Over the past year, WPP has started up market research businesses in China, Indonesia and South Korea. We have set up a joint venture in healthcare marketing services in Japan. Earlier this month we bought the largest sales promotion and direct marketing agency in Taiwan. These initiatives are a sign of our commitment to the so-called ‘emerging markets', more aptly named ‘fast-growing markets'. Asia Pacific, Latin America, central and eastern Europe, Africa and the Middle East accounted for about one-fifth of WPP's business last year. This year they will account for almost a quarter, and in five years' time, I would be disappointed if the proportion were not at least one-third.
It seems to me that consumer-driven businesses in the West are preoccupied with the development, or lack of it, of our own markets and so miss out on opportunities elsewhere. Unilever is a rare exception among multinationals in setting the objective that half of its business comes from Asia Pacific, Latin America, Africa and the Middle East within five years, instead of the one-third currently generated. It also seems to me that most major multinational businesses are not pursuing global strategies in the way they would have us believe. The average US-based multinational still derives only 20% of its sales from outside the USA. Coca-Cola is the exception not the rule, with 80% of its business outside the USA.
Yet over the next ten years worldwide geographical expansion must be a strategic priority. Many consumer goods and services companies promise growth of 5, 10 or 15% in earnings per share or a similar measure. When the world's population is growing at less than 2% a year on average, this means finding new international opportunities. As we have seen in the case of Vietnam, with a market of around 75m people, and with South Africa and its market of around 40m people, unprecedented foreign investment flows in as soon as political conditions allow. The same will be true for Burma's 45m people market and Cuba's 11m people.
As a result of greater economic stability, more welcoming governments and harder working people, Asia Pacific still retains the lead in terms of interest among multinationals. Latin America is a close second. Within Asia Pacific, only China remains an enigma, with significant revenue growth but limited profitability. Western businesses should not assume that these markets are simply awaiting their arrival. Besides the dominant Japanese financial institutions, some of the leading Korean chaebols - conglomerates such as Samsung, Hyundai, LG and Daewoo - have grown as big as or bigger than IBM in a shorter time. President Foods, one of the world's biggest food companies, based in Taiwan, and San Miguel, the Philippines-based brewing company, are both capable of developing global brands.
Latin America is also witnessing the development of significant global forces. In the media and communications sector, for example, the Azcarraga family, the Marinho family and John Malone of TCI have all collaborated with Rupert Murdoch on pan-regional projects or companies. Against this background, if we in Western companies don't develop our businesses, products and services in the new, faster growing markets, we will ultimately suffer competitively as the growing forces invade our own backyards. The author is chief executive of WPP Group. Source: Sorrell12 (reprinted with permission)
Question
1. Discuss the kind of marketing research that might be undertaken in the various markets mentioned in this case study. What kind of problems do you think researchers will encounter in each case?