expanding to the east

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MARKETING FOR FUTURE BUSINESS GROWTH EXPANDING YOUR MARKET DURING A RECESSION Daniel Evans Chief Executive Officer [email protected] www.ormita.com June 2011 © Copyright 2011 – Ormita Commerce Network Limited. All Rights Reserved

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Expanding your market into Asia.

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Page 1: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

EXPANDING

YOUR MARKET

DURING A

RECESSIONDaniel Evans

Chief Executive [email protected]

www.ormita.com

June 2011

© Copyright 2011 – Ormita Commerce Network Limited. All Rights Reserved

Page 2: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

THE BIG DEAL

ABOUT ASIA

Page 3: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

The Plain Facts

China: • Is the worlds fastest growing economy

• Doubles in size approximately every seven years

• Will be the largest economy by 2020

• Is the largest country by population

• Is the worlds largest lender

India: • Is the worlds forth largest economy

• Will be the third largest economy by 2020

• Has maintained growth over the past 20 years

• Is the second largest country by population

Page 4: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

The Future : The Worlds Largest Economies

14.9 tr 14.7 tr 9.9 tr 4.3 tr 4.0 tr 2.2 tr

European Union

U.S.AChina

Japan India

Russia

30 tr 29.6 tr 28.1 tr 13.4 tr 6.8 tr 4.3 tr

European Union

China U.S.A

India

Russia

2010GDP PPP-adjusted

Values in Trillions of USD

Source: World Bank

2020GDP PPP-adjusted

Values in Trillions of USD

Japan

Page 5: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

Biggest Economies in 2020

Source: World Bank

Page 6: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

China & India

Worlds Fastest Growing Economies

-10

-5

0

5

10

15

20

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Australia

Canada

China

India

Russian Federation

United Kingdom

United States

European Union

GDP GROWTH

PER YEARReal growth rate

Values expressed as a percentage

Source: World Bank

Page 7: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

The Largest Populations in the World

0

200

400

600

800

1000

1200

1400

1600

China

India

Euro A

rea

United S

tates

Indon

esia

Brazil

Pakist

an

Banglad

esh

Niger

ia

Russia

2010

POPULATION

IN MILLIONS

Source: CIA World Fact Book

Page 8: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

ASIAN

ECONOMIES ARE

THE MOST

RESILIENT

Page 9: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

South Asia

The Most Resilient Economies

-6

-4

-2

0

2

4

6

8

10

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

East Asia & Pacific

European Union

Latin America & Caribbean

Middle East & North Africa

North America

South Asia

Sub-Saharan Africa

GDP GROWTH

PER YEARReal growth rate

Values expressed as a percentage

Source: World Bank

Page 10: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

Global Lenders Vs Global Borrowers

ChinaJapan

GermanySaudi Arabia

RussiaSwitzerland

Netherlands

NorwayKuwaitSingapore

South AfricaRomania

FranceTurkeyGreece

AustraliaItaly

United KingdomSpain

United States

-1,000 -800 -600 -400 -200 0 200 400 600

1

BORROWERS

LENDERS{}

Source: World Bank

Page 11: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

ASIA HAS MORE

MONEY TO

SPEND

Page 12: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

0

50

100

150

200

250

Japan

Greece

IcelandItaly

Singapore

Belgium

United States

Ireland

France

Portugal

Egypt

Hungary

Germany

Israel

United Kingdom

Austria

Netherlands

Spain

Brazil

Poland

Turkey

Norway

Denmark

Mexico

Canada

South Africa

New Zealand

China

Saudi Arabia

Russia

Estonia

China

Source: Cia World Fact Book

Asian Travellers Have Less Debt

GOVERNMENT

DEBT AS A

PERCENTAGE

OF GDP

Page 13: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

LURING THE

ASIAN

TRAVELLER

Page 14: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

Motivation & Needs

Chinese & Indian Travellers

Travel Motivation

• Rising Incomes

• Need to travel for business

• Travel (especially to Europe) as a status symbol

• Curiosity

Travel Needs

• Safety of a destination

• Ease of getting a visa

• Other factors:– Natural Scenic Beauty

– Well-known landmarks

– Friendly local people

Page 15: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

Business Travellers

Official:

• Travel by people employed in government or public service upon invitation of a related organisation in the destination country

Business:

• Incentive travel, visiting exhibitions and inspections or technical visits

Purpose of Travel

• Paid by company/bureau

• Predominantly company of male colleagues

• Convenience and time

• Concentrated shopping

• Appreciate flexibility and attention to time management

Page 16: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

Private Travellers

Group:

• First time visitors and travel in groups, given the

language barriers and unfamiliarity with the destinations.

