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Marketing Demographics by Age

Marketing Demographics by Age

Companies seeking long-term business growth can find it by emphasizing the earning power of young workers, near-retirees, and women.

We all want to be treated equally and fairly during the buying and service process, regardless of our age. Let’s examine how you, as a service provider, can give exceptional service by understanding the needs and values of each age group.

Marketing to The Veterans

Marketing to The Veterans These people were born before 1943. Their beliefs and values include: Everyone should adhere and conform to the same rules, regulations, and policies. Those who are older or in positions of authority automatically deserve respect. Patience is an important virtue. The bigger the better. Personal pleasure is secondary to job responsibilities and tasks.

To win them over as a lifetime customers, make them feel special by remembering their name. Honor them by calling them Mr. or Mrs. or Sir and Ma’am. Thank them for their patronage with a personal note. Add a personal touch, and show genuine interest in them as a person.

Marketing to The Boomers

Marketing to The Boomers These people were born between 1943 and 1960. Their beliefs include: If it’s not working, either fix it or move on and find something better. They value personal growth, health, and wellness. They are optimistic. They believe they are the star and deserve center stage.

To keep them as lifetime customers, provide service that treats them as individuals, not just clients. Be personable. They value personal relationships that grow with time. Be solution oriented. If you can’t fix something, be honest; and then offer alternatives. Boomers value their time and want solutions now. Don’t tell Boomers what they can do.

Marketing to Generation X

Marketing to Generation X Baby Busters or 20-somethings were born between 1960 and 1980. They have a need to be self-reliant. They value family and friends. They tend to be informal and look for fun in every situation. They treat everyone as an equal regardless of “rank” but tend to be skeptical. They have respect for knowledge and technology.

If you want them to do business with your company, show interest in their family and friends, and admire their children if they are tagging along, or their pictures are prominently displayed on their desk. Treat them as equals. Approach situations in a relaxed and informal manner. Let them ask questions and seek information. Show that you have nothing to hide. Use technology to demonstrate your product and services.

Marketing to The Nexters

Marketing to The Nexters Generation Y or the Internet Generation were born between 1980 and 2000. They tend to be optimistic, street smart and very computer and technology literate. Achievement oriented, they are also strong believers in civic duty. They learn flexibility early since many come from divorced families.

If you want these customers to do business with your company, appeal to their strengths. These young people like to spend money, and they are more likely to purchase your product if your business donates to non-profit organizations. Also, appeal to their technical shrewdness. If it makes life more convenient, easier or is the latest in technology, they will probably want it.

Conclusion: For successful marketing by age-demographics, consider each age group and customize your service

Service providers can give exceptional service by understanding the needs and values of each age group. I give these guidelines to assist you in providing the best possible customer care, but nothing will ever surpass kind and equal treatment to each and every customer you serve.

Learn to present information in a different manner to appeal to core values, which are different for each generation.

Posted in Business and Strategy Management and Leadership

Creating a Positive Global Community

Creating a Positive Global Community

To create a positive global community, we need to meet three key challenges:

  1. Reaching out to humanity and avoiding isolationism. In the global community, it is easier to reach out and easier to become isolated. Superficial communication with everyone can lead to meaningful impact on no one. We need to be inspired and educated in the value of trying to benefit the world, not just ourselves. As the opportunities for huge individual achievement and wealth form, we need to better recognize people who make the transition from success to significance. Community heroes need to be celebrated based upon their skills in giving—not their skills in taking.
  2. Celebrating diversity and avoiding conformity. Our ability to adapt to changing situations is largely a function of our diversity. Language leads us to view the world in different ways and to have different approaches to making decisions and solving problems. We need to encourage diversity in language, culture, and lifestyle to ensure our own survival. Powerful countries must not try to make other countries become like them. Residents of the global community need to celebrate the fact that “different” may be synonymous with “fascinating,” “enhancing,” and even “necessary.”

