Unit 5
Marketing management in Asia-Pacific
I.
Objectives
1.
Identify the factors shaping the marketing
environment in selected Asia-Pacific countries
2.
Describe the nature of consumer behavior in
Asia and how this has been influenced by the Asia crisis
3.
Link the principles of marketing strategy
to the market environment in Asia
4.
Evaluate the standardization versus
adoption debate in the Asia-Pacific context
5.
Discuss issues specific to Asia-Pacific
which affect the nature of:
(a)
Product
(b)
Pricing
(c)
Promotion
(d)
Distribution strategies in the region
6.
Explore other key marketing issues specific
to the Asia-Pacific region
II.
Asia as a market
(A)
Marketing environment
1.
Asia-Pacific become attractive markets in
the world
(a) Consumption
in this region has grown as disposable incomes rise
(b) Traditional
values become more westernized
(c) Has
not gone unnoticed by multinational companies who have sought to capture the
opportunities offered by the markets in Asia
2.
Changes in the marketing environment in Asia are result of events and trends in cultural, economic,
political, legal and technological environments
(a) Shaped
the current operating environments of each Asian economy in unique ways
(b) The
major trends over the past decade include:
i.
Fast growing markets that continue to grow,
albeit at a slower rate, even after the Asian crisis
ii.
Increasing customer spending power as a
result of higher disposable incomes and more relaxed attitude to saving
iii.
Increasing income gaps between the rich and
the poor, and between urban and rural populations
iv.
Flourishing underground economy
v.
Both traditional and emerging values and
beliefs that are shaping the modern Asian consumer
vi.
Customers who are fulfilling their ‘wants’
rather than just their ‘needs’
vii.
High levels of demand for customer durables
viii.
Changing preferences towards foreign products
rather than domestic products
ix.
Shift towards a more Western lifestyle
x.
Increasing awareness of brands, self-image
and conspicuous consumption, return to price-conscious shopping
xi.
Rapid diffusion of new products, ‘fads’ and
mass-consumer trends in purchasing
xii.
Willingness to try new products or services
xiii.
Dramatic increases in the use of credit
cards and credit facilities
3.
Trends in more detail and explain their implications
for implementing elements of the marketing mix, such as product design,
advertising strategies, pricing and distribution
4.
Cultural characteristics common to Asia :
(a) Identify
the aspects of the cultural environment that influence the company’s marketing
programme
(b) Long-term
orientation
(c) Extensive
use of relationships based on trust and loyalty in the business setting
(d) Collectivist
or group-oriented culture
5.
Business is based on long-term
relationships and commitment between buyer and seller
(a) Keiretsu,
Japanese business system
i.
Excluded all but the most innovative
outside firms from the production network
ii.
Small to medium-sized suppliers depended on
relationships with larger firms
iii.
Competition between these suppliers is
fierce
iv.
Typically two alternative suppliers compete
to provide their same product or service
6.
The network of firms that may be unwilling
to distribute foreign products that compete with existing lines
(a) Dominated
by relationship-based business
(b) Chinese
dominant business activity and pervasive influence of guanxi (connection) that
difficult for outsiders to operate effectively
7.
Long-term orientation is also reflected in
consumer purchasing
(a) Higher
education and rising incomes have allowed many who live in Japan
(b) Technology
and exposure to mass media make more informed choices about the way they live
(c) Encouraged
confidence in consumers such as entrepreneurs who barrow money to establish
their own business and young couples who take out mortgages
(d) Raised
awareness of the need for precautionary spending for products
8.
Loyalty has been part of traditional
consumer behavior in Asia
(a) Large
proportion of consumers still display quite conservative shopping habits
(b) In
rural areas and among the older generations
(c) Tendency
to be both risk-averse and price conscious in their shopping behavior, preferring
to remain with a trusted brand
(d) Trustworthy
friend able to give advice about any product or brand in the store
(e) Desire
to buy goods and services that conform to accepted norms or reference group
choices
9.
Family-oriented as a result of collectivist
trait and Confucian values
(a) Women
is expected to leave work when she is married and reflect
(b) Woman’s
place at home and extended family still holds very strong in Japanese, Chinese
and Korean
(c) In
Korean, rules towards marriage and the role of the wife are changing slowly
(d) Women’s
existence is based on her relationships with her father, husband and sons
(e) Traditionally
her role was to produce a male heir to continue the family line
10.
Opening up of their economies to trade and
investment
(a) In
Japan, A proactive approach towards encouraging trade from the West and
lowering trade surpluses with USA
(b) In
China
(c) Increasing
levels of disposable income under the evolving socialist market system
(d) Technology,
management skills and access to overseas markets to fuel the growth of the
exporting industries on the SOuntern coast of China
(e) China
(f) State
involvement in the economy gradually and to introduce market-regulated supply and
demand
11.
Chinese government maintains its socialist
political ideology
(a) Market
forces has been to create pockets of wealthy business entrepreneurs in the
prosperous areas while the majority of rural peasants remain very poor
(b) China
i.
Corruption and collusive agreements with or
influence by government bureaucrats
ii.
Lack of clarity and consistence in rules
and regulations pertaining to business
iii.
Lack of reliable statistic and economic
data on which to base market assessments and feasibility studies
(c) Infrastructure
in most areas-including transport, distribution finical and legal systems are
still under development and presents a real problem for any Western firm
entering the market
12.
Japan
(a) Government-imposed
restrictions on importing or investment
(b) Due
to the confounding nature of the Japanese business environment
(c) Independently
from outside influence on the basis of longstanding relationships between
groups of Japanese companies
(d) Determined
and well-resourced firms from competing on an equal basis with Japanese firm
(e) The
close network of firms also allows rapid responses to changes in consumer
preferences and market demand
(f) Favoritism
towards Japanese products is evident by both industrial companies and consumers
in Japan
(g) Lack
of understanding of Japanese consumer by foreign firms contributes to the desire
to purchase locally made goods or services
(h) Start
from scratch to find new premises and new staff, build market share and
customer loyalty and develop network of supporting firms
(i) IBM
as example that establish a workable distribution system and a position in the
market
13.
Japanese government
(a) Reduce
the barriers to foreign business in Japan
(b) Helps
foreign exporters establish themselves in the Japanese market
(c) Large
Japanese firms are also becoming more open to outside sourcing of products and
services
14.
Hong Kong
and Taiwan
(a) Governments
adopted a minimal involvement philosophy that focuses on maintaining stability
and a relatively corruption-free regulatory environment
(b) The
major change in HK business environment is the handover of the former British
colony to China
(c) Hong Kong remain economically
independent and close relationship with the ever-growing China
15.
Korea
(a) The
are liberalization of policies concerning entry of foreign investment and some
imports
(b) Subject
to very heavy government involvement and direction
(c) Tariffs
on imported products are slowly being reduced
(d) Non-tariff
barriers, such as government regulation, inspection and interference hinder the
importation of foreign goods
16.
Education and training
(a) Asian
economics and consumers are continuing to invest heavily
(b) The
emphasis on education encouraged a virtuous cycle of economic development and
rising incomes supported by skilled workers
(c) More
accessible and affordable to these workers and children
(d) Education
is linked to financial and career success
(e) Learning
has progressed dramatically of open-door policies and the influx of foreign
companies
(f) Japan
invest in the upgrading of infrastructure, technology and human resources in
the host economy
(g) Develop
skills such as teamwork, quality control, electronic component assembly,
clothing manufacture and numerous associated with light manufacturing
17.
Adoption and adaptation of Western ideas,
products and consumer culture
(a) Profound
effect on the behavior of consumers in Asia
(b) In
the wealthier coastal areas of China
(c) The
fast-food chain phenomenon is one of the more visible signs of the West in Asia
(d) The
influx of technology originating from developed countries, expatriates and other
foreigners and overseas travel are all important sources of Western influence
(e) Changing
traditional values and customs and altering shopping behavior
(f) Dramatic
increase in the use of customer credit including credit cards, bank overdrafts
and loans, and hire-purchase style options
(g) Thrift
and saving are well-recognized values in Asia
based on the long-team orientation of society
(h) The
perceived and actual need to protect one’ family against any hardship such as poverty,
natural disaster, war and disease
(i) Fuelled
demand and consumption and has been a boon for banks and companies selling
consumer products in the East
(j) Changing
societal characteristics of Asian economies
(k) The
demand for the better quality goods and services also rises, the willingness to
try new things increase and the consumer becomes more cosmopolitan in his or
her tastes
(l) Japan
adopted as part of the collection of presents traditionally given to the bride,
rather than a symbol of love and commitment as in the West
(m) HK
sales of non-traditional foods such as beef are on the increase but the meat is
prepared in traditional Chinese style
(B)
Demographic factors and market segmentation
1.
No denying that the wider Asia
region represents a huge actual and potential market
2.
