International Marketing 463-441 (3-0-3)

Introduction

Murray Hunter

murrayhunter58@gmail.commurray@unimap.edu.my

Telephone:6019 5233801 (Malaysia)

0843 3134105 (Local)

Available Weekends (Most) & Mondays before & after lectures

What We are Going to Cover in this unit

•The Global Environment & International Marketing Concepts

•International Marketing from the ASEAN region perspective• The basic tools of marketing redefined in the

international context•Identifying International Market opportunities and

undertaking market research•Formulation of market entry strategies•International new Product Development

•Company readiness for international markets•International Supply chain approach

•Negotiation and international regulation•Trends in International Marketing

3 Assignments 80%Presentations 10%

Class Participation 10%

Small Research Thesis

8-12K wordsshould be commenced

during the first week of class

ability to research the dynamics

of the topic and argue their case

40%

A Case Study

about a product/market in an international setting

The case study will be presented as a written report and presentation

An allocation of marks will be reserved for student’s defence of their conclusions

20%

the selection of a product and target international market to undertake a study upon

the construction of a general business model and strategy to successfully enter the product in the target market

This assignment will involve using all the tools and skills learnt during the course

submission of both a report and formal presentation

This will also be a group assignment. 30%

Books/References

Cateora, P., R., and Graham, J., International marketing, 13th

Edition, McGraw-Hill, New York, 2007.

What is a Product?

Anything that can offered to a market that will satisfy a want or

need.

It includes physical objectives, services, events, persons, places, organisations, and

ideas.

The Branding Paradigm

The Level of Competition

The Channel of Distribution

What is a Market?The set of all actual and

potential buyers of a product or service

Market SegmentA group of consumers who

respond in a similar way to a given set of marketing efforts

What is market positioning?Arranging for a product to occupy a clear distinctive and desirable place relative to competing products in the minds of target consumers

1. Line extensions

2. Different Pack Sizes

3. Different Price/consumer

categories

Examples of Market Positioning

Same Product – Different

Positioning

Different Market

High End

Medium EndLow End

High End Strategies

• High Quality

• Premium Price

• Targeted Niche

• Specialised Media Campaign

Medium End Strategies

• Benchmark Quality

• Price Reference

• Strong General Media

Low End Strategies

• Match Medium End Quality or lower

• Compete on Price (?)

• Incentives to retailersIn this case: Medium end was once the high end, then company redefined the market by adding an extra premium product.

Normally medium end product have very limited strategies other than price to utilise.

Australia: very few medium end products, Malaysia many

How Different People Look at Markets

Small holder FarmersSmall holder Farmers

• Production orientated

• Passive Marketers

• Follow Pricing mechanism

• Little (if any) planning

• Doubtful sustainability

Production Approach

Usually

OEM

Production

Sales Approach

Marketing Approach

The Marketing Mix

Product

Price

Position

Promotion

Customer Solution

Customer Cost

Convenience

Communication

Product Life Cycle

• Getting shorter

• 33% sales from products less than 5

years old

• Changing tastes

• Changing Technology

• Product Evolution

Developing Product Specifications

Market & Product Planning

Product Registration

Concept & Prototype Generation

Packaging Design

Further Formulation Development

Continued

First Part of the Product

Development Process

Further Formulation Development

Manufacturing System Design

Final Packaging & Formulation Review

Marketing Review

Refining of Product Before Major Launch

Major Launch

Optional Today

Test Marketing/ Pilot Production

Cont.

