Chapter

2. 8 Chapter Local Marketing in Mature Markets

3. Three Local Marketing Environments • Marketing Environment • Emerging markets • Characterized by low levels of product penetration, weakly established marketing infrastructure, relatively unsophisticated consumers with weak purchasing power, and weak domestic competitors • New growth markets in NIEs • Show greater purchasing power and more demanding consumers than emerging markets. Possess a rapidly developing marketing infrastructure • Mature markets • Show slow growth apart from some high-technology markets. The customers in these mature markets are pampered by strong domestic and global companies who compete intensely for customer satisfaction

4. Three Local Marketing Environments • Marketing Tasks • Marketing infrastructure • Involves enlarging market research through improved logistics and establishing functioning distribution points • In new growth markets, the typical strategic aim of the local marketer is generic market development efforts involving promotional efforts to get more customers into the market and generate economies of scale for an existing product line • In mature markets, the strategic focus for the local marketer is typically on gaining market share. This is when fine-tuning of the marketing effort is necessary

5. Local Marketing in Mature Markets • Market Segmentation • In mature markets customers are increasingly particular with well-developed preferences • The fragmentation of mature markets presents an opportunity that there will often be a part of the market that has yet to find the kind of product desired • Product Positioning • The creation of a particular place in the prospect’s mind for the product or service • In mature markets, successful products have to provide “something special”

6. Local Marketing in Mature Markets • Marketing Tactics • Product Policies • Many Third World countries tend toward selling a low-cost “me-too” product in a mature market • A “me-too” product is basically a copy of another product, often with simpler features and at a lower price • The global marketer introducing a new kind of product to a local market has the advantage of little or no competition • Pricing • In mature markets it is common to think of pricing in terms of selecting a target position and then using temporary deals and offers to attract customers in the short term

7. Local Marketing in Mature Markets • Marketing Tactics • Distribution • In mature markets, the distribution system is usually well developed • One distribution strategy is “piggybacking” • An existing network controlled by another company, often a potential competitor, in which the product is distributed through contracting with the competitor to move products on a fee or commission basis • Promotion • In many mature markets where market share is the criterion of success s • Sales promotions are used to break the habitual choice of the loyal customer

8. Local Marketing in Mature Markets • Competition • In many mature markets • Intense competition has produced a management focus on customer satisfaction • There exists a need to make sure that existing customers will stay loyal • Two factors make customers satisfied in mature markets • Product quality including functional performance factors • Emotional factors or a matter of pleasing the customer

9. Close-Up: Pan-European Marketing • Background • The decision in 1986 to establish a single European market within the EU by 1992 • Led to a completely changed strategic environment for most businesses • Although not all the national differences in regulations were eliminated by the 1992 deadline, the EU has moved steadily closer to a fully integrated marketplace • Europe is steadily becoming a very large single market approaching 400 million consumers with a single currency, the “euro,” in place in the beginning of 1999

10. Close-Up: Pan-European Marketing • Competition • The integration forced large European corporations to start coordinating previously independent national operations • Many large non-European companies were unburdened by old and outdated affiliations and practices • For smaller European companies and even the many large firms, the threat from these foreign entrants has been met by the creations of larger and stronger companies • At the corporate level, there seems to be only one strategic response possible for European firms • Get bigger and go pan-European

11. Close-Up: Pan-European Marketing • Market Segmentation • As companies developed capabilities for a pan-European strategy, the businesses’ segmentation and positioning plans followed predictably • Product Positioning • There are very few products today that can maintain different images in different countries of Europe • In pan-European marketing, product positioning is the same across countries • The alternative to a pan-European approach is to seek out a niche

12. Close-Up: Pan-European Marketing • Marketing Tactics • Product Policies • The marketing mixes of the European marketers have moved toward uniformity as the pan-European strategies are implemented • Most packaged goods in Europe feature packaging in at least four languages • English, French, German, and Spanish • Pricing • Pan-European pricing is a particularly 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 a neighboring country

13. Close-Up: Pan-European Marketing • Marketing Tactics • Distribution • Retail and wholesale distribution is gradually being transformed from locally based smaller units to large integrated organizations resembling those common in North America • Promotion • There is increasing use of pan-European TV advertising, taking advantage of the satellites beamed across previously closed borders • The Future • The drive toward the single market is well under way and will only be reinforced by the arrival of the common euro currency and the success of the companies with pan-European strategies

14. Close-Up: Marketing in Japan • Background • The Japanese economy exploded in the 1950s during the Korean War as the U.S. invested millions of dollars into its industry • The recurring recessions in the decade of the 1990s • Have been very difficult on the Japanese psyche • Without a strong social welfare system and with an aging population individuals and households soon decided to start saving instead of spending • The Japanese marketplace at the start of the new millennium is in a holding pattern

