International Marketing

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International Marketing

• Tim Beal
• Lecture 9
• 22 September 2006

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TODAY

• Where were at
• Information and IM
• Market and environmental research and analsyis
• Country study South Korea

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Where were at

• Environmental issues
• IM strategy and implementation
• Continuing our country studies
• http//www.vuw.ac.nz/caplabtb/m302w06/SCHEDULE.mh
  t
• Marketing to Islamic world readings
• Tutorials

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Educational Services project

• Any questions?

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Information and IM

• Importance of information
• Limits of information
• Skills linking information and marketing
• What sort of information?
• Glance at sources

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Importance of information for IM

• Recent issue of Hong Kong Monitor
• MNCs setting up regional HQs in HK
• why HK?
• clean government, low taxes, banking and
  financial facilities, rule of law BUT MAIN FACTOR
  WAS
• Information

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Still in China

• Sun Zi (c 400BC)

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Sun Zi

• Know yourself, know your enemy, a hundred
  battles, a hundred victories
• The more we know and understand the better our
  marketing is likely to be
• True domestically, even more so internationally
• But its not easy..

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Skills we seek to develop

• Ability to gather information
• Analyse information
• Formulate strategies
• Facts are for illustration not memorisation
• Because facts change

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Beyond facts and figures

• Dating
• Complexity
• Contestability
• Not sufficient

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Dating

• World is constantly changing
• last weeks facts may be of no use
• may be misleading
• questions need to be constantly re-asked

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Complexity

• World in hugely complex
• Relevant data and information boundless
• Couldnt cover everything

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Contestability

• few facts are unchallenged
• facts are often contradictory
• Opinions more so
• Some say global economy will prosper, others say
  no
• Need to develop ability to cope with
  contradictory facts and opinions

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Never sufficient

• Marketing goes beyond facts
• Human beings complex and often unpredictable
• Facts only take us so far
• Fijians with freezers, ice cream sold last year
• Doesnt tell what will happen if we introduce new
  brand to Fijian market

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What sort of information?

• What is it that we are seeking information on?
• Customers
• Competitors
• Business environment

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Business environment

• laws and regulations
• technology
• Social and demographic trends
• political changes
• cultural and religious factors..

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Criteria

• Too much information can be as bad as too little
• One reason for word limits and executive
  summaries
• Information must be
• Up-to-date
• Relevant
• authoritative
• actionable
• Marketing information is information for DECISION
  MAKING

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Market and Environmental research and analysis

• Environment broader term than market
• eg wine market in China
• Start broad then narrow
• start with examination of broad business
  environment
• Then focus on characteristics of wine market
• customer tastes, distribution etc

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research and analysis

• Research - getting and structuring information
• Analysis - using the information to answer
  specific questions
• eg what price will consumers pay for my bottle of
  chardonnay?

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(No Transcript)
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Overview

• Environmental frameworks
• overview of environmental and market analysis
• environmental analysis for screening
• identifying promising markets
• Use of indicators
• pc GDP
• Market research companies

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Relevance

• Relevance is vital
• Focus on information which is relevant to task at
  hand (eg assessing market opportunities for
  educational services)
• Exclude irrelevant
• Often relevance is a matter of judgement
• May not be spelled out in original source
• You need to make connection explicit
• Eg religion

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Environmental frameworks

• PEST
• SLEPT
• C factors
• Overlap
• Link with SWOT

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PEST - political

• Political
• Examples?
• Examples
• Malaysian government and sending students abroad
• Attitude of government to imports from NZ (lamb,
  apples)
• Boycotts (South Africa, Japan, US)
• protection of local industry
• But keep it RELEVANT

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PEST - economic

• Economic
• Examples?
• Examples
• size of economy
• growth rate
• type of economy (market orientation?)
• But keep it RELEVANT

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PEST -Social/cultural

• Social/cultural
• Examples?
• Examples
• do people drink wine?
• Only men? What age? Class?
• Effect of religion
• Preference of different ethnic groups in Malaysia
  for education subjects

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PEST - Technological

• Technological
• Examples?
• Examples
• electrical standards (240V 110V?)
• telecommunications
• repair and servicing facilities

