptation, global cost leadership,
nationally differentiated, and transnational cost
adaptation strategies. According to him, each
strategy is appropriate for specific product cate-
gories. According to him, for example, products
whose features are most amenable to direct
inspection, such as clothing, cars, and collectibles
should follow a nationally differentiated strategy
because these categories need high local respon-
siveness in website design, language, return
policy, and customer service, but low integra-
tion across countries. The framework is useful
for classifying different categories but offers few
guidelines on leveraging the digital medium in
the global marketing context.
DIGITAL MEDIUM AND GLOBAL PRODUCT
DEVELOPMENT
The Internet is increasingly used in global
product development. Companies can use real
time collaboration software for product design
so that product developers across the globe
can connect and simultaneously work on the
same product idea. A driving factor for using
the Internet in global product development is
shorter design cycles fueled by the opportunity
to develop products on a 24 × 7 basis globally.

Companies use global Web-based design plat-
forms to develop products through collaborative
teams across the world. The primary benefits
Wiley International Encyclopedia of Marketing, edited by
Jagdish N. Sheth and Naresh K. Malhotra.
Copyright © 2010 John Wiley & Sons Ltd
2 digital medium and global marketing
Internet & Internet
marketing
International
distribution decision
International
communication &
promotion decisions
International price
decision
International product
& brand decisions
Company performance
(sales, market share, profits,
shareholder value)
Figure 1 An organizing framework for Internet and international
marketing. (Bold lines represent direct effects. Dashed

lines represent moderating effects.) Source: Shankar and Meyer
(2009).
of Web-based global product development are
reduced product development time, greater
ideas and inputs from design engineers around
the world, and better time-leveraging of
talent located at different time zones. Some
companies also use these Web-based systems
to work across the globe with ‘‘offshoring’’
partners.
The Internet also plays an important part
in the diffusion of a new product within and
across countries. For products such as pharma-
ceutical drugs and movies, the Internet serves
as a powerful medium to inform potential users
and customers across countries. On the one hand,
firms can leverage this information dissemination
ability of the Internet to accelerate the diffusion
of their products across countries. On the other
hand, if customers in the initial markets had
adverse experiences with their products, firms
may be hampered by the Internet in new global
markets. Therefore, firms need to more care-
fully plan the design and management of product
launches in the initial markets.
To sum up, the Internet has an important role
to play in product development across coun-
tries. Managed appropriately, the Internet can
result in better new product ideas, more effec-
tive collaboration, shorter development cycle
time, and better use of talent across multiple
time zones. The Internet can play both positive

and negative roles in the diffusion of new prod-
ucts across cultures and countries. Hence firms
will have to more carefully plan their product
introductions in the initial countries.
Digital medium and global communication. The
Internet plays a key role in companies’ communi-
cation and promotion efforts and in their
effectiveness in the global marketplace. Commu-
nication efforts can be of two types: company-
generated and user-generated. Company-gener-
ated communication efforts are typically cente-
red on company websites. User-generated
communication efforts relate to activities such
as the creation and management of social media,
community sites, blogging, and file sharing by
customers.
Company-generated communication. Culture
affects customer attitudes toward company
websites, and hence has a strong effect on
website effectiveness. Most companies have
country-specific websites. For example, Procter
& Gamble created regional sites during the 2006
World Cup soccer championship to promote its
Gillette, Braun, Duracell, and Oral B brands
digital medium and global marketing 3
and to raise awareness of its status as an official
sponsor (Shankar and Meyer, 2009). Users from
several countries first selected one of the four
geographical regions on its website and then had
the option to choose the language in which the

website appeared. Research suggests that local
language and local adaptation are keys to the
success of global marketing on the Internet.
An important strategic issue related to the
Internet in the global context is the globalization
versus localization of products and websites.
Globalization refers to the standardization of
products and sites across countries and cultures,
while localization refers to the adaptation
of products and sites to different countries
(Shankar and Donato 2003). While companies
should naturally adapt their websites to local
languages, the extent to which they should adapt
the website content to the individual countries
would depend on the product development and
marketing costs, culture-specificity of products,
importance of brand equity, and the degree of
country-specific customer needs.
User-generated communication. The Internet
enables users to share information and create
global communities focused on specific topics.
User-generated communication in the global
context can be classified into different forms:
posting on social media such as Facebook,
MySpace, Twitter, and LinkedIn; blogging
on own as well as community global sites;
podcasting; posting videos on video sites such
as YouTube and Flickr; and posting product
reviews in global communities. By measuring
and monitoring such communication about
the firm and its products, a firm can use the
information to better manage its relationship
with its customers and improve its products
and customer service. For example, before

the launch of PlayStation 2, a global brand
community that allowed consumers to discuss
and anticipate attributes of the new product
had emerged. However, because the Internet
also allowed ‘‘brand terrorists’’ (users who
can control a brand in ways detrimental to
the firm owning the brand), Sony decided to
launch its own global brand community so
that it could monitor and proactively listen to
the conversations among consumers. Another
example is Stormhoek winery in South Africa.
Through the use of various online marketing
activities, including blogging, Stormhoek
increased its shipments to the United Kingdom
from 50 000 cases in 2005 to 350 000 cases in
2007 (Business Day, 2007).
Another example of a global online brand
community is NikePlus, designed with music
collaboration from Apple, that offers an array
of useful tools for running enthusiasts. These
tools include managing own runs, issuing
running challenge to friends, socializing with
other community members across the world,
obtaining music through Apple, and sharing
information through blogs.
To summarize, the Internet moderates the
effect of communication and promotion on
firm performance in the global context. By
better understanding customer needs across
different countries and cultures, firms can
develop appropriate content on their websites in
different markets. They could also measure and
monitor user-generated communication and

proactively use the information for improving
products, enhancing customer service, and
deepening customer relationships.
DIGITAL MEDIUM AND GLOBAL PRICING
The Internet affects prices and their disper-
sion across sellers. The Internet has allowed
different segments to become aware of prices
offered to one another, regardless of where the
segments are physically located. For example,
the pricing of pharmaceuticals in Europe is
changing such that price differentials across
countries are narrower because consumers know
that the price of a drug in Spain is different
from that in Belgium. Sometimes, online price
dispersion across countries may be influenced
by regulatory authorities. Consider the case of
pricing of Apple’s iTunes in Europe (Sweeny,
2008). Until 2008, the prices for downloading
a song or album through iTunes were higher in
the United Kingdom than in 16 other Euro-
pean countries. For example, in France and
Germany, music buyers were charged ¤0.99
(74p) per track, while British music fans were
charged 79p. Following consumer complaints,
the European Commission investigated Apple
for unfair pricing. In early 2008, Apple agreed
to reduce the price it charges UK users to buy
tracks from iTunes by almost 10% within six
months to bring them in line with the rest

of Europe. Although Apple finally made the
decision to follow a harmonized pan-European
pricing policy, its ability to do so also depends on
the willingness of the major record labels to adopt
a pan-European standardized view of pricing.
These examples highlight the role of price
transparency in firms’ pricing strategy across
global markets. Although the Internet has
brought increased transparency on costs and
prices, it has also allowed firms to highlight and
differentiate on nonprice attributes (Shankar,
Rangaswamy and Pusateri, 2001). It is possible
for firms to tailor their offerings to the needs
of consumers in different countries or offer
branded variants across countries, thus reducing
the inclination or ability of customers to
directly compare prices of the same item across
countries.
Owing to such possibilities, there are
differences among prices and dispersion of
prices among retailers across different countries.
Ancarani et al. (2008) argue that on the one
hand retailer price levels and dispersion may
be similar across countries because channel
competition and the roles of channels are
increasingly similar across countries and the
borderless nature and transparency of the
Internet can have a positive influence on the
similarity of retailer pricing across countries.
However, on the other hand, they suggest that
retailer price levels and dispersion may be
different across countries because of differences
in the adoption rate of the Internet, consumer
attitudes toward the Internet, price sensitivities,

and competitive landscape across countries.
Ancarani et al. (2008) present an empirical
analysis of retailer price levels and dispersion
using data collected for different product cate-
gories (e.g., books, CDs) in three European
countries, namely, France, Germany, and Italy.
Their results show that, in general, price levels,
including shipping costs, are higher online than
offline in each of these three countries and that
price dispersion is persistent across these coun-
tries. Multichannel retailers have the highest
price levels in each of these countries, but they
do not exhibit the highest price dispersion. Their
results suggest that the opportunities for price
differentiation for a given type of retailer may
be different in different countries. Their data,
however, are restricted to two product categories
in three Group 7 (G7) countries and may not be
generalizable across developing economies.
Thus, consumer and company use of the
digital medium have important influences on
firm prices and on the effect of pricing on firm
performance. The Internet enhances price trans-
parency and allows customers to compare prices
across countries. However, empirical analysis of
price levels and price dispersion suggests that
price dispersion is persistent, and the opportu-
nities for price differentiation do exist and may
be different across countries.
DIGITAL MEDIUM AND GLOBAL CHANNELS
The Internet serves as a distribution channel for

