Global Mktg, Ch 7: Global Segmentation & Positioning

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Segments should ideally possess the following set of properties (Reasons for Intn'l Makt Segmentation)

Identifiable, Sizable, Accessible, Stable, Responsive, Actionable.

Reasons for International Market Segmentation*

Country Screening, Global Market Research, Entry Decisions, Positioning Strategy, Resource Allocation (Exhibit 7-1), Marketing Mix Policy (Balance between Standardization & Customization)

Country Screening* (Reasons for Intn'l Mkt Segmentation)

Companies do preliminary screening of countries to IDing attractive mkt ops. for their product. To screen, analysts rely on indicators for which info easily gathered from 2ndary data sources. Countries classified into piles such as "Go"(meet all criteria)/"No Go"/ 3rd set which meets some but not all criteria(may be interest in future, not in s-term)Comps use diff. sets of criteria to screen countries depending on nature of product. Criterions they rely on: Cultural similarity to domestic mkt, Market Attractiveness in terms of Econ. prosperity(per capita GNP), geographic proximity, countries infrastructure.

Global Mkt Research*(Reasons for Intn'l Mkt Segmentation)

Companies operate in large # of countries, so doing mkt research in each one is inefficient. In early stage, likely to focus on select few countries.Key ? is which ones. One approach is grouping prospective mkts in clusters of homeogenous countries and choosing one member out of each, concentrating rsrch on that one.Then the findings for selected key member countries can be projected to other countries belonging to its cluster.

Global Mkt Research Example*(Reasons for Intn'l Mkt Segmentation)

Heineken chose four countries to do mkt research for Buckler(non alcoholic beer): The Netherlands, Spain, US, France. The Dutch brewer wanted to assess mkt appeal of Buckler & feasibility of pan-European mktg strategy consisting of roughly common targeting, positioning, & mktg mix strategy across the continent.

Entry Decisions*(Reasons for Intn'l Mkt Segmentation)

When product does well in one country, firms hope to replicate the success story in other countries. Logic is to launch product in countries highly similar to country where prod was introduced already. Important to remember that host of factors make/break success of new prod. launch. Tabasco sauce is popular in Asian countries(Japan)w/liking of spicy dishes.So,McIlhenny(Louisiane Based maker of tobacco sauce.

Entry Decisions Example*(Reasons for Intn'l Mkt Segmentation)

Cadbury Schweppes was confident about launching Schweppes tonic water in brazil, given that it was well accepted in similar culture countries such as Mexico.

Positioning Strategy*(Reasons for Intn'l Mkt Segmentation)

Once firm selects target segments, management has to dev. Positioning strategy to embrace thosechosen segments.Decide how to position products in mind of prospective target customers. Environmental change/shifting preferences force firm to rethink pos. strategy.

Positioning Strategy Example*(Reasons for Intn'l Mkt Segmentation)

Cathay Pacific's repositioning strategy in mid 90's. Hong Kong based airline carrier realized that its product offerings failed to meet Asian clients needs(Asian 80% of customer base) to better satisfy target seg, repositioned itself to become preferred airline among Asian travelers.Wanted to project Asian personality w/personal touch.

Resource Allocation* (Reasons for Intn'l Mkt Segmentation)

Useful in deciding how to allocate market resources across different countries.

Resource Allocation Example*(Reasons for Intn'l Mkt Segmentation)

Nestle clusters countries using 2 criteria for Nescafe: per capita coffee consumption and the market share of in-home soluble coffee of overall coffee consumption. Leader markets(where instant coffee share>50%) Challanger markets(where R&G coffee dominant)Developed mkts are those w/annual capita consumption of more than 360 c. Those below the 360 mark are developing markets.

Resource Allocation Example: Nestle allocation decisions*

Nestles managers could decide to concentrate mkt resources in countries w/low share of mkt but a high per capita consumption to bolster mkt share. Or,resources could be allocated to countries where firm is strong competitor but low coffee consumption. Could ponder cutting resources in mkts w/weak Nestle market share & low consumption.

