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Kotler ASEAN -The Paradox of Globalization vs Localization

Kotler ASEAN -The Paradox of Globalization vs Localization

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Published by: imad rehman on Jul 07, 2012
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03/09/2013

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Contents

Why ASEAN?

ASEAN Community 2015

ASEAN Regional Marketing

2

Why ASEAN?

ASEAN Community 2015

ASEAN Regional Marketing

3

Regionalization: The Right Balance

Globalization

 ICT has allowed wide information access.  Goods and services can move cheaper thanks to cheap transportation and ICT.  The world is more borderless.  In a flat world, competition searches for lowest cost.

Regionalization

 Convenience of flows of information, goods, services, and people within the region  Relatively similar psychology and national interest within region

Localization

 National borders still have economic meaning.  National markets exist and are defined by psychology and politics.  National economic and political setbacks can threaten globalization.
5

The paradox has forced countries to form regional blocs

Source: Wikipedia.com

6

Global View of Asia

 Regional Blocs, including East Asia will be prominent Principal blocs will be Europe, East Asia and the Americas.  The 21st Century is the Asian Century!  Asia will be almost half of the world’s economy by 2020

8

Asia Pre-Crisis: The Flying Geese
Before the crisis, “the flying geese” phenomenon was soaring throughout Asia and influencing the Pacific Rim economies.

The formation resembled flying geese, headed by Japan, while the rest of the group followed. Countries toward the front tend to transfer “older” industries to countries at the back.

Note: “Flying Geese” is a concept developed by Kaname Akamasu that best describes the economic structure of Asia before the crisis.

9

Asian Crisis
But the crisis put an end of “flying geese”.

Source: BBC

Asian Economic Crisis in 1997-1998: The End of “Flying Geese”, The end of the good old days of the Asian miracle
10

Asia Post-Crisis: The Regional Squadrons
After the crisis, squadrons of the former flying geese, who increasingly drive regional integration.

SAARC Squadron

China Squadron Korea Squadron Japan Squadron

ASEAN Squadron
11

Chindia, where the world's workshop meets its office China
 Manufacturing giant with the lowest prices  Hybrid communist-capitalist model that enables development  Solid primary schools  Infrastructure that lures foreign investment  Good distribution of wealth with higher per-capita income Strengths

 Strong technology and service industry  Relatively efficient capital market  Strong private sector and legal framework  Younger workforce  Growing population  Great university system  Strong entrepreneurial culture  Attracts higher prices  Red tape, corruption, tough labor laws and bureaucracy all deter investment  Woeful infrastructure  Lackluster primary education system  Exclusive growth environment to the rich  The privatization of key industries has stopped

India

Strengths Weaknesses

Weaknesses

   

Heavy reliance on low prices Weak financial system Inefficient capital system Slow population growth

12

How should ASEAN ride the wave of the rising East (read: Chindia)?

13

ASEAN Countries at a Glance

14

The Rising East: Threat or Opportunity?

Threat
ASEAN Integration Individual countries in ASEAN are nothing compared to Chindia

Opportunity

ASEAN is the only region capable of being in the driver seat of the Greater East Asia integration*

* ASEAN is the first to seat ASEAN countries together with China, India, Japan, South Korea, Australia, and New Zealand, as well as Russia (as an observer) in one table during the first East Asia Summit.
15

The First East Asia Summit Driven by ASEAN
Initiated by ASEAN, the first East Asia Summit held in Kuala Lumpur, Malaysia, in December 2005, brought together leaders of the former flying geese, with the objective to establish the East Asia Free Trade Area by 2015 and moving towards the New Asia.

(Observer)

16

Why is ASEAN in the Driving Seat of the Greater East Asia?

ASEAN

Neutral Position

High Bargaining Power

ASEAN is not considered a “threat” to China, India, Japan, South Korea, Australia, and New Zealand

Attractive Single Regional Market

Competitive Regional Production Base

 Huge market  High consumption  Less competitive

 Smooth flow of goods, services, and people under FTA  Abundance of natural resources  Low labor cost
17

Why ASEAN?

ASEAN Community 2015

ASEAN Regional Marketing

18

Towards ASEAN Community 2015

ASEAN COMMUNITY 2015
ASEAN SocioCultural Community (ASCC)

ASEAN Security Community (ASC)

ASEAN Economic Community (AEC)

The Peaceful, Prosperous, and People-Centric ASEAN

Production/Supply Regional Production Base

Single Regional Market

Consumption/Demand

Dual Track Strategy

19

What does ASEAN Integration Mean?
 Tariffs will be eliminated and non-tariff barriers will be gradually phased out  Rules and regulations will be simplified and harmonized  ASEAN investors will be permitted to invest in sectors formerly closed to foreigners and the services sector will also be opened up  Applicable international standards and practices are followed, and policies on intellectual property rights and competition are put in place  Regional infrastructure will be more developed with the expansion of transportation, telecommunications and energy linkages

All barriers to the free flow of goods, services, capital, and skilled labor are removed

The region will become a more level playing field

20

Four Key Success Factors of ASEAN Integration

Rigorous Focus on High-Impact Sectors

Workable Institutions

Continued Support by ASEAN Leaders

More Effective PublicPrivate Collaboration

Source: McKinsey&Company, ASEAN Competitiveness Study, 2003.
21

Corporate Trends Supporting ASEAN Integration
Global trends in manufacturing indicate a shift towards adopting flexible production techniques and integrated production chains

It is no longer cost effective for all manufacturing activities to be done in in-house or in a single country MNCs are integrating their manufacturing activities across several locations MNCs are not only seeking large consumer markets but also regional sites where they can establish efficient production networks

 

Regional Production Base
22

Potential Cost Savings from ASEAN Integration

23

A Balanced Approach is Needed

Benefits to MNCs  Targeting more sales volume in the ASEAN market  Components procurement on an ASEAN-wide basis  More product specialization to achieve economies of scale  Greater emphasis on profitability using ASEANwide operations

Benefits to Local Companies  More export opportunities to ASEAN market  ASEAN-wide expansion opportunity for corporate growth strategy  Technology and financial support opportunities from MNCs  ASEAN-wide pool of talent

A Balanced Approach

24

Why ASEAN?

