International Marketing (IR90007_01)

Segmentation, Targeting, and

Positioning

1. International Market Segmentation

2. International Market Targeting
3. International Market Positioning
International Market Segmentation

 International market segmentation

 The process of dividing world market into distinct subsets of customers that have similar
needs (e.g., country groups or individual interest groups)

 Pluralization of consumption (Segment simultaneity)

 One or more segments on a global scale to identify consumers in different countries who
share similar needs and desires

 Types of segmentation methods

 Demographic segmentation

 Psychographic segmentation

 Behavior segmentation

 Benefit segmentation
Demographic Segmentation

 Measurable characteristics of populations

 Age, income, gender, age distribution, education, and occupation

 Income and population segmentation

 For products with low enough price, population is a more important variable than income.

 Don’t use income as the only variable for assessing market opportunity.

- Use Purchasing Power Parity.

 Do not read into the numbers.

- Some services are free in developing nations so there is more purchasing power.
Demographic Segmentation (cont.)

 Age segmentation
 Global Teens: a group of teenagers chosen from different parts will share many of the same tastes.

 Global Elite: affluent consumers who are well traveled and have the money to spend on
prestigious products with an image of exclusivity.

 Gender segmentation
 Gender segmentation is an obvious choice for some companies.

 Fashion designers or cosmetic companies focus on women but may also offer men’s products.

- Nike is opening shops for women.

- Levi Strauss opened Levis for Girls in Paris.

Psychographic Segmentation

 Psychographic segmentation
 Grouping people in terms of their attitudes, values, and lifestyles

 Data are obtained from questionnaires that require respondents to indicate the extent to which
they agree or disagree with a series of statements.

 Porsche’s psychographic segmentation

 Top Guns (27%): Ambition, power, control

 Elitists (24%): Old money, car is just a car.

 Proud Patrons (23%): Car is reward for hard work.

 Bon Vivants (17%): Car is for excitement, adventure.

 Fantasists (9%): Car is form of escape.

Behavior Segmentation

 Behavior segmentation
 Focus on whether people purchase a product or not, how much, and how often they use it

 Usage rates: heavy, medium, light, or non-user

 User status: potential users, non-users, ex-users, regulars, first-timers, and users of competitors’
products

 80/20 rule (the law of disproportionality or Pareto’s Law)

 80 percent of a company’s revenues or profits are accounted for by 20 percent of their products
or customers
Benefit Segmentation

 Benefit segmentation
 The numerator of the value equation: Value = Benefits / Price

 Marketers’ superior understanding of the problem a product solves, the benefit it offers, or the
issue it addresses, regardless of geography

- Food marketers are finding success creating products that can help parents create nutritious

family meals with a minimal investment of time.

- As consumers care about whitening, sensitive teeth, gum disease, and other oral care issues,

marketers are developing new toothpaste brand extensions suited to the different sets of

perceived needs.
International Market Targeting

 Assessing market potential

 Tendency to overstate the size and short-term attractiveness of individual country markets

 The company does not want to ‘miss out’ on a strategic opportunity.

 Management’s network of contacts will emerge as a primary criterion for targeting.

 Criteria for targeting

 Current size of the segment and anticipated growth potential

 Potential competition

 Compatibility with company’s overall objectives and feasibility of successfully reaching the
target audience
International Market Targeting (cont.)

 Current segment size and growth

 Is the market segment large enough to present a company with the opportunity to make a profit?

 If the answer is ‘no,’ does it have significant growth potential to make it attractive in terms of a
company’s long-term strategy?

 Potential competition
 Is there currently strong competition in the market segment?

 Is the competition vulnerable in terms of price or quality?

 Feasibility and compatibility

 Will adaptation be required? If so, is this economically justifiable in terms of expected sales?

 Will import restrictions, high tariffs, or a strong home country currency drive up the price of the
product in the target market currency and effectively dampen demand?
Selecting Target Markets

 Market selection framework

Competitive Market Terms of Market
Market Size
Advantage Potential Access Potential
China (1.3 B) 100 0.70 = 7 0.50 3.5

Russia (143 M) 50 0.10 = 5 0.35 1.7

Mexico (122 M) 20 0.20 = 4 0.90 3.6

Selecting Target Markets (cont.)

