International Market Selection Process STP PDF

The international market selection process 1 Agenda  International market selection process  Segmentation  Steps for the IMS  Entry modes 2 Market segmentation (I)  The process of dividing a market into distinct groups...

The international market selection process 1 Agenda  International market selection process  Segmentation  Steps for the IMS  Entry modes 2 Market segmentation (I)  The process of dividing a market into distinct groups (segments) with distinct needs, characteristics, or behavior who might require separate products or marketing mixes.  “the identification of individuals or organizations with similar characteristics that have significant implications for the determination of marketing strategy” (Fay, Jobber, 2019). Market segmentation (II) Behavioural 4  Pdf File 5 Psychographic segmentation: Swatch targets those with an active lifestyle Behavioural segmentation Checkout Direct offers retailers & manufacturers an excellent method of reaching segments of heavy users, as well as users of the direct competition. Marketers divide buyers into groups on the basis of their knowledge of, attitude toward, use of, or response to a product Market segmentation (II) 8  Market segmentation (IV) Measurability: the degree to which the size, purchasing power of a market segment can be measured. Accessibility: the degree to which a market segment can be reached and served. Substantiality/profitability: the degree to which a market segment is sufficiently large or profitable. Actionability: the degree to which effective programmes can be designed for attracting and servicing a given market segment. Global market segmentation  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.  Companies should attempt to identify consumers in different countries who share similar needs and wants. 10 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 Global market segmentation  In defyning broad segments, country-based segmentation or customer based segmentation can be used.  In country-based segmentation, geographic or demographic variables can be used.  In consumer-based segmentation, psycographic and behavioural variables can be used. 12 Global market segmentation: Defining criteria High degree of measurability, accessibility, and actionability General characteristics Geographic Language Economic factors – population Political factors Demography income levels or overall level Economy of economic development Industrial structure Political and legal factors – the Technology type and stability of Social organization government, receptivity to Religion foreign firms, monetary Education regulations, and the amount of bureaucracy Specific characteristics Culture Lifestyle Low degree of measurability, Personality accessibility, and actionability, but Attitudes and tastes high degree of relevance  In looking at international segments, marketers can assume that: 1. Customers are heterogeneous among countries and homogeneous within a given country and focus on the macro-level differences (Multinational Segmentation) 2. Differences exist in a given country and international homogeneous segments exist (global segmentation) 14 Customers are heterogeneous among countries and homogeneous within a given country, focusing on macro-level differences.  Example:  Product: Fast Food Chains Macro-Level Differences: Country A (United States): Consumers prefer larger portion sizes, value-added menu items (like fries and drinks), and a variety of meat options. Country B (Japan): Consumers favor smaller portion sizes, rice-based items, and unique flavors (e.g., teriyaki or wasabi) that align with local tastes. 15 Differences exist in a given country, and international homogeneous segments exist.  Example: Luxury Skincare Products  International Homogeneous Segments: Segment: Health-Conscious Consumers Countries: United States, Australia, South Korea Characteristics: This segment consists of consumers who actively seek skincare products with organic ingredients and clean formulations. They are concerned about the impact of skincare products on their health and the environment, often preferring brands that are cruelty-free, vegan, and free from harmful chemicals. 16  Market Targeting Strategies kotler+f08-02 Generally, marketers identify niches by dividing a segment into subsegments Colgate Sparkling White display box A company targets a large share of a small Colgate Dora The Explorer display bottle segment or niche with specialized offerings. Rolls-Royce focuses on the high-end luxury car market, catering to affluent individuals who are looking for exclusivity and personalized luxury. Rather than targeting mass markets, they focus on a very specific, wealthy consumer base  Pdf FILE 18 Market Targeting  Evaluating Market Segments  Segment size and growth  Segment structural attractiveness  Level of competition  Substitute products  Power of buyers  Powerful suppliers  Company objectives and resources 19 International Marketing strategy  Undifferentiated targeting strategy All customers are similar and have similar expectations and tastes. It is based on the premise that a mass market exists around the world. In addition, that mass market is served with a marketing mix of standardized elements. Product