15. Close-Up: Marketing in Japan • Foreign Trade Agreements • Japan has a long history of deliberate isolation from the rest of the world which has made it reluctant to engage in trade agreements • Marketing in Japan is not easy as the distribution system is complex and costly, and the consumer is very demanding • Competition • The intense competition between domestic competitors in Japan spawned the development of quality circles and “total quality management” techniques by leading Japanese companies • Deregulation has allowed discount stores and “category killers” to enter in suburban locations

16. Close-Up: Marketing in Japan • Market Segmentation • The Japanese are becoming more similar to Westerners in their leisure and shopping behavior • For each product category, there are upscale segments, middle-of-the-roaders who buy the tried and true, and those buying on price • The Japanese market segments have become more similar to other mature markets while Japanese customers once were demanding in terms of quality, service, and up-to-date technology and design • They are now also open to discounted prices

17. Close-Up: Marketing in Japan • Product Positioning • Less secure financially • Japanese consumers take time to evaluate products and compare prices rather than focusing on brand and all the latest features • Many consumers are learning to make trade-offs between what they really need to have and what the price is • Marketing Tactics • Product Policies • The basic demand in Japan has been for quality and luxury products • However, as income decline and as foreign products are entering often at lower price points

18. Close-Up: Marketing in Japan • Marketing Tactics • Pricing • Price sensitivity on the part of the Japanese consumer • Has increased considerably in the last few years • The Japanese consumer today benefits from strong interbrand price competition • Distribution • The traditionally fragmented nature of the Japanese distribution system has frequently been noted by foreign companies • For a newcomer to break into an established relationship is not easy

19. Close-Up: Marketing in Japan • Marketing Tactics • Promotion • The Japanese penchant for polite indirectness has made their advertising singularly unfocused and “nonsensical” • For mundane packaged goods, the adverting has shifted to more of an American style “unique selling proposition” approach • The lack of store space affects promotional efforts directly • There is need to offer smaller packages, fewer units, and faster restocking of supplies

20. Close-Up: Marketing in Australia and New Zealand • Australia • A vast country more than twice the size of India with 18 million inhabitants and an economic base in raw materials • New Zealand • Has only 4 million people with a domestic economy can be divided into four industries • Paper, dairy products, meat products, and fruits • Regional Trade Agreements • Australia and New Zealand • Are members of the APEC (Asia-Pacific Economic Cooperation) and participate in the ARF (ASEAN Regional Forum) • For most marketers, the two countries can be approached as one regional market

21. Close-Up: Marketing in Australia and New Zealand • Competition • The relatively limited size and the geographical distance to this region makes some companies reluctant to enter the market • Those competitors that do enter the market often produce on location to offset costs and to bypass tariffs and other trade barriers • Market Segmentation • The Australia-New Zealand region • Offers typical consumer markets where careful targeting and segmentation become important • Natural segmentation criteria involve cultural roots, urban versus rural, and demographics

22. Close-Up: Marketing in Australia and New Zealand • Product Positioning • Despite the relatively recent protectionist history in the region, global products and brand are appreciated in these markets • Marketing Tactics • Product Policies • Most global products and services need only slight adaptation to appeal to customers in these markets • Because of its terrain, the region offers conditions for product testing

23. Close-Up: Marketing in Australia and New Zealand • Marketing Tactics • Pricing • Prices in the Australian and New Zealand markets are relatively high • Distribution • In the metropolitan areas of the two countries, the distribution system is modern and up-to-date • Promotion • Global communications make it feasible to reach these markets with globally integrated promotional messages

24. Close-Up: Marketing in North America • Regional Trade Agreements • The 1994 NAFTA agreement has created increased exchange between Canada, the U.S., and Mexico • Background • Ethnic Diversity • A fundamental cultural factor is the region’s ethnic diversity • Religion • In North America, church and state are separated by law • Decentralization • In North American, firms are spread all over the world and even into small towns

25. Close-Up: Marketing in North America • Background • Regulations • The prevalence of many regulatory differences between central and regional governments is particularly difficult for foreign companies entering the North American market to address • Competition • The U.S. is one of the most competitive markets in the world • Although there are many reasons for companies failing to do business in the North American market, the underlying factor is often the marketing complexity fostered by the cultural diversity in North America

26. Close-Up: Marketing in North America • Market Segmentation • For segmentation purposes cultural identity can serve as a useful criterion • Product Positioning • When positioning in the U.S., premium is placed on direct and straightforward explanations • The Canadian approach treats differences in cultural norms with more sensitivity and more soft sell

27. Close-Up: Marketing in North America • Marketing Tactics • Product Policies • Market size, affluence, and diversity have meant that the North American market offers a dizzying array of choices of product and services • Pricing • The attractiveness of the North American market has made it a very competitive arena for many domestic and foreign producers • Distribution • The great size of the North American continent and the wide spread of its people seems to be the main cause for a very efficient distribution system in the U.S. • Promotion • North American communications media are similar to media elsewhere, but the use of advertising and commercials is greater in North America