a

dc

b

Eagle & Nest: 5

“ Activities such as Agri-Business, IT, Logistics, Mining, Bio-technology and infrastructure are among the top performers and drivers of growth in recent years”

Mercosur: 5

New Tigers: 2

Eagle & Nest: 5

BRIC: 1

Pacific Alliance:3

TOP 50 PPP:4

BRIC: 1

RIC: 1

BRIC: 1

Eagle & Nest: 5

Eagle & Nest: 5

Eagle & Nest:5

New Tigers: 2

New Tigers: 2

New Tigers: 2 New Tigers: 2

Mercosur: 5

BRIC: 1BRIC: 1

BRIC:1

TOP 50 PPP

T0P PPP: 4

Mercosur:5

Mercosur: 5

New Tigers: 2

Pacific Alliance: 3

Mercosur: 5

Mercosur:5

TOP 50 PPP:4

BRIC: 1

TOP 50 PPP:4

Tigers: 2

Eagle & Nest: 5

BRIC: 1

New Tigers: 2

New Tigers: 2

BRIC: 1

Eagle & Nest: 5

New Tigers: 2

TOP 50 PPP:4

TOP 50 PPP:4 Eagle & Nest: 5

BRIC: 10 PPP:4

TOP 50 PPP:4

TOP 50 PPP:4

TOP 50 PPP:4

Pacific Alliance:3

Pacific Alliance:3

Pacific Alliance:3

Eagle & Nest: 5

Strategic Marketing appears to be a part of the Business or Corporate strategy that instead of converging on the details of the 4P’s, focuses on how the marketing mix will increase the competitiveness of the whole organization as well as on the constantly changing business environment

(…)none of the models and conceptual frameworks utilized is per se more or less useful alone towards explaining the elusive essence of Strategic Marketing

2.2.1 Porter’s 5 forces2.2.2 SWOT-TOWS and PEST analysis2.2.3 BCG Matrix2.2.4 Weihrich’s Matrix2.2.5 Treacy and Wiersema Model2.2.6 Miles and Snow Model2.2.7 Gap Analysis2.2.8 Directional Policy Matrix2.2.9 Ansoff Matrix

Potential

Rivalry among

existing

firms/industry

Competition

Substitutes

Buyers

Suppliersof suppliers

Bargaining

power

of buyers

Threa t of substitute

products or s ervices

Threat of new

entrants

Bargaining

power

Relationship

Excellence

Superior Value

Exchange

Product

Performance

Excellence

Transactional

ExcellenceStandarized

Product

Customized

Product

Superior

Product Benefit

Superior

Customer Value

…industrial market is (….) a continuum of industrial goods classified in function of the speed of sale; there are industrial products that report a very slow speed for sale such machine tools and complex computer software, products that lie in between such domestic appliances and Printed Circuit Boards, and industrial goods that are both B2B and B2C oriented such canned food or soap powder (Meldrum and McDonald 2007, 37-38; Gummerson 2012, 33-35)

a

db

there are five (5) fundamental areas for industrial markets: Manufacturers, Contractors, Mining, Public Services and Government (Brion 1967, 316)

c

Industrial SELLER

Industrial productFinancial assets

Information

Institutionalization&

Adaptations

Archetypes-Close-Recurrent-Dominant Partner-Discrete

MACRO-ENVIRONMENT

-PEST-Industry stage (Tech, supply chain and product life cycle stage)-Government-Competitors

Industrial BUYER

Opportunity Identification of the overall attractiveness of the target market (Potential & Limitations)

Grounding Consist on the way the company can

capitalize the attractiveness (competitive advantage)

Orientation Consists on focus. In industrial marketing this

is essential due the importance of close relationships and complexities of macro-

environment (value proposition + key stakeholders) (Donaldson and O’Toole 2007)

Luck is what happens when preparation meets opportunity (Seneca, Letter XXIV)

Finally, we have to recall the literature concerning to Industrial Markets and consider that the deployment of the Strategic Marketing in this type of markets needs to be specially ADAPTED to its particularities

The first one comes from the especial predominance of RELATIONSHIPS in the marketing strategy of B2B firms that as seen in the literature review, is explained by factors such as the expertise, importance and even purchase power of an industrial counterpart, usually more knowledgeable, wealthy and influential than an individual average consumer.