adaptation is minimized, and a strategy of intensive distribution ensures that the product is available in the maximum number of retail outlets. The appeal of global mass marketing is clear: lower production costs.The same is true of standardized global communications. Differentiated targeting strategy The company targets each segment with (a different brand and) different marketing strategies Concentrated target marketing Firms choose a specific segment among the customers. In cosmetics, the House of Lauder, Chanel, and other cosmetics marketers have used this approach successfully to target the upscale, prestige segment of the market. Companies define their markets narrowly and strive for global depth rather than national breadth 20 Positioning  Positioning:  The place the product occupies in consumers’ minds relative to competing products.  Typically defined by consumers on the basis of important attributes. 21 Positioning  Choosing a Positioning Strategy:  Identifying possible competitive advantages. (Be aware to choose the right competitive advantage!)  Many potential sources of differentiation exist:  Products  Services  Channels  People  Image (How many differences to promote? Which differences to promote?) Positioning by Attribute or Benefit  Exploits a particular attribute, benefit, or feature of the product being sold.  Economy, Reliability, and Durability are frequently used positions that use product attributes, benefits and features.  Which car company is the safest?  Which batteries last the longest?  Most consumers have immediate answers to these questions due to the positioning of companies’ products in their minds. Positioning by Quality and Price  Focuses on positioning a brand as a superpremium entity.  Rolex, Rolls Royce, and Grey Goose Vodka all position themselves in customers minds as the best there is of their type of product. Positioning by the Use or User  Focuses on how the product is used and aims at associating the products with a specific use  Max Factor makeup is positioned as “the makeup that makeup artists use.”  To capitalize on the global success and high visibility of the Lord of the Rings trilogy, Gillette’s Duracell battery unit ran print and TV ads proclaiming that, on location in remote areas of New Zealand, Rings director Peter Jackson and his crew used Duracell exclusively Positioning by Competitor  One company implicitly or explicitly refers to competitors to position its own product.  For example:  Burger King highlights its flexibility of options. Porsche is positioned on the basis of performance and freedom. 8- 27 Positioning errors burger-king-large  Under-positioning  Over-positioning  Confused- Positioning Positioning errors  Under-positioning: When a brand fails to clearly differentiate itself from competitors, leading to a vague or indistinct image in the minds of consumers. Consumers don't perceive any significant advantage or unique value in the product.  Over-positioning: When a brand is too narrowly positioned, leading consumers to have a very limited perception of its capabilities or target market, which can alienate other potential customers.  Confused-Positioning: When a brand sends mixed or contradictory messages about its products, leading to confusion among consumers. This happens when the brand tries to appeal to too many different market segments without a clear and coherent message. 8- 29 Positioning  Choosing a Positioning Strategy:  Developing a positioning statement  Positioning statements summarize the company or brand positioning  EXAMPLE: To (target segment and need) our (brand) is (concept) that (point-of-difference).  Communicating the chosen position  A written positioning statement states: 1. the target market 2. The needs satisfied, 3. the good (service) class or category in which the organization’s offering competes, 4. the offering’s unique attributes or benefits provided 31 International Positioning  Global consumer culture positioning (GCCP)  Local consumer culture positioning (LCCP)  Foreign consumer culture positioning (FCCP) 32 Global consumer culture positioning  A GCCP strategy is defined as a strategy that “identifies the brand as a symbol of a given global culture” (Alden, Steenkamp, and Batra 1999, p. 77). To do so, advertising aims to create the association that “consumers all over the world consume a particular brand” or that the brand is a “conduit to feeling at one with the global culture” (Alden, Steenkamp, and Batra 1999, p. 77). 33 Global consumer culture positioning (GCCP)  Global consumer culture positioning (GCCP) is defined as a strategy that identifies the brand as a symbol of a particular global culture or segment It has proven to be an effective strategy for communicating with global teens, cosmopolitan elites, globe-trotting laptop warriors who consider themselves members of a “transnational commerce culture”.  Benetton uses the slogan “United Colors of Benetton” to position itself as a brand concerned with the unity of humankind. Heineken’s strong brand equity around the globe can be attributed in good measure to a GCCP strategy that reinforces consumers’ cosmopolitan self- image.  Certain categories of products lend themselves especially well to GCCP. Hightech and high-touch products are both associated with high levels of customer involvement and by a shared “language” among users.  