20080124165829 marketing in 2008 getting out of price war

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Dangerous Traps

Envisioned Trends

Creat ive Strategies

MARKETING IN 2008:GETTING OUT OF PRICE WAR

I N D O N E S I A O U T L O O K



Execut ive Summary

The first three quarters of the 2007 has exhibited many

companies pursuing aggressive growth strategies through

marketing innovations. However, the optimism has spurred

unprecedented p rice war in the last quarter of the year.

The optimism of 2007 has attracted many players in several

mass-market industries such as telecommunication, airline,

and retail to initiate a perpetual pricing game.

This phenomenon is predicted to continue in 2008.

Moreover, the year 2008 will be very much influenced by

the upcoming general election 2009. As many experts

foresee, any general election in Indonesia is usually preceded

with the rise of lower mass market segment. This will further

urge the players aiming for market share to push the prices

down.

Unless the players consolidate to stop the p rice wars and

play a fair game of creativity, the profit margin will continue

to deteriorate and the product quality will continue to

decline. To lead companies in avoiding this price war traps,

8 creative strategies have been identified to take advantage

of the 8 envisioned trends of 2008.

Marketing In 2008: Getting Out Of Price War December 2007 2

MarkPlus Whitepaper

This MarkPlus, Inc whitepaper is a

collaborative effort amongst MarkPlusInsight (our research arm),

MarkPlus&Co (our consulting arm), and

MarkPlus Institute of Marketing (our

education arm).

The whitepaper team has conducted

literature/desk researches, field

observations, and discussions on the

past and future trends with A. Syafii

Ma’arif (politic and social-culture),

Ashadi Siregar (literature and

lifestyle),Dyonisius Beti (marketing

and lifestyle),Eep Saefulloh Fatah

(politic), Eric Meijer

(telecommunication), Faisa l Basri

(economy),Roy Suryo (information

technology and lifestyle), and Sri Bud i

Santoso (television media and social-

culture).

The MarkPlus, Inc Whitepaper Team

Editors:

Michael Hermawan (Partner,

MarkPlus&Co)

Yuswoh ady (Chief Executive, MarkPlus

Institute of Marketing)

Authors:

Iwan Set iawan (Consultant,

MarkPlus&Co)

Ario Surind ro (Business Analyst,

MarkPlus&Co)

Research Team:

Taufik (Chief Executive, MarkPlus Insight)

Hasanuddin (Research Manager,

MarkPlus Insight)

Layout:

Arif Priambudi (BrandCredence)



Major macroeconomic indicators have shown good

performances during 2007, as predicted the previous

year. During the first three quarters of 2007, manyindustry players have grown optimism and have

fought harder in securing large market share.

Although this is normally a positive sign of growth,

it also holds a potential downside. Too much

optimism shared across too many players is certain

to make the competition more intense. New players

are attracted by the growing market, while old players

are expanding into new markets. Here is where the

danger surfaces: in an attempt to secure larger market

share, players are starting to cut prices.

Across industries, there have been many noticeable

facts during 2007. One of the most relevant one we

observed strongly rising during the last quarter of

2007 is the occurrence of price wars, particularly in

mass-market industries such as the cellular, airline,

and retail (refer to Exhibit 1). As the optimism

increases in 2008, the price war phenomenon is

predicted to continue in 2008. Exhibit 2 shows several

projections of GDP growth for 2008 from various

institutions. All but IMF share the same optimism

that 2008 will experience a slightly higher growth

rate than the year 2007.

Furthermore, if we look forward for what awaits after

2008, the national general election is on the top list

for anticipation. In anticipating 2009, the political

direction will turn to address the interest of the

largest market – the mass market. These facts will

create a unique composition of dynamics during the

year of 2008. The most apparent one is the rise of the lower mass market.

The price war and mass market wave are actually

closely aligned to one another and reciprocate with

one another. As the mass market grows in number

and importance, players try to cater them by

implanting a quick-yielding low price strategy. Almost

always there are other players in the market

presenting lower prices for their product offerings.

Some for a penetration purpose, thus aiming for

market share, while others were able to implant it as

a low cost strategy. Though some succeed,

competing on price is widely perceived as a

vulnerable competitive edge. Those few who do

prevail have been proven very difficult to copycat.