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SLEPT

• add Legal
• Social/cultural, Legal, Economic, Political,
  Technological

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SLEPT -legal

• Legal
• Examples?
• Examples
• can your goods be imported?
• (eg Alcohol banned)
• packaging and labelling requirements
• permitted additives

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C factors

• Culture
• separate and important factor
• Competitors
• Currencies
• Specific companies may develop own frameworks
• Key is to identify factors which will have impact
  on your marketing

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Overview of environmental analysis

• majority of mistakes could be avoided with better
  information
• Information is the key component in developing
  successful marketing strategies
• General information for market opportunity
  assessment (environmental)
• Specific information for 4 Ps

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International information

• Information becomes more crucial in international
  markets
• constraints of time and cost
• Even large corporations face constraints
• Research is the art of the possible
• never enough time or money
• Quality information is expensive

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Objectives

• Marketing research is the systematic gathering,
  recording, and analysing of data to provide
  information useful in marketing decision making

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Systematic and useful

• systematic
• what you do for one market you should do for the
  others to enable comparisons
• learn from mistakes
• gain experience - build up institutional
  knowledge
• Useful
• not knowledge for its own sake
• tool for decision making

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Tools and techniques

• Basically the same whatever the market
• Used for same purposes
• marketing decisions
• Questions vary
• Availability of techniques, data, etc vary
• Some countries difficult to interview women

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Types of research

• General information about country, area, market
• country ltgt market
• information about trends to forecast marketing
  requirements
• Specific market information

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General to specific

• Broad picture
• which countries drink/import wine?
• Select promising countries for further research
  (screening)
• Go into more depth
• perhaps exclude further countries (iterative
  process)

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Ending up

• End with specific answers for marketing decision
  making
• Which distributor should we use?
• What should our pricing strategy be?
• What should the package look like?

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What happens in practice?

• Information and analysis is expensive
• IM extends the boundaries for what is required
• Reluctance

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International domestic

• When companies go from domestic to international
  they need to spend money on things that werent
  necessary before
• They knew their customers, the laws, the
  geography
• Learning curve
• But domestic markets becoming more multicultural
  gtgt requiring more research

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Examples

• Kid R us in Puerto Rico
• Didnt realise that kids wore uniforms to school
• Clothes too heavy for hotter climate
• US auto manufacturers exported left-hand drive
  cars to Japan
• Japanese drive on left

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Research process

• Define problem and objectives
• Determine sources of information
• Compile information
• Analyse, interpret and present the results

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Define problem and objectives

• Self reference criterion blinds us to questions
• Questions are usually based on assumptions
• eg hot milk-based drinks

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hot milk-based drinks

• Use varies examples?
• UK - evening, sleep-inducing
• Thailand - morning for stimulation
• US - either morning or evening but only in cold
  weather
• Need to step back to ask the right questions

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Availability of data

• Varies considerably from country to country
• Lot in US..not so much in China
• Data collected by government, trade associations,
  private companies
• Data may be collected but not made available
• eg security reasons

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Reliability of data

• Healthy scepticism
• Why is data collected?
• eg tax
• What are incentives for falsification?
• tax, customs, etc
• World exports gt world imports
• Why?
• Tariffs apply to imports not exports

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Comparability of data

• Time periods may vary
• Categories may be different
• even if same words are used
• Read the small print

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Validating secondary data

• Who collected and why?
• why would it be falsely reported?
• For what purpose was it collected?
• How collected (methodology)?
• Is data consistent?
• with other known data
• Internally
• Wine assignment

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Data consistency

• Statistical data often has errors
• Inconsistencies in wine statistics
• Eg arithmetical sum ltgt given total
• Why?
• Someone, somewhere had made a mistake
• Moral?
• Wherever possible check

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Secondary gtgtPrimary

• Secondary data starting point
• then move on to primary data
• Secondary data is published data
• Cheaper (though may be more expensive)
• Tends to be general
• Not collected for your specific purpose
• Primary data research you do/commission
• More focussed, up to data and expensive

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Examples of indicators

• Political stability
• Economic growth rate
• Disposable income
• pc GDP

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pc GDP

• pc GDP/GNP most popular single measure of wealth
• Country A - pc GDP US30,000
• Country B - pc GDP US300
• Customers in A are 100 times richer than in B
• But are they?

