international marketing lecture 2
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International Marketing 463-441 (3-0-3)
Lecture 2The ASEAN and ASIAN Region
Country Thailand Malaysia Singapore Philippines Indonesia Vietnam
Population 65,068,149 24,821,286 4,553,009 91,077,287 234,693,997 85,262,356
Age Structure 0-14 21.6%
15-64 70.1%
65+ 8.2%
0-14 32.2%
15-64 62.9%
65+ 4.8%
0-14 15.2%
15-64 76.3%
65+ 8.5%
0-14 34.5%
15-64 61.3%
65+ 4.1%
0-14 28.7%
15-64 65.6%
65+ 5.7%
0-14 26.3%
15-64 67.9%
65+ 5.8%
Sex Ratio 0.979M/F 1.027M/F 0.954M/F 0.999M/F 1.05M/F 1.07M/F
Pop. Growth 0.663% 1.759% 1.275% 1.764% 1.213% 1.004%
GDP US$596.5 B US$132.3B US$122.1B US$449.8B US$948.3 B US $262.5 B
Budget Expenditure US$36.61B US38.89 B US18.8B US $19.07 B US $77.39B US $15.9 B
Exports US $128.2 B US$160.8B US$289.4 B US $46.16 B US $102.4B US $39.9 B
Imports US $113.4 B US $124 B US$244.6B US 53.13 B US 73 B US $40.6 B
GDP Per capita (PPP)
US$9,200 US$12,800 US$31,400 US$5,000 US $3,900 US $3,100
Income Distribution Lowest 10% 2.7%
Highest 10% 33.4%
Lowest 10% 1.4%
Highest 10% 39.2%
N/A Lowest 10% 2.2%
Highest 10% 34.2%
Lowest 10% 3.6%
Highest 10% 28.5%
Lowest 10% 2.9%
Highest 10% 28.9%
Poverty 10% 5.1% N/A 40% 17.8% 19.5%
Mobile Phone Users 40.8 million 19.424 Million 4.789 Million 42.869 Million 63,809 Million 15.505 Million
Internet Users 8.466 million 11,292 Million 1.71 Million 4.615 Million 16 Million 14.658 Million
Economic Comparison of Major ASEAN Countries(Source https://www.cia.gov/library/publications/the-world-factbook)
Economic Comparison of ASEAN Countries to Other Major Economies
(Source https://www.cia.gov/library/publications/the-world-factbook)
Country Selected
ASEAN
US China India Japan EU
Population 505,476,084 301,139,947 1,321,851,888 1,129,866,154 127,433,494 490,426,060
Age Structure 0-14 20.2%
15-64 67.2%
65+ 12.8%
0-14 20.4%
15-64 71.1%
65+ 7.9%
0-14 31.8%
15-64 63.1%
65+ 5.1%
0-14 13.8%
15-64 65.2%
65+ 21%
0-14 15.72%
15-64 67.16%
65+ 17.11%
Sex Ratio 1.027M/F 1.06M/F 1.064M/F 0.953M/F 0.96M/F
Pop. Growth 0.894% 0.606% 1.606% -0.088% 0.16%
GDP US2,511.5 B US$13.16 Tr US$10.21 Tr US$4.164 T US$4.218 T US $13.08 T
Budget Expenditure
US$766.86B US2.655 Tr US515.8B US $127.8 B US $1.586 T
Exports US 766.86 B US$1.023Tr US$969.7 B US $123.1 B US $615.8B US $1.33 T
Imports US 648.73 B US $1.861 T US$751.9 B US 184 B US 543.5 B US $1.466 T
GDP Per capita (PPP)
US $4,900 US$43,800 US$7,800 US$3,800 US $33,100 US $29,900
Income Distribution
Lowest 10% 2.9%
Highest 10% 30.49%
Lowest 10% 1.9%
Highest 10% 29.9%
Lowest 10% 1.6%
Highest 10% 34.9%
Lowest 10% 3.6%
Highest 10% 31.1%
Lowest 10% 4.8%
Highest 10% 21.7%
Lowest 10% 2.8%
Highest 10% 25.1%
Poverty 19.3% 12% 10% 25% N/A
Mobile Phone Users
187.2 million 233 Million 461 Million 166.1 Million 101.7 Million 466 Million
Internet Users 56.65 million 208 Million 131 Million 60 Million 87.55 Million 247 Million
Thailand Malaysia Indonesia Philippines Vietnam Australia
Middle Class
Per capita Income US $7,551 US $3,957 US $3,429 US $4,535 US $3,078 US $29,959
Population 52,054,519 19,857,028 187,755,197 72,861,829 58,148,926 16,347,340
Upper Class
Per Capita Income US $30,618 US $20,894 US $11,515 US $16,890 US8,8975 US $83,853
Population 6,506,814 2,482,126 23,469,399 9,107,728 8,526,235 2,043,417
Income for Middle & Upper Economic Classes
Wealthy
TransitionMiddleClass
Poverty
ChinaLDCs NIEs
Thailand Malaysia Singapore Indonesia Philippines Vietnam
