Local Marketing in Mature Markets

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Local Marketing in Mature Markets
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Segmentation and Positioning (MSPP)
MATURE MARKETS
MARKET SEGMENTATION
PRODUCT POSITIONING

• Segmentation is vital, customers are extremely
  particular with well developed preferences
• Small differences in products services make a
  big difference to the consumer
• Narrow niche segments continually increase
• Foreign entrant must be skilled in finding the
  proper niche

• Brand image, name, are very important indicators
  of quality reliability
• Country of origin effect may have
  positive/negative implications on customer
  perceptions
• Foreign entrants from third world countries may
  try to introduce low-end products to undercut
  other brands such a strategy will only work in
  the short term

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The 4Ps in Mature Markets
PRODUCT
PRICING

• Target positions may be high end or low end, with
  temporary deals offers to steal share attract
  consumers
• Fierce competition makes discounts and other
  pricing scheme necessary
• Perceived status of the brand will always affect
  buyer behavior

• 3rd world countries tend to sell low-cost me
  too products success depends on price
  sensitivity of the local market
• Introducing a new product has little or no
  competition first mover advantage
• Brand name always matters

DISTRIBUTION
PROMOTION

• Well developed
• Hardly any problems in terms of infrastructure
• Channels are crowded hard to get into (e.g.
  slotting fees)

• Market share is the criterion of success
• All types of promotion tools are used to break
  habitual choices of loyal consumers

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Customer Satisfaction (CS)
MATURE MARKETS

• Intense competition has produced a management
  focus on customer satisfaction
• Focusing on satisfaction ensures a steady loyal
  customer base
• Quality must be instilled in each level (product
  quality, functional performance, delivery,
  warranty, after sales service) in order to
  prevent post-purchase cognitive dissonance
• Real satisfaction comes from emotional factors
  such as personal attention, courtesy, value-added
  services or features, exceeding expectations

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Local Marketing in New Growth Markets
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Two Kinds of New Growth Markets

• Those rich in NATURAL RAW MATERIALS but where
  most people have suffered under authoritarian
  political regimes colonial domination (e.g.
  Latin American countries, South Africa)
• Those rich in LOW COST LABOR have turned to
  Western-style capitalism recently, with the help
  of FOREIGN DIRECT INVESTMENT (e.g. Asian
  countries, Israel)

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Marketing in New Growth Countries
2 REASONS WHY MEMBERSHIP IN TRADE BLOCS IS
IMPORTANT

• Membership in trade blocs makes the country more
  attractive to foreign investors
• (e.g. Malaysia Thailand through ASEAN)
• Trade blocs enlarge market potential for members
• (e.g. Argentina Brazil through MERCOSUR)

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New Growth Markets MSPP
PRODUCT POSITIONING
MARKET SEGMENTATION

• Core middle class emerges
• Well known brand names are favored
• Foreign capital and technology fuels economic
  growth, hence foreign brands are considered the
  real thing
• Neo-colonialism emerges as consumers shun
  domestic products

• New growth markets are in the growth phase of the
  product life cycle
• Certain markets may be mature but there is a lot
  of room for new variants international
  offerings
• As incomes rise people demand variety
  experiences offered by more mature markets

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The Importance of a Middle Class
MASS MARKET FOCUS
Strong core middle class
One-to-one marketing
Few strong segments
NICHE MARKET FOCUS
EMERGING MARKETS
NEW GROWTH MARKETS
MATURE MARKETS
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New Growth Markets The 4Ps
PRODUCT
PRICING

• Basic localization to ensure that the product
  functions well
• Being positioned as a foreign brand attracts
  certain segments
• Brand name must be strongly supported.

• Status positioned products must be high-priced
• Price must not be too limiting, despite increase
  purchasing power of consumers
• Pricing must foster brand loyalty

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New Growth Markets The 4Ps (contd)
DISTRIBUTION
PROMOTION

• Firms must think long-term, setting up service
  centers and more outlets
• Expansions are suggested in order to counter
  competitive threats
• Cash flow is sacrificed in the short-term,
  awaiting long-term gains

• Products must communicate their future potential
  benefits
• Strong brand images must be created
• Good relations with local sales/staff should
  foster brand equity

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Local Marketing in Emerging Markets
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Marketing in Emerging Markets
ESSENTIALLY, EMERGING MARKETS DO NOT USUALLY
HAVE AN EFFECTIVE MARKETING INFRASTRUCTURE. IN
THE OLD SYSTEM, ESPECIALLY IN NEWLY DEMOCRATIZED
COUNTRIES, THERE WAS MUCH MORE VALUE PLACED ON
PRODUCTION AND ON INDUSTRIAL PRODUCTS TO THE
NEGLECT OF CONSUMER PRODUCTS AND EFFECTIVE
DISTRIBUTION SYSTEMS. THESE DIFFICIENCIES MAKE
IT DIFFICULT TO BE A LOCAL MARKETER IN AN NDC.
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Marketing Infrastructure
THE LOCAL MARKETER MUST DETERMINE WHAT FUNCTIONS
CAN BE PERFORMED BY EXISTING CHANNELS OF
DISTRIBUTION AND, IF NEED BE, CREATE NEW
ONES. THE LOCAL MARKETER HAS TO ADAPT HIS
PRODUCT TO LOCAL STANDARDS, EX. BATTERY OPERATED
APPLIANCES. SOMETIMES, THE FIRMS VALUE CHAIN
HAS TO BE RECONFIGURED. FOR EXAMPLE, IF THE
REQUIRED KNOW-HOW IS NOT AVAILABLE, THE MARKETER
MUST CREATE A SERVICE NETWORK AND TRAIN THE
SERVICE STAFF.
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Professor Marketer

