JOHANSSON - chap (9)

8/7/2019 JOHANSSON - chap (9)

http://slidepdf.com/reader/full/johansson-chap-9 1/38



Local Marketingin New Growth Markets

C h

a p

t e r

9

© 2006 The McGraw-Hill Com anies Inc. All ri hts reserveMcGraw-Hill Irwin



Outline

Basic Marketing in New Growth Markets

Marketing in Latin America

Major Country Markets in Latin America

Marketing in New Asian Growth Markets

Major Country Markets in Asia

Takeaways.



1. Those rich in NATURAL RAW MATERIALS but where most

people have suffered under authoritarian political regimes &

colonial domination (e.g. Latin American countries, SouthAfrica)

2. Those rich in LOW COST LABOR have turned to Western-

style capitalism recently, with the help of FOREIGN DIRECTINVESTMENT (e.g. Asian countries, Israel)

Two Kinds of New Growth Markets



1. Membership in trade blocs makes the country moreattractive to foreign investors

(e.g. Malaysia & Thailand through ASEAN)

2. Trade blocs enlarge market potential for members

(e.g. Argentina & Brazil through MERCOSUR)

Marketing in New Growth Countries

2 REASONS WHY MEMBERSHIP IN TRADE BLOCS IS IMPORTANT



• New growth markets are in

the growth phase of the

product life cycle

• Certain markets may be

mature but there is a lot of

room for new variants &

international offerings

• As incomes rise peopledemand variety &

experiences offered by

more mature markets

MARKET SEGMENTATION PRODUCT POSITIONING

• Core middle class emerges

• Well known brand names

are favored• Foreign capital and

technology fuels economic

growth, hence foreign

brands are considered the

“real thing”

• Neo-colonialism emerges

as consumers shun

domestic products

New Growth Markets: MSPP



MASS

MARKET

FOCUS

NICHE

MARKETFOCUS

EMERGING

MARKETS

NEW GROWTH

MARKETS

MATURE

MARKETS

Few

strong

segments

Strong core

middle class

One-to-one

marketing

The Importance of a Middle Class



• Basic localization to

ensure that the product

functions well

• Being positioned as a

“foreign” brand attracts

certain segments

• Brand name must be

strongly supported.

PRODUCT PRICING

• Status positioned

products must be high-

priced

• Price must not be too

limiting, despite increase

purchasing power of

consumers

• Pricing must foster brandloyalty

New Growth Markets: The 4Ps



• Firms must think long-

term, setting up service

centers and more outlets• Expansions are suggested

in order to counter

competitive threats

• Cash flow is sacrificed in

the short-term, awaiting

long-term gains

DISTRIBUTION PROMOTION

• Products must

communicate their future

potential benefits• Strong brand images must

be created

• Good relations with local

sales/staff should foster

brand equity

New Growth Markets: The 4Ps (cont’d






Large geographical area, Indian background with Spanish,

Portuguese, and Catholic influences,varied ethnicities,

relatively poor, monetary and price instability, political

upheavals.

Language is Spanish, except for Brazil’s Portuguese.

Total population is 537 million people, with Brazil largestat 176 million followed by Mexico at 102 million.


MARKET BACKGROUND



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.


MARKET BACKGROUND (CONT’D)



REGIONAL TRADE AGREEMENTS

•LAIA - Latin American Integration Association.

•ANCOM - Andean Common Market.

•MERCOSUR - Southern Cone Common Market. •NAFTA - North American Free Trade Area.

•FTAA - Free Trade Area of the Americas




• Urban versus rural (80% purchasing power in urban areas).

• Age and income level.

• Large young, style-conscious segment.

• Religious, tradition-bound, family-oriented.

MARKET SEGMENTATION

Marketing in Latin America: MSPP



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.

arketing in Latin America: MSPP (cont’



• 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.• Pent-up demand for global

brands.• Increase in pan-regional

products.

PRODUCT PRICE

• Foreign companies price

higher than locals.• Top-to-midrange for global

brands (not only skimmingprices), low-end local

brands.• Midrange core market

increasing as middle class

expands.

• Plans for a common

Mercosur currency.