The most classic reasoning behind it is that the price

cut-offs hurt profit margins. And in the long run they

can damage brand image. Should there be a tradeoff

between pricing and market share? This question

causes a dilemma for many players.

8 Dang erous Trap s

There are eight reasons why the price war will meet

its momentum to accelerate in 2008. These eight

reasons would trigger price wars in any normal time

and condition. The question is how true is it in each


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Exhibit 1: The Price War Trap s across Ind ust ries in Ind onesia



industry and how the players are reacting towards

it. Most players build a misconception on these eight

reasons, thus turning them into eight dangerous

traps. The idea is that the players do not have to

pursue a price war temptation even though these

reasons occur. We observe that many players are

lured in the price war simply by affirming these

reasons. Trap #1 and 2 are driven by the changes by

the global business landscape, trap #3, 4, and 5 are

pushed by the competition, and trap #6 is influenced

by the customer, while trap #7 and 8 are shaped by

company’s internal mindset, as seen in Exhibit 3.

Trap # 1: Global Deflation due to t he

China Price

Until the early 2000, only inflation was considered

an imminent threat, while deflation was scarcely

even mentioned. Today, almost everyone is worried

about China’s low prices due to their unique low

production cost structure. The feared global deflation

is still haunting players in the competition. In some

instances, these worries are relevant. For textileproducts, Indonesia has felt the hardship of

competing against China’s products. But, when the

widely anticipated Chinese motorcycles entered the

Indonesian market back in 1999, it proved to be a

faded fad in just a couple of years. News sources are

even predicting that in 2008 China could change

from being a deflation exporter to an inflation

exporter. The global deflation is not a constant threat,

but pushes lower production costs. Players should

follow the lower cost trend but not necessarily the

lower price trend.

Trap # 2: Disrup tive Techno logy

Disruptive innovations can be broadly explained as

new technologies which force the industry to adopt

a lower cost structure. Sometimes, a disruptive

technology comes to dominate an existing market

by either filling a role in a new market that the older

technology could not fill (as more expensive, lower

capacity but smaller-sized hard disks did for newly

developed notebook computers in the 1980s) or by

successively moving up-market through

performance improvements until finally displacing

the market incumbents (as digital photography has

begun to replace film photography). New

technologies in consumers electronic and

information has enabled customers to enjoy more

and more products in a more affordable price range.

Trap # 3: Big Ind ustry Marg inWhen we observe an industry where the common

profit margin provides room for price decrease, a

large number of players are usually tempted in doing

so. A strong practice of price war occurred in the

cellular industry since the thick industry margin

allowed them to do so. Although still arguable,

Indonesia’s cellular industry is widely touted as the

most profitable mass industry in the world. The


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No

12

3

4

5

6

Agency

Government of IndonesiaBank Indonesia

IMF

World Bank

ADB

Citigroup

Date

March 2007April 2007

October 2007

April 2007

September 2007

August 2007

2007

6.36.0

6.2

6.3

6.2

6.0

2008

6.86.2

6.1

6.5

6.4

6.5

Exhibit 2: GDP Growth Project ion 2008

Source: Adopted from Faisal Basri’s summary on the Economic Outlook 2008



pharmaceutical and cigarettes industry also records

a return on assets higher than 14%. Contrary to the

facts, players do not necessarily need to cut prices

just because a big industry margin. In fact, almost

all cigarette p layers do not use price as means to

win competition. They prefer to build the ir brand

around a unique positioning. If players can maintain

this margin even when other players are not, they

are proving to have a strong competitive advantage

over others.

Trap # 4: Oversupp ly of Compe tition

One of the most classic reasons of a price war

occurrence is merely the p resence of a sufficient

number of players resulting in a relatively larger

supply than demand in a particular product market.

In markets where the players tend to over supply

the market, you can not rely on price cuts to get or

keep sales. Within the cellular industry, we can see

several new players have crowded the already tight

competition. According to Eric Meijer, the Deputy

President Director of Bakrie Telecom, the revenues

of players in the telecommunication industry have

been shrinking, up to 70% in some cases, due to the

immensely tight competition. A similar phenomenon

also occurred in the airline and retail industry, where

players are campaigning on low prices almost all the

time. Almost any player in the industry would admit

that their market is oversupplied, thus directing the

market to a red ocean one. When an over supply

competition occurs, players should build a

differentiation to compete upon. If they candifferentiate, they have not only escaped from a price

war but can also charge a premium price for it.