Post Launch Product

Modifications

Entrepreneurial approach

The Summarised

Entrepreneurial

Process

Idea

Turn into Opportunity

Final Commitment

Start-Up

Growth

Sustainability

Creativity

Innovation

Strategy

Sales

NPD

Resource Gathering

Ideas Opportunities Solutions Realisation Performance

Spots Evaluates Selects Targets

Creativity Innovation Strategic Thinking

Management Capability

Capabilities Governing Competitive Scope

Competitive Advantage

Costs: to customers Knowledge: Industry/market/technical/p rocess Relationships: Customers/suppliers/distri butors/relative power Structure: Ability

Differentiation

Competencies Entrepreneurial, Opportunity

Identification, Network, Conceptual, Organisational, Strategic, Commitment,

Resources

Technology Approach

Tissue Culture

SME Approach

Where the business is

currently performing

The base potential for development

The process of product/market development

The Outcomes

(potential targets)

Siz

e an

d de

pth

of c

hang

e

Tim

e

Key internal influences on the development process

Key external influences on the development process

Gibb & Scott 1988

Performance Base

Profile of business in terms of performance:

• Market trends: current product mix, market mix, competition

• Production trends: Utilisation, efficiency, quality

•Financial and Management: net worth, liquidity, gearing, trends

Key internal influences on the development process

Administrative, marketing, production and Managerial resources and capabilities.

Key external influences on the development process

Competition, market restrictions

All influence the type of product and market development that will take place

Personal

Objectives

Business

Objectives

Strategies & Tactics

Operating

Needs

Products

Manpower

Finance

Operating

Budgets

Feedback loops

Business Analysis: Strengths and Weaknesses

Product: 4 Ps or 4 customer wants Profit/Cash flow: its sources and uses

People: Management and Skills Facilities: age, technology and utilisation

Environmental Analysis: Threats and Opportunities

Market: product position and prospects Competition: Traditional, new firms, new

industries, profits

Technology: Changes and developments The Economy: Growth, inflation, Law

Burns & Dewhurst 1993

Sources of Competitive Advantage

(The reason for any product development in a company)

Costs:Importance of price to customers, distributors, the extend of demand elasticity

Knowledge: Stage of industry lifecycle, common industry knowledge verses your own specialised knowledge

Relationships:Links with customers, suppliers, distributors, relative power

Structure:Appropriate organisational structures, Ability to respond to market, leadership.

Technology State of the art and emerging technology Re-evaluating existing technology

Product Opportunity

Gap Economic State of the economy Shift in focus on where to spend money Level of disposable income

Social Social and cultural trends and drivers. Reviving historical trends

Cagan, J. and Vogel, C., M., (2002),

Many Factors Change Markets and Give rise to Opportunities

Areas of Firm Innovation

Sty

le

TechnologyLow High

Lo

wH

igh

Hotel Coffee Shop

Kedai Kopi Fast Food

Coffee Bean

Technology/Market Positioning

Product Life Cycle

• Getting shorter

• 33% sales from products less than 5

years old

• Changing tastes

• Changing Technology

• Product Evolution

Pioneers Early followers

Early

Majority

Late

Majority

Late

Followers

Product LifecyclePotential Profitability

Time

Concept

Risk Taking

Competitive

Risk Taking

IP Value &

NoveltyIP Value

Prof

it

0 10 20 30

Length of Life Cycle (Years)

Cosmetics

Toys

Tools

Food Items

Pharmaceuticals

Fifty Years Ago

Today

Figure 6.7. The Product Life Cycle Has Shortened Dramatically Over the Last 50 Years

Laundry Liquids Detergents

Concentrated Laundry Powders

Detergents with Special Additives

Laundry Detergent Tablets

Laundry Detergents Powders

Solid Soaps & Powders

Laundry Blue

Laundry Detergent Bars

Pre 1900’s

Up to Late 1940’s

1950’s until present

1980’s until present

Product Evolution

Can we predict the future?

The Past

Present time

We know the past and present Without any changes our

timeline will remain relatively unaltered

The effect of competitor innovation will bring

product evolution

This changes the parallel of the market gradually

A Radical change in technology

Will radically change the timeline into a new industry

Innovation & Invention

Products more than 5 years old usually don’t make major

contributions to a company’s revenue

•Technology

•Consumer style change

Vanilla Breakthrough?

