Philip Kotler

S.C. Johnson & Son Distinguished Professor of International Marketing

Kellogg School of Management, Northwestern University

Contents

Why ASEAN?
ASEAN Community 2015
ASEAN Regional Marketing

Why ASEAN?
ASEAN Community 2015
ASEAN Regional Marketing

The Paradox of Globalization vs. Localization

The World is Flat

Thomas L. Friedman
New York Times columnist

The World is Still Round

Robert J. Samuelson
Newsweek columnist

Regionalization: The Right Balance

Globalization

Regionalization

Localization

ICT has allowed wide information access.

Goods and services can move cheaper thanks to
cheap transportation and ICT.
The world is more borderless.
In a flat world, competition searches for lowest
cost.
Convenience of flows of information, goods,
services, and people within the region
Relatively similar psychology and national
interest within region

National borders still have economic meaning.

National markets exist and are defined by
psychology and politics.
National economic and political setbacks can
threaten globalization.

e paradox has forced countries to form regional bl

Source:
Wikipedia.com

Regionalization of Asia

Global View of Asia

Regional Blocs, including East Asia will be prominent

Principal blocs will be Europe, East Asia and the Americas.
The 21st Century is the Asian Century!
Asia will be almost half of the worlds economy by 2020

Asia Pre-Crisis: The Flying Geese

Before the crisis, the flying geese phenomenon was soaring
throughout Asia and influencing the Pacific Rim economies.

The formation resembled flying geese, headed by Japan, while the rest of the group followed.
Countries toward the front tend to transfer older industries to countries at the back.

Note:
Flying Geese is a concept developed by Kaname Akamasu that best describes the economic structure of Asia before the crisis.

Asian Crisis
But the crisis put an end of flying geese.

Source: BBC

Asian Economic Crisis in 1997-1998: The End of Flying Geese, The

end of the good old days of the Asian miracle

Asia Post-Crisis: The Regional Squadrons

After the crisis, squadrons of the former flying geese, who increasingly
drive regional integration.

SAARC Squadron

China Squadron
Korea Squadron
Japan Squadron

ASEAN Squadron

hindia, where the world's workshop meets its offic

China

Heavy reliance on low prices

Weak financial system
Inefficient capital system
Slow population growth

Red tape, corruption, tough

labor laws and bureaucracy
all deter investment
Woeful infrastructure
Lackluster primary education
system
Exclusive growth environment
to the rich
The privatization of key
industries has stopped

Weaknesses

Weaknesses

Strong technology and service

industry
Relatively efficient capital
market
Strong private sector and
legal framework
Younger workforce
Growing population
Great university system
Strong entrepreneurial culture
Attracts higher prices

Strengths

Strengths

Manufacturing giant with the lowest

prices
Hybrid communist-capitalist model
that enables development
Solid primary schools
Infrastructure that lures foreign
investment
Good distribution of wealth with
higher per-capita income

India

How should ASEAN ride the wave

of the rising East (read: Chindia)?

ASEAN Countries at a Glance

The Rising East: Threat or Opportunity?

Opportunity

Threat
ASEAN
Integration
Individual countries in
ASEAN are nothing
compared to Chindia

ASEAN is the only region

capable of being in the
driver seat of the Greater
East Asia integration*

* ASEAN is the first to seat ASEAN countries together with China, India, Japan, South
Korea, Australia, and New Zealand, as well as Russia (as an observer) in one table during
the first East Asia Summit.

The First East Asia Summit Driven by ASEAN

Initiated by ASEAN, the first East Asia Summit held in Kuala Lumpur,
Malaysia, in December 2005, brought together leaders of the former
flying geese, with the objective to establish the East Asia Free Trade
Area by 2015 and moving towards the New Asia.