Building long-term value and avoiding short-term stimulation. Residents of the global community have almost unlimited access to sources of pleasurable, short-term stimulation. Television, movies, interactive games, virtual-reality experiences, chat rooms, and other options are available at a low cost. Yet few of these activities produce any long-term value. We need to inspire and educate people about the value of “investing” for the future. Long-term value is the result of vision, creativity, innovation, and hard work. We now have access to tools with the potential to dramatically increase our productivity, but we also have access to countless pleasurable distractions that lead nowhere.

Challenges and Opportunities for the Global Community

Challenges and Opportunities for the Global Community

The global community has the potential to become a nightmare:

  • A world of conformity: with billions of people wearing the same baseball caps, baggy shirts, jeans, and shoes, speaking the same language, and laughing at the same jokes.
  • A world of short-term stimulation: with countless hours spent on mindless social media, television, video games, and a virtual reality that begins to eliminate the real human experience.
  • A world of isolation: with lives spent in front of a screen, striving for personal excitement and gain with little thought for others and even less effort devoted to helping future generations.

The global community has the potential to be a dream come true:

  • A world of diversity: with billions of people being able to communicate, trade, share cultural experiences, and appreciate each other, with access to a range of products, services, religions, cultures, philosophies, and languages.
  • A world building long-term value: with countless people working together to advance our cultures, building on what has been learned in a manner that is positive, efficient, and productive.
  • A world reaching out to humanity: with people helping each other in ways that could never have been imagined, celebrating each other’s success, and helping less fortunate members of the community become more productive.

Will the global community of the future become a nightmare or a dream come true? No doubt it will be some of both. The increase in global communication, trade, technology, and culture will continue. By inspiring people and educating them in the values of celebrating diversity, building long-term value, and reaching out to humanity, we can build a global community that is more like a dream come true.

Posted in Business and Strategy Global Business

India in the ‘Fragile Five’ Club of Emerging Nations in Turmoil

The phrase ‘Fragile Five’ was coined by a research analyst at Morgan Stanley in 2013 to classify Turkey, Brazil, India, South Africa and Indonesia as economies that have become too reliant on foreign investment to bankroll their development ambitions. These countries have one essential thing in common—high and rising current account deficits that compel them more dependent on foreign capital flows. The expression has caught on in large degree for the reason that it emphasizes the strains that befall when countries place too much emphasis on fuelling fast rates of economic growth.

The Emergence of Narendra Modi

The Emergence of Narendra Modi

India’s confused point of view was reflected in the emergent legacy of Manmohan Singh, who may be reminisced as the nation’s best finance minister and its worst prime minister. The breakthrough opening of India that Singh planned as finance minister in the 1990s has been generally outdone by growing corruption and incompetence during his ten year tenure as prime minister. As his feeble coalition government continued to dither despite slowing growth and rising inflation, surveys showed that Indian voters were looking to new faces—even a strongman—to put things right.

'India for a Billion Reasons' by Amit Dasgupta (ISBN 8183281435) Over the years, political momentum shifted to regional parties with strong leaders, and in recent months to the opposition Bharatiya Janata Party (BJP) and its prime ministerial candidate, Narendra Modi, the energetic but overbearing regional leader who positioned his state of Gujarat as the “China of India” after presiding over Gujarat as Chief Minister for twelve years.

A recipe of good luck and resolution has reawakened economists’ cheerfulness about India just as the halo besieging Narendra Modi is beginning to grow fainter. Good luck has come in the form of plummeting oil prices, which are reducing the import burden. Modi took benefit of the price cut to abolish diesel-fuel subsidies and raise regulated natural-gas prices by a third, saving India’s under-pressure budget close to 1% of gross domestic product and disentangling a key market distortion.

Propelling India Forward

'Imagining India: The Idea of a Renewed Nation' by Nandan Nilekani (ISBN 0143116673) The benchmark Sensex Index on the Bombay Stock Exchange has by now climbed 30% ever since Modi became prime minister. But, he may still not have provided enough to lift India’s stock markets higher right away. Companies traded on India’s Sensex index already boast an average price/earnings ratio of 17.4 times 2014 estimates, compared with 11.4 for Brazilian shares, 9.5 for stocks in Shanghai, and 4.7 for distressed Russia. So a good portion of reform success is already priced in.