Rapid rate of economic growth and industrialization
that has made these countries attractive markets
(a) Japan
(b) HK,
Singapore, Taiwan South Korea
(c) Thailand,
Philippines, Indonesia and Malaysia have rapidly progressed into budding
consumer societies, purchasing fashion items, products for the home and
customer services
(d) China
is higher costs of land, labour and other resourced, appreciating currencies
and financial woes are eroding margins and comparative advantages
3.
The geographical spread of the population
and the underdeveloped infrastructure means that urban areas will be easier and
more profitable as target markets
(a) The
potential of the market, which numbers in the population that have sufficient
incomes to afford the production
(b) The
ease of accessing the market, which numbers in urban areas as opposed to rural
areas, those with televisions and ratios and adequate distribution
infrastructure
(c) The
distinct characteristics of the market, which the number of people in each age
group, the numbers of working women
4.
Some statistics available to conduct
environmental and market analyses
(a) Population
density
(b) Life
expectancy
(c) Population
distribution (Rural or urban)
(d) GDP
and employment per sector (Agriculture, industry and services)
(e) Changes
to GDP and GDP per capital over time
(f) External
debt, government expenditure, investment and savings
(g) Level
of foreign investment, imports and exports by sector, commodity
(h) Major
trading partners
5.
In China
(a) Willing
to buy consumer goods, including larger ticket items-Refrigerators and washing
machines and luxury items-Convenience foods and beauty products
(b) China’s
market are perhaps the most diversified in Asia
(c) Population
and geographic spread, coupled with the diversity in dialects and spending
power makes China-wide statistics poor indicators for marketers
(d) More
useful to segment the market on the basis of the different economic regions to
get a clearer idea of consumer characteristics
(e) A
smaller group have become China
(f) Chinese
have sufficient disposable income to become shoppers for consumer durables,
such as bicycles, watches, television sets and other household appliances
(g) Chinese
government’ s subsidization of basic necessities such as food and housing,
transport, education and medical care
6.
In HK
(a) Emigration
from HK has been high through the 1990s during the lead-up to the handover to
the Chinese government in 1997
(b) The
potential for further emigration if the new political situation becomes unfavorable
(c) Most
industrial countries and reflects the increase in working women
(d) The
focus on attaining material wealth and the change n traditional values such as
the importance of an extended family
(e) Attaining
material wealth and the change in traditional values
(f) Living
standards and household income are high in HK and comparable to those in the
West and Japan
7.
South Korea
(a) Ethically
homogeneous population, albeit has been influenced colonial rule, war and civil
conflict
(b) The
nuclear family has become the norm for the majority of households and divorce
has now been legalized
(c) Working
women make up 45% of workforce and are having to balance long hours and family
responsibilities
(d) Traditional
values of frugality and conservative consumption are reinforced by the
government prominent business people who call for, personally demonstrate acts
of sacrifice and personal moderation
8.
In Taiwan
(a) Second
highest population density in the world
(b) Avoided
the large income disparity of other Asian nations thereby making the market
stable and attractive
(c) With
low levels of inflation and unemployment and high trade surpluses and savings
(d) Become
the big spenders and consumption is even endorsed by the government
(e) Increasing
the gender ratio of males to females
(f) The
traditional Chinese desire to have a male heir and is being perpetuated by
women technologies that can detect and dispose of the unwanted foetus
(C)
Segmentation
1.
Process of dividing a potentially large
market into distinctive subsets of consumers and target the marketing strategy
towards one or more of these segments
2.
Starts with an analysis of the marketing
environment , or changes and trends influencing consumer behavior
3.
Identify where there are potentially
profitable areas of the market that are not being exploited or where new
products can be introduced
4.
Ways that a potential market could be
divided into more manageable segments:
(a) Demographic
variables, such as age, gender, family size and type, income, occupation,
education, religion, place of residence and nationally
(b) Psychographics
and lifestyle approaches, which divide consumers according to their social
class, culture, attitudes, behavior, lifestyle or personality
(c) Behavioral
segmentation bases, such as perceived and actual benefits of the product to the
consumer, like functional benefits, image and prestige, convenience or economy,
or usage patterns, such as heavy, moderate or light users of a product or
service
5.
The marker decides to deconstruct lager
markets into smaller market segments, each segment characteristics:
(a) Readily
identifiable relevant to the product in question. Age and income might be
suitable as bases for targeting motorized carts for the elderly
(b) The
segment should be measurable
i.
Able to count or estimate the number of
people that fall into that segment
ii.
People that are increasing their levels of
activity and exercising more, how will this be calculated in practice?
iii.
These people may not be willing to purchase
equipment for the home if they are already members of a gym
(c) Substantial
in size and durable to be profitable
i.
Sustainable long enough to worth targeting
ii.
Income level are increasing rapidly, the tastes
and preferences of members of specific market segments also change very quickly
iii.
Define actual and potential market segments
very carefully
iv.
Demographic segmentation is preferred
rather than psychographics or lifestyle patterns
(d) Must
be similarities between the members of a segment
i.
The emerging affluent and upwardly mobile ‘Yuppie’
segment in Southeast Asia
ii.
Difference in culture, demonstrate similar
preferences for Western-style consumption of fine wine, golf, travel and
designer labels
iii.
Based on the need for status and
conveniences rather than solely functional attributes
(e) Accessible
by the company
i.
Product and promotion of the product must
be able to reach the targeted segment
ii.
Lacks of infrastructure, roads, electricity
and public transport or lack of suitable adverting media may still restrict a
company’s access to a potential segment
iii.
Purchasing power of the segment and the
literacy rate inhibit the marker’s efforts to reach a particular group of
consumers
iv.
Affected by political events or policies,
such as the closed door policies in China Indonesia
6.
Type of segmentation used will depend on
the type of product and its likely customers
(a) Such
as soft-drinks (Asia ), coffee (Singapore
(b) Coffee
is more favored in Singapore
(c) Chinese
tea is drunk on the mainland and sweet bean curd is drunk in Taiwan
(d) Income
is the most widely used in the Asia region
generally, as this variable clearly demarcates those customers who are able to
purchase
(e) Asian
consumers become more discerning and there is a need to understand the activities,
interests and opinions of smaller segments of consumers better
(D)
Consumer behavior
1.
In the market segments identified through
the analysis of the marketing environment and specific characteristics of the
consumers
2.
The feature of the marketing environment, coupled
with demographic information and other segmentation bases
3.
These characteristics should also serve as
a useful indication of consumer behavior in the target segments
4.
Existing culture, trends and changes in
Asian society with demographic features of region in order to define the main market
segments across the region
5.
Japan
(a) Dominant
middle class consumer exhibits very similar patterns of buying behavior
(b) Attributed
to the collectivist and relatively homogeneous nature of Japanese society
(c) The
rapid adoption of new trends by a well-educated population have served to make
Japanese consumer behavior much more uniform
(d) Emphasis
on quality and service rather than price
(e) Also
emphasis on education produced customers that are more discerning and more sophisticated
in their buying behavior
(f) Not
only includes financial inputs, but the ability and willingness to adapt the
business to suit Japanese consumers
6.
China
(a) The
middle class consumer exhibits a fairly conservative style of consumer behavior
(b) Remain
faithful to traditional Chinese products
(c) Aspirations
of new refrigerator or a second television set
(d) Younger
generation and the wealthier entrepreneurial class are keen to try new things
and make riskier purchasing decisions
7.
The time for leisure and family is more in
demand in Asia
(a) Increasingly
encroached upon by the higher numbers of women in the workforce
(b) Pursuit
of higher education and training
(c) Children’s
schoolwork and extracurricular activities
(d) Products
and services that reduce the time needed for household chores, such as vacuum
cleaners, microwaves, family restaurants and product with remote control
8.
Working women
(a) They
are earning money themselves and household has higher levels of discretionary
income to spend
(b) Less
time to spend with the family has encouraged purchases of convenience products
and restaurant meals
(c) HK,
women are holding down goods in service sectors and devoted to the raising of
the family still very strong
9.
Yuppies
(a) Rising
incomes and the availability of credit from banks and stores has prompted nay
Asian consumers
(b) Focus
on their ‘wants’ rather than just their ‘needs’ in purchasing behavior
(c) Items
such as Cars, refrigerators and mobile telephones have become necessities in
life for most urban consumers, these items would have been considered as
luxuries
(d) Purchasing
behavior in the wealthier focus from functional attributes of the product or
services to the aesthetic attributes
(e) Concern
price has lessened in favour of concern for brand name, style, design and
packaging
(f) Nouveaux
riches are striving to fit into an emerging lifestyle that is modern
(g) Led
to conspicuous consumption or the acquisition of material assets that will
reflect the purchaser’s newly found success and status in society
(h) Products
such as fine wines, expensive jewellery, luxury vehicles and artwork
(i) Services
as foreign maids, tutors, medical insurance, overseas travel and golf
membership
10.