ASEAN Community 2015

ASEAN Regional Marketing

25

26

What is Marketing?

Brand Integrity

Positioning
Being Strategy

Differentiation
Core Tactic

BRAND

Brand

Value Indicator

27

Nine Core Elements of Marketing
(mind-share) (market-share)

S
Explore
1

STRATEGY

TACTIC

T
Engage

Positioning
'BEING' STRATEGY

Differentia tion
'CORE' TACTIC

2

3

4

5

6

7 8 9
Process
VALUE 'ENABLER'

Execute

VALUE
(heart-share)

V
28

Three Types of ASEAN Marketing Companies
(3) THE MULTINATIONALS FOCUSING ON ASEAN MULTINATIONALS

ASEAN

LOCALS

LOCALS

(1) THE LOCAL CHAMPIONS

(2) THE LOCALS GOING ASEAN
29

Local Champions

S

Play small by serving niche markets

T

Address the local needs and wants

V

Maintain high level of customer intimacy

30

MBF Cards of Malaysia
Local Champions

Positioning
Malaysia’s largest and most innovative and issuer of niche cards

Brand Integrity

Differentiation
 Selection of cards suited to niche segments  Early adoption of new card technologies

Brand
BRAND

MBF Cards

31

Goldilocks of the Philippines
Local Champions

Positioning
The bakeshop with international standards catering to Filipino taste

Brand Integrity

Differentiation
 Varieties of Philippines original bakery products and cuisine  Understanding of Pinoy values and sentiments

Brand
BRAND

Goldilocks

32

Bengawan Solo of Singapore
Local Champions

Positioning
The convenient gift and souvenir options of hand-made premium cakes, kueh, and cookies

Brand Integrity

Differentiation
 High quality hand-made products with attractive and exclusive packaging  Convenience for order, delivery, and collection  Gift voucher packages

Brand
BRAND

Bengawan Solo

33

Locals Going Regional

S

Translate the regional positioning to local context

T

Ensure regional visibility and availability

V

Build regional brand

34

Extra Joss of Indonesia
Locals Going Regional

Positioning
The affordable core essence of energy drink for core generation

Brand Integrity

Differentiation
 In sachets, not in bottles  Generation Biang (core generation)  Large retail distribution networks

Brand
BRAND

Extra Joss

35

Black Canyon of Thailand
Locals Going Regional

Positioning
Food houses that combine West and East

Brand Integrity

Differentiation
 Extensive Western and Asian (especially Thai) food and coffee menu  Wild Wild West name and décor  Large chain of outlets

Brand
BRAND

Black Canyon

36

AirAsia of Malaysia
Locals Going Regional

Positioning
ASEAN no-frills and fun low-cost carrier

Brand Integrity

Differentiation
 Low-cost structure  Fun internal culture

Brand
BRAND

AirAsia

37

MNCs Focusing on ASEAN

S

Coordinate the regional strategy

T

Execute the local customization

V

Maintain the consistency of the global value

38

Glorecalization Approach for MNCs
MNC Type 1 - Strategy, Tactic, and Value are determined by the global office with little modification. Regional and local offices merely act as supervisor and operator.
Strategy Tactic Value

MNC Type 2 - MNC with Glorecalization Approach: Consistent global value, Coordinated regional strategy, and Customized local tactic (The 3C Formula)
Strategy Tactic Value

Global Office (Conceptor)

Global Office (Composer)

Consistent Global Value

Regional Office (Supervisor)

Regional Office (Conductor)

Coordinated Regional Strategy

Local Office (Operator)

Local Office (Improviser)

Customized Local Tactic

39

Yamaha Motor

Consistent Global Value

  

Yamaha Brand and “Three Tuning Forks” logo The spirit of creating “Kando” (feelings of deep satisfaction and excitement) as the brand mission Yamaha technology and production

Coordinated Regional Strategy

 

“Growth” strategy for ASEAN “Profitability” strategy for US and Europe

Customized Local Tactic

 

Different product mix for each ASEAN country Different communication approach for each ASEAN country

40

Toyota Kijang

Consistent Global Value

  

Toyota Brand and “Three Ovals” logo Japan-quality manufacturing Sales, Service, and Spare parts businesses

Coordinated Regional Strategy

Positioning: ASEAN Family Car

Different communication approach for each ASEAN country

Customized Local Tactic

41

Conclusions
• ASEAN is a regional bloc of 550 million customers with rich resources. • ASEAN is sure to get attention from MNCs and investors both as a source of products and a market for products. • ASEAN will bring benefits to the companies in all 10 ASEAN countries because it will lower their costs and provide larger opportunities .
42

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