Global Market Segmentation

Global Market Segmentation

• Global market segmentation divides world markets into subsets of customers.
• These subsets have similar needs and can be based on interests or country groups.

Criteria for Segmentation: Geographic Segmentation

• Geographic segmentation divides the world into geographic subgroups.
• Proximity can be an advantage in geographic segmentation.
• Populations in geographically close countries may still be different.

Demographic Segmentation

• Demographic segmentation is based on measurable population characteristics such as age, gender, income, and education.
• National income is often the most important variable in demographic segmentation.

Psychographic Segmentation

• Psychographic segmentation is based on attitudes, values, and lifestyles.
• These are measured by attitudes, interests, and opinions.
• Lifestyle surveys, such as VALS, are used to measure psychographics.
• Innovators are high resource and innovation individuals.
• Thinkers are driven by ideals.
• Believers also are driven by ideals.
• Achievers are driven to demonstrate success to their peers.
• Strivers seek approval of others.
• Experiencers want to impact the world around them.
• Makers express themselves by making.
• Survivors focus on meeting needs rather than fulfilling desires.

Psychographic Profiles of Porsche's American Customers

• Top Guns (27% of owners): Driven and ambitious, care about power and control.
• Elitists (24% of owners): Old money, expect to be noticed and drive expensive cars.
• Proud Patrons (23% of owners): See ownership as a reward for hard work and like being noticed.
• Bon Vivants (17% of owners): Cosmopolitan jet setters and thrill-seekers who enjoy excitement.
• Fantasists (9% of owners): Car represents a form of escape, don't care about impressing others, and may feel guilty.

Behavior & Benefit Segmentation

• Behavior and benefit segmentation focuses on how much people buy or use a product.
• This includes heavy, medium, or light usage rates and user status.
• Benefit segmentation focuses on the "B" in the equation V=B/P.

Qualities of Good Segmentation

• Segmentation must be measurable, sustainable, stable over time, accessible, and actionable.

Market Potential Indicators

• GDP, industries & agriculture, market size & potential and consumer buying power are examples of market potential indicators.

Additional Indicators

• Investment statistics, politics, marketing support, and brand strength are also key indicators

Global Targeting

• Targeting involves evaluating and comparing defined groups.
• It also involves selecting the prospect with the highest potential.

Criteria for Targeting

• Size & growth potential, competition, compatibility, & feasibility are key criteria for targeting.

Target Market Strategy Selection

• Standardized or undifferentiated strategy involves one product and a single strategy for a mass market (e.g., powder milk, beans).
• Concentrated global targeting focuses on a single segment with one product (e.g., Mont Blanc pens).
• Differentiated global targeting involves targeting different segments with different products (e.g., Procter & Gamble ).

Global Positioning

• Positioning is the location of a product in the consumer's mind.
• It is partly controlled by the marketing mix.

How to Position the Brand

• Examine competitors and how they are perceived, determine positioning in the consumer's mind, analyze the customer, select the positioning and monitor positioning.

Positioning Strategies

• Positioning can be based on attitudes/benefits, price/quality, use/application, or product user.
• Other positioning strategies are based on product class and competition.

High-Tech Positioning

• Products purchased on product features.
• Buyers have or will require technical information.
• Specific for computer and chemical products or special interest product like sporting goods.

High-Touch Positioning

• Product image, products that solve common problems, and global village products such as cosmetics or fashion are examples of High-Touch Positioning

Summary

• Before expansion analyse the global environment
• Global segmentation identifies similarities and differences of potential customers
• In global targeting market segments are evaluated and a strategy is formulated

Market Entry and Expansion

• Market entry and expansion notes

Decision Criteria for International Business

• Political risk, market access, factor costs & conditions, country infrastructure, and foreign exchange rates.

Non-Financial Reasons to Expand

• Market size, growth potential, few barriers to entry, and price attraction.
• Competitors, distribution channels, and time.

Market Selection

• Market potential, market access, shipping costs & time, potential competitors, service requirements, and product fit.

Visiting the Potential Market

• Visiting the potential market can assess or contradict market assumptions.
• It can also help to gather additional data.
• Developing the marketing mix with agents or distributors.

Entry and Barrier Decisions: Sourcing

• Home, in-country, third country, and combination.

Direct & Indirect Entry

• Direct entry includes retailers, wholesalers/distributors, and direct to the consumer.
• Indirect entry includes piggybacking, countertrade, and management companies.

Exporting Advantages

• Home-based manufacturing is less risky.
• One can understand the market before investing heavily.
• Risks and costs of overseas operations are reduced.

Exporting Disadvantages

• Lack of control of the marketing mix.
• Reliance on agents.

Overseas Production

• Licensing, franchising, joint venture, contract manufacturing and wholly owned subsidiaries.

Licensing

• Contractual agreement between the licensee and licensor.
• The licensor provides technology, know-how, patents, or a successful brand to a licensee.
• The licensee pays a fee or royalties.

Advantages of Licensing

• Low risk and easy start to manufacturing.
• Both the licensee/licensor benefit from the marketing effort.
• No capital is needed to set up a foreign operation.
• Licensing may allow buying into a foreign business or taking royalties in stock.

Disadvantages of Licensing

• Limited participation.
• Potential earnings may be lost.
• The licensee can develop know-how and become the competitor.
• The process needs information gathering and planning.

Franchising

• A form of licensing.
• A company permits its name, logo, cultural design, and operations to be used when setting up a new firm/store.

Joint Venture

• Two or more investors share ownership or control over property rights and operation.

Advantages of JV

• Joint ventures share risk, know-how, and technology.
• They also joint financial strength in most cases.
• The company may only be able to enter this way.
• JV may be a source of supply for a third country.

Disadvantages of JV

• Partners do not fully control the management.
• It may be difficult to recover capital if necessary.
• Disagreements on operational issues.

Other Expansion Methods

• Export management company offers a range of support services to the exporting company.
• A distributor owns the goods and helps coordinate aspects of the marketing mix.

Strategic Alliances

• Strategic alliances includes each partner bringing a skill/resource (e.g., JV).
• Partners join forces to profit from their experiences.
• These are in distribution, production or technology (LSG & GODDARDS TOGETHER IN CATERING IN CENTRAL AMERICA, HONDURAS & BELIZE, ECUADOR & URAGUAY).

Acquisitions & Mergers

• Allow easy entry as well as provide a base to take out a competitor.

Acquisition & Merger (Disadvantages)

• Expensive entry mode.
• More assets may be acquired that are not necessary (dead beat companies ).
• Integrating is challenging for top management.

Countertrade

• The company may have no competition but there may be currency restrictions.
• Modern barter.
• No legal contracts or covered by GATT.
• Used to overcome government quotas.

Countertrade (Disadvantages)

• Dumping may occur since it is not covered by GATT.
• Quality may be overlooked.
• Marketing may be non-existent.
• Inconsistent delivery.
• Difficult to go to currency.

Market Expansion Strategies

• Narrow focus involves concentrating on markets and countries.
• Country focus involves diverse markets and concentrated countries.
• Country diversification concentrated markets and diverse countries.
• Global diversification diverse markets and diverse countries.

Stages of Developmental Model

• Domestic, international, multinational, global and transnational.