MODULE 3 RESEARCHING GLOBAL MARKETS 7.

1 GLOBAL MARKETING PLAN

The Chinese leadership is trying to demonstrate that a country can have a powerful modern economy without allowing its people the individual freedoms that the Western World calls human rights. The entire Asian Model is based on a variant of this proposition: that it is possible to become as strong as the Western World without embracing its permissive ways.James Fallows, Author Marketing Strategies in the European Community: Changes Affecting Strategies Product Strategies
Harmonization in product standards, testing & certification process Common patenting & branding More competitive environment Antimonopoly measures Common guidelines on TV broadcast Uniform standards for TVCs

Threats to Marketers Planning

Untimeliness of directives Local content rules Rules of origin Differences in marketing research Parallel importing Different taxation of goods Restriction on alcohol & tobacco ads Limits on foreign TV production

Managements Strategic Options

Consolidate production Obtain marketing economies Shift from brand to benefit segmentation High-margin products Introduce visible low-cost brand Position product as per local markets Coordinate components of promotional mix Consolidate manufacturing facilities Centralize distribution

Pricing Strategies

Promotion Strategies

Distribution Strategies

Simplification Increase in of documents & distributors procedures margins Elimination of Lack of direct customs marketing formalities infrastructure

MODULE 3 RESEARCHING GLOBAL MARKETS 7.2 GLOBAL MARKETING PLAN

How global are various industries? Selected Industries Aerospace Banks Beverage Chemicals Computers Electronics Energy Engineering Food Food & Drugstore Forest & Paper General Merchandise Industries & Farm Equipment Insurance Mail Delivery Metals Motor Vehicles & Parts Petro Refining Pharmaceuticals Specialty Retailers Telecommunications Trading Utilities # in Industry 9 63 5 14 11 25 5 10 10 30 7 13 10 54 8 9 24 27 13 13 20 19 19 US & Canada 7 14 4 2 8 8 3 2 6 12 4 7 2 18 3 1 6 8 8 10 10 0 8 EU 2 30 1 9 0 6 1 2 2 12 2 3 5 16 3 3 9 6 3 3 7 3 5 Japan 0 9 0 2 3 8 0 6 0 2 1 3 2 13 2 4 8 3 0 0 2 11 5 NonTriad 0 10 0 1 0 3 1 0 2 4 0 0 1 7 0 1 1 10 2 0 1 5 1

Wholesalers

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MODULE 3 RESEARCHING GLOBAL MARKETS 7.3 GLOBAL MARKETING PLAN (CONTD)

Asia-Pacific Income & Population: Country
Japan China Korea India Australia Taiwan Indonesia Hong Kong Thailand Singapore Malaysia New Zealand

GNP ($ Billion)
4,427 1,179 521 430 407 362 248 188 177 120 111 60

Population (Million)
127 1,268 47 1,015 19 22 211 7 63 3 23 4

GNP (Per Capita $)

34,796 930 10,992 424 21,239 16,370 1,176 27,463 2,822 36,484 4,746 15,376

GNP Growth Rate (97-00 %)

1.1 8.9 5.0 2.5 1.2 0.0 4.2 1.4 4.7 4.7 3.3 --0.4

TOTAL

8,230

2,809

2,930

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Cultural Values/Marketing Values: Classical Western

Nuclear family Beliefs in competition, challenges Personal independence Doing ones own thing Resentment of authority Primacy given to youth & change Control by guilt & conscience Brand segments: personal choice

Cultural Values Traditional Asian

Extended family Harmony, avoiding confrontation

Shared responsibility, interdependence Public self & face Respect for authority Age & seniority important Control by shame & loss of face

Marketing Values
Confidence in brand/corporate names 3

Testimony for attention to brands Diffusion from leading edge Understatement of wealth Environmentalism

Presenters as role models in ads

Rapid adoption of successful brands Display of wealth & status Confidence in technology

MODULE 3 RESEARCHING GLOBAL MARKETS 7.4 GLOBAL MARKETING PLAN (CONTD)

Marketing Myths Vs Realities in Japan:

MYTH
Customers buy based on relationships & rarely shop around

REALITY

Customers shop around for deals & sometimes even more than their peers in New York & London Customers equate price with quality Customers increasingly seek value Customers are fiercely nationalistic Customers are standing in line for goodquality foreign products Customers are conservatives & only Consumers are willing to experiment purchase well-known Japanese brands with new domestic & foreign brands Customers only shop face-to-face Customers are driving rapid growth in direct-mail & Internet sales Distribution channels are impossible to Distribution channels & relaxed crack regulations are making the Japanese market easier to crack Firms place long-term relationships with In a value-conscious environment, firms other companies above all other are placing the value of business considerations relationships & harmony With a population crossing one billion & a GNP ofabove $ 430 stability billion, Indias per capita GNP of $ 424 in 2000 was one of the lowest in the region. India Income within the country is polarized. 22% of the population is so poor that they are undernourished. India also has a plethora of talented technical graduates who are fuelling the growth of software industry elsewhere. The SW industry in India has experienced a growth of 60% per year for the past several years & this growth is expected to continue. By 2006, the IT sector is expected to be a $ 100 billion industry in India. Another growing industry is film-making. It is a $ 750 m business a year, still not officially recognized as an industry by the government. The industry produces 750 films per year, thus making it world leaders. Yet the political environment is still unstable. In 1998, following the detonation of 5 nuclear bombs, the US invoked 4 sanctions against India. This is a vivid reminder that the political situation in the area, especially