Marketing Mix Policy(Reasons for Intn'l Mkt Segmentation)

Segmentation & Position decisions dictate firm's marketing mix policy. Country segmentation guides global marketer's mix decisions. Problem for marketers to balance customization & Standardization.Countries belonging to same segment usually use stand. Marketing mix strategy. Same product design, similar advertising messages and media, and same distrib channels used here. Difficult to establish link btwn market segments & all four elements of marketing mix.

Segmentation Scenarios*

When a firm segments foreign markets, different scenarios can arise. Common one is where we have one universal segment (A) & the other segments are either unique to a particular country or exist in only 2 of 3 countries. Size of the different segments varies depending on the country. One poss. Is uncovering universal/global segments, these transcend national boundaries. Universal b/c customers belonging to such segments have common needs.

Segmentation Scenarios: Universal/Global Segments*

These are segments that transcend national boundaries. Universal in sense that customers belonging to such segments have common needs. Note that this segment could also be a universal niche. Examples of possible universal segments

Segmentation Scenarios: Niche*

Universal/Global Segments could also have a universal niche. Commonly defined as a more narrowly defined group of consumers who seek a very special bundle of benefits. Examples of possible universal segments that are emerging include global youth, international business travelers, and the global elite.

Segmentation Scenarios: Study at Harvard University*

Looked at consumers attitudes toward global brands. Based on survey done in twelve countries found following seven global segments: Global Climbers, Civic Libertarians, Multinational fans, Antiglobalists, Global Citizens, Global Agnostics, Pro-West.

Segmentation Scenarios: 1. Global climbers

(23.3%)Attracted to brands exuding global status, unimpressed by brands linked w/countries that have strong quality reputation for specific products.

Segmentation Scenarios: 2.Civic Libertarians

(21.5%)This group puts heavy emphasis on social responsibility. They are not impressed by brands that are produced in countries w/a high reputation in the product category.

Segmentation Scenarios: 3. Multinational Fans

(15.5%)This segment ranks highest on the influence of reputation & global status on brand preference.

Segmentation Scenarios: 4. Antiglobalists

These people are strongly against brands that express American values and are very cynical about the ethics of companies that own global brands.

Segmentation Scenarios: 5. Global Citizens

(10.1%) This segment values social responsibility.

Segmentation Scenarios: 6. Global Agnostics

(7.6%)These consumers value global brands just as any other brand w/out using global dimension as a cue.

Segmentation Scenarios: 7. Pro-West

These people have a high esteem for American values. Their brand preferences are highly influenced by global status.

Segmentation Scenarios: Regional Segments*

Similarity in customer needs & preferences exists at regional not global level. While differences in consumer needs exist among regions, there are similarities within the region.

Bases for Country Segmentation: 2.Socioeconomic Variables*

A. Caveats in using per capita income as an economic development indicator 1. Monetization of transactions w/in a country. 2. Gray & Black Markets. 3. Income Disparities

Socioeconomic Variables(Bases for Country Segmentation)

Consumption patterns for G&S driven by consumer wealth/country's level of economic development in general. Consumers from countries at same stage of econ. development often show similar needs in terms of per capita amt & types of goods they desire. Many consumer good marketers view per capita income as one of key criteria in grouping international markets.

Bases for Country Segmentation: 2. Socioeconomic Variables: Gray and Black Markets*

National income figures only record transactions that arise in legitimate sector of a country's economy. Many countries have sizable gray sector consisting of untaxed exchanges that involve barter transactions. In developing world cities, professors make ends meet by driving taxi. In exch. For a dental checkup, a TV repairman might fix the dentist's tv set. Many communities also thrive on substantial black sector, involving illegal transactions(drug trade, prostitution)

(Bases for Country Segmentation: Socioeconomic Variables) Human Development Index(HDI) Classification

Other schemes broaden the notion of a country's level of development by going beyond standard living measures. One popular classification schema is based on HDI, released every yr by the United Nations, Covers 177 UN member countries. Widens notion of economic dev. By looking at country's achievements in 3 areas: life expectancy at birth(long/healthy life), knowledge(literacy), and decent standard of living(per capita PPP)

Human Development Index Statistics(Bases for country segmentation: Socioeconomic Variables)

07/08 Report classified 70 countries as having achieved high lvl of economic development(HDI of .80 or above), 85 as medium(HDI of .5-.799) and 22 as low(HDI less than .50) Highest scores were Norway, Iceland, and Australia.