many firms for several products. It often acts as a
direct distribution channel for marketers of items
ranging from apparel to computer hardware and
software to books to CDs and DVDs to electronic
equipment. In some cases, the Internet serves as
a substitute channel for other distribution chan-
nels such as physical stores and catalogs. In other
cases, it acts as a complementary channel. The
use of the Internet as an important distribution
channel in the emerging practice of multichannel
marketing is growing.
In the global context, the use of the Internet
as a distribution channel is significant because it
allows many firms to reach a wide global audi-
ence without substantially increasing the cost
of channel development. However, the prac-
tice of multichannel marketing in the global
context depends on the degree of substitute or
complementary effects of the Internet relative
to other channels in each country. In countries
where the complementarity of the Internet with
other channels is high, firms will practice greater
multichannel marketing than in countries where
the Internet is perceived as a substitute to other
channels.
A firm’s extent of use of the Internet as
a distribution channel in each country may
depend on the country, customer, company,
and competition factors. The country factors
include regulatory issues, taxes, transportation
modes, geographical proximity of the country
to fulfillment center, Internet penetration level,
and logistical infrastructure. Customer factors

digital medium and global marketing 5
include desired delivery speed, willingness to
pay, the extent of physical inspection desired,
and the influence of consumer-generated digital
media. Company factors comprise market reach
goals, distribution competency, fulfillment capa-
bility, shipping costs, and the like. Competition
factors include the number and intensity of
competitors in that country, the distribution
channels of competitors in the country, channel
expertise of competitors, and anticipated channel
moves of competitors (Shankar, Rangaswamy
and Pusateri, 2010a, 2010b). Depending on the
combination of these factors, a firm may tailor the
extent of the use of the Internet as a distribution
channel for different countries.
The evidence for the use and success of the
Internet as a distribution channel in the global
context, however, is mixed. While many firms
use their websites as store fronts to customers
in multiple countries and fulfill orders that they
receive through their sites, because of the level
of investment required by the clients, physical
market presence and personal contact may be
more important for sales. However, informa-
tion designed for and placed on the Internet
can improve a firm’s reputation and credibility,
making personal selling easier in global markets.
The example of Stormhoek wines in South
Africa illustrates how Internet can help global
distribution for some types of products. By

leveraging UK bloggers to sell directly to UK
consumers, Stormhoek became ‘‘the wine of the
blogging world.’’ Stormhoek’s shipments to the
United Kingdom increased from 50 000 cases in
2005 to 350 000 in 2007 (Business Day, 2007).
A well-designed channel strategy involving the
Web across global markets will likely improve
firm performance. However, apart from anec-
dotal evidence, there is sparse research on the
effects of the Web as a distribution channel on
firm performance across global markets.
In summary, there is mixed evidence on the
use of the Internet as a distribution channel in
global markets. The use of the Web as a channel
depends on factors relating to country, customer,
company, and competition. Although the use of
the Web as a channel is likely to have a positive
effect on firm performance in global markets,
there is not enough evidence on this topic for us
to make a strong conclusion.
FUTURE OPPORTUNITIES AND CONCLUSION
As Internet penetration in different countries
continues to grow, the role of the Internet in
global marketing will keep rising. The impact
will be more significant and often more dramatic
in countries where Internet penetration is
still low and has enormous potential for
improvement. In some countries, the ability
of the Internet as a viable new medium of
communication and channel of distribution can
significantly impact economic growth.
A major development related to the Internet

is the spread and rise of mobile media and tech-
nology across the world. Mobile devices such
as cell phones, personal digital assistants, digital
music players (e.g., iPod), and hybrid devices
(e.g., iPhone, iPad) now provide more perva-
sive connectivity to websites and users through
mobile Internet than ever before. Many devel-
oping countries are leapfrogging others in the
use of the mobile Internet and email (through
short-messaging service or SMS). For example,
two emerging economic superpowers, China and
India, are major beneficiaries of the surge of
mobile Internet. China has the biggest user base
of mobile phone subscribers, while India has the
fastest growing mobile subscriber base (Shankar
and Balasubramanian, 2009). Such rapid pene-
tration of mobile Internet and connectivity will
accelerate the impact of Internet marketing activ-
ities on firm performance across the world.
The rise in importance of the Internet and
the mobile media in the global context offers
several opportunities for future research on
global marketing issues. Important questions
in this regard are how does customer behavior
with regard to the use of the Internet vary
across countries? How do customers differ in
mobile media usage across countries? How does
the mobile Internet affect firm’s marketing
mix decisions? What impact does mobile
Internet have on firm performance? What is
the impact of user-generated communication
among customers across diverse cultures on the
diffusion of products across countries?
With regard to measures of firm performance,

research on the Internet and global marketing
has at best focused on company sales. Future
research should examine measures such as profits
and shareholder value. The availability of data on
Internet marketing activities in the global context
will continue to be a challenge. In particular,
because company data on costs and profits by
country are confidential, it would be difficult to
collect such data. Nevertheless, more empirical
research in these areas will offer deeper insights
into Internet and global marketing.
Not much is known on the differences
between goods and services with regard to the
role of the Internet in global marketing. Are
the effects of the Internet on global marketing
mix decisions and on the relationships between
these decisions and firm performance the
same for goods and services? In particular, are
there differences between digitizable goods and
digitizable services? Digitizable products (e.g.,
books, music, video, software) are those that
can be easily distributed over the Internet to
customers. In the global context, these products
assume significance as they can be downloaded
by customers in multiple countries any time.
The iTunes is an example of such a digitizable
product. With the launch and high initial sales of
e-readers such as Amazon’s Kindle, Barnes and
Noble’s Nook, and Apple’s iPad, which offer
advanced reading benefits, how should firms

approach global marketing of print content?
Future research could address these interesting
questions and topics.
In conclusion, the explosive growth in the use
of the digital medium continues to alter global
marketplace and global marketing in important
ways. The digital medium and global Internet
marketing strategy have both a direct effect and
moderating effects on the impact of marketing
mix decisions on firm performance. With regard
to global product development, the Internet
has significant influences on the effectiveness
and speed of new product development and
its impact on firm performance. The Internet
also has an important role in the effects of
both company- and user-generated communica-
tion efforts on firm performance. On the global
pricing dimension, the Web allows more pricing
transparency, but also permits opportunities for
differentiation across countries. With regard to
global distribution, the Web may serve as either
a substitute or a complementary channel in
different global markets and by coordinating the
Internet with other channels, firms can improve
performance in global markets.
In the future, continued Internet penetration
and the surging growth of mobile media may
change global marketing further. Research on
the digital medium and global marketing is still
growing and many important questions remain
largely underexplored. More research is needed
to better understand the relationships among
the Internet, mobile Internet, marketing mix
decisions, and firm performance in the global

context.
See also competitor analysis; competitive analysis;
marketing strategy; marketing strategy models
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Heading information courtesy of OWL. Purdue University
Online Writing Lab [OWL]. (2009, October 24). APA
formatting and style guide. Retrieved
October 29, 2009, from
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college education than many traditional students.
Most adult students who make the choice to return to college
are accustomed to prioritizing their tasks. These individuals
have experienced the demands of juggling their responsibilities
and are more willing
and able to take the initiative to succeed in their academic
career. (Smith, 2002, p. 121)
Many adults who have excelled in their professional lives know
how to apply themselves in their new academic life.
Smith (2002) points out that adult students are often more
dedicated to achieving their college education than many
traditional students.
Most adult students who make the choice to return to college

are accustomed to prioritizing their tasks. These individuals
have experienced the demands of juggling their responsibilities
and are more willing
and able to take the initiative to succeed in their academic
career. (p. 121)
Many adults who have excelled in their professional lives know
how to apply themselves in their new academic life.
NOTE: After the initial introduction of the author, you may then
use the author’s only to introduce the quote or paraphrase, a
technique that adds credibility and authority to your sources.
Citing Personal Communication - For letters, memos, e-mail,
interviews, cite source in text only. Do not list on References
page.
S.U.Varnes (personal communication, May 12, 2001)
acknowledges …
– Interpreting an idea expressed by author, by restating passage
in your own words
No quotation marks used
No page or paragraph #
Book, Magazine, Journal article:
(Author’s last name, publication date)
Ex: (Smith, 2009)
Webpage article w/author:
(Author, copyright date OR last update)
Ex: (Jones, 2009)
Webpage article with NO author:
(“Shortened article title”, copyright date OR last update)
Ex: (“Pizzas,” 2009)