High-tech: sophisticated, technologically complex, and/or difficult to explain or understand. High-tech brands and products are frequently evaluated in terms of their performance against established objective standards. Because most people who buy and use high-tech products “speak the same language” and share the same mindset, marketing communications should be informative and emphasize performance related attributes and features to establish the desired GCCP. 34 Global consumer culture positioning (GCCP)  By contrast, when shopping for high-touch products, consumers are generally energized by emotional motives rather than rational ones. 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. High-touch products appeal to the senses more than the intellect. Luxury perfume, designer fashions, and fine champagne are all examples of high-touch products that lend themselves to GCCP. Some hightouch products are linked with the joy or pleasure found in “life’s little moments.”  Nescafé brand, a type of high-touch, emotional appeal that is understood worldwide. 35 Global consumer culture positioning (GCCP)  Characteristics of GCCP: Global Appeal: Brands promote themselves as part of a universal consumer culture that transcends national borders. Universal Values: Messaging often revolves around universal themes like youth, technology, innovation, sustainability, or freedom. Standardized Branding: The brand’s look, feel, and message are consistent across multiple countries to build a unified global identity. 36 Global consumer culture positioning (GCCP)  Apple Strategy: Apple’s products, such as the iPhone, are positioned as premium, innovative gadgets for modern global citizens. Its marketing highlights cutting-edge technology, creativity, and sleek design that appeal to a worldwide audience. Global Message: Apple's campaigns focus on the idea that using Apple products is part of a global, tech-savvy lifestyle. The advertisements rarely emphasize national or local culture, focusing instead on the universal appeal of simplicity and innovation. 37 Global consumer culture positioning (GCCP)  McDonald’s Strategy: McDonald’s GCCP focuses on being a globally recognized brand, synonymous with quick, convenient meals and familiar flavors around the world. The "I'm Lovin' It" slogan is used worldwide, emphasizing shared enjoyment. Global Message: While McDonald’s adapts its menu for local tastes (glocalization), its core positioning remains consistent globally—affordable, accessible food that can be enjoyed by families and individuals in any country. 38 Foreign consumer culture positioning (FCCP)  Foreign consumer culture positioning (FCCP): the product, the brand or the company is associated with a foreign culture (e.g. Swiss for watches, Germany for household appliances…etc). The “American-ness” of Levi jeans, Marlboro cigarettes, and HarleyDavidson motorcycles—sometimes conveyed with subtlety, sometimes not— enhances their appeal to cosmopolitans around the world and offers opportunities for FCCP. FCCP is sometimes used in automobile advertising; in the early 1990s, for example, Volkswagen ran an advertising campaign featuring a German word, Fahrvergnügen, that was meant to signify both the cars’ German origins and a European joy of driving.  Sometimes, brand names suggest an FCCP even though a product is of local origin. For example, the name “Häagen-Dazs” was made up to imply Scandinavian origin even though the ice cream was launched by an American company. Conversely, a popular chewing gum in Italy marketed by Perfetti bears the brand name “Brooklyn.” 39 Foreign consumer culture positioning (FCCP)  Characteristics of FCCP: Cultural Association: The brand links its identity to the values, traditions, or expertise of a particular foreign culture. Prestige or Exotic Appeal: FCCP often taps into consumer perceptions that products or services from a particular country are superior, luxurious, or more authentic. Selective Use of National Identity: The brand highlights the origin or cultural association of the product even if it is sold globally or in markets far from the country of origin. 40 Foreign consumer culture positioning (FCCP)  Barilla (Italian Pasta Brand) Strategy: Barilla promotes itself as the quintessential Italian pasta brand, emphasizing the rich culinary traditions of Italy. Foreign Appeal: Consumers associate Italy with high- quality, authentic pasta, and Barilla reinforces this perception by using Italian imagery and emphasizing its Italian roots in its marketing and packaging, even when sold globally. Tagline: "Italy’s No. 1 Pasta Brand" further reinforces its Italian identity 41  Local consumer culture positioning (LCCP)  Local consumer culture positioning (LCCP): 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.  Examples of LCCP include Budweiser’s and Chevrolet’s advertising in the United States, both of which depict strong all-American values and being a part of American history 42 Local consumer culture positioning (LCCP)  Characteristics of LCCP: Cultural Familiarity: The brand connects its identity to local customs, traditions, or values, emphasizing that it understands and respects the local consumer's way of life. National Identity: The brand often highlights its origins or local production, appealing to consumers' pride in supporting locally made products. Localized Messaging: The brand may adapt its marketing campaigns to reflect local language, symbols, or imagery that resonate with the target market. 