Marketing the Nation

1. Marketing the Nation • Philip Kotler, Ph.D. • Kellogg School of Management • Northwestern University • CEO Forum • Bangkok, Thailand • October 18, 2001

2. Strategy Development • Situation Analysis • SWOT • Objectives • Strategies • Implementation

3. Situation Analysis: Past Policies • Thailand’s annual growth was 8% between 1991 and July 1997 when the currency collapsed. • 1960s: Import substitution • 1970s: Export promotion • 1980s: Foreign direct investment • 1990s: Trade liberalization • 2000s: ???

4. Situation Analysis: Strategy Dilemma • Past growth was based on factor input growth, not productivity (Paul Krugman) • Problem with factor-driven growth: China and IndoChina will be cheaper. • The nutcracker dilemma: Thailand is caught in the middle between low cost-based competitors (China) and high value based competitors (Italy, Japan). • Low cost based country: stagnation, unemployment, shortage of hard currency, second class economic power. • High value adding country: develops sophisticated industries with differentiation and niche potential.

5. Situation Analysis: Thailand’s Strengths • Good natural resources • Low labor costs • Large internal market • Democratic government, politically stable, safe haven (Switzerland) • Good access for reaching other markets in Southeast Asia, China and India

6. Situation Analysis: Thailand’s Weaknesses • Bad bank loans • Credit crunch • Bankruptcies • Weak capital inflow • Unemployment

7. Objectives • First, get out of the crisis. • Second, improve international competitiveness.

8. Objective One: Escaping from the Crisis • Fighting Unemployment • Many Thais may come back to Thailand from the Middle East • Many unemployed Thais will go to villages • Undergraduates should stay in school one extra year to pick up more skills • Unemployed MBAs introduced to program for entrepreneurs • Slow down company downsizing through consulting and subsidies. • Start large scale government work projects • Get banks on a sound footing. Thailand Assets Management Corporation. • Companies need to revise their product mix, segment mix, customer mix, and marketing mix.

9. Objective Two: Improving International Competitiveness • Thailand needs to improve productivity, innovation, and marketing. • Examples of specific objectives: • Among top five trading countries in Asia, • Occupy eight niches in world markets. • Achieve three global brands. • In top ten more favored countries to invest in. • In top ten tourist destinations. • In top ten with high quality of life. • In top ten with social and political stability.

10. Strategies • Choose the industries to develop. • Improve the financial system. • Facilitate entrepreneurship. • Support small and medium scale enterprises. • Help villages and cities develop place marketing. • Consider import substitution.

11. Strategies: Industries to Develop • Tourism • Green tourism, quality tourism, Japanese weddings, Second Phuket, Long stays for retired people, “Be My Guest” program • Promote Thai food restaurants around the world. • Promote entertainment industry in Thailand. • Build auto industry; make Thailand, “Detroit of the East.” • Build natural foods industry. • Apply biotechnology to agriculture. • Some industries have to be extended (Thai foods); some strengthened (tourism, entertainment); and some started (Biotech) • Two types of companies: • Physical based companies (speed, quality, delivery) • Knowledge based companies (design, differentiation, branding, high value add)

12. Strategies: Encourage Entrepreneurship • Ministry of Entrepreneur Development. One stop service and lending and training. • Micro-lending • Drucker’s suggestion

13. Strategies: Support Small and Medium Scale Enterprises • SMEs that feed into LSEs. • SMEs that feed into international markets. • SMEs that feed into local markets.

14. Strategies: Build Places • Places need to develop place marketing plans. • One product, one village: already 4,000 products. Marketing needed. • A few products will end up in international market (Thailand Plaza); some in regional market; many in domestic market; most in local market.

15. Strategies: Import Substitution • Machinery (raise tariff) • Grow flowers and fruit here that were imported • Grow quality beef

16. Implementation • Role of government • Office of Opportunity Development

17. Implementation: Government’s Role • Government should be the driver. Guided capitalism. • Build infrastructure. • Improve credit availability. • Build public service information. • Deregulate, privatize, where appropriate. • Lower tariffs on luxury products. • Reduce bureaucracy

18. Implementation: Opportunity Development • September 11 creates new opportunities for Thailand. Every sector must develop a list of opportunities. • Needed: Opportunity Development Salesforce • Don’t wait for industry and investors to come here. Go and market to them.

19. Conclusion • Thailand is better situated that neighboring countries that went hi-tech. • Thailand must position itself as a safe neutral haven in a troubled world. • Government must apply business and marketing thinking to support recovery and competitiveness. • Thailand must extend and strengthen present industries and build new ones that have high value-added, knowledge-added content. • Thailand needs to apply marketing skills in order to turn ideas into results.