Multiple Authors: with TWO authors:
Ex: (Smith & Jones, 2002)
Multiple Authors: with 3 - 5 authors:
Cite each author the first time the citation appears Ex. (Jones,
Smith, Collins, & Krantz, 2002)
In subsequent citations, cite only the last name Ex. (Jones
et al., 2002)
of the first author, followed by “et al.”
More Than six (6) authors:
Cite only the last name of the first author followed by
Ex. (Jones et al., 2002)
“et al.” every time the citation appears
Author’s name not given within paraphrased sentence:
(Author, publication date – no page #)
The revitalization of many urban neighborhoods has resulted in
a substantial increase in property values (Lentz,
2003).
Author’s name used to introduce paraphrase:
Introductory phrase with author name (publication date) . . .
(page #)
Urban planner James Lentz (2003) asserts that the revitalization
of many urban neighborhoods has resulted in a substantial
increase in property values.
– DON’T PLAGIARIZE!
Plagiarism is the “use or close imitation of the language and

thoughts of another author and the representation of them as
one's own original work" (Stepchyshyn & Nelson, 2007, p. 65).
Paraphrasing is reading the work of another author, interpreting
it into your own words, and then citing the original source.
Three or more consecutive words directly from a source are
considered a Direct Quote, and must be cited as a Direct Quote.
Original by author James Baker, published 2003:
A dilemma considering position is an improvement in
employment situation, a change in their health insurance
coverage, particularly for individuals .
Plagiarism - Passage rewritten, but with only a few words
changed:
A problem thinking about job is better than job, getting
different health insurance, especially for people (Baker, 2003).
Paraphrased - Passage re-written to express the idea of the
author, but in words:
For many employees with health problems, often making the
decision of whether or not to change jobs is based on the need
to maintain the same health insurance coverage and not on the
prospect of a better career opportunity (Baker, 2003).
RULE OF THUMB for Using Sources:
Never begin a paragraph with a quote, end a paragraph with a
quote, or use back to back quotes –
OFFER YOUR ANALYSIS! DON’T LET THE QUOTE SPEAK
FOR ITSELF!

IN-TEXT CITATION – WEBPAGES
The same rules for regular in-text citations apply to webpages,
except that page numbers are replaced by paragraph numbers,
which are found by counting paragraphs starting at the top of
the page.
REMEMBER:
Direct Quotes > Quotation marks, para. # Paraphrases
> No quotation marks, no para. #
:
(Author, update/copyright date, paragraph #)
(Author, update/copyright date)
1. If no author -- give shortened article title. If no article title
--give website name (NOT URL!)
2. If no date for website -- put n.d.
3. Hand number paragraphs -- when citing Direct Quotes
Direct Quote
(Author, update/copyright date, paragraph #)
The use of “pizza toppings that seem bizarre to current tastes,
such as squid and octopus, were common
in the fishing areas of the Mediterranean sea” (Smith, 1998,

para. 5).
Direct Quote – from article entitled “Pizzas of the World,” from
website called PizzaLore, No author given:
(“Shortened article title”, update/copyright date, para. #)
The use of “pizza toppings that seem bizarre to current tastes,
such as squid and octopus, were common in the fishing areas of
the Mediterranean Sea” (“Pizzas,” 1998, para. 5).
Direct Quote - from website called PizzaLore, No author or
article title given:
(Website name, update/copyright date, paragraph #)
Many culinary archaeologists have determined that “the making
of pizza was actually an accident”
(PizzaLore, 1998, para. 5).
REFERENCES
All research papers must contain a reference page with is a list
of references (all sources cited in the paper,) starting on a new
page after the body of the paper.
The References page should contain full publication information
(see examples below). Only sources cited in the body of the
paper should appear on the References page.
Center title “References” typed lower case, no underline, no
italics
Page numbering should be continued in the upper right corner of
the Reference page.
For each entry in the list, the first line begins at the left margin

and all following lines are indented a half inch or twelve
spaces.
Lines are double-spaced.
Alphabetize by first word of entry (author’s last name; title if
no author)
If there are two or more entries for the same author, arrange by
year of publication with the earliest one first. If the entries are
for the same year, use lowercase letters (a, b, c) with the year.
Do not utilize any underlining or quotation marks for titles.
Book titles, magazine/journal titles and volume (issue) number
are to be in italics .
Websites are not to be underlined. Hyperlinks should be
removed.
Capitalize journal or magazine titles.
Capitalize only the first word of the title of a book or article,
except for proper nouns.
(Examples are single-spaced; actual reference list is double
spaced.) The following entries are examples
of the most commonly used research sources. Refer directly to
the APA Manual for additional examples of Reference list
entries.
Book with One Author:
Author, A.A. (year of publication). Book Title. City published,
State Initials (if applicable – see APA Style Guide, states are
not always included): Name of Publisher.
Jones, S. (2010). The Jones Chronicles. Boston: Smith
Publishing Company.
Book with Two or More Authors:

Author, A.A., & Author, B.B. (Year of Publication). Book Title.
City published, State Initials (if applicable): Name of
Publisher.
Jones, S., & Smith, J. (2010). The History of Miami Regional
University. Washington, DC: Jones and Smith
Publishing.
Book with Three to Six Authors:
Miller, J., Kramer, P., Cane, L. & Font, M. (2010). How to Be
a Business Partner. New York: Harlan
Publishers.
Book with More Than Six authors:
Logan, P., Smith, U., Lenz, R., Tome, M., Fox, P., Jones, M., et
al. (2010). Elements of Real Estate
Transactions. Boston: Ridgeworth Publishers.
Edited Book:
Jones, S., & Smith, J. (Eds.). (2010). The History of Miami
Regional University (4th ed.). Washington, DC: Jones and
Smith Publishing.
Article/Essay in an Edited Book:
Author, A.A. (Year of Publication). Article/essay title. Book
editor’s name (editor abbreviated Ed.), Book Title. (article
pages). Place of publication: Publisher.
Spencer, J. (2010). The ethical basis for termination. In J.
Kelp (Ed.), Ethics in Business (pp 282-292).
New York: Hampton Press.
Dissertation:

Author, A.A. (Year of Publication). Dissertation Title
(Doctoral dissertation). Available from (Database). (UMI No.)
Smith, J.V. (2010). Relationship between Board of Directors
and Executive Offers: Effect on Turnover. Available from
ProQuest Dissertations and Theses database. (UMI no. 1234567)
Newspaper Article (this is the only instance where you will use
p. or pp. in front of the page numbers on the References page):
Author, A.A. (Year, Month Day). Article title. Name of
Newspaper, p. or pp. page #(s).
Jones, S. (2009, April 12). MRU opens new campus. Miami
Observer, p. A3.
Magazine Article :
Author, A.A. (Year, Month Day). Article title, Magazine Name,
volume (issue #, if applicable), page #(s).
Smith, J. (2009, May 1). Florida Power understates earnings.
Newsweek, 5(1), 23-24.
If a magazine or journal article has more than two authors,
follow the rule for books regarding number of authors.
Magazine Article with No Author:
Article title. (Year, Month Day). Magazine Name, volume (issue
#, if applicable), page #(s).
Florida Power understates earnings. (2009, May 1). Newsweek,
5(1), 23-24.
Journal Article:

Author, A.A. (year of publication). Article title. Journal Name,
volume (issue #), page #(s).
Johnson, J. (2010). The undergraduate student population of
Miami Regional University’s graduating class of 2018. Journal
of Education Statistics, 1(2), 200-211.
APA recommends that, when a digital object identifier (DOI) is
available, the number be included for
both print and electronic sources. The DOI is typically located
on the first page of the electronic journal article, near the
copyright notice. A DOI is a unique alphanumeric string
assigned by the International DOI Foundation and the publisher
to identify content and provide a link to its location on the
Internet. The DOI is assigned when an article is published and
made available electronically. All DOI numbers begin with a 10
and contain a prefix and a suffix separated by a slash. i.e.
doi:10.1037/028-6133.27.3.379
Journal Article Retrieved from an Online Database with a DOI:
The MRU Online has many scholarly databases such as EBSCO
Host, Academic Search Elite, LIRN,
etc.
Author, A.A. (Year of Publication). Article title. Journal name,
volume (issue #), page #(s). DOI
Johnson, J. (2010). The undergraduate student population of
Miami Regional University’s graduating class of 2018. Journal
of Education Statistics, 1(2), 200-211. doi:10.1037/028-
6133.27.3.379

Journal Article Retrieved from an Online Database without a
DOI:
Online scholarly journal articles without a DOI require a URL.
Author, A. A., & Author, B. B. (Date of publication). Title of
article. Title of Journal, volume #. Retrieved from
http://www.someaddress.com/full/url/
Kenneth, I. A. (2010). A nurse’s response to the nature of
human rights. Journal of Ethics, 8.
Retrieved from http://www.cac.psu.edu/jbe/twocont.html
Must give author’s name if available, last update/copyright
date, retrieval date, or complete URL. DO NOT ONLY LIST
URL for Webpage sources.
If author given:
Author, A.A. if known. (Year, Month Day). Title of section.
Retrieved from (website address).
Grant, C. (2010). Why go to college? Retrieved from
http://www.college/rev.Q&A.html
If no author is given, begin with article title:
Article name. (Year, Month Day). Retrieved from (website
address).
Shark attack. (2010, January). Retrieved from
http://www.allaboutsharks.com/attacks
Newspaper Article Retrieved from the Newspaper’s Website:
Author, A.A. (Year, Month Day). Article title. Newspaper
Name. Retrieved from (website address).

