Segmenting Global Markets: By: V. Kumar and Anish Nagpal Look Before You Leap

“I am a citizen, not of Athens or Greece, but of the world.” -Socrates Before implementing a global market segmentation strategy, it’s critical to understand both local and global issues Before implementing a global market segmentation strategy, it’s critical to understand both local and global issues Global Marketing: emphasizes 4 activities Global Marketing: emphasizes 4 activities Cost efficienciesCost efficiencies Opportunities to transfer products, ideas, etc.Opportunities to transfer products, ideas, etc. Emergence of global customersEmergence of global customers Better links between national marketingBetter links between national marketinginfrastructures

What is GMS? Global marketing segmentation (GMS) is the process of identifying specific segments of potential customers, across countries with similar attributes who are likely to exhibit similar buying power. Global marketing segmentation (GMS) is the process of identifying specific segments of potential customers, across countries with similar attributes who are likely to exhibit similar buying power. The goal of GMS is to break down the world market for a product or service into different groups of consumers that differ in their response to the firm’s marketing mix program. The goal of GMS is to break down the world market for a product or service into different groups of consumers that differ in their response to the firm’s marketing mix program.

Targeted segments in GMS should possess these properties: Measurability: Easy to define and measure Measurability: Easy to define and measure Size: Large enough to go after Size: Large enough to go after Accessibility: Easy to reach via the media Accessibility: Easy to reach via the media Actionability: Effective marketing programs should be easy to develop Actionability: Effective marketing programs should be easy to develop Competitive intensity: Should not be preempted by the firm’s competition Competitive intensity: Should not be preempted by the firm’s competition Growth potential: High return on investment should be attainable Growth potential: High return on investment should be attainable

How to Implement GMS Six step process Six step process 1.Identify the purpose. 2.Select segmentation criteria. 3.Collect relevant information. 4.Segment the countries/consumers according to criteria. 5.Reevaluate the fit of the segment after implementation of the intended program. 6.Update/reassign segment membership.

Categories for Selecting Segmentation Criteria Demographics: Measurable characteristics of population. Demographics: Measurable characteristics of population. Culture: Religion, education, and language. Culture: Religion, education, and language. Geography: World region, economic stage of development, and population. Geography: World region, economic stage of development, and population. Environment: Political, legal, and business Environment: Political, legal, and business environments. environments.

4 Critical Equivalencies

Construct Equivalence Whether the segmentation basis has the same meaning and is expressed similarly in different countries and cultures. Whether the segmentation basis has the same meaning and is expressed similarly in different countries and cultures. Example: Bicycles in the U.S. are classified under the recreation-sports industry, whereas inExample: Bicycles in the U.S. are classified under the recreation-sports industry, whereas in India and China they are considered a means of transportation.

Scalar Equivalence Results from marketing research should have the same meaning and interpretation in different countries. Results from marketing research should have the same meaning and interpretation in different countries. Example: The U.S. generally uses a 5 or 7 point scale while in France the most common scale is a 20-point scale.Example: The U.S. generally uses a 5 or 7 point scale while in France the most common scale is a 20-point scale.

Measurement Equivalence Whether the measures used to operationalize the segment are comparable across countries. Whether the measures used to operationalize the segment are comparable across countries. Example: Household income is difficult to compare across countries due to differences in tax structure and the purchasing power.Example: Household income is difficult to compare across countries due to differences in tax structure and the purchasing power.

Sampling Equivalence Identifies comparable populations and selects samples that are representative of other populations and comparable across countries. Identifies comparable populations and selects samples that are representative of other populations and comparable across countries. Example: In the U.S., office supplies are often purchased by secretaries, while in manyExample: In the U.S., office supplies are often purchased by secretaries, while in many other countries this decision is made by a middle-level manager or CEO.

Think Globally, Act Locally Segmentation allows global marketers to take advantage of standardization while addressing the needs and expectations of a specific target group. Segmentation allows global marketers to take advantage of standardization while addressing the needs and expectations of a specific target group. To be successful, GMS needs to achieve a balance between the local and global concerns of the customers. To be successful, GMS needs to achieve a balance between the local and global concerns of the customers.