Strategic Marketing Management in Asia

The concept of marketing has evolved over time. One can even be so bold as to conjecture that it is as old as the process of transaction itself. However, as a proper and discretely structured framework, the advent of marketing is fairly recent, roughly around the 1900s, when it began to divorce itself from its founding discipline “economics.” Many significant changes have occurred in marketing that have touched almost all spheres of human civilization, globally. Thus, companies no longer operate in the way they did in the last century.

It is interesting to note how much can be learned from the gradual changes in the official definition of marketing over the years. The following is a timeline of the changes in the marketing era.^1–5

• “Marketing consists of those activities involved in the flow of goods and services from the point of production to the point of consumption” (American Marketing Association, 1938).⁶

• “Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchange and satisfy individual and organizational objectives” (American Marketing Association, 1985).⁷

• “Marketing is the management process that identifies, anticipates and supplies customer requirements efficiently and profitably” (The Chartered Institute of Marketing, 2003).⁸

• “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large” (American Marketing Association, 2007).⁹

It is particularly noteworthy how the objective of marketing has slowly shifted from bare, cold economic facts, to “organizational objectives,” and finally, inexorably, to the wants and necessities of the consuming end. This “value for customers, clients, partners, and society at large” approach has set the pace for much of the development in marketing in the last 30 years. And these changes have been drastic, conforming to the volatile, constantly evolving nature of consumer wants.

By 1900, marketing had become more than just a business principle. This era marked the blooming of the concept that demand consisted of more than just simple purchasing power. The idea that “marketing and commercials are synonymous” began to lose steam and marketing became the study of the mind. As human minds are constantly seeking new ideas, marketing is also constantly evolving. The twentieth century was when other disciplines such as economics, psychology, and sociology lent concepts to marketing which itself became a focus that opened doors to millions of other opportunities. Today, marketing is everywhere and it is affecting us in more ways than we can think. Perhaps we can say that modern marketing took root in the early 1970s.

Society and marketing go hand-in-hand and the influence that each had on the other was undeniable. However, since 1980 marketing has constantly and consistently evolved at a fast pace. Thus, the trajectory of marketing continues to reflect broader business, economic, and cultural trends.

The main objective of marketing is to provide value and satisfy customers. Customers live in society and are influenced by changes therein; consequently, societal changes must, in some form or shape, affect marketing as well.

In the early 1990s, microcomputers and local area networks (LANs) made it possible for companies to have a customer database. This is when database marketing moved into the mainstream. Forward thinking companies applied the technology to better understand their customers. In turn, they were able to target their marketing efforts to meet their customers’ wants and needs. These forward thinking companies began to raise the bar for their competition by reaching out to customers on a more personalized basis. That is how the trend which continues to drive marketing innovation today was born. Database marketing technologies were put to use by savvy marketers to reach customers in ways they had only dreamed of before.

In the late 1990s, the Internet brought the revolution right into customers’ homes. Most marketers today know the basic history of the Internet. It first came online in 1969 as a way to share information between universities and Government agencies; whereas, it was the invention of Hypertext Markup Language (HTML) and the World Wide Web (WWW) in the early 1990s that created the websites we know today. These websites enabled the marketers to reach customers’ homes easily and the era of digital marketing began. It began to get popular in the 1990s and was primarily made popular by Rayport through his book, “The Virus of Marketing.”¹⁰

The prominent changes that occurred in the field of marketing in the current century and the latter half of the last century are due to the discoveries and development of television, computer, internet and internet based social media (i.e., Facebook, Twitter, YouTube, etc.). A revolution in the field of technology sparked another revolution in the field of marketing. Lately, the Internet has seemingly transformed the meaning of global marketing; thus the role of marketers in selling or in brand-building based on country-of-origin is taking a new shape.

Kotler, Kartajaya, and Setiawan (2010)¹¹ opine that marketing in future must do more than merely satisfying needs and creating demand. It must engage people in ways that provide “solutions to their anxieties to make the globalized world a better place; embrace the values that drive human spirit.” This is the vision for the future of marketing. In realizing this vision, certain strategic approaches are essential.

Kotler (2007) identified four categories of products, classified in terms of long-term benefits and immediate satisfaction:¹²

• Pleasing products, which bring a high level of immediate satisfaction, but can cause harm to society in the long run.

• Salutary products, which bring low short term satisfaction, but benefit society in the long run.

• Desirable products, which combine long-run benefit and immediate satisfaction.