Greenwood, L. C. (2009, May 3). Education loans at all-time
low. The Washington Post. Retrieved from
http://www.washingtonpost.com
Article in an Online Only Periodical:
Author, A.A. (Year, Month Day). Article title. Periodical Title,
volume(issue). Retrieved from (website address)
Kobb, M. (2010). The New South. Lifestyles, 5(2). Retrieved
from http://www.lifestyles.com/south.html
Article in an Online Encyclopedia or Other Reference Work:
Reference article name. (Year, Month Day). In Name of
Reference Source. Retrieved from (website address).
Scholar. (n.d.). In Merriam-Webster’s online dictionary.
Retrieved from http://www.merriam-
webster.com/dictionary/scholar
Organization/Company Website:
Author, A.A. if known. (Year, Month Day). Title of section.
Retrieved from (website address).
Wal-Mart Stores, Inc. (2010). About us. Retrieved from
http://walmartstores.com/AboutUs/
Government Publication Print Version:
Governmental agency. (Year of Publication). Title of
Publication. (Publication #.) Place of publication: publisher.

U.S. Department of Labor U.S. Bureau of Labor Statistics.
(2009). Women in the labor force: A databook (2009 edition).
(Report No. 1018). Washington, DC: U.S. Government Printing
Office.
Government Publication Electronic Version:
Governmental agency. (Year of Publication). Title of
publication. (Publication #.) Place of publication: Publisher.
U.S. Department of Labor U.S. Bureau of Labor Statistics.
(2009). Women in the labor force: A databook (2009 edition).
(Report No. 1018). Retrieved from U.S. Bureau of Labor
Statistics Division of Labor Force Statistics website:
http://www.bls.gov/cps/wlf-databook2009.htm
References
A condition we can ill afford: Debating the Equal Pay Act of
1963. (n.d.). Retrieved from
http://www.historymatters.gmu.edu/d/6196
Banzak, L., Bewith, K., & Rut, D. (2009). Women’s movement
facing the reconfigured state. New York: Cambridge University
Press.
Boushey, H. (2006). Tag-team parenting. Washington, DC:
Center for Economic and Policy Research. Carr-Ruffino, N., &
Acheson, J. (2007, July). The hybrid phenomenon. Futurist,
41(4), 16-22.
doi:10.1037/028-6133.27.3.379
Hars, M. (2008). Welcome to ‘Whole-Mart’. Dissent, 53(1), 61-
66. Retrieved from
http://web.ebscohost.com/ehost/pdf?vid=5&hid=7&sid=38fd32e
3-c9af-4794-a2eb-
35a712877e34%40sessionmgr4

JetBlue Airlines. (2010, January, 15). About JetBlue. Retrieved
from
http://investor.jetblue.com/phoenix.zhtml?c=131045&p=irol-
irhome.
Kagey, Y. (2007, June 22). Jim Press gets ok to join Toyota’s
board. Washington Post. Retrieved from
http://www.washingtonpost.com/wpdyn/content/article/2007/06/
21/AR20070 62102647_pf.html
National Organization for Women [NOW]. (2009). Women lose
million due to wage gap. Retrieved from
http://www.now.org/press/2578
U.S. Equal Employment Opportunity Commission. (2007a).
Equal pay and compensation discrimination. Retrieved from,
http://www.eeoc.gov/types/epa.html
U.S. Equal Employment Opportunity Commission. (2007b).
Facts about compensation discrimination.
Retrieved from http://eeoc.gov/facts/fs-epa.html
international product innovation and
development
Roger J. Calantone and Janell D. Townsend
For millennia, individuals and firms have tried
to create local or regional monopolies through
differentiation. By offering a good, product,
or service that was better in some (generally
tangible) manner the aspiring monopolist could
command a price differential from the price
paid for the ordinary good purchased by the
‘‘mass’’ market. When unobservable quality
or exclusivity was the differentiator, special
‘‘trademarks’’ denoted the distinctive outputs of

the maker. As countries industrialized various
economic sectors in the 1800’s efficiency allowed
prices to fall dramatically and mass production
with little differentiation began to dominate the
scene. In the 1830’s clockmakers in Connecticut
were able to produce clocks so cheaply that
almost every working household had the means
to purchase a mantle place clock, whereas in
Europe at that time, clocks were still made
individually – only the wealthy had clocks.
Skilled workers in industries such as this,
possessing both the explicit and tacit learning
of their employer’s processes, immigrated to
new countries where they became agents of
innovation in processes that increased produc-
tivity. The most common base differentiator
was price accomplished through cost economies
of process reengineering allowing for the mass
diffusion of innovation across markets. Such
engineering of efficiency reduced waste, which
coincidentally has beneficial effects on quality
delivered. No one country was a single source
of this systematic industrialization, although
resource endowments allowed some to move
process innovation forward more rapidly.
Thus, process innovation delivered production
economies to mass markets, and in today’s
global marketplace, differentiation is derived
from product innovation itself.
This article reviews international product
innovation taking an activist firm perspective
with respect to global product development.
First, an overview of the nature of strategic
innovation management in global markets is
presented. The strategic intent and role of stan-

dardization versus adaptation in global products
is then discussed. Next follows a delineation
of significant factors associated with organizing
and managing global product innovation, and a
conclusion summarizes.
STRATEGIC INNOVATION FOR GLOBAL
MARKETS
In today’s global marketplace, the process of
innovation relies heavily on flexibility, speed, and
efficiency as the rates of technological innovation
have increasingly shortened product life cycles,
and enabled a broader and more diverse set of
competitors. During this period of increasing
resource constraints as well as greater competi-
tive threats, companies are faced with the need
to accelerate product development (Rothwell,
1994). The growing complexity and pace of
industrial technological change are forcing firms
to first understand the role and importance of
global product innovation, how this fits with
the firm’s level and strategic orientation toward
globalization, and the interaction of these forces
with the international marketing concept of the
company.
New product development (NPD) involves
the necessary but competing goals of minimizing
risk by acquiring sufficient market information
while reducing costs and time to market, thus
escalating the importance of NPD process
design and implementation (Harmancioglu
et al., 2007). In other words, a firm’s NPD
processes and how they are implemented are

vital for decreasing lead time and increasing
innovation productivity. NPD processes involve
a series of stages aimed at delivering a functional
commercial benefit to customers (Calantone and
DiBenedetto, 1995). Proficiency in executing
NPD processes is important because it deter-
mines the degree to which businesses can
meet and/or exceed customer demands, and
thus succeed in a global marketplace (Cooper,
1991). The stages of NPD are rather universal,
although various authors break it into as few as
three steps and as many as forty, according to
a particular application. There is no ‘‘one size
fits all’’ approach to NPD, so the organizational
design elements of each firm are different
and come into play at different stages of the
NPD process. However, each element plays a
2 international product innovation and development
vital role, requiring careful consideration and
planning.
GLOBAL ORIENTATION OF INNOVATION
Globalization of the firm has been conceptual-
ized as the transformation of businesses from
domestic, to multinational, to those with global
scale and scope (Ghoshal, 1987; Perlmutter,
1969). Following the basic tenets of incremental

internationalization applied to the globalization
process (Johanson and Vahlne, 1977), increasing
knowledge of global markets yields a hierarchical
structure of potential structural orientations.
This is based on complex interactions with
respect to the role of market attractiveness,
experiential learning, and mimetic behavior in
globalization patterns (Townsend, Yeniyurt, and
Talay, 2009). The level of commitment is not
static over time, but dynamically ranges from
initial market entry approaches such as casual
exporting to very high levels of integration for
the more globally oriented firms. Identifying the
current firm orientation toward international-
ization provides a basis for understanding the
underlying philosophy that guides the organiza-
tion’s approach toward international strategy and
decision-making (Cateora and Graham, 2009).
Global orientation is conceptualized as the orga-
nization’s ability to view the entire world as its
marketplace, not relying on individual markets
or regions exclusively, or independently. While
a multidomestic company treats customers and
competitors in each country or region on a
stand-alone basis, a global company takes an
integrated approach across countries and regions
(Birkinshaw, Morrison, and Hulland, 1995; Zou
and Cavusgil, 2002). This means emphasizing
the global success of the firm, as opposed to
accentuating nation- or market-based measures
(Ohmae, 1989), and is consistent with Perl-
mutter’s (1969) original conceptualization of
the geocentric firm. Yet, the implementation
of a global orientation remains a major chal-
lenge for leadership, when trying to integrate
a global strategy and a global structure (Roth,

Schweiger, and Morrison, 1991; Yip, 1992; Zou
and Cavusgil, 2002). High-level strategic orien-
tations such as these impact all elements of the
marketing mix, with innovation and product
development being among the core processes
undertaken by the firm (Townsend et al., 2004).
Three general international marketing
concepts are commonly used to define level
of commitment: domestic market extension
concept, multidomestic market concept, and
global marketing concept (Cateora and Graham,
2009). The domestic market extension concept is
characterized by the selling of domestic product
in foreign markets. Minimal to no adaptation is
done to the marketing mix. The multidomestic
market concept is characterized by a firm’s
recognition of the importance of the differences
in foreign markets along with the recognition of
the importance of international business to its
operations. Companies that operate under this
approach tend to look at foreign markets as being
vastly different, and accordingly, requiring a
unique strategy for each country. At the core of
the global marketing concept are the efficiencies
that can be obtained through standardization. In
general, strategy is set at a global level with the
understanding that some decisions are affected
by local influences and will need to be looked at
on a country-by-country, or region-by-region
basis. From this conceptual perspective, the
entire world is seen as a market, with segments
that span multiple countries.
PRODUCT POLICY: STANDARDIZATION

VERSUS ADAPTATION
The globalization of product marketing origi-
nates from the debate about the relative level of
marketing mix standardization (Buzzell, 1968).
It appears that consumer expectations around
the world are beginning to converge in terms of
needs and expectations as products that deliver a
consistent identity have become more viable. A
study identifying ‘‘marketing universals’’ found
that there are few differences in consumers’
use of quality signals across cultures – yet, only
for selected levels of segmentation (Dawar and
Parker, 1994). Research does suggest a general
degree of homogeneity across market segments
which transcend national boundaries (Yavas,
Verhage, and Green, 1992). This is supported
by recent findings that socioeconomic variables
moderate the effects of cultural dimensions on
the acceptance of new products (Yeniyurt and
international product innovation and development 3
Townsend, 2003), and the degree of foreign-
ness of new products is having less of an effect
on performance over time (Townsend, Calan-
tone, and Schmidt, 2003). Thus, product policy
related to standardization versus adaptation is
the function of the firm’s strategic orientation
coupled with the degree of homogeneity across
geographic and cultural markets.
A firm’s international product policy is
critical due to cost ramifications, and the inimi-

cal prospect that value creation and transmittal
manifests in the product. Packaging style,
quality, labeling, and brand name may seem
trivial to some. Yet, these characteristics play
a major part in international marketing due to
the degree of calibration with cultural norms
and preferences. Some products may need
to be slightly altered and others not at all.
Observations from the marketplace seem to
support the idea of finding an appropriate
balance between standardization and adaptation
(Cavusgil, Zou, and Naidu, 1993; Jain, 1989b),
with the premise being to embrace the concept
of being global, but acting locally as necessary.
Standardization. A standardized product
policy generally means that the firm will create a
standard product to be sold in all markets served.
However, companies will sometimes market
their current domestic product internationally,
as is, under the same brand name, in the same
packaging, and with the same level of quality.
The product policy does not change irrespective
of the target market. While this approach
preserves the low cost producer idea, long
production runs, undifferentiated marketing,
and economies of scale and experience, driving
per unit variable and fixed costs downward, it
ignores an inherent need for variety within any
culture, and the differences of tastes between
cultures. This is hubris in the face of the
diversity of other cultures, and usually market
punishment is quick and sure.
The primary benefits of a standardization
approach to product development are the produ-

ction economies and other cost savings that
can be obtained. Supporters of standardization
believe that price, quality, and reliability will
offset any differential advantage that having a
culturally adapted product would provide in
the eyes of the customer (Jain, 1989b). A stan-
dardized product policy can be useful because
economies of scale are created in activities, espe-
cially in research, development, manufacture,
and marketing (Kuvykaite, 2008). Some market
segments are the same no matter where they
exist geographically (Katz, 1987). Proponents
of standardization argue that with the increased
levels of global communication and other world-
wide socializing, the tastes, needs, and values in
a significant sector of the population across all
cultures has become more homogeneous. The
argument is that market segmentation is based
on the lifestyle of the consumer, and standard-
ized products can be marketed globally when the
segmentation scheme is done using criteria other
than geography alone. Product standardization is
a forerunner of overall marketing mix standardi-
zation, reducing the complexity of operations.
Standardization allows for less complex orga-
nizations that are easier to manage and control
(Majaro, 1982).
No policy is without disadvantages though.
Marketing flexibility is lost because of the
inability to match the product to local require-
ments. Standardization suppresses entreprene-
urship because a standard global product is
accepted in all markets, complacency sets in
and fresh new ideas are few and far between

(Wind, 1986) – some personnel may be lost to
organizations that provide more opportunities
for creativity in marketing and product design
(Majaro, 1982). Also, standardized products
can be too complicated for some markets and
too simple for other markets; some markets
may need extensive training before accepting a
product, while others may find the product too
simple and will thus reject it (Wind, 1986).
Industrial customers around the world are
generally more similar than their consumer
goods counterparts because their purchasing
decisions are driven less by attitudes and feelings,
and more by economic considerations. Because
of this, standardization is typically seen as the
strategy of choice for manufacturers of indus-
trial products. The main concerns of industrial
customers are service, dependability, quality,
performance, and cost (Cateora and Graham,
2009). Also, in recent years, there has been
a trend toward more international standards
(e.g., ISO standards) (Usunier, 2003), providing
impetus for using a standardization strategy for
industrial products.
Adaptation. Adapting products for interna-
tional markets simply means expanding the
organization’s product line (Calantone,
Cavusgil, and Schmidt, 2004). Supporters
of adaptation say it is inevitable. The most

important objective of a firm is not minimization
of costs through standardization, but long-term
profitability, achieved by satisfying various
consumer needs in different countries, thus
ensuring greater sales (Pimblett, 1997). Many
of the benefits of an adaptive product policy
are obvious. For instance, the more a product
is tailor-made for a specific market, the better it
will fit the needs of the customers (Calantone,
Cavusgil, and Schmidt, 2004). This, in turn,
should lead to higher sales and sustained growth.
A product adapted to a target market based
on market research is more likely to succeed,
and therefore carries less inherent risk than a
standardized product.
Drawbacks to the adaptation approach can
include increased costs related to research and
development and the loss of scale economies.
There may also be an increase in the complexity
of the organization in response to the addition
of foreign market operations to the preexisting
domestic market operations. This will add a level
of complexity to the management and an overall
control of the organization. When defining the
level of international commitment, management
should ensure that they have the appropriate
level of resources committed to the foreign
endeavors (Cateora and Graham, 2009). From a
consumer’s standpoint, multiple products with
different packaging and different brand images
can cause identity or credibility problems.
Adaptations can be grouped into two cate-
gories: obligatory adaptation and discretionary
adaptation. Obligatory adaptations are defined

as those that an exporter is forced to undertake
because of regulations that must be met in order
to enter a foreign market or because of external
environmental factors (e.g., climate considera-
tions). Discretionary adaptations are voluntary
adaptations that a firm undertakes in order to
better align its product with market needs or
other cultural factors (Jain, 1989a).
Several considerations come into play when
determining the level of adaptation necessary
for a product in a foreign market. In order
to understand all the possible ways a product
can be adapted it should be deconstructed into
components based on benefits delivered. Major
adjustments to the core component can be costly
if changes to the production processes must be
made to accommodate the specialized products.
This may require a large capital investment.
Auxiliary components include things such as
packaging which protect the product’s integrity,
but also serve as a communications platform,
sometimes tightly regulated by governmental
edits.
The importance of the features contained
within the packaging component depends on the
need that the product is designed to serve. For
example, in countries where literacy levels are
relatively low, packaging must include symbols
or pictures to aid the consumer in identifying
the contents of the package and the appro-
priate usage. In other instances there may be
legal requirements for labeling (e.g., information
printed in multiple languages). It could also be
the case that package sizes are regulated by law.