Socioeconomic Variables: Purchasing Power Parity

To protect against the shortcomings of standard "per-capita income" segmentation exercises, marketers can employ other metrics to group consumers in terms of their buying power. One alternative is to use PPP as a criterion. It reflects how much a household in each country has to spend in USD to buy a standard basket of goods. Can be found in World Bank Atlas.

Bases for Country Segmentation: Behavior-based Segmentation(List of 5)*

Brand Loyalty, Usage Rate, Product Penetration, Benefits, Lifestyles (Roper Consulting's Valuescope Model: achievers,traditionals, survivors, nurturers, etc.)

Behavior Based Segmentation: Lifestyle Segmentation

Mktg people decided concerns about lifestyle segmentation. Segment across globe not similar to one another even tho lifestyle similar. Consumption patterns don't always match. Not stable over time, changes frequently. Variation in lifestyle doesn't transfer well across cultures. Been around long time, but not that valuable domestically, even less valuable when talking about global segmentation.

International Positioning Strategies*

Formulate positioning strategy after segmentation done. Before positioning: 1. Get segmentation done, and 2. Pick Target Market

Positioning(Def)

must be unique image of your product or brand in minds of customer(in target market)

Uniform Vs. Localized Positioning Strategy*

Must decide whether to use same positioning. Market universally(uniform) or local positioning strategy.

Most desirable positioning strategy from cost standpoint*

Universal(same all over world)

Universal Positioning*

Very desirable, but challenging to do. Positioning themes don't travel well. We can take advantage of global media.

Why is it beneficial to tap into global media?*

Get volume discount on media, and its cheaper.

Universal Positioning Appeals: Positioning Themes*

Don't travel well. Ex: Land Rover in European mkts. Synonymous w/authenticity. Brought Land Rover to US but had probs b/c couldn't use same positioning. Avon's "Let's Talk", positioning campaign that met great success. Corporate mission: Company made up of women, & for women.

Good Possibilities to use as Themes for Universal Positioning*

Financial Services: lots of leverage around world b/c people worry about it the same around the world. Family Products: also work well

Localized Positioning Strategies*

Used lots b/c easiest way to go, but also most expensive way to go. Companies will use product that is mainstream @ home, but premium brand abroad. Positioned at high end in other places of world.

Localized Positioning Strategies: Costs higher to export b/c(3)*

Costs are higher to export, by the time you get it to destination market b/c: 1. Might have to pay tariffs, 2. Have to pay more transportation, and 3. Lengthening supply chain, so costs are higher.

Localized Positioning Strategies Example*

Pizza Hut is high end fashionable restaurant in China. Burberry is high end. Levis are mainstream here but high end in other places. Budweiser, Heineken.

(Universal Positioning Appeals: Positioning Themes)Specific Product Features & Attributes*

If zero in on specific best features of product, tends to travel well. Especially regarding B2B products. Performance, Quality equals objective measures.

Global Consumer Culture Positioning (GCCP)*

Brand as a symbol of a given global consumer culture. "My First Sony" & "Just Do It"(Nike, global successful universal positioning)

Local Consumer Culture Positioning (LCCP) + Example*

Brand as an intrinsic part of the local culture. Ex: Singer Sewing Machines made to feel as if local product. Germany thought made in Germany, every country thought was local made product; really, it is American company. Big Benefit to thinking a brand is domestic.

Foreign Consumer Culture Positioning (FCCP)*

Brand mystique built around a specific foreign culture. American blue jeans, Swiss Watches.

Positioning strategy depends on*

Target market(values/attitudes/aspirations).Some products can be universal (luxury goods such as jewelry), translate well across all cultures or are there lots of local differences. We must consider what the competition is doing: will the target market confuse us w/competition. Break thru clutter.

Positioning Strategy: Example*

McDonald's, globally recognized, cosmopolitan cities w/lots of people based fast food chain. Make different products....McBratwurst, Salmon. Zero in on employment of local folks. Considered authentic American.

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