Kotler’s (2007) concept of societal marketing suggested that for the well-being of society, deficient products should be eliminated from the market, while pleasing and salutary products should go through a product modification process to reach the fourth category: by incorporating missing short-term benefits into salutary products and long-term benefits into pleasing products, companies’ ultimate goal should be to develop desirable products. This way, rather than focusing on selling products, which can be good or bad for consumers, the main focus will be on the well-being of consumers and society.

It is imperative for future success in marketing to come from actions based on marketing principles delivered via civic coalitions. This implies that the future must bring all stakeholders of a society linked to a specific sub-sector to a focal point, implying that if any of the stakeholders remain dissatisfied, it is likely to have a negative impact on the entire value chain. In recent years, scholars have begun talking about social approaches to business and marketing; however, one must not be driven merely by a sentimental conceptualization of the social approach which may result in fostering a regime of subsidy; that is, an inefficient support system.

Anwar (2012)¹³ suggests “the future of marketing thus must follow a societal-pull rather than social-push approach for subsidies can only provide short term advantage.”

Marketing focuses on both for-profit as well as not-for-profit engagements; it encompasses both macro as well as micro pursuits. Marketing is also applicable to both private as well as public goods. In all of these areas, competition is getting stiffer. Enterprises must understand that marketing is a key function of all socio-economic pursuits. This necessitates that the enterprises of tomorrow must be inclusive in nature with marketing at the center.

Reality holds that, globally, only a handful of billionaires gained their wealth through inheritance. The rest started out as “garage entrepreneurs.” Entrepreneurship emphasizes a particular activity-innovation. Successful entrepreneurs are committed to systematic practice of innovation. The necessity to do anything successfully is also an innovation. Innovation is the cornerstone of successful marketing; thereby “supporting and fostering innovation will continue to be the key to creation of new solutions, resulting in business growth.”¹³

The focus on cost cutting or profit maximization through false promises cannot be a sustainable model. Every enterprise should figure out not only how to improve its output but also its outcomes. This primarily requires providing experiences that build trust, which removes uncertainty, engages us, and enables us to participate in inter-personal transactions.

Marketers should try to make the greatest impact on every contact made with their stakeholders. One of the main agendas of the future of marketing is that communication messages need to be created that must be share-worthy and can strike an emotional chord with the stakeholders, leading to the creation of brands. One thus needs to appreciate the role of stakeholders in the value chain: any distortion or rupture in the communication will snap the linkage. Mere presence of voice in the media will not create brands; “brands will not be made up of the stories they tell, but the stories that are told about them by those who engage with them and create value.”¹⁴

Let us assess some of the top global brands of 2012 and evaluate the factors contributing to their brand equity versus sustainability. Apple, for example, ranked number one in terms of the world’s largest technology company and as the second most valuable brand, mainly due to its consumer shift driven by Apple’s emotional appeal to the human spirit and love for innovation. However, Apple has been criticized for its labor, environmental, and business practices. This brought them to the 13th position as far as sustainability is concerned and implies that consumers are likely to shift their preference for Apple if sustainability factors are not taken seriously. In the same category, under sustainability, Samsung is making greater strides, being placed in the 5th position simply because they have outlined “planet first” as part of their eco-management policy. However, the paradigm of not being able to perform effectively in the societal dimension, globally, due to poor value chain management, has kept Samsung in the 6th position in terms of brand value.

In the automobile industry, Honda and Toyota are considered to be the most sustainable brands, simply because they have kept their focus on the triple bottom line (People, Planet, and Profit) as the ultimate business motive while pushing innovation for societal impact. They are followed by the German brands — Volkswagen, BMW, and Mercedes — that have greater brand value but have lower sustainable scores. The only American brand that is close to these sustainable brands is Ford which has placed emphasis on both governance resulting out of marketing integration and protection of the environment. The shift in brand value to a large extent is dependent on the sustainability value that focuses on improving quality of human life while supporting the ecosystem.

In the fast moving consumer goods (FMCG) category, the cosmetics brand L’Oreal, has set out to conquer over a billion new consumers via “sustainable growth” and “sustainable innovation.” In 2011, L’Oreal has shown significant improvements in performance by increasing the amount of plant-based materials in its products by up to 55 percent and reducing the amount of waste they produce. Currently, half of the company’s cardboard packaging comes from Forest Stewardship Council certified sources and L’Oreal has also reduced its water consumption and transportable waste by almost 25 percent. Unfortunately, no other FMCG brand has shown such effort along its life cycle; they are thus threatened in local markets by more societally friendly brands. For example Unilever is facing stiff competition from local brands in emerging economies like India, Brazil, and even developing economies like Bangladesh.

