International Marketing Introduction to International Marketing.
International Marketing Lecture 1
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Transcript of International Marketing Lecture 1
International Marketing 463-441 (3-0-3)
Introduction
Murray Hunter
[email protected]@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
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ticals
&
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re a
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Fo
od
Ind
ustr
ial
Mate
rials
Mach
ine T
oo
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Mech
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ical
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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