(Observer)

is ASEAN in the Driving Seat of the Greater East A

ASEAN

Neutral Position

ASEAN is not considered a

threat to China, India,
Japan, South Korea, Australia,
and New Zealand

High Bargaining
Power

Attractive Single
Regional Market
Huge market
High
consumption
Less
competitive

Competitive
Regional
Production Base
Smooth flow of
goods, services, and
people under FTA
Abundance of
natural resources
Low labor cost

Why ASEAN?
ASEAN Community 2015
ASEAN Regional Marketing

Towards ASEAN Community 2015

ASEAN COMMUNITY 2015

ASEAN Security
Community
(ASC)

ASEAN Economic
Community
(AEC)

ASEAN SocioCultural
Community
(ASCC)

The Peaceful, Prosperous, and People-Centric ASEAN

Regional Production Base

Production/Supply

Single Regional Market Consumption/Demand

Dual Track Strategy

What does ASEAN Integration Mean?

All barriers to the free

flow of goods, services,
capital, and skilled labor
are removed

Tariffs will be eliminated and non-tariff

barriers will be gradually phased out
Rules and regulations will be simplified and
harmonized
ASEAN investors will be permitted to invest
in sectors formerly closed to foreigners and
the services sector will also be opened up

The region will become a

more level playing field

Applicable international standards and

practices are followed, and policies on
intellectual property rights and competition
are put in place
Regional infrastructure will be more
developed with the expansion of
transportation, telecommunications and
energy linkages

Four Key Success Factors of ASEAN Integration

Rigorous Focus on
High-Impact Sectors

Workable
Institutions

Continued Support
by ASEAN Leaders

More Effective
Public-Private
Collaboration

Source: McKinsey&Company, ASEAN Competitiveness Study, 2003.

Corporate Trends Supporting ASEAN Integration

Global trends in manufacturing indicate a shift towards
adopting flexible production techniques and integrated
production chains

It is no longer cost effective for all manufacturing activities to be done in in-house

or in a single country

MNCs are integrating their manufacturing activities across several locations

MNCs are not only seeking large consumer markets but also regional sites where
they can establish efficient production networks

Regional Production Base

Potential Cost Savings from ASEAN Integration

A Balanced Approach is Needed

Benefits to MNCs
Targeting more sales
volume in the ASEAN
market
Components
procurement on an
ASEAN-wide basis
More product
specialization to achieve
economies of scale
Greater emphasis on
profitability using ASEANwide operations

Benefits to Local
Companies
More export opportunities
to ASEAN market
ASEAN-wide expansion
opportunity for corporate
growth strategy
Technology and financial
support opportunities
from MNCs
ASEAN-wide pool of
talent

A Balanced Approach

Why ASEAN?
ASEAN Community 2015
ASEAN Regional Marketing

What is Marketing?

Differentiation

en
Id
y
tit

Value Indicator

dI

d
an
Br

Brand

BRAND
BRAND

ma
ge

Core Tactic

Being Strategy

Br
an

Positioning

Brand Integrity

Nine Core Elements of Marketing

(mind-share)

(market-share)

STRATEGY

Explore

Positioning

TACTIC

Engage

Differentia
tion

'BEING'
STRATEGY

'CORE' TACTIC

7
8
9
Process

VALUE
'ENABLER'

VALUE

(heart-share)

Execute

Three Types of ASEAN Marketing Companies

(3) THE
MULTINATIONALS
FOCUSING ON
ASEAN
MULTINATIONALS

ASEAN

LOCALS

LOCALS

(1) THE LOCAL CHAMPIONS (2) THE LOCALS GOING ASEAN

Local Champions

Play small by serving niche markets

Address the local needs and wants

Maintain high level of customer intimacy

MBF Cards of Malaysia

Local Champions

Brand Integrity

Differentiation

en
Id

BRAND
BRAND

y
tit

MBF Cards

dI

d
an
Br

Brand

ma
ge

Selection of cards
suited to niche
segments
Early adoption of new
card technologies

