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«Understanding Consumer Behavior in the Asia Pacific Market and Developing Appropriate Marketing Strategies. Country: Australia& Hong Kong Group: # 3 ...»

-- [ Page 1 ] --

Course: International Marketing

Instructor: Mahmood Hussain, PhD

Understanding Consumer Behavior in the Asia

Pacific Market and Developing Appropriate

Marketing Strategies.

Country: Australia& Hong Kong

Group: # 3

Student Name 1

Student Name 2

Student Name 3

Student Name 4

Date: ____________



I.Summary of the Project 4

II.Introduction 5

III.Country Profiles—Australia& Hong Kong

• Population, age/ gender distribution, literacy rate. 6

• GDP, GDP per capita. 6

• Foreign Trade and Investment:

1. Export-Import-by products, 1990-2004 6-7

2. Foreign Direct Investment-by sector/products, 1990-2004 7

• Multinational Enterprises Investment operations and performance: 1990-2004. 7-8

• Stage of economic development- size of manufacturing/ service sectors v. s agriculture sector. 8-9

• Significant economic/ social change(s) in the past 10-20 years. 9-10 IV.Reasons (Psychological/ Sociological/ Historical) for differences in behavior between Australia and Hong Kong.

• Differences in the purchase experience by countries.

10-11 2

• Cultural differences in negative product assessment- Safety Equipment. 11-12

• Cultural differences on Internet buying behavior and product customization -Telecommunication. 13-15

• Cross-cultural differences in sensitivity to advertising. 15-17

• The value of promotions across cultures. 17-18

• How can we satisfy consumers in these countries?

18-20 V.Three potentially marketable products/service

• Hybrid car 20-21

• Cosmetics- Skincare 21-22

• Wine 22-23 VI.The product we choose to market in Australia& Hong Kong-Skincare

• Target market 23

• Positioning strategy that matches behavior of this target group. 23-24

• Marketing strategies based on 4 P’s. 24-27 VII.Appendices 28-31 VIII.References 32-35

–  –  –

The purpose and scope of our project is to understand consumer behavior in Australia and Hong Kong and developing appropriate marketing strategies. First of all, from the first part, country profiles, we planned to get a general idea how these two countries performed in terms of GDP, exports and imports, foreign direct investment, stage of economic development as well as any significant economic/social changes in the part 10 years. In addition, we analyzed cross-cultural differences in these two countries regarding to different marketing issues including sensitivity to advertising, negative product assessment, Internet buying behavior, product customization, purchase experience and value of promotions. Based on our analysis, we came up with a brief solution in order to satisfy consumers in these two countries. Moreover, given a specific product, anti-aging for Australia and whitening for Hong Kong market, a series of marketing strategies including how to position the target market and a brief discussion with four P’s, were developed so as to successfully introduce our new product in a new market.

The methods we used for our project were varied. In order to get the most updated data, we searched from some official and professional website for both countries, such as WTO, Bureau of East Asian and Pacific Affairs, U.S. Department of State, and so on. Additionally, school library database was a good resource center.

From there we got plenty of information we need. The major database we used were ABI/Inform, EIU, Factiva, Lexis Nexis, etc. Also, journal articles, newspapers, internet data were helpful for our research.

The results of our project were positive and important. Basically trough the project we know it is true that operating business in foreign markets is more that just having offices and production facilities scattered throughout the globe. Understanding the foreign consumer behavior and develop appropriate marketing strategies to satisfy their needs become very important issues for marketers. More important, through the project, we learned how it is vital and difficult for those marketers to keep their strategies successfully in a long run.