Trap # 5: Dee p Pocket Price Players

In the banking industry, the top four banks, Bank

Mandiri, BCA, BNI, and BRI can dig very deep for prize

money in their lucky draw programs. Garuda

Indonesia as the country’s national airline has been

through several financial crisis but has always found

a way to obtain financial backups, making them

adding an extra pocket to reach in for. Another typical

example is in the retail industry with giants like

Carrefour holding a strong advantage due to

everyday low prices strategy. In the cellular industry,

dominant players can gain advantage over smaller

players with smaller resources by price cuts and

massive promotion budgets. With the enormous

financial back-up, deep pocket players can butt out

other players who dare to follow their pricing tactics.

The interesting fact in Indonesia is that Telkomsel,

the market leader in cellular industry does not always

communicate its price as the ‘cheapest’. One player,

Bakrie Telecom, is also using product bundling and

low cost channel to gain market share in the CDMA

market under their Esia brand.

Trap # 6: Decrea sing Purchasing

Power

Almost everyone would agree on a simple statement

that prices never go down. If that were the completetruth, purchasing power would have a hard time

moving up. Decreasing purchasing power is also a

classic reason for players to cut prices. During the

crisis of 1998, this was indeed the general norm.

Now, let us take a look at a phenomenon close to

us – in the people searching for jobs. With the

unemployment rate still high in 2008, around 10.4%,

some segments are predicted to experience a low

purchasing power. There is an assumption that the

purchasing power in Indonesia will decrease due torising oil prices. This makes the inflation rate tend to

increase. This is not entirely true. We must see the

market place by place, by demographic, geographic,

and psychographic. Some segments are actually

potential growth targets.

Trap # 7: Market Share Orien ta tion

In the short run, many marketers are tempted in


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bringing sales on a market share orientation. Despite

many other short run dimensions overlooked such

as profitability, they may also hurt the brand in thelong run. We can see how market share has been an

over rated value indicator for many companies. In

the airline industry we can see how companies are

bragging on their low prices in order to acquire and

regain market share. When more and more new

players enter, they are mostly trying to secure a piece

of the market share. A fatal impact hurting the

national airline industry was the European flight ban

on Indonesian airlines due to strong suspect of below

standard flight practices. In the computer industry

and automotive for instance, some players are

boasting their dominant market share (in terms of a

defined sales or revenue) in their advertisements.

Chasing market share is a positive activity as long as

long term and industry wide interest are also catered.

A narrow market share orientation also hurts the

competitive dynamics in the market, bringing it more

to a price relying competition.

Trap # 8: Price Elast icity Trap

If you want to easily make more sales, lower your

prices. The players, often termed as values suppliers,

are following the basic supply-demand rule which

suggests that a decrease in price will result in an

increase of quantity. They have somehow neglected

another basic theory of price elasticity – suggesting

that the relation between price and quant ity is not

always elastic. There are other possibilities of price-

quantity relations. For some products, sales will even

decline if prices were lowered. Luxury products are

a common example. Marketing has encompassed

the concept of brand, positioning, and differentiation

as the core to marketing itself, as well as facing price

elasticity of demand.

8 Envision ed Trends

To escape from the price war traps in 2008,

companies must identify key trends as a result of

change factors in technology, political-legal, social-


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Trap # 1: Global Deflation due t o t he China Price

Trap # 2: Disrupt ive Technology

Trap # 3: Big Industry Margin

Trap # 4: Oversup ply of Competition

Trap # 5 Deep Pocket Price Players

Trap # 6 Decreasing Purchasing Power

Trap # 7 Market Share Orient ation

Trap # 8 Price Elasticity Trap

Exhibit 3: The 8 Dangerou s Traps

Change

Company

CustomerCompetition



cultural, economy, and the market (refer to Exhibit

4). There are eight envisioned trends, each conveying

a unique story.

These trends will serve as a guideline to discovernew market segments, new ways to engage the

customers, and new techniques to execute strategies

in 2008.

