Segmentation and Positioning in Global Markets

Requirements of an Effective SegmentationMeaningfulMeaningful ActionableActionable SubstantialSubstantial MeasurableMeasurable Customers must demonstrate needs, aspirations or behavioral patterns that are similar within a segment and different across segments –A distinction between a price sensitive and a quality seeking segment is meaningful, since the two segments demonstrate distinguishable sets of needs A company must be able to reach customers within each segment through effective and targeted marketing programs –A customer segment consisting of customers with blue eyes is not actionable, since it is very hard to identify and reach only customers with blue eyes Segments must be large and profitable enough to make the investment in serving them worthwhile –myCFO.com is targeted towards high net worth individuals, helping them manage their portfolios. Even though the number of those individuals is small, the $ amount managed is sizeable, thus constituting a substantial segment Key characteristics of the segments (e.g. size and spending patterns) must be easy to measure Source: Philip Kotler, Marketing Management, 1997 (Chapter 9, page 269) In order for a customer segmentation to be effective, it must be meaningful, actionable, measurable and substantial

Segmentation Approaches

Needs Based Segmentation –Consumers and businesses purchase goods and services because they satisfy their needs u The same product may satisfy many different needs; a person may purchase chewing gum in order to freshen her breath, to promote dental health, to help them quit smoking, or because she enjoys the taste –Needs based segmentation seeks to understand why a purchase is made (i.e., what needs are being satisfied) and to divide the market up into groups of buyers whose needs are homogenous –Needs based segmentations are particularly compelling for technology companies because they can prevent companies from developing new technology features because they are “cool” or just because they are possible

International Positioning Strategies F Global Positioning and Segmentation Strategies –Universal Segment / Uniform Positioning Theme –Universal Segment / Different Positioning Themes –Different Segment / Different Positioning Themes

Global Positioning & Segmentation Strategies

What is a brand? F A name, term, sign, symbol, or design, or combination of them which is intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors (Kotler, 1991)

What is brand equity? F A set of brand assets linked to a brand, its name and symbol, that add to or subtract from the value provided by a product or service to a firm and/or to that firm’s customers.

Brand Associations

What is customer-based brand equity? F The differential effect of brand knowledge on customer response to the marketing of the brand.

Developing A Framework For Generic Brands Based on Brand Knowledge F Brand Awareness –Recognition –Recall F Brand Image –Type –Strength –Favorability –Uniqueness of Brand Associations Components of Brand Knowledge (Keller, 1992)

Customer-Based Brand Equity

BRAND Product Category Product Attributes Usage Situation Customer Benefits Brand Associations Source : Aaker, D.A. (1991) Managing Brand Equity. New York: The Free Press

PRODUCT CATEGORY BRAND A BRAND B BRAND C Brand A Associations Brand B Associations Brand C Associations BRAND REPRESENTATION IN MEMORY