Youth and teenagers
(a) Demonstrated
a passion for consumer ‘fads’
(b) Taiwan
(c) Bean
sprout generation as they are considered to be like young plants in the
greenhouse that well protected, yet feeble and vulnerable
11.
Post-crisis consumers
(a) Japanese,
shifted towards goods that are realistically priced and offer value for money
(b) Willing
to purchase high quality functional items, less willing to pay for unnecessary
frills such as elaborate packaging
(c) The
rise of cut-price or no-frills shopping outlets that provide the customer with
the best value for money
(d) Marketers
are finding customers are choosier than before, actively have to readjust their
marketing mixes and product offerings to suit the ‘new’ consumers
12.
Past 5 years
(a) Consumer
spending in HK has fallen dramatically in response to changes in the economic
and political environments
(b) HK,
consumers are cautious and prefer to save their money rather than upgrade to
newer models of cars, stereos and TV
(c) Korea
(d) Consumer
confidence has been dampened considerably and there is an air of caution about
materials spending, for high-ticket luxury items or excessive frills
III.
Marketing
strategy and the marketing programme
(A)
Marketing strategy: Basic concepts
1.
Marketing philosophy
(a) Behind
marketing-oriented strategy
(b) Focus
on determining the needs and wants of the customer
(c) Develop
a product that meets those needs, then sell it for profit
2.
Marketing concept
(a) Seek
to achieve its goal through identifying the needs and wants of target markets
(b) Delivering
the product more effectively than competitors
(c) Increasingly
dynamic and competitive markets the most successful for companies to understand
what their customers expect
(d) Able
to satisfy those customers better than any other company in the marketplace
(e) Leads
to high demand, sales and ultimately to achieving the company’s goals
3.
Selling
(a) Encouraging
customers to buy existing products through use of the promotion and adverting
and aggressive selling techniques
(b) Selling
try to sell what it makes rather than what the market wants
i.
Insurance companies as example
ii.
Use hard-sell techniques to sell a service that
often a customer may not seek out or may be reluctant to purchase
(c) Marketing-oriented
i.
Employ aspects of the marketing function
ii.
Oriented towards selling, production or the
product
(d) Production-oriented
i.
Lowering the cost of the through efficient
production techniques
ii.
Making the product widely available through
expansive distribution coverage
iii.
Profits are achieved through mass selling
and low margins
iv.
High demand for a standardized product or
customers want low process and value for money
v.
Develop and refine their product offering
vi.
Disadvantage of this strategy is that increasing
choice of products, available consumers may put other needs of product quality
4.
Marketing fundamentals (Market-oriented)
(a) Customer
satisfaction is ultimate goal
i.
Understanding what customers want
ii.
How the company can best meet customer
needs profitable and achieve this goal
iii.
The objective of everyone in the company
not just these in the marketing department
(b) Customers
do not buy products or services
i.
Solutions or benefits the product can
provide to customer
ii.
Kodak as example
iii.
The company who buys a lawnmower wants the
grass cut
iv.
Led marketing-oriented firms to view their
products as ‘bundles of benefits’
v.
Leads to a combination of product and service
that offers a solution or a benefit to the customer
vi.
IBM as example
(c) Made
up different groups of consumers with different characteristics
i.
Sell a single idea or product to all these
people in the same way is usually ineffective and a poor use of company resources
ii.
Market segmentation and adoption of the
marketing mix to suit the segment
(d) Needs
to review each element of the marketing mix continually in view of these
changes
i.
More volatile than others
ii.
Computers as example that technological
products and the youth market are two areas where product life cycles are short
and the marketing mix, needs to keep up with these trends
5.
Market positioning
(a) Consider
the market positioning of your company relative to your existing competitors
(b) The
market is different to positioning each of the economy’s product offerings and
brands
(c) McDonald’s
hamburger chain in Asia
i.
Different products
(1) Vegetarian
and chicken burgers to Indians and Muslims
(2) Kid’s
meals and toys to children
ii.
Emphasis the company image and its ‘bundle
of benefits; as a lifestyle and image choice
iii.
Convenience of the purchase, the congenial
family atmosphere of the restaurants, promotions targeted at different customer
segments, the hygienic and efficient food preparation
iv.
Associated with a sun outing for children
and teenagers rather than just a meal
v.
Willing to pay more for this experience
than other local offerings
(d) Strongly
influenced by the firm’ strengths and weaknesses relative to competing firms
(e) Existing
competitors and other factors in the Marco-environment
(f) Understand
the extent of its resources and the nature of the business environment
(g) The
main purpose of market positioning is to find and try to maintain a competitive
edge in the market
6.
Companies in Asia
have often positioned themselves according to the main market segments that
have emerged, such as the yuppie segment
(a) Marketers
tried to position their position their companies as suppliers of luxury goods
only for the elite
(b) Through
building brand reputation, up-market promotion techniques, high prices and
technologically sophisticated products or snob-appeal
7.
Future growth is the marketing of
environmentally friendly products to the ‘green’ segments
(a) Minimize
the harmful effects on the natural environment
(b) Invested
heavily in promotion and product development in order to re-position themselves
as environmentally friendly businesses
(c) Environment
concern will increase among consumers and companies alike
(d) China
(e) Products
are produced and sold at a lower cost than in the West
(f) Produced
by or use non-renewable resources or obsolete technology from the West
8.
Different market segments identified
(a) Analyze
the company’s strengths, weaknesses, opportunities and threats (SWOT analysis)
(b) Competitor
analysis
i.
Useful for developing marketing strategy
after the market grouped into clearly defined segments of customers
ii.
Allowed the firm to see if any segments are
not being served adequately-fill that “gap”
iii.
Incorporating all the environmental and
internal analyses clarify the process of strategy formulation
(B)
Standardization versus adaptation
1.
Firm’s offering and the elements of the
marketing mix can be standardized across international markets
2.
Full standardization would mean than
identical product was offered, using the same promotional material and
distribution methods
3.
Standardization across world markets is
globalization
(a) Becoming
more homogeneous due to the growing influence and accessibility of travel and
worldwide media, such as TV, films, telecommunications and the Internet
(b) McDonald’s
and Coca-Cola as example
i.
Employ global marketing strategies
ii.
Attempt to sell standardized products using
similar outlets
iii.
Promotion to capture this worldwide market
iv.
Identify and target homogeneous market
segments that exist globally, such as the youth/teen, yuppie, or young family
market segments
4.
Adaptation (or customization)
(a) Modified
to account for differences in host-country environments, demographic characteristics
and consumer tastes, needs and preferences
(b) Needs
to be modified account for differences in host-country environments,
demographic characteristics and consumer tastes, needs and preferences
(c) Consumers
in global markets are diverse rather than homogeneous and marketing programme
should be directed accordingly
(d) Honda
Motor Company as the example
5.
Full standardization or full adoption
strategies must be extremely uncommon
(a) Take
Coca-cola for example
i.
Promotional material translated into
different languages for different countries
ii.
Sophistication and availability of
different distribution channels
iii.
Pricing depends on what the market bear and
the strength of the other competitors
iv.
The product must be altered, the can is
green where red is considered to be offensive
v.
Professional service companies customize
the service offered to each customer
(b) Companies
must find a middle ground between standardization and customization have
advantages if used appropriately
6.
Marketing mix elements 3 key advantages for
the firm:
(a) Cost
advantage through achieving economies of scale in production, research and
development, promotional material
(b) Standardization
also promotes consistency and customer recognition of products that are offered
in more than one country
i.
The golden arches of McDonald, which provide
a consistent product, pricing and distribution regardless of location
(c) International
firms have found that standardization improves marketing performance, market
share and profitability through ease of implementation, control and management
of standardized marketing programme
(d) Adaptation
of the elements of the marketing mix resulted in higher levels of consumer
satisfaction, patronage and ultimately profits
(e) Advantages
of partial adaptation
i.
Better tailor the marketing mix to specific
segments and cater to the differences in customer needs
ii.
Mandatory to meet the legal requirements of
some countries, such as safety standards, labeling and censorship
7.
Balance must be achieved somewhere between
full standardization and full adaptation of marketing mix
(a) Based
on traditional and marketing mix elements
(b) Able
to capture an international market segment
(c) Used
geographic, political, economic and cultural bases for segmenting markets
(d) Standardization
will be determines by:
i.
Product features and type
ii.
Environmental variables such as Political
and legal requirements
iii.
Demographic and economic characteristics of
the segment
(C)
Introduction to the marketing programme
1.
Identified and the marketer has ensured
that this segment is large and sustainable enough to be profitable
2.
Potentially incorporate a number of
different product offerings over several market segments or countries
3.