Tren d # 1: Int ern et Booming

(technology)

Indonesia has abundant technology presence despite

low product adoption. This seemingly paradox can

be traced to the fact that most technology product

customers need more of the prestige fashion than

the technology itself. The 3G adopt ion hasn’t

penetrated the market as high as the ads are.

Indonesia has been facing a low penetration level

of internet but high level of access mediums. While

available, technology oriented products is not as hot

as fashion oriented products. Already building

momentum, in 2008 there will be a leap in terms of

internet penetration.

Indonesia is still low in terms of penetration (8.9%),

but actually the enabler to use internet has grown

stronger with internet kiosks and many medium

types, such as Wi-Fi, broadband, and cable. Therefore,all the consumers need is just a little trigger to use

internet . Observing the government ’s initiation to

support this through the campaign of internet for

rural areas and hotspot set ups in numerous cities

throughout Indonesia. Another strong signal from

the government is the Palapa Ring project. Upon

completion, the new network could provide

telephony for and internet services to some 40,000

villages. Take the Indonesia Air Asia online ticketing

case for example. With a bit incentive andconvenience, the targeted rate of online purchase

has been reached and even surpassed.

Trend # 2: Pro-compe tition Policy

(political-legal)

Many thoughts have occurred on how a bureaucratic

and large-sized government organization can

perform an effective and efficient practice like a


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Trend # 1 Internet Booming

Trend # 2

Pro-competition Policy

Trend # 3

Decentralization Flourishing

Trend # 5 Rise of i-Express Community

Trend # 6 Listening to Rumors versus

Finding Facts

Trend # 7 Higher Non-Java Purchasing

Trend # 8 Proliferat ion of Mass Market

Exhibit 4: The 8 Envisioned Trends of 2008

Technology

Market

Social culturePolitical-legalTrend # 4 Populist Economy

to the Bottom of the Pyramid

Economy



typical business organization. There is a building

momentum for government political practices to

become inspired from business practices. Accordingto Eep Syaifullah Fatah, the participation, competition,

and liberalization of people in politics are gett ing

better. The accountability hasn’t. Towards

globalization and the need for foreign investment,

government is aware the drive to push accountability

to a higher level.

After long deserted , authorities are also enforcing

law for merger and acquisition practice. Cross

ownerships, a practice not strange for Japanese

companies, are heading for investigation. Along theway, more public service obligations are tendered

to the p rivate sectors. The government is starting to

show discipline and is likely to grow stronger. This

will actually encourage a fair competition p ractice

throughout the industry.

Trend # 3: Decentra lizat ion

Flourishing (political-leg al)

Decentralization of authority, once viewed as adistribution of corruption, actually can take an

analogy of creating smaller and quicker

entrepreneurial government companies. The state

government is then viewed more as the elephant

company, slow and reactive to change. Political

parties having creating success stories of a certain

city are going to commercialize on it. This is where

it becomes important to everyone. There are cities

like Sragen with the ir successful e-government

initiative and Lamongan which managed to

cooperate with Temasek in building an industrial

estate, giving only a small concession.

Many successful decentralization stories are also an

important asset for political parties rallying for the

2009 general election. Untung Wiyono, the mayor

of Sragen from one large political party, was elected

for his second period with an 87% victory rate in the

local election party in 2006. With his initiation of e-

government, the city has attracted many investors.

Trend # 4: Populist Economy to the

Bott om o f the Pyramid (economy)

The government will apply smarter pro-populist

policies to anticipate 2009. After the kerosene to

liquefied petroleum gas (LPG) conversion campaign,

the government is planning to limit the use of

gasoline for private car owners. These policies aimed

in saving fuel subsidies allocation in the state budget

and expenditure is perceived as a short cut around

more fundamental issues in the oil and gas sector,

such as import and export inefficiency. What is really

happening is that the government will take more

measurable policies aimed in the favor for the large

number mass market. The large number mass market

which comprise of the C, D, and E segment is

estimated over 185 million people – majority figure

from the 225 million people of Indonesia. Despite

rumors on the reasoning, such as votes for the 2009

general election, we predict that the trend will get

stronger in 2008. Simply said, the government will

increase spending for more tangible results.

