International marketing Lecture 2 - ASEAN & Asian markets

1. International Marketing
463-441 (3-0-3)
Lecture 2
The ASEAN and ASIAN Region

3. Economic Comparison of Major ASEAN Countries
(Source https://www.cia.gov/library/publications/the-world-factbook)
Country Thailand Malaysia Singapore Philippines Indonesia Vietnam
Population 65,068,149 24,821,286 4,553,009 91,077,287 234,693,997 85,262,356
Age Structure 0-14 21.6% 0-14 32.2% 0-14 15.2% 0-14 34.5% 0-14 28.7% 0-14 26.3%
15-64 70.1% 15-64 62.9% 15-64 76.3% 15-64 61.3% 15-64 65.6% 15-64 67.9%
65+ 8.2% 65+ 4.8% 65+ 8.5% 65+ 4.1% 65+ 5.7% 65+ 5.8%
Sex Ratio 0.979M/F 1.027M/F 0.954M/F 0.999M/F 1.05M/F 1.07M/F
Pop. Growth 0.663% 1.759% 1.275% 1.764% 1.213% 1.004%
GDP US$596.5 B US$132.3B US$122.1B US$449.8B US$948.3 B US $262.5 B
Budget Expenditure US$36.61B US38.89 B US18.8B US $19.07 B US $77.39B US $15.9 B
Exports US $128.2 B US$160.8B US$289.4 B US $46.16 B US $102.4B US $39.9 B
Imports US $113.4 B US $124 B US$244.6B US 53.13 B US 73 B US $40.6 B
GDP Per capita US$9,200 US$12,800 US$31,400 US$5,000 US $3,900 US $3,100
(PPP)
Income Distribution Lowest 10% Lowest 10% N/A Lowest 10% Lowest 10% Lowest 10%
2.7% 1.4% 2.2% 3.6% 2.9%
Highest 10% Highest 10% Highest 10% Highest 10% Highest 10%
33.4% 39.2% 34.2% 28.5% 28.9%
Poverty 10% 5.1% N/A 40% 17.8% 19.5%
Mobile Phone Users 40.8 million 19.424 Million 4.789 Million 42.869 Million 63,809 Million 15.505 Million
Internet Users 8.466 million 11,292 Million 1.71 Million 4.615 Million 16 Million 14.658 Million

4. Economic Comparison of ASEAN Countries
to Other Major Economies
(Source https://www.cia.gov/library/publications/the-world-factbook)
Country Selected US China India Japan EU
ASEAN
Population 505,476,084 301,139,947 1,321,851,888 1,129,866,154 127,433,494 490,426,060
Age Structure 0-14 20.2% 0-14 20.4% 0-14 31.8% 0-14 13.8% 0-14 15.72%
15-64 67.2% 15-64 71.1% 15-64 63.1% 15-64 65.2% 15-64
65+ 12.8% 65+ 7.9% 65+ 5.1% 65+ 21% 67.16%
65+ 17.11%
Sex Ratio 1.027M/F 1.06M/F 1.064M/F 0.953M/F 0.96M/F
Pop. Growth 0.894% 0.606% 1.606% -0.088% 0.16%
GDP US2,511.5 B US$13.16 Tr US$10.21 Tr US$4.164 T US$4.218 T US $13.08 T
Budget US$766.86B US2.655 Tr US515.8B US $127.8 B US $1.586 T
Expenditure
Exports US 766.86 B US$1.023Tr US$969.7 B US $123.1 B US $615.8B US $1.33 T
Imports US 648.73 B US $1.861 T US$751.9 B US 184 B US 543.5 B US $1.466 T
GDP Per capita US $4,900 US$43,800 US$7,800 US$3,800 US $33,100 US $29,900
(PPP)
Income Lowest 10% Lowest 10% Lowest 10% Lowest 10% Lowest 10% Lowest 10%
Distribution 2.9% 1.9% 1.6% 3.6% 4.8% 2.8%
Highest 10% Highest Highest 10% Highest 10% Highest 10% Highest 10%
30.49% 10% 29.9% 34.9% 31.1% 21.7% 25.1%
Poverty 19.3% 12% 10% 25% N/A
Mobile Phone 187.2 million 233 Million 461 Million 166.1 Million 101.7 Million 466 Million
Users
Internet Users 56.65 million 208 Million 131 Million 60 Million 87.55 Million 247 Million

