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06/26/2017 HYU News > Academics

Title

Assessing the Effectiveness of Global Marketing Strategies

Professor Kim Bo-young (Department of Business)

윤지현

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http://www.hanyang.ac.kr/surl/BqPM

Contents
Professor Kim Bo-young of the Department of Business has been nominated as the researcher of the week for her active research in the field of international business and marketing. In her paper, “Assessment of the Economic Benefits from US Meat Export Federation’s (USMEF) Marketing Investment in South Korea”, Kim explains how controllable economic factors such as marketing expenditure can have substantial impact on enhancing international trade and business.
 
A photo of Professor Kim (Photo couresy of Kim)


More specifically, this research aims to estimate the economic impacts of USMEF marketing investment for commodity on US beef in South Korea. An econometric framework has been developed to assess the effectiveness of USMEF’s marketing strategies and promotional programs in South Korea, by developing an import demand model for US beef and eliciting Benefit-Cost-Ratio (BCR) of USMEF’s promotion investment. From this analysis, 1) the relationships between selected uncontrollable and controllable economic variables and the US beef demand in South Korea are assessed, and 2) with BCR simulation analysis, the return on promotion investment (ROI) of USMEF is derived.
 
In the first stage, the baseline scenario was constructed with the estimated import demand which is set to historical level (i.e.100%) of marketing expenditure, then compared with a counterfactual scenario, where marketing expenditure was hypothetically reduced by 75% below the historical level. The difference between the two scenarios implies the impact of reduction in marketing investment.
 
 
Hypothetically, 75% reduction in USMEF marketing investment would have decreased US beef import in South Korea, a possible reduction of 20.68% in US beef import demand. (Photo courtesy of Kim)

 
In the second stage, BCR is calculated (i.e.).   is the benefit of USMEF promotion investment (i.e. the additional net revenue of US beef due to increased export volume & export price), and   is the cost of USMEF promotion investment (i.e. the sum of the various marketing costs). Using this BCR calculation approach, 9 simulated scenarios are generated, which suggest BCRs for US beef with USMEF promotion investments over nine different market and supply conditions.
 
The graph above shows a caculation of BCR.
(Photo courtesy of Kim)


The study results show that increase in USMEF promotion investment had a significant and positive impact on the net revenue of US beef export to Korea over the period of 2007-2013. The estimates of BCRs ranged from 2.20 to 9.66 under 9 different market scenarios, indicating that on the average, the benefits of USMEF promotion is greater than the cost of USMEF promotion for all 9 scenarios. For example, 9.66 for BCR imply that the benefit of USMEF promotion is 9.66 times greater than the cost. In translation, under the 10% net margin scenario, every dollar invested in USMEF promotion to Korea market generated a return of U$9.66 at most. The incremental benefits for US beef (i.e. additional net revenue) range from U$15.73 million (=10 & =3%) to U$69.95 million (=2 & =10%). Thus, there are substantial returns on USMEF promotion investment.
 
When it comes to international trade of commodity products, there are varying degrees of control over factors that affect their economic benefits in the foreign market. Exchange rates, the price of substitutes, income growth in importing country are some examples of uncontrollable variables affecting commodity exporters. Nonetheless, the study results suggest that there is convincing evidence of commodity promotion expenditure in foreign market, exerting a significant positive influence on the commodity import demand. Thus, promotion investment by international marketing agency can be viewed as an important controllable variable for successful export of commodity. Korean commodity exporters may need to take this as a lesson in developing their export marketing strategies in the future.
 
Currently, Kim is in charge of the Korea Institute of Sustainable Economy (KISE) and her research team is conducting Korea-Japan-China triad comparative analysis on the Omni channel marketing and retailing. By using corporate big data and survey, she is exploring the optimal development of the Omni channel in retail markets in Korea, Japan and China. Kim plans to expand her studies on consumer analytics and international business/data analytics for better understanding of rapidly evolving global retail markets.
 


Yun Ji-hyun        uni27@hanyang.ac.kr
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