External environment factors, such as humidity,
could also bring about the need for adjustments
to packaging. In some countries, such as Japan,
the quality of the packaging has a direct impact
on the consumer’s perception of the quality of
the product within.
In addition to the physical and service aspects
of product adaptation, the impact of the symbolic
attributes related to a product must also be
examined (Usunier, 2003). In order to determine
the symbolic attributes a product may have,
a firm needs to first understand the culture
of the country in which the product will be
sold, including elements such as materialism,
social institutions, belief systems, and language.
There are two types of cultural knowledge that
are necessary: factual and interpretive. Factual
knowledge can be easily learned; interpretive
knowledge, conversely, requires cultural insight
usually acquired through personal experience.
ORGANIZATIONAL DESIGN
Organizational design elements are critical to
success if product innovation and management
is to be successful across global markets. Global
organizations need to determine and achieve a
balance between central authority and respon-
siveness to local preferences that optimizes their
business position (Johansson and Yip, 1994;

Roth, Schweiger, and Morrison, 1991). Influ-
ential organizational design elements include
formally planned stages, senior level involve-
ment, business case preparation, customer
input, and cross-functional integration (Barczak
and McDonough, 2003), while a business case
delineates project goals, market projections, and
possible product specifications (Harmancioglu
et al., 2007). Coordination mechanisms in NDP
include linking electronically geographically
dispersed parts of the organization via intranets,
extranets, and so on (Boudreau et al., 1998),
best practice repositories, and lead centers of
excellence (Frost, Birkinshaw, and Ensign,
2002).
Subsidiary integration and global product
mandates. A general trend has been observed
such that multinational corporations have begun
initiatives focused on integrating value-added
activities which were once globally dispersed.
This global dispersion occurred as a response to
host government import/export regulations and
tariffs, but with the globalization of business
in recent years, these types of dispersed orga-
nizational structures are no longer necessary.
Utilizing formal and informal interfunctional
coordination mechanisms allows organizations
to achieve global responsiveness while balancing
flexibility and efficiency (e.g., Bartlett and
Ghoshal, 1987; Martinez and Jarillo, 1991).
With increased globalization foreign subsidiaries
are now being used in more specialized roles
with greater market scope (e.g., exporting) but
narrow functional and/or product responsibility
(Birkinshaw, 2002). World product mandate

gives global responsibility to a subsidiary for
development, manufacturing, and marketing
of a single product line. Although full-scope
mandates of this nature are relatively rare,
regardless of scope, the primary outcome of
the mandate process is greater specialization
in terms of focused product responsibility
(Birkinshaw, 2002).
In terms of specialization there are two theo-
retical approaches: rationalization-integration
and world product mandate. Rationalization-
integration occurs when a subsidiary produces
a component under assignment from the
parent organization for the firm as a whole.
Exporting is controlled by the subsidiary but
upstream responsibilities such as development
and design are controlled by the parent orga-
nization. Full-scope world product mandate,
as mentioned previously, gives full control
of development, manufacturing, and export
marketing to the subsidiary. In this type of
relationship, the subsidiary acts more as a
partner than a subordinate to the parent and
has a higher level of autonomy than in the
rationalization-integration approach (Birkin-
shaw, 1996). In practice, a hybrid approach
is more commonly observed; for example, a
subsidiary may have global production and
marketing responsibilities but utilizes central
R&D resources for new product development.
There are four motives that are generally
accepted classifications of subsidiary mandates:
market-seeking, resource-seeking, efficiency-

seeking, strategic asset-seeking (Birkinshaw,
1996). Each has a set of characteristics related to
the business benefit the parent organization is
attempting to achieve via the mandate. There are
several challenges related to the establishment
and management of subsidiary mandates. One
such challenge is the restructuring of the orga-
nization to accommodate a new decentralized
decision-making and reporting structure. The
estimated value addition from the subsidiary
should be able to cover the costs associated
with this restructuring. Also, typically, the
products assigned as a part of the subsidiary
mandate approach are usually products at the
end of the product life cycle. Care must be
taken to ensure that the subsidiaries remain
relevant to the current strategic vision of the
parent organization even if the primary focus
is on a product that is not at the forefront for
management. Lastly, because of the specialized
nature of these mandates, foreign subsidiaries
are vulnerable to changes in the marketplace. If
subsidiaries are unable to adapt to the market
changes, or if organizations are unprepared to
shift mandates to different subsidiaries to meet
market needs, the mandate approach will be
unsuccessful (Birkinshaw, 1996).
Open innovation. Traditionally, the ideas
and concepts that feed innovation have been
generated via experts and/or scientists within
internal research and development departments.

Recently, more organizations have adopted an
approach which includes ‘‘open innovation’’
in the new product development cycle. Open
innovation utilizes ideas and inspiration
from ‘‘creative consumers.’’ These creative
consumers differ from mainstream consumers
in that they are excited by new ideas whereas
mainstream consumers tend to like what they
already know. The open innovation theory
proposes that tapping into these creative
consumers will help to overcome the thinking
that most market research is backward looking
as opposed to the forward-looking approach that
is needed for product innovation (Clegg, 2008).
The engaged consumer has always existed,
but now they are easier to identify and access
via social networking and user-generated com-
munities. The openness emerging from user-
generated forums is where the true gain accrues
relative to the classic opinion/idea collection
methods of surveys and focus groups. The use
of the web as a means of communication gives
companies access to consumers on a global scale
which is more difficult and expensive using the
classic methods of data collection. This broad
and global perspective on consumer ideas gives
companies an advantage when attempting to
generate breakthrough innovations.
Although disruptive product innovation
appears to be key to the long-term health of
an organization, there is no assurance that
the ideas generated from open innovation
mechanisms ultimately lead to these highly
coveted product outcomes. The volume of

information acquired can itself hinder the
creative process. Automated tools provide
an information capture mechanism, but the
screening and sifting task to discover something
commercially successful can be frustrated in
many ways. This uncertainty drives many firms
to opt for incremental product line extensions
that utilize their current business capabilities
as opposed to the more risky breakthrough
innovation route.
Cooperation in the new product development
process. The complexities of the global
marketplace have required companies to forge
new vertical and horizontal alliances and to seek
greater flexibility and efficiency in responding
to market changes. These multifaceted and
complex organizational relationships seek to
establish or extend a firm’s differentiation by
way of an alliance, either vertically in its value
chain or horizontally through either competitors
or complementary companies. Since alliances
allow for the pooling of resources, it stands
to reason that they would create a broader
range of resource opportunities in the product
innovation process. Through alignment and
extension, collaboration with a partner provides
an opportunity to fulfill the requirements
of a sustained competitive advantage, which
cannot be achieved independently; through the
efficient use of a partner’s existing resources,
the boundaries of the firm can be effectively
extended. This includes knowledge sets that
are both externally facing like culture and
markets, and those that are internally oriented

like product-specific processes.
In recent years, the trend has been for orga-
nizations to cooperate with different external
partners as a way to enhance the efficiency and
effectiveness of the new product development
process, cut costs, and to reduce risk. These
partners can include distributors, consumers,
universities and research centers, and even
competitors. Studies suggest that there is a
positive relationship between cooperation and
the achievement of success in the process of
innovation. Cooperative alliances can be divided
into two categories: (1) those based on synergies
and complementary assets; (2) those based
on growth opportunities and market power
(Arranze and Arroyabe, 2008). Cooperation
can be further identified as ‘‘vertical’’ or
‘‘horizontal’’ cooperation, respectively. Vertical
cooperation (also known as supply chain
cooperation) plays an important role in the
collection of information on technologies, user
needs, and markets. Partnerships with suppliers
are seen as a complement to internal R&D
activities as opposed to a substitute for them,
and partnering with customers reduces the
risks associated with market introduction. With
horizontal cooperation, competitors may have
complementary resources which will allow both
parties to reduce costs and risks in large projects.
These types of partnerships are best suited for

scenarios where either a strong common interest
has been identified, for example, cooperating
on the development of a new range of product
or services, or scenarios where the resulting
research leads to generic results (Arranze and
Arroyabe, 2008).
There are a number of benefits derived from
using a cooperative approach to new product
development (Vilaseca-Requena, Torrent- Sell-
ens, and Jimenez-Zarco, 2007) – for example,
the establishment of work teams made up of
experts in different functional fields who adopt
flat structures (e.g., minimal layers between
employees and management) that are highly
adaptable, wherein decisions are taken in a
decentralized way. Cooperation also favors
the creation of products designed for and
adapted to new needs and demands, and the
development of a more efficient process of
innovation that incorporates the ‘‘voice of the
consumer’’ together with the experience and
know-how of other partners. It also reduces
the uncertainty surrounding the product’s
future and its dependence at the time of
product launch, while improving on the results
obtained.
Yet, it has been estimated that approximately
60% of established cooperative relationships fail,
and there are various factors that have been
identified as barriers to effective cooperation.
Lack of familiarity between the partners, the
distance that separates them, and the absence
of prior collaboration experience are noted as
the most important inhibitors of the process