Trend # 5: Rise of i-Express

Community (social-culture)

Individuals are excited about making themselves

heard and watched. The bloggers held gathering

party on late October 2007 at Jakarta: “Pesta Blogger

2007”. We could see that more people are expressing

themselves and communicating with others freely.

Blogs, yahoo messenger, friendster, you-tube are just

some of the media. This will cause a clash of

authorization, a state where everybody feels right

and wants to communicate that they are.

Independent information sources are sometimes

more credible then well established news sources.

As they say, word of mouth, a more personalized

and independent medium is more credible than any

sponsored medium. Most players want to maximize

their self best interest and are trying harder to do so.


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Trend # 6: Listen ing t o Rumors

versus Finding Facts (social-cultu re)

Most Indonesian people tend to be on the receiving

side of information, since they rather sit-and-listen

than stand-up-and-search. An important output is

that Indonesian people prefer to listen to rumors

compared to finding facts. Gossip shows are all over.

We have heard of so many rumors on papers

headlines, one after another. Eventually people get

overflowed with information from formal sources

and tend to digest lighter information from lighter

sources. This is also a way some parties to test or

even play with the people’s emotion and interest for

the 2009 general election. Companies must take

notice on this obvious behavior in planning and

executing marketing strategies. The ap proach of

marketing to potential customers will have to follow

accordingly.

Tren d # 7: Highe r Non-Java

Purchasing Power (market )

More and more cities with natural resources are able

to secure larger local revenues since almost all natural

commodities produced in Indonesia, mostly outside

Java, is rising. This brings a trickle down effect for the

people there in a higher purchasing power level.

Most cities in Java that are short of quick revenue

sources tend to hold purchasing power to a low

level.

During 2006 the Central Statistics Agency (BPS)

reported that the consumption spending outside

Java is generally higher than Java (excluding Jakarta).

Faisal Basri cited that many commodity products,

mostly produced outside Java, are reaching high

level of prices now. The commodity prices from

industries such as plantation, agriculture, and mining

have been rising and resulting in a growing wealth

in many areas outside Java. Furthermore, MS Hidayat,

president of Indonesia Chamber of Commerce and

Industry, stated that in January 2008 almost all

commodity products prices will increase around

10%. This is an effect of the oil price increase. As a

result there will be an emerging market with higherpurchasing power outside Java.

Trend # 8: Prolifera tion of Mass

Market (market)

From 1998 until 2007, the value-oriented segment

was known to be the bulk of the market. In 2008,

most of the value-oriented segment will migrate

downward to price-oriented segment and form a

new cluster of smarter value-oriented segment. This

is because they can compare value offerings but

prefer the one that offers lowest p rice. Most of the

price-oriented segment will also migrate upward to

smarter price-oriented cluster. Therefore, the smarter

value-oriented segment and the smarter price-

oriented segment will be the new mass market.

Because most value-oriented segment migrates, the

value segment becomes smaller. Company that offers

value will eventually have to reduce the price and

offer “same for less”to mass segment or move upwardand offer “more for more”to luxury segment, or else,

the company will be locked in the value trap. The

same phenomenon was indicated at North America

and Europe in late 2005. As cited from a McKinsey

article titled “The Vanishing Middle Market”, authors

Trond Riiber Knudsen, Andreas Randel and Jørgen

Rugholm suggest that that p remium and value

offerings are squeezing middle-of-the-road products

and services in many industries. Their research across

25 industries and p roduct categories in Europe andNorth America shows the extent of this market

polarization.

8 Crea t ive Strat eg ies

As the competition becomes more intense and

players are signaling price wars, the importance of

marketing will grow even greater. Marketing is a


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strategic business concept where companies must

lay out the ir strategy, tactic, and value from a

marketing framework. Once the industry experiences

a price war, the challenge is actually shifting from

focusing on low price products and more on

creativity. As it is hard to copycat, creativity is what

makes a strong differentiation. Combined with a

correct positioning and a strong brand, companies

can build ground for escaping from any price war.

Creative Explorat ion: Discover New Market

Segments

New segments have shown their peek preview

during late 2007. Based on the simple segmentation

basis and the eight envisioned trends of 2008, we

identified three potential segments that will serve

as a new market segment in 2008.

