SEGMENTATION AND PRODUCT PART 1 INTERNATIONAL MARKETING

SEGMENTATION According to Philip Kotler “Market Segmentation is the subdividing of the market into homogeneous sub-sets of customers, where any subset may conceivably be selected as a market target to be reached with a distinct Marketing Mix.”

PURPOSE The purpose of segmentation is the concentration of marketing energy and force on the subdivision (or the market segment) to gain a competitive advantage within the segment. It’s analogous to the military principle of “concentration of force to overwhelm an enemy”.

PROCESS

CRITERIA Measurability A segment should be measurable. You should be able to tell how many potential customers and how many businesses exist within the segment. Accessibility A segment should be accessible through channels of communication and distribution, e.g.: sales force, transportation, distributors, telecom, or the Internet. Durability A segment should not have frequent changes in its most important attributes. Substantiality The size of a segment should be large enough to be significant and large enough to be profitable. Unique Needs A segment should carry its own commercial opportunities and react differently in its response to specific marketing efforts than other segments.

BASES NEEDS  The basic criteria for segmenting a market are customer needs. To find the needs of customers in a market, it is necessary to undertake market research. PROFILES  Profiles are the descriptive, measurable customer characteristics: Geographic variables Demographic variables Psychographic variables Behavioral variables

B2B SEGMENTATION Company Size. Industry. Purchasing approaches. Product usage. Geography.

NEEDS or VALUE The basic criteria for segmenting a market are customer needs. To find the needs of customers in a market, it is necessary to undertake market research.

PROFILE Profilers are the descriptive, measurable customer characteristics:  Geographic variables  Demographic variables  Psychographic variables  Behavioral variables

B2B SEGMENTATION Company Size: what company sizes should we serve? Industry: Which industry to serve? Purchasing approaches: Purchasing-function organization, Nature of existing relationships, purchase policies and criteria. Product usage Situational factors: seasonal trend, urgency: should serve companies needing quick order deliver, Order: focus on large orders or small. Geographic: Regional industrial growth rate, Customer concentration, and international macroeconomic factors.

Segmentation Process

PRODUCT POLICY Maintain current product or develop new products?  Product planning & development

Dimensions of a product

Research the new market

Research the new foreign market Export of domestic products New products addition: Acquire a firm Copying products Product planning and development: New product development Changes in existing products Finding new uses for existing products Product elimination

Internal product development stages

Changes in existing products To extend its life cycle one must apply changes to the physical product core / packaging / auxiliary services.

New uses for existing products Related application Become unisex New use with another product B2B & B2C Attributes suggest new uses

Product Elimination If we can’t change the product to adapt to the new market If we can’t find new uses to adapt to the new market. Keeping weak products can add substantially to overhead costs. Get rid of weak products.