mktg 680 group project final paper, bundle 1 …usermktg 680 group project final paper, bundle 1...
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MKTG 680 Group project Final Paper, Bundle 1 Instructor’s notes: 1. This is for illustrative purpose only. 2. Use this format to develop your plan. 3. You must consult the group project outline before you start writing
your plan. 4. Do not use any product idea presented in this sample plan. 5. You are expected to use more recent sources for information and
data. 6. This report deals with two countries and three products. 7. Your task is to focus on one country and one product only. 8. Do not exceed paper length (see group project outline) 9. Do not forget Bundle 2 (see group project outline)
10. Feel free to ask me specific questions, if any.
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SAMPLE
MKTG 680 __________ 200_
Group __
Student name 1 Student name 2 Student name 3 Student name 4 Student name 5
Name of the countries studied
South Korea Malaysia
Understanding Consumer Behavior in South Korea and Malaysia
and Developing Appropriate Marketing Strategies
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EXECUTIVE SUMMARY
South Korea is the 12th largest economy in the world and Malaysia is fast growing as a multi
sector economy. Both the countries have recovered well from the Asian crisis in 1997. Although
there are some basic differences in these two countries, the consumers of both the countries seem
to exhibit similar buying behaviors. This is especially true for the high income and the young
consumers. These groups have access to the western world through media and internet and are
extremely brand conscious. The consumers in these two countries have evolved to become more
sophisticated and cosmopolitan. For the high income level society in both countries the quality
of goods and the status symbols attached to it matters most. Although retail market in South
Korea has become saturated there are still opportunities for high end products and niche products.
Malaysia’s economy is growing at a very fast rate. The economy is doing well and people are
spending a lot of money on goods and services to satisfy themselves. If the correct product is
introduced along with well tailored marketing strategies a retailer can gain market share.
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TABLE OF CONTENTS
I. Executive Summary………………………………………………………………………1 II. Table of contents………………………………………………………………………….2 III. Introduction……………………………………………………………………………….3 IV. Country Profiles…………………………………………………………………………..4 South Korea 1. General Information………………………………………………………………………..4 2. Economic…………………………………………………………………………………...4 3. Foreign Trade and Investment……………………………………………………………...4 4. Multinational Enterprises Investment operations and performance………………………..5 5. Stage of economic development……………………………………………………………5 6. Any significant economic/social change(s)………………………………………………...5 Malaysia 1. General Information………………………………………………………………………...6 2. Economic…………………………………………………………………………………....6 3. Foreign Trade and Investment………………………………………………………………7 4. Multinational Enterprises Investment operations and performance………………………...8 5. Stage of economic development…………………………………………………………….8 6. Any significant economic/social change(s)…………………………………………………8
V. Reasons (Psychological/Sociological/Historical) for differences in behavior…………….9 1. Cross-cultural differences in sensitivity to advertising ……………………………………..9 2. Cultural differences in negative product assessment……………………………………….10 3. Cultural differences in Internet buying behavior and product customization………………11 4. Differences in the purchase experience by country………………………………………...12 5. The value of promotions across cultures…………………………………………………...16 6. How to satisfy consumers in these countries……………………………………………….17
VI. Three Potentially marketable products/services…………………………………………..19 1. Ben and Jerry; For Malaysia………………………………………………………………...19 2. Vitaminwater by Glacéau; For South Korea………………………………………………...21 3. Sephora; For both Countries………………………………………………………………...22 VII. Choose one product/service from the list and do the following…………………………..23 1. Target Markets………………………...……………………………………………………24 2. Positioning Strategy………………………………………………………………………...25 3. Positioning Statement………………………………………………………………………26 4. Marketing Strategy…………………………………………………………………………26 VIII. Appendix………………………………………………………………………………….29
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INTRODUCTION
In this project our aim is to first state some facts about the economic and social conditions
that exist South Korea and Malaysia. We then will touch on some psychological and social
reasons that will give us insights into the reasons behind the differences that occur in these two
countries. Once we have good background information and a better understanding of the issues
that surround the people in these two countries, we will introduce three products/services that we
think would do best in these countries and our reasons for picking these particular
products/services. We will then take this a step further and select one out of the three products
that we feel would do best in both the countries given the current economical and social needs of
the consumers in the two countries. The paper will then further discuss the positioning and the
marketing strategies best suited to promote the product in these countries.
COUNTRY PROFILES
South Korea
1. General Information
• Population: 48,422,644 (July 2005 est.)
• Population Growth: 0.38% (2005 est.)
• Age/gender distribution:
0-14 years: 19.4% (male 4,952,177/female 4,450,821)
15-64 years: 72% (male 17,715,267/female 17,147,808)
65 years and over: 8.6% (male 1,670,971/female 2,485,600) (2005 est.)
• Literacy rate: age 15 and over can read and write
total population: 97.9%
male: 99.2%
female: 96.6% (2002) (“Korea, South”, cia.gov)
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2. Economic
• GDP: purchasing power parity - $925.1 billion (2004 est.)
• GDP per capita: purchasing power parity - $19,200 (2004 est.) (“Korea, South”, cia.gov)
3. Foreign Trade and Investment
Export-Import:
Exports: Most popular export commodities from South Korea are: semiconductors, wireless
telecommunications, equipment, motor vehicles, computers, steel, ships, and
petrochemicals. Some of the export partners and their shares are: China 22.4%, US 17.8%,
Japan 8.3%, Hong Kong 4.8% (2004)
Imports: Popular commodities that are imported into South Korea are: machinery,
electronics and electronic equipment, oil, steel, transport equipment, organic chemicals,
plastics the important import partners are: 21.6%, US 12.7%, China 12.3%, Saudi Arabia
5.1% (2004) (“Korea, South”, cia.gov).
Export-Import – by products, 1990-2004
The export-import data by products for Korea is listed in Table 1 in the appendix.
Foreign Direct Investment – by sector/products, 1990-2004
In 1998, the South Korean government created the “Foreign Investment Promotion
Act” in order to promote foreign investment. Foreign investment is usually accepted in most
industries, expect for public organizations, the fishing industry and meat wholesale (“From
Beijing to Budapest”, pwc.com).
Foreign direct investment by type and industry is listed in Table 2 in the appendix.
4. Multinational Enterprises Investment operations and performance: 1990-2004
South Korea in the early 1990’s was a hot spot for Multinationals to invest in. South Korea
experienced an increase in foreign direct investment; in fact foreign direct investment reached a
record $8.85 billion in 1998, up 27% from 1998, and including an 87% increase in December
alone, the eighth consecutive monthly increase. (Lim, 1999, Prospects for foreign investments in
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Asia). Foreign direct investment has dropped by 25% in the last quarter due to reduced tax
breaks, ax probe into foreign capital and regulations against hostile takeovers. (Jung, July6, 2005:
S.Korea FDI drops 25% in second quarter)
5. Stage of Economic Development – size of manufacturing/service vis-à-vis agricultural
sector:
Korea, once known to be one of the world's poorest agrarian societies, has undertaken
economic development in earnest since 1962. After the Korean War, the government promoted a
policy for economic development. At this time, economic development was achieved through an
extensive program of building factories with foreign capital and export goods to foreign markets.
Over time, the industrial structure of the country has evolved and the country has become
advanced. Manufacturing activity represented 10% of the GDP in 1965 and in 1999 it
represented 31%. In 1965 agricultural activity was 50% of the GDP and in 1999 it was only 5%.
Today, South Korea is the leader in high-speed Internet service, memory semiconductors, flat-
panel screens, mobile phone. It also ranks high in shipbuilding, tire production, automotive
production and steel output.
(“History of Korea”, kbs.co.kr), (“Economy”, wikipedia.org), (“About Korea”, korea.net)
6. Any significant economic/social change(s) in the past 10-20 years
In the late 80s, the South Korean government launched a program to build strong
relationship with local businesses in order to make the country grow. The program emphasized
on directed credit, import restrictions, sponsorship of specific industries, and a strong labor effort.
Additionally, the government encouraged imports of raw materials and technology, savings and
investment, at the expense of consumer goods and consumption. However, the Asian financial
crisis of 1997 stressed the economic development model’s weaknesses out: high debt-equity ratio,
massive foreign borrowing and out-of-control financial sector. Along with the IMF, the Korean
government implemented an economic reform and a restructuring of its foreign debts with
creditor banks. Today South Korea is the 12th largest economy in the world and has become an
integrated player in the global economy. Moreover, the Koreans elected in 1987 ROH Tae-Woo
as President and this was the end to 26 years of military dictatorship (“Economy”,
wikipedia.com), (“South, Korea”, cia.gov).
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Malaysia
1. General Information
• Location: Asia
• Capital: Kuala Lumpur
• Population: 23.953 million
• Currency: Rinngitt
• Ethinic groups: Malay and other indigenous 58%, Chinese 24%, Indians 8%, others
10%.
• Languages Spoken: Bahasa Melayu, Chinese, Tamil, Telugu, Punjabi and Thai
• Religion: Muslim, Buddhist, Hindu, Christian, Sikh, Daoist
• Population Age: 0-14 (33%), 15-64 (62.4%), 65+ (4.2%)
• Population rate: 1,8%
• Literacy rate : Total population 88.9 %, male 92.45 %, female 85.4 %
(“Malaysia”, cia.gov), (“South Asia: Malaysia”, nationmaster.com).