The Four elements, or “Ps” of the marketing
mix are more closely aligned with the needs and wants of the consumers and
being the trends of the marketing environment
(a) Product-the
firm’s offering of both products and services
(b) Price-which
includes the purchase price of the product in different markets, and the value
of the product to different customers
(c) Promotion-of
the product and communication of the product’s benefits to the customer
(d) Place-or
distribution of the product from manufacturer to end consumer
IV.
Product
management and development
(A)
Understanding the product/service mix
1.
The most important elements of the
marketing programme is the product
2.
The company’s offering to the market and
can include physical goods, services, ideas and even places or organizations
and people
3.
Focus on ‘bundle of benefits’ embodied in
the physical product and service mix offered to customer
4.
Having services:
(a) Pre-purchase
advice, installation and instructions for use, or after-sales service such as maintenance
and repair
5.
Example of IBM
(a) Involve
some ‘physical’ product elements
(b) And
either not retained by the customer-air travel
(c) Brochures
from the travel agent, the airplane itself and the food served
6.
‘Bundles of benefits’ or product offerings
are products and which are services:
(a) A
meal at a restaurant
(b) A
mobile telephone
(c) A
doctor’s consultation and prescription for pharmaceuticals
(d) An
outdoor landscaping service
(e) A
personal computer
(f) A
tailored suit
7.
Consumers become more discerning about the
products they buy, the range of choices increases
(a) Companies
need to spend more time considering how their product could be supplemented by
supporting service elements and vice versa for services
(b) Avoid
confusion we will refer to the product and/or service mix as the product
offering, or simply the product
8.
Product offering at f different levels:
(a) Most
basic level
i.
Company is selling a fundamental or core
benefit to the customer
(b) Second
level
i.
Benefit must be transformed into a generic
product to relay the benefit to the customer
(c) Third
level
i.
Expected product includes all features and
attributes
ii.
Most customers would expect to receive upon
purchasing the product
(d) Fourth
level
i.
Augmented product embodies more than the
expected features to make the offering superior to competitors
ii.
Their product offering from the
competitors’ offerings by providing additional benefits sought or desired by
customers
(e) Fifth
level
i.
Product evolve sometimes in the future and
will better meet the changing needs of the customer and generate more business
for the company
9.
Manufacturing firms in Asia
have traditionally focused on the functional attributes of the generic product
(a) Maximum
benefit through functional attributes at minimal cost
(b) Cost-focused
or product-oriented strategy works well when consumers are price-sensitive
(c) Attention
to developing the expanded product offering
i.
Tangible and intangible attributes sought
after by the customer
ii.
Select their products over their
competitors and are willing to pay a premium for additional actual or perceived
benefits
10.
The marketers communicate to the customer
the actual benefits of buying their product over substitute products or brands
(a) Product
differentiation and commonly used include price, brand names, packaging,
quality of the product and aesthetic attributes such as style and design
(b) Books
and CDs as a example
(c) Services
included with the product (as free delivery), promotion and give-away
(d) Appeals
to identity and image are also used to differentiate the product
(e) Depend
on the needs and wants of the consumer
(B)
Managing brands
1.
Represents a lasting symbol of the company
and its products in the eyes of the consumers
2.
Define brand as ‘a name, term, sign,
symbol, or design, or a combination of them, intended to identify the goods or
services of one seller or group of sellers and to differentiate them from those
the competitors
3.
Purpose of branding is to create awareness,
foster loyalty and encourage repeat sales of the company’s products
4.
Associated with a certain reputation, as
quality and reliability, value for money, or innovation and technological
sophistication
5.
Produces a wide range of non-durable
consumer goods ,focuses on positioning the brand names of the products rather
than the company in the marketplace
6.
The customer about the company and its
product offerings
7.
The brands develop as many levels of meaning
as possible, promotes better recognition by consumers and minimizes duplication
of ideas by competitors
8.
Six levels of meaning can be incorporated
into the branding strategy:
(a) Product
attributes such as quality, reliability and prestige
i.
FEO (Singapore
ii.
Achieved ISO 9002
(b) Product
benefits communicate the value of the specific product attributes to the
customer
i.
Installing a comprehensive range of
additional features
ii.
Caters to emotional benefits such as the
need for security and admiration from friends
(c) Values
of the company or what the company stands for
i.
Body shop, retailer and marketer of its
unique range of cosmetics and toiletries
ii.
Not testing on animals, using renewable
natural resources and promoting the personalities rather than the body image of
its clients
(d) Cultural
influences are evident in many products from developed countries
i.
Italy
(e) Personalities
normally associated with person, animal or object can be projected by the brand
i.
Slogan or Puma logo which suggest strength
and dominance
(f) User
characteristics are potentially the most influential aspect of the brand
i.
LV Toyota
9.
Marketing mix should support the desired
reputation or image of the brand
(a) The
product itself, the packaging, the way in which the product is promoted,
distributed and sold
(b) The
Mercedes as example (Motorcar as a luxury)
(c) McDonald’s
is renowned for its consistently efficient service
(d) IKEA
affordable design furniture
(e) Swatch
watches as fashion accessories
10.
The brand-name decision is vital to the success
of the company and its products
(a) Consistency
of the name across markets and countries is important
(b) Initially
produce for home markets
(c) Internationalize
their operations into less culturally similar markets
11.
Some strategies that company take to
overcome the difficulties of branding across several counties
(a) Standardization
of a brand name to cover both company and products
i.
Advantages of consistency and clarity for
the consumer and economies of scale
ii.
Disadvantages of firm risk its own
reputation, based on the poor performance of a single product if the two are so
closely associated
iii.
Translate appropriately and still appeal to
local tastes
iv.
Coca-Cola, Nissan, Kodak, IBM and AT&T
(b) Standardization
of a brand name to cover all products
i.
Promotes brand awareness and product
acceptance
ii.
Avoids the risks of the first strategy, may
create lower levels of loyalty with some consumers
iii.
Tend to remain loyal to the company rather
than its products
iv.
Overcome this using both company name and
product name together, which is commonly used strategy for Japanese cars
(c) Standardization
of brand names for different classes of product produced by the same firm
i.
Advantage of associating a brand name with
a specific product or consumer segment
ii.
Lower-priced goods without hurting the
quality reputation of its more expansive product lines
(d) Individualized
brand names for each product
i.
More time-consuming and expensive, brand
names to suit both products and markets and re-package and re-label products
ii.
Closely tailored to customer tastes and
requirements and brand names for the same product are changed for different
situations
12.
Common characteristics of successful names
are:
(a) Ability
to convey meaning about the product
(b) Names
being short and easy to pronounce
(c) Recognizable
and easy to remember
(d) Able
to translated into different languages
13.
In Asia ,
brand name that sounds good when spoken and looks good on paper
(a) Names
and numbers are associated with luck
i.
Number eight (associated with prosperity)
ii.
Number four (avoid, considered unlucky)
(b) Symbols
are used to support the brand name, are instantly recognizable and overcome the
difficulties of translation
14.
Using translations may be problematic
within countries as well as between countries
(a) Japanese,
4 different writing systems exist and associated with different historical or
cultural characteristics
i.
Kanji, traditional and quite inappropriate
for a technologically sophisticated product
ii.
Katakana, borrowing language from the West
iii.
Hiragana, perceived to be feminine and used
for beauty prodcuts and hair dressing salons
15.
Brand equity
(a) The
loyalty to the brand by consumers, awareness of the brand, perceived quality,
the strength of brand associations and supporting patents, trademarks
(b) Tailoring
each element of the marketing mix contributes to brand equality
(c) Gain
legal protection of their name and unique products features
(d) Gain
leverage when dealing with distributors and retailers who need to offer the
brand to keep customers satisfied
(e) Easily
identify the type of goods or services that suit them best
16.
Branding strategy
(a) Japanese
(Flexible branding strategies)
i.
The products to meet the customer needs
that change over time
ii.
Product attributes have been translated
into direct benefits for the consumer
iii.
Advertising and promotion have sought to
support the image of the brand
iv.
Example as Mitsubishi, Toyota
(b) South
Korean
i.
Brands internationally
ii.
Example as Goldstar, Samsung, Daewoo and
Hyundai
(c) Taiwanese
i.
Ranging from the computers to fashion
clothing , relied on established brands from the USA Japan Europe
to market these products
17.
Rely on product function, low prices and
international distribution and marketing to promote their products
(C)
Product life cycle and positioning
1.
PLC concept refers to the stages of a
product’s life span in the marketplace
2.
Depend on how well the company can
stimulate demand for the product
3.
The perception of the product type changes
and the elements of the marketing mix are adjusted
4.
PLC consists of 4 separate stages:
(a) The
first stage-Introduction
i.
First released onto the market
ii.
Typically slow, aware of the product,
consider it to be inferior to their current brand or are waiting for others in
their peer group to try the product first
iii.
Products are minimal at this stage due to
the high costs of product development, trials, promotion and distribution
channel set-up
iv.
