Mature Markets Western Europe Japan North America Australia & New Zealand Sarah Silvas Kimi Bahret Michael Johnson
Economic Factors • GDP (purchasing) – $12.82 trillion (2006 est.) • GDP (official exchange rate) – $13.74 trillion (2006 est.) • GDP (real growth rate) – 2.8% (2006 est.) • GDP (per capita) – $29,400 (2006 est.) • Labor Force- 222.7 million (2005 est.) • Labor Force – by occupation: - Agriculture-4.3% - Industry-27.2% - Services- 67.1% Note: The remainder is in miscellaneous public and private sector industries and services.
Economic Factors Industries: • Ferrous and non-ferrous metal production and processing • Metal Products • Petroleum • Coal • Cement • Chemicals • Pharmaceuticals , construction Equipment • Industrial Equipment • Shipbuilding • Electrical Power Equipment • Electronics and telecommunications Equipment • Paper • Textiles • Tourism
Economic Factors Exports- $1.33 trillion • Machinery • Motor Vehicle • Aircraft • Plastics • Pharmaceuticals and other Chemicals • Fuels • Iron and Steel • Non ferrous metals, • Wood Pulp and Paper products • Textiles • Meat • Alcoholic Beverages
Economic Factors Imports -$1.466 trillion • Machinery • Vehicles • Aircraft • Plastics • Crude Oil • Chemicals • Textiles • Metals • Foodstuff • Clothing
Political Factors • A hybrid intergovernmental and supranational organization • 27 member states Political Parties and Leaders • Confederal Group of the European United Left-Nordic Green Left or EUL/NGL [Francis WURTZ]; • Group of the Alliance of Liberals and Democrats for Europe or ALDE [Graham WATSON]; • Identity, Tradition, Sovereignty Group or ITS [Bruno GOLLNISCH]; Independence/Democracy Group or IND/DEM [Jens-Peter BONDE and Nigel FARAGE]; • Socialist Group in the European Parliament or PES [Martin SCHULZ]; • Union for Europe of the Nations Group or UEN [Brian CROWLEY and Cristiana MUSCARDINI]
Political Factors International Organization Participation: • European Union: ARF (dialogue member), ASEAN (dialogue member), • IDA, • OAS (observer), • UN (observer) • European Community: Australian Group, • CBSS, • CERN, • FAO, • EBRD, • G-10, • NAM (observer), • NSG (observer), • OECD, • UNRWA, • WTO, • ZC (observer) • European Central Bank: BIS • European Investment Bank: EBRD, WADB (nonregional member)
Market Factors • Single European market within the EU • Tariff barriers and custom duties were scrapped and good and labor were to move freely between countries. • Product Standards were harmonized • Border controls were abolished and a common European passport was created • Commercial Vehicles needed a single loading document for shipments across Europe. In the past each country had it own documents and standards.
Market Factors • National price controls where eliminated , helping to create a large and unified market with competitive prices. • A single currency , the “Euro” was introduced in 1999 making payments easier and equalizing prices( even though not all countries joined the currency system). • EU is a single market with upward of 450 million consumers the biggest mature market in the world. ( though not all members countries are really in a mature stage yet.)
Market Segmentation • European Wide segments were identifies and targeted. • Pan- European product designs and marketing communications were created to achieve the same synergistic positioning in all countries. • Before the integration the European market it had been up to the marketing manager of each country subsidiary to develop a segmentation scheme for the customers in that country. • One researcher identified six basic segments The clusters of countries form large markets by themselves making it possible to gain many scale advantages without necessarily operating across the whole EU region.
Product Positioning Three Strategic Options: 1.Market Retreat- • Sell out to pan-European player example, Nabisco) • Seek a different less competitive market example Nokia Dtra)
Product Positioning 2. Pan-European Competition- • Identify true pan-European market segments (example Perrier) • Organic penetration from existing national markets (example Pilkington) • Aggressive policy of acquisitions to complete European portfolio9example BSN) • Cooperation with other national player to form pan-European organization9example Carnaud-Metal box) or alliances (example European Retailers Association)
Product Positioning 3. Niche Position • Consolidate national position through realignment, merger or acquisition (example Mannesmann-VDO) • Identify new Euro-regions • Identify segments across limited number of countries (example Campbell Biscuits) • Seek economies at component level while retaining niche brands9example Electrolux) • Become an OEM supplier to pan-European companies.
Market Tactics Product Policies- • Euro –Brand is common and are becoming Global. • Brand Names may vary in language differences the product itself may bi identical across countries. • Packaged goods in Europe feature packaging in at least four languages ( English ,French, German, Spanish.) • European Brands design products with a more European Feel like slimmer and thinner designs, colors and features that are not available for there other products.