2. Economic
• GDP: US 229.3 billion (2004 est.)
• GDP real growth rate: 5.7 % (2005 est.)
• GDP per capita: $ 9700 (2004 est.)
• GDP composition by sector agriculture: 7.2%, Industry 33.3%, 59.1 % (2004 est.)
• Investment Gross fixed: 21.7% of GDP
• Population below poverty line: 8%
⇒ Gender distribution:0-14 age group male 4,067,006/female 3,837,758
⇒ 15-64 age group male 7,488,367/female 7,447,047
⇒ 65+ age group male 490,334/female 622,624) (2005 est.)
• Unemployment rate: 3%
• Percentage living in urban area: 64%
• Percentage living in rural area: 36%
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(“Malaysia”, cia.gov), (“South Asia: Malaysia”, nationmaster.com).
3. Foreign Trade and Investment
Malaysia, which was initially a middle-income country, has evolved from being a producer of
raw materials to a fast growing multi-sector economy over the last 30 years or so. Most of
Malaysia’s growth has been driven by exports – particularly electronics. Malaysia’s top export
destinations are US, China and Japan. (“Malaysia, cia.gov”, “South Asia: Malaysia,
nationmaster.com”). Table 8 in Appendix shows Malaysia’s top 10 trading partners.
Exports:
Most popular export commodities from Malaysia are: electronic equipment, petroleum and
liquefied natural gas, wood and wood products, palm oil, rubber, textiles, and chemicals. Some
of the export partners and their shares are: US 19.6%, Singapore 15.7%, Japan 10.7%, China
6.5%, Hong Kong 6.5%, and Thailand 4.4% (2003).
Exports by product are listed in Table 3 in the appendix. (“Key Statistics”, statistics.gov.my)
Imports:
Popular commodities that are imported into Malaysia are: electronics, machinery, petroleum
products, plastics, vehicles, iron and steel products, and chemicals. The important import
partners are: Japan 17.3%, US 15.5%, Singapore 11.9%, China 8.8%, South Korea 5.5%, Taiwan
5%, Germany 4.7%, Thailand 4.6% (2003). Table 10 in Appendix gives more details on imports.
Foreign Direct Investment :
To attract more foreign direct investment, Malaysian government has adopted a pro-business
environment policy which creates a harmonious place for business to operate. Most commonly
approved FDI’s by the Malaysian Investment Development Authority are generally concentrated
in chemical, electronics and electric sectors. FDI flows into Malaysia have stabilized in the
recent years. There has also been a change in the nature of the flows of FDI into Malaysia.
These flows have become more broad-based with a higher share of new flows shifting towards
higher value added activities in the services and the manufacturing sectors. (“South Asia:
Malaysia”, nationmaster.com)
4. Multinational Enterprises Investment operations and performance: 1990-2004
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In the last few years, Multinational Enterprises are also pouring money into developments of
hypermarkets in Malaysia. Since Dec 2003, there are 32 foreign owned hyper markets in
Malaysia. Some of the companies that have a huge FDI in the country are companies like Dairy
Farm Giant, Marko, Tesco, Carrefour. (“Malaysia”, pwc.com)
5. Stage of economic development
Malaysia’s economy grew rapidly between 1980s and 1990s under Prime Minister Dr.
Mahathir bin Mohamad’s leadership. Malaysia was affected by the economic crisis in Asia in
1997-98 but it rebounded from the crisis with the help of a substantial financial stimulus package.
Today, Malaysia is considered to be one of the most developed of the developing countries. The
country is experiencing an increase in the rural to urban migration. Labor force by occupation in
2000 was estimated to be Agriculture 14.5%, Industry 36%, Services 49.5%. The current GDP
by sector also shows that services sector contributes most heavily: services: 59.1% (2004 est.).
Manufacturing industry: 33.6%, Agriculture: 7.2%. Looking at these numbers above number one
can say that Malaysia’s economy is in a high stage of economic development. Malaysia’s current
GDP growth level is 7.1% (2004 estimate). Private consumption and investment are both on a
rise since 2003 (“Malaysia”, cia.gov), (“Malaysia”, pwc.com).
6. Significant economic/social changes
One of the most significant economic changes over the past few years in Malaysia has been
the emergence of the services and manufacturing industry. Today Malaysia is a multi-sector
economy. The most significant social change in the past 10 years or so has been the replacement
of Prime Minister Dr. Mahathir bin Mohammad. Under his command the political environment
had become highly authoritarian and there was very little criticism of the government. In 2003,
Mahathir resigned and Abdullah Ahmad Badawi took over his position under his leadership
Malaysia’s aim is to become a fully developed country by 2020, which under today’s
circumstances seems quite possible (“Malaysia”, cia.gov), (“History”, wikipedia.org).
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REASONS (PSYCHOLOGICAL/SOCIOLOGICAL/HISTORICAL) FOR
DIFFERENCES IN BEHAVIOR BETWEEN THESE TWO CULTURES/COUNTRIES
1. Cross-cultural differences in sensitivity to advertising
Sensitivity to advertising in South Korea
According to a consumer survey, 68% of South Koreans revealed that advertising
influences their purchase decisions. They prefer buying a product that has been frequently
advertised. Paradoxically, they seem not to always trust advertising contents. For marketers to be
successful in advertising in South Korea, they must challenge this contradiction. They must
customize the message to society’s values, emotions and perceptions. One of the best ways to do
so is to use word-of-mouth advertising. Koreans trust a friend, family member, opinion leader or
eventually a customer’s testimony more than television or newspaper advertising. Additionally,
the use of celebrities usually makes the ads successful.
Koreans are sensitive to creativity and thus marketers should try to set the trend. Even
though traditional values are still common ground, the Korean society is changing and nudity in
advertising works. In fact, controversy is a good way to market a product and create brand
awareness.
Finally, with the increasing development of Internet, South Koreans are sensitive to
Internet advertising.
(Hyson, Jr., Larry M.)
Sensitivity to advertising in Malaysia
Malaysia is a very diverse country and is divided into different ethnic groups, with
different religious backgrounds and beliefs and languages. Thus, the advertisers in Malaysia
have to adhere to some strict government rules and regulations, which are in place to make sure
that none of the ethnic groups feel offended by any of the advertisements. In Malaysian culture,
advertising is treated as a tool that can be used to build a society and not merely a consumer
society.
Due to the above mentioned reasons ads in Malaysia are very dry and not as humorous as
the ads in the USA for example. TV ads are very descriptive in nature. Newspapers, Magazines
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are the most popular advertising medium probably because these ads can target specific
audiences. Only ads on the internet have no restriction on their content.
One cannot say that ads make a huge impact on the buying decisions of people. People in
Malaysia are very price sensitive and like to buy goods that give them value for money.
Malaysians are also very brand and “prestige” conscious and they seem to be more influenced by
the opinions and suggestions of close friends and family members.
A list of products that cannot be legally advertised is: Racial extremist groups, Funeral
services, Gambling, Religious denominations, Guns and armaments and Political parties.
(Waller, David S.), (“The Malaysian Advertising Code of Ethics for TV and Radio” Asian
Market Research News)
Although, the main reason for advertising restriction in Malaysia is based on advertising
images, of which some of the main ones that advertisers need to be carefully about are: Nudity,
Indecent language, Sexist images. Example of some other unacceptable products and services
are: Liquor and alcoholic beverages, Scenes of amorous, intimate or suggestive nature.
Newspapers remained the biggest advertising medium in Malaysia in the first quarter of
this year, accounting for 62 per cent of total spending, TV 28 per cent, radio 4 per cent,
magazines 4 per cent, and cinema and others 2 per cent (Asian Market Research Dot Com)
2. Cultural differences in negative product assessments
South Korea
South Koreans are not willing to give up spending money for preparation for the future.
According to a survey from the Korean Chamber of Commerce and Industry, in case of
economic difficulties 28.3% of South Korean would continue spending money for preparations
against uncertain future such as installment savings or savings insurance. 22.4% said that they
would continue spending money for their children’s education, 36.8% for newspaper/magazine
subscriptions, and 38% for occasions of congratulations or condolences.
(Survey of Recent Change in Consumption Behavior, KCCI)
Malaysia
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In Malaysia the culture like most Asian cultures is to save money, but in the recent years more
people have started owning credit cards, although it is still safe to say that the majority of people
do like to save money for difficult times. Brands are not considered important for necessities like
medicines etc. Private Local brands are gaining popularity in Malaysia. (AC Nielsen Asia
Pacific : 2002 Shopper Trends Asia Special)
3. Cultural differences on Internet buying behavior and product customization
Internet buying behavior
South Korea
South Korea has one of the highest rates worldwide for Internet access: 63% of the
households have a computer and 46% have an Internet connection. People not only surf the web
but also they shop on line. The country has one of the highest e-commerce conversion rates on
the planet. Indeed, 48% of those who visited a shopping site in the last six months went on a
complete transaction. In details, according to a KCCI survey, Internet shoppers are mostly in
their 30s (79.3%) and women (74.9%).
