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Philip Kotler S.C. Johnson & Son Distinguished Professor of International Marketing Kellogg School of Management, Northwestern University. Contents. Why ASEAN?. ASEAN Community 2015. ASEAN Regional Marketing. Why ASEAN?. ASEAN Community 2015. ASEAN Regional Marketing.

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Presentation Transcript
slide1

Philip Kotler

S.C. Johnson & Son Distinguished Professor of International Marketing

Kellogg School of Management, Northwestern University

slide2

Contents

Why ASEAN?

ASEAN Community 2015

ASEAN Regional Marketing

slide3

Why ASEAN?

ASEAN Community 2015

ASEAN Regional Marketing

slide4

The Paradox of Globalization vs. Localization

“The World is Flat”

Thomas L. Friedman

New York Times columnist

“The World is Still Round”

Robert J. Samuelson

Newsweek columnist

slide5

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

Regionalization

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.
slide8

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
slide9

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.

slide10

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

slide11

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

slide12

Chindia, where the world's workshop meets its office

India

China

  • 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
  • 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

Strengths

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

Weaknesses

Weaknesses

slide13

How should ASEAN ride the wave

of the rising East (read: Chindia)?

slide15

The Rising East: Threat or Opportunity?

Opportunity

Threat

ASEAN Integration

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

Individual countries in ASEAN are nothing compared to Chindia

* 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.

slide16

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)

slide17

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
slide18

Why ASEAN?

ASEAN Community 2015

ASEAN Regional Marketing

slide19

Towards ASEAN Community 2015

ASEAN COMMUNITY 2015

ASEAN Security Community (ASC)

ASEAN Economic Community (AEC)

ASEAN Socio-Cultural Community (ASCC)

The Peaceful, Prosperous, and People-Centric ASEAN

Regional Production Base

Single Regional Market

Consumption/Demand

Production/Supply

Dual Track Strategy

slide20

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

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

  • 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

The region will become a more level playing field

slide21

Four Key Success Factors of ASEAN Integration

Rigorous Focus on High-Impact Sectors

Workable Institutions

Continued Support by ASEAN Leaders

More Effective Public-Private Collaboration

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

slide22

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

slide24

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 ASEAN-wide 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

slide25

Why ASEAN?

ASEAN Community 2015

ASEAN Regional Marketing

slide27

What is Marketing?

Brand Integrity

Positioning

Differentiation

Core Tactic

Being Strategy

BRAND

Brand

Brand Image

Brand Identity

Value Indicator

slide29

Three Types of ASEAN Marketing Companies

(3) THE MULTINATIONALS FOCUSING ON ASEAN

MULTI-

NATIONALS

ASEAN

LOCALS

LOCALS

(2) THE LOCALS GOING ASEAN

(1) THE LOCAL CHAMPIONS

slide30

Local Champions

S

Play small by serving niche markets

T

Address the local needs and wants

V

Maintain high level of customer intimacy

slide31

MBF Cards of Malaysia

Local Champions

Positioning

Differentiation

Brand Integrity

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

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

Brand

BRAND

Brand Image

Brand Identity

MBF Cards

slide32

Goldilocks of the Philippines

Local Champions

Positioning

Differentiation

Brand Integrity

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

The bakeshop with international standards catering to Filipino taste

Brand

BRAND

Brand Image

Brand Identity

Goldilocks

slide33

Bengawan Solo of Singapore

Local Champions

Positioning

Differentiation

Brand Integrity

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

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

Brand

BRAND

Brand Image

Brand Identity

Bengawan Solo

slide34

Locals Going Regional

S

Translate the regional positioning to local context

T

Ensure regional visibility and availability

V

Build regional brand

slide35

Extra Joss of Indonesia

Locals Going Regional

Positioning

Differentiation

Brand Integrity

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

The affordable core essence of energy drink for core generation

Brand

BRAND

Brand Image

Brand Identity

Extra Joss

slide36

Black Canyon of Thailand

Locals Going Regional

Positioning

Differentiation

Brand Integrity

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

Food houses that combine West and East

Brand

BRAND

Brand Image

Brand Identity

Black Canyon

slide37

AirAsia of Malaysia

Locals Going Regional

Positioning

Differentiation

Brand Integrity

  • Low-cost structure
  • Fun internal culture

ASEAN no-frills and fun low-cost carrier

Brand

BRAND

Brand Image

Brand Identity

AirAsia

slide38

MNCs Focusing on ASEAN

S

Coordinate the regional strategy

T

Execute the local customization

V

Maintain the consistency of the global value

slide39

Glorecalization Approach for MNCs

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

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

Strategy

Tactic

Value

Consistent

Global

Office

(Conceptor)

Global

Office

(Composer)

Global

Value

Coordinated

Regional

Office

(Supervisor)

Regional

Office

(Conductor)

Regional

Strategy

Local

Office

(Operator)

Local

Office

(Improviser)

Customized

Local

Tactic

slide40

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
slide41

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

Customized Local Tactic

  • Different communication approach for each ASEAN country
conclusions
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 .