Introduction
According to Yucel et al. (2009), global marketing refers to the international marketing activities of a firm in order to sell its brands in foreign countries (p.95). Nonetheless, in spite of the escalating interest in global marketing, there is insufficient information regarding the optimal global marketing strategy and whether it influences the global market performance of multinational firms (Zou & Cavusgil, 2002, p.40).
Several studies have shown that the central principle of global marketing is that a company’s international marketing strategy has a positive outcome on its global market performance (Craig & Douglas, 2000, p. 8; Yip, 1995; Zou & Cavusgil, 1996). The aim of this report is to evaluate appropriate global marketing strategies that can be adopted by firms undertaking operations in a South East Asian market.
Literature Review
Many researchers concur that global marketing strategy (GMS) plays a vital role with respect to global market performance of a firm (Zou & Cavusgil, 2002, p. 41; Yip, 1995; Craig & Douglas, 2000, p. 8). Currently, there are three key approaches regarding global marketing strategy (see table below).
The standardization approach is considered the most influential perspective (Zou & Cavusgil, 2002, p. 41). According to Keegan (2000), a firm that pursues this approach in its GMS strives to achieve standardized marketing programs while undertaking operations in foreign markets. Protagonists of standardization approach argue that advancement in transport and communication technologies have enhanced normalization of global markets.
Given that consumers in remote parts of the globe tend to demand same products, the ability of a firm to produce high-quality products at affordable price has become a major competitive advantage in the global market. Therefore, standardization approach entails consistency in handling tastes and preferences of consumers (Laroche et al., 2001, p.249), economies of scale in production and marketing (Levitt, 1983, p.92), as well as ability of a firm to adopt noble ideas on an international scale (Ohmae, 1989, p.152).
A second critical aspect of the global marketing strategy lends credence on coordinating and configuring value chain operations of a firm (Craig & Douglas, 2000, p.6). Proponents of this perspective argue that firms adopt GMS in order to take advantage of the existing synergies in foreign markets, including the comparative advantages present in such markets.
In order to achieve a competitive edge in international market, a firm must coordinate its operations in different markets as well as configure its value chain operations efficiently. When a firm configures its activities properly, it is able to benefit from comparative advantages (existing in different foreign markets) via specialization (Zou & Cavusgil, 2002, p. 41).
On the other hand, cross-national coordination enables a firm to exploit synergies obtained from learning, scope and economies of scale. The degree of concentration is also a critical component of configuration. Since comparative advantages in all countries are dissimilar, a firm can optimize efficiency by concentrating its value-chain operations in selected countries where they can be performed in a productive manner.
For instance, labor-intensive activities can be performed in countries where labor is abundant and affordable (i.e. Vietnam). On the other hand, engineering and product development operations can be done in countries with first-class engineering skills, such as Japan and China (Samiee et al., 2004, p.249; Walters & Samiee, 2003, p.97).
The integration approach constitutes the third perspective of global marketing strategy. This approach lends credence on the manner in which firms organize and execute their competitive battles across global markets.
Proponents of the integration approach assert that a firm can attain success in global marketing by partaking in all key international markets to acquire competitive edge as well as proficient integration of its competitive operations across foreign markets (Birkinshaw et al., 1995, p.637). In essence, this approach lends credence on the ability of a firm to integrate its competitive edge across key markets in the world Walters & Samiee, 2003, p.97).
Global Marketing in Turbulent Environments
In order to market a brand effectively in a turbulent environment, a firm must adopt a unique strategy different from that recommended by conventional marketing theories. For instance, the product life-cycle approach can be deceptive if environmental aspects are not addressed simultaneously, and marketing competition lends emphasis on the competitive environment while ignoring other crucial variables.
In essence, traditional marketing approaches cannot produce strong, workable and competitive advantages for a firm undertaking marketing activities in foreign countries (Mason, 2006, p.241). Kumar et al. (2000) asserts that conventional marketing mix models are extremely one-dimensional to understand intricate marketing environments since “such models assume linear relationship between mix variables and their outcomes” (p.129).
When faced with turbulent environments, a firm must discern an opportunity swiftly, create novel brands, and minimize the time taken to market them. Given that marketing decisions, in turbulent environments, must be adopted without adequate information, planning should focus on “how to do it” and maintain the “what to do” alternatives in the event they are needed (Nilson, 1995, p.70).
Thus, as turbulence and complexity in the environment surge, a firm must employ its limited resources on those major operations that will generate desirable returns. For example, a firm can employ stabilizing and destabilizing approaches when faced with turbulent environments in foreign markets (Nilson, 1995).
A number of global marketing operations stabilize by inspiring the system to function within boundaries, whereas other operations destabilize by creating unexpected costs. D’Aveni (1999) reported that a stabilizing strategy generated superior returns in a steady environment, but discovered some disparity between superior and inferior performers (p.127). Nonetheless, when turbulence in global market increases, firms that employ a stabilizing approach perform poorly.
This means that destabilizing approach, employed in turbulent environments, should bring about better returns compared to when stabilizing approaches are employed in such markets. Thus, continuous innovation will free a firm from archaic technology and enable it maintain its competitive edge in global marketing (Mohr, 2001; Chao et al., 2003, p.480).
Global Marketing in South East Asian Region
A substantial number of South East Asian countries have, in the last two decades, embraced novel economic policies that have reinforced their prominence in the global market (Chao et al., 2003, p.480; Mohr, 2001). Nonetheless, the key challenge encountered by global marketers who aspire to venture in South East Asian region is the extremely diverse levels of IT penetration and economic growth.