E-shoppers use the web to buy clothes and fashion goods, books and CDs and household
appliances. 66% of them purchase products at multi-channel shopping malls supported by
department stores, TV home shopping and catalog sales networks over single-channel sites.
There is a trend for consumer to buy at Internet shopping malls because they offer low priced
goods.
Most of consumers think that the Internet offers competitive prices. Yet, they are only a
few to find the transaction convenient. One of the biggest disadvantages that consumers see in
shopping on line is the inability check the quality of the products. Also, they are afraid of the
possible disclosure of their personal information and don’t feel comfortable to make online
payment with credit cards.
Finally, mobile commerce is an increasing trend. Purchases made through mobile phones
and PDAs are becoming more and more common due to the increased use of mobile devices and
wireless Internet application.
Malaysia
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Number of Internet users has reached about 8.6 million representing roughly about 37.1%
of the total population. The percentage of internet population that buys online is roughly 28.4%,
almost one third of the users have purchased things online and most of these purchases were
made in the following areas: CDs, clothing and flowers: 45%, computing products: 18% and
traveling products: 7%. Internet shopping gained popularity and rose from 24% in 2002 to 28%
in 2003.
Of the countries in Southeast Asia with more than 20% Internet penetration, only Korea
has a significant level of on-line purchasing, 19% of all shoppers, including 11% for groceries or
personal care products. Internet population growth from 2002-2007 is projected to be 19.9
million people. Projections of Malaysian e-commerce market for 2005 are: Business – Business
(B2B) RM 29.6 billion (IDC) and Business-Consumer (B2C) is forecasted to be RM 5.7 billion
(IDC)
(“2004/2005 Global Retail & Consumer study from Beijing to Budapest”), (“2002 Shopper
Trends Asia Special”), (“MATRADE: Malaysian External Trade Development Corporation” The
National Trade Promotion Agency of Malaysia)
Product customization
South Korea
Advertising will fail if it is not customized to Korean emotions.
For skin products, women usually don’t follow the trends and want to keep their
individuality. They want their own products and colors.
(Kim, Eun Young)
Malaysia
As the income levels and economic welfare have been on the rise, the consumers in
Malaysia have started demanding goods and services that meet their specific needs and
preferences. That tells us that the product customization is getting more important in this country.
For instance, where food item are concerned more Malaysian like to buy in smaller quantities
and thus the suppliers need to adapt to this need of the consumer.
(“Global Lifestyles.”, Socialtechnologies.com).
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4. Differences in the purchase experience by country
Purchase Experience in South Korea
When it comes to shopping, there are many choices such as Department Store, Large
Discount stores, and Open-air markets. There are two characteristics in Korean retail business.
First, Koreans’ lifestyle has been changing and they spend more time for leisure. Because of this,
people want to have fun while shopping, therefore as multi-complex theaters and game rooms
have become very popular. Satisfying customer needs and differentiating from Internet-shopping
mall, many malls and department stores offer multi-functional stores with entertainment facilities.
Second, in general, Koreans are willing to pay lower-prices for products these days. Thus, the
number of discount store is increasing. Moreover, convenience stores and no-store sales have
increased. On the other hand, small size supermarkets sales have decreased.
Customer services are is limited in South Korea, especially small stores. They don’t offer
thirty-day money back guarantee, a five-year warranty and so on. For instance, most clothing
shops don’t have fitting room, however, if you don’t like items or they don’t fit you, you have to
exchange within three days.
(“2004/2005 Global Retail & Consumer Study from Beijing to Budapest”),
(“What has changed in the past ten years of door opening in distribution” KCCI), (Kim, Eun
Young), (“Shopping in Korea” Life in Korea)
Here are the characteristics of each shopping site.
Department store
Many department stores are located near subway station. So it is easy to access stores.
Most department stores open from 10:30AM to 7:30PM and also all weekend.
Most of them offer two-week long sale four times a year in January, April, July and October.
(“Korea.worldtips.net”), (“Shopping” Korea.Net), (“Shopping in Korea”, Tour 2 Korea)
Large Discount Store
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Large discount stores sell a variety of products which is close to what department stores
sell too. However, there are two big differences. First, of course, discount stores offer cheaper
price. Second, discount stores usually don’t sell luxury brands of clothing.
Thus, many consumers go to shop at large-sized discount stores for foods, durable goods. They
are usually busy on the weekdays between 5 and 9P.M., as well as on weekend. When you get in
a discount store, you can put in your personal belongings in lockers during you shop. Also you
can use carts and hand-carry baskets for shopping.
(“Shopping in Korea” Tour 2 Korea), (“What has changed in the past ten years of door opening
in distribution” KCCI)
Open-air market
Most of department stores sell items for fixed price. So if you want to get items for lower
price, people usually shop at street vendors and in the major open-air markets such as
Namdaemun and Dongdaemun. There are thousands of shops and stalls. These markets are
famous for inexpensive and wide variety of products. In addition, they are the largest general
wholesale markets in Korea. Koreans prefer to buy especially clothes at Dongdaemun because
they offer various kinds of clothes. They open until daybreaks, which attract night shoppers.
However, most large open-air markets in Korea are closed on Sundays.
(“Shopping in Korea” Life in Korea), (“Shopping in Korea” Korea.net), (“Shopping in Korea”
Tour 2 Korea)
Traditional markets
Usually traditional markets are found one-story building and have many interesting
products. They usually are open 10:00AM to 21:00PM. In opposition to department store, fixed
prices are not available at traditional markets. However, you can get discount when you pay cash.
In addition, you should ask before buying whether they offer an exchange or a refund.
(“Shopping in Korea” Korea.net), (“Korea.worldtips.net”)
Others
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There are many special markets in Seoul. Some examples are: a health supplement and
oriental medicine market (Gyeongdong Market), an electronics market (Yongsan Electronics
Market which is the largest electronics market in Asia).
(“Shopping in Korea” Korea Net)
Purchase experience in Malaysia
If we look at the purchase experience in Malaysia, we can see that Malaysia offers
different shopping experience for each taste and budget. For example, there are modern air-
conditioned shopping malls, department stores, shopping arcades, bazaars, night markets, duty
free shops, hypermarkets, and handicraft centers in the country. Although shopping malls’ have
comfortable air conditioned atmosphere, shop-lot stores are usually cheaper than malls. In
general, the most economical way of shopping in Malaysia is the markets. These markets offer
different kinds of products, from fruit, vegetables, and meat to electronics and perfume.
However, shopping in these markets requires some quality control and price negotiations.
Bargaining is normal in small stores and roadside vendors; however, prices in large stores and
malls are fixed. Malaysians love to spend time in malls, look over shops in there, eat in the food
outlets, and enjoy activities in the malls, such as bowling. Shopping malls in Malaysia are also
entertainment centers with mini-cinemas and ice-skating rings. In general, the staff in stores is
very polite, friendly, and attentive.
Stores in Malaysia, in general, open from 9.30 A.M. to 7.00 P.M. Business hours of the
most department stores and supermarkets are 10.00 A.M. to 10.00 P.M. Return policies for
products are very strict in Malaysia. One cannot get money back and in some cases customers
are allowed to exchange items where size is an issue, but this practice is not encouraged. These
rules apply to all stores in malls and discount shops as well.
(“Shopping in Malaysia.” Malaysiahotels.com), (“Malaysia Shopping.” Kylvag.com),
(“Malaysia Mega Sale.” Thaiwave.com.), (“Malaysia” Pwc.com) , (Divya’s interview with
Niki)
Malaysians who live in urban areas are used to shopping for groceries in supermarkets
and other foreign-owned hypermarkets in the country, such as Carrefour and Makro. However,
traditional stores, e.g. grocery shops, are still popular because they are located in residential areas
17
and are easily accessible. Meanwhile, people who live in rural areas purchase from traditional
groceries and mini-marts.
In Malaysia, the popularity of internet shopping is rising. The number of internet users in
Malaysia reached 8.6 million in 2003. Moreover, the usage of credit cards is on the rise in
Malaysia. There were 2.4 million credit card holders in Malaysia in 2000, up to 16.9 from 2.07
million in 1998.
Malaysia has a number of laws to regulate the activities of business and protect consumer
rights. Most of these laws are administered by The Ministry of Domestic Trade and Consumer
Affairs. Some of the ministry’s responsibilities are: fixing and monitoring prices of certain
goods; offering services for consumer events, regulating the petrochemical and gas industries,
and creating policies for intellectual property.
(“Malaysia”.Pwc.com.) (“Malaysia Exporter Guide 2004”. Fas.usda.gov.), (“Global Lifestyles.”
Socialtechnologies.com.), (“Malaysia: Competition and price regulations.” EIU Newswire.)
5. The value of promotions across cultures
Value of Promotions in South Korea
There are two important aspects about promotion. First, 44.3% of Koreans always use
discount coupons and mileage cards. Offering coupons and mileage cards is essential. Secondly a
lot of people lay emphasis on price while making buying decisions. A survey showed that 81.3%
of consumers answered price is more important factor.
Because of economic difficulties, many companies including smaller companies are
opting for direct marketing. Consumers think that direct marketing is cost effective. Actually,
direct marketing has been increasing 10 to 20 percent monthly for the past several months.
(“Survey of Recent Change in Consumption Behavior”, KCCI), (Yorgey, Lisa A.)
