Segmentation and Positioning
Segmentation - grouping customers, regions, countries in a meaningful way - we use criteria called “bases” for segmentation
Segmentation is important in developing a focused market approach with economical use of resources
Positioning- how is your product, brand, company perceived in
comparison to those of your competitors? E.g. quality brand, value brand,
traditional company with local roots
How has Kellogg’s grouped customers, regions, countries in a meaningful way
- we use criteria called “bases” for segmentation
What do customers is certain areas need? Are their needs different?
Are their ways of meeting the same need different from our company’s traditional way of meeting those needs?
How is your product, brand, company perceived in comparison to those of your competitors?
How are Chocolate Brands perceived around the world? What is a high quality chocolate?
Condensed vs. Dry soups? (Campbell vs. Knorr)
Reasons for Global Market Segmentation
Properties: Measurable, Sizable, Accessible, Actionable, Competitive Intensity, Growth Potential
Suppose that we had a product that could meet the needs of consumers
having lower standards of living
- perhaps a food product or simple home appliance
Suppose that we specialize in products for the elderly? What are
life expectancies in various countries?
Go pile vs. No-go pile
We try to identify constructs and items that are meaningful indicators
AGE: Elderly: what is life expectancy
AGE: Children’s market: infant mortality rate
EDUCATION: Reading/computer products: literacy rate
How can we obtain such information?
Use UN Infonation site - gives segmentation info
Existing Secondary Research can Provide Clues
Global Market Research- are there studies that can give you some insight? Your text gives several illustrations
Entry Decisions* - may complicate your segmentation ideas - suppose that there are restrictions or demands made by your destination country
Marketing Mix Policy
Exhibit 7-1 “Think” and “Feel” Country Clusters
Segmentation by Country Approaches
Exhibit 7-2 Macro-Level Country Approaches - pick one key criterion across countries
Exhibit Two- and Three- Segment Solutions
Exhibit 7-4 Different Segment Scenarios - segments within countries
What about Cross-Border Segments?
E.g families with young children throughout South America
- market for Gerber baby foods
Target Market Strategies
Universal Segment - there are elderly in every country - what does it mean to be elderly? What is the life expectancy in Country X? Are the elderly active in society? Are they cared for by social institutions?
Diverse Segment - different needs in different countries, mothers in US need convenience of formula
vs. mothers in LDCs need nutrition in formula, HIV
Mixture of Universal and Diverse Segments; all mothers need to feed their babies
LDC mothers live with malnutrition
China’s Three Generations
Asian Values - E.g. Jetro study
Bases for Country Segmentation
Demographics - objective and measurable charaacteristics of a group
Rostow’s Basic stages of economic development
1. Traditional Societies
2. Preconditions for take-off
3. The take off
4. The drive to maturity
5. High mass-consumption
Be careful since many countries do not fit into these categories as neatly as defined: e.g. NICs
Caveats in using per capita income
Monetization of transactions within a country - what does the currency actually buy? Are goods also traded?
Gray and Black Market sections of the country/ “Dual economy” - look at South Africa
Exhibit 7-6 Latin-American Markets: Many Latin Households have Lots of Spending Money
More Bases for Country Segmentation
1. Individualism vs Collectivism (IND)
2. Power Distance (PD) how are inequalities handled?
3. Uncertainty Avoidance (UA)
4. Masculinity - Feminism (MA)
Can these cultural characteristics be related to products? To advertising
E.g. Suppose we are developing software products for collectivist cultures - would our ads stress achievement?
Even More Bases for Country Segmentation
Behavior-Based Segmentation: what are they looking for in a product? What products are desired in each country? What are necessities? What are luxuries? What activities do people value? E.g. small appliances, detergents which clean plus are environmentally safe
Life Style Segmentation - What are the activities, interests, and opinions? Psychographic method? Is environmentalism important? How are products related to lifestyles and values?
What else do people do who could use your product?
Country Segmentation Tools
Issues in International Market Segmentation
Poor Quality Data - recency, accuracy, bias?
Presence of Outliers
Stability of Segments Over Time
International Positioning Strategies
Global Positioning and Segmentation Strategies
1. Keep things simple.
2. Consider several levels of aggregation, not just one.
3. Two ways to fine tune an existing segmentation scheme.
4. Pursue “creative” ways to segment your market.