New Flavour – New Product

Evolution

Evolution Verses Revolution

Changing Technology (slow to Change)

Changing Lifestyles

Cheap Clothes Available (substitute)

Had to Reinvent the Company due to Slow Product Development

Examples of Innovation

Examples of Innovation

Examples of Innovation

Cationic Breakthrough?

To soap or not to soap?

Invention

Less than 2% of filed patents are ever commercialised

Does a new invention have consumer benefits or create any competitive advantage?

Can consumers accept the new invention?

New Knowledge Innovation is the most risky

Better to focus on other sources of innovation: ie, applications of existing ideas and technologies as new knowledge technology development is extremely long term.

Bright ideas are the riskiest source of innovation and rarely succeed. Receptability is always the problem (look at patents files but never commercialised)

Table 6.1. Drucker’s Sources of Innovation

Source Explanation Examples

The unexpected success, failure

or external occurrence

Success of a revolutionary product or the application of technology from one industry to another, sudden or unnoticed demographic changes caused by wars, insurgencies, migration, etc.

Apple computerRapid decline of Proton’s market share

An incongruity between reality as it actually is

and what it ought to be

A change that is already occurring or can be made to occur within an industry. It may be visible to those inside the industry, often overlooked or taken for granted.

Sugar free products and sugar replacements due to concern for healthIncreasing demand for travel and holidays due to increasing incomes and leisure time

Inadequacy of an existing

technology or business process

An improvement in process that makes consumers more satisfied based on an improvement or change in technology.

Caffeine free productsMicrowave ovensMobile phones

Changes in industry or

market structure

New ways and means of undertaking business based on identified opportunities or gradual shifting of the nature of the industry.

Health care industryEducation industry – private education

Perceptual changes

Changes in peoples awareness founded on new knowledge and/or values or growing affluence leading to new fashions and tastes

Leisure and exercise industry aerobics & gyms

Demographic changes

Gradual shift of demographics in population by age, income groups or ethnic groups, etc

Establishment of more retirement homes

New knowledge New knowledge or application of existing theoretical knowledge into an existing industry that can create new products not previously in existence

Video and VCD industryRoboticsBiotechnology

Types of InnovationType Description ExamplesInvention Totally new product Wright Bros – plane Edison – light bulb Bell – telephoneExtension New use or different application Kroc – McDonald’s of an already existing product Bushnell – Atari Wilson – Holiday InnDuplication Creative replication of an Wal Mart – Dept Stores existing concept Pizza Hut – Pizza restaurantSynthesis Combination of existing Smith - Fedex concepts and factors Merryil Lynch – Home equity into new use Financing

1800s1930s1950s1960s1970s1980s1990s2006

“Too much focus on process, on a static agenda, while it may get a lot done initially, will tend to drive

core competencies towards core rigidity.”

Practice Process

Innovation Optimal Innovation Area

Ideas

Little gets done

Organisation becomes rigid

Practice/Process Trade-off

Definition:International Marketing involvesEstablishing and Coordinating

Marketing Activities Across NationalBoundaries

- Requires a global “mindset”

