Asia has long been a focus of marketing strategy thanks, primarily, to the expansive opportunity that a successful market entry has on moving the bottom line. With an aggregated Gross Domestic Product of over $18 trillion USD, the region is full of talent, resources, opportunity and customers. And those customers have money to spend—case in point that there are an estimated 2 million millionaires in Asia and they are consuming goods from around the world at an increasing rate.

In the same breath, Asia also represents one of the largest competitive threats. As ranked by the Global Forbes 2000, China-based companies on the list grew from 34 to 89 over the past 4 years, while Indian companies grew from 20 to 34 during the same period. The Chinese government has even made the bold declaration that by 2010, 50 of the Fortune 500 companies will be Chinese-owned…and they are well on their way with 20 under their belts. As more companies enter Asian markets, new streams of competition are flowing out of the region offering identical products that are brought to market faster and for less.

Simply put: Accessing Asia is as big of an opportunity as it is a risk.

Specific to marketing, attention into messaging, customer engagement and overall spend will continue to be a focal point for many years to come. With global advertising spend estimated to top $479 billion, Asia is expected to gobble up an estimated $115 billion of that budget. In China alone, the advertising market is expected to be up by at least 19 percent this year. Between online advertising, the development of marketing services and resources on the ground in the region, and the growth in areas of spend including data management and even product placement, marketing spend is increasing as quickly as the market itself is developing.

Partially in honor of the Olympics, but also to recognize the importance of this emerging market and opportunity, Marketing Magnified, turns its attention to the Asia Pacific. I recently had the opportunity to learn about the challenges and struggles that our asian-based marketers of the CMO Council face in the region. Finding, activating and retaining talent that understands the region and the enterprise topped the list of issues for the year ahead. Another distinct challenge is creating a balance between the variety of cultures and embracing the diversity in approach and process that each country brings to the overall region.

How are you looking to leverage this emerging market—or have you already conquered it? Is Latin America on your expansion list, or is the opportunity greater in the Middle East? Where are new routes or revenue leading you? Share your views with us by sending over your global expansion intentions. We will be gathering your insights and sharing them in our next issue. Send your insights to Jessalyn Clark, our content manager for Marketing Magnified, at jclark@globalfluency.com.

Until next month!
Liz Miller
VP, Programs & Operations
CMO Council

Winning Back American Consumers
By Lynn B. Upshaw, Upshaw Marketing

Originally printed in the Peking University Business Review, March 2008

The year 2007 was not a good year for the exporting of Chinese goods to the United States. To briefly recap what has occurred in the past few months:

• Millions of toys manufactured in the PRC have been recalled in the US because of their use of lead paint, which can be hazardous to the health of children.
• Many brands of pet food products packaged in the PRC had to be removed from US shelves because of toxins.
• There have been similar recalls in tires, toy ovens, computer batters, fans, infant swings, cribs, and baby carriages manufactured in China.

According to news reports within China and elsewhere, some (but not all) of these problems have allegedly been caused by a combination of factors, including inconsistent quality control, corruption, and bureaucratic mistakes.

Such missteps and malfeasance are nothing new, and certainly not confined to any one country or region. However, when a nation’s commerce is growing as rapidly as China’s, such problems can quickly result in massive loss of credibility and, ultimately, customer trust. That is also the case even if many of the allegations are exaggerated or untrue because, in business, perception is often reality.

To be sure, the credibility crisis that China faces is not a unilateral problem. For example, in September of 2007, the Mattel toy company apologized to China’s industries for blaming them for manufacturing flaws that were, in fact, design flaws. Nevertheless, as recently as December 2007, more than 8 out of 10 American respondents in a consumer survey indicated that they were concerned about toys manufactured in China. At those levels, it really doesn’t matter who is at fault; the important fact is that action must be taken quickly to rectify these attitudes.

My expertise is strategic brand marketing, not international relations, but it is clear that China has encountered a significant nation brand challenge. It is within that context that I add my thoughts to those of others who have provided their views on this sensitive subject.

Brands and Promise-keeping

The growing concern—and even antipathy—within the US toward Chinese-manufactured goods originated with product issues, but has become much larger than that alone. As US Treasury Secretary Henry Paulson has pointed out in October of last year, "Recent and repeated reports of tainted food and product imports are causing fear and uncertainty in American consumers and harming the 'Made in China' brand here in the United States.” Strong product and service brands throughout the world are created and sustained on a mutual understanding: sellers offer products and services that will deliver what is promised in performance and reliability, and buyers will respond by loyally purchasing those branded products and services based on that premise. There are no guarantees that either party will deliver on its promises, but it is certain that a strong brand is not viable if such promises are not kept.

Companies and countries that have mastered relentless promise-keeping are always at an advantage, in good times or bad.

In the late 1950s, the Tokyo Tsushin Kogyo company became Sony Corp., partly because that name change distanced the company from the cheap, low-value image of Japanese products at that time. “Made in Japan” was a term of derision in the minds of many Americans at that time. But when Sony distributed a transistor radio of authentic quality, followed by a stream of innovations of similar caliber, they began to erase the identity that equated Japanese products with substandard value.

