Global Marketing Management, 5e Chapter 7Copyright (c) 2009 John Wiley & Sons, Inc. 1 Chapter 7 Global Segmentation and Positioning

Chapter Overview 1. Reasons for International Market Segmentation 2. International Market Segmentation Approaches 3. Segmentation Scenarios 4. Bases for Country Segmentation 5. International Positioning Strategies 6. Global, Foreign, and Local Consumer Culture Positioning Appendix Chapter 7Copyright (c) 2009 John Wiley & Sons, Inc. 2

Introduction  Variation in customer needs is the primary motive for market segmentation.  Most companies will identify and target the most attractive market segments that they can effectively serve.  In global marketing, market segmentation becomes especially critical because of wide divergence in cross-border consumer needs and lifestyles.  Once the management has chosen its target segments, management needs to determine a competitive positioning strategy for its products. Chapter 7Copyright (c) 2009 John Wiley & Sons, Inc. 3

1. Reasons for International Market Segmentation  Segments ideally should possess the following set of properties:  Identifiable  Sizable  Accessible  Stable  Responsive  Actionable Chapter 7Copyright (c) 2009 John Wiley & Sons, Inc. 4

1. 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 and customization Chapter 7Copyright (c) 2009 John Wiley & Sons, Inc. 5

Chapter 7Copyright (c) 2007 John Wiley & Sons, Inc. 6 Exhibit 7-1: Market Clustering Approach for Instant Coffee

2. International Market Segmentation Approaches  International segmentation procedures:  Country-as-segments or aggregate segmentation (See Exhibits 7-2 and 7-3.)  Disaggregate international consumer segmentation  Two-stage international segmentation  Standard country segmentation classifies prospect countries on a single dimension (e.g., per capita GNP) or on multiple dimensions—cultural, socioeconomic, and political criteria available from secondary data sources.  For numerous country traits, use data reduction such as factor analysis. Chapter 7Copyright (c) 2009 John Wiley & Sons, Inc. 7

Exhibit 7-2: Nestlé’s Geographic Segmentation of the Americas Chapter 7Copyright (c) 2009 John Wiley & Sons, Inc. 8

Chapter 7Copyright (c) 2007 John Wiley & Sons, Inc. 9 Exhibit 7-3: Macro-Level Country Characteristics

3. Segmentation Scenarios  Universal or global segments  Regional segments  Unique (diverse) segments Chapter 7Copyright (c) 2009 John Wiley & Sons, Inc. 10

Exhibit 7-4: Different Segment Scenarios Chapter 7Copyright (c) 2007 John Wiley & Sons, Inc. 11

4. Bases for Country Segmentation  Demographics  Demographic variables are among the most popular criteria (Exhibit 7-5).  Socioeconomic Variables  Caveats in using per capita income as an economic development indicator: Monetization of transactions within a country Gray and Black Market sections of the economy Income disparities  Purchasing Power Parity (PPP) criteria  Human development index (HDI) classification  Socioeconomic Strata (SES) Analysis (Exhibit 7-6) Chapter 7Copyright (c) 2009 John Wiley & Sons, Inc. 12

Chapter 7Copyright (c) 2007 John Wiley & Sons, Inc. 13 Exhibit 7-5: Six Types of Chinese Pre-Elders

Chapter 7Copyright (c) 2007 John Wiley & Sons, Inc. 14 Exhibit 7-6: Market Development and Brand Building

Chapter 7Copyright (c) 2007 John Wiley & Sons, Inc Bases for Country Segmentation  Behavior-based segmentation (Exhibit 7-7)  Brand loyalty  Usage rate  Product penetration  Benefits

Chapter 7Copyright (c) 2007 John Wiley & Sons, Inc. 16 Exhibit 7-7: Benefit Segments of Toothpaste Market in the U.S.A., China, and Mexico

4. Bases for Country Segmentation  Lifestyles  Roper Consulting’s Valuescope Model. 30,000 interviews around the world. Achievers Traditionals Survivors Nurturers Hedonists Social-Rationals Self-Directeds Chapter 7Copyright (c) 2009 John Wiley & Sons, Inc. 17

5. International Positioning Strategies  The formulation of a positioning strategy (local or global) includes the following steps: 1. Identify the relevant set of competing products or brands. 2. Determine current perceptions held by consumers about your product/brand and the competition. 3. Develop possible positioning themes. 4. Screen the positioning alternatives and select the most appealing one. 5. Develop a marketing mix strategy. 6. Over time, monitor the effectiveness of your positioning strategy and if needed, conduct an audit. Chapter 7Copyright (c) 2009 John Wiley & Sons, Inc. 18

5. International Positioning Strategies  Uniform versus Localized Positioning Strategies  Universal Positioning Appeals  Positioning themes : Specific product features/attributes Product benefit, solutions for problems user category user application heritage lifestyle Chapter 7Copyright (c) 2009 John Wiley & Sons, Inc. 19

Exhibit 7-9: Global Positioning and Segmentation Strategies Chapter 7Copyright (c) 2007 John Wiley & Sons, Inc. 20

6. Global, Foreign, and Local Consumer Culture Positioning  Global consumer culture positioning (GCCP)  Brand as a symbol of a given global consumer culture  Local consumer culture positioning (LCCP)  Brand as an intrinsic part of the local culture.  Foreign consumer culture positioning (FCCP)  Brand mystique built around a specific foreign culture Chapter 7Copyright (c) 2009 John Wiley & Sons, Inc. 21

Chapter 7Copyright (c) 2007 John Wiley & Sons, Inc. 22 Exhibit 7-10: McDonald’s Promoting Its Local Community Support in New Zealand

Appendix: Segmentation Tools  Segmentation techniques and tools:  Cluster Analysis: Collection of statistical procedures for dividing objects into groups (clusters). The grouping is done in such a manner that members belonging to the same group are very similar to one another but quite distinct from members of other groups. Chapter 7Copyright (c) 2009 John Wiley & Sons, Inc. 23

Appendix: Segmentation Tools  Regression Analysis: In regression, one assumes that there exists a relationship between a response variable, Y, and one or more so-called predictor variables, X1, X2 and so on.  For each of the parameter estimates, the regression analysis will also produce standard error.  The higher the R 2 value, the better the ability of the regression model to predict the data. (See Exhibits 7-11 through 7-13.) Chapter 7Copyright (c) 2009 John Wiley & Sons, Inc. 24

Chapter 7Copyright (c) 2007 John Wiley & Sons, Inc. 25 Exhibit 7-11: Principles of Cluster Analysis

Exhibit 7-12: Plot of Concentration versus Category Growth Chocolate Market Chapter 7Copyright (c) 2007 John Wiley & Sons, Inc. 26

Exhibit 7-13: Cluster Analysis Chapter 7Copyright (c) 2009 John Wiley & Sons, Inc. 27