of cooperation. The issue of lack of familiarity
arises when the primary organization fails to
research what each partner’s desired benefits,
level of risk aversion, level of commitment, and
strategic similarity are prior to the beginning of
the project. The issue of distance can be phys-
ical, time related, or cultural. The last inhibitor,
the absence of prior collaboration experience,
arises when partners have not been a part of
these types of alliance previously. The thought
is that partners with prior experience will be
more able to efficiently and effectively partner
with organizations in new alliances making the
overall management of the relationship easier for
all parties (Vilaseca-Requena, Torrent-Sellens,
and Jimenez-Zarco, 2007).
Partner selection and management is inher-
ently important. Prior to …
global branding: three keys for global brand
success
Kevin Lane Keller
INTRODUCTION
Many companies have been global marketers for
decades – firms like Nestlé, Shell, Bayer, and
Toshiba have sold their products around the
world for years. In more and more product cate-
gories, the ability to establish a global profile is
becoming virtually a prerequisite for success. In
luxury goods such as jewelry, watches, and hand-

bags, where the addressable market is a relatively
small percentage of the global market, a global
profile is essential to grow profitably. Marketers
for luxury brands such as Prada, Gucci, Cartier,
and Louis Vuitton have long managed lucrative
global franchises.
Besides the need for a larger customer base
to achieve necessary economies of scale, compa-
nies may look to sell outside their domestic
market for a number of different reasons: better
perceived profit opportunities in international
markets than in the domestic market; a need to
diversify risk and reduce their dependence on
any one market; a desire to counterattack global
competitors in their home markets; and a real-
ization that their customers are going abroad and
require international service.
But global competition is intensifying as new
firms make their mark on the international
stage. The automotive market is becoming a
worldwide free-for-all. In Chile, for example,
because there are no domestic auto manufac-
turers, imports come from all over the world,
including 14 different brands of Chinese cars,
trucks, and commercial vehicles. Competition
in developing markets has also intensified.
In China’s exploding mobile-phone market,
Motorola found their market share drop in half
over a two-year period because of inroads made
by Nokia and different Asian competitors.
Competition arising from firms based in
developing markets is also heating up (see
EMERGING MARKETS). In various developing

markets, India’s Tata Motors have launched
the people’s car whose spartan features are
offset by a rock-bottom price. Eyeing more
developed markets down the road, Tata can
afford to charge a fraction of what other auto
manufacturers charge because of their reduced
development costs and innovative distribution
strategy that requires dealers to participate in
the final assembly.
India’s Mahindra Motors are not even going
to wait before entering developed markets. Their
four-door, diesel-powered short-bed trucks are
tackling the competitive small utility vehicle
(SUV) and truck markets in Europe, Asia, and
the United States with a promise of superior
fuel economy. To offset a lack of image and
reputation, Mahindra are targeting three groups
in the United States that are believed to be
most receptive to their appeals: consumers who
identify themselves as ‘‘green’’; people who have
bought their other main automotive product,
Mahindra tractors; and Indian expatriates.
Given the significant growth opportunities
offered by international markets, developing a
global strategy can be of paramount impor-
tance to brand builders everywhere. For many
companies, however, global branding has been
a mixed blessing. On the one hand, a global
branding program can lower marketing costs,
realize greater economies of scale in production,
increase distribution efficiencies, and provide a
long-term source of revenue. On the other hand,
if not designed and implemented properly, a

global branding program may fail as a result
of ignoring important differences in consumer
behavior and/or the competitive environment in
the individual countries.
The goal for any brand builder, obviously,
is to obtain as many of the benefits of global
branding as possible while minimizing the poten-
tial risks and downside. Not surprisingly, many
companies have experienced both tremendous
success and embarrassing failures in their global
branding efforts. It is not always the case that
the most successful brand in one country will
find success in other countries. Although US
retail giant Wal-Mart have had some success
entering the overseas markets in Latin America
and China, despite concerted efforts, they found
themselves having to withdraw from both the
German and South Korean markets.
The goal of this article is to share some
common themes or guidelines for success that
have emerged in global branding (see Johansson,
2009 for more detail). We outline three keys
2 global branding: three keys for global brand success
for global brand success: (i) understand the
global consumer context, (ii) build a solid global
marketing foundation, and (iii) strike a balance

in global brand management. They represent
global branding fundamentals that provide the
necessary foundation for creating a strong global
brand. We raise a number of different issues and
offer a number of different examples in each case.
UNDERSTAND THE GLOBAL CONSUMER
CONTEXT
First – and perhaps most fundamental – it
is important to recognize that international
markets vary in terms of consumer behavior
and all the different marketing forces and other
factors that impact them (see BASE OF THE
PYRAMID MARKETS: CULTURE INSIGHTS
AND MARKETING IMPLICATIONS). As a
result, consumers may vary accordingly in
their perceptions, beliefs, attitudes, images,
experiences, behaviors, and so on, toward both
the brand itself as well as the product category
in general. These differences can have profound
implications on building and managing brand
equity across geographical boundaries.
For example, consider the following (Hollis,
2008). The median age in India and China is
roughly 25 years, whereas in Japan, Germany,
and Italy it is around 43. When asked if they
are more concerned with getting a specific brand
than the best price, roughly two-thirds of Ameri-
cans agreed as compared to around 80% in Russia
and India. A lot of these differences in consumer
behavior reflect cultural differences that can be
pronounced across countries. Hofstede (1980)
identifies four cultural dimensions that differen-
tiate countries (with countries or areas that score

high and low):
1. Individualism versus collectivism. In collec-
tivist societies, the self-worth of an indi-
vidual is rooted more in the social system
than in individual achievement (high: Japan;
low: United States).
2. High versus low power distance. High power
distance cultures tend to be less egalitarian
(high: Russia; low: Nordic).
3. Masculine versus feminine. This dimen-
sion measures how much the culture
is dominated by assertive males versus
nurturing females (high: Japan; low:
Nordic).
4. Weak versus strong uncertainty avoid-
ance. Uncertainty avoidance indicates how
risk aversive people are (high: Greece; low:
Jamaica).
At the same time, many countries do not vary
much on one or more of these various consider-
ations, suggesting that differences in marketing
activity can create unnecessary or ineffective
marketing activity. An important key to global
marketing success is understanding consumers
in different markets, recognizing what they
know and feel, and could potentially value about
the brand, and, as described below, tailoring
marketing programs to their desires as a result.
Obviously, the fewer the differences in

consumer behavior found across markets,
the more effective a standardized marketing
program will be. Some types of products
travel better across borders than others. New
products often represent promising candidates
for standardization. While mature products may
have vastly different histories (or even positions)
in different markets, consumer knowledge for
new products is generally the same everywhere
because perceptions are yet to be formed.
Many of the leading internet brands – Google,
eBay, and Amazon – have made relatively
quick progress in overseas markets. In addition,
high-end products also benefit from standard-
ization because a high quality or prestige image
often can be marketed similarly across countries.
On the other hand, food and beverage marketers
find it more challenging to standardize their
products as they have to contend with widely
varying tastes and cultural habits and norms.
Developing markets. In understanding cons-
umer behavior in a global context, because of the
wide income and economic disparity involved,
some of the biggest differences are found
between consumers in developing or emerging
(e.g., the BRICS countries: Brazil, Russia, India,
China, and South Africa) versus developed
markets (Mahajan, De Moraes, and Wind, 2000;
Khanna and Palepu, 2006). These differences
can have profound implications forhow brands
should be marketed (see EMERGING MARKETS).
global branding: three keys for global brand success 3