MODULE 3 RESEARCHING GLOBAL MARKETS

7.5 MARKETING IN TRANSIONAL ECONOMIES/LESS-DEVELOPED COUNTRIES

The shortage of goods & services is the central problem of transitional economies (those converting from a command economy to a free market economy) & less-developed countries (LDCs). Marketing is a discipline that guides the process of identifying & fulfilling the needs of these people. Clearly marketing is needed & much desired by consumers in these countries. Certain baseline characteristics present marketing challenges: (1) low per capita income -- $ 4000 & under, (2) high inflation, (3) wide income distribution gap, (4) high levels of taxation & other bureaucratic hurdles, (5) lack of marketing awareness with the presence of a black market, (6) fragmented communication & distribution channels & (7) inadequate distribution & logistics infrastructure. Despite these difficulties, long-term opportunities can be nurtured. Today, Nike produces & sells only a small portion of its output in China, but when the firm refers to China as a 2 billion foot market, it clearly has the future in mind. In deciding whether to enter an LDC, one study suggested the following: 1. Look beyond per capita GNP. The per capita figures may hide the existence of a sizable middle class in that market. India, for ex, has a huge middle-class market that is hidden by the countrys average statistics. 2. Consider LDCs collectively rather than singly. One market may not be appealing; there may be broader possibilities with neighboring countries.
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3. Weigh the benefits & costs of being the first firm to offer a product or service in an LDC. Governments of LDCs often bestow tax benefits or other special treatment on companies that set up operations. Entering a successful LDC is an opportunity to get in on the ground floor of a significant market opportunity. 4. Set realistic deadlines for results. Due to different legal, political or social forces, events may move slowly.

MODULE 3 RESEARCHING GLOBAL MARKETS 7.6 GLOBAL BUYERS

Each buyer is unique & all buyers go through a similar process in making a purchase decision. Thus, although buyers in different countries will go through a similar process in making their purchase decisions, they will make different purchases since they will respond to the unique economic, social & cultural, political & governmental, environmental, competitive & personal factors that influence buyer decisions.

Diffusion Theory: The process that buyers go through is summarized Sociologist Everett Rogers distilled the research into 3 concepts that are extremely useful to global marketers: the adoption process, characteristics of innovations & adopter categories.
1. The Adoption Process: These are the mental stages through which an individual passes from the time first knowledge of an innovation to the time of product adoption or purchase. 2. Adopter Categories: These are classifications of individuals within a market on the basis of their innovativeness. They are early adopters, early majority, late majority & laggards (late starters). 3. Characteristics of Innovations: In addition to describing the product adoption process, Rogers also identifies 5 major factors affecting the rate at which innovations are adopted:

Relative Advantage: How does a new product compare with existing ones? Compatibility: Consistency of existing values & past experience of
adopters.

Complexity: Degree to which an innovation is difficult to understand & use.

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Divisibility: Can a product be tried on a limited basis without great

expense?

Communicability: Degree of benefits of an innovation may be

communicated.

Diffusion of Innovations: In a cross-national comparison of the

US, Japan, South Korea & Taiwan, evidence is presented that different country characteristics in particular, culture & communication patterns affect diffusion processes for room air conditioners, washing machines & calculators. It is found that faster rates of diffusion would be found in Asia (high-context culture) than US (lowcontext culture).

If a marketing manager plans to enter the newly industrialized countries (NICs) or other Asian markets with a product that has proved to be successful in the home market, the products diffusion processes are likely to be much faster than the home market.

MODULE 3 RESEARCHING GLOBAL MARKETS 7.7 GLOBAL MARKETING PLAN

Each country in the world is sovereign & unique, but there are similarities among countries in the same region or in the countries at the same stage of development that make both the regional & the market stage approaches sound bases for marketing planning. The organization of material is around geographic regions. It could just as well be organized around stages of economic development or a company may organize its plan by product or function.

Perhaps the most striking fact about world markets & buyers is that for the first time in modern history, the entire world is growing. According to World Bank estimates, every world region including Africa will grow & for the most part the poor countries will grow faster than the rich. This will provide new opportunities for marketers who, despite increasing globalization, need to look at the characteristics of each new market they plan to enter or expand.