If we look at advertising in South Korea, South Korea is the second largest advertising
market in Asia. Newspaper is the most popular media of advertising. Television, radio, and
magazines are the next often used media.
(Kim, Eun Young)
Value of Promotions in Malaysia
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If we look at the value of promotions in Malaysia, we can see that Malaysian spending
patterns are effected heavily by promotions and advertising. Free gifts, special deals, and
discounts also have some degree of success in marketing campaigns. Coupons are very popular
for household goods and stacked in the entrance of stores for consumers. However, rebates are
not popular forms of promotions. In-store promotions, especially product demonstrations, also
appear to be useful for introducing new products. There is an intense competition among
retailers in Malaysia. Researches show that the more developed the retail markets, the greater
the emphasis on price and promotion. In countries with developed retail markets, consumers rate
price and convenience as main factors in purchasing decisions. These researches explain the
high price sensitivity of Malaysian consumers because the retail market in Malaysia is very
developed.
(“Malaysia” Pwc.com), (“Marketing Your Products and Services” Australian Government),
(“Malaysia Capsule” Asiamarketresearch.com), (Personal interview of Divya with Nikki Low),
(“Diet revolution in Pacific Rim creates new customers for U.S. foods – Interview” AgExporter),
(“Pricing for Success” Asiapacific.acnielsen.com.au)
If we look at mass media advertising in Malaysia, we can see that the money spent on TV
advertisements is expected to decrease by 4% in all of Asia as more money will be spend on less
expensive media. In the past few years the media scene has changed in Malaysia and radio is not
the most appropriate way to reach consumers any more. Today, the Malaysian media scene is
similar to ones in most developed cultures. Newspapers are one of the most popular medium for
advertising in Malaysia, because it reaches maximum number of people and because Malaysians
have a high level of literacy. Thus, the print media can be a useful channel for informational
campaigns. Furthermore, a wide range of magazines are available in Malaysia. These
magazines vary form regional or international magazines in English to local magazines. These
magazines cover a wide range of interests, such as, women, women’s fashion trade, sports,
tourism, and business. Another important factor why TV is not as important a medium could be
due to the fact that Malaysian TV promotions have high levels of regulation and should be
appropriate for viewers belonging to the various ethnic groups in Malaysia.
If we look at direct marketing in Malaysia, we can see that with a few exceptions from
credit card firms and publishers, business in overall Asia hardly used direct marketing until the
19
1980s. Lately, direct marketing is on the rise in the Asian region. In Malaysia, direct selling is
becoming an important distribution channel within the country’s total retail system.
(“Diet revolution in Pacific Rim creates new customers for U.S. foods – Interview.”
AgExporter), (“Media & Marketing”), (Allen Tim, and Lucas Louis), (Newlands, Mike), (“What
is Direct Selling?.” Dsam.org.my)
6. How can we satisfy consumers in these countries?
How to satisfy Korean Consumers
In general, Koreans like brand names, especially younger people. They want to have
sporting name brands such as Calvin Klein, Gucci and so on. Thus, branding is one of the
important factors to satisfy Korean consumers. In order to satisfy Korean consumers, companies
need to create a brand image.
Because of economic difficulties in South Korea, data shows that their expenses’ have
decreased in the past year. Here is the data for 2004: clothes (24.5%), eating out (18.6%) and
culture/leisure (12.4%). If we look at the detail by age group culture/leisure is affected the most
among 20s (21.4%), eating out is affected the most among 30s (23.3%), and clothing is
affected the most among 40s and 50s (respectively 23.3% and 28.3%)
In addition, we should know the income differences, which have made Koreans change
their consumer behavior. Discount stores emphasis on low-price products and department stores
emphasis on high-price products.
Considering target customers is one of the most important factors because there are two
types of consumers. The first type is middle to low income level people who are not willing to
pay expensive products. The second type is high income level people who care about brand
names and want to buy quality products. Younger people would be included in the second type.
In order to satisfy the first type of consumers, pricing is the most important. People are willing to
pay more in low priced products. That’s why recently people tend to go discount stores to shop.
In order to satisfy the second type of consumers, the brand name is important. In recent years, the
prices are competitive, so lower price is not always the best way to attract consumers. Products
and companies may be seen degraded by consumers. For all consumers, quality is essential.
Koreans don’t pay for low quality products even though it is cheap.
20
(“2004/2005 Global Retail & Consumer Study from Beijing to Budapest, South Korea”), (Kim,
Eun Young), (“Survey of Recent Change in Consumption Behavior”, KCCI)
We also need to think from psychographical point of view because Koreans lifestyles
have been changing. Firstly, Korean lifestyle is changing to become more westernized. Secondly,
Koreans are getting more interested in fashion, their own well-being and shopping. In addition,
companies are trying to satisfy new target markets, which are three S; Single, Security, and Self-
satisfaction. Here are the reasons:
• The number of single households is expected to increase
• The number of crimes has been increasing
• Younger people are interested in self-satisfaction product even though it is expensive.
(“2004/2005 Global Retail & Consumer Study from Beijing to Budapest”), (“Expected
buzzwords in domestic consumption market in 2005”, KCCI)
How to satisfy Malaysian Consumers
Malaysians consumers are increasingly demanding for products that are specific to their
preferences and needs. They like branded products, high quality products and their demand for
healthy food items is on the rise. Many consumers are demanding food items that do not include
additives, salt or sugar because health consciousness is increased in the country as the country’s
wealth level is raised. Furthermore, as stated above, Some segments of the Malaysian population
are also very price sensitive. Malaysian shoppers like to purchase things in smaller quantities but
more frequently than the American consumers, thus companies trying to satisfy these consumers
should keep that in mind. For instance, one-bite portions of fried chicken and ice cream are
selling well in Malaysian restaurants. Furthermore, Malaysians would like more convenient food
items since Malaysians have less time to prepare meals. Today, almost 45% of Malaysian women
are employed and as more start working, there is less time to prepare meals and, therefore, the
rely on convenience foods is rising. Because of the reasons above, new suppliers try to enter the
Malaysian market need to introduce products that are in good quality, well-packaged and
competitively priced. Foreign brand names are also doing well.
A consumer survey satisfaction survey conducted by Malaysian Communication and
Multimedia Commission for the communication sector revealed that the quality of service or
products is important for Malaysian consumers. Friendliness and politeness of consumer service
21
are factors that effect consumer satisfaction. M, the speed of service, attractive promotions, easy
accessibility and parking in malls, speed of handling complains, and accessibility to consumer
services are other important areas for Malaysian consumers. Malaysian consumers are also
getting very brand conscious and with incomes on the rise and the economy doing well many
Malaysian are looking for affluent brand names and products that are symbols of prestige.
(“Global Lifestyles.” Socialtechnologies.com), (“Diet revolution in Pacific Rim creates new
customers for U.S. foods – Interview.” AgExporter), (“Agri-Food Country Profile Malaysia.”
Atn-riae.agr.ca.), (“Malaysia Booms as U.S. Market Destination.” Fas.usda.gov.), (“Customer
Satisfaction Survey 2004.” Mcmc.gov.my.)
THREE POTENTIALLY MARKETABLE PRODUCTS/SERVICES
1. Ben and Jerry; For Malaysia
What factors explain the appropriateness of marketing of these products/services?
In our opinion, Ben & Jerry’s organic ice cream and low fat yogurt would be successful in
Malaysia because health consciousness is rising among Malaysians and many consumers are
demanding healthy products that do not include sugar and additives (“Global Lifestyles”,
socialtechnologies.com). Ben &Jerry’s would offer other their normal ice cream products besides
organic ice cream and low fat yogurt; however, organic and low fat products would be
emphasized to reach a number of health conscious Malaysian consumers. In Malaysia, the
demand for organic and health foods that include low calories are on the rise (“Industries in
Malaysia”, mida.gov.my). As Mary Keong stated in her “Malaysia Booms as U.S. Market
Destination” article, dairy products including ice cream and yogurt have excellent potential in
Malaysia (Keong, Mary; fas.usda.gov). The consumption of dairy products is rising because of
the increased awareness of health benefits of drinking milk (“Dairy Products in Malaysia”, the-
infoshop.com). Furthermore, a 30-nation survey found that 95% of consumers in Malaysia and
Philippines shop for health reasons. According to this survey, Malaysian consumers try to
control health problems and meet the health needs of their children (“Healthy Insights”,
rathdc.com.au). Moreover, the obesity rates among Malaysians are approaching to the obesity
rates of the United States. In 1998, 16.2 % of Malaysian women were obese (“Global Lifestyles”,
22
socialtechnologies.com). Furthermore, Malaysians have a demand for foreign brands and like to
use foreign brands (“Malaysia”pwc.com). Because of these reasons above, Ben and Jerry’s
marketing campaign in Malaysia can emphasize the health benefits of eating dairy products, the
organic ice cream and low fat yogurt products.
Who are the target markets and why?