For example, consider channels of distribu-
tion. Eighty percent of consumers in developing
markets buy their products from tiny bodegas,
stalls, kiosks, and mom-and-pop stores not much
bigger than a closet, which Procter & Gamble
call high-frequency stores. Smaller packaging and
lower sales prices are often critical when incomes
and housing spaces are limited. Unilever’s 4-cent
sachets of detergent and shampoo have been
successful in rural India, where 70% of the
country’s population still lives. Coca-Cola’s sales
jumped when they moved to a smaller, 200-ml
bottle in India, selling it for 10–12 cents in small
shops, bus-stop stalls, and roadside eateries.
Recognizing that their cost structure made it
difficult to compete effectively in developing
markets, Procter & Gamble have devised a
number of cheaper, clever ways to make the
right kinds of products to suit consumer demand
there.
Fundamentally, marketers must rethink
all aspects of their marketing program in
developing markets. As another example, high
cell-phone penetration in developing markets
makes mobile marketing an attractive option.
A pioneer in China, Coca-Cola China created
a national campaign asking Beijing residents
to send text messages guessing the high
temperature in the city every day for just over
a month, for a chance to win a one-year supply
of Coke products. The campaign attracted more
than four million messages over the course
of 35 days. In Africa, mobile-phone operator
Celtel invested in rural services by introducing

the Me2U service, by which callers could send
airtime credit to other mobile phones. Because
most Africans do not have bank accounts, it
has become a convenient and cheap way to
transfer money, even substituting for cash in
some villages.
BUILD A SOLID GLOBAL MARKETING
FOUNDATION
The second guideline emphasizes the impor-
tance of building a solid global marketing foun-
dation. A solid global marketing foundation
results when (i) the proper marketing infrastruc-
ture is put into place; (ii) the right marketing
partners are enlisted; and (iii) steps are not
skipped in brand building.
Proper marketing infrastructure. A crit-
ical success factor for many brands has
been their manufacturing, distribution,
and logistical advantages in domestic
and foreign markets (see DESIGNING A
GLOBAL SUPPLY CHAIN: OPPORTUNITIES
AND CHALLENGES; GLOBAL SOURCING
STRATEGY: AN EVOLUTION). This has
involved (i) creating the appropriate marketing
infrastructure ‘‘from scratch’’ (if necessary); as
well as (ii) adapting to capitalize on the existing
marketing infrastructure in other countries
(Craig and Douglas, 2000).
Since international markets vary greatly in
terms of existing infrastructure, companies have
gone to great lengths to insure consistency in

product quality. Through the years, Nestle have
invested in systems, equipment, and so on, so
that proper production and distribution infras-
tructure could be put into place that would
otherwise not have existed. For example, Nestle
devised ‘‘milk roads’’ in China to overcome local
deficiencies in transportation and distribution
systems.
More often, however, companies have to adapt
operations and/or invest in foreign partners
in order to succeed abroad. One of the most
crucial global investments is the establishment
of a reliable distribution system (Arnold, 2000).
Companies often differ in their approach to
distribution, and the results can be dramatic. For
example, Coca-Cola’s distribution strategy and
ability to adapt to specific regional concerns (e.g.,
the necessity for vending machines in Japan) has
been a key to their global success.
Sometimes, companies mistakenly adapt
infrastructure strategies that were critical success
factors, only to discover that these changes
eroded the brand’s competitive advantage. For
example, Dell Computer initially abandoned
their direct distribution strategy in Europe and
instead decided to establish a traditional retailer
network through existing channels, with poor
results. Ignoring critics who claimed that a direct
distribution model would never work in Europe,
Dell revamped their direct approach and
relaunched their personal computer line with
a new management team to execute the direct
model that the company had pioneered in the
United States, finding greater success as a result.

4 global branding: three keys for global brand success
Developing a proper marketing infrastructure
is especially important in developing markets.
India still struggles with poor infrastructure and
highly restrictive labor laws. Its retail channel
structure, although improving, still lags. The
quality of public services – education, health,
provision of water – is also often lacking. In
China, after a series of high-profile product
quality scares and crises, government standards
were put in place for product quality and safety
standards in manufacturing to try to assure over-
seas consumers and gain their trust.
Right marketing partners. In developing their
infrastructure, most global brands have
marketing partners of some form in their inter-
national markets, ranging from joint venture
partners, licensees or franchisees, distributors,
ad agencies, and other marketing support
personnel. One common reason for establishing
brand partnerships is access to distribution.
For example, Guinness have very strategically
used partnerships to develop markets or provide
expertise that the company lacked with their
own personnel or capabilities. Partners can
also help to make sure supply and distribution
chains operate smoothly in different markets.
With 226 offices in 70 countries, Seattle-based
freight-forwarder Expeditors International help
firms keep track of 3000 shipping containers and
2 million pounds of airfreight around the world.

Successful brand partnerships can become
key components to overall profitability for each
of the parent companies. The value of a part-
nership can extend far beyond increased sales
or access to distribution. Good partners share
‘‘brand values’’ that help maintain brand consis-
tency across markets. For example, McDonald’s
fierce commitment to product and service stan-
dardization is one reason why the retail outlets
are so similar all over the world. To achieve such
consistency, McDonald’s handpick their global
partners one by one in order to find ‘‘compulsive
achievers’’ who will put forth the desired effort.
Avoiding branding shortcuts. Building a brand
in a new international market needs to be done
from the ‘‘bottom-up’’ – both strategically and
tactically. Strategically, this means concentrating
on building awareness first before building the
brand image (i.e., to ‘‘lay the foundation’’ for the
brand). Tactically, or operationally, this means
determining how to best create sources of brand
equity in new markets. In other words, the means
by which a brand was built in one market (e.g.,
the particular product, distribution, commu-
nication, or pricing strategies and marketing
activities) may not be appropriate in another
market even if the same overall brand image may
be desired.
Many times marketing programs have to be
adjusted because the brand is at an earlier stage
of development in its new market (see MARKET
ENTRY AND EXPANSION). In such situations,

consumer education about the product itself
may need to accompany brand development
efforts. When Coca-Cola moved into developing
markets in Asia, they encountered consumers
who loved the brand, but had never drunk the
product before. Not realizing it needed to be
chilled, they required education as to the fact
that it should be drunk cold.
The recommendation to avoid shortcuts
suggests some patience on the part of marketers.
Firms may have to ‘‘backtrack’’ to an earlier
stage of brand development in these new
markets and engage in a set of marketing
programs and activities that the brand – in its
existing markets – had long since moved beyond.
Although the time taken to build the brand
in new markets may be compressed because
of greater financial resources and a keener
understanding of effective strategies and tactics,
it could still take some time. The temptation
– and often mistake – is to export the current
marketing program because it seems to basically
‘‘transfer’’ or ‘‘work.’’ Although that may be
the case, the fact that a marketing program can
meet with acceptance or even some success in
a market does not mean that it is the proper
marketing activity in terms of building a strong,
sustainable brand equity there.
For example, when Nike made a big push into
Europe in the early 1990s, they were too aggres-
sive in their approach and overrelied on their
well-known American sports stars. Although
athletes such as Michael Jordan, Bo Jackson, and
Wayne Gretzky were known to varying degrees

in Europe, they represented sports (i.e., basket-
ball, football, baseball, and hockey) that were not
as popular in Europe as they were in America.
As a result, the ads that were so captivating in
global branding: three keys for global brand success 5
the United States generated much less fanfare in
Europe. The brand met with some success, but
failed to live up to its potential. Nike manage-
ment soon came to realize that Nike’s brand
mantra of ‘‘authentic athletic performance’’ had
a different meaning in the European culture.
Instead of using American heroes playing Amer-
ican sports, Nike adopted a more ‘‘grassroots
approach’’ to better reflect authentic athletic
performance ‘‘European style.’’ Soccer, or foot-
ball, thus became an indispensable ingredient,
and Nike sales began to rise accordingly.
Not taking shortcuts helps to create
marketing momentum and support from a
growing customer base in the new market.
Red Bull deliberately adopted a phased roll-
out program in entering a new market with
imposed scarcity to help drive up interest and
demand in their new functional energy drink
product. Jamaica-based Digicel have success-
fully conquered many politically unstable
third-world countries such as Papua New
Guinea, Haiti, and Tonga by developing
product and programs that appeal to the poor
consumers who are typically otherwise over-
looked. The fierce loyalty of these consumers

helps to protect Digicel from any overly
aggressive government actions or interventions.
STRIKE A BALANCE IN GLOBAL BRAND
MANAGEMENT
Ideally, a single marketing program could be
devised and implemented that would turn out
to be the most effective and efficient possible
option for each and every country in which the
brand is to be sold. There are many advantages to
launching such a globally consistent marketing
program for a brand: economies of scale in
production and distribution; lower marketing
costs; power and scope; consistency in brand
image; ability to leverage good ideas quickly
and efficiently; and uniformity of marketing
practices.
Unfortunately, such uniformly optimal global
marketing programs are rarely possible. One
implication of the similarities and differences
across international markets is the need to
blend local and global elements in marketing
programs. The best examples of global brands
retain a thematic consistency and alter specific
elements of the marketing mix in accordance
with consumer behavior and the competitive
situation in each country. An oft-heard – and
sometimes modified – expression of prescriptive
advice to marketers of global brands is to ‘‘Think
Global, Act Local.’’ In that spirit, HSBC are
even explicitly positioned as ‘‘The World’s
Local Bank.’’

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