Not like in China, which is grappling to transform from manufacturing to a more consumer-oriented economy, India’s evolution counts on strengthening uncompetitive factories, which produce just 16% of GDP, compared to more than 20% in most emerging markets.

At any rate, Modi is endeavoring to impel his country in a positive direction. That alone makes India an refuge among the BRIC markets. Brazil and Russia are rallying around leaders who are moving resolutely in the wrong direction, as far as world markets are concerned, while China sends mixed, opaque signals about its own promised reforms and seems resigned to economic slowdown.

India: A Reading List

Posted in Global Business

China’s Roller-Coaster Love Ride with the Oreo: Challenges for Marketers

Challenges for Marketers in China: Kraft Mondelez Oreo Cookies

While there are tremendous growth opportunities for global brands in the Chinese consumer marketplace, to be successful in China, global brands must align with local Chinese culture and tastes. It is essential that multinational corporations understand the promise, the potential, and the complexity of China’s markets

In 2013, the market size of the biscuit and cookies market segment in China was estimated to be about 50.4 billion Yuan, or USD 8.3 billion. With 16% market share, Mondelez International lead this market segment with Oreo established as the country’s most popular cookie brand.

Kraft Foods, then the parent of Mondelez, launched Oreo in China in 1996. In 2012, Kraft Foods split into two distinct publicly traded companies: snack-food giant Mondelez International and the North American grocery business Kraft Foods Group. For most of its 100-year existence, Oreo has been America’s best-loved cookie, and today it is a global brand.

'China's Super Consumers: What 1 Billion Customers Want and How to Sell it to Them' by Savio Chan, Michael Zakkour (ISBN 1118834747) In 2006, however, the Oreo cookies business was a tiny $30 million business that was losing money. This was largely because executives in Kraft’s headquarters, near Chicago, expected to just drop the American sandwich cookie into the Chinese market and watch it fly off shelves. The US-parent had assumed that what made Oreo cookies successful in its home market would be a winning formula in other markets as well. Kraft Foods CEO Irene Rosenfeld admitted, “It was too sweet, too big and cost too much.” The tradition of twisting open Oreo cookies, licking the cream inside and then dunking it in milk before enjoying Oreo cookies was considered a “strangely American habit.” Kraft’s local Chinese leaders developed a regional concept—a wafer format in subtler flavors such as green-tea ice cream.

By Q1 2013, China is the second-largest Oreo market, a $600 million business growing 30% a year. Fortunes declined by Q4 in part because China’s appetite for the creme-filled sandwich cookie fell. Distributors had excess biscuit inventory and a general realization that cookies are not as healthier. Chinese consumers bore easily, so food makers need to innovate and introduce new brand to keep the market constantly hooked. Traditional techniques, such as changing the packaging often is not enough.

Recommended Reading: ‘China’s Super Consumers: What 1 Billion Customers Want and How to Sell it to Them’ by Savio Chan, Michael Zakkour narrates the underlying change in the nature of Chinese consumers and the way that they think about buying products and services.

Posted in Business and Strategy Global Business

Critical Success Factors for Joint Ventures

Joint Venture Management

According to the Association of Strategic Alliance Professionals, there are 7 critical success factors for joint ventures:

  1. Well-defined shared objectives
  2. An appropriate scope for the partnership
  3. Support of senior management from both the JV partners
  4. Devoted champions on both sides of the joint venture partnership
  5. Strong relationship management at all levels
  6. Cultural compatibility / or respect for diversity
  7. A high level of trust
Posted in Business and Strategy Global Business

Ideal Structure for a Successful Joint Ventures

Joint Venture Management

Joint ventures developed using familiar best practices can fail without a solid structure and a cross-process discipline for strategy, planning, operations, and implementation. Joint ventures that frequently struggle to sustain the continuity of vision as they develop and execute joint ventures.