1. Explore Non-Java Segment (geographic

segmentation)

Java has long been the focus of marketing

efforts. The logic is that the island comprise of

around 60% of the population. But we must

be creative in viewing our market. The

population outside Java is predicted to become

a very potential growth area. As the people

outside Java accelerate their purchasing power,

they have become an interesting market

segment to target in 2008. The rural markets

represent a distinct dynamic in how they come

into being and make unique demands on how

the product is designed and how the brand is

positioned and promoted. The challenge is to

reach wide coverage to specific potential areas.

Thus, the key here is accessibility.

2. Explore the Bottom-of-the-Pyramid Segment

(demographic segmentation)

Once viewed as low potential target market,

the D and E market segment is actually rising

and is predicted to gain better product value.

Combined with the C segment, the size of this

market is estimated to reach over 185 million

people. Despite lower incidence of premium


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Exhibit 5: The Creat ive Marketing Strategy Frame work

Explore Non-Java Segment

Explore the Bottom -of-the-Pyramid Segment

Explore the-iExpress Segment

Engage Market b y Market

Engage with Internet

Engage with Word of Mouth &Commun ity

Execute with Efficient Cost

Execute with Experiential Service

Creative explorationsegmentation, targeting positioning

Creative engagementdifferentiation, marketing mix, selling

Creative executionbrand, service, process



product purchases, BOP consumers across all

income segments exhibit marked propensity

to spend on premium high quality productswhich are backed by strong brand values,

where they correspond to their own aspirations

and quality needs. As stated before, this market

was the once price oriented segment but have

started moving up towards a smarter price

oriented segment. The key here is affordability

of products.

3. Explore the -iExpress Segment (psychographic

segmentation)

Exploring deeper into psychographics, one

emerging trend in 2008 is the self-expressionist

people. They like to talk and form a community

of listeners as well as viewers. When we targe t

this segment, we can observe their behaviors

in terms of how they spend their spar time and

spare money. If we adopt the segments from

the VALS survey, the i-Express segment is

represented by the ‘experiencers’and ‘makers’

segments. Experiencers are avid consumers

and spend a comparatively high proportion of

their income on fashion, entertainment, and

socializing. Makers live within a traditional

context of family, practical work, and physical

recreation and have little interest in what lies

outside that context. They also

prefer value to luxury, thus mostly buy basic

products. The key here is catering their lifestyle

pleasures.

Creat ive Engag ement: Crafting Tactics

To engage the envisioned trends of 2008 and cater

the new market segments above, we also suggest

three tactics in 2008. The tactics consist of marketing

mix and selling.

4. Engage Market by Market (marketing mix)

The old saying says that each unique market

segment requires a customized marketing mix.

The shift of the mass market to more rural areas,

particularly outside Java will require companies

to do so. Products, place, promotion, and prices

must be tailored according to each localizedmarket. The logical reason behind this it that

many segment throughout Indonesia

sometimes requires a unique offering and

access. From our interview with Sri Budi

Santoso, a top management for program with

Media Nusantara Citra (MNC) Group which

holds the largest broadcast coverage in

Indonesia, national television stations are

preparing to cater more localized flavor in

television programs. This is aligned with the

governments plan to require national television

stations to own a local network in local areas.

5. Engage with Internet (channel, promotion, and

selling)

With the internet penetration boom next year,

companies have to start thinking on how to

capitalize on it. To win more market share,

companies must activate their channels and

selling efforts with the customers’buying

process. We know that the interne t is the

relatively the cheapest access channel in the

marketing mix – place and promotion.

Companies should anticipate this trend

accordingly. Creating interactive promotion

through the internet to target expressionists

would be easier for the company. Furthermore,

the targeted customers would have much

more convenience in accessing it.

6. Engage with Word of Mouth (WOM) &

Community (promotion and selling)

In order to win the market shares in those

respective market segments, companies must

customize to their social-cultural trend. People

are interacting more through a human network,

thus creating network hubs. As more and more

people prefer to listen to rumors instead of

facts, the community-base selling tactic via

word of mouth communication will gain higher


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effectiveness in 2008. Companies should

optimize their bellow-the-line promotion

efforts targeting specific network hubs in order

to spill the effect to the larger mass market.