Market Tactics Pricing- • European pricing can be complicated issue as the single Euro currency is introduced and companies have to set a common Euro price throughout the region. • Price differentials on the same product and brand in different countries are being minimized to avoid inducing customers to buy in neighboring countries . • Long standing practices are not easily changed especially since in many protected local markets the high prices have made some products cash cows for the distributor.
Market Tactics Distribution- • Sales networks , retail, and wholesale distribution is gradually being transformed from locally based smaller units to large integrated organizations resembling those common in North America. • The new large units have help to facilitate the introduction of pan-European strategies among manufactures. • Saving that have been created through large centralized negotiations between the manufacturer and a large distribution chain are well known in the American marketplace but are relatively new to Europe
Market Tactics Promotion- • A Striking Development is the increasing use of pan-European TV advertising , and taking advantage of the satellite beamed across previously closed borders. • As public ownership of TV broadcasting lessens and commercial airtime is made available , even in previously protected countries .They are exposed to the dame mass media messages as the rest of the EU. • Languages differences are overcome by limiting copy to voice over's , making it possible to quickly adapt a given commercial to broadcasting in a different language.
Competition • New rules meant that national subsidiaries had to be given stronger central direction to gain projected savings from eliminating unnecessarily costly national differences in product design, brand names and promotions. • Smaller European companies and even large firms the threat from these foreign entrants has been met by the creation of larger and stronger companies. • At the corporate level there seems to be one strategic response pssisble get bigger and go pan-European
Foreign Trade Agreements • The EU has taken over the role as the primary trade negotiation entity for tits members countries. • The EU undertakes trade negotiations and dispute resolution with other regional groupings, often under the World Trade Organization (WTO) umbrella. • The EU also takes the lead in conflict resolution with other trade regions . • The EU will continue to be an important player in the worlds trade negotiations.
Economic • Overall real economic growth was good • 1960s averaging 10% • 1970s averaging 5% • 1980s averaging 4% • 1990s averaging 1.7% (slowdown) • Growth slowed in 1990s due to- effects of overinvestment and an asset price bubble during late 80s that required an extended period of time for firms to reduce excess debt, capital, and labor. • GDP (purchasing power parity)- $4.22 trillion (2006 est.)
Economic cont. • GDP (official exchange rate)- $4.911 trillion (2006 est.) • GDP – per capita- $33,100 (2006 est.) • Industries- motor vehicles, electronic equipment, machine tools, steel and nonferrous metals, ships, chemicals, textiles, processed foods • Labor force – by occupation: • Agriculture: 4.6% • Industry: 27.8% • Services: 67.7% (2004) • Unemployment rate: 4.1% (2006 est.)
Political • Government type: constitutional monarchy with a parliamentary government • Executive, Legislative, Judicial branches • Chief of State: Emperor Akihito • Head of Government: Prime Minister Shinzo Abe • 2006 Corruption Perceptions Index score of 7.6 - Country rank: 17th (transparency.org)
Market Factors • Age Structure: • 0-14 years: 13.8% (male 9,024,344/ female 8,553,700) • 15-64 years: 65.2% (male 41,841,760/ female 41,253,968) • 65 years and over: 21% (male 11,312,492/ female 15,477,230) • Population growth rate: -0.088% • Birth rate: 8.1 births/ 1,000 population • Ethnic groups: Japanese 98.5%, Koreans 0.5%, Chinese 0.4%, other 0.7% • Literacy rate (age 15 and over can read and write) • Total population: 99%
Market Factors cont. • Geographic location- Eastern Asia, island chain between the North pacific Ocean and the Sea of Japan, east of the Korean Peninsula • Area comparative: slightly smaller than California • Climate: varies from tropical in south to cool temperature in north
Market Segmentation • Japanese consumers the most spoiled buyers in the world • Japanese becoming more similar to Westerners in leisure and shopping behavior • For each product segment 1. Upscale segments 2. Middle-of-the-roaders who buy tried and true 3. Those buying on price- looking for cheaper imports and private labels • Japanese open to discounted prices in addition to quality, service, and up-to-date technology
Product Positioning • Japanese are now learning to make trade-offs between the brand and the latest features and the price • “value conscious”- Japanese don’t necessarily demand the very latest (although exceptions in some product categories) • However, there is not compromise with quality when consumers trade off features and prices
Marketing Tactics • Product Policies- Western quality levels are a concern to Japanese consumers • Signs of poor product in packaging- variations in label position, blemishes in the wrapping, unappealing color combinations • Japanese’ attention to detail in all forms of shopping • Pricing- Price sensitivity has increased • Lower-priced imports in discount outlets, strong interbrand price competition • Lower prices do not always mean lower quality