Ethnic Backgrounds
Thai 75% Chinese 14% Other 11%
Malay 50.4%, Chinese 23.7%, Indigenous 11%,
Indian 7.1%, Others 7.8%
Chinese 76.8%, Malay 13.9%, Indian 7.9%, Other 1.4%
Javanese 40.6%,
Sundanese 15%, Madurese
3.3%, Minankabau 2.7%, Betawi 2.4%, Bugis
2.4%
Tagalog 28.1%, Cebuano
13.1%, Ilocano 9%,
Bisaya/Binisaya 7.6%,
Hiligaynon Ilonggo 7.5%,
Bikol 6%, Waray 3.4%
Kinh (Viet) 86.2%, Tay 1.9%, Thhai
1.7%, Muong 1.5%, Khome
1.4%, Hoa 1.1%, Nun
1.1%, Hmong 1%
Religions Buddhist 94.6% Muslim 4.6%
Christian 0.7%
Muslim 60.4%, Buddhist 19.2%, Christian 9.1%,
Hindu 6.3%, Traditional
Chinese 2.6%
Buddhist 42.5%, Muslim 14.9%, Taoist 8.5%, Hindu 4%,
Catholic 4.8%, other Christian
9.8%
Muslim 86.1%, Protestant 5.7%, Roman Catholic 3%, Hindu 1.8%
Roman Catholic 80.8%, Muslim 5%, Evangelical 2.8%, Iglesia ni
Kristo 2.3%, Aglipayan 2% other Christian
4.5%
Buddhist 9.3%, Catholic 6.7%, Hoa Hao 1.5%, Cao Dai 1.1%,
Protestant 0.5%, Muslim 0.1%, none 80.8%
Languages Thai, English and ethnic, regional
dialects
Bahasa Malaysia, English,
Chinese, Tamil, Telugu, Punjabi,
Thai, Iban, Kadazan
Mandarin 35%, English 23%, Malay 14.1%,
Hokkien 11.4%, Cantonese
5.7%, Teochew 4.9%, Tamil
3.2%
Bahasa Indonesia,
English
Tagalog, with 8 dialects, English
Vietnamese, English, some
French, Chinese and Khmer, mountain languages
% Rural/Urban
71/28% 37/63% 0/100% 54/46% 39/61% 75/25%
Some Other ASEAN Indicators
Geography(Climate, Topography, Flora, Fauna, Microbiology)
History
Technology and Political Economy
Social Institutions(Family, Religion, School, Media, Government, Corporations)
PeersElements of Culture
(Values, rituals, symbols, beliefs, though processes
Consumption decisions and behaviours Management Styles
Consequences
Ad
apta
tio
n
So
cial
isa
tio
n
Ap
pli
cati
on Imitation
Market Structure
Adapted from Cateora & Graham P. 99
Actualisation
(The Artist) Self-fulfillment
Rice
Soap Fresh
Vegetables
Most Household Cleaning Products
Water Purifiers
Fashion Clothes (e.g. Jeans)
Chewing Gum
Car Air Fresheners
Travel & Vacations Fine Fragrances
Aromatherapy products Luxury cars
Nutraceuticals & herbs
Books Fine Dining & Processed Foods
Study after retirement Fresh vegetables (Organic)
Esteem (The Executive)
Achievement, prestige,fulfillment
Social (Worker) Family, relationships,
workgroups
Safety (The Farmer) Home, Security and stability
Physiological (The Hunter) Basic Biological Needs – Food, water, air
Staples: based on survival (fear)
Necessities: based on what is good (existence)
Community: (acceptance)
Responsibility: (hope)
Fulfillment: (dreams)
Singapore, Brunei
Malaysia, Thailand
Indo, Philip, Viet
Camb,Laos
Economy(Central)
SocialCultural
Political legal
Technology
Market
Immediate
Primary
Incremental
Ultimate
Regulation Educa
tion
InspirationCre
ation
Accomm
odation
AdoptionDestruction
Decon
struc
tion
Kotler, et. Al., Think ASEAN
Adapt
ion
RationalizationAcceleration
Coordination
Redefinition
Realization Formation
The Forces of Change in the
Business Landscape Digitization
Globalization
FuturizationPeace
(Regional Peace and security)
Prosperity(Economic
integration and cooperation)
People(Human and social
development๗
Economy Social-CulturalPolitical Legal
Technology
Market
Certain/Uncertain Important/Unimportant
ChangeValue Migrator
TOWS Examination
Value Determiner
CustomerCommitted, Lost, New
Value Decider
Company Existing competence,
Risk, Attitude, Stretch Possibility
Value Supplier