Malaysias largest
and most innovative
and issuer of niche
cards

Br
an

Positioning

Goldilocks of the Philippines

Local Champions

Brand Integrity

The bakeshop with

international
standards catering
to Filipino taste

Differentiati
on
Varieties of Philippines

en
Id

BRAND
BRAND

y
tit

Goldilocks

dI

d
an
Br

Bran
d

ma
ge

original bakery
products and cuisine
Understanding of Pinoy
values and sentiments

Br
an

Positionin
g

Bengawan Solo of Singapore

Local Champions

Brand Integrity

Differentiation

d
an
Br

Brand

en
Id

BRAND
BRAND

y
tit

Bengawan Solo

dI

The convenient gift

and souvenir
options of handmade premium
cakes, kueh, and
cookies

ma
ge

High quality handmade products with

attractive and
exclusive packaging
Convenience for order,
delivery, and collection
Gift voucher packages

Br
an

Positioning

Locals Going Regional

Translate the regional positioning to local context

Ensure regional visibility and availability

Build regional brand

Extra Joss of Indonesia

Locals Going Regional

Brand Integrity

The affordable core

essence of energy
drink for core
generation

Differentiati
on
In sachets, not in

en
Id

BRAND
BRAND

y
tit

Extra Joss

dI

d
an
Br

Bran
d

ma
ge

bottles
Generation Biang (core
generation)
Large retail
distribution networks

Br
an

Positionin
g

Black Canyon of Thailand

Locals Going Regional

Brand Integrity

Food houses that

combine West and
East

Differentiati
on
Extensive
Western and

en
Id

BRAND
BRAND

y
tit

Black Canyon

dI

d
an
Br

Brand

ma
ge

Asian (especially Thai)

food and coffee menu
Wild Wild West name
and dcor
Large chain of outlets

Br
an

Positionin
g

AirAsia of Malaysia
Locals Going Regional

Brand Integrity

Differentiati
on
Low-cost structure

en
Id

BRAND
BRAND

y
tit

AirAsia

dI

d
an
Br

Brand

ma
ge

Fun internal culture

ASEAN no-frills and

fun low-cost carrier

Br
an

Positionin
g

MNCs Focusing on ASEAN

Coordinate the regional strategy

Execute the local customization

Maintain the consistency of the global value

Glorecalization Approach for MNCs

MNC Type 1 - Strategy, Tactic, and
Value are determined by the
global office with little
modification. Regional and local
offices merely act as supervisor
and operator.
Strategy

Tactic

MNC Type 2 - MNC with

Glorecalization Approach:
Consistent global value,
Coordinated regional
strategy, and Customized
local tactic (The 3C Formula)

Value

Strategy

Global
Office
(Conceptor)

Global
Office
(Composer)

Regional
Office
(Supervisor)

Regional
Office
(Conductor)

Local
Office
(Operator)

Local
Office
(Improviser)

Tactic

Value

Consistent
Global
Value

Coordinated
Regional
Strategy

Customized
Local
Tactic

Yamaha Motor

Consistent Global
Value

Coordinated
Regional Strategy

Customized Local
Tactic

Yamaha Brand and Three Tuning Forks logo

The spirit of creating Kando (feelings of deep
satisfaction and excitement) as the brand mission
Yamaha technology and production

Growth strategy for ASEAN

Profitability strategy for US and Europe

Different product mix for each ASEAN country

Different communication approach for each ASEAN
country

Toyota Kijang

Consistent Global
Value

Coordinated
Regional Strategy

Customized Local
Tactic

Toyota Brand and Three Ovals logo

Japan-quality manufacturing
Sales, Service, and Spare parts businesses

Positioning: ASEAN Family Car

Different communication approach for each ASEAN

country

Conclusions
ASEAN is a regional bloc of 550 million customers
with rich resources.
ASEAN is sure to get attention from MNCs and
investors both as a source of products and a market
for products.
ASEAN will bring benefits to the companies in all 10
ASEAN countries because it will lower their costs
and provide larger opportunities .