Lecture 1The Global Environment

& International Marketing Concepts

1. Historical Market Evolution2. Drivers to International Marketing

3. Our place in the international Market4. The evolution of the international Marketing

Company5. The Influence of Technology and Competition

on International Marketing

Chemical Raw Materials Packaging

Style

Branding

Promotion

Finance

Logistics

Company Fit Manufacturing Processes

Competencies

Competitors

Material Availability

Sourcing

Trends

Tastes

Technology

International Markets

Domestic Market

Relative Competitive Advantage

Channels

Regulation

Feedback

Feed forward

Source: http://en.wikipedia.org/wiki/Image:PeriplusMap.jpg

http://www.history.upenn.edu/coursepages/hist086/material/frank_map8a.jpg

History of the Development of the Malay Archipelago

• Portuguese

• The Dutch

• The British East India Company• British

Colonial and Post Colonial Companies

• Companies here to benefit from comparative advantage

• Companies here to exploit the local market

http://www.irows.ucr.edu/cd/courses/122/b10toch17_files/image092.jpg

Tribal Societies

Merchant Capitalism

Industrial Capitalism

Financial Capitalism

Tech & Travel Capitalism

Globalism Vs. Localism

Malay Fashion

Thai Fashion

Hong Kong

Fashion

Breakfast in the World

Or

Where is this? Thailand

Australia

USA

Asian Influence

Sesame, wasabi, ginger, noodle and

Asian cabbage

Indian Influence

Fruit, spice and toasted nuts, chutney, quince pear, roasted

coriander, pistaschio,almond &

walnut

Blue and goat cheese

Mexico

Tarmarind, squash flowers, huitlacoche (corn mushroom),

portobello mushroom, duck meat

North America

Cuisines with most potential for growth

Mediterranean influence

Indian influence

Middle East influence

Slow Food

Europe

Fusion style

Thai, Indonesian, Vietnamese influences

Contemporary cuisine

Mediterranean influence

Exotic combinations

South America

Fusion style

Thai/ChineseWestern/ChineseIndonesian/Thai

American/Mediterranean

Italian

French

Asia/Pacific

Geography(Climate, Topography, Flora, Fauna, Microbiology)

History

Technology and Political Economy

Social Institutions(Family, Religion, School, Media, Government, Corporations)

PeersElements of Culture

(Values, rituals, symbols, beliefs, though processes

Consumption decisions and behaviours Management Styles

Consequences

Ad

apta

tio

n

So

cial

isa

tio

n

Ap

pli

cati

on Imitation

Market Structure

Adapted from Cateora & Graham P. 99

Culture

Values

Beliefs

Assumptions

Leadership

Theories in action verses Espoused

Norms and group behaviour

Organisational learning (single or double looped

Productivity & effectiveness

Stories, myths, heroes, artifacts, informal behaviours

Interpersonal Interactions

Sincerity

Warmth Personality

Networking Team/Individual Orientation

Character

Judgment

Culture

Hunter, Baharuddin (OUM) & Rozhan (UIA): Alpha Model of Innovation

FMCG Market Fragmentation/Concentration Comparison Between Malaysia, Thailand, Hong Kong

and Australia Outlet Type Malaysia Thailand Hong Kong Australia

Hyper & Supermarkets (Chain Owned)

20% 68% 91% 85%

Independent Hyper & Supermarkets

20% 2% 2% 10%

Wholesale Trade – Sundry & convenience Stores

57% 10% 2% 3%

Other 3% 20% Convenience

Chains

5% 2%

Manufacturer

National Distributors

Wholesalers

Consumers

Hypermarkets Super- markets

Sundry Stores

Convenience Stores

Chinese Medical Halls

Malaysian Retail MarketChannels & Structure

Manufacturer

Sales Broker

Major Retailers

Retail Outlets

Australian Retail Market Channels and Structure

Actualisation

(The Artist) Self-fulfillment

Rice

Soap Fresh

Vegetables

Most Household Cleaning Products

Water Purifiers

Fashion Clothes (e.g. Jeans)

Chewing Gum

Car Air Fresheners

Travel & Vacations Fine Fragrances

Aromatherapy products Luxury cars

Nutraceuticals & herbs

Books Fine Dining & Processed Foods

Study after retirement Fresh vegetables (Organic)

Esteem (The Executive)

Achievement, prestige,fulfillment

Social (Worker) Family, relationships,

workgroups

Safety (The Farmer) Home, Security and stability

Physiological (The Hunter) Basic Biological Needs – Food, water, air

Staples: based on survival (fear)

Necessities: based on what is good (existence)

Community: (acceptance)

Responsibility: (hope)

Fulfillment: (dreams)

http://www.brandingstrategyinsider.com/all_of_derricks_posts/index.html

Geert Hofstede studied 88,000 employees of one MNC over sixty-seven countries to develop a framework for understanding cultural differences and defined cultural

differences along five dimensions[ii];

[ii] Hofstede, G., (1991), Cultures and Organisations: Software of the Mind, Berkshire, McGraw-Hill.