5. Income for Middle & Upper Economic Classes
Thailand Malaysia Indonesia Philippines Vietnam Australia
Middle Class
Per capita Income US $7,551 US $3,957 US $3,429 US $4,535 US $3,078 US $29,959
Population 52,054,519 19,857,028 187,755,197 72,861,829 58,148,926 16,347,340
Upper Class
Per Capita Income US $30,618 US $20,894 US $11,515 US $16,890 US8,8975 US $83,853
Population 6,506,814 2,482,126 23,469,399 9,107,728 8,526,235 2,043,417
Wealthy
Transition
Middle
Class
Poverty
LDCs NIEs China

6. Some Other ASEAN Indicators
Thailand Malaysia Singapore Indonesia Philippines Vietnam
Ethnic Thai 75% Chinese Malay 50.4%, Chinese 76.8%, Javanese Tagalog 28.1%, Kinh (Viet)
Backgrounds 14% Other 11% Chinese 23.7%, Malay 13.9%, 40.6%, Cebuano 86.2%, Tay
Indigenous 11%, Indian 7.9%, Sundanese 13.1%, Ilocano 1.9%, Thhai
Indian 7.1%, Other 1.4% 15%, Madurese 9%, 1.7%, Muong
Others 7.8% 3.3%, Bisaya/Binisaya 1.5%, Khome
Minankabau 7.6%, 1.4%, Hoa
2.7%, Betawi Hiligaynon 1.1%, Nun
2.4%, Bugis Ilonggo 7.5%, 1.1%, Hmong
2.4% Bikol 6%, Waray 1%
3.4%
Religions Buddhist 94.6% Muslim 60.4%, Buddhist 42.5%, Muslim 86.1%, Roman Catholic Buddhist 9.3%,
Muslim 4.6% Buddhist 19.2%, Muslim 14.9%, Protestant 5.7%, 80.8%, Muslim Catholic 6.7%,
Christian 0.7% Christian 9.1%, Taoist 8.5%, Roman Catholic 5%, Evangelical Hoa Hao 1.5%,
Hindu 6.3%, Hindu 4%, 3%, Hindu 1.8% 2.8%, Iglesia ni Cao Dai 1.1%,
Traditional Catholic 4.8%, Kristo 2.3%, Protestant 0.5%,
Chinese 2.6% other Christian Aglipayan 2% Muslim 0.1%,
9.8% other Christian none 80.8%
4.5%
Languages Thai, English and Bahasa Mandarin 35%, Bahasa Tagalog, with 8 Vietnamese,
ethnic, regional Malaysia, English 23%, Indonesia, dialects, English English, some
dialects English, Malay 14.1%, English French, Chinese
Chinese, Tamil, Hokkien 11.4%, and Khmer,
Telugu, Punjabi, Cantonese mountain
Thai, Iban, 5.7%, Teochew languages
Kadazan 4.9%, Tamil
3.2%
% 71/28% 37/63% 0/100% 54/46% 39/61% 75/25%
Rural/Urban

8. Geography
(Climate, Topography, Flora, Fauna, Microbiology)
Adapted from Cateora & Graham P. 99
History
Adaptation
Technology and
Political Economy
Social Institutions
Socialisation
(Family, Religion, School, Media, Government, Corporations)
Application
Imitation
Elements of Culture
Peers
(Values, rituals, symbols, beliefs, though processes
Consequences
Consumption decisions Market
and behaviours Management Styles Structure

9. Malaysia, Thailand
Singapore, Brunei Indo, Philip, Viet
Fulfillment: (dreams)
Actualisation
(The Artist)
Study after retirement
Self-fulfillment
Fresh vegetables (Organic)
Books
Fine Dining & Processed Foods Aromatherapy products Camb,
Luxury cars
Esteem Nutraceuticals & herbs
Laos
Travel & Vacations (The Executive)
Achievement, Fine Fragrances
prestige,fulfillment
Car Air Fresheners Responsibility: (hope)
Fashion Clothes (e.g.
Social (Worker) Jeans)
Chewing Gum Family, relationships,
workgroups
Community: (acceptance)
Most
Water Household
Purifiers
Safety (The Farmer)
Home, Security and stability Cleaning
Necessities: based on what is good (existence) Products
Fresh
Soap Vegetables
Physiological (The Hunter) Rice
Basic Biological Needs – Food, water, air
Staples: based on survival (fear)

