IM_ch7

7-*Chapter 7 Segmentation, Targeting, and Positioning

7-*Market SegmentationRepresents an effort to identify and categorize groups of customers and countries according to common characteristics

7-*TargetingThe process of evaluating segments and focusing marketing efforts on a country, region, or group of people that has significant potential to respond

7-*Global Market SegmentationDefined as the process of identifying specific segmentswhether they be country groups or individual consumer groupsof potential customers with homogeneous attributes who are likely to exhibit similar responses to a companys marketing mix.

7-*International Marketing Mix DecisionsStrategic Alternatives in international and global marketing mix decisions. Managerial issues

Identifying the competitors in national markets


Identifying the competitors in national markets FlavoredMineralWaters

BottledDrinks

Beer

Milk

Lemon/LimeOrangeColaFreshlySqueezedFruit JuiceCoffee & tea with milk


Example: Soft drinks in Japan


Example: Beer, Ireland Customer Usage PatternsDaily Life RhythmsUsage ScenariosCultural Conventions and PracticesDesired Customer BenefitsProