Marketing in South East Asian Region - Essay Example

Marketing (South East Asian Region) Marketing in general is descried as an activity of a corporate organisation that has a direct bearing on the acceptance of the organisation's product in the market. It is the set of human activities directed at facilitating and consummating exchanges (Kotler, 1974). Global economic expansion has opened up avenues for expansion and marketing in many more markets beyond the domestic boundaries. But before venturing in to an alien land the company must have enough knowledge about the obstacles and facilitators. Any organisation/ company wishing to enter a new market tries to gather as much data as possible about the prospective markets. The business venture can prove to be successful if the company takes couple of distinct steps in the planning process for the foreign market. Such key steps for success in any foreign market are (John R. Darling et.al, 2004): Analyzing the market potential and opportunity Assessing the product potential Establishing the market entry mode Making a firm commitment Allocating necessary resources Identifying technical issues Developing strategic marketing plan Organizing operational team Implementing marketing strategy Evaluating and controlling the operations In order to assess and analyze the market potential market research proves to be handy tool. The phenomenal growth in the number of marketing research departments suggests that this technique is being rapidly accepted by the business community. Marketing research itself comprises of studying the; Consumption pattern of the target markets Competitive environment prevailing in the market Role of government/ state machinery in the overall business environment Behavior and experiences of some earlier investors in those markets Awareness level/ Brand equity about the company's products in the prospective market Types of promotional channels available Attachment or detachment level with the local competitive brands Most of the theories of internationalization have their roots in industrial organisation and economics (from Coase in 1930s through Bain in 1950s to Williamson in the 1970s) and most of these theories were developed as a direct consequence of US MNCs desire to explore the markets of Europe and elsewhere. Since then the world has changed a lot with Asian nations like India taking a big lead in IT sector and China in manufacturing sector. The dominant change in the world economy is of course is the globalisation of markets. This phenomenon is a result of the convergence of the advances in technology, transport processes and production techniques. Globalization of markets and international competition are requiring firms to operate in a multicultural environment. People from different cultures may vary in convenience orientation not only because of time pressures but also because of the value placed on physical or mental comfort. For example, the oil rich consumers or Arabian Gulf countries place less value on time and more on high levels of comfort, as their oil wealth fuels convenience-driven demand. But in Southeast Asian nations money and time are more valued than the comfort. Southeast Asia comprises of huge developed markets like Indonesia, Malaysia, Philippines, Singapore and Thailand, besides other significant markets like Vietnam and Myanmar. Southeast Asian markets have made tremendous efforts in restructuring recovering, and strengthening their economies since the 1997 crisis. This recovery is very much visible in the stock market indices of these nations. For example, Malaysia's Kuala Lumpur Composite Index (KLCI), Singapore's Straits Times Index (STI) Thailand Index (SET) and Indonesia's Jakarta Stock Exchange Composite Index (JCI) have been on an upswing throughout the year 2006. These nations led by China and India are being termed as Asian tigers as a tribute to the consistent performances in their economies. Though there are country specific issues affecting the entry modes and the extent of entry by any MNC, still the overall environment appears to be investment friendly. But there are apprehensions as well. These apprehensions are in a way the result of non-availability of comprehensive information about the economies of Southeast Asian nations. For example when I tried to gather some information about these markets with he help of a questionnaire, comprising of the questions with the assumptions like; South East Asian businesses have modern looking equipments The physical facilities at excellent south East Asian business are visually appealing Materials associated with services (such as pamphlet or statement) are visually appealing in south east Asian business South east businesses perform the services right the first time Employees in south East Asian business have never been too late in responding to customer's request. The behaviour of the employees in south East Asian business instills confidence in customers The type of response I received was quite contrary to what market analysts have been writing about the maturity of Southeast Asian markets. I solicited responses from 10 people and found that most of them are disagreeing to the assumptions in the questionnaire. This shows the apprehension attitude of the host country, which