1. Individual verses collective orientation: the extent to which people have an individual

orientation, concerned primarily for themselves and families, verses to the extent that an individual

identifies with a group and feels their interests are best served in a group context, which they

will give loyalty,

1. Power-distance relationships: the extent to which people accept that power is distributed to individuals and

institutions unequally, thus in high power-distance relationships there is more respect for authority, where one

would not be expected to go over their boss, than in low power-distance cultures

where people would be sensitive to people showing authority and seek help from those

they believe they could get it from[i],

[i] Hofstede, G., (1980), Culture’s consequences: International differences in work-related values, Beverly Hills, Sage.

1.Uncertainty avoidance: the extent to which people feel

threatened and stressful towards ambiguity and the importance attached to rules and procedures, i.e., workers

characterised high on uncertainty avoidance like in Malaysia would tend to value security

over self actualisation[i],

[i] Hofstede, G., (1980), ‘Motivation, Leadership and Organization: Do American Theories Apply Abroad?’, Organizational Dynamics, Summer, pp. 42-63.

Masculinity: the nature of dominant values

in the organisation such as assertiveness and directness,

View of time: refers to the different time frames used by people and organisations,

which influences values about certain actions relating to procedures and

decision making, status and rewards, etc.

Trompenaars and Hampden-Turner postulate that culture is an extremely complex phenomenon which cannot be easily rationalised. Even within a single country a

cultural trait can differ significantly within an ethnically homogeneous population. Trompenaars and Hampden-Turner surveyed 15,000 managers in 28 countries to explore the differences in cultures and hypothesised there are seven areas where

diametrically opposed paradoxes occur[i];

[i] Trompenaars, F. and Hampden-Turner, C., (1993), Riding the Waves of Culture, London, Nicholas Brealey.

Universalism verses Particularism

Universalists (US, Canadians, Australians and Swiss) tend to follow sets of rules, seek clarity, and follow logically and systematically, therefore assuming there is one correct way of doing things. In contrast particularists (South Koreans, Chinese and Malaysians) are pragmatic, flexible, make exceptions according to situations and thus act more in ambiguity, therefore focus on the peculiar nature of the situation.

Individualism verses Communitarianism

Individualists are orientated towards the self and family, while communitarialists are

orientated towards a group.

Neutral verses Affective

Neutralists are orientated towards not expressing opinions and emotions openly, while affectivists

are orientated towards giving opinions and showing emotion in public.

Specific verses Diffuse

Specificists tend to separate relationships between business and personal lives, where diffusists tend

to blend relationships together.

Achievement verses Ascription

Achievement is orientated towards what one does, whereas ascription is orientated towards who we are.

Sequential verses Synchronic

Sequential view time as separate periods and are orientated with the present, while synchronic is

orientated to blending in past, present and future together in ones outlook.

Internal verses External Control

Internal views dominance over nature, while external views are subservient to nature.

Country Cultural Dimensions - Ranking for Selected Countries Power Individualism Masculinity Uncertainty Long-term Distance Avoidance Orientation USA L H H L L Germany L H H M M Japan M M H H H Netherlands L H M M M Hong Kong H L H L H Indonesia H L M L L Malaysia* H M M M M Thailand M L L M * Estimated national average L = low M = medium H = high

Malaysia: Cultural Dimension Ranking By Race

Overseas Chinese Malays Indians Power distance H H L Individualism L M H Masculinity H M M Uncertainty Avoidance L H M Long-term Orientation H L H Source: Estimates H=High M=Medium L=low

Sayed Mushtaq Hussain, CULTURAL CONSTRAINTS IN LEADING MALAYSIAN SMEsTO GLOBAL MARKETS, 2ND NATIONAL CONFERENCE ON ENTREPRENEURSHIP AND

SMALL BUSINESSVISTANA HOTEL, PENANG, DECEMBER 9-10, 2006

http://www.uwsp.edu/geo/courses/geog100/CarCult-Ideol.htm

How are pick ups advertised in Thailand?