43 Local consumer culture positioning (LCCP)  Heineken (Dutch Beer in the Netherlands) Strategy: While Heineken is a globally recognized beer brand, in its home country of the Netherlands, the company positions itself as a symbol of Dutch heritage and national pride. Local Appeal: In Dutch marketing campaigns, Heineken emphasizes its local roots and longstanding history in the country, appealing to consumers who value supporting home-grown brand 44 Local consumer culture positioning (LCCP)  Coca-Cola’s “Share a Coke” Campaign (Various Countries) Strategy: Coca-Cola ran localized versions of its global “Share a Coke” campaign by printing popular names or phrases in the local language on its bottles in each country. In Ireland, bottles featured common Irish names, while in China, phrases reflecting local culture were used. Local Appeal: This campaign allowed Coca-Cola to blend its global image with local consumer culture, making the brand feel personalized and relevant to each market, while still maintaining its global identity. 45 International Positioning  The GCCP versus LCCP strategies should not be confused with standardized versus adapted marketing strategies (Alden, Steenkamp, and Batra 1999). Whereas GCCP is more feasible to use across different markets than LCCP, it is not the equivalent.  Although GCCP can be employed in a standardized advertising campaign, so can FCCP (e.g., Louis Jadot wine positioned globally as a "taste" of France). At the other extreme, a manager may position the brand using GCCP in one national market, FCCP in a second, and LCCP in a third. Fi- nally, GCCP may be communicated (somewhat) differently in each market. For example, P&G's "all-in-one" shampoo with conditioner, Wash & Go, has been positioned globally as a time saver in a busy world. In the United States and Europe, this was signified by a woman rushing into locker room and slamming the locker door, but in Thailand, the creative content was toned down, though it still communicated convenience in a hectic world (The Economist 1992). Thus, though GCCP may be used in standardized advertising, we view it as a distinct construct 46 Signs of consumer culture positioning (Alden, Steenkamp, and Batra 1999) 1) pronunciation of brand name, 2) symbols used and/or spelling of visually displayed brand name, 3) symbol used for brand logo, 4) central themes, and 5) appearance of spokesperson(s). If coders found that one or more of the signs were present in the advertisement, they determined whether the indicator(s) reflected global, local, or foreign consumer culture. 47 Signs of consumer culture positioning  Coders were told that the signs should be coded as  local, if they reflected their own native culture (e.g., use of the Thai alphabet to write the brand name in Thailand);  foreign, if they represented another individual, identifiable culture (e.g., use of the southern French countryside in an American advertisement for wine); and  global, if they represented a cultural element that was not associated with a single country (local or foreign), but rather a larger group generally recognized as international and transcending individual national cultures (e.g., an airline advertisement featuring businesspeople from multiple countries interacting in business class on an international flight Westjohn, S. A., Arnold, M. J., Magnusson, P., & Reynolds, K. (2016). The influence of regulatory focus on global consumption orientation and preference for global versus local consumer culture positioning. Journal of International Marketing, 24(2), 22-39.  According to Alden et al. (1999), the use of Michael Jordan in Nike commercials emphasizes that Nike is a global brand (GCCP).  The Ikea logo contains the colors of the Swedish flag (FCCP)  We define LCCP as advertisements that are rich in local symbols and imagery, whereas GCCP refers to advertisements rich in global symbols and imagery. Although using neither local nor global symbols may be a viable strategy, Alden, Steenkamp, and Batra's (1999) analysis finds that, from a random sample of 200 advertisements in the United States, more than 90% could 49be classified as having either global or local positioning Westjohn, S. A., Arnold, M. J., Magnusson, P., & Reynolds, K. (2016). The influence of regulatory focus on global consumption orientation and preference for global versus local consumer culture positioning. Journal of International Marketing, 24(2), 22-39.  As two different positioning strategies, GCCP and LCCP offer distinct benefits.  Brands positioned with GCCP are often associated with higher quality and prestige (Steenkamp, Batra, and Alden 2003) while brands positioned with LCCP are often associated with trustworthiness and value (Schuiling and Kapferer 2004).  Alden, Steenkamp, and Batra (1999) find that the usage of GCCP and LCCP across seven developed and emerging markets was 22% and 59%, respectively; however, these rates varied substantially between countries and product categories 50 51