Competitor Winner, Loser,
Emerging
Go invest No-Go/Hold
Harvest Divest
Choice
Kotler, et. al, Think ASEAN P. 6
The Diamond 4C Sub-Model
Casualties
Traditional Economies New Economies
Markets Stable Dynamic
Scope of competition National (or regional) Global
Organizational form Hierarchical / Bureaucratic Networked/Entrepreneurial
Key production factor Labour and Capital Knowledge and innovation
Importance of research Moderate Critical
Nature of employment Stable Risk and opportunity
Regulation Commend and Control Market Orientated Flexibility
Kotler, et. al, Think ASEAN P. 49
Disparity Between the “Traditional” Economies and the “Knowledge-Based” Economies
Traditional Businesses Future Businesses
Markets National, Overseas subject to tariffs Trading block, free trade zones
Scope of Competition National or regional: Protectionist Global, liberalised
Organisational Structure Hierarchical, bureaucratic, specific scope, localised
Networked, entrepreneurial, multidisciplinary, empowerment
Key Productivity Factor Labour (skills), capital, in-house expertise, durability
Knowledge, innovation, outsourcing, offshoring, time to market
Importance of Research Moderate, imitate and improve Critical, innovate and invent
Nature of engagement Mandate, relationship, intuition Opportunistic, free trade, due diligence
Regulation/Governance Top down silo, closed group Connected matrix, transparency
Strategic Management Inside out- SWOT-strengths, weaknesses, opportunities, threats
Outside in – TOWS- threats, opportunities, weaknesses, strengths
Strategic Marketing 3 Cs – customer, competition, company, 4 Ps – product, place, promotion, pricing
4 Cs – change, customer, competition, company PDB triangle – positioning, differentiation, brand
Marketing Focus Product centric distribution Customer centric service
Growth Strategy Market share Sustainability
Changing Business Landscape
Kotler, et. al, Think ASEAN P. 54-55
Significant forces of change
New rules of the game
New Value Propositions
New value requirements
WinningValueapp
New Competitive
setting indications
New Customer
profile indicators
F8 + E8 “Total Get”Value = __________ = __________ P + Oe “Total Give”
Value Migrator
Company
Existing competence Risk-attitude Stretch possibility
The New Landscape Configuration
Kotler, et. al, Think ASEAN P. 77
Competitive Rivalries Lemongrass quick yield and straightforward to cultivate and distil – expect high elasticity of supply from both existing and new producers. Producers of substitutes very aggressive
Bargaining Power of Suppliers Collecting the most suitable planting material require effort. Extraction and harvest .technology needs to be acquired or developed Analytical equipment or service maybe expensive/remote.
Substitutes Citral (main constituents) can be produced from a number of chemical feed stocks. Alternative oils (litsea cubeba) cost much less to produce. Lemon myrtle oil much smoother and acceptable to end users Many alternatives to lemongrass in product formulations.
Trends & Technology Alternative technologies to steam distillation (CO2) can make much smoother oil but will increase capital needs greatly. Natural, exotic, organic, FAIRTRADE could increase oils popularity (?) if seen as exotic.
Substitutes
Tre
nd
s &
Te
ch
no
log
y
Bargaining power of buyers
Bargaining power of suppliers
Competitive Rivalries
Re
gu
lati
on
Regulation SCCP placed lemongrass oil under scrutiny as a cosmetic ingredient in EU.