What affect does culture have on consumer tastes and preferences?

What affect does culture have on necessary product form to be successful?

What affect does culture have on forms of distribution, promotion, pricing, etc?

How will culture affect the ways of doing business?

Underdeveloped

Market

Developing

Market

Developed

Market

• Most Items Imported

•Fragmented with few large customers

•Heavy use of intermediaries

•No market segments

• Local production following international trends

•Cooperation with international firms

•Large customers developing although market still fragmented

•Beginning of market segmentation •Open market to the world

•Own production with exports

•Markets adequately covered with products

•Full market segmentation

Hunter (1993)

A Market Typology

Thailand

Underdeveloped

Market

Developing Market

Developed Market

Beginning to rely on imports again:

Colgate, Unilever

Aspect of market globalisation

Market segmentation still weak; along ethnicity lines only

Large customers developing bringing more market concentration

Still undeveloped logistic systems

Category management still in infancy

Local firms exporting to the world

Still many market gaps

Global trends do not necessary follow

Poor Innovation

Strategic Decisions Entry

Stages

Growth Consolidation

Ambition •Identify opportunities•Initiate Investments•Develop Partnerships•Start operations

•Gain market share•Expand aggressively•Reach critical mass•Reach economies of scale•Reach break-even point

•Achieve long-term goal •Make Country/region a major contributor in the corporate portfolio•Produce positive returns

Positioning •Test/Product/Service concept•Trial and Error•Start presence in platform countries•Initiate presence in key countries

•Operate out of key countries•Combine global standardization and local adaptation

•Integrate with global network•Search for products/services optimisation

Capabilities •Invest in strategic and marketing intelligence•Look for acquisitions•Negotiate JVs•Invest in building contacts

•Invest in building assets•Acquisitions, JV and Greenfield operations•Invest in distribution, branding and human resources

•Rationalization and specialization of operations•Regional logistics•Regional facilities

Organization •Operate out of platform countries (i.e., Singapore, Hong Kong)•Rep offices in key countries

•Local autonomy of countries subsidiaries•Regional HQ as contributor and resource provider

•Mosaic of operations•Global/regional integration with some local autonomy•Regional HQ as coordinator

Strategic Decisions Related To Stage of Development

Solely Focused on Domestic Market

Company covers partial of

complete domestic market.

No or very few export sales.

Company exports on an ad-hoc basis to customers

Company exports to customers with existing products. Tends to be passive marketer overseas responding to customer inquiries

Company exports existing products and lines to a single or multiple export markets

A successful product line in the

domestic market is exported to

third countries or a number of

countries (with or without some

modification)

Company exports its product range globally

A successful product (range) is exported all around the world to customers

Company manufactures products in other markets for distribution in those markets

The company saves on freight and tariffs through manufacturing the product in other markets, either directly, under contract, license, etc.

Company sets up sales & Marketing operations regionally, globally for sales, service to customers

Company manufacturers products in other markets for export to third markets in regional manufacturing operations

Marketing Company

Marketing Company

Manufacture & Market

Manufacture & MarketManufacture & Market

Manufacture & Market

Marketing Company

The Drivers of International Marketing

Geographic, Climatic & Resource Factors

Economies of Scale

Production Layouts Logistics R&D

Economies of scales are not enough: have to be coupled with innovation, customer service and correct strategies to maintain competitive advantage. Competitive advantage is also a

fluctuating state

Growing Affluence

New markets New Products

Networking

Different types of Networks

Support Networks

Resource Networks

Regulatory Networks

Development Networks

Sales Networks

Peer Networks

Two elements:

Technical Know How

Technical Know Who

Business is close up and personal

Different levels of business require different types of

relationships

The Way of Doing Business -Merchandising

Ways of doing business and education changing

Almost universally, Large organisations will bully small organisations in

Malaysia

Guanxi

Different Origins, backgrounds, personalities,

interests, approaches

Education

Generation Gap

Market Fragmentation

Centralisation

So What are the Barriers to Networking?