• They belong to the rising middle classes.

FITs:

• Has a high income and big purchasing power

• More likely to speak other languages

• Are experienced travellers

Page 17: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

Who Are The Travellers ?

• Well educated (with tertiary education)

• With higher income

• Top management of companies and government bureaus

• Working professionals and semi-professionals

• Small groups on an incentive trip

• Tech-savvy and fashionable (interested in cutting-edge gadgets and latest fashions)

• 4:2:1 (3 generations – grandparents, parents and single child)

• Young (20-39 years old)

Page 18: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

Accommodation Preference

Source: World Travel Forum

0

5

10

15

20

25

30

35

40

45

50

5 Star Hotels &Resorts

4-Star Hotel 3-Star Hotel 2-Star Hotel Others

Chinese Indians

Page 19: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

China: Major Travel Generating Regions

Northern China (Beijing and Northeast China)– Most of the official travel is from Beijing

– Beijingers are engaged in politics and love socialising

– Work comes second to friends and family

Eastern China (Shanghai and the Coastal Provinces Zhejiang and Jiangsu)– Regions with a history of overseas travel, resulting in relatives abroad

– Wealthiest in terms of average income

– Shanghainese are trendy and internationally oriented

– Very price-driven, shrewd business people who drive hard bargains

South China (Guangdong Province and Neighbouring Provinces)– Guangdong benefits from its proximity to Hong Kong as the commercial

gateway into China

– Its capital city, Guangzhou, is a major trading and commercial centre

– Consumer spending is the highest among China’s provinces

– People in the south prefer higher standard of services to cheap prices

Page 20: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

When Do They Travel?

• Outbound mainly for business and official travel, hence not reliant on peak seasons

• Private travel is mainly concentrated during the public holidays and school vacations

– School vacations take place around Chinese New Year (4 weeks in Jan/Feb) and in summer (July and August)

– Preferred destinations are domestic destinations and South East Asia

– October is chosen for long haul destinations

– 5 to 15 days paid holidays are available since 2008

Page 21: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

Travel Preferences

• Short Haul to Long Haul: Significant growing interest to ‘less discovered’European destinations; trips to S.E. Asia, Japan, Korea and Oceania still popular

• Group Tour to Independent Travel:More Chinese travellers are able to apply for individual visas (as long as they showcase sound financial and employment status)

• Multi-Country Packages to Hybrid Tours: Travellers are interested in in-depth travel rather than multi-country packages. They are keen to return to destinations enjoyed the first time.

• The Chinese ‘top priorities’ in life are keeping fit & healthy, professional development and spending time with family & friends.

• In terms of holidays, taking domestic holidays is at least ‘quite important’for 80% and ‘extremely important’ for 9%. Foreign holidays are regarded as at least ‘quite important’ for a smaller proportion (61%) and ‘extremely important’ for 10%.

Page 22: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

Chinese Travellers

Approved Destination Status (ADS)

• Approved Destination Status (ADS) Policy is a bilateral government agreement defining the arrangement between the Chinese Government and a foreign destination whereby Chinese tourists are permitted to undertake leisure travel in groups to that destination. Business and official travel to overseas destinations are not included.

• Was first introduced in the early nineties for destinations in Southeast Asia such as Singapore, Thailand and Malaysia.

• Countries without an ADS agreement are not allowed to receive tourism groups from China or to promote their destination in China for tourism and are restricted to business and official travel groups only.

• More than135 different countries and territories have been granted ADS. The EU Member States, Switzerland, Norway, Iceland, USA, Canada,Australia and New Zealand are some of the major countries with ADS agreement.

Page 23: Expanding to the East

MARKETING FOR FUTURE BUSINESS GROWTH

Travel Information Sources

0

10

20

30

40

50

60

70

80

Destin

ation

Web

sites

Trave

l Agen

cies

Adverti

sing at

Bor

ders

/ Airp

orts

Newsp

apers

/ Mag

azin

es

Trave

l Books

Recom

mendat

ion

from

Oth

ers

Billboar

ds & P

rom

otional

Signs

TV/Rad

io

China India

Source: World Travel Forum