10. The Forces of Primary
Change in the Technology
In
Business
sp
n
ira
Landscape
a tio Digitization
t io
re
n
C
n
Ac
io
co
ct
ru
m
st
m
on
Destruction Adoption od
ec
at
io
D
n
Political Coordination Social
legal Cultural
Economy
(Central)
Globalization
Immediate Incremental
Acceleration Rationalization
Re
n
tio
de Realization Formation
ap
f in
Ad
itio
n
R Prosperity
n
eg Peace
tio
ul (Economic People
Futurization
a
at
(Regional
uc
io integration and (Human and social
Ed
Peace andn development๗
cooperation) Market
security)
Ultimate Kotler, et. Al., Think ASEAN

12. Value Migrator
Change
Certain/Uncertain Technology Important/Unimportant
Political Legal Economy Social-Cultural
Market
Value Supplier Value Determiner
Competitor Customer
TOWS Examination
Winner, Loser, Committed, Lost, New
Emerging
Value Decider
Company
Existing competence,
Risk, Attitude,
Stretch Possibility
The Diamond 4C
Sub-Model Choice
Go invest No-Go/Hold
Harvest Divest
Kotler, et. al, Think ASEAN P. 6

13. Casualties

14. Disparity Between the “Traditional” Economies and the
“Knowledge-Based” Economies
Traditional Economies New Economies
Markets Stable Dynamic
Scope of competition National (or regional) Global
Organizational form Hierarchical / Bureaucratic Networked/Entrepreneurial
Key production factor Labour and Capital Knowledge and innovation
Importance of research Moderate Critical
Nature of employment Stable Risk and opportunity
Regulation Commend and Control Market Orientated Flexibility
Kotler, et. al, Think ASEAN P. 49

15. Changing Business Landscape
Traditional Businesses Future Businesses
Markets National, Overseas subject to tariffs Trading block, free trade zones
Scope of Competition National or regional: Protectionist Global, liberalised
Organisational Structure Hierarchical, bureaucratic, specific Networked, entrepreneurial,
scope, localised multidisciplinary, empowerment
Key Productivity Factor Labour (skills), capital, in-house Knowledge, innovation, outsourcing,
expertise, durability offshoring, time to market
Importance of Research Moderate, imitate and improve Critical, innovate and invent
Nature of engagement Mandate, relationship, intuition Opportunistic, free trade, due
diligence
Regulation/Governance Top down silo, closed group Connected matrix, transparency
Strategic Management Inside out- SWOT-strengths, Outside in – TOWS- threats,
weaknesses, opportunities, threats opportunities, weaknesses, strengths
Strategic Marketing 3 Cs – customer, competition, 4 Cs – change, customer,
company, 4 Ps – product, place, competition, company PDB triangle –
promotion, pricing positioning, differentiation, brand
Marketing Focus Product centric distribution Customer centric service
Growth Strategy Market share Sustainability
Kotler, et. al, Think ASEAN P. 54-55

16. Value Migrator
The New Landscape
Configuration
Significant
forces of
change
New rules of
the game
New New
Competitive New Value Winning New value Customer
Propositions Value requirements
setting app profile
indications indicators
F8 + E8 “Total Get”
Value = __________ = __________
P + Oe “Total Give”
Kotler, et. al, Think ASEAN P. 77
Company
Existing competence Risk-attitude Stretch possibility

17. Regulation
SCCP placed lemongrass oil
under scrutiny as a cosmetic
Trends & Technology ingredient in EU.
Alternative technologies to
Trends & Technology
steam distillation (CO2) Substitutes
can make much smoother Citral (main constituents) can
Regulation
oil but will increase capital be produced from a number of
needs greatly. chemical feed stocks.
Natural, exotic, organic, Alternative oils (litsea cubeba)
FAIRTRADE could cost much less to produce.
increase oils popularity (?) Lemon myrtle oil much
if seen as exotic. smoother and acceptable to
end users
Many alternatives to
lemongrass in product
formulations.
Substitutes
Industry Competitors
Bargaining
Bargaining power of
power of buyers
suppliers
Intensity of Rivalry
Competitive
Rivalries Bargaining Power of Buyers
Currently small item of trade in
flavour industry, strong
relationships with established
producers.
Bargaining Power of Suppliers
Collecting the most suitable Competitive Rivalries
planting material require effort. Lemongrass quick yield and
Extraction and straightforward to cultivate and distil
harvest .technology needs to be – expect high elasticity of supply
acquired or developed from both existing and new
Analytical equipment or service producers.
maybe expensive/remote. Producers of substitutes very
aggressive