• Social Background

• Ethnic Background

• Education Background

• Domicile (Rural/Urban)

• Latent Peer Group

• Personality

• Cultural Transgression (Ability)

• External Perception of You • Ability to Communicate

Identify the

Stakeholders

Logistics

Growing Intellectual Property

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

Pate

nt A

pplic

atio

ns F

iled

Figure 9.1. Worldwide Patent Filings

Non-Resident Filed Applications

Resident Filed Applications

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Source: WIPO Statistics

0 50000 100000 150000 200000 250000 300000 350000 400000 450000

Number of Patent Filings

JapanUSA

Korea, Rep.China

European Patent OfficeGermany

CanadaAustralia

Russian FederationUnited Kingdom

BrazilIndia

FranceMexicoNorway

Hong Kong (SAR)SingaporeArgentina

ItalyPoland

Figure 9.2. Twenty Largest Patent Filing Countries 2004

Resident Patent File Applications

Non-Resident Patent File ApplicationsSource: WIPO Statistics

2189645

587479

402385

347335320308

275236227217

160148147134125111108

86756762615150282111775

2884

0 500 1000 1500 2000 2500 3000

J apanKorea, Rep.

USAGermanyAustralia

New ZealandFinland

DenmarkNorway

UKSwedenAustriaFrance

IsraelSwitzerland

RussianWorld Average

SingaporeNetherlands

CanadaItaly

BelarusUkraineHungary

SpainPoland

Czech RepublicChina

BeligiumArgentina

BrazilThailand

TurkeyIndia

Mexico

Number of Resident Patent Filings/Million Population 2004

Source: WIPO Statistics

World Average

Figure 9.3. Number of Resient Patent Filings per Million Population 2004

2139

1

3910

6

627

26906

4

5935

54

316

15402

12

9

0 5000 10000 15000 20000 25000 30000

Number of International Patents Filed by Residents

Australia

Brunei Darussalam

China

Indonesia

India

Japan

Dem. Rep Korea

Republic Korea

Malaysia

New Zealand

Philippines

Singapore

Thailand

Vietnam

Figure 9.4. International Patents Filed by Residents in Asia-Pacific Region 2006

Source: WIPO Statistices

4.63.49

3.151.67

1.51.46

1.181.13

0.990.92

0.810.78

0.710.620.61

0.560.54

0.510.46

0.430.41

0.410.37

0.30.290.290.280.27

0.260.230.23

0.230.21

0.140.08

0 1 2 3 4 5

Number of Resident Patent Filings per USD 1 Million R&D Expenditure

Korea, Rep.Japan

BelarusNew Zealand

UkraineRussian

SingaporeAustralia

PolandGermany

World AverageChina

USAUK

ArgentinaNorway

HungaryThailand

DenmarkAustriaFinlandFrance

ItalyBrazil

SwitzerlandSweden

Czech RepublicSpain

NetherlandsIndia

CanadaIsrael

MexicoTurkey

Belgium

Figure 9.5. Resident Patent Filings per USD 1.0 Million R&D Expenditure

Source: WIPO Statistics

Transport3%

Materials Processing, Textiles & Paper

3%

Machine Tools, Engines, Thermal Process

5%

Mechanical Components3%

Consumer Goods & Equipment

5%

Other1%

Civil Engineering, Building, Mining

2% Electrical devices & electrical engineering

6%

Audio-Visual4%

Telecommunications8%

Industrial Processes, Handling & Printing

7%

Agriculture and Food Processing

2%

Pharmaceuticals & Cosmetics

8%Biotechnology

4%

Chemical Engineering2%

Material & Surface Technology

5%

Organic, Macromolecular & Polymer Chemistry

7%

Analysis & Medical Technology

13%

Optics2%

Semiconductors3%

Information Technology8%

Source: WIPO Statistics

Figure 9.6. Major Categories of International Patent Applications 2006

11%13%

8%

13%

12%13%13%

8%

21%

-5%

17%

11%

11%

8%

16%

28%