The target market in Malaysia will be consumers in each age group because ice cream is a
product that people can enjoy at any age group. In each group, the target would be consumers
that are affluent enough to buy medium priced Ben and Jerry’s products. Some specific groups
in the target market would be the health conscious consumers, whom we will target with Ben &
Jerry’s organic ice cream and low fat yogurt. These health conscious consumers could be
Malaysians, who are on diet, or consumers would like to eat organic food and low fat food, or
shoppers who would like to benefit from consuming dairy products. Secondly, we will target
consumers who just would like to eat high quality ice cream or yogurt. To market the products
for this group of consumers, it can be emphasized that Ben & Jerry’s has high quality and fresh
ice cream in different varieties. Thirdly, we will target Malaysian consumers with children and
emphasize the health benefits of including dairy products to their kids’ diet. Malaysians are used
to shopping for groceries in supermarkets (“Malaysia”, pwc.com). Therefore, we will offer Ben
& Jerry’s in supermarkets to reach a high sales volume. Fourth, we will target young consumers
between ages of 13 to 25 because Malaysian’s young consumer segment offers huge benefits. In
2000, there were 16.5 million people under the age of 40 in the county (“Global Lifestyles”,
socialtechnologies.com). Moreover, Ben & Jerry’s would offer products that are suitable for the
tastes of different nations in Malaysia. Malaysia has a population that are made of Malays (62%),
Chinese (27%), and Indians (8%) (“Global Lifestyles”, socialtechnologies.com). Therefore, Ben
& Jerry’s could design products that are suitable for each cultural group. Furthermore, according
to “Research and Market’s” report, Malaysian consumers buy ice cream as unplanned purchases;
therefore, Ben & Jerry would provide point of purchase promotions to encourage people to try
our ice cream.
In short, considering the growing health conscious attitude shown by a large amount of
population in Malaysia and their liking for dairy products, we believe that low fat and organic
23
options along with regular Ben and Jerry’s Ice cream would do well in Malaysia. We will be
offering these ice creams in popular local flavors to meet the local needs of the consumers.
2. Vitaminwater by Glacéau; For South Korea
Vitaminwater is a low calorie and nutrient enhanced water. It provides consumers an
alternative to high-calorie, high-sugar beverages and offers a variety of tastes.
What factors explain the appropriateness of marketing of these products/services?
The values in South Korea are changing and people are showing a strong desire for well-
being. For more than 20 years, South Koreans were characterized as hardworking and really
devoted to their company. They also they had a strong sense of sacrifice of individual values for
the communal good. With the economic development, South Koreans have seen their disposable
incomes increasing. They are able to acquire more goods and have more time to spend for leisure.
Consequently, they are looking for ways to improve their quality of life. Additionally, the
population is aging. Its growth rate is only 0.38% and forecasts predict that in 2022 people over
65 years old will represent 15% of the population (compared with 8.6% in 2005). All these
factors have lead to an increased awareness in healthy lifestyle and people adopt healthy drinking
and eating habits. Consequently, the bottled water market in South Korea has more than doubled
between 2000 and 2004. Demand for foreign bottled water is surging. Bottled water imports
were reported to be $2.38 millions in 2004.
For these reasons, we feel that nutrient enhanced water, and in particular Vitaminwater
could be successful in South Korea if we target the right markets.
(“Packaged Food in South Korea”, the-infoshop.com), (Masamune, Elizabeth “Well being in
South Korea”) (Kim Sung-jin. “Imports of Bottled Drinking Water Surge”)
Who are the target markets and why?
We understand that the well-being phenomenon has happened mostly among the middle
and upper class that lives in big cities. Within this category we could target different age ranges
and consequently use different marketing strategies. Our major target market would be the
people who are in their late 20s, 30s and early 40s. They are concerned about aging and would
24
like to have a healthier life to prepare better the future. We would emphasize on the healthy
benefits of our drinks. We would sell the Vitaminwaters in spas, gymnasiums and also at the food
section of high end department stores. Our secondary target market would be the youth in their
early, mid 20s who are experiencers. They are not yet health conscious but they follow the latest
trends. We would market the water as a hip alternative drink to traditional water and soft drinks.
Also, we would customize the product to the taste of South Koreans.
3. Sephora; For both Countries
Sephora is the leading retail beauty chain in Europe. Sephora's unique, open-sell
environment features over 250 classic and emerging brands across a broad range of product
categories including skincare, color cosmetics, fragrance, makeup, bath & body, and hair care, in
addition to Sephora's own private label. (“About Sephora”, Sephora.com)
What factors explain the appropriateness of marketing of these products/services
South Korea
As more South Korean women have joined the labor force and started earning higher
incomes, they have become more receptive to western lifestyle. Their preference for imported
cosmetics has significantly grown. Koreans tend to favor European cosmetics because they have
traditionally had a more luxurious image compared to other countries’ products. The percentage
of imported cosmetics in high-end specialty stores is about 80%. Sales of skin care products have
raised the most, especially among women in their 20s who favor shopping for luxury imported
brands at department stores. Sales to female shoppers in their 30s and 40s who purchase
imported skin care products through direct selling companies have also highly increased.
Cosmetics have also been gaining attention from men over the past few years. Korean
men are beginning to spend more time and money on skin care. In 2003 the sales of men’s
cosmetics in Korea increased significantly, to approximately USD 262 million or about 6% of
the overall market. This value has been growing at a 15-20% rate each year.
Additionally, there is an increasing trend for cosmeceuticals or highly functional products
such as whitening, anti-wrinkle and sun care SPF products because they offer a wide variety of
25
skin care needs. Also, as more consumers become aware of natural ingredients there is a strong
demand for natural/organic cosmetics.
The Korean cosmetics market, including skin care, body care, and make-up, is expected
to grow over the next three years. In 2001, prestige cosmetics, such as high-priced functional
cosmetics, have shown a growth rate of 36%.
Bath products are receiving more attention from Korean consumers nowadays as people
are becoming more aware of a variety of foreign bath products such as bath salts, oils, scrubs,
and aroma-therapy products. Hair care products have shown significant market growth especially
those directly sold to Korean women in their 30s and 40s.
(Lew, Daniel. “Korea Country Commercial Guide FY 2003”), (Buyusainfo.net U.S)
Malaysia
Malaysian economy has been growing since the past few years and since 2003, due to
high rate of urbanization and increase in purchasing power, there has been a growing demand for
good quality cosmetics from women and in recent years also from men. There is also a growing
demand of skin care products from men. In Malaysia the cosmetics market is growing at the rate
of 13% annually. Although the market has many small and medium size companies producing
local brands, the demand of high end skin care and color cosmetics is on the rise. It is estimated
that by 2006 the sale of premium skin care and color cosmetics will take over mass brands.
(“Cosmetics and Toiletries Malaysia” malaysiamission.com)
Who are the target markets and why?
Because Sephora offers a broad range of product categories, it takes care of its costumers
from head to toe and we are able to reach a huge proportion of people. As for South Korea, we
want to target working middle and high class women and men. As for Malaysia, our target
segments are the young working teenage girls, working women and upper class women and men.
CHOOSING ONE PRODUCT/SERVICE FROM THE LIST
Sephora in South Korea and Malaysia : SWOT Analysis for Sephora in Appendix, Table 11.
26
1. Target markets:
South Korea
Our target market for Sephora in South Korea is the working middle and upper class
women and men.
Age: We will be targeting women and men in the age group of 20-45 years. 72% of the South
Korean population is aged between 15 and 60 years. The median age is 34.51 years (33.53 and
35.53 respectively for men and women). (“South Korea” exxun.com)
Size of Target: 72% of the South Korean population is aged between 15 and 64 years. There are
17,715,267 males and 17,147,808 females in South Korea that age ranges from 15 to 64 years
old. (“South Korea” exxun.com)
Growth rate: The South Korean population is aging and its growth rate is only 0.38%.
(“South Korea” exxun.com)
Urbanization: With respect to urbanization, in 2005 80.8% of the population lives in big cities.
About 48% of the population lives in Korea’s six biggest cities; 11 million people live in Seoul,
the capital and the largest city. (“South Korea: Urban Population” globalis.gvu.unu.edu)
Psychographic profile: As lifestyle is becoming more and more westernized and due to higher
incomes, and more leisure time, more and more middle and upper income class South Koreans
are shopping and spending money on fashion, and prestigious foreign brands.
Malaysia
Our target segments for Sephora are the young working teenage girls, working women
and upper class women and men of Malaysia.
Age: We will be targeting females in the age group of 15- 64 years, and men in the age group of
20-40 years. In Malaysia the median population is 23 years old and about 60 percent are of
working age and these people have the money to spend and are getting very fashion conscious
and like spending money on high quality foreign cosmetic brands.
(Keong, Mary. “Malaysia Booms as U.S. Market Destination”)
27
Size of Target: Size of population between 15 and 64 is 62.8 %. This age group is the largest in
Malaysia. The median age in Malaysia is Total: 23.6, Male: 23 years, Female: 24.3 years (2002
est.) There are 7,447,047 females in Malaysia in the age group of 15-64 years and 7,488,367
males in the age group of 15-64 years.
Growth rate: The growth rate among, 0-19 is 43% 20-40 age group is 43.4 % and 50 and above
is 13.6 %The population is growing at the rate of 1.8%. Approximately six million, out of an
estimated population of 24.53 million as of 2002, will fuel demand for cosmetics and
dermatological products. When this segment of the population matures, demand should grow
stronger because age-related skin problems such as fine lines, wrinkles, dull skin and brown
spots start to surface
(“Cosmetics and Toiletries Malaysia” malaysiamission.com), (Malaysia, pwc.com)
Urbanization: With respect to urbanization, it was observed that the proportion of urban
population had increased to 62.0% in Census 2000 from 50.7% in 1991.