Three decades later Japan had gained an advantage, not just in electronics, but in other industries, such as the fast-growing motorcycle market, and it was an American company that was not delivering on its promises. Back then, the Harley-Davidson company was on the brink of being sold for scrap. Most of their classic “choppers” seized up and left an oil stain wherever they were parked. In contrast, products from Harley’s Japanese competitors were cheaper, more reliable, and just as fast (or even faster) around a curve. By 1985, the company was literally within days of bankruptcy when it was saved by a corporate angel and a company-wide commitment was made to superior product quality.

In one year, between 1985 and 1986, Harley dramatically increased its share of heavy-duty motorcycles from 16% to 25%. Of relevance to the China experience, their Phoenix-like resurgence in the US marketplace was greatly aided by two key factors: Americans’ perennial preference to buy from US-based companies (all other things being equal), and by a punitive tariff directed specifically at Harley’s Japanese rivals in the mid-1980s.

Today, Harley-Davidson is a $6+ billion global brand with more than 1,000 HOGs (Harley Owner Groups) clubs worldwide with 350,000 members. Improved products have attracted new customers to the brand, but it was the brand’s credibility, along with sociopolitical events, that rebuilt the company. As pointed out by Kent Grayson, associate professor at Northwestern University's Kellogg School of Management: "It's more than a brand. It's a culture."

Harley-Davidson’s consistent delivery of what was promised, along with similar consistency from many other US-based firms such as IBM, Nike, Coca-Cola, and McDonald’s, has created untold brand equity for US brands – and the US nation brand – in overseas markets.

Read the full article (PDF) »

Lynn Upshaw is an internationally known strategic marketing consultant, speaker, and author, who also teaches marketing in the MBA programs at the Haas School of Business, University of California-Berkeley. He can be reached at: upshaw@upshawmarketing.com or upshaw@haas.berkeley.edu.

Email Marketing Increasingly Important In Reaching Consumers In Asia Pacific
From Epsilon International

A survey conducted by Epsilon International and Return Path has revealed that email-based marketing resonates strongly with consumers across the Asia Pacific region and, alongside traditional mediums, is fast becoming one of the key ways to reach consumers. In one of the most significant findings, nearly one in three respondents (32%) said that they would "always" respond to targeted, promotional e-mails.

The survey, which was carried out in February 2008 throughout Asia-Pacific region, surveyed 1,169 participants and sought to discover consumer email habits and attitudes to permission email marketing and spam.

"Through client campaigns across Asia Pacific, we know that consumer interaction and responses to targeted permission based communications are high, and drive significant returns for our clients," said Dominic Powers, senior vice president, Asia Pacific, Epsilon International. "This survey further supports the fact that consumers respond to email marketing if it is directed to the right person, at the right time, and with the right message."

Another survey finding pointed to the increasing acceptance of electronic marketing when used in a controlled and targeted manner, with 54% of the respondents saying that they would use e-mail coupons to buy products online or offline.

"E-mail marketing is rapidly becoming the preferred method for consumers to be reached by marketers," Powers said. "Aside from the obvious environmental angles, consumers are now savvy enough to realize that targeted campaigns can offer them deals or savings above the typical promotional offers they find in their letterbox at home."

In addition, the survey revealed the speeds at which average email users in APAC are accessing the Internet. In Australia about half (52% home and 49% work) said they accessed the Net at speeds of 1.5Mbps or less. In contrast, in Japan and Hong Kong over 70 percent and 63 percent of email users respectively are using high speed broadband of 10Mbps or more at home and at work.

Other key findings in the survey:

• Mainland Chinese respondents have the highest uptake (34%) of using mobile devices for email, followed by Hong Kong at 29% and Japan 27%. Australia reported the lowest at 6%, followed by Malaysia at 11%.
• Before 10am is the favorite time for checking personal emails, with 9am being the peak email-opening hour among respondents of all territories except in Japan. About half of the Japanese respondents (46%) reported to check their personal inbox at night at 9pm or later.
• Promotional emails increases brand loyalty, said 63% of the respondents in India and 70% in China; while every other Indian respondent (52%) and 63% Chinese respondents said they had made more purchases after receiving promotional emails.
• Customers interact on relevancy. Half or more respondents in all the surveyed territories said they are willing to share personal information if they believe it drives relevant and more targeted offers, except in Hong Kong where more respondents (63%) said they would not want to release additional personal details regardless of the offers.
• Irrelevancy is the new spam. In addition to unsolicited emails, many respondents consider that the definition of spam also includes promotional emails or e-newsletters which they subscribed to but which they find no longer engaging or that fail address to their needs. 34% of respondents in China concur with this view of spam while only 11% in Australia do. Yet users suffer similarly on the time used to clear spam. More than half of the respondents across the region (59%) having reported spam, 63% are doing so at least three times a week.
• A low usage rate of spam filtering software is seen across Asia, except for Australia where over half of their respondents (59%) are using some kind of spam filtering program. The lowest usage was found among Hong Kong respondents with a usage rate of 21% only, followed by China of 32% and India 33%.

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