22%

15%

9%

12%

-5%

0%

5%

10%

15%

20%

25%

30%

Perc

en

tag

e G

row

th (

%)

Ele

ctr

ical d

evic

es &

Au

dio

-Vis

ual

Tele

co

mm

un

icati

on

s

Info

rmati

on

Sem

ico

nd

ucto

rs

Op

tics

An

aly

sis

& M

ed

ical

Org

an

ic,

Ch

em

ical

Mate

rial &

Su

rface

Bio

tech

no

log

y

Ph

arm

aceu

ticals

&

Ag

ricu

ltu

re a

nd

Fo

od

Ind

ustr

ial

Mate

rials

Mach

ine T

oo

ls,

Mech

an

ical

Tra

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Go

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,

Figure 9.7. Main Areas of Patent Filing Growth 2006

Source: WIPO Statistics

Figure 9.8. Integration between a Firm’s Core Mission and Intellectual Property

1. Recognition 2. Desirability

To develop public recognition and carry over certain desired values to consumers

Trademarks and certain Copyright Information

To enable companies to delivery good products with superior performance to competitors, new features, extended product life, etc, so that products are

competitive and desirable.

Patents, Registered Designs and Proprietary Knowledge

3. Form 4. Emotional Connection

To develop recognisable literary and visual forms that add value and assist in creating an inherent desirability to the

form of communication between company and consumer.

Copyrights and Trademarks

To maximise financial returns for production undertaken by the company,

add to product differentiation and develop an emotional connection with consumers.

Brands and Trademarks

[i] Stamm, O., A., (1993), ‘Intellectual Property Rights and Competitive Strategy: A Multinational Pharmaceutical Firm’, in

Competitors

The Market Place

Values Expectations Emotions Recognition Potential

Emotional Connections

Influence of Product Lifecycle

The General Business Strategy

Influence of New

Technology Product Development - Invention (new to the world) - New to company product - New Style, variant or benefits

Patent, Registered Design, Proprietary

Knowledge (secrecy and non-disclosure agreements)

Process Development (manufacturing)

Patent, Proprietary Knowledge (secrecy and

non-disclosure agreements)

Market Strategy Market parameters (mix) Channels

Knowledge Image & Story (target)

Knowledge, Creativity, Branding, Trademarks,

Copyright

Figure 9.9. The General Tools of Intellectual Property in Business Strategy

Compact Disks

Rapid decline of media use after introduction of new media until product ceases to be used anymore, Companies must cease operations or switch to new technology

Floppy Disks

Failure to advance IP and convert into new products results in competition in a price sensitive market where brands don’t attract consumer recognition

Car Air fresheners

Branding

Patents

Rela

tiv

e C

om

peti

tiv

e A

dv

an

tag

e

a. Slow Emerging Technology Market Air Fresheners

Gel Air Fresheners

Liquid Air Fresheners

1960s 1970s 1990s Time

Registered Designs

Primary Used IP Protection

Patents

Rela

tiv

e C

om

peti

tiv

e A

dv

an

tag

e

Primary Used IP Protection

1960s 1970s 1990s Time

b. Fast Emerging Technology Market Electronic Media Storage

Pen Drives

Figure 9.10. IP/market scenarios with competitive advantage in slow and fast technology emerging industries

Innovation is needed to convert any factor into a source of competitive advantage

New Technologies

New Business Models

Entrepreneurship

Opportunity Discovery