4 Introduction

Australia and Hong Kong, two major countries of Asia Pacific Region, are playing important roles in world trade activities. According to WTO ‘s statistic of world trade profile released in 2003(WTO,2005), Australia’s export and import performance ranked No. 26 and No.19 respectively in merchandise category in the world; Hong Kong ranked No.11 in the same category of both export and import performance. Hong Kong government is deepening its economic interaction with the Pearl River Delta in an effort to maintain Hong Kong's position as a gateway to China (U.S. Department of State, 2004). Since China has relaxed the restriction about Chinese people travel in Hong Kong, more and more affluent Chinese people come across the river for sightseeing and shopping. Therefore, the market scale is extended rapidly and market potential is unlimited. Looking at Australia, it commenced various economic reforms in the 1980s and has successfully transformed itself from agricultural, import-substitution country to an internationally competitive one. Its role in global business is becoming critical. As result of growing business opportunities and increasing global competition in both markets, Corporate America has to understand and respond to different cultural values and different consumer behavior as well in order to successfully explore local markets.

Country Profiles:

Population, age/gender distribution, literacy rate Australia—Australia had a population of 20.2 million with an annual growth rate of 1.2% (U.S. Department of State, 2004). People between 0 and 14 years old distributed 20.1% of total population. People between 15 and 64 years old occupied 67.2% of total population and others aged over 65 years were 12.8% of total population. And in Australia, the gender distribution was found that female and male distributed almost equally in half (Nationmaster.com, 2005). The literacy rate was 85% (U.S.

Department. of State, 2004).

Hong Kong--Hong Kong’s population in 2003 was 6.81 million with 0.2% of growth rate (U.S. Department of State, 2005). People between 0 and 14 years old distributed 14.2% of total population with 52.3% male and 47.7% female, people between 15 and 64 years old occupied 73.3% of total population with 49% male and 51% female, 5 others aged 65 years and over were 12.5% of total population with 46.1% male and 53.9% female (Nationmaster.com, 2005). The literacy rate was 92%, specifically with 95% male and 88% female (U.S. Department of State, 2005).

GDP, GDP per capita Australia—Australia’s GDP in 2003 was $504.4 billion and per capita real GDP (2002) was $21,233.

Hong Kong—Hong Kong’s GDP (2003) was $158 billion and per capita GDP (2002) was $22,988.

Foreign Trade and Investment:

Export-Import-by products, 1990-2004 Australia—Australia’s major exports were fuels and mining products, agricultural products, manufactures, and food. Generally, from 1990 to 2003 all four major exports products were in an increasing trend. Specifically, fuels and mining products increased over the years. Agricultural products, manufactures and food products increased from 1990 to mid 1990s and then decreased from that time (See Graph 1 & Table 1). Three major imports products for Australia were manufactures, machinery and transport equipment, office and telecom equipment. Specifically, manufactures increased a lot from 1990 to 2003, especially from 1990 to mid 1990s. The trend for machinery and transport equipment was kind of stable over the years with an increasing but not much. Office and telecom equipment didn’t increase a lot over the years but in a kind of stable situation (See Graph2 & Table 2).

Hong Kong—It is very interesting that major exports and imports products for Hong Kong from 1990 to 2003 were same. They were manufactures, machinery and transport equipment, office and telecom equipment. Over the past years, they were all increased, especially for manufactures for both exports and imports (See graph 3,4 & Table 3, 4).

Foreign Direct Investment:

Australia--One of Australia’s biggest challenges was finding sufficient capital to finance growth. Partly in response to the country heavy burden or external debt, both the conservative Liberal-National coalition and the Labor Party have relaxed limits on foreign ownership, even in such traditionally sensitive areas as broadcasting, airlines and telecommunications. So, from 1996 to 2004, the largest concentration of foreign investment has been in finance and insurance. Also, the USA was Australia’s largest single foreign investor, with ranging from 24% to 29% of total investment and the UK 6 was next with ranging from 12% in 1996 to 27% in 2004. In 2004, the accumulated investment for the US was A$242.1bn (up 3% on 2000/01), A$223.9bn for the UK (up 9.2% on 2000/01) (EIU—Australia, 2005).

Hong Kong— Hong Kong’s market is small which is attractive to foreign retailers because of the population’s high disposable income and the sophistication of its brand-conscious consumer market; also with its geographic location, communications network, infrastructure, free-port status and the relatively low level of taxes.