(“Population and Housing Census 2000” statistics.gov.my)
Psychographic profile: In Malaysia with the recent economic progress most of people in urban
areas are being paid well and their lifestyles are comfortable. There is a high demand in luxury
lifestyle products. Due to the high exposure to the western world through TV and the internet
the younger generation in Malaysia is becoming extremely brand conscious and believe in
“prestige” factor that foreign brands add. Malaysians spend a lot of their income on personal care
products. (Malaysia, pwc.com)
2. Positioning Strategy:
We want to position Sephora as a high class, trendy one stop shop for high brand beauty
products. We also want to differentiate ourselves by not only offering a wide variety of
products, but also by creating a unique in-store experience for our customers. We will offer our
customers enhanced services that our competitors don’t. Our consumers will have the freedom to
browse or be guided and advised by our well trained beauty consultants. Personnel
differentiation is an important point of our positioning strategy and we will make sure that our
staff is skilled to identify skin types, have knowledge of skin physiology, application techniques,
28
the science of creating fragrances, and most importantly, how to interact with Sephora's clientele.
We will also pay attention to the needs of both women and men.
3. Positioning Statement:
For fashion conscious, women and men who want to experience the world of effortless
beauty and indulgence – Sephora is here! Our exclusive store offers world class beauty products
and services under one roof, to take care of all your needs from head to toe.
4. Marketing Strategies:
Price:
We are planning to introduce Sephora in Malaysia and South Korea as a high end beauty
store and want to maintain its high class image. We believe this will be achieved by charging a
higher price than the other local brands. Therefore, we plan to price our products to match the
prices that the products are sold for in USA and Europe. We realize that the consumers that we
plan to attract are the working teenage girls and women, and upper middle class women and men
who lay emphasis on the prestige factor that comes from owing foreign brands. These people are
brand conscious and willing to spend more on good quality products. Therefore, to maintain a
high quality image we will not reduce our prices. Also, as is the case with most consumers in the
rest of the world, consumers from both these countries also judge the quality of a product by its
price. Keeping all the above factors in mind we chose to standardize the pricing strategy.
Product Strategies:
Sephora stores in Malaysia and South Korea will provide a full range of high quality beauty
products: fragrances, makeup, skincare, hair care, bath and body products, professional tools and
accessories for both women and men. The stores will carry prestigious cosmetic brands that are
known worldwide for their superior quality. Keeping in mind the growing demand of high
quality anti-aging and skin care products, fairness creams and fragrances in both these countries,
Sephora will offer products that cater to the above needs and in additional will also offer brands
that are well known for using natural ingredients for making cosmetics. By doing so Sephora
consumers would be able to find a wide range of high end brands satisfying all their specific
beauty needs under one roof. For Malaysia, our products will be more suited to cover the needs
29
of different ethnic groups. We will offer skin care and color cosmetics that will be best suited for
the skin types of these different groups. We also plan to offer enhanced services such as
customized foundation, nails bar and express makeup station in our stores, in both countries.
(“Cosmetics and Toiletries Malaysia” malaysiamission.com)
Promotion:
For promoting our Sephora stores, we would like to use a combination of Advertising,
Events and Experiences, Direct Marketing and some sales promotion techniques.
Advertising: We would like to place our advertisements in the print media like newspaper and
men and women fashion magazines. The reason we think that the print media will be more
effective in these two countries rather than television is because the literacy rate is very high in
both the countries and a large number of people can be reached via this medium. Malaysia
consists of different ethnic groups and through newspapers and magazines we can tailor our
message to suit different ethnic groups as well as men and women separately. In South Korea, we
will use local celebrities in our advertisements to create brand awareness.
Events and Experience: We would also like to sponsor some fashion shows or some fashion
oriented events so that people discover Sephora, and the consumers who are into fashion and
beauty scene learn more about Sephora. In Malaysia such events attract a lot of young
consumers and help create more buzz than normal advertising. We would also like to organize
special beauty events where our consumers can learn beauty tips from some top industry beauty
consultants. We want to create hype when we open Sephora and we want people to come and
connect with the store on a personal level. We want to attract innovators who will try our
products and would experience our customer service and spread the word around. As mentioned
earlier in the project, consumers in both these countries seems to get influenced by what their
friends and relatives have to say that gives us reason to believe word of mouth will be an
effective medium.
Direct marketing: We will send out catalogs to people in rich areas to attract the upper class
income consumers.
30
Promotions: Our first time purchasers will get to sample some of our products for free and we
would stick sample of our skin care products or perfumes in magazines. Since there are many
other cosmetic retailer in both these countries we realize the need to start a loyalty program,
whereby every time a customer spends above $50 they would receive certain points on their
Sephora card which will eventually lead to a free gift. Our consumers will also earn points when
someone they referred to the store purchases something from us.
Distribution Channels:
Our distribution channel in both the countries will be exclusive. We want to promote the
high quality image of our products therefore we will initially open 2-3 Sephora stores in highly
urbanized cities in each of these countries. These stores will be located in areas with high
income people around. In Malaysia, due to the parking problem we will have to open our store
inside the mall. We want our consumers to have easy access to us. Our stores will pick the best
and most convenient locations. South Koreans are intensive e-shoppers and Malaysians are
increasingly buying more and more fashion items on line. So, we want to launch Sephora’s
website in both countries. Customers will get the chance to receive information about all our
products and buy them. Additionally, our beauty consultant will also be reachable via online.
As explained above all our marketing strategies will be similar for Malaysia as well as
South Korea. The demand and the target market that we want to go for display very similar
behavior in both the countries. Therefore, we can standardize our strategies for these two
countries. The only difference that we can point out is the fact that consumers in South Korea
prefer European cosmetic brands more to US cosmetics brands. Therefore when we open in
South Korea while advertising we will make it a point to emphasize that we are a European
brand and will carry more European brands in the Sephora stores there. In Malaysia, since
people have not displayed any specific preference we will keep products from Europe and USA.
It is to our advantage that at Sephora we offer so many different brands, because it gives us a
chance to be flexible and customize the assortment of brands that match best with our consumers
preferences and needs in these countries.
31
Sephora’s image, name, logo and the look of our stores will be standard. The only
differentiation would be in terms of product assortment, additional customer service in stores and
the addition of beauty services like nail bar and express make-up counters.
32
APPENDIX
By Sou
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n Trad
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294,17
5573
,233
2,432,
5825,3
72,152
6,252,
4927,2
34,909
2,983,
8831,5
64,049
1,109,
412983
,600
2,009,
6733,0
24,610
Food an
d live an
imals
2,037,
3392,1
57,803
2,118,
5192,0
60,260
2,294,
5822,6
55,743
2,724,
3212,6
56,028
2,420,
4562,6
08,762
2,402,
3522,2
05,342
2,114,
6382,1
64,487
2,445,
862
By Sou
th Korea
n Trad
e Categ
ories E
xports a
nd imp
orts199
0199
1199
2199
3199
4199
5199
6199
7199
8199
9200
0200
1200
2200
3200
4TOT
AL69,
843,67
881,5
24,858
81,775
,2578
3,800,
142102
,348,1
75135
,118,9
33150
,339,1
00144
,616,3
7493,
281,75
4119,
752,28
2160,
481,01
8141,
097,82
1152,
126,15
3178,
826,65
7224,
462,68
7Bev
erages a
nd toba
cco188
,226
227,96
4243
,392
262,74
1348
,612
534,54
4664
,756
660,42
8300
,128
378,69
3529
,164
563,97
1693
,927
629,55
3553
,035
Crude m
aterials
,inedibl
e,excep
t fuels
8,650,
9958,9
03,124
8,317,
5238,8
75,866
9,404,
46911,
713,27
610,
965,15
610,
423,85
97,2
74,538
8,413,
7879,9
12,164
9,052,
3199,1
78,505
10,146
,529
13,535
,289
Mineral
fuels,lu
bricants
and rela
ted mat
erials
11,023
,1801
2,747,
88814,
636,12
115,0
52,583
15,414
,530
19,012
,929
24,283
,551
27,380
,944
18,195
,129
22,874
,943
38,076
,557
34,069
,283
32,431
,151
38,629
,653
50,278
,545
Animal
and veg
etable o
ils,fats
& waxe
s185
,258
245,72
6250
,926
259,04
9323
,535
393,23
2369
,350
358,70
0304
,729
359,19
7285
,976
269,32
6339
,257
389,33
0543
,543
Chemic
als & re
lated p
roducts
, n.e.s.