have to be taken into account whenever the company starts devising a strategy for its Southeast Asian foray. At the same time we'll have to ponder over the consumer behaviour of the target markets. It is worthwhile here to mention that Over 40% of US exports of manufactured goods goes to developing countries. And well known companies in the USA and Europe have made countries like Singapore, Taiwan, Thailand and Indonesia their top priority for the future expansion. Faced with maturing markets back home and stiffening competition, industries are forced to rethink their strategies. In this, Internationalization of activities is now a core strategy for these MNCs. Several multinationals have interests in at least 30 counties (Mitra and Golder, 2002), and a company such as Unilever sells its Lipton tea in more than 110 countries. Unfortunately, little off the shelf empirical research is available on customs, habits, attitudes, and reactions to the required marketing efforts in different regions. Southeast Asian region in particular is the least known from the marketing perspective. Therefore, companies tend to collect marketing information themselves (or have this done for them) in order to make well-founded decisions. While analyzing some of the big markets Southeast Asian nations we may stumble at Indonesia's business-operating environment which is known to be among the worst in Asia. Investors are advised that they'll have to contend with security concerns and weak governance, particularly in the legal sphere. A series of high-profile court rulings have rocked investor confidence in the country. There are also charges of widespread corruption and an explosion of local taxes following fiscal decentralization in 2001. All these facts lead one to believe that it is not worth investing. But on a closer look we find that Indonesia is South East Asia's largest economy with a GDP of US$287bn. It offers investors a vast home market for doing the business and marketing the goodies. The purchasing power of an average Indonesian too is on the rise with GNI per capita at $1280. Similarly, Malaysia is considered by some as an Islamic country not favourable for investments, but strong domestic demand and exports in Malaysia resulted in overall growth in real GDP of 5.3% for 2005. The country aspires for more with the desire driven mainly by strong growth in the global and regional economies and through domestic private consumption. Before venturing into the Southeast Asian market the local sensibilities and beliefs must also require some analysis. For example, one recent study (Savage, Mike, 2005) it was found that while international brands are welcomed as a sign of increasing prosperity in markets such as China and Vietnam, many people in Southeast Asia and India are concerned that buying foreign brands damages the local economy. On the contrary, certain sections of society in Asia, such as a Filipino strata, a well-educated streetwise middle class, felt the presence of international brands had helped improve local products, even though 60 per cent of people in the Philippines thought buying foreign brands was unpatriotic. Similarly, young affluent educated Southeast Asians, like a group from Thailand known as 'Tung-Jai Eager Rookies', saw foreign brands as symbols of success. Stephen Drummond, Lowe's regional planning director who oversaw the agency's Faces of Asia study, based on interviews with more than 20,000 people in nine markets also came out with the conclusion that even Indonesia, where many people see the growth of Western brands running hand in hand with the erosion of traditional values, there are certain groups displaying a healthy appetite for foreign brands. Limitations: Southeast Asian market is a very interesting and a complex market, that is evident from the researches that have taken place in these markets. But some of the markets have accessibility and language problems. Moreover the level of infrastructure developments may prove to be a dampener at times. The level of education is one more area of concern for the researcher as well as for the marketing team. Conclusion In Southeast Asia while there is increasing awareness about foreign brands amongst the young consumers in particular, still marketers need to be aware of the sensibilities of the locals. This proves to be the ultimate mantra of success in marketing. The market in particular is worth exploring, because of late more and more premium brands in fashion, soft-drinks, fast-food corners etc have made their entry into these versatile markets and made themselves acceptable and profitable as well. References: 1. John R. Darling and Hannu T. Seristo (2004), 'Key steps for success in export markets', European Business Review Vol. 16 No. 1, 2004 2. Malhotra, N.K. (1999), Marketing Research: An Applied Orientation, 3rd Ed., Prentice-Hall, Englewood Cliffs, NJ. 3. Mitra, D. and Golder, P.N. (2002), "Whose culture matters Near-market knowledge and its impact on foreign market entry timing", Journal of Marketing Research, Vol. 39 No. 3, pp. 350-65. 4. Indonesia at a glance, (2006), World Bank, available online at, http://devdata.worldbank.org/AAG/idn_aag.pdf 5. Savage, Mike, (2005), 'Local brand fervour high in SE Asia, India', Lowe, Media Asia Read More