CASE: MARKETING MANAGEMENT

IT Industry of Bangladesh — In Search of Marketing Success

Syed Ferhat Anwar

Information Technology (IT) is a subject of widespread interest in Bangladesh. Currently, there are around 100 software houses, 35 data entry centers, thousands of formal and informal IT training centers, and numerous computer shops. The IT industry in Bangladesh has gradually come of age and today accounts for more than Taka 25 billion or USD 350 million in annual revenues.

There are more than 320 software and IT services firms registered as members of the Bangladesh Association of Software and Information Services (BASIS) that adds in excess of USD 100 million in value through offering full spectrum software and IT services for both domestic as well as overseas clients.

The software and IT-enabled services (SITES) industry in Bangladesh has grown at over 40 percent during the last five years; however, this is considered to be far lower than what was forecasted. This growth is supported by good software export trends and a large demand for IT automation in domestic industries. Recently, large-scale automation projects have been widely implemented in telecom, banking, finance, pharmaceutical, and garments/textile industries. Domestic demand for software and SITES industries is therefore expected to grow. However, the general corporate sector, assumed to be the major user of IT services, is yet to gain the trust of local entrepreneurs.

Bangladesh has a large pool of prospective young workers for the IT industry. Yet this human resource pool, both in quality as well as quantity, is not sufficient to maintain the growth of the industry. Non-availability of IT graduates and lack of IT expertise often result in loss of productivity and diminish the quality of IT services. However, IT firms are keeping up in small ways with the competition by providing generic software and packages that are capable of providing high-quality support services. Their lack of marketing focus has failed to both create categories as well as brands. It seems that all companies are doing the same thing.

A recent study of the IT industry in Bangladesh indicated that its core strength is its people. An educated, trainable, and young workforce in this sector possesses the required skill set to compete in the global market. However, this needs to be further strengthened to attain international standards. A survey conducted by BASIS on 1100 employees of 55 IT companies revealed that, respectively, 42 and 14 percent of the respondents were engaged in programming and networking tasks. The most significant advantage of the Bangladeshi workforce is their low wage rates. The salaries for IT professionals could be as low as USD 75/month. On the other hand, higher salary ranges are approximately between USD 1000–1200/month. This practically implies that the low salary structure in Bangladesh can provide a price advantage on the global platform where virtual presence is more important compared to the country-of-origin. In addition, presence at the higher level is likely to result in brand creation. The quality of the graduates coming out of various institutions is also satisfactory. Another great advantage with the Bangladeshi workforce is their longer term commitment as workers.

Adequate infrastructure is the key to developing the IT industry in Bangladesh. The Government of Bangladesh needs to introduce special initiatives to develop high-speed and reliable data communication systems, uninterrupted power supply, and proper computing facilities. This is necessary to attract investors, entrepreneurs, and multinational companies from overseas to open businesses in Bangladesh and create jobs in the IT area. It will also create domain expertise and enhance software growth significantly.

Publicly available computer centers also need to be built so that people who cannot afford computers or Internet connections can take advantage of IT facilities. Industry experts are of the opinion that the geographical location of the country is suitable for reaching other markets in Asia. Additionally, India is moving to a higher strata due to price inefficiency in the generic global IT market, which has created an opportunity for Bangladesh to capture the lower niches (left by India) of the market. This way the whole country can benefit from the IT revolution and can become an “IT Country.” Marketers are also of the opinion that with globalization creating of global value chains, almost all products and services will become global. Thus, a brand will no more be tagged to a country of origin. This, essentially, may provide the competitive advantage for the youth in countries like Bangladesh.

IT firms revealed several crucial factors that contribute to the success of IT firms in Bangladesh:

• Experienced management. A team of experts who helped build the IT industry in Bangladesh. These professionals have been in this industry from its very inception.

• Strong networking team. A group of skilled personnel who are adept at developing the necessary software solutions.

• Low cost of support services. Providing after sales service at an affordable price to clients.

• Low cost of human resources. Relatively low wage rates provide a competitive advantage to the IT firms in Bangladesh. Government support, Tax holiday and waiver of import duties have helped the IT firms to maintain a decent profit margin.

Some of the major drawbacks of the IT industry:

• Total IT solution. A complete package to meet the needs of the customers, so that all their IT needs are met by a single IT firm.

• Generic product. The basic concept of marketing, creating targeted products for targeted markets, is lacking. The entrepreneurs at times are blinded by the products they have created and ignore the concept of consumer needs and wants.

• Good support service. Providing after sales service to clients, which can be the major source of revenues for the firms.

• Customized solution. Tailoring the software solutions to meet the specific needs of the target clients.