Be long and protracted in Asian
v.
Lack of understanding of Asian consumer
preferences and behavior may also slow the availability and acceptance pf the
product
(b) The
second stage- Growth
i.
Consumers accept the products and sales
rise rapidly and profits follow
ii.
Promotion related costs are offset by
higher revenue
iii.
Try and extend the PLC through improvements
or additional features
iv.
Competitors start to enter the market
during this stage, firm must clearly differentiate the benefits of its product
offering and communicate these to consumers
(c) The
third stage-Maturity
i.
Sales reach their peak and level off
ii.
Profits are highest early in this stage
because steady revenue generated by sales and lower costs once the product has
been established
iii.
Offering against products from competing
firms (lowering prices)
iv.
Offering promotional deals or
differentiating the product through minor modification
v.
Products have been available for years and
merely being updated and improved
(d) The
fourth stage-Decline
i.
Product and profits decrease
ii.
Product becomes a short-lived ‘fad’, or its
style and features go out of fashion
iii.
Product becomes obsolescent or replaced by
a superior model
iv.
Competitors supply rival models of the
product, purchase have already done so
5.
Consumer behavior in response to the
product’s entry, acceptance and maturity provides a rationale for the PLC
concept
(a) Introductory
stage are known as ‘innovators’
(b) Growth
stage are known as ‘early adopters’
(c) Decline
stage, the product becomes legitimized for the majority of the target segments
who then decide to purchase
(d) Substitutes
rise and price wars ensure, consumers move on to new products and alternative
brands
6.
Strategies for the PLC
(a) Introduction
stage-skimming strategy
i.
High price level while it is still new and
offers additional benefits over existing products
ii.
Promotion is high, encourages more rapid
acceptance and awareness
iii.
Promotion is low, company recover some of
the costs of the product development and introduction
iv.
Willing to pay premium for product and the
threat from competing products is low
(b) Introduction
stage-penetration strategy
i.
Product is introduced at a low price to
capture market share quickly
ii.
Higher level of promotion encourage rapid
adoption of the product
iii.
Used when competition is fierce, the market
is already price-sensitive and awareness of the product is low
iv.
Lower level of promotion, market id large
enough to sell sufficient volume of the product
(c) Growth
stage
i.
Sustain rapid sales growth for as long as
possible, avoid the onset of the maturity stage
ii.
Product involve improving quality and
design
iii.
Adding features to the product
iv.
Introducing new models or products that
complement the existing model
v.
Redesigns promotional materials or lowers
prices to attract new customers
(d) Maturity
stage
i.
Dominant players and by competition on the
basis of price and new product attributes
ii.
Selling based on their established brand
and brand reputation
iii.
For quality, value-for-money or service
iv.
Smaller customer segments avoid head-on
competition with the dominant market players
v.
Employ market and product expansion
strategies during this stage
(1)
Attempting to increase the volume of sales
by attracting new customers in new segments or from competitors
(2)
Increasing the purchase rate of existing
customers or modifying the product features, style or performance
(3)
Marketing mix elements is reviewed
(e) Decline
stage
i.
Need to address its position in the market
for the product in question
ii.
Decide on some type of exit or harvest strategy
(1)
More profitable to drop the product than to
continue to complete
(2)
Business is then offered for sale or
liquidated if it has very little value to other buyers
(3)
Decide the product is able to continue to
generate sales
iii.
Substantially curb expenditure on the
product while maintaining sales levels
iv.
The company’s strengths versus those of the
competitors and the potential return during the decline stage
(f) Product
positioning
i.
Identified target markets, evaluated the
company’s strengths and weaknesses and those of competitors
ii.
Firm needs to establish and clearly
communicate the grounds on which the product is differentiated from the
products of the competitors
V.
Pricing
for Asia-Pacific
(A)
Pricing contexts: External and internal
influences
1.
External influences on pricing relevant to
the pricing decision that are outside the firm
(a) Consumer
characteristics and market demand, existing and potential supply by the
competitors
2.
Internal influences originate from within
the firm
(a) Objectives
look specifically at pricing objectives in the following part of this costs
3.
Customers
(a) Price
setting through demand for the product
(b) Perception
of the value of the product
(c) Unique
behaviors
(d) Their
demographic characteristics such as income level
(e) Company
needs to estimate the effect of changes in price level on the demand for the
product
(f) Price
elasticity of demand is equal to:
Price elasticity of demand=%
change in quantity demanded
% change in price
4.
Need to find a balance between charging a
price that will meet company objectives while still attracting a sufficient
number of customers
(a) Some
products sensitive to change in price, such as mature products where many
substitutes and competitors exist
(b) Convenience
products and luxury products will be less affected by changes in the price
level
(c) Command
a completely different price depending on the circumstances
(d) Coca-Cola
as example
5.
Price is represented by the amount of
consideration required to purchase it relative to the value of the product to
the customer
(a) Monetary
value and a subjective contextual value according to the customer and the
attributes of the product
(b) The
consumer
i.
Cost of locating the specific product
ii.
Accessing
iii.
Evaluating
iv.
Buying and using the product
6.
First consumer is willing and able to buy a
more expensive set of furniture, while consumer No.2 wants to buy budget
furniture
(a) The
second consumer has higher costs than the first
(b) Make
the purchase and to use the product
(c) Taking
broader look at the price and value relationship
7.
Implications of this price/ value
relationship for the marketer
(a) Consider
how to lower the cost of purchase to the consumer, not just the purchase price
(b) The
cost of the time taken locating and evaluating the product may be low relative
to the perceived advantages achieved through this process
(c) The
cost to reputation or ‘face’ of self-assembled furniture consider too high for
some consumer groups in Asia
(d) Japan
(e) Customer
hold the belief that value for money is more important than unneeded extras:
i.
The value of the product is increased by
eliminating frills or unwanted extras, while maintaining quality and lowering
price
8.
Marketer attempt to rise the value of the
product to the customer
(a) Offering
special promotional deals or additional features and services without altering
the purchase price can increase product value
(b) Product
value are increased and maintaining a high price rather than discounting
(c) Price-conscious
Chinese, are willing to pay a higher price for higher quality and the latest
technology
(d) The
purchase price of the gift indicates the value of the gift to the receiver
(e) Product
always on sale, not create a favorable perception of the giver
(f) Goods
are purchased for conspicuous consumption reasons
i.
For the status symbol or for snob appeal
ii.
Less desirable if the prices are reduced
9.
Competitors
(a) Pricing
of a product over its life cycle also reflects the nature of the competitive
environment
(b) The
relative value of the company’s offering in terms of price level, quality,
features and compared with the competitor’s offering
(c) The
price must be line with the product positioning
(d) Try
to differentiate their products on other attributes that add value to the
product
i.
Quality, brand reputation, durability,
technological features, service components
ii.
Charge higher prices, customers must still
understand why the value of the car is higher than more cheaply priced models
iii.
Brands are clearly separated from competing
brands by value and by price
(e) The
price should reinforce the intended perception of the product to consumers
i.
Customer expects to pay a higher price than
for other Japanese cars without these features
ii.
The customer relative to the value offered
by competing or substitute products
10.
Costs
(a) Play
a dominant role in the pricing strategies of local and international firms
(b) The
region experience dynamic economic conditions, high levels of
industrialization, growth in incomes and GNP
(c) Subject
to constant economic and social change
i.
Exchange rates, interest rates and growth
rates also the cost to the firm of doing business
ii.
Rental, property, salaries, land and labor
costs have all risen dramatically in Asia on
line with economic growth
iii.
Physical and marketing infrastructure has
improved demand services
iv.
Such as marketing expertise, advertising
space, distribution and telecommunications
11.
Pricing are the costs a business incurs
(a) Developing,
producing, marketing, distributing and selling a product
(b) Market-oriented
company concerned with customer pricing considerations
(c) Market
demand and how much the customer is willing or prepared to pay when setting
prices, rather than traditional cost-plus or historical costing
(d) Cannot
easily apply each cost a particular product to arrive at a suitable price
(e) Costs
typically fall into broad categories:
i.
Fixed costs with levels of production and
include such as overheads, equipment and plant costs, rent and power
ii.
Variable costs with each unit of production
and included such as materials or labor required, packaging and distribution
costs
(B)
Pricing objectives and strategies
1.
Profit-oriented, pricing is to maximize the
financial performance of the company
(a) Attempts
to estimate the different levels of demand for, the product associated with
different price levels
(b) Most
likely to maximize short-term returns is chosen
(c) Help
to cover the high costs of product introduction
(d) Ultimately
generates cash flow
(e) Good
return on investment and profit
(f) Less
likely to account for customer and competitor influences on and reactions to
the product
2.
