Marketing the Nation Philip Kotler, Ph.D. Kellogg School of Management Northwestern University CEO Forum Bangkok, Thailand October 18, 2001

Strategy Development Situation Analysis –SWOT Objectives Strategies Implementation

Situation Analysis: Past Policies Thailand’s annual growth was 8% between 1991 and July 1997 when the currency collapsed. 1960s: Import substitution 1970s: Export promotion 1980s: Foreign direct investment 1990s: Trade liberalization 2000s: ???

Situation Analysis: Strategy Dilemma Past growth was based on factor input growth, not productivity (Paul Krugman) Problem with factor-driven growth: China and IndoChina will be cheaper. The nutcracker dilemma: Thailand is caught in the middle between low cost-based competitors (China) and high value based competitors (Italy, Japan). –Low cost based country: stagnation, unemployment, shortage of hard currency, second class economic power. –High value adding country: develops sophisticated industries with differentiation and niche potential.

Situation Analysis: Thailand’s Strengths Good natural resources Low labor costs Large internal market Democratic government, politically stable, safe haven (Switzerland) Good access for reaching other markets in Southeast Asia, China and India

Situation Analysis: Thailand’s Weaknesses Bad bank loans Credit crunch Bankruptcies Weak capital inflow Unemployment

Objectives First, get out of the crisis. Second, improve international competitiveness.

Objective One: Escaping from the Crisis Fighting Unemployment –Many Thais may come back to Thailand from the Middle East –Many unemployed Thais will go to villages –Undergraduates should stay in school one extra year to pick up more skills –Unemployed MBAs introduced to program for entrepreneurs –Slow down company downsizing through consulting and subsidies. –Start large scale government work projects Get banks on a sound footing. Thailand Assets Management Corporation. Companies need to revise their product mix, segment mix, customer mix, and marketing mix.

Objective Two: Improving International Competitiveness Thailand needs to improve productivity, innovation, and marketing. Examples of specific objectives: –Among top five trading countries in Asia, –Occupy eight niches in world markets. –Achieve three global brands. –In top ten more favored countries to invest in. –In top ten tourist destinations. –In top ten with high quality of life. –In top ten with social and political stability.

Strategies Choose the industries to develop. Improve the financial system. Facilitate entrepreneurship. Support small and medium scale enterprises. Help villages and cities develop place marketing. Consider import substitution.

Strategies: Industries to Develop Tourism –Green tourism, quality tourism, Japanese weddings, Second Phuket, Long stays for retired people, “Be My Guest” program Promote Thai food restaurants around the world. Promote entertainment industry in Thailand. Build auto industry; make Thailand, “Detroit of the East.” Build natural foods industry. Apply biotechnology to agriculture. Some industries have to be extended (Thai foods); some strengthened (tourism, entertainment); and some started (Biotech) Two types of companies: –Physical based companies (speed, quality, delivery) –Knowledge based companies (design, differentiation, branding, high value add)

Strategies: Encourage Entrepreneurship Ministry of Entrepreneur Development. One stop service and lending and training. Micro-lending Drucker’s suggestion

Strategies: Support Small and Medium Scale Enterprises SMEs that feed into LSEs. SMEs that feed into international markets. SMEs that feed into local markets.

Strategies: Build Places Places need to develop place marketing plans. One product, one village: already 4,000 products. Marketing needed. A few products will end up in international market (Thailand Plaza); some in regional market; many in domestic market; most in local market.

Strategies: Import Substitution Machinery (raise tariff) Grow flowers and fruit here that were imported Grow quality beef

Implementation Role of government Office of Opportunity Development

Implementation: Government’s Role Government should be the driver. Guided capitalism. Build infrastructure. Improve credit availability. Build public service information. Deregulate, privatize, where appropriate. Lower tariffs on luxury products. Reduce bureaucracy

Implementation: Opportunity Development September 11 creates new opportunities for Thailand. Every sector must develop a list of opportunities. Needed: Opportunity Development Salesforce –Don’t wait for industry and investors to come here. Go and market to them.

Conclusion Thailand is better situated that neighboring countries that went hi-tech. Thailand must position itself as a safe neutral haven in a troubled world. Government must apply business and marketing thinking to support recovery and competitiveness. Thailand must extend and strengthen present industries and build new ones that have high value-added, knowledge-added content. Thailand needs to apply marketing skills in order to turn ideas into results.