Industry Competitors
Intensity of Rivalry
Bargaining Power of Buyers Currently small item of trade in flavour industry, strong relationships with established producers.
Scope
Global
Regional
Local
Contextual and political knowhow
Low resource costs Technology and Marketing
Domestic players both large and small – Chinese SMEs, overseas Chinese firms,
national companies
Regional National ChampionsCP, Singapore Telecom
Multinational firms
Basis of Competitive Advantage
Competitors in Asia
Sourcing CountriesSouth China ASEAN
Key Countries JapanChinaTaiwanSouth Korea
Emerging CountriesThailandIndonesiaMalaysiaIndiaPhilippinesVietnam
Marketing CountriesMyanmarLaos, Cambodia
Platform CountriesSingaporeHong Kong
Entry Growth Consolidation
Establish a base to learn, collect information and set up contracts
Set up a regional office to coordinate efforts
Regional office for administration
of synergies
Agents Representative
office
Establish initial investment through
JV or local subsidiary
Joint ventures representative offices
Distributors
Initiate several business activities multiple presence
Rationalization
Joint venture Acquisition Greenfield
Expand
Sourcing office OEM Contracts
Offshore factories in export zones
JV with resource rich partners
Integrate into global/regional
operations
MNC Development According to Country Development
Start up in Trading
Investment in industrial activities, either direct or through
joint ventures
Progressive vertical
integration in upstream activities
Real Estate
Banking & Financial Services
Diversified Activities
Diversified Activities
The
Golden
Diam
ond
Finance
Manufacturing
Property Trade
Typical Evolution of Chinese Groups
in ASEAN
Lasserre & Schutte, P. 132
Salim Group (Lim Soe Liong)
Cement, Automobiles, flour, floods, chemicals, banking, property, insurance
Sinar Mas (Eka Tiga Wijaya):
Paper, pulp, chemicals, agribusiness, finance, property
Asta (W. Soeryadjaya):
Automobiles, heavy equipment, office equipment, agribusiness,
property, finance
The Kuok Group (Robert Kuok)
Plantations, edible, flour, shipping, hotels, mining, computer services, retail,
film distribution
Hong Leong (Quek Leng Chan)
Banking, Insurance, car distribution, construction, building materials, manufacturing
Genting Group (Lim Goh Tong)
Hotels, Casinos, resorts, plantations, property, paper mills, power generation
Charoen Pokphand (Dhanin Chearavanont)
Feed Mills, poultry, chemicals, automatics, telecommunications, textiles, property
Bangkok Bank (Charti Sophonpanich)
Banking, Insurance, financial services
Siam Motors (Khunying Phornthip)
Automobiles, musical instruments
China
Units per 100 Households (Rural)
Units per 100 households (Urban)
National Average
Bicycle 121.3 142.7 128.1
Motorcycle 28.1 22.2 26.2
Car N/A 0.9 N/A
Radio Cassette Recorder 20.4 47.9 26.2
Colour Television 60.5 126.4 81.2
B/W Television 48.1 N/A N/A
Telephone 40.8 93.7 57.4
Mobile Phone 13.7 62.9 29.2
Air conditioner 2.3 44.1 16.2
Camera 3.3 44.1 16.2
Electric fan 134.3 182.6 149.5
Hi-Fi System 9.7 25.2 14.6
Refrigerator 14.8 87.4 37.7
Video Recorder 3.3 18.4 8.1
Washing Machine 31.8 92.8 51.1
Ownership of Consumer Durable Goods in China (2002)
China Statistics Handbook 2003
Differentiation
Modernisation
Egalitarianism
Traditionalism
Thoughts of Chairman Mao
Yuppie Fashion
Change in Consumer Behaviour in China
Lasserre & Schutte, P. 74
Traditional Values Communist Values
Emerging Values
EgalitarianismCountry Orientation
PartyClass Background
Sacrifice
Less HierarchicalIndividualist/Materialist
Hero EntrepreneurHere and now orientation
More direct communication
HierarchyFamily orientation
Societal orderRelationships
HarmonySeniority
Face Saving
Lasserre & Schutte, P. 80
Chinese Culture in Flux and Transformation
Marketing Effort/Time
Sales
Marketing Potential
Concave Function: Elite Segment
S-Curve Function: Transition Segment
S-Curve Function: Traditional Segment
Sales Response Function to Income
Lasserre & Schutte, P. 71
Technology and Marketing
Advantages
High
Low
No Specific cost advantages based
on volume
Based on volume and local knowledge
Advantages based on local knowledge only
Cottage Industries
Differentiated PositioningApplied to high end
segmentsPrice premiumLow VolumeHigh costsHigh Tech
Strong Brands
Most Western Competitors
Cost LeadershipPositioning applied to high volume low-end segments
Low CostMass distribution
Large Chinese competitors (Kanko, Haier)
Emerging BattlefieldLow Cost
Mass DistributionDifferentiated
Large Chinese Companies, (Huawei, TGL), and some Western companies
Cost Advantages
Competitive Positioning in China
A Look at the Malaysian Retail Market Channels
Manufacturer
National Distributors
Wholesalers
Consumers
Hypermarkets Super- markets
Sundry Stores
Convenience Stores
Chinese Medical Halls
Malaysian Retail MarketChannels & Structure
Hypermarkets
• Hypermarkets make up approximately 15% of the national market. Tesco (12), Carrefour (12) and Giant (20), dominate this sector. Makro (8) is a closed system for wholesalers and small business customers, although this policy varies from time to time. There are approximately 50 hypermarkets in Malaysia.