18. Competitors in Asia
Scope
Global
Multinational firms
Regional National Champions
Regional CP, Singapore Telecom
Domestic players both large and small –
Chinese SMEs, overseas Chinese firms,
national companies
Local
Contextual and
Low resource costs
political knowhow Technology and Marketing
Basis of Competitive Advantage

19. MNC Development According to Country Development
Sourcing Countries Sourcing office Offshore factories
South China ASEAN Integrate into
OEM Contracts in export zones
global/regional
JV with resource rich partners
Key Countries operations
Japan
China Joint venture
Taiwan Acquisition Expand
South Korea Greenfield
Emerging Countries
Thailand Joint ventures Initiate several
Indonesia representative offices business activities Rationalization
Malaysia Distributors multiple presence
India
Philippines
Vietnam
Agents Establish initial
Marketing Countries Representative investment through
Myanmar office JV or local subsidiary
Laos, Cambodia
Platform Countries
Singapore Establish a base
to learn, collect Regional office
Hong Kong Set up a regional
information and for administration
office to coordinate efforts
set up contracts of synergies
Entry Growth Consolidation

21. Banking & Financial Finance
Typical Evolution of Services
Chinese Groups
in ASEAN
he en d
T ld n
Property Trade
Real Estate o o
G am
i
D
Progressive Manufacturing
vertical
integration in Diversified
upstream activities Activities
Investment in industrial
activities, either Diversified
direct or through Activities
Start up in Trading joint ventures
Lasserre & Schutte, P. 132

22. Salim Group (Lim Soe Liong)
Cement, Automobiles, flour, floods, chemicals,
banking, property, insurance
Sinar Mas (Eka Tiga Wijaya):
Paper, pulp,
chemicals, agribusiness, finance, property
Asta (W. Soeryadjaya):
Automobiles,
heavy equipment, office equipment, agribusiness,
property, finance

23. The Kuok Group (Robert Kuok)
Plantations, edible, flour, shipping,
hotels, mining, computer services, retail,
film distribution
Hong Leong (Quek Leng Chan)
Banking, Insurance, car distribution,
construction, building materials, manufacturing
Genting Group (Lim Goh Tong)
Hotels, Casinos, resorts, plantations, property,
paper mills, power generation

24. Charoen Pokphand (Dhanin Chearavanont)
Feed Mills, poultry, chemicals, automatics,
telecommunications, textiles, property
Bangkok Bank (Charti Sophonpanich)
Banking, Insurance, financial services
Siam Motors (Khunying Phornthip)
Automobiles, musical instruments

25. China

26. Ownership of Consumer Durable Goods in China (2002)
Units per 100 Units per 100 National Average
Households (Rural) households (Urban)
Bicycle 121.3 142.7 128.1
Motorcycle 28.1 22.2 26.2
Car N/A 0.9 N/A
Radio Cassette Recorder 20.4 47.9 26.2
Colour Television 60.5 126.4 81.2
B/W Television 48.1 N/A N/A
Telephone 40.8 93.7 57.4
Mobile Phone 13.7 62.9 29.2
Air conditioner 2.3 44.1 16.2
Camera 3.3 44.1 16.2
Electric fan 134.3 182.6 149.5
Hi-Fi System 9.7 25.2 14.6
Refrigerator 14.8 87.4 37.7
Video Recorder 3.3 18.4 8.1
Washing Machine 31.8 92.8 51.1
China Statistics Handbook 2003

27. Change in Consumer Differentiation
Behaviour in China Yuppie
Fashion
Traditionalism Modernisation
Thoughts of
Chairman Mao
Egalitarianism Lasserre & Schutte, P. 74

28. Chinese Culture in Flux and Transformation
Traditional Values Communist Values
Egalitarianism
Country Orientation
Hierarchy Party
Family orientation Class Background
Societal order Sacrifice
Relationships
Harmony
Seniority
Face Saving
Emerging Values
Less Hierarchical
Individualist/Materialist
Hero Entrepreneur
Here and now orientation
More direct communication
Lasserre & Schutte, P. 80

29. Sales Response Function to Income
Sales
Marketing Potential
Concave Function:
Elite Segment S-Curve Function:
Traditional Segment
S-Curve Function:
Transition Segment
Lasserre & Schutte, P. 71
Marketing Effort/Time

