Lesson 7

Segmentation,
Targeting, and
Positioning

7-1
Market Segmentation and
Targeting
Represents an effort to identify and categorize groups of customers and
countries according to common characteristics
The process of evaluating segments and focusing marketing efforts on a
country, region, or group of people that has significant potential to
respond

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Global Market
Segmentation
Defined as the process of identifying specific segments—whether they
be country groups or individual consumer groups—of potential
customers with homogeneous attributes who are likely to exhibit
similar responses to a company’s marketing mix.
Theodore Levitt – pluralization of consumption / segment simultaneity

7-3
Contrasting views of global
segmentation
Conventional Wisdom Unconventional Wisdom
◦ Assumes heterogeneity ◦ Assumes emergence of
between countries segments that transcend
◦ Assumes homogeneity within a national boundaries
country ◦ Recognizes existence of within-
◦ Focuses on macro level cultural country differences
differences ◦ Emphasizes micro-level
◦ Relies on clustering of national differences
markets ◦ Segments micro markets within
◦ Less emphasis on within- and between countries
country segments

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Global Market
Segmentation
Demographics
Psychographics
Behavioral Characteristics
Benefits sought

7-5
Demographic
Segmentation
Income
Populations
Age distribution
Gender
Education
Occupation
What are the trends?

7-6
Demographic facts and
trends
A widening age gap exists between the older
populations in the West and the large working-age
populations in developing countries
In the European Union, the number of consumers
aged 16 and under is rapidly approaching the
number of consumers aged 60-plus
Asia is home to 500 million consumers aged 16 and
under
Half of Japan’s population will be age 50 or older by
2025

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Demographic facts and
trends
America’s three main ethnic groups—African/Black
Americans, Hispanic Americans, and Asian Americans—
represent a combined annual buying power of $1 trillion
The United States is home to 28.4 million foreign-born
residents with a combined income of $233 billion
By 2030, 20 percent of the U.S. population—70 million
Americans—will be 65 or older versus 13 percent (36
million) today
India has the youngest demographic profile among the
world’s large nations: More than half its population is under
the age of 25

7-8
Segmenting by Income and
Population
Income is a valuable segmentation variable
◦ 75% of world GNP is generated in the Triad
◦ 13% of the world’s population is in the Triad
Conventional wisdom – focus on high-income
countries
Unconventional wisdom – explore countries with
high income disparities (e.g. BEMs)
For products whose price is low enough population
is a more important variable

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Per Capita Income
(2016)
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD

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Purchasing Power
Parity
Calculate per capita NI in home country’s currency and
convert that into USD at prevailing exchange rate
1USD buys you a certain basket of goods in the US.
Does it buy you the same basket of goods in the other
country, or more (China, India), or less (Japan)?
Put another way – how many USD would you need in that
country to buy the same basket of goods which 1 USD buys
for you in the US?
◦ More USD means higher prices and perhaps inflation
◦ Less USD means lower prices and maybe a better standard of living

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10 Most Populous
Countries

https://www.census.gov/popclock/print.php?component=counter

7-12
Segmenting by
Population
“Urban India is getting saturated. In the cities, everyone who can afford
a television has one. If you want to maintain high growth, you have to
penetrate into rural India.”
- K. Ramachandran, Chief Executive Philips Electronics India

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Age Segmentation
Global Teens – young people between the ages of 12 and 19
◦ A group of teenagers randomly chosen from different parts of the world will
share many of the same tastes

Global Elite – affluent consumers who are well traveled and have the
money to spend on prestigious products with an image of exclusivity

7-14
Psychographic
Segmentation
Grouping people according to attitudes, value, and
lifestyles
◦ SRI International and VALS 2

Porsche example
◦ Top Guns (27%): Ambition, power, control
◦ Elitists (24%): Old money, car is just a car
◦ Proud Patrons (23%): Car is reward for hard work
◦ Bon Vivants (17%): Car is for excitement, adventure
◦ Fantasists (9%): Car is form of escape

7-15
Honda HR-V SUV in
Europe
Initially market defined as 25 – 35 yr. olds
◦ Positioned as the joy machine
People of all ages were buying the car. Why?
Consumers across age categories share the same
mind-set
Consumers in the same age category may not share
the same mind-set
Psychographics are a better predictor of buying
behavior than demographics

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Psychographic
Segmentation
The Euroconsumer:
◦ Successful Idealist – Comprises from 5% to 20% of the population., consists of
persons who have achieved professional and material success while
maintaining commitment to abstract or socially responsible ideals
◦ Affluent Materialist – Status-conscious ‘up-and-comers’ – many of whom are
business professionals – use conspicuous consumption to communicate their
success to others

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Psychographic
Segmentation
The Euroconsumer:
◦ Comfortable Belongers – Comprising from 25% to 50% of a
country’s population, they are conservative and most
comfortable with the familiar. They are content with the
comfort of home, family, friends, and community
◦ Disaffected Survivors – Lacking power and affluence, this
segment harbors little hope for upward mobility and tends
to be either resentful or resigned. They are concentrated in
high-crime urban inner city neighborhoods. Despite a lack
of social status, their attitudes nevertheless tend to affect
the rest of society

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DMBB’s study of Russian
consumers
Five categories based on their outlook, behavior
and openness to Western products (“kuptsy”,
cossacks, students, business executives and
Russian souls)
“Kuptsy” – prefer Russian products but look down
on mass produced goods of inferior quality
Strategic opportunity for premium products made
in Russia

7-19
Psychographic Segmentation –
what variable(s) did Sony
differentiate on?