The second source is the MACRO-ENVIRONMENT (Hakansson 1982, 24), which is highly critical for B2B-oriented companies in the sense that they are essentially interconnected with its surroundings, particularly with other companies in the supply chain (which can act simultaneously as counterparts, competitors or allies in JV’s for example) and the government that grant permissions, promulgate licenses and/or impose taxes or tariffs to Industrial firms. This source becomes even more critical when the macro environment the firm wants to enter in is a foreign market; in this scenario, a more careful analysis is needed, because aside from potential clients and the local government, there are also multiple actors and situations worth of analysis such as local competitors, market structure, political and social situation and so on.

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c

b

aFounded in the mid 70’s, the company has been devoted to the manufacture of different kinds of plastic molding machinery

…the interest in Brazil (along with other emerging markets such Mexico) started almost 20 years ago after the Asian Financial Crisis of 1997 and the increasingly strong competition coming from Mainland China

Brazil is the country that captures the attention of the company because it has the most robust industrial base in the subcontinent. Factors such as an intricate bureaucracy and the language barrier convinced the company’s management to start looking for a distributor right away

…start offering after sales service and installation services in situ for small and medium-sized molding equipment and even they also tried to assemble small equipment too

…due to the taxation policy in Brazil and a restrictive customs practice, Company A is intending to manufacture its plastic molding equipment locally

bstarted its operations in the early 80’s as an OEM of toys

Later on, following the vision of its leader Mr. Chen, the company created their own brand –which made of the company to climb up to OBM successfully- focused on assorted baby products such as strollers and baby walkers (…) Currently, the company positions its brand as a middle-high, which makes for them interesting all developed markets

The company has been exporting to South America for a long time, starting since 2001, but in this process they have not exported steadily to this region, so then, what is customary is to send shipments there twice a year.

…they have perceived the need of counting with sales representative for South America, especially in the light of the fact that for the company, this market is very diverse and specific country by country

c…started its operations in the mid 80’s as a local manufacturer of traffic signal equipment and road safety equipment made of die casting materials, plastic and other metal alloys

…they decided to create their own brand, under which are currently marketed a total and holistic solution in the incorporation of traffic lights, their electronic coordination systems and different road safety equipment

…since 2012 that it started to do business with South American counterparts. At the moment, the company has sold road safety products and traffic lights in Argentina, Chile, Colombia and Brazil, but it is in latter one in which the firm is more interested

Currently, the adaptation of the company to South American Markets is given mostly in its human resource (having distributors that speak the local language) and customizable products in its catalogue

d…has been accumulating more than thirty (30) years of experience in the manufacture of auto parts for Asian Brands originated in Japan and Korea

…great deal of innovation in response to new models launched by Asian car manufacturers not only globally but also locally

…started to sell directly to South American clients one year ago. Before, the company managed to reach this market through a Taiwanese international trade company

…the marketing strategy of the company consist of dividing the marketing at the company into two levels; firstly, full time employees that are entitled with a client base and the responsibility of attaining certain sales goals and secondly, a pull of part-time salesforce that earn money through commissionsCompany D focuses on quality and positions itself as an alternative to cheap but quality-inferior Chinese products

…this analysis will be divided in nine (9) parts, corresponding to the nine (9) frames of the analytic matrix inspired in the essence of the Strategic Marketing. The analysis will start from the upper left frame (number one) and will end in the lower right one (number nine)

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b

…while Company D, C and A find attractive ANY market since it complies with specific requirements of their respective industries off course (…) Company B in the other hand just consider Europe as an attractive market because of their high purchase power. Off course, this difference is understandable because the positioning strategy of this firm is very specific and narrowed,

…all the companies analyzed use the same sources of information (i.e. secondary data from governmental and/or private websites, industry exhibitions and open news on the web). (…)only Company D and Company B use trading websites (…) This particularity, we believe, responds to the diversity of industrial goods that are traded within the spectrum of industrial goods we talked about in the literature review (Brion 1967, 308-16; Haas 1989, 5). Then, we have that both Company D and Company B’s products are not accompanied by the load of service and complexity that accompanies the products of companies C and A, which require a careful follow-up, assisted installation, training in house and the comply of many critical local regulations (Transaction costs).

