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9. Marketing Theory in Global Business Context

9.1 Global Strategy and Marketing in Emerging Countries

Advancements in emerging countries present new market opportunities for Japanese corporations; however, to do so, they must confront the threats posed by local companies playing catch up by moving from a “build it and it will sell” product model to a customer value model that maximizes the value to the customer. To overcome this dilemma, companies must understand markets in these emerging countries (i.e., customer needs) at productand service-planning levels, accordingly design products and services that maximize value to the target customers, and create channels to get these products and services to the consumers. These activities comprise marketing activities.

Compared with their counterparts in the West, Japanese companies have little understanding of marketing activities. Japanese companies heavily emphasize sales. In Europe and the US, marketing and sales denote different functions, but in Japan, they are often mixed. The Japanese word for sales, eigyou, refers to activities that increase the revenue from existing products, for example, a sales representative visiting customers in an effort to book orders. Marketing, on the other hand, is based on a principle that encompasses a strategic philosophy that determines the types of customers—including new customers—a company should target, and the types of products that should be developed to increase customer satisfaction. With the “build it and it will sell” concept, marketing is not essential, and sales activities alone are sufficient. However, a customer value model that designs products and services that maximize customer value requires a company to grasp the needs of its customers and prioritize marketing activities.

Marketing activities can be divided into two main steps. The first is a strategic step of segmentation of market information by customer type, and the selection of a target customer group. In taking such a step to facilitate global businesses, the CAGE framework explained in Chap. 2 is valuable to analyze the differences between a company's home country and other countries. A company will have a deep understanding of the history of its own country, and the CAGE framework will provide hints to deepen a company's understanding of other target countries. A company must gather important points from the CAGE framework to develop marketing strategies and conduct a more detailed analysis using market survey data and various types of statistical data.

The second step moves into execution with the careful consideration and implementation of product, price, place, and promotion based on the aforementioned strategies. These elements are collectively called the 4Ps of marketing. For example, in Shiseido's marketing in China, covered in the next chapter, the company switched its brand names and distribution channels when selling its products to high-income and middle-income consumers. Companies must, thus, select the right target customers and 4P marketing mix on the basis of a marketing strategy, and execute the plan accordingly.

In this chapter, we discuss the important concept of the “good enough market” as we examine marketing strategies in emerging countries. The average income levels in these countries are lower than those in developed countries; however, they constitute a rapidly expanding middle class who wish to own low-cost products with a certain level of quality. This is called the “volume zone.” Reducing a product's functionality to what is required by customers in an effort to minimize costs is one way in which companies can develop products for particular markets, thereby enabling high returns in the huge markets within emerging countries. In this chapter, we discuss the strategy for the “good enough” product market in both China and India as we analyze the markets in each country.

We conclude this chapter by examining the bottom of the pyramid strategy or BOP. Of the entire global population of approximately six billion people, four billion have an annual income of less than USD 1,500. This amounts to living on an income of just a few dollars per day. BOP businesses require strategies to target this lowest level of the population pyramid. In India, consumer packaged goods (CPG) manufacturer Unilever and the micro-financing giant ICICI Bank both target the BOP layer. Among Japanese companies, Ajinomoto's work on improving nutrition in Ghana is one such example. BOP has been the focus of attention for companies thinking about their global business; it is a business model that provides valuable hints for companies' business in emerging countries, such as relationships with local governments and nongovernmental organizations (NGOs).

 
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