Marketing Tactics cont. • Distribution- Japanese system features several layers of small, specialized units, each handling small quantities of products • In 1988 wholesale-to-retail ratio in Japan: 4 to 1; in US: 2 to 1 • Difficult for newcomers to break into a distribution channel because of the Japanese preference of establishing relationships with middlemen and dealing with same people • Japanese retailers have “an understanding” with domestic manufacturers not to stock competing products • American cigarettes • European beer • Western PCs • Creating a new distribution channel is expensive
Marketing Tactics cont. • Promotion- Japanese advertising unfocused and “nonsensical” • Advertising is an art form not sales tool- little need for advertising to provide information • Consumers spend more time contemplating purchases than people in the West • Mundane packaged goods- shift to “unique selling proposition” • Due to economic difficulties the buyer needs reasons for purchasing and focus on low prices • Need to offer smaller packages, fewer units, and faster restocking of supplies due to lack of storage
Foreign Trade Agreement • Reluctance to engage in trade agreements due to country’s relative isolation (geographically and culturally) • Tariff trade protection is dismantled • Combination of high incomes, high productivity workers, state-of-the-art technology, successful exporting • Eased control over foreign capital investments • Eager to attract foreign products • Diminished need for protection
Competition • Intrabrand price competition suppressed- meaning a particular brand and model will cost the same in all stores in Japan • THEN: Interbrand competition is strong- companies compete in terms of product innovation, quality, and service • Formation of quality circles and total quality management (TQM) • Consumers’ choices were based on design, brand image, and other “intangibles” • NOW: after economic slowdown in 1990s, discount stores and “category killers” entered in suburban locations • Deregulation, elimination of certain trade barriers allow foreign firms to enter • New emphasis on price and value by consumers
America Judicial branch:Supreme Court (nine justices; nominated by the president and confirmed with the advice and consent of the Senate; appointed to serve for life); United States Courts of Appeal; United States District Courts; State and County Courts Political parties and leaders:Democratic Party [Howard DEAN]; Green Party; Libertarian Party [William (Bill) REDPATH]; Republican Party [Robert M. (Mike) DUNCAN] Canada Constitution:made up of unwritten and written acts, customs, judicial decisions, and traditions; the written part of the constitution consists of the Constitution Act of 29 March 1867, which created a federation of four provinces, and the Constitution Act of 17 April 1982, which transferred formal control over the constitution from Britain to Canada, and added a Canadian Charter of Rights and Freedoms as well as procedures for constitutional amendments Legal system:based on English common law, except in Quebec, where civil law system based on French law prevails; accepts compulsory ICJ jurisdiction, with reservations Political System
GDP (purchasing power parity): $1.165 trillion (2006 est.) GDP (official exchange rate): $1.089 trillion (2006 est.) GDP - real growth rate: 2.8% (2006 est.) GDP - per capita (PPP): $35,200 (2006 est.) GDP - composition by sector: agriculture: 2.3% industry: 29.2% services: 68.5% (2006 est.) Canada
GDP (purchasing power parity):$12.98 trillion (2006 est.) GDP (official exchange rate):$13.22 trillion (2006 est.) GDP - real growth rate:3.4% (2006 est.) GDP - per capita (PPP):$43,500 (2006 est.) America
Market Segmentation/ Factors • Population • 287/32 Million, USA/Canada • High income per capita • Heterogeneous • Many diverse products • Open market • One of the most competitive
Market Segmentation/ Factors cont… • Ethnic Diversity • Religion • Decentralized • Regulations
Market Segmentation/ Factors cont… • Ethnic Diversity • Melting pot that has differences • 1,063,732 immigrants in 2002 • Americans helpful and • Assimilation • Learn vs. Teach roles
Market Segmentation/ Factors cont… • Religion • Separated by law • Federal, State, Township, or Country • Can not restrict on individual freedom or freedoms of enterprise using religion as rationale • Blue Laws • Difference in views of religion
Market Segmentation/ Factors cont… • Decentralization • Non-big firms • Can be found all over • Many in small towns • Non-centralization • People don’t take their cues from focal points • Blissfully ignorant about New Yorkers and Las Angelinos • May be good test market, compared to Tokyo
Market Segmentation/ Factors cont… • Regulations • Regulatory differences • Differences between central and regional governments • Problems • Product adaptation, after sales services, packaging, and warehousing • Stiff regulations protecting consumers • Advertising and “puffery”
Foreign Trade Agreements • NAFTA • America, Canada, and Mexico • Canada and the U.S. already had some strong ties • Seagrams, Cars, etc.
Competition • One of the most competitive markets in the world • Has many multi-national companies • Relatively low barriers to entry • Marketing complexity to diverse market • Simple messages can be misinterpreted or misunderstood • Plenty of marketing needed for successful entrance into N.A. markets