• Peripheral devices. Providing the necessary hardware needed to complement software solutions.

• Providing in-depth software solutions. Versatile software solutions which can cater to multiple functions simultaneously.

• Poor training facility. The IT graduates are not trained to define and meet customer requirements and thus require a high level of training after being recruited. This increases costs and reduces efficiency of the firms. The practical knowledge of the graduates is not adequate.

• High competition. Severe competition in the industry has led to reduced sales volume for individual IT firms.

The clients of IT firms revealed several issues pertaining to both the success of firms in meeting needs as well as the shortcomings from the perspective of the clients:

• Timely delivery. IT firms are able to effectively meet deadlines expected by the clients.

• Innovative software solution. IT firms are able to analyze business processes and provide software solutions that help to remove redundancy in business processes and save costs.

• High price. The software solutions are too expensive and are beyond the perceived value of the clients.

• Customized software. The ability of the IT firms in adapting the software to the needs of the clients has been a major influencing factor.

• Brand names. Brand names do not play an important role in influencing decision of clients when choosing IT services.

• Reference. Reference plays a more important role by generating word-of-mouth clients.

• Marketing myopia. IT firms frequently focus too much on trying to sell their technology to the clients rather than focusing on the benefits.

A basic SWOT analysis of the industry focuses on the following major issues: The strengths and weaknesses are based on the current success factors of the IT firms of Bangladesh and are summarized below.

Strength	Weakness
High level of profit margin	Low sales volume
Experienced management team	Poor level of expertise of current IT graduates
Skilled personnel	High cost of services
Ability to provide customized software solutions	Poor branding
Ability to provide good support service	Focusing more on attributes of a product rather than on its benefits
Ability to provide customized software solutions

The opportunities were evaluated based on the long-term sustainability factors of the IT firms. The ability to avail the opportunities for long-term sustainability depends on the formation of an IT Park in Bangladesh. The opportunities and threats which are affecting the IT firms are summarized below:

Opportunities	Threats
Sharing of knowledge	Lack of private investment initiative
Strategic alliance	Lack of uninterrupted power supply
Developing in-house software	Lack of effective training facility
Greater scope for R&D	Severe competition

QUESTIONS FOR DISCUSSION

1. Why marketing linked to technological innovation is so important?

2. Can societal marketing be used under all social and economic conditions?

3. How do you assess the future of the IT industry in Bangladesh based on the fact that India is far ahead in this sector?

TIPS FOR DISCUSSION

The case presents a typical startup industry that focuses mostly on the product concept. It is apparent that the industry is evolving and the entrepreneurs are suffering from marketing myopia. The students thus will develop a path for the future of the industry based on basic marketing principles along with global changes discussed in the chapter. While discussing the strategies, the students will be expected to assess if the industry could move at a rapid pace and utilize some of the contemporary marketing strategies to be able to build a unique positioning in the minds of both the local as well as the global clients. In addition, students should be asked to collect recent information on the industry to help understand the industry and how it relates to the society of Bangladesh. Since, this is the first chapter; the students should focus only on the possibilities of utilizing the marketing concept.

Answer guide Q1:

Since the 1950s, majority of the consumers have been looking for innovative products more aggressively than before. For example, in 1950, the first remote control was marketed by Zenith with the tagline “Take It Easy” and the promise of “complete automatic program selection in the palm of your hand.”^a Similarly, in 1973, Motorola was the first company to produce a handheld mobile phone.¹⁵ Other companies also came up with innovative mobiles. Presently, all the leading companies have advance mobile with latest “generations” (popularly called “G”).Innovation is now the core of all products and services ranging from mobiles to TVs, medical equipments to automobiles, hospitals to hotels, and so on. “Martech” has become a buzz word in the business world where manufacturers think about marketing and technological innovation as one of the drivers to attracting consumers. The case shows how marketing and technological innovation work to penetrate the IT industry in Bangladesh.

Answer guide Q2:

Initially, marketing was more of product-centric. Gradually the concept transformed from there to product-based, now more of people-oriented — considering people’s welfare and benefit. Therefore, the marketers concentrate more on societal marketing. Since human being and our planet are the prime concern, any business endeavors based on societal marketing is equally applicable in any social and economic conditions.

Answer guide Q3:

Though Bangladesh is new in the Industry, still there are positive aspects, which can lead this country to become an “IT Country.” SWOT analysis between these two countries (India and Bangladesh) may help developing a strategy for Bangladeshi IT entrepreneurs for entering global market with long-term sustainability.

Evolution of Marketing as a Discipline

QUESTIONS FOR DISCUSSION

TIPS FOR DISCUSSION