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Limitations of pc GDP

• pc - hence an average
• distribution not equal
• Even in poor countries rich and middle class
  can be affluent markets

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distribution of wealth

• distribution of wealth varies
• social class
• ethnicity
• may be related to class
• geographical location
• eg Chinese coastal provinces
• Auckland versus Invercargill

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Exchange rate fluctuations

• As currency fluctuates against US so does
  apparent GDP
• real changes less than currency fluctuation
• Lot of economy is domestic
• leads to questioning of appropriateness of
  trade-based exchange rates

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Purchasing power parity rates

• measures relative purchasing power of currencies
  over same types of goods and services
• Still uncertain but gives better indication of
  real wealth
• Differences between two calculations can be
  dramatic

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Japan or China?

• David Ferguson, NZ Trade Commissioner in Tokyo
  Japan second largest market in world
• But CIA says thats China

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Table on course page

• Readings - Effect of PPP calculation

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Market research in action

• Your major research project is environmental and
  market research in action
• Quality information is expensive and difficult to
  obtain
• But lack of quality information is more expensive
• missed opportunities
• expensive mistakes

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South Korea
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The Korean Economy and Future
Opportunities for New Zealand
June, 2006 Jung Taik HYUN President Korea
Development Institute
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Contents
1. Transformation of the Korean Economy
(1945-2005)
2. The Current Status of the Korean Economy
3. Challenges Ahead
4. Koreas Efforts for Globalization
5. Korea and New Zealand Economic Opportunities

63
1. Transformation of the Korean Economy
(1945-2005)
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1.1 Overview - Per Capita Income

Per Capita Income (US)
16,291
14,193
11,432
10,000
Six 5-Year-Economic- Development Plans
7,355
Financial Crisis
5,000
Liberation from Japanese Colonial Rule
1,000(1977)
OECD Member
100(1964)
89
67
1953
1945
1995
2004
1980
1961
1970
1990
1998
2005
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1.1 Overview - GDP Structure Employment
Structure
lt GDP Structure gt
Agriculture, fisheries, and mining 4
Agriculture, fisheries, and mining 45
Services 40
Manufacturing 28
2005
1963
Services 68
Manufacturing 15
lt Employment Structure gt
Agriculture, fisheries, and mining 6
Manufacturing 19
2005
1963
Services 75
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1.2 Economic Take-Off with Outward-looking
Development Strategy (1/5)
lt Economic Conditions of the Early 1960s gt
Capital Shortage
Abundant Labor
High Level of Education
?
Weak Technology Base
Strong Economic will
Underdeveloped Private Sector
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1.2 Economic Take-Off with Outward-looking
Development Strategy (3/5)
lt Growth in Imports and Exports gt
Imports
Exports
Trade balance
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1.2 Economic Take-Off with Outward-looking
Development Strategy (5/5)
lt Changes in Export Commodity Profile From
Light Industry to Heavy Industry gt
Semiconductor, Mobile Phone, DTV, Display,
Automobile, Ship-building, etc.
Export Commodity Profile
Semiconductor
HCI Product
79.8
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Light Industry Product
14.1
Agricultural Product
6.1
1980
1990
2003
1960
1970
1999
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2. The Current Status of the Korean Economy
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? KDI ????
I. ?? ???? / 70
2.1 The Current Status of the Korean Economy
(y-o-y, )
Note P denotes Preliminary. Source KDI
71
3. Challenges Ahead
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3.1 Potential Growth Rate and Productivity (1/2)
Economic growth of Korea depended on resources
such as capital and labor.

• Korea has shown one of the highest saving ratio.
• It is well endowed with highly educated and well
  trained labor.

lt School Enrollment Rate gt
the
number of enrollments in a specified age range
Note Enrollment rate ----------------------
-----------------------------------------------
the
whole population in the same age range
73
3.3 Industrial Restructuring and Challenges
from China (2/5)
During 1993-2004, Korea gained a CA in high-tech
products and improved medium-high tech, while CA
declined in medium-low tech and Low tech products.

• China showed similar phases of restructuring and
  became challenges to the Korean
• economy.