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b

The usage of industry exhibitions as a privileged alternative to contact counterparts in business was expected to be used by all the interviewed companies and indeed, that was verified in all the four companies’ responses

…particularity showed by Company D, consisting of hiring staff with the sole purpose of studying foreign markets. This was not found in any other of the companies interviewed. (…) but if for instance the company’s target market would be more specialized or technical (…) what is more critical is to have even just one person, but a person specialized not also in finding clients but also in bonding with them and thus, understand in depth the potential client, in accordance to the relevant literature we have cited in Chapter 2, point 2.3

…only Company C puts emphasis on information released by foreign governments (…) this company depends directly on the decision of local governments

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bAll the four (4) interviewed companies have shown different and varied interests in the region proposed as the example for this case analysis (South America) and consequently, came up with different reasons to justify both the potential and limitations of the countries matter of their interest in South America. This diversity was expected and is welcomed in the light of the diversity of the industrial markets they participate in

…in addressing a target market in its specificity, the same region and even the same country could represent different things for a business, even in industrial markets, which are highly technical and in consequence, less dependable on cultural differences than consumer markets (Blythe and Zimmerman 2005, 4-13)

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bWhile Company A and C identify Colombia and Brazil as the most promising markets for their businesses, Company D mentioned Bolivia, Peru, Ecuador and Brazil and Company B pointed Argentina and Brazil. It is interesting to note that the only country matter of interest for the whole four (4) companies is Brazil and in second place comes Colombia, mentioned in two (2) responses. Finally, was interesting the mention of Argentina in the case of Company B because currently this market is being closing its economy to exporters, a fact clearly stated by Company D

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b

…for Company A the potential of the countries they pointed as attractive is that this countries –specially Brazil- there is a robust industrial base in plastics manufacture. In the case of Company C and Company B, the potential is conceived as an abundant and growing middle class (…) In the case of Company D, the potential is given by the popularity of Asian car models in the region, in part propelled by the local manufacture of some Asian Companies

…in regard to the limitations found in the countries chosen as attractive in South America, the diversity of responses is also present but somehow related as follows; both Company C and Company B mentioned social-related arguments, but in the case of the former, the limitation was conceptualized as (…) urgency in the demand of transport, but in the case of the later, they argue the paradox found in the region in terms of an increasing middle class accompanied by a lack of interest in spending in middle-high end baby products (…) Company D and A focused their replies in the economy and specifically, in the degree of their openness.

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b

…we found several distinctive practices in each one of the interviewed companies; in attention to what has been stated in precedency, this diversity is explicable by the inherent diversity of the interviewed companies, which manufactures different products

Company A is currently willing to open an assembly facility in Brazil in order to increase the competitiveness of its products by avoiding the taxation and customs barriers imposed in Brazil and leveraging the purchase of their products with the aid of Brazilian government

Company B’s adaptation in two fronts: It is the only company out of the four (4) that we interviewed that places attention on the registration of patents on each country the company is interested in and regardless that, it is also the only company in this small sample that is open to customize or adapt the scope of the exclusive distribution of their products in accordance with the operations size, reliability and experience (among other factors) of a potential distributor

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bCompany C points its resolution in an understanding of the target market under a long term basis, while Company D adjusts its price according to the degree of development of the target market -the more developed a country is, the higher the price- and its marketing operation into two (2) levels, being one in charge of existing markets while the second one is responsible for opening new ones.

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b

Companies C and A place more emphasis on the service associated with the products they sell as part of the competitive advantage (…), Companies B and D rely on alternative sources of competitive advantage, being for the former its original design capability that help them to stand out of competitors creatively and for the later their specialization in Korean and Japanese car models

All this aforementioned sources of competitive advantage have been suggested in different Strategic Marketing models such as Porter’s five (5) forces that suggest specialization, (an strategy used by Company D) and innovation to attend a niche market, (a path specially followed by Company B); BCG and Ansoff Matrixes in turn, explain why Companies A and C focuses on customer service to differentiate themselves in mature industries. Finally, Treacy and Wiersema’s model invites companies to adapt or customize their products and services, which is an strategy clearly seen in Companies A and C, and in some stent, in Company D, which are open to customize their products after a careful consideration.

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b

Although all of this manufacturers claim to be excellent in the delivery of quality leveraged in an average of thirty (30) years of experience, this is no longer a source of competitive advantage if considered alone; indeed, the manufacturing capability of B2B-oriented companies sometimes lack of a competitive edge, not because their quality is not good enough but for market standards that became a common ground in mature industries such as in Plastic Molding, Auto Parts or in Transportation-related infrastructure

…when the complexity of the product increases, it is more likely that quality and its balance with price becomes the main issue to be considered (Martin 2009, 83-86; Hutt and Speh 1995, 80-84). In this order of ideas, in the case of expensive and complex machinery and transportation-infrastructure related products for instance, there is a minimum quality that is already expected, not as an advantage worth of extra payment but as a requirement already taken for granted

