CHAPTER THREE

International Market Segmentation, Selection, and Positioning

Learning Objectives
Up on completion of this chapter, you will be able to:
 Discuss international market segmentation

 Identify the bases of international market segmentation

 Describe international market targeting

 Indicate the criteria for selecting international market targeting

 Define international market positioning

 Specify the international market positioning strategies

 Market segmentation represents an effort to identify and categorize
groups of customers and countries according to various
characteristics.

 Targeting is the process of evaluating and selecting the segments,

and focusing marketing efforts on a country, region, or group of
people that has significant potential to respond.

 Positioning is required to differentiate the product or brand in the

minds of target customers.
3.1. International Market Segmentation and Selection

3.1.1 International Market Segmentation

 International market segmentation is the process of dividing the

world market into distinct subsets of customers that behave in the

same way or have similar needs.

 It is "the process of identifying specific segments- whether they be

country group who are likely to exhibit similar buying behavior”.

 Each subset may conceivably be chosen as a market target to be

reached with a distinctive marketing strategy.

 The process begins with a basis of segmentation-a product-specific
factor that reflects differences in customers’ requirements
(possibilities are purchase behavior, usage, benefits sought, intentions,
preference, or loyalty)…

3.1.1.1 Criteria’s for International Market Segmentation

1. Identifiable: The segments should be easy to define and to measure.

2. Sizable: The segments should be large enough to be worth going after.

3. Accessible: The segments should also be easy to reach through promotional and

distributional efforts.

4. Stability: If target markets change their composition or behavior over time, marketing

efforts devised for these targets are less likely to succeed.

5. Responsive: For market segmentation to be meaningful, it is important that the
segments respond differently from each other to differentiated marketing
mixes.
6. Actionable: Segments are actionable if the marketing mix necessary to address
their needs is consistent with the goals and the core competencies of the
company.

3.1.1.2 Reasons for International Market Segmentation

A. Country screening (preliminary screening of countries)
B. Global marketing research
C. Entry decisions
D. Positioning Strategy
E. Resource allocation
F. Marketing mix policy
 3.1.2 Bases of Market Segmentation
Segment world markets according to one or more key criteria:
 Geography, demographics (including national income and size of
population), psychographics (values attitudes, and lifestyles), behavioral
characteristics, and benefits sought.

 Cluster different national markets in terms of their environments (e.g.

the presence or absence of government regulation in a particular
industry).
1. Geographic Segmentation
Geographic segmentation is dividing the world into geographic subsets.

Advantage of geography

 Proximity: Markets in geographic segments are closer to each other and

easier to visit on the same trip or to call on during the same time
window.

Major limitations

 The mere fact that markets are in the same world geographic region
does not meant that they are similar.

 Geography was ranked lowest as a basis for market segmentation.

2. Demographic Segmentation
 Demographic segmentation is based on
measurable characteristics of population such as
age, gender, education, and occupation.

A number of demographic trends: aging

population, fewer children, more women working
outside the home, and higher incomes and living
standards - suggest the emergence of international
segments.
 Age is useful demographic variable. One global
segment based on demographics is global teenagers-
young people between the ages of 12 and 19.
 Teens, by virtue of their interest in fashion, music
and a youthful life style, exhibit consumption
behavior.
 Another global segment is so called elite
 Elite- are a group of people considered to be
superior in a society or organization.
  Older, more affluent consumers who are well
travelled and have the money to spend on prestigious
products with an image of exclusivity.
 This segment’s needs and wants are spread over various
product categories:
 Durable goods e.g. luxury automobiles
 Non-durables e.g. upscale beverages such as rare
wines and champagne
 Financial services e.g. American express gold and
platinum Cards
3. Psychographic Segmentation
Psychographic segmentation involves grouping people in terms of
their attitudes, values, and lifestyles.
 An example of the general-type lifestyle segmentation approach is GfK
Roper Consulting’s Value scope model.
 The market research company conducts 30,000 interviews around the world
to monitor consumer values.
 Based on the responses, Value scope identified seven values segments:
1. Achievers place high importance on obtaining and showing social status.
They put their own interests ahead of others’.

2. Traditionalist believe that their inherited way of life is the best and does not
need any changes. Religious beliefs and cultural traditions rule their lives.
3. Survivors try to always give their best effort while being modest. They are not
looking for a lot of money, just enough to eke out a living. They want to
keep their life as simple and uncluttered as possible.

4. Nurturers place high value on maintaining long-term commitment to friends

and family. In building relationships with friends and relatives, they find it
important to be sincere and to have integrity.

5. Hedonists need instant gratification. They are always looking for new
experiences. They need to feel young and want to have a good time.

6. Social-rationales view the world as a large and diverse place where differences
should be respected. They value open-mindedness and try to save the
world because they feel it is sensible to do so.

7. Self-directed value freedom of action and thought so they can choose their own
goals and achieve them.
4. Behavioral Segmentation
 Behavioral segmentation focuses on whether people buy and use a
product, as well as how often and how much they use it.
 Consumers can be categorized in terms of usage rates.
For example: heavy, medium, light, and nonuser.
 Consumers can also be segmented according to user status:
Potential users, nonusers, ex-users, regulars, first-timers, and
users of competitors' products.
5. Benefit Segmentation
 International benefit segmentation focuses on the numerator of the
value equation – the B in V=B/P.
 This approach can achieve excellent results by virtue of marketer's
superior understanding of the problem a product solves or the
benefit it offers, regardless of geography.
 Benefit segmentation is often used in global marketing for product
positioning, product design or product adaptation purposes.
3.2 International Market Targeting
Targeting is the act of evaluating and comparing the identified groups
and then selecting one or more of them as the prospect(s) with the
highest potential.