  1. Balanced unique value added from shareholders to JV
  2. Business dependence between JV and shareholders
  3. Balanced returns from JV to shareholders
  4. Good mechanisms to manage support and involvement
  5. Balanced leverage between shareholders to ensure JV remains on the right path
Posted in Business and Strategy Global Business

Strategic Success in Joint Venture Management

Joint Venture Management

A joint venture represents the prospect of two businesses that believe that they can collaborate to accomplish marketplace goals that neither could achieve single-handedly. Joint venture partnerships are essential to how multinational companies can best achieve their global business objectives and improve top-line and bottom-line growths. Alliances and joint ventures provide many benefits, including filling gaps in capabilities or facilitating entry to new markets. Through carefully structured joint venture partnerships and international alliances, businesses can combine mutual strengths and capabilities to gain the benefits of scale that they would be unable to realize without help.

Each company must strive to be exceptional in how it develops, manages, operates, and evaluates joint venture partnerships. Joint ventures frequently go wrong due to neglect of the first stage (development of strategy) and operating implementation. A frequent and detailed joint venture assessment can determine if the company’s partnerships are being operated and managed in a way that provide real value to end customers and the joint venture partners and to determine ongoing improvements to ensure that the joint venture represents a rapid and very effective mechanism for strategic growth.

Doing Business in China

Statements of Joint Venture Management Excellence

  1. The JV partners and the joint venture recognize the needs of the end-customers in order to present tangible business value.
  2. The joint venture partnership is structured and leveraged to generate multiple sources of economic value for each JV partner.
  3. JV partners pay particular attention to the ownership and governance arrangement of the joint venture.
  4. Business objectives, strategies, and processes of the joint venture partnership are aligned with the objectives, strategies, and processes of the respective JV partners.
  5. The support mechanisms and processes of each JV partner that are significant to the success of the joint venture partnership are documented, synchronized and controlled to generate measurable results.
  6. The JV partners set priorities, convey the underlying principle behind them, advocate them even when the outcomes are undefined, and provide the support that the management of the joint venture needs to stand behind those choices as well.
  7. Business and functional leaders of each JV partner offer best practices and capable processes, tools and people to sustain the joint venture partnership.
  8. The joint venture partnership is managed using best practices, processes, tools, and quality standards as established by the JV partners.
  9. Confidential information received or created by the joint venture partnership is defined and maintained in a confined environment.
  10. Regular and consistent communication and flow of information occur within the joint venture partnership and between all parties at numerous levels.
  11. Representatives of the JV partners engage in shared activities that develop mutual trust.
  12. The parties openly define the roles of the JV partners, the Board and operating management of the joint venture partnership, and then they authorize the management and operate according to the agreed definitions.
  13. Managements of cross-border joint venture partnerships consist of a diverse mix of local managers and locally capable expatriates. Companies that survive the experience of doing business in other countries can learn from this experience and develop a distinctive competitive advantage that will serve them well when entering comparable challenging markets around the world.
  14. The right environment within the joint venture partnership is established based on reciprocated trust and shared respect. By understanding the changing nature of business and the potential pitfalls of joint venture partnerships, businesses can collaborate stronger alliances that benefit both JV partners.
  15. JV partnerships operate in conformity with all governmental laws, regulations, environmental standards, and safety standards and with the codes of conduct of the JV partners.
  16. JV partners are treated as customers and favored suppliers. Profitable exploratory actions hold more meaningful lessons for companies than failures do.
  17. Joint venture partnerships use shared problem-solving tools as reciprocally agreed by the partners. Lean manufacturing and other reliable management principles are used to identify and deliver process improvements.

Businesses pursuing joint ventures would do well to contemplate on the lessons of other companies that have engaged in joint ventures to improve the chances of success.

Posted in Business and Strategy Management and Leadership

The Impending Raise the Cost of Chinese Goods

Cost of Chinese Goods

There has been a greater focus and global attention on the future viability of China as a low-cost manufacturing center. Over the years, China has been at the forefront of containing global inflation. Increase in wages in China will set in motion a ripple effect across the world and bring about price rises across the spectrum of economic consumption. Apart from labor cost and economies of scale, Chinese manufacturers received extensive export subsidies from the Chinese government up until 2007.