© 2005 Prentice Hall 7-20

Behavior Segmentation
How much they use it – heavy, medium, light, non-users
User status – current, ex, non, first-timers, regulars, etc.
Law of disproportionality/Pareto’s Law – 80% of a company’s revenues
are accounted for by 20% of the customers

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Tambrands’ behavioral
clusters
Cluster 1 - women who are comfortable and
regularly use tampons (US, UK, Australia)
Cluster 2 – women who believe tampons may
result in loss of virginity – few use them (France,
Israel, SA)
Cluster 3 – virginity issues and no experience using
tampons (China, Brazil and Russia) – very limited
use
Advertising Strategies vary from cluster to cluster

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Ethnic Segmentation
3 main groups in the US include: African-Americans,
Asian-Americans, and Hispanic Americans
◦ Mexican households in California - after-tax income of $100
billion, half the total of all Mexican Americans.
◦ Number of Hispanic teens projected to swell from 12
percent of the U.S. teen population to 18 percent in the
next decade.
Hispanic & Asian Americans live in two worlds
◦ Strong identification with the US and
◦ Strong ties with native cultures
◦ Longing, guilt, nostalgia, divided values, etc.

7-23
Assessing Market Potential -
Pitfalls
Size and short-term attractiveness of individual
country markets (e.g. 400 million strong Indian
middle class)
Pressure to reap “first-mover” advantages
◦ May be illusory; “followers” may be a good strategy

Management’s network of contacts will emerge as

a primary criterion for targeting
◦ Heavy reliance on a few judgments from known people
rather than a systematic analysis of the market

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Assessing Market
Potential
Three basic criteria
◦ Current size of the segment world-wide and anticipated growth potential
◦ Competition
◦ Compatibility with the company’s overall objectives/feasibility of reaching a
designated target

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Framework for Selecting
Target Markets
Demographic information is a starting point but not
the decision factor
Product-Market must be considered
◦ Market defined by product category (e.g. minivan market)

Marketing model drivers must be considered

◦ Internal factors required for a business to take root and
grow
Are there any enabling conditions present?
◦ External conditions whose presence or absence will
determine success of the marketing model

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Framework for Selecting
Target Markets
Cost of entry vs. cost of waiting
◦ First-mover vs. follower
◦ First movers often develop the category, followers benefit from this development
◦ First movers enjoy strong product category-brand associations, followers find it hard to
compete

Risk / control trade off

7-27
9 Questions
Who buys our product?
Who does not buy it?
What need or function does it serve?
Is there a market need that is not being met by current
product/brand offerings?
What problem does our product solve?
What are customers buying to satisfy the need for which our
product is targeted?
What price are they paying?
When is the product purchased?
Where is it purchased?

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Target Market Strategy
Options
Standardized global marketing (e.g. Revlon)
◦ Mass marketing on a global scale
◦ Undifferentiated target marketing

Concentrated global marketing (e.g. Estee Lauder)

◦ Niche marketing
◦ Single segment of global market

Differentiated global marketing (e.g. Stolichnaya)

◦ Multi-segment targeting
◦ Two or more distinct markets

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Positioning
Locating a brand in consumers’ minds over and against competitors in
terms of attributes and benefits that the brand does and does not offer
◦ Attribute or Benefit
◦ Quality and Price
◦ Use or User
◦ Competition

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Positioning Strategies
Global consumer culture positioning
◦ Identifies the brand as a symbol of a particular global
culture or segment (e.g. Global teens, global elite)
◦ High tech (computers, cell phones) and high touch
products (perfumes, designer fashions, fine wines)
◦ The positioning theme travels well across cultures
including the home country culture without any
modifications (e.g. romance, elegant tastes, music,
fashions, etc,)

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Positioning Strategies
Foreign consumer culture positioning
◦ Associates the brand’s users, use occasions, or product
origins with a foreign country or culture (e.g. Fosters,
Outback restaurants, Marlboro, Levis)
◦ The positioning theme cannot travel into the home
country culture without modifications
Local Consumer Culture positioning
◦ Associate the brand with local cultures, symbols,
meanings
◦ The positioning theme does not travel outside the
culture (e.g. Budweiser Clydesdale horses or football
associations)

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Positioning Strategies

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