• IN EMERGING MARKETS, THE ENTERING LOCAL MARKETER
  NEEDS TO BE A TEACHER AS WELL AS A BUSINESS
  PERSON. A LOCAL MARKETER NEEDS TO
• 1. DEVELOP TRAINING PROGRAMS FOR STORE PERSONNEL,
  FOCUSING ON CUSTOMER SERVICE.
• 2. PREPARE MANUALS AND PAMPHLETS DESCRIBING
  PRODUCTS AND SERVICES AND HELP MIDDLEMEN DEVELOP
  FACILITIES, INVENTORY, SHIPMENT, SHELVING
  PROCEDURES FOR THE PRODUCT.

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Professor Marketer

• 3. HELP MIDDLEMEN DEVELOP A TRACKING AND COST
  ACCOUNTING SYSTEM.
• 4. MAKE SURE THAT PRODUCT LOCALIZATION IN TERMS
  OF DESIGN AND PACKAGING ALSO TAKES INTO ACCOUNT
  THE NEEDS OF THE MIDDLEMEN.
• 5. DISTRIBUTE INSTRUCTIONAL VIDEOS AND OTHER
  EDUCATIONAL MATERIAL TO MEMBERS OF THE
  DISTRIBUTION CHANNEL, EXPLAINING THE IMPORTANCE
  OF CUSTOMERS IN THE FREE MARKET SYSTEM AND
  IMPORTANCE OF MARKETING.

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Consumers in Emerging Markets
Buyer Decision Problems in Emerging Markets

• 1. LACK OF CASH AND HARD CURRENCY
• 2. USED TO FEW ALTERNATIVES
• 3. LACK OF KNOWLEDGE
• 4. STEREOTYPICAL EVALUATION
• 5. KNOW MAINLY WHAT THEY DONT WANT
• 6. SUSPICION OF THE TRADE
• 7. DOUBTS ABOUT ADVERTISING CLAIMS
• 8. UNACCUSTOMED TO FREE CHOICE AND HANDLING
  COGNITIVE DISSONANCE

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Two Kinds of Emerging Markets
NEWLY DEMOCRATIZED COUNTRIES VS. DEVELOPING
MARKETS (B2-4B)
DEVELOPING COUNTRIES
NDC MARKETS
Russia the newly democratized post-communist
nations, China
Poor nations of Africa (Nigeria, Zambia,
Tanzania), Asia (Pakistan, India, Vietnam),
Central America (Nicaragua, Guatemala).
Both are defined primarily by low per capita
income levels severe lack of marketing
infrastructure
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Why NDC Markets Are Different
3 SPECIAL FEATURES OF NEWLY DEMOCRATIZED COUNTRIES

• BASIC NEEDS WERE SATISFIED ESSENTIALLY, NO ONE
  WAS GOING WITHOUT FOOD, SHELTER, CLOTHING AND
  OTHER BASIC ITEMS.
• EDUCATION AND SOCIAL CONTROL A GOOD, SOLID BASIC
  EDUCATION WAS PROVIDED, ALONG WITH SOCIAL CONTROL
  AND A SECURE LIFE.
• NO FREE MARKET THERE IS A LACK OF UNDERSTANDING
  OF THE CONCEPT OF A FREE MARKET ECONOMY.

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Marketing in Developing Countries MSPP
MARKET SEGMENTATION

• Income level represents the basic segmentation
  criterion
• Market for upper-end status products often
  lucrative due to uneven income distribution
• Effective income measure is defined in terms of
  access to foreign or convertible currency
• Most promising market is the urban population of
  big cities

PRODUCT POSITIONING

• Customer needs are basic
• Domestic alternatives are weak
• Upscale positioning can play an important role

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Marketing in Developing Countries The 4Ps
PRODUCT
PRICING

• Policies are dominated by the balance between
  affordability upper end positioning
• Pricing fluctuates between a skimming price and
  a lower penetration price
• Innovative financing communal buyers, smaller
  packaging thats less expensive, store credit

• Initial offerings are usually standardized
  simpler selections from existing lines
• Limited features make it possible to sell
  through low-service outlets
• Smaller sizes/smaller packaging

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Marketing in Developing Countries The 4Ps
(contd)
DISTRIBUTION
PROMOTION

• Most critical issue
• Cheap domestic labor offers alternative routes
  for distribution
• Personal service is a convenience good
• Weak logistics systems make it difficult for
  marketing organization control.

• Initially limited due to lack of broadcast media
• Although limited, this means there will be less
  clutter
• Literacy levels differ from more developed
  nations, promotions must be more visual versus
  verbal