Sales growth, require penetration pricing
(a) At
a lower or similar level to competitors and offering more value
(b) This
maximizes sales, lowers per unit costs and leads to profit in the longer term
(c) Useful
in a price sensitive market and has been used by Japanese firms to maximize
sales and market share for cars, video recorders, stereo equipment
3.
Market skimming
(a) Raise
prices to the highest level that the market will bear on
(b) Intended
to ‘skim’ the highest profit margins from the top group of customers while the
product is new, desirable or unavailable from other sources
(c) The
price is gradually lowered to attract the next level of more price sensitive
customers
(d) Example
as Polaroid used that pricing technique when its first ‘instant’ picture
cameras were introduced
4.
Product quality leadership
(a) Company’s
desire to lead the market for its particular product class
(b) Positive
reputation for innovative product offerings
(c) Very
strong and life-cycles of products are short, customers do not want to pay for
a product that has already been superseded by another
(d) Consumers
demand that the product features on cars, electronic goods and appliances and
even residential properties are leading edge
5.
Asia-pacific region seek to develop
country-specific pricing
(a) Demographic
characteristics such as the income of target market segments
i.
Consumers able to afford the product at
certain prices
ii.
The strength of competition
iii.
Exchange rates
iv.
Pricing or importing restrictions that may
be set by the country in question
v.
Leads to substantial differences in prices
charged for identical or very similar products
(b) Customers
traveling or ordering lower priced products across borders
i.
Free trade efforts in the region
ii.
Increased travel between countries
iii.
Better-educated
iv.
More aware customers and parallel importing
(c) Company
now faced with the difficulty of trying to standardize pricing without having
to reduce the price to the lowest available in the region
(d) Practical
solution:
i.
Offering additional support services
ii.
Advertising benefits
iii.
Scaling the offering up or down to suit the
market better
VI.
Promotion
and selling strategies
(A)
The promotional mix
1.
Promotion means of communication intended
to persuade, inform and remind customers about the company’s product offering
(a) Make
customers aware of the value or benefits of the company’s product offering
increase sales and ultimately, profits
(b) Includes
advertising, personal selling, sales promotion and publicity and uses various
media
2.
Need to consider the objective of the
promotion effort
(a) Based
on the corporate goals, type of product, target market segments and a sound
environmental analysis
(b) Establish
sound objectives prior to designing the promotional strategy, the firm trends
in market share, sales and customer behavior
3.
5 specific objectives of the promotional
effort and the reasons why firms may choose to pursue them:
(a) Create
awareness
i.
Introduce a new product or modified product
onto the market
ii.
The promotional mix included more
publicity, heavy personal selling to familiarize dealers and customers with the
product, and supportive advertising
(b) Create
acceptance
i.
Product or a brand is introduced to new
market with resistance from customers
ii.
Heavy use of advertising to change this
perception, offer guarantees for the vehicles and improving the quality over
time
iii.
Japanese cars could be value for money and
good quality
iv.
Gain acceptance for their products
internationally
(c) Exposure
to the product and demonstration of its benefits
i.
Require personal demonstration to display
their benefits adequately to the customer
ii.
Combination of personal selling and sales
promotion is frequently used to educate and attract the customers
iii.
Salesperson uses referrals from friends to
contact potential customers who are offered a free carpet cleaning with the
demonstration
iv.
Use the promotion to ‘push’ the product
through distribution channels
(1)
Focuses on the intermediaries in the
distribution chain
(2)
Marketer uses personal selling techniques
to communicate the benefits or improved features of product to people
(3)
Demonstrate the product in detail, allowing
the intermediary to grasp some of the more complex features that customers need
advice on
(4)
‘Push’ strategy, combined with advertising
and promotions to attract attention to the product
(d) Stimulation
of demand by consumers
i.
‘Pull’ strategy use heavy advertising and
sales promotion to encourage customers to approach their retailers and ‘demand’
the product
ii.
The product from competitors’ offerings and
to create specific demand for a singular brand
iii.
High profile branded products that go on to
command a dominant position in retailing outlets because of their popularity
iv.
Comparative advertising techniques and
directly compare the benefits of their product to the competitor’s product
v.
Not acceptable behavior to be openly
critical of others
vi.
Example as Coca-Cola and Pepsi
(e) Brand
building and product image building
i.
Devote promotional expenditure to specific
brand building programmes are the larger multinational companies afford to
spread costs over many market
ii.
Cosmetic firms, fashion chains and Western
fast-food outlets
iii.
Effective ‘pull’ strategy and high profile
brands have generated enormous customer demand, such as McDonald, Levi and
Relvon
iv.
Large advertising budgets are required to
mass communicate an image or reputation of a specific brand
v.
Celebrity advertising or create their own
celebrities who promote and foster the image of the product
(f) Product
reminders and brand recall to stimulate sales and gain market share
i.
Product’s life cycle compete the firms and
substitute products available
ii.
Brand recall is to remind customers of the
product and the brand so that the company’s offering is chosen over its
competitors
iii.
The majority of consumer products fall into
the mature category
iv.
Heavily rely on sales promotion at this
stage to differentiate the offering at the time of evaluation and
point-of-scale
v.
Mobile phones are another good example
vi.
Free phone or free calling time when they
sign up with a particular cellular provider
4.
Promotional effort seeks to achieve and how
this will meet the longer-term goals
(a) Adjust
the mix to account for differences in product characteristics
(b) Target
market characteristics
(c) The
promotional budget will determine the final combination of promotional
techniques used
(B)
Advertising and communication
1.
Any paid form of non-personal presentation
and promotion of an idea or a product/service
2.
Advertising covers a broad scope of
messages, mediums and forms but is characterized by 3 attributives:
(a) Public
communication, one-way form of mass
(b) Persuasive
by being repetitive and convincing
(c) Positive,
reflecting the company’s desired image, size and product offerings
3.
Advertising is one the most culture-bund
elements of the marketing mix
(a) Adapt
to the specific cultural contexts of Asian that communicate the benefits of
their offering and win customers
(b) Tailored
to suit the cultural norms and values of the target market, the language,
religious beliefs and level of education
(c) Good
understanding of these factors from the environmental analysis
(d) Recognizes
where elements of the adverting, such as the theme, can be standardized over
many markets and where other elements
4.
International companies consider the
cultural differences may affect the correct interpretation of their advertisements
(a) Considered
to be appropriate behaviour differs between countries, cultures, religions and
ethnic groups
(b) USA
(c) Asian,
inappropriate theme for selling a product
(d) Humor
in advertisements is culturally bound and often difficult for an outsider of
fathom
5.
Language
(a) Merely
a written symbol for the spoken words we use to describe our world
(b) Inextricably
linked to culture:
i.
USA, bread is typically white, sliced and
comes in plastic bags
ii.
France, bread is translated into le pain, thin crusty loaf in a brown
paper bag
iii.
Indian and Arabic countries traditional
bread is flat
(c) Poorly
translated advertisements that are ambiguous, offensive, humorous or simply
incomprehensible are common
(d) Use
English for slogans and for products targeted to more-up-market segments
(e) Reduced
to pictures or packaging that illustrate the usage of the product
(f) Pictures
and the use of characters or symbols that support the advertising message are
common
6.
Communication is also influenced by culture
(a) Advertisements
try to adopt one or a combination of the following three styles:
i.
Informative
ii.
Rational and persuasive
iii.
Or based on image and emotion
(b) Shift
away from demonstrating product benefits and hard-core selling towards
establishing a ‘face’ to the product or the brand
(c) Attempted
to personality the product to make consumers identify with images
(d) Brand
advertising use images and appeals to the target customer on a personal level
rather on the basis of product attributes
(e) Samsung
as example
(f) Companies
release sophisticated look-alike products every day that all compete for the
market share
(g) The
newest products contain the latest features as a matter of course and these
features are no longer a strong basis for differentiation
(h) Information
and guidance about the purchases can be obtained when the customer goes into
the store to buy the product
(i) Japanese
often appeal to the emotional desires of consumers, evocative images and
creative use of language and feeling
(j) The
message is minimalist and subtle and the product is not even shown
(C)
Sales promotions and consumer response
1.
Thought of as any marketing activities
other than advertising, personal selling and publicity that stimulate sales
2.
Short-term incentives to encourage
customers to try the product or switch from their usual brand
3.
Suitable for the majority of mature
products that are already known to the consumers
4.
Introduce a product improvement or new
product lines
5.
Trend towards better-educated and more
deal-oriented customers
6.
Reduced effectiveness of advertising have
fuelled consumer sales promotion
7.
Tools are included coupons, rebates or
cash-back offers, samples and free trails, demonstrations, premiums, rewards
for repeat purchasing, sweepstakes and competitions
(a) Coupons,
rebates and cash-back
i.
Take advantage of a discounted price and
usually require then to cash in or redeem the coupon
(b) Premiums
i.
Receives a free product, service or gift
with purchase
ii.