 Framework for selecting target markets

 Marketing model drivers: key elements required for a business to take root and grow in a
particular country market environment

 Enabling conditions: structural market characteristics whose presence or absence can determine
whether the marketing model can succeed
Selecting Target Markets (cont.)

 First mover advantage

 The first company to enter a market has the best chance of becoming the market leader

 Late mover advantage?

- Benchmarking established companies and then outmaneuvering them, first locally then globally

 Questions for creating a product-market profile

 Who buys our product? / Who does not buy it?

 What need or function does it serve?

 Is there a market need that is not being met by current product/brand offerings?

 What problem does our product solve?

 What are customers buying to satisfy the need for which our product is targeted?

 What price are they paying?

 When is the product purchased?

 Where is it purchased?
Target Market Strategy Options

 Basic categories of target marketing strategies

 Standardized marketing

 Concentrated marketing

 Differentiated marketing

 Standardized global marketing

 Same marketing mix for a broad mass market of potential buyers

 Undifferentiated target marketing based on the premise that a mass market exists around world

 Mass market is served with a marketing mix of standardized elements.

 Product adaptation is minimized.

 Intensive distribution ensures that the product is available in the maximum number of retails.

 Lower production costs based on cost leadership strategy

Target Market Strategy Options (cont.)

 Concentrated global marketing

 Devising a marketing mix to reach a niche

 A niche is simply a single segment of the global market

 Hidden champions

- Companies unknown to most people that have succeeded by serving a niche market that exists

- They define their markets narrowly and strive for global depth rather than national breadth.

 Differentiated global marketing

 A more ambitious approach than concentrated target marketing

 Multi-segment targeting, targeting two or more distinct market segments with multiple marketing
mix offerings

 It allows a company to achieve wider market coverage.

Global Market Positioning

 Positioning
 The act of differentiating a brand in customers’ minds in relation to competitors in terms of
attributes and benefits that the brand does and does not offer

 The process of developing strategies for “filling a slot” in the mind of target customers

 Conjunction with segmentation variables and targeting strategies

 Positioning by attribute or benefit, quality and price, use or user, or competitor

 Attribute or Benefit
 Economy, reliability, and durability are frequently used attribute/benefit positions
Global Market Positioning (cont.)

 Quality and Price

 High fashion/quality and high price to good value (rather than low quality) at a reasonable price

 Transformation advertising to describe advertising that seeks to change the experience of buying
and using a product to justify a higher price

 Use or User
 How a product is used or associates the brand with a user or class of users

- e.g., Max Factor makeup is positioned as “the makeup that makeup artists use”

 Competition
 Implicit or explicit reference to competitors can provide the basis for an effective positioning

- e.g., Dove’s “Campaign for Real Beauty”

Positioning Strategies

 Global consumer culture positioning (GCCP)

 A strategy that identifies a brand as a symbol of a particular global culture or segment

 An effective strategy for communicating with global teens, cosmopolitan elites, globetrotting
laptop warriors who consider members of a transnational commerce culture and other groups

- e.g., Heineken: strong brand equity to reinforce consumers’ cosmopolitan self-images

 High-touch products to reinforce user’s actual/ideal self-image, or interpersonal relationships

 Use of English in advertising and labeling: modernism and cosmopolitanism to achieve GCCP

- e.g., Benetton’s tag line “United Colors of Benetton” appears in English in all of advertising

 Brand symbols that cannot be interpreted as associated with a specific country culture

- e.g., Nike’s swoosh or Mercedes-Benz’s star

Positioning Strategies (cont.)

 Local consumer culture positioning (LCCP)

 Brand with local cultural meanings

- to reflects the local culture’s norms

- to portray the brand as consumed by local people in the national culture

- to depict the product as locally produced for local consumers

 Foreign consumer culture positioning (FCCP)

 Brand’s users, use occasions, or production origins with a foreign country or culture