41. Differentiated Positioning
High Applied to high end
segments Emerging Battlefield
Price premium Low Cost
Low Volume Mass Distribution
High costs Differentiated
High Tech
Strong Brands Large Chinese Companies, (Huawei, TGL),
and some Western companies
Most Western Competitors
Technology
and Marketing
Advantages
Cost Leadership
Positioning applied to high
volume low-end segments
Advantages based Low Cost
Mass distribution
on local knowledge only
Low
Cottage Industries Large Chinese competitors
(Kanko, Haier)
No Specific cost Based on volume
advantages based
Cost Advantages and local knowledge
on volume
Competitive Positioning in China

42. A Look at the Malaysian Retail Market Channels

43. Malaysian Retail
Manufacturer
Market
Channels & Structure
National
Distributors
Wholesalers
Super- Sundry Convenience Chinese
Hypermarkets markets Stores Stores Medical
Halls
Consumers

44. Hypermarkets
• Hypermarkets make up approximately
15% of the national market. Tesco (12),
Carrefour (12) and Giant (20), dominate
this sector. Makro (8) is a closed system
for wholesalers and small business
customers, although this policy varies from
time to time. There are approximately 50
hypermarkets in Malaysia.

45. Supermarkets
• Supermarkets can be broken down into
two categories. Those foreign owned and
part of a chain like Jaya Jusco (7) and
Giant (numbering around 65), locally
owned groups like Fajar (16), Suiwah (6)
and Econsave (16),(numbering around
100) and those locally owned independent
supermarkets with no affiliations
(numbering around 220). This is
approximately 25% of the market.

46. Sundry Stores
• Approx. 80,000 in Malaysia in both urban
and rural areas, majority independently
owned small family businesses. Attempts
have been made to franchise or develop
chains like Felda and Pernama, but not so
successful. This is about 30% of the
market.

47. Convenience Stores
• These usually franchised stores are
rapidly growing in numbers as both 7-
Eleven & the petrol companies have seen
opportunities to enter into the retail trade.
Their market share is approximately 6%
but rapidly rising.

48. Chinese Medical Halls
• Traditional Chinese medical halls are
scattered across the country and often
develop into a small supermarket or
sundry store. They, together with
pharmacies have around 14% market-
share but this is losing out to the
convenience stores and chain
pharmacies. About 6,000.

49. Pharmacy
• Pharmacies primarily part of chains like
giant, but still number of independents.
They are specialist stores usually selling
OTC and widening ranges to include
herbs and nutraceuticals.

50. Other
• A specialist group that sells confectionary,
OTC drugs and FMCG goods. Number
around 200.
• Sell books, magazines, Newspapers,
drinks, etc.
• An emporium group with 10 stores
throughout Malaysia specialising in
emporium items and some FMCG.

51. FMCG Market Fragmentation/Concentration
Comparison Between Malaysia, Thailand, Hong Kong
and Australia
Outlet Type Malaysia Thailand Hong Kong Australia
Hyper & 20% 68% 91% 85%
Supermarkets
(Chain Owned)
Independent 20% 2% 2% 10%
Hyper &
Supermarkets
Wholesale 57% 10% 2% 3%
Trade – Sundry
& convenience
Stores
Other 3% 20% 5% 2%
Convenience
Chains

52. Kedah/Perlis 15%
Kelantan/Terengganu 8%
Perak 8% East Malaysia 6%
Pahang 8%
Klang Valley &
Central Region
(N. Sembilan)
35%
Penang 5%
Southern Region
(Johor & Melaka) Approximate National
Market Break-Up
15%

53. Barriers to Entry

54. Market Fragmentation

55. Centralisation

56. Merchandising

57. The way of doing business

58. Guanxi

59. Financial Issues

60. Clear
Competitive
Context Perceptions of the
Clarity of Rules Accessibility of the
Asian Pacific Region
Political, Singapore
Legal, and
Hong Kong
Ethical Context Taiwan
Familiarity
Malaysia
Japan
Philippine
Not Familiar Vietnam Familiar
Thailand
South Korea
India
Indonesia
China
Unclear Lasserre & Schutte, P. 184

61. Definitely yes
Reliability Strategic Market
Information the
Asian Pacific Region
Japan
Taiwan
Easy to Obtain South Korea
Hong Kong
Singapore
Philippine Malaysia
Definitely No Definitely yes
India Vietnam
China
Thailand
Indonesia
Definitely No
Lasserre & Schutte, P. 189