This has a two fold advantage. First, it can

reduce the big bulk of above-the-line

promotion. Second, it can target the customersmore specifically.

Crea tive Execu tion: Aim High o r Low

As the market is polarizing towards high-end and

the low-end, companies must aim high or aim low.

The execution phase is focused on the mass segment

market and the quality oriented market. When we

want to target the mass market, we must adopt an

efficient cost product ion strategy. If we target the

quality oriented market, we must adopt anexperiential service and brand strategy. The execution

consists of brand, process and service.

7. Execute with Efficient Cost (to target the entire

price oriented segment)

In designing and executing the process,

companies must pay attention to the quality,

cost, and delivery (QCD) elements in it. This

means that while pursuing a cost leadership

strategy through cost efficiencies tasks,

companies must maintain the quality and

delivery level at a proportional level in order

to guard their brand image. The retail giant

Carrefour is a classic example on

how the QCD can create a great execution

advantage.8. Execute with Experiential Service (to target the

quality oriented segment)

Execut ion for the quality oriented segment

must take a careful design on the service. This

segment expects not only a product or service,

but an experience. This experience can be

delivered not only with a high level of QCD,

but must be added with the correct personal

touch. Experiential service attempts to connect

consumers with brands in personally relevantand memorable ways. This experience allegedly

creates a stronger relationship with the

consumer. Luxury products such as Louis-

Vuitton bags and the just launched Lexus cars

in Indonesia are some examples. Since

competing in quality-oriented segment means

competing in new market where competitive

advantage is gained by offering fashion, many


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We believe that 2008 is the year of creativity.

In fact, next year is a year full of optimism. After

all, in 2008 Indonesia will be celebrating the

100th year of the National Resurgence Day.



MarkPlus Whitepaper


brands must position themselves as part of

their customers’lifestyle.

In anticipating the eight dangerous traps, companiesshould not give up to a price war. As for the eight

envisioned trends, companies must understand how

the impact will hinder or accelerate their

performance. In order to outsmart the competition

in 2008 companies must adopt a creative marketing

framework. We believe that 2008 is the year of

creativity. In fact, next year is a year full of optimism.After all, in 2008 Indonesia will be celebrating the

100th year of the National Resurgence Day. The

momentum couldn’t be more perfect to be creative.



MarkPlus, Inc is the first integrated marketing solution in Southeast Asia. For years, MarkPlus, Inc has served

many privately-owned and state-owned companies, as well as several multinational corporations across

virtually every type of industry. We have more than 150 full-time staff across the region, with a large number

of them professing as consultants, researchers, trainers, and administrators. Everywhere we practice, we

always establish ourselves as the country's local champion in the marketing field.

MarkPlus&Co is the exclusive consulting arm of MarkPlus, Inc. Since 1989, we have emerged as the trusted

advisor and, in many cases, change agents in the areas of strategy and marketing to many businesses and

institutions in the Southeast Asia region. At MarkPlus&Co, we look at a business holistically, whilst focusing

on strategy and marketing. We guide our clients in search of their core strengths, improve their positioning

&market-orientation and achieve sustainable growth.

MarkPlus Insight is a respected Southeast Asian-based research firm and the market research arm of MarkPlus,

Inc. We are a leading research service provider which promises to provide clients with reliable information

and relevant insights, so our clients can enhance their decision-making process. We provide relevant customer

insights as op posed to ordinary customer data by using the most recent research approaches together with

our strong analytical capabilities to synthesize findings and to develop practical recommendations.

MarkPlus Institute of Marketing (MIM) is MarkPlus Inc's training and publishing division. For 18 years, MIM has

conducted trainings and seminars for more than 2000 companies and 20,000 executives through our public

and in-house programs across South East Asia. We have virtually served every type of client categories: From

consumer goods to manufacturing, from government companies to multinationals.

BrandCredence is the brand &communications consulting division of MarkPlus&Co. BrandCredence has

conducted numerous brand research, strategy development, communication planning, design, as well as

training and inplementation services for various clients from telecommunications, banking &financials,

automotive, fast moving consumer goods, pharmaceuticals, properties, and many other industries.

BrandCredence operates in Jakarta, Kuala Lumpur, and Singapore.

MarkPlus Whitepaper

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20080124165829 marketing in 2008 getting out of price war

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