3.2.1 Criteria For International Market Targeting

The same as in single-country targeting, there are three basic criteria for
assessing opportunity in global target markets:

1. Current Segment Size and Growth Potential

• Is the market segment currently large enough that it presents a company
with the opportunity to make a profit?
• Even a narrow segment can be served profitably with a standardized product
if the segment exists in several countries.
2. Potential Competition
 Strong competition may be a segment to avoid or one in which to utilize a
different strategy.
 A local brand may present competition to the entering multinational.

3. Compatibility and Feasibility

 The final consideration is whether a company can and should target that
market.
 Reaching global market segments requires considerable resources such as
expenditures for distribution and travel by company personnel.
 Another question is whether the pursuit of a particular segment is
compatible with the company’s overall goals and established sources of
competitive advantage.
 3.2.2 Selecting a Global Target Market Strategy
There are three basic categories of target marketing strategies:
1. Standardized Global Marketing
 It involves creating the same marketing mix for broad market of-
potential buyers.
 Calls for extensive distribution in the maximum number of retail
outlets.
 The appeal of standardized global marketing is clear: greater sales
volume, lower production costs, and greater profitability.
 A good example is Coca-Cola.
2. Concentrated Global Marketing
• Involves devising’ a marketing mix to reach a single segment (niche) of the

global market.

• They go for global depth rather than national breadth.

• For example, Winter Halter (a German company) is a hidden champion in the

dishwasher market, but the company has never sold a dishwasher to a

consumer.

It focuses exclusively on dishwashers (water conditioners, detergents, and

service)

for hotels and restaurants.

3. Differentiated Global Marketing
 It is a variation of concentrated global marketing.

 It entails targeting two or more distinct market segments with

different marketing mixes.

 This strategy allows a company to achieve wider market coverage.

3.3 International Market Positioning

♥ Positioning is the location of your product in the mind of your

customer.

♥ The position that a product occupies in the mind of a customer

depends on a host of variables, many of which “are controlled by

the marketer”.
3.3.1 International Positioning Strategies
These include;

A.Positioning by Attribute or Benefit

o Economy, reliability, and durability are frequently used
attribute or benefit positions.
o Positioning strategy exploits product performance.

B. Quality and Price

 Assumed in terms of a continuum from high fashion/quality and
high price to good value (rather than “low quality”) at a
reasonable price.
C. Use or User
Represents how a product is used or associates the brand with a
user or class of users.

For instance,
 Max Factor makeup is positioned as “the makeup that
makeup artists use.”
 Pulsar watch associates the brand with a handsome man…..

D. Competition
Implicit or explicit reference to competitors can provide the
basis for an effective positioning strategy.
3.3.2 Global, Foreign, and Local Consumer Culture Positioning

i. Global Consumer Culture Positioning (GCCP)

 Identifies the brand as a symbol of a particular global culture or

segment.

 An effective strategy for communicating with global teens,

cosmopolitan/multicultural/ elites, globetrotting/travelling/ laptop

warriors who consider themselves members of a “transnational

commerce culture,” and other groups.

 High-tech and high-touch products are both associated with high levels

of customer involvement and by a shared “language” among users.

 a. High-tech products
 are sophisticated, technologically complex, and/or difficult to
explain or understand.

For instance,
 Personal computers, video and stereo equipment, and automobiles.

 Such products are frequently purchased on the basis of concrete

product features.
 Buyers typically wish to acquire considerable technical
information.
 High involvement of consumers.
High-tech products may be divided into three categories:

 Technical Products
 Buyers have specialized needs.
 Require a great deal of product information, and share a common
“language.”
E.g. Computers, chemicals, tires, and financial services

 Special-Interest Products
♪ Less technical and more leisure or recreation oriented, special-interest
products.
♪ Characterized by a shared experience and high involvement among
users.
♪ Common language and symbols associated with such products.

E.g. Fuji bicycles, Adidas sports equipment, and Canon cameras

 Demonstrable products
b. High-touch products
♠ Consumers are energized by emotional motives rather than rational
ones when shopping it.
♠ Consumers may feel an emotional or spiritual connection with
high-touch products
♠ The performance of which is evaluated in subjective, aesthetic
terms rather than objective, technical terms.
♠ Requires less emphasis on specialized information and more
emphasis on image.
♠ High involvement of consumers.
♠ Share a common language and set of symbols relating to themes of
wealth, materialism, and romance.
The three categories of high-touch products are:
a. Products That Solve a Common Problem

 Provide benefits linked to “life’s little moments”.

 Ads that show friends talking over a cup of coffee in a cafe or quenching thirst

with a soft drink during a day at the beach put the product at the center of

everyday life and communicate the benefit offered

b. Global Village Products

 Designer fashions, mineral water, and pizza are all examples of products whose

positioning is strongly cosmopolitan in nature.

 Fragrances and fashions have traveled as a result of growing worldwide

interest in high-quality, highly visible, high priced products that often enhance

social status.
c. Products That Use Universal Themes

♥ Some advertising themes and product appeals are thought to be

basic enough that they are truly transnational.

♥ Additional themes are materialism (keyed to images of well-being

or status), heroism (themes include rugged individuals or self-

sacrifice), play (leisure/recreation), and procreation (images of

courtship and romance).

ii. Foreign Consumer Culture Positioning (FCCP)
♪ It associates the brand’s users, use occasions, or production origins

with a foreign country or culture.

iii. Local Consumer Culture Positioning (LCCP)

 It is a strategy that associates the brand with local cultural

meanings;

 reflects the local culture’s norms, portrays the brand as

consumed by local people in the national culture, or depicts

the product as locally produced for local consumers.

THANK YOU FOR THE ATTENTION!!

Questions Please!