Marketing in Latin America: The 4Ps



• Towards larger units,

hypermarkets, integrated

chains.

• Rural areas have weakinfrastructure.

• Foreign entrants investing

(including joint ventures) to

help improve efficiency.

• Some regulatory barriers.

DISTRIBUTION 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.

Marketing in Latin America: The 4Ps

(cont’d)



• After WWII, was one of the 10 riches

countries in the world on a per capita

income basis• Population = 38 million• Peso devaluation led to a crisis

situation, now improved• Highly sophisticated industrial &

agricultural sector • Consumers oriented toward

western/global products/brands

ARGENTINA

Major Country Markets: Argentina



BRAZIL

• Largest Latin American country,

population = 176 million• Generates a third of South

America’s economic output, & is

a major consumer of its exports• Highly attractive to foreign

investors

• 10% of exports are manufacturedgoods

Major Country Markets: Brazil



• Population = 15 million

• Most vigorous growth,booming consumer markets

• Credit card issuers have

lowered application

requirements, encouraging

spending• Shopping mall boom

CHILE

Major Country Markets: Chile



MEXICO

• Population = 102 million• 2nd largest market in Latin

America• Home to many foreign

manufacturing plants• Mexico City: major market

for global brands & upscale

consumer goods• NAFTA membership

encourages economic

come-back

Major Country Markets: Mexico



Marketing in Asian Growth Markets



• Annual growth rates between 5-10% (China is at 10%

plus, see ch.10).

• Size: from Indonesia's almost 200 million people to

Singapore's 3 million.

• Ethnic Chinese with economic leadership.

• Love-hate relationship with Japan: WWII vs. FDI.

• Output from raw materials and apparel to technology

products.

MARKET BACKGROUND




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)




• Basics: cultural, ethnic, and religious roots.

• Significant middle class ("have some’s").

• Large metropolitan areas.

• Poor rural areas.

• Demographics: Age, marital status.

• Pan-regional marketing via trading blocs.

MARKET SEGMENTATION

Asian Growth Markets: MSPP



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.

Asian Growth Markets: MSPP (cont’d)





PRICE

• 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 arehigh.

sian Growth Markets: The 4Ps (cont’d



• Dynamic urban retail

sector.

• Rural areas have weak

infrastructure.

• Underdeveloped

transportation networks.

DISTRIBUTION




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 tothe home -- meet in the offices, and offer family

conveniences in dealerships.




• Population = 45 million• Per capita income on par with

many European countries (as of

1995)• Market entry barriers are high• Pent-up demand for western goods

as preferred over domestic

products

• Distribution regulations graduallyeased

SOUTH KOREA

Major Country Markets: South Korea



TAIWAN ( aka REPUBLIC OF CHINA)

• Population = 23 million• Political struggle with mainland China

• Vigorous export industry, through skilledlabor & high technology

• Entry barriers going down• Large MNC activity• Particularly exacting consumers, used to

test market products before Asian roll-

out

Major Country Markets: Taiwan



• Population = 6 million

• Most affluent of S. East Asian nations• Geographic central hub for firms entering

Asian markets• Very international consumers,

trendsetters for the rest of Asia• High-end/luxury brands thrive

HONG KONG

Major Country Markets: Hong Kong



As western markets have matured, new growth markets in

Asia, Latin America, and elsewhere have become the newsources of growth for global companies – and for their own

domestic firms as well.

Takeaway



Despite recent global turmoil, many of these countries still

have strengths as markets and producers, and sustainedpotential for the longer run.

Takeaway



Trading blocs are good for these economies because as

stand-alone markets they tend to be too small for targeting - &blocs provide advantages for their own exports.

Takeaway



Marketing in a high-growth market in a newly industrialized

economy is not the same as marketing in a high growth

market in a mature economy.

There is less stress on new product development and more

on generic market development for existing products.

Takeaway



Standardized global products & brands can be successful due

to pent-up demand in many of these markets.

As markets evolve and affluence grows, customers quickly

become fickle consumers requiring adaptation &

customization, much like consumers in mature markets.

Takeaway

Documents

JOHANSSON - chap (9)