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b…the more the knowledge and adaptation to a foreign market, the greater the competitive advantage a company will have there

…there are two main trends that rule markets in general and particularly, industrial markets (Burkitt and Zealley 2006, 29-59; House et al 2013, 111-39): One is standardization –commonly materialized in minimum standards of quality as mentioned in immediate precedency-. The other trend is (…) Adaptation –or customization-, which in turn can be a source of competitive advantage in the light of the fact that industrial supply chains are fuelled in the end by the final consumer (Martin 2009) + by multiple factors such as the ones that Companies A and C have detected in the deployment of their Strategic Marketing such as a rigid taxation system in the target markets

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b

…the strategies chosen by Companies A, C and D to count with a solid “grounding” towards South American Market can be synthetized in counting with either distributors in situ or a native sales force that speaks the native languages such as Spanish or Brazilian Portuguese

A and C holds an active policy of getting to know the gemba or in other words, the reality of the industrial activities of their clients (Martin 2009; Masaaki 2002)

However, in the case of Company B we did not found any competitive advantage rooted in any effort of adaptation to the target market we proposed as an example. The reason is that in spite of their will to count with a South American Native as a Sales Manager, the overall marketing strategy of the firm is firmly oriented towards the standardization

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b

Although this strategy is not less valid than the marketing strategy of the other three (3) companies, it is riskier due to the fact that they are choosing to narrow their target market, which in turn increases their exposure to the risk associated with this target market. Concretely, this risk is a low demand that could not be covered by alternative segments

Perhaps Company B could listen more carefully to the needs of South American Middle class, that in spite of having less purchase power than Europeans, is booming and since they are not willing to pay the same as Europeans, there are still opportunities that could be seized in this segment by Company B, for instance, by utilizing part of its manufacturing capability to become a “house of brands” (Kotler et al 2012, 324-25) by launching an innovative, yet more affordable line of baby products under a different brand

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b

In terms of grounding, the strategies of all companies interviewed are fully aligned with the dynamic of industrial markets explained in Chapter 2, in the sense that creating and sustaining business relationships is perhaps one of the most important aspects of the Strategic Marketing of B2B-oriented companies

…concrete outcomes this companies reported such as the hiring of sales representatives that speak the native language of the target market ( all the companies interviewed) -and by extension, of local distributors in situ (Companies A and C)-, the offering of training programs in the headquarters (Company A) and the visit of the client’s facilities by headquarters’ engineers and executives, intended to get to know and understand its needs in depth (Companies C and A)

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b…out of the four (4) companies interviewed, Company B is the company that is least adapted in terms of “grounding” and in contrast, Company A is the one that runs more concrete ways to adapt to South American Market at a “grounding” stage, counting with more than ten (10) distributors in situ and both the practice of regularly visiting its clients to get to know their gemba as well as their training programs

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b

In this frame there are two main issues considered: The way companies identify key stakeholders located in foreign markets and the value proposition

In regard to the first issue, it is worth to mention that all the interviewees’ responses share a common ground (explicable in turn by the fact that all the companies analyzed are B2B companies that compete in industrial markets), because all of them somehow used the same sources such as industry exhibitions -also e-mails and phone calls-, but it still remain some particularities explained by the specificity of the products manufactured by each company, so in the case of Company C for instance, they find stakeholders through specialized networks of contractors in the target markets

three (3) out of the four (4) interviewed companies share the same positioning: balance price and quality, so then the outcome would be somehow in between of European or USA and Chinese ones. This is indeed the case of Companies A, C and D. In the case of Company B, their positioning strategy is clearly settled as middle-high, both in quality and price

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b

…interesting sources of added value.(…) Company A offers their own software to operate the plastic molding machinery as well as a product customization, a 24h service as well as a technical support in installation. Company B offer value through original design and availability of spare parts anytime, anywhere for free. Company C adds value by offering a total solution in which this products are supplied in strictly accordance to bidding requirements and regulations, seeking to bound perfectly with the contractor’s responsibilities.

Company D added value comes from its longstanding specialization in Asian car brands and their willingness to offer suitable solutions to its foreign customers by either associating with other Taiwanese firms when the query of a client includes parts that are not produced by the company (D is the only company that show association with other firms in the supply chain) or by opening production lines that matches car models that exist only in one country or region –such as South America-, for example.