Prepared to pay full price and companies
not risk lowering the quality image of the product through price related promotion
(c) Samples,
free trails and demonstrations
i.
Reduce the risk associated with the
purchase by trying the product first
(d) Sweepstakes
and competitions
i.
Provided high impact promotion at
relatively moderate cost
ii.
Without having to discount the product
8.
Sales promotion directed to trade customers
and intermediaries responsible for distrusting and selling the product
(a) Usefulness
of the promotion and include price reductions, added value, improved features
or quality and convenience
i.
Emphasis the enjoyment and emotional
aspects of the promotion, providing entertainment, exploration, self-expression
and fun
(b) 3
key attributes of a good sales promotion are:
i.
Communication to attract the customers’
attention to the product
ii.
Incentive which is concession or inducement
that lends additional value to the product
iii.
Invitation the encourages the customer to
purchase the product at that time
(c) The
marker attempts to stimulate sales at the time of the promotion
i.
Lift sales on a short-term basis and can be
used to even out irregularities in supply and demand
ii.
Sales promotion as a short-term rather than
long-term promotional technique
iii.
Some loyalty may be achieved from customers
iv.
Lack of loyalty forered by sales promotion
techniques is a concern to marketers of competing products
v.
Overuse of this tactic erode the brand
image
(1)
Unintentionally re-position the brand as
‘good quality on special’
(2)
Or even worse, as low-price item
(3)
Increased the price sensitivity of the
consumer
(4)
Reduced the focus of marketing on the
benefits of the product
9.
The limitation of literature documenting
the response to sales promotion in Asian
(a) In
Taiwan
i.
Familiarity with the promotion and use of
coupons and sweepstakes was lower than Thailand
(b) In
Malaysia
i.
Exhibited the most fear of embarrassment or
‘lost face’ when using coupons
(c) The
countries share some cultural similarities, they perceived the sales promotions
in different way
i.
Need to customize promotional strategies to
account for cultural, legal and economic differences in Asian countries
VII. ‘Place’ /distribution
(A)
Market channels and logistics
1.
Passed on from the manufacturer to the
customer is the fourth element of marketing mix
(a) Distribution
represents the link
(b) Series
of links
(c) Between
the company that makes the product
(d) Customer
who buys the product
2.
The industrial product
(a) Sold
from one business to another, usually only requiring early stages of the
distribution chain
3.
The physical consumer product
(a) Typically
passes through several stages, or channels of distribution before being
presented and sold to the customer
4.
Larger firms will control the whole
distribution chain from production, transportation, warehousing, retailing and
delivery
5.
Many international firm management of the
distribution channels is not a viable option for the following reasons:
(a) Unfamiliarity
of the firm with distribution channels used in a foreign market
(b) Inability
to access or establish foreign market channels independently
i.
Establish relationships between existing
firms or government regulation prohibiting wholesaling activities by foreign
companies
(c) Limitations
to resources
i.
Finance, transportation or storage
equipment and expertise
(d) Need
to reach customers by selling products through established outlets
i.
Reputable chain/department stores or
supermarkets
6.
Sought joint venture partners or close
relationships with other firms in Asia
7.
Franchises are also popular way of
combining marketing and merchandising expertise with local know-how and
distributive capability
8.
The distribution chain
(a) Manufacturer
sends bulk goods to the wholesaler or importer
(b) Product
channeled to final consumers
(c) When
this is not the customer who physically bought the products
(d) Standardized
distribution chain can take many different forms in the real marketplace
9.
Wholesaling
(a) Low
entry and exit barriers to trade led to very complicated distribution systems
(b) Multiple
layers of small wholesalers or middlemen purchase goods form each other before
selling them on to the retailers
(c) More
sophisticated in Asia , being streamlined and
products are finding their way to customers more rapidly
(d) The
function is not restricted to distribution and most consider their business to
involve selling and financing as the main activities
(e) High
turnover and low margins combined with credit services for customers generate
revenue
(f) The
difficulties of companies:
i.
Employing intermediaries is control over
the marketing programs
ii.
Manage the quality and the consistency of
advertising, branding and positioning strategies through these mediums
iii.
Rely on educating shop assistants on the
virtues of the product and providing point-of-scale promotional material rather
than focusing on the wholesalers
(g) Parallel
importing of products through unauthorized suppliers
(h) Identical
goods are purchased from cheaper locations offshore
(i) Brought
into the country to undercut the firm’s existing offerings
(j) The
customer benefits from the lower price, they out on the service component
included with product
10.
Retailing
(a) Retail
sector in the Asia-Pacific region has blossomed as incomes and consumers
spending power have grown
(b) Evolved
from smaller localized stores to larger chain stores that the Western style of
commercial retailing business
(c) The
modern shopping center is reserved for the main centers only and traditional
outlets prevail in other regions
(d) Department
stores are the leaders in new design and cater to the social aspect of shopping
in Asia
i.
Rely on established reputation for high
quality impeccable service and heavy customer traffic
ii.
Japan
iii.
Customers as honored guests and establishes
customer loyalty by offering the nest brands and excellent service
iv.
Foreign brands have utilized the expertise
of the Japanese department store to target their products better to the
Japanese consumers (Western product used in Japanese style)
(e) Malls
represent complete shopping packages and typically contain a large department
store
i.
Specially shops, the latest and best brand
names, sufficient store for comparative shopping, place to eat and parking and
entertainment
ii.
Customers able to do all in one location
and take advantage of any complex-wide discounts or promotional offerings
iii.
Store owners, benefits increased from
traffic and loyalty created by advertising and promotion done by leading stores
or mall itself
iv.
Large scale chain stores are on the rise in
Asia
(1)
Become more aware of the need for convenience,
value for money and quality
(2)
Toy-R-Us, Yaohan, Carrefour of France
v.
More rural areas, smaller and more
personalized outlets are still the norm
(1)
Insufficient to warrant a full-size
shopping complex
(2)
Public transport to and from the area is
workable or discount outlets are establishes in the suburbs to take advantage
of lower overheads
(3)
Customer take advantage of the proximity of
the shops to their homes
(4)
Availability of credit through the personal
relationships developed with the local shopkeeper
(5)
Products nay also packaged to lower cost,
such as cigarettes sold individually, or come with fewer accompanying services
and extras
(6)
Small sop owner provided fresh produce on a
daily basis
11.
The choice f distribution channel and
outlet should reflect the firm’s positioning in the market relative to
competitors
12.
The product and service mix and the need to
meet any local requirements, such as government regulations and customer
preferences
(B)
Emerging channels
1.
Include direct marketing, personal selling
and selling via the Internet
(a) Direct
marketing
i.
Transfer of the product directly from the
manufacturer to the customer without the use of intermediaries
ii.
Such as wholesales and retailers
iii.
Use personal selling techniques, direct
mail or electronic media to reach the consumer
iv.
Form of distribution and promotion as cost
effective, flexible and fast, and the concept is rapidly catching on
v.
Daewoo, Korean car manufacturer has taken
one of the most innovative approaches to distribution via direct marketing
(b) Personal
selling
i.
Direct customer-to-seller relationship and
is quite common in the West products
ii.
Such as Avon
cosmetics, Tupperware and life insurance
iii.
Used as a platform for business dealings,
personal selling has worked well as distribution method
iv.
More frequently as a promotional and distribution
strategy
v.
Products emerge in markets have benefited
from hands-on approach to selling
vi.
Cosmetics are a good example, use the
products in the privacy of their own homes
vii.
Knowledgeable saleswoman is often a
personal friend or acquaintance or will soon become one as relationship
develops
viii.
Attempts at direct marketing using more
impersonal channels, such as telemarketing, direct mail, mail order catalogues
and magazine
ix.
More successful in affluent markets (Japan Korea
x.
The lukewarm reception in response to
several specific attributes:
(1)
Lack of face-to-face buyer-seller
relationship is foreign to Asian way of shopping
a)
Difficult to develop any form of personal
relationship with clients using this technique
(2)
Customers cannot taste, feel or experience
the product as part of the shopping experience, making product comparisons and
quality assessments more difficult
(3)
Less-developed markets, transport and
postal infrastructure in their infancy and may not be a highly reliable source
of product distribution
(4)
Mail order of in the West of convenience,
not having to go out of the house to shop
a)
Asia
customers are shopping as a justifiable and enjoyable excuse for leisure
activity
b)
Go out abs window shop, compare prices,
look for promotions and bargain is considered as an occasion to enjoy oneself
c)
Engage in social exchanges as well as
monetary ones
(c) Most
potential in the Asia of feature is electronic
and Internet marketing
i.
Released their first direct marketing
catalogues and sites to sell via the Internet
ii.