Rising wages and the appreciation of the Yuan have diminished China’s exports in the past few years. Some Chinese firms manufacturing goods for foreign customers doubled worker wages in response to growing disquiet about wages and welfare. Last year, many local governments raised minimum wages to avert growing worker unrest.

Several empirical studies have suggested that the relative contribution of the manufacturing sector to a country’s economy tends to max out when it reaches 20 to 35 percent of the country’s Gross Domestic Product (GDP). Today, China’s manufacturing sector accounts for approximately 40 percent of its GDP.

Three powerful economic forces fuel the increase in Chinese wages:

  1. The prices of food and housing are increasing briskly. Contributing to Inflation is China’s insistence on maintaining the Chinese Yuan pegged to U.S. Dollar. This renounces China’s power to establish detached monetary policy. Macroeconomic principles hold that, given China’s rapid economic growth, tight monetary policy characterized primarily by high interest rates is necessary for an expanding economy. High interest rates moderate economic growth, and in turn repress inflation. Inflation is an expected outcome of loose money in an expanding economy.
  2. The Chinese government is inclined to encourage spending and thus spur the domestic economy by <3 paying more to Chinese workers. Rising wages, the Chinese government hopes, may perhaps ameliorate the effects of a reduced demand for Chinese products by strengthening domestic demand.
  3. China is now facing a labor shortage. There is competition among employers for capable workers. By providing more desirable wages, the Chinese also hope to draw fresh pools of workers from among new Chinese who live inland and have traditional livelihoods.

Combine these with the prospect (long-held promise, by the way) of China allowing its currency to appreciate against other currencies. If the Chinese Yuan were to trade more freely and/or appreciate, then Chinese goods would turn out to be more costly for importers. Then, the importing countries would buy fewer Chinese goods (and more domestically made goods) and exported goods would be become relatively cheaper for Chinese so they too would buy goods that are increasingly made in other countries.

All told, demographic trends, the prospect of a consumption-driven economy and unrest in the work force will dissuade American businesses from outsourcing manufacturing to China. And businesses that have, for years, used China as the “world’s factory” will either have to relocate to even-lower cost manufacturing bases in South East Asia, Eastern Europe, or scout out appealing geographies in Africa. Regardless, American consumers should anticipate an increase in the price of products made in China.

Posted in Global Business

Charlie Munger on Energy Independence, Future Oil Prices, and Energy Policy

Here’s Charlie Munger, Vice Chairman at Berkshire Hathaway on energy independence, future oil prices, and energy policy. Charlie was a panelist at a roundtable discussion on “U.S. — China Bilateral Investment: Managing Challenges, Optimizing Choices” at the 21st Annual Conference of the “Committee of 100.”

Charlie Munger, Vice Chairman of Berkshire Hathaway Oil is absolutely certain to become incredibly short in supply and very high priced. The imported oil is not your enemy, it’s your friend. Every barrel that you use up that comes from somebody else is a barrel of your precious oil which you’re going to need to feed your people and maintain your civilization. And what responsible people do with a Confucian ethos is suffer now to benefit themselves and their families and their countrymen later. The way to do that is to go very slow in producing domestic oil and not mind at all if we pay prices that look ruinous for foreign oil.

It’s going to get way worse later.

The oil in the ground that you’re not producing is a national treasure … It’s not at all clear that there’s any substitute [for hydrocarbons]. When the hydrocarbons are gone, I don’t think the chemists are going to be able to just mix up a vat and create more hydrocarbons. It’s conceivable that they could, I suppose, but it’s not the way to bet. We should spend no attention to these silly economists and these silly politicians that tell us to become energy independent.

Let me pose a question for you. It’s 1930. Oil in the United States is in glut. We have cartels to get the price up to $0.50 a barrel. Everywhere we drill we find more oil in our own country; everywhere we drill in Arabia we find even more.

What would the correct policy of the United States have been in that time? Well, the correct policy would have been to issue $150 billion of very long-term bonds and cart 150 billion barrels of Middle Eastern oil into the United States and throw it into our salt caverns and leave it there untouched until the current age.

