Chapter Eleven Global Segmentation and Positioning Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000

Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide KEEGAN’S EXPANSION STRATEGIES 1. PRODUCT-COMMUNICATIONS EXTENSION 2. PRODUCT EXTENSION-- COMMUNICATIONS ADAPTATION 3. PRODUCT ADAPTATION -- COMMUNICATIONS EXTENSION 4. DUAL ADAPTATION 5. PRODUCT INVENTION

Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide A Two-Dimensional Country Clustering Map Exhibit , SOT UKI NOR SWE DEN FIN SWI AUS NET GER NEZ BEL AUT COL CHI VEN SPA BRA PER MEX PUE FRA ITA ARG PHI THI ISR JAP MAC IND PAK Factor VI TUR Protestant Catholic

Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide DescriptorsDescriptors Source: Charles Ramond. The Art of Using Science in Marketing. New York: Harper & Row, Copyright ©1974 by Charles Ramond. Reprinted by permission of Harper Collins Publishers, Inc. Exhibit 11.1 cont.

Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide A Market-Oriented Clustering of World Markets Exhibit 11.2 Source: Cavusgil, 1990, pp Reprinted by permission of Butterworth- Heinemann, Ltd.., and the author.

Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide A Market-Oriented Clustering of World Markets Exhibit 11.2 Cont. Source: Cavusgil, 1990, pp Reprinted by permission of Butterworth-Heinemann, Ltd.., and the author.

Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide A Market-Oriented Clustering of World Markets Exhibit 11.2 Cont. Source: Cavusgil, 1990, pp Reprinted by permission of Butterworth-Heinemann, Ltd.., and the author.

Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide GLOBAL PRODUCT POSITIONING THERE ARE THREE PSYCHOLOGICALLY DIFFERENT EFFECTS ON BUYERS WHEN A GLOBALLY STANDARDIZED PRODUCT OR SERVICE IS INTRODUCED ON A LOCAL MARKET: 1. CUSTOMERS’ EXISTING PERCEPTUALMAPS OF THE PRODUCT CATEGORY REMAIN INTACT, BUT THE NEW BRAND TARGETSONE UNTAPPED SEGMENT. 2. THE PRODUCT SPACE IS ALTERED, BY ADDING DIMENSIONS OR EXTENDING ENDPOINTS. 3. BUYER PREFERENCES ARE CHANGED. IN PRACTICE, ALL THREE PROCESSES ARE OFTEN AT WORK SIMULTANEOUSLY.

Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide Market Positioning Map of Selected Automobile Brands (1984) Exhibit 11.3 Has a touch of class A car I’d be proud to own Distinctive looking Very practical Gives good gas mileage Affordable Conservative -looking. Appeals to older people Spirited performance. Sporty looking Fun to drive. Appeals to young people Lincoln Cadillac Mercedes Chrysler Buick Oldsmobile 4. BMW Porsche Pontiac Ford Dodge Plymouth Chevrolet Datsun Toyota VW Source: John Koten, “Car Maker’s Use ‘Image’ Map as Tools to Position Products,” The Wall Street Journal, March 22, 1984, pp. 31. Reprinted by permission of The Wall Street Journal, ©1984 Dow Jones & Company, Inc. All rights reserved worldwide

Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide WHEN PERCEPTIONS CHANGE IT IS RARE THAT CUSTOMERS’ PERCEPTIONS REMAIN UNCHANGED WHEN A GLOBALLY STANDARDIZED PRODUCT ENTERS THE MARKET. EXTENDED PRODUCT SPACE THIS OCCURSWHEN GLOBALLY STANDARDIZED PRODUCTS OFFER MORE OF THE SALIENT FEATURES DESIRED. THE NEW FEATURES TEND TO ENLARGE THE SPACE WHICH DEFINE THE PRODUCT. (EX: MORE MEMORY IN PCs) ADDED DIMENSIONS THIS OCCURS WHEN THE GLOBALLY STANDARDIZED PRODUCT OFFERS IMPORTANT NEW FEATURES (EX: CD ROM CAPABILITY)

Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide How the Honda Accord Extended the Product Space Source: Johny K. Johansson and Hans B. Thorelli, “International Product Positioning,” Journal of International Business Studies, vol. 16, no. 3, (Fall 1985), pp Reprinted by permission of the Journal of International Business Studies Exhibit Mazda 626 Audi 4000 BMW 320i Overall rating Economy Honda Accord VW Rabbit Datsun 200SX Toyota Celica Chrysler K-car Chevrolet Citation Ford Mustang Performance

Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide CHANGING CUSTOMER PREFERENCES OVER TIME CUSTOMER PREFERENCES CAN AND DO CHANGE. SEVERALFACTORS CAN BRING ABOUT THIS CHANGE: EMERGENCE OF NEWER ANDBETTER PRODUCTS GLOBAL COMMUNICATIONS CHANGING FASHIONS SOCIAL AND NATIONAL MOVEMENTS TECHNOLOGY ADVANCES

Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide PREFERENCE CONVERGENCE PREFERENCE CONVERGENCE IS THE IDEA THAT CONSUMER TASTES WILL DEVELOP TOWARDS A COMMON DENOMINATOR. THREE KEY FACTORS: 1.CUSTOMER PREFERENCES ARE DYNAMIC AND CHANGING. 2.NEW PRODUCTS ON THE MARKET IS A MAJOR DRIVER. 3.NEW STANDARD-SETTING PRODUCTS ARE FIRST INTRODUCED AND TESTED IN LEADING MARKETS.

Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide Illustration of Joint Space of Ideal Points and Stimuli (1968) Source: Paul E. Green and Donald S. Tull, Research for Marketing Decisions, 3rd ed. (Englewood Cliffs, NJ: Prentice Hall, 1975), p © Adapted by permission of Prentice Hall Inc., Upper Saddle River, NJ. Exhibit 11.6 Ford Thunderbird V8 Jaguar sedan Sporty Ford Mustang Plymouth Barracuda AMC Javelin Mercury Cougar Chevrolet Corvette Ford Falcon Luxurious Ideal point for subject I Lincoln Continental Chrysler Imperial Buick Le Sabre Ideal point for subject J

Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide STAYING THE COURSE PERCEPTION-WISE WHEN PRODUCTS ARE ONLY STANDARDIZED AND NOT ADAPTED TO THE PARTICULAR MARKET, THEY ARE OFTEN “MISPOSITIONED” (NOT HITTING THE TARGET BULLSEYE). THREE REASONS FOR BUYING MISPOSITIONED PRODUCTS: LOWER PRICE BRAND IMAGE COUNTRY OF ORIGIN

Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide BRAND IMAGE MISPOSITIONED PRODUCTS CAN BE ATTRACTIVE TO POTENTIAL CUSTOMERS BECAUSE OF BRAND IMAGE AND STATUS. GLOBAL BRANDS OFTEN DO BETTER THAN LOCAL BRANDS THAT MAY BE BETTER SUITED TO CUSTOMER NEEDS FOR THAT AND OTHER REASONS: CONSPICUOUS CONSUMPTION -- LET EVERYONE SEE WHAT YOU BUY AND HOW MUCH YOU BUY. CONSPICUOUS CONSUMPTION -- LET EVERYONE SEE WHAT YOU BUY AND HOW MUCH YOU BUY. LOWER PERCEIVED RISK AND COGNITIVE DISSONANCE

Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide COUNTRY OF ORIGIN WHERE A PRODUCT OR BRAND COMES FROM OFTEN COUNTS A GREAT DEAL WITH CONSUMERS. COUNTRY-OF-ORIGIN EFFECT DEALS WITH QUALITY PERCEPTIONS OF PRODUCTS. THIS EFFECT DIFFERS BY PRODUCT CATEGORY. ALSO, THE QUALITY LEVEL AT WHICH A COUNTRY PRODUCES IS FACTORED IN. COUNTRY-OF-ORIGIN BIAS CUSTOMERS TEND TO OVERSTATE THE POSITIVE AND NEGATIVES OF PRODUCT ATTRIBUTES ANDTHIS CAN CAUSE A BIAS TOWARDS PRODUCTS FROM A GIVEN COUNTRY.

Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide LOWER PRICE THROUGH A REDUCED PRICE, A CUSTOMER CAN BE INDUCED TO BUY A MISPOSITIONED BRAND BECAUSE THEY FEEL THAT THEY AR GETTING A “GOOD DEAL.” HOWEVER, THIS CAN BACKFIRE ON THE MARKETER, SINCE THE PRICE PAID GRADUALLY LOSES SALIENCE, WHILE THE PRODUCT STAYS.