In many circumstances, it is not unusual for a number of western firms to culturally group South East Asian countries together and to further make assumption that market information in these countries is readily available (Chao et al., 2003, p.489). Walter and Samiee (2003) state that firms wishing to venture in South East Asia Markets should know that environments within these markets differ substantially from one country to another (p.97).
For example, a number of markets in South East Asia (i.e. Japan) are highly advanced while others (i.e. China) are developing rapidly. On the other hand, other countries in the region (i.e. Cambodia and Vietnam) grapple with considerable infrastructure and economic development issues. Therefore, the varied environment of these markets requires a close market-based consideration, which implies that South East Asian markets cannot be nurtured and explored with a single regional marketing strategy (Chao et al., 2003, p.489).
Recommendations
Developing Reputable Brands
Consequently, firms that aspire to undertake operations in South East Asian markets must grapple with the challenge of developing reputable global brands. In the event that these brands are nonexistent, the extent of their participation in the region would be confined to marginal exporters or competing as contract producers.
Given the current conditions, prospects for growth opportunities and development within South East Asian markets are extremely high. For example, investments in information technology (i.e. hardware, software, access) in the region have the potential to speed up development of multinational firms and their respective brands in Asian market. This is a crucial factor that foreign firms can exploit fully in their global marketing activities in the region.
In addition, some South East Asian firms are extremely efficient in the management of production facilities and have gained immense knowledge on how to manufacture first-class products. Consequently, this capability is evidently a crucial one that must be adopted by foreign firms wishing to undertake operations in South East Asian markets in order to develop effective brands that can be distinguished from those offered by local firms (Chao et al., 2003, p.490).
Developing Relationships and Networks
Business relationships and networks are key pillars used in South East Asian markets to undertake business operations and complete transitions. It is worth mentioning that personal and business relationships and networks are highly valued in South East Asian region. Consequently, Asian firms have a competitive edge over foreign multinational since they have adopted some relationships and networks in their operations successfully.
For instance, home-grown brands (i.e. Legend Computers in China) possess a considerable competitive edge over multinational corporations since they have the capability to swiftly adjust to local culture, tastes and preferences of consumers. Although the multinational corporations have developed techno-savvy marketing drives to promote their brands in densely-populated Asian cities, local brands have established unrivalled networks that reach rural areas, where mass media is somewhat ineffective (Chao et al., 2003, p.488).
Thus, the ability to develop relationships and networks with consumers will play a crucial role for foreign firms wishing to undertake operations in South East Asian markets and compete effectively with local firms (Chao et al., 2003, p.488).
In addition, Since South East Asian markets are large and growing rapidly, it is thus vital for foreign firm, wishing to venture in the region, to establish close ties with consumers in the market. In other words, foreign firms must build relationships, satisfy the requirements of consumers and establish regional offices to gather market information (Ho, 1998, p.184).
Establishing Regional Offices
The establishment of regional offices across South East Asian economies can enhance the competitiveness of foreign firms wishing to venture in these markets. There are two important roles that a regional office can play. First, since South East Asian region is made up of several emerging markets, the regional office can be used to coordinate marketing activities as well as develop these markets. This is commonly referred to as the “beachhead” (Bosman & Smidt, 1993, p.973) or “scouting” (Lasserre, 1996, p.31).
For example, Dow Jones Telerate has a regional office to develop emerging markets in South East Asian region. Likewise, the Matsushita regional headquarters manages the sales and marketing operations for Myanmar and Vietnam, where it has not established offices or production plants. Nonetheless, when the market in a given zone has grown to a satisfactory degree, a local office must be established to supervise its expansion (Ho, 1998, p.184).
Secondly, regional office can be used for assembling a regional package for multinational customers. Daniels (1987) explains the rationale for this:
Frequently, a supplier sells to subsidiaries of the same multinational firm in more than one country. By combining efforts, the supplier may be able to deal with regional or global decision makers, rather than those within each country, and determine what types of concessions will be needed to gain region-wide sales. Such regional control also helps assure that one group does not make concessions, such as price decreases or product modifications, which are inconsistent with other corporate entities within the area (p.33).
Daniels’ argument is supported by two examples from dissimilar industries. Dell has a regional office in Penang, which sells customized computer systems to its clients. Under this circumstance, Dell’s regional office is in a unique position to seize corporate connections. Consequently, Dell’s regional office can provide a global or regional package to MNC.
This includes a single economical price for computer machines to numerous countries, payable by one or several countries. These machines offer customized content (i.e. diverse modems, diverse language keyboards), including diverse configurations.
In addition, the customized machines have original components (compared to local machines which have a basic model) as well as proprietary needs of the clients (i.e. company symbols). The potential for marketing and sales of this nature can bolster operations of the regional office as well as reinforce its prominence within an international and regional network (Ho, 1998, p.185).
Conclusion
As noted earlier, global marketing refers to international process adopted by a multinational firm with the aim of selling its brands in foreign markets (Zou & Cavusgil, 2002, p.40). The aim of this report was to evaluate appropriate global marketing strategies that can be adopted by firms undertaking operations in a South East Asian market.
This report has demonstrated that a firm cannot employ a single global marketing strategy for South East Asia since the region is characterized by irregular technological advancement and economic development (Chao et al., 2003, p.489). Some countries (i.e. Japan) are more developed compared to others (i.e. Cambodia and Vietnam). Consequently, this report has made several suggestions that can be adopted by multinational firms wishing to undertake marketing operations in South East Asia region.
These include: developing reputable global brands that can be distinguished from local brands (Chao et al., 2003, p.490); developing business relationships and networks to address local culture, tastes and preferences of consumers (Chao et al., 2003, p.488); and establishing regional offices to coordinate and expand marketing activities in the region (Ho, 1998, p.184).
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