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b

This frame comprises three issues to be considered as part of the orientation of the marketing strategy towards South American Markets

The first one is the value proposition ESPECIALLY relevant for South American industrial markets –if any-. The second issue is the key players considered by the interviewed companies in this region and particularly, in the South American Countries they are interested in and finally, the last issue to be analyzed is the ways these companies contact and bond with those key players in the aforementioned specific market.

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b

…all the companies interviewed actually offer -or are willing to- customer service in Spanish and Brazilian Portuguese and in the case of Companies A, C and D it is offered a certain degree of customization of their products in order to meet local client’s requirements

Company B is the only company out of the four (4) that does not adapt their products, offering the same quality and price regardless of the target market

…key players considered are also different for the companies analyzed, but they can be grouped in two: wholesalers and trade companies, which are especially critical in the marketing strategy of Companies B and D, then secondly, industrial companies (either manufacturers or contractors), a group of market actors that are more closely considered in the operation of Company A and Company C.

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b

There are two additional types of players that require a further mention:

Distributors: a type of player that is in the radar of all the companies interviewed as an alternative to place their products in the market.

Local government: In particular, Companies C and A are more sensitive to the influence this player could have in the market in the form or regulations in taxes, customs and quality as well as in the guidelines of biddings at either state or federal levels (Portal Brasil 2009)

Lastly, the ways or alternatives the interviewed companies followed in order to contact and bond with the already mentioned key players are basically the same for all of them: Industry exhibitions, phone calls and e-mails, but Company A stands from the crowd by being the only company that offers in-house training to the client’s technical staff

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b

…the concrete ways or alternatives used by the companies interviewed to orientate their Strategic Marketing towards the target market –in this case analysis, South America- also differs from company to company, but in the case of Company D and Company B, seems to be specially important to hire or keep hiring a native salesforce and/or distributors.

In the case of Company A, the main outcome was to finally decide to set up an assembly facility in Brazil, (…) in response to the complexity of the taxation and custom systems in this country as well as in response to the opportunity that represents the financial leverage offered by Brazilian government to local manufacturers

Other significant outcomes (…) are for instance, to place more attention to the regulation and particularly, to the specifications required in the public bids in South America in order to remain competitive (Company C), assist to more industry exhibitions (Company B) and get more relevant industry certificates to be more competitive in the case of Company D

The present thesis has been aimed at delivering three main contributions that we hope, would enrich the state of the art in Management as sources of knowledge in Strategic Marketing for Industrial markets, while serving as a guide to many Taiwanese B2B-oriented companies that are or will be trying to internationalize

An extensive literature review in Strategy, Strategic Marketing and Industrial Markets

An analytic matrix that inspired in different Strategic Marketing-related models, the particularities of industrial markets as well as in an ancient aphorism, constitutes a killing tool to disclose a the Strategic Marketing of any B2B-oriented company immersed in industrial markets (…) it is ample enough to receive multiple insights and contain multiple alternatives and courses of action, but is specific enough to lead to an orderly analysis of what is missing in the big picture of the Strategic Marketing.

A business case analysis of four (4) Taiwanese manufacturers that had South America as its backdrop in the form of the “target market” for analytical purposes

it became clear that behind the apparent promising scenario described about South American economies of the introduction of this Thesis, there are plenty of details that only arises when a target market is carefully de-constructed in the formulation of the marketing strategy of a firm

Overall, we have not found a more or less effective or desirable strategy, but in the case of Company B we dared to suggest more adaptation, but it is necessary to point out that their strategy of standardization is still a legitimate in spite of its inherent risks, it can also report benefits in form of a clear differentiation in the market.

b…we have found very interesting practices and some of them, unique in the small sample analyzed; in the case of Company D, there are used two (2) levels in marketing and in the case of Company A, in house training is offered in order to increase the professionalism associated with the usage of its machinery

adWe have also found practices that in the light of the literature review could be regarded as standards in industrial markets such as visiting clients directly and the utilization of emails, phone calls and industry exhibitions

Industrial markets, although sometimes invisible to final

consumers, represent an active and organized force that leverages not only

individual economies but also our entire civilization; its importance is

capital because in its shoulders stands the responsibility of innovate and

manage all the scientific knowledge and technical efficiencies that makes

possible to count with all the consumer products that you and me use in our

daily life

Every idea, analysis, business case or conceptual contribution shared

through this text has been carefully projected with the sincere aim of increasing the awareness of how

Strategy -and more concisely, Strategic Marketing- actually works

for countless companies that in Taiwan and everywhere else, while

selling to other businesses as part of industrial markets, are quietly

making of this world a better place

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