7,430,
2548,2
85,522
7,681,
4318,2
28,122
9,762,
75813,
156,34
813,
230,67
113,
110,20
29,2
40,025
11,311
,566
13,492
,431
12,921
,266
14,156
,258
16,482
,032
20,654
,513
Manufac
tured g
oods cl
assified
chiefly
by mat
erial
10,580
,7891
3,461,
86211,
962,11
412,0
69,904
15,936
,367
21,270
,446
20,946
,959
19,249
,005
11,111
,604
15,080
,021
18,290
,890
16,683
,839
19,241
,503
22,369
,584
30,825
,223
Machine
ry & tra
nsport
equipm
ent23,
943,53
228,2
48,018
28,904
,4642
8,416,
77337,
408,24
149,
436,45
854,
674,85
648,
721,62
831,
215,47
843,
608,87
259,
078,89
647,
911,00
953,
307,68
962,
655,14
175,
361,57
4Mis
cellane
ous ma
nufactur
ed articl
es4,2
40,260
5,097,
9115,2
08,562
6,147,
9078,1
64,609
10,803
,425
12,061
,503
11,561
,078
6,479,
3568,7
78,267
12,021
,456
11,166
,620
13,358
,580
16,234
,036
19,852
,918
Commod
ities & t
rans. n
ot class
ified els
ewhere
in the sk
tc354
,590
375,23
9473
,966
488,25
9823
,742
2,872,
5915,8
77,664
6,633,
3784,5
56,718
3,395,
6432,2
96,786
1,670,
9201,7
98,999
2,959,
7473,5
77,640
Food an
d live an
imals
3,246,
5963,9
31,604
4,096,
7583,9
98,938
4,761,
3115,9
25,684
7,264,
6366,5
17,153
4,604,
0485,5
51,293
6,496,
6986,7
89,267
7,620,
2848,3
31,050
9,280,
408
Source:
Korea
Nationa
l Statis
tical Of
fice
1000$
The am
ount of
export
1000$
The am
ount of
impor
t
Table 1: Exports Imports by Products (Korea National Statistical Office, kosis.nso.go.kr)
33
Foreign Direct Investment (Inward)
By TypeㆍBy Industry
No. of Cases
AmountAcquisition of Newly Issued
Stocks
Acquisition of Outstanding
Stocks
Long-term Loans
Manufacturing Services Others
1962∼1990 5,337 7,873,832 7,873,832 - - 4,635,596 2,985,376 252,860
1991 510 1,395,996 1,395,996 - - 477,587 912,301 6,108
1992 445 894,506 894,506 - - 516,020 376,761 1,725
1993 458 1,044,274 1,044,274 - - 390,630 590,170 63,474
1994 646 1,316,505 1,316,505 - - 490,747 789,151 36,607
1995 874 1,947,619 1,947,619 - - 1,062,177 819,893 65,549
1996 967 3,202,580 3,202,580 - - 1,672,957 1,221,329 308,294
1997 1,055 6,970,916 6,207,595 699,644 63,677 2,507,599 4,361,774 101,543
1998 1,401 8,852,566 6,524,223 1,244,992 1,083,351 5,829,882 2,591,012 431,672
1999 2,105 15,541,547 12,570,819 2,333,369 637,359 8,356,202 6,782,673 402,672
2000 4,140 15,216,711 13,593,999 1,276,969 345,743 6,847,878 8,110,301 258,532
2001 3,341 11,291,994 8,774,957 1,900,908 616,129 2,911,122 7,235,561 1,145,311
2002 2,408 9,102,512 8,192,575 714,356 195,581 2,336,434 5,132,086 1,633,992
2003 2,564 6,468,193 4,630,751 1,757,684 79,758 1,697,135 4,132,068 638,990
2004 3,068 12,785,417 7,126,573 4,624,096 1,034,748 6,210,456 6,141,117 433,844
2005(1Q) 849 3,121,688 1,178,495 1,913,362 29,831 575,479 2,542,852 3,357
2000(1Q) 947 2,258,413 1,992,505 242,057 23,851 1,147,065 1,106,868 4,480
2000(2Q) 1,156 2,997,367 2,877,784 75,106 44,477 1,021,746 1,823,475 152,146
2000(3Q) 1,018 4,695,857 4,376,745 238,627 80,485 2,925,072 1,708,486 62,299
2000(4Q) 1,019 5,265,074 4,346,965 721,179 196,930 1,753,995 3,471,472 39,607
2001(1Q) 846 1,543,688 1,047,072 332,512 164,104 417,904 1,058,339 67,445
2001(2Q) 1,119 2,194,710 1,491,202 606,251 97,257 1,299,318 784,629 110,763
2001(3Q) 681 2,433,614 1,738,517 411,926 283,171 793,222 1,382,103 258,289
2001(4Q) 695 5,119,982 4,498,166 550,219 71,597 400,678 4,010,490 708,814
2002(1Q) 504 2,149,491 1,967,885 53,196 128,410 590,031 1,473,635 85,825
2002(2Q) 604 2,635,273 2,431,141 171,811 32,321 429,054 1,605,350 600,869
2002(3Q) 596 2,459,837 2,157,718 300,591 1,528 658,417 915,342 886,078
2002(4Q) 704 1,857,911 1,635,831 188,758 33,322 658,932 1,137,759 61,220
2003(1Q) 554 1,107,587 928,909 133,540 45,138 220,370 744,375 142,842
2003(2Q) 662 1,552,806 850,258 694,419 8,129 922,979 408,910 220,917
2003(3Q) 649 1,970,108 1,649,002 315,080 6,026 319,033 1,471,648 179,427
2003(4Q) 699 1,837,692 1,202,582 614,645 20,465 234,753 1,507,135 95,804
2004(1Q) 652 3,048,718 970,424 1,904,236 174,058 449,983 2,430,557 168,178
2004(2Q) 755 2,008,477 1,427,966 443,082 137,429 1,192,186 774,326 41,965
2004(3Q) 763 3,371,734 2,204,164 1,114,318 53,252 1,511,655 1,845,216 14,863
2004(4Q) 898 4,356,488 2,524,019 1,162,460 670,009 3,056,632 1,091,018 208,838
2005(1Q) 849 3,121,688 1,178,495 1,913,362 29,831 575,479 2,542,852 3,357
1962~2005.1Q 30,168 107,026,856 86,475,299 16,465,380 4,086,177 46,517,901 54,724,425 5,784,530
Note : Notification Cases
Source : Ministry of Commerce, Industry and Energy
(Unit : US$ thousand, Cases)
By Type By IndustyTotal
Table 2: Foreign Direct Investment
(Korea National Statistical Office, kosis.nso.go.kr)
34
Table 3: Export by products 2004-2005 (“Key Statistics”, statistics.gov.my) Major Export (RM million)
2004 2004 2005
Rubber 5,197 1,784 1,723
Palm Oil And Palm Oil Based Products 29,116 8,937 9,158
Crude Petroleum 21,762 6,079 8,654
Petroleum Products 12,059 3,499 4,386
Liquified Natural Gas 17,079 5,403 7,036
Timber And Timber Based Product [2] 19,778 5,809 6,819
Electrical And Electronic Products [2] 241,483 74,536 80,609
Articles of Apparel & Clothing Accessories [2]
8,840 2,604 2,807
Other Manufactured Goods and Articles [2] 54,965 17,020 19,107
Rubber 5,197 1,784 1,723
Palm Oil And Palm Oil Based Products 29,116 8,937 9,158
Crude Petroleum 21,762 6,079 8,654
Petroleum Products 12,059 3,499 4,386
Liquified Natural Gas 17,079 5,403 7,036
Timber And Timber Based Product [2] 19,778 5,809 6,819
Electrical And Electronic Products [2] 241,483 74,536 80,609
Articles of Apparel & Clothing Accessories [2] 8,840 2,604 2,807
Other Manufactured Goods and Articles [2] 54,965 17,020 19,107
35
Table 4: Major export markets of Malaysia
(Key Statistics: MATRADE Malaysia : http://www.matrade.gov.my/)
Major Export Markets January 2001 Jan 2001 Dec 2000
Value (RM Million)
Share(%)
Value (RM Million)
Share(%)
COUNTRY USA 5,661.2 20.1 5,815.7 19.3 Singapore 5,175.0 18.4 5,631.3 18.7 Japan 4,347.7 15.5 4,426.5 14.7 Netherlands 1,320.7 4.7 1,410.0 4.7 Thailand 1,249.7 4.4 1,125.6 3.7 Republic of Korea 1,111.3 4.0 1,044.0 3.5 Hong Kong SAR 1,022.7 3.6 1,355.7 4.5 PRC 1,012.8 3.6 1,044.0 3.5 Taiwan 791.9 2.8 980.6 3.3 UK 765.9 2.7 988.1 3.3 GROUPING ASEAN 7,534.6 26.8 7,996.9 26.5 South Countries excluding Singapore 5,279.8 18.8 5,549.0 18.4
EU 3,721.0 13.2 4,132.5 13.7 TOTAL EXPORTS 28,096.8 100.0 30,161.6 100.0
Source : Department of Statistics Note : "% share" is share of total exports Last updated : 22/03/2001
36
Table 5: Malaysian Trade with the World 1992-2004
(Key Statistics: MATRADE Malaysia : http://www.matrade.gov.my/)
Year Export Import Balance
1992 103.66 101.44 2.22
1993 121.24 117.40 3.83
1994 153.92 155.92 (2.00)
1995 184.99 194.34 (9.36)
1996 197.03 197.28 (0.25)
1997 220.89 220.94 (0.05)
1998 286.56 228.12 58.44
1999 321.56 248.48 73.08
2000 373.27 311.46 61.81
2001 334.28 280.23 54.05
2002 357.43 303.09 54.34
2003 397.88 316.54 81.35
2004 480.74 400.08 80.66
37
Table 6: Malaysia's Top 10 Export Products (2004) (Key Statistics: MATRADE Malaysia : http://www.matrade.gov.my/)
SITC Description Total Export (RM Billion)
776 TRANSISTORS,VALVES,ETC. 89.30752 AUTOMATIC DATA PROCESSING EQUIPT 45.90759 PARTS & ACC., FOR OFFICE MACHINES 30.31764 TELECOMM. EQUIPT PARTS NES 25.27333 PETROLEUM OILS, CRUDE 22.78422 FIXED VEG. FATS,OILS,CRUDE, REFINED NOT SOFT 19.80343 NATURAL GAS 17.08772 ELECTRICAL SWITCHER RELAYS,CIRCUITS NES 14.08334 PETROLEUM PRODUCTS 12.10761 TELEVISION RECEIVERS ETC 7.79
OTHERS 196.33TOTAL 480.74
Table 7: Malaysia's Top 10 Import Products (2004)
(Key Statistics: MATRADE Malaysia : http://www.matrade.gov.my/)
SITC Description Total Import (RM Billion)