74
2
3.3 Industrial Restructuring and Challenges
from China (3/5)
Chinas export structure is rapidly converging
with that of Korea.

• Particularly, China achieved a large increase in
  the export of IT products.

lt China gt
lt Korea gt
Source UNCOMTRADE
75
3.4 Aging Society
The speed of population aging is far higher in
Korea than other major developed countries.

• Reforming the public pension and health insurance
  program
• Extending employment opportunities for female,
  elderly and disadvantaged groups

lt Share of the old (65) gt
76
4. Koreas Efforts for Globalization
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4.1 Koreas Efforts for Globalization (1/2)
Korea pursues to be a global leader, through FTA
and the plan to be a Northeast Asian Economic
Hub.

• Korea aims to enhance regional cooperation and to
  be a center of RD, logistics and financial
  services in Asia.
• It also endeavors to transform into an open and
  globalized economy, promoting FTA with a variety
  of economies.

lt Koreas Promotion of FTA gt
FTA completed Negotiation in progress or
to be started FTA under consideration
Chile, Singapore, EFTA, ASEAN
USA, Canada, Japan, Mexico
China, EAFTA, India, MERCOSUR, EU
78
5. Korea and New Zealand Economic Opportunities

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5.1 K-NZ Bilateral Relationship in Merchandise
Trade (1/3)
Korea was the 7th largest trade partner of New
Zealand in 2005.

• One of the most striking findings from the two
  nations trade relationship is the
• complementarity.
• Comparing the trade relationship between the
  two countries ten years ago, the
• importance of Korea to NZ increased.

lt Bilateral Trade Volume gt
lt World Trade Volume gt
265 bil
Year 2005
Year 2005
248 bil
890 mil



595 mil

25 bil
22 bil


export import
export import
K to NZ NZ to K
Korea
New Zealand
Source UN Trade Data, 2005
80
5.1 K-NZ Bilateral Relationship in Merchandise
Trade (2/3)
Korea has build up comparative advantage in
high tech manufacturing product.

• While Korea exported semiconductors, IT
  equipment and electronic parts, the
• nation possessed disadvantage in natural
  resource.

lt Exports of Korea to NZ gt
Year 2005
other 15
General Machinery 10
IT Equipment 18
Chemical Products
17
Automobiles 15
Food, Products Beverages 12
Basic Metals
13
Source UN Trade Data, 2005
81
5.1 K-NZ Bilateral Relationship in Merchandise
Trade (3/3)
Major imports of Korea from NZ included wood
and bovine meats.

• Koreas total imports to NZ was explained by
  food, beverage and Agriculture,
• Forestry Fishery.
• Primary ferrous metal products and paper
  products also explained about 6
• of exports to Korea respectively.

lt Major Imports of Korea gt
lt Imports of Korea from NZ gt
277
(million)
Year 2005
162
Year 2005
44
38
25
5
Wood of coniferous species
Fruit
Bovine meat
vegetable
Other cheese
Food preparations
ltFood, Products Beveragesgt
ltAgriculture Forestry, Fisherygt
82
5.2 Market Share of NZ in Korea
The share of NZ in Korea market soared up in
2005.

• In Wood , Fruit, Sheepskins and Bovine, the
  share of NZ in the Korea market
• took more comparative advantages than other
  competitors.

83
5.3 Korea-NZ Bilateral Relationship in Service
Sector
There should be large opportunities of the
expansion of relationship between Korea and NZ in
a variety of service sectors.

• In 2004, it was estimated that overseas
  expenditure for education reasons
• reached as much as 5.1 billion.
• In 2005, 10 million Koreans visited foreign
  countries and spent 1,239 for their
• trips.

lt Overseas Expenditure on Education Training gt
lt Outbound Tourists and Expenditure gt
10,077,619
Year 2004 Unit mil
Year 2004, 2005 Unit person,

8,825,585
2005

2004
1,239
3,378 studying abroad

1,169

2005
2004
1,770 Training abroad
Expenditure per Capita
Tourists
Overseas Expenditure - Korea
84
DVD

• Tim Beal and Michel Rod in South Korea Sept-Dec
  2003
• Visiting professors at Korea University, Seoul
• Rough cut of videos taken at the time