It’s easy to see that in retrospect, but who do you see who ever points this out? Zero. We have a brain-block on this issue. We should behave now to do on purpose what we did on accident then.

The roundtable discussions were moderated by Dominic Ng, Chairman and Chief Executive Officer, East West Bank. Other than Charlie Munger, the speakers included Victor K. Fung, Chairman, Li & Fung Group and Jim Sinegal, Co-Founder and Director, Costco Wholesale Corporation.

On a related note, in an interview with Charlie Rose, ExxonMobil’s CEO Rex Tillerson thinks energy independence may actually put America at risk:

I don’t think that’s in our best interest to be independent. We need to be connected to multiple sources.

Clearly, the world is — has a lot of places in the world today where stability is an issue. And that can — that can influence the price. It’s probably not going to dramatically alter people’s access to energy, but it can alter the price at which they have to pay for that energy because a piece of the supply comes off the market, the capacity gets very tight, and the price goes up.

Posted in Global Business Investing and Finance

On Doing Business in China & Cultural Distinctions

Deb Weidenhamer, the chief executive of Auction Systems Auctioneers & Appraisers The Small Business segment of the The New York Times recently carried three articles featuring Deb Weidenhamer, the chief executive of Auction Systems Auctioneers and Appraisers. Since 1995, Deb Weidenhamer has grown her Phoenix-based auction house from $1.5MM in 1996 to $135MM in commissions today.

Deb Weidenhamer’s operations in China involve selling at auction Western-made goods to the Chinese on behalf of small American companies that cannot afford to have a full-blown, multinational presence in China.

The three articles feature interesting conversations on doing business in China and cross cultural differences. Here are the highlights.

Doing Business in China

What it Takes for a Small Business to Do Business in China

  • 'Chinese Business Etiquette: The Practical Pocket Guide' by Stefan H. Verstappen (ISBN 1933330635) On selling used goods in opposition to selling new goods: “There’s a huge stigma in China over used goods. They throw them away. It’s a very disposable country. Plus, a business liquidation would be a loss of face. You just close — maybe make a private, side deal to dispose of something.”
  • On difficulties of setting up business in China: “It was a major project. To open an office, we had to have 18 different approvals from 18 different ministries in the government. Each took between 15 and 90 days.”
  • On social media in China: “Many Chinese and Western companies buy followers so that new fans feel like they’ve joined a group of forward-thinking social media participants, but buying messages and advertising completely bombards the Chinese consumer. Successful social media strategies in China revolve around connecting with fans on other subjects rather than the business at hand, which is also consistent with the traditional Chinese custom of building relationships and not just breeding customers. For example, a cute photo of a puppy brings in thousands of comments and usually cycles back around to a conversation about auctions.”

Cross-Cultural Distinctions and Communication Styles in China

On Cross-Cultural Distinctions and Communication Styles

  • 'Doing Business in China: The Sun Tzu Way' by Laurence J. Brahm (ISBN 0804835314) On the importance of learning the local language: “I think there’s an expectation from the Chinese community that if you are committed and you care about having a business in China that you will make a valiant effort to learn Mandarin.”
  • On the Chinese mindset at negotiations: “Westerners come at a negotiation as a win-win for both parties. Obviously, I want to win a little more than you do on your end, but we try to make it a win-win for each other. The Chinese consider a successful negotiation in terms of a win and a loss. And obviously, their desire is to win.”
  • On the importance of building personal connections: “The Chinese term “guanxi” means “relationship,” but it really signifies a person’s influence throughout their social network. This is the key principle in understanding how business gets done in China, but we foreigners typically struggle to grasp the full scope of this system. Building strong relationships and understanding how your web of associations works is critical.”
  • On small-talk: “I struggled to restrain the American urge to dive straight into the matter at hand. I traded in my robotic business talk and learned to ask about the hometowns, education, hobbies and interests of those I hoped to work with.”

Recommended Reading on China’s Business Culture

Posted in Global Business Travels and Journeys