Industries are completely transforming
their approach to business by using the Internet:
(1)
Online trading has revolutionized Asia ’s financial industries
a)
Not going on line are going out business
b)
Traders access to instant, up-to-date
information as well as a more cost-effective and less-risky means of investing
c)
Explode as countries liberalize government
regulation on Internet trading
(2)
Japan
a)
Site was fairly standard
b)
Provided customers with information about
flight times
c)
Seat availability and fares
(3)
Used World Wide Web to support other
marketing efforts and reduce expenditure from alternative forms of advertising
and promotion
a)
Up-to-date information about housing prices
and trends, far surpassing other less reliable information sources
b)
Builds its own image and reputation
c)
Providing customers, developers, fund
managers and media access to the database
VIII.
Asia-Pacific
marketing-areas for analysis
(A)
Relationship marketing and guanxi
1.
The relationship between salesperson and
customer that is the focus
(a) Relationship
marketing in the broader sense is a way of life
(b) Social
interaction and bargaining of the market to the complex keiretsu groups in
Japan
i.
Japanese refer to the harmony of a
relationship
ii.
Wa, termed inhwa by the Koreans
iii.
The Chinese refer to relationship or
connections as guanxi
2.
Guanxi applies to the concept of
relationship marketing
(a) Built
up over time based on family and social connections, reciprocity and
maintaining ‘face’
(b) Plays
an equally important role as in social settings
(c) Chinese
inherent distrust of outsiders or non-members of their ‘family’ group
(d) Extends
from immediate relations to friends and the families of friends, contacts from
birthplace, school, work and social settings
(e) Built
on each individual’s commitment to homour his or her obligations to the other
(f) The
marketer needs to work within one of these Chinese business networks
(g) Relationships
must also be continually maintained and strengthened
3.
Advantages of strong relationship network
in Asia
(a) Influence
of people, rather than alternative forms of promotion, on generation of sales
(b) Personal
contacts are the most effective means of advertising and selling in many parts
in Asia
(c) One-on-one
selling to networks of customers and distribution is an age-old business strategy
and still the most popular basis of selling today
(d) High-tech
advertising, media coverage and trade-shows emerge as methods to increase sales
in Asia
(e) Reduction
of risk and opportunities to use the expertise of local business people
(f) Functions
of complex legal systems in West
(g) The
trust established between business partners compensates for a lack of
transparency and rules in the emerging Chinese business system
(h) Difficult
to penetrate by foreign firms without the help of a well-connected Chinese
partner
i.
Troubled spots of Asian have much to gain
by staying put and standing by their relationships
ii.
Trusted, cooperative contacts if firms
remain flexible and help each other through the difficulties
iii.
IBM is an excellent example
4.
Identified four key benefits of guanxi:
Information, transaction smoothing, procurement and bureaucracy
(a) The
ability to gain information from personal contacts
i.
Compensates for the lack of data available
from public or government sources
ii.
Notification of ‘deals’ or business
opportunities and current information on local and regional government
regulations
iii.
Benefit of easier and smoother day-to-day
transactions, such as collection of payment and the transportation of goods
iv.
Most highly valued benefited of the guanxi
system
(b) Procurement
of resources is also greatly facilitated through guanxi
i.
Sourcing materials and components in China
ii.
As the central or local government or a
combination of both still controls much of this activity
iii.
Potential to source from emerging legitimate
market channels and black market channels
iv.
Locating, evaluating and purchasing goods
and services get very complicated
v.
Right people in power that help cut through
the government bureaucracy
vi.
Gain access to permits, land, licenses for
importing resources and other necessary local and central government approvals
5.
Establishment and maintenance of enduring
relationships within larger networks is both a necessary to perform the
marketing function and a potential source of competitive advantage for the
committed firm
(B)
Marketing of service
1.
Demand is also driven by increased spending
power, the need for convenience, the pending saturation of many consumer
durables in the market, increase leisure time and conspicuous consumption
2.
The unique characteristics of services:
(a) Intangibility
i.
Service cannot be seen, touched, worn ore
eaten like a physical product
ii.
Assess the quality of a service and use
physical cues
iii.
Firm try to present the tangible aspects
associated with the service
iv.
The place of delivery, the people,
equipment, advertising and communication materials that reflect the quality of
the service
(b) Heterogeneity
i.
Human involvement by the seller and client
ii.
Counseling session depend on the input from
both the counselor and the patient, the moods and health of both people affect
it on the day
(c) Inseparability
i.
Cannot be separated from the production of
the service and even the consumption of the service
ii.
The quality of the service is also
determine at the time of delivery
(d) Perishability
i.
Inability to be stored and its short-term nature
ii.
Attribute cause problems for service
companies trying to manage supply and demand
iii.
Firms try to even out fluctuations by
offerings discount, or employing temporary staff during the peak periods
(e) Ownership
i.
Not transferred to the customer as a
product would be, but is retained by the service provider
ii.
Attach products to their services in the
form of complementary items
iii.
Food on the airline, a written report for a
management consultancy, or follow-up gifts from real estate agents for the
purchasers of a new home
iv.
More tangible to the customer
3.
Traditionally a service-based culture,
services and relationship marketing are often an expected part of the product
offering
4.
2 crucial aspects of services in Asia
(a) People
orientation
i.
Service is based around people, not transactions
nor outcomes
(b) Service
rituals
i.
Throughout Asia
and become an integral part of consumer behavior
ii.
Expects a service salesperson to act in a
particular way, to treat the customer as a guest and any purchase as a
privilege
iii.
Example ,
Japan
(C)
Industrial markets
1.
Acquire goods and services that are used in
the production process
2.
Delivery of a service of the processing of
raw materials and agricultural products
3.
Companies that operate the production and
distribution chain, transforming inputs to semi-finished and then final
products
4.
Demand for production inputs has grown with
Asia ’s industrialization
(a) Firms
in export-oriented industries
(b) Involved
in construction, telecommunications and infrastructure projects in the ASEAN
countries
(c) Government
operated and government directed industry demand for industrial goods and
services
5.
Key differences between business markets
and consumer markets:
(a) Fewer
buyers who make larger purchases
i.
Few major competitors per country and firms
purchase in bulk, often from the same suppliers
(b) Close
buyer and supplier relationships in business markets
i.
Keiretsu networks in Japan
ii.
Chaebol in Korea
iii.
Guanxi relationships between smaller
Chinese family businesses
(c) Derived
from the demand for consumer goods
i.
Demand for industrial goods also trends to
fluctuate more than for consumer products
ii.
Essential components and inputs is
inelastic because industrial buying reflects consumer trends
iii.
Huge increase in number of competitors
seeking to ‘cash in’ and rise in production capacity which increase demand for
industrial goods
(d) Industrial
products are also different
i.
More 2 people involved in the purchase and
trained to locate, evaluate and select the goods to be purchased
ii.
Decide the types of goods to be bought, the
people who use the goods nor the people who pay for the goods
iii.
Business-to-business marketers must work
very closely with their customers and the need for relationship marketing is
paramount
6.
The lower price is not always important
features of the product, the personal relationship between buyer and seller are
more important
(a) Japanese
as example
(b) Service
also ranks very gighly as a sought-after feature in industrial contracts
7.
Japanese firms pioneered a new form of
industrial buying gained popularity in the West and other parts of Asia
(a) Just-in-time
manufacturing, or JIT, based on reliable and timely arrival of zero-or near
zero-defect production inputs
i.
Just-in-time inputs for further
manufacturing processes down the line
ii.
Extending to providing the retailer or
dealer with stock just in time to fill orders
iii.
Designed to create a smooth-running,
continuous process that flexible to changes in demand as inputs are created to
order rather than stockpiled
(b) JIT
system of manufacturing
i.
Requires a high level of buyer/supplier
cooperation
ii.
Strict adherence to quality and reliability
and continuing service
iii.
Demands from buyers are not restricted to
the Japanese
iv.
Supplier is willing to offer complementary
services
v.
Industrial buyers in Asia
have a tendency to buy high quality, technologically sophisticated capital
equipment
8.
Industrial manufacturers in the ASEAN
countries can be classified into 3 main types:
(a) Implementers
i.
Assembly type operators who tend to
purchase a complete package of technology, raw materials and components to
enable them to manufacture standardized goods with little technical know-how
(b) Assimilators
i.
Progressed from assembly operations
specific products or product features
ii.
Quality and technical expertise are both
important aspects of purchases for this group
(c) Improvers
i.
Developing and manufacturing more
sophisticated products to international standards
ii.
Suppliers offer full service, reliability
of supply, technical expertise and quality inputs as a matter of course, low
price
9.
Government organization
(a) Departments,
institutions, military and business typically seek different inputs to those of
profit-oriented companies
(b) Suppliers
have to be prepared to establish relationships
(c) Work
on overcoming ‘red tape’ that may slow the transaction process
(d) Government
buyers are known for favoring local over foreign suppliers
(e) Marketing
function manage channel relationships and the selling process are the most
important elements
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