CLOSE-UP : Marketing in the New Asian Growth Markets

2. CLOSE-UP: Marketing in the New Asian Growth Markets

3. BACKGROUND • Before the Asian crisis: Annual growth rates between 5-10%. • Size from Indonesia's almost 200 million people to Singapore's three million. • Ethnic Chinese with economic leadership. • Love-hate relationship with Japan: WWII vs FDI. • Output from raw materials and apparel to technology products.

4. REGIONAL TRADE AGREEMENTS • ASEAN (The Association of South East Asian Nations). • APEC (Asia-Pacific Economic Cooperation). • ARF (ASEAN Regional Forum). • AFTA (ASEAN Free Trade Area).

5. MARKET SEGMENTATION • Basics: cultural, ethnic, and religious roots. • Significant middle class ("have somes"). • Large metropolitan areas. • Poor rural areas. • Demographics: Age, marital status. • Pan-regional marketing via trading blocs.

6. PRODUCT POSITIONING • Global luxury brands ("if you've got it, flaunt it"). • Imports: globally standardized products. • Pent-up demand for Western products. • Less affluent segments: less advanced, adapted products. • Use of acquired local brand names.

7. PRODUCT POLICIES • Product design. Localized by offering smaller packages. Style and finish important. • Product line. Achieve "a harmonious whole". Full-line policies with interrelated products. Material possessions clearly signify one's worth. • New Products. Not lead markets, but followers (except for emerging markets and selected electronics products). Endorsement of brand's success elsewhere is important.

8. PRICING • Natural positioning of a global brand entering is at the upper end (skimming). • Lower-end products alternatives through acquired local or adapted brands (penetration pricing). In Asia, the entry price will lock in the brand's positioning ("harmony"). Risks of gray trade are high.

9. DISTRIBUTION • Dynamic urban retail sector. • Rural areas have weak infrastructure. • Underdeveloped transportation networks.

10. PROMOTION • Advertising minimally adapted from elsewhere (pattern standardization). • Local language and native endorsers, including local sports heroes and television stars. • Sales promotion tools adapted to local regulations and culture. Ex: Few sales calls to the home -- meet in the offices, and offer family conveniences in dealerships.

11. CLOSE-UP: Marketing in Latin America

12. BACKGROUND • Large geographical area, Indian background with Spanish, Portuguese, and Catholic influences,varied ethnicities, relatively poor, monetary and price instability, poliitcal upheaval. • Total population 460 million people, with Brazil providing 160 million.

13. BACKGROUND (Cont’d.) • Growth fueled by regional trading blocs, a political shift toward increased democracy, and a gradual emergence from a large debt burden in several of the countries. • Free trade is surging. • A movement toward pan-regional marketing. • Brazil's currency, the real, came under pressure after Asia and Russia devalued, but bounced back.

14. REGIONAL TRADE AGREEMENTS • LAIA - Latin American Integration Association. • ANCOM - Andean Common Market. • MERCOSUR - Southern Cone Common Market. • NAFTA - North American Free Trade Area.

15. COMPETITION • Global entrants with higher prices focus on the urban markets leaving the lower-price end of the range to local companies. • Now, foreign producers are doing increasingly well with middle of the road products at affordable prices, targeting the new middle class. But here the local producers and retailers are also active, and the competition can be fierce.

16. COMPETITION (Cont’d.) • Sears, Roebuck, with long standing presence throughout Latin America, was forced to withdraw from Chile in the early 1980s. Local chains such as Sodimac Homecenter offer comparable products and matches prices-- and are more attuned to the local market.

17. MARKET SEGMENTATION • Urban versus rural(80% purchasing power in urban areas). • Age and income level. • Large young, style-conscious segment. • Religious, tradition-bound, family-oriented.

18. PRODUCT POSITIONING • Status-conscious urban markets means brand names matter. • Upgrading quality of life with consumer durables. • Successful mass marketing through creative packaging (small volume, low-price units), taking new product roll-outs incrementally, and spending heavily on advertising.

19. PRODUCT POLICIES • Continuous upgrading of products and services because of increased competition from foreign producers and new trade agreements between Latin American countries. • Localization changes but only limited product adaptations. • Pentup demand for global brands. • Increase in pan-regional products.

20. PRICING • Foreign companies price higher than locals. • Top-to-midrange for global brands (not only skimming prices), low-end local brands. • Midrange core market increasing as middle class expands. • Plans for a common Mercosur currency.

21. DISTRIBUTION • Towards larger units, hypermarkets, integrated chains. • Rural areas have weak infrastructure. • Foreign entrants investing (including joint ventures) to help improve efficiency. • Some regulatory barriers.

22. PROMOTION • Brand TV advertising high, sponsorship of daytime soap operas. • Religions, political, ethnic, and cultural issues are sensitive. • Detailed product information, with colorful and lively presentation, including popular music. • Many retailers do not handle manufacturers' coupons.