776 TRANSISTORS,VALVES,ETC. 102.95759 PARTS & ACC., FOR OFFICE MACHINES 23.54772 ELECTRICAL SWITCHER RELAYS,CIRCUITS NES 14.49764 TELECOMMUNICATION EQUIPT PARTS NES 14.39334 PETROLEUM PRODUCTS 13.63778 ELECTRICAL MACHINERY & APPARATUS NES 10.05752 AUTOMATIC DATA PROCESSING EQUIPT 8.81333 PETROLEUM OILS, CRUDE 7.72874 MEASURING, ANALYS`G,CONTROL`G INSTRU. ETC, PARTS 7.21728 OTH MACHINES PARTS,SPECIALIZED FOR PARTICULAR IND. 6.78
OTHERS 190.51TOTAL 400.08
38
Table 8: Malaysia's Top 10 Trading Partners (2004) (Key Statistics: MATRADE Malaysia : http://www.matrade.gov.my/)
COUNTRY VALUE (RM BILLION) % SHARE
United States of America 148.06 16.80Republic of Singapore 116.65 13.24Japan 112.29 12.74People's Republic of China 71.44 8.11Thailand 44.95 5.10Hong Kong 39.55 4.49Taiwan 37.41 4.24Republic of Korea 36.71 4.16Federal Republic of Germany 28.36 3.21Republic of Indonesia 27.61 3.13Others 217.79 24.72
TOTAL 880.82 100
Table 9: Malaysia's Top 10 Export Markets (2004) (Key Statistics: MATRADE Malaysia : http://www.matrade.gov.my/)
COUNTRY VALUE (RM BILLION) %SHARE
United States of America 90.18 18.75Republic of Singapore 72.18 15.01Japan 48.55 10.09People's Republic of China 32.15 6.68Hong Kong 28.69 5.96Thailand 22.95 4.77Republic of Korea 16.84 3.50Australia 15.78 3.28Taiwan 15.76 3.27Netherlands 15.76 3.27Others 121.90 25.35
TOTAL 480.74 100
39
Table 10: Malaysia's Top 10 Import Origins (2004) (Key Statistics: MATRADE Malaysia : http://www.matrade.gov.my/)
COUNTRY VALUE (RM BILLION) %SHARE
Japan 63.74 15.93United States of America 57.88 14.46Republic of Singapore 44.48 11.11People's Republic of China 39.29 9.82Thailand 22.00 5.49Taiwan 21.65 5.41Republic of Korea 19.87 4.96
Federal Republic of Germany 17.87 4.46
Republic of Indonesia 15.94 3.98Hong Kong 10.86 2.71Others 86.50 21.62
TOTAL 400.08 100
40
Table 11 SWOT Analysis for Sephora in Malaysia and South Korea
1. SWOT Analysis Strengths
Everything under one roof: consumers will come to our store and they will have all the products they need. Our range of product is broad: fragrance, make up, skincare, hair care, body care
European name: Korean women prefer European brands because they have a luxurious image. Sephora being a French company and leader in the European retailing beauty industry, this is a strong point for the company to create brand awareness. Malaysian women love trendy western brands too, this Sephora will have an edge.
Brands: our store will carry prestigious cosmetics brands that are known worldwide for their super high quality as well as local hip ones to satisfy the needs of all our customers
Product Consultants: our staff will have the level of expertise to provide our customers the best experience in shopping at our stores and give a feeling of uniqueness that Korean women particularly care for. Malaysian also like high quality service. Friendliness and good customer service is important to them.
Weaknesses Lack of brand awareness: Sephora is unknown in Malaysia and South Korea and must
establish a brand image. Opportunities
Increasing demand for men’s beauty products and highly functional and natural products: Korean men are beginning to spend more time and money on skin care. In 2003 the sales of men’s cosmetics in Korea increased significantly, to approximately USD 262 million or about 6% of the overall market. In Malaysia a similar trend has been noticed.
There is an increasing trend for cosmeceuticals or highly functional products such as whitening, anti-wrinkle and sun care SPF products because they cater to a wide variety of skin care needs. Also, as more consumers become aware of natural ingredients there is a strong demand for natural/organic products.
Internet Shopping: South Korea has one of the highest e-commerce conversion rates on the planet. Indeed, 48% of those who visited a shopping site in the last six months went on a complete transaction. E-shoppers use the web to buy clothes and fashion goods, books and CDs and household appliances. In Malaysia the trend of buying fashion related items of the internet is on the rise.
(Lew, Daniel. “Korea Country Commercial Guide FY 2003”), (Buyusainfo.net U.S), (“Consumer Behavior at Internet Shopping Malls”, korcham.net), (Creed, Adam. “Koreans Most Active Net Users In The World.”), (“2004/2005 Global Retail & Consumer Study from Beijing to Budapest”. Pwc.com.), (“Koreans embrace e-commerce.” New Media Age) Threats
Fierce competition: High-end, traditional department stores that sell multi-brand products have a strong position in the marketplace. Yet, in 2002 a new cosmetic franchise, Missha, was introduced which featured a good quality total line of cosmetics ranging from $3 to $10. By creating strong brand awareness, Missha has succeeded in having a good reputation for offering good quality cosmetics at a reasonable price and that appealed to
41
both women and men. Following this success, other companies have opened similar stores. This rapid growth of these lower end cosmetic shops has led department stores to transform themselves into trendy stores targeting the lower-end of the market. In Malaysia the group called Kens has established itself as a high-end retailer of cosmetics and will be one of Sephora’s main competitors.
(Buyusainfo.net U.S), (Cosmetics and Toiletries malaysiamission.com)
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<www.buyusainfo.net/docs/x_56613.pdf> “Consumer Behavior at Internet Shopping Malls”, korcham.net KCCI; The Korean Chamber
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“E-commerce” matrade.gov.my MATRADE: Malaysian External Trade Development Corporation. 23 Jun. 2005 <http://www.matrade.gov.my/ecommerce/fact_figure.htm>
“Dairy Products in Malaysia”. The-infoshop.com. 28 June 2005. <http://www.the-infoshop.com/study/ae15775_analysis.html 2003/08>
“Expected buzzwords in domestic consumption market in 2005”, korcham.net KCCI; The Korean Chamber of Commerce & Industry, < http://english.korcham.net/>
“General Info” Koreatips.net Korea worldtips.net16 Jun, 2005 < http://korea.worldtips.net/english/generalinfo/general_traveler09.html >
“Global Lifestyles.” Socialtechnologies.com. 2002. Social Technologies. 24 June 2005 < http://66.102.7.104/search?q=cache:wRvZN2dcFVoJ:www.socialtechnologies.com/lifestyles/Sample%2520GL-2002-17.pdf+global+lifestyles+malaysia&hl=en>.
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“History of Korea”. Kbs.co.kr. 20 June 2005. http://world.kbs.co.kr/english/korea/korea_history_con92.htm
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“Ice-Cream in Malaysia”. Researchandmarkets.com. Oct 2003. Research and Markets. 20 June 2005. <http://www.researchandmarkets.com/reports/65444/>
“Industries in Malaysia”. Mida.gov.my. 26 May 2005. Malaysia Industrial Develepment Authority. 25 June 2005. <http://www.mida.gov.my/beta/view.php?cat=5&scat=9&pg=104>
“Key Statistics”. 30 June 2005. Statistics.gov.my. Department of Statistics Malaysia. 1 July 2005. <http://www.statistics.gov.my/English/frameset_keystats.php?fid=g>
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KCCI; The Korean Chamber of Commerce & Industry, < http://english.korcham.net/> Others
Personal Interview of Divya with Nikki Low Personal Interview of Yasunori with Gia
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Note: This will be in a separate bundle Group Project Final Paper, Bundle 2 [15 points]: References In a packet; not bound; simply stacked and well organized. • Cover page (Course #, your group #, names of team
members, names of the countries studied, and a complete title)
• References [5 points]: See below for examples. • Appendices [10 points]: Hard copies of all your sources
(journal articles, book chapters, Internet articles etc.) that you have referred to in your report