Global Marketing Management, 5e

Chapter 7 Global Segmentation and Positioning

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Chapter Overview
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1. Reasons for International Market Segmentation 2. International Market Segmentation Approaches 3. Segmentation Scenarios 4. Bases for Country Segmentation 5. International Positioning Strategies 6. Global, Foreign, and Local Consumer Culture Positioning Appendix Copyright (c) 2009 John Wiley & Sons, Inc. Chapter 7

Introduction
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Variation in customer needs is the primary motive for market segmentation. Most companies will identify and target the most attractive market segments that they can effectively serve. In global marketing, market segmentation becomes especially critical because of wide divergence in cross-border consumer needs and lifestyles. Once the management has chosen its target segments, management needs to Copyright (c) 2009 John Wiley & Sons, Inc. Chapter 7 determine a competitive positioning

1. Reasons for International Market Segmentation

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Segments ideally should possess the following set of properties:

Identifiable

Sizable Accessible Stable Responsive Actionable

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1. Reasons for International Market Segmentation

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Country Screening Global Market Research Entry Decisions Positioning Strategy Resource Allocation (Exhibit 7-1) Marketing Mix Policy

Balance between standardization and customization

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Exhibit 7-1: Market Clustering Approach for Instant Coffee

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2. International Market Segmentation Approaches

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International segmentation procedures: Country-as-segments or aggregate segmentation (See Exhibits 7-2 and 7-3.) Disaggregate international consumer segmentation Two-stage international segmentation Standard country segmentation classifies prospect countries on a single dimension (e.g., per capita GNP) or on multiple dimensions cultural, socioeconomic, and political criteria available from secondary data sources. Copyright (c) 2009 John Wiley & Sons, Inc. Chapter 7 For numerous country traits, use data

Exhibit 7-2: Nestls Geographic Segmentation of the Americas

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Exhibit 7-3: Macro-Level Country Characteristics

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3. Segmentation Scenarios
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Universal or global segments Regional segments Unique (diverse) segments

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Exhibit 7-4: Different Segment Scenarios

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4. Bases for Country Segmentation

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Demographics Demographic variables are among the most popular criteria (Exhibit 7-5). Socioeconomic Variables Caveats in using per capita income as an economic development indicator: Monetization of transactions within a country Gray and Black Market sections of the economy Income disparities Purchasing Power Parity (PPP) criteria Human development index (HDI) classification Socioeconomic Strata (SES) Analysis (Exhibit 76)
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Exhibit 7-5: Six Types of Chinese Pre-Elders

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Exhibit 7-6: Market Development and Brand Building

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4. Bases for Country Segmentation

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Behavior-based segmentation (Exhibit 7-7)

Brand loyalty Usage rate Product penetration Benefits

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Exhibit 7-7: Benefit Segments of Toothpaste Market in the U.S.A., China, and Mexico

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4. Bases for Country Segmentation

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Lifestyles Roper Consultings Valuescope Model. 30,000 interviews around the world. Achievers Traditionals Survivors Nurturers Hedonists Social-Rationals Self-Directeds
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5. International Positioning Strategies

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The formulation of a positioning strategy (local or global) includes the following steps: 1. Identify the relevant set of competing products or brands. 2. Determine current perceptions held by consumers about your product/brand and the competition. 3. Develop possible positioning themes. 4. Screen the positioning alternatives and select the most appealing one. 5. Develop a marketing mix strategy. 6. Over time, monitor the effectiveness of your Copyright (c) 2009 John Wiley & Sons, Inc. Chapter 7 positioning strategy and if needed, conduct an

5. International Positioning Strategies

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Uniform versus Localized Positioning Strategies Universal Positioning Appeals

Positioning themes:

Specific product features/attributes Product benefit, solutions for problems user category user application heritage lifestyle
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Exhibit 7-9: Global Positioning and Segmentation Strategies

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6. Global, Foreign, and Local Consumer Culture Positioning

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Global consumer culture positioning (GCCP)

Brand as a symbol of a given global consumer culture

Local consumer culture positioning (LCCP)

Brand as an intrinsic part of the local culture.

Foreign consumer culture positioning (FCCP)

(c) 2009 John Wiley & Sons, Inc. Chapter 7 Brand Copyright mystique built around a specific

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Exhibit 7-10: McDonalds Promoting Its Local Community Support in New Zealand

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Appendix: Segmentation Tools

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Segmentation techniques and tools:

Cluster Analysis: Collection of statistical procedures for dividing objects into groups (clusters). The grouping is done in such a manner that members belonging to the same group are very similar to one another but quite distinct from members of other groups.

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Appendix: Segmentation Tools

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Regression Analysis: In regression, one assumes that there exists a relationship between a response variable, Y, and one or more so-called predictor variables, X1, X2 and so on. For each of the parameter estimates, the regression analysis will also produce standard error. The higher the R2 value, the better the ability of the regression model to predict the data. (See Exhibits 7-11 through 7-13.)
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Exhibit 7-11: Principles of Cluster Analysis

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Exhibit 7-12: Plot of Concentration versus Category Growth Chocolate Market

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Exhibit 7-13: Cluster Analysis

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