Supermarkets
• Supermarkets can be broken down into two categories. Those foreign owned and part of a chain like Jaya Jusco (7) and Giant (numbering around 65), locally owned groups like Fajar (16), Suiwah (6) and Econsave (16),(numbering around 100) and those locally owned independent supermarkets with no affiliations (numbering around 220). This is approximately 25% of the market.
Sundry Stores
• Approx. 80,000 in Malaysia in both urban and rural areas, majority independently owned small family businesses. Attempts have been made to franchise or develop chains like Felda and Pernama, but not so successful. This is about 30% of the market.
Convenience Stores
• These usually franchised stores are rapidly growing in numbers as both 7-Eleven & the petrol companies have seen opportunities to enter into the retail trade. Their market share is approximately 6% but rapidly rising.
Chinese Medical Halls
• Traditional Chinese medical halls are scattered across the country and often develop into a small supermarket or sundry store. They, together with pharmacies have around 14% market-share but this is losing out to the convenience stores and chain pharmacies. About 6,000.
Pharmacy
• Pharmacies primarily part of chains like giant, but still number of independents. They are specialist stores usually selling OTC and widening ranges to include herbs and nutraceuticals.
Other• A specialist group that sells confectionary,
OTC drugs and FMCG goods. Number around 200.
• Sell books, magazines, Newspapers, drinks, etc.
• An emporium group with 10 stores throughout Malaysia specialising in emporium items and some FMCG.
FMCG Market Fragmentation/Concentration Comparison Between Malaysia, Thailand, Hong Kong
and Australia Outlet Type Malaysia Thailand Hong Kong Australia
Hyper & Supermarkets (Chain Owned)
20% 68% 91% 85%
Independent Hyper & Supermarkets
20% 2% 2% 10%
Wholesale Trade – Sundry & convenience Stores
57% 10% 2% 3%
Other 3% 20% Convenience
Chains
5% 2%
Klang Valley & Central Region (N. Sembilan)
35%
Southern Region (Johor & Melaka)
15%
Perak 8%
Penang 5%
Kedah/Perlis 15%
Pahang 8%
Kelantan/Terengganu 8%
East Malaysia 6%
Approximate National Market Break-Up
Barriers to Entry
Market Fragmentation
Centralisation
Merchandising
The way of doing business
Guanxi
Financial Issues
Competitive Context
Clarity of Rules
Political, Legal, and
Ethical Context Familiarity
Clear
Unclear
Not Familiar FamiliarVietnam
South Korea
Indonesia
Philippine
China
India
Thailand
Malaysia
Taiwan
Hong Kong
Japan
Singapore
Perceptions of the Accessibility of the
Asian Pacific Region
Lasserre & Schutte, P. 184
Reliability
Easy to Obtain
Definitely No Definitely yesVietnam
South Korea
Indonesia
Philippine
China
India
Thailand
Malaysia
Taiwan
Hong Kong
Japan
Singapore
Strategic Market Information the
Asian Pacific Region
Lasserre & Schutte, P. 189
Definitely yes
Definitely No
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