Moreover, there are no restrictions on foreign ownership of property or companies and no foreign-exchange controls. Hong Kong is a premier capital-raising centre, especially for mainland Chinese companies. From 1996 to 2004, the major sources of inward direct investment were mainland China with average of 29% of total, The British Virgin Islands with average of 28% of total, Bermuda, and the United States.

Since the services sector generated more than 80% of Hong Kong’s GDP, the Hong Kong government actually made a push to attract more investment in service industries, such as transportation, insurance, regional header quarters, environmental consulting and building and project management (EIU—Hong Kong, 2005).

Multinational Enterprises Investment operations and performance Australia— According to OECD guidelines for multinational enterprises, government addresses guidelines to multinational enterprises operating in or from 30 OECD member countries and non-member adhering countries. The Guidelines are a set of recommendations for responsible business conduct covering a broad range of issues including information disclosure, employment and industrial relations, environment, combating bribery, consumer interests, science and technology, competition and taxation.

The guidelines aim to ensure that the operations of business enterprises are in harmony with Government policies, to strengthen the basis of mutual confidence between enterprises and the societies in which they operate, to help improve the foreign investment climate and to enhance the contribution to sustainable development made by multinational enterprises. Moreover, the ANCP has formal procedures in place to address specific issues of multinationals operating in a manner which is not consistent with the Guidelines. The ANCP offers a forum for discussion and will mediate discussions where appropriate to help resolve the issues (Legg, 2003).

Hong Kong— As at June 1, 2001, there were a total of 3 237 regional operations, representing a 7.9% increase over 2000, a record high since the survey started 11 years ago. More and more multinational corporations (MNCs) are flocking to set up

–  –  –

8 Any significant economic/social changes(s) in the past 10-20 years Australia—Australia was one of the OECD’s fastest-growing economies throughout the 1990s, a performance that owed much to the economic reform program. Despite a transient slowdown in late 2000, it has been 14 years since Australia experienced a recession and economic growth remains robust. Economic growth should be around 3% in 2004, despite the negative effect of the prolonged drought on Australian agricultural exports. The latest predictions suggest that GDP growth will exceed 3% Political condition: Over the next 2 years (U.S. Department of State, 2004).

The liberal Party/National Party coalition came to power in the March 1996 election, ending 13 years of ALP government and electing John Howard prime minister.

Howard’s conservative coalition moved quickly to reduce Australia’s government deficit and the influence of organized labor, placing more emphasis on workplacebased collective bargaining for wages. The Howard government also has accelerated the pace of privatization, beginning with the government-owned telecommunication corporations (Country Watch--Australia, 2005).

Hong Kong--Being a free port, Hong Kong has become a manufacturing, commercial and tourism center with few equals. Its achievements make it one of the four "small dragons" in East Asia characterized by its rapid economic growth and high per capita income. Negotiations started in 1982 between the British and Chinese governments for the future of Hong Kong. In December 1984 the Sino-British Joint Declaration was signed for the British to hand over Hong Kong to China at the end of their lease on July 1, 1997. China agreed to make Hong Kong a special administrative region (SAR) after its handover. According to the agreement, as an SAR, Hong Kong would enjoy considerable autonomy except in areas of defense and foreign policy. The Chinese government also promised to let Hong Kong retain its political, economic and judicial systems for 50 years after the reversion. All these measures for taking over Hong Kong are known as the "one China, two systems" policies. (Country Watch—Hong Kong, 2005).

Consumer Behaviors:

Differences in the purchase experience cultures:

Hong Kong—According to the 2003 ACNielsen Asia Pacific ShopperTrends, Hong Kong consumers are by far the most impulsive shoppers in the region with 67% who make unplanned purchases.Specifically, in Hong Kong, a relatively small and 9 concentrated market, 44% of shoppers claimed to use 3 or more stores regularly for grocery shopping, compared to an average of just two in South-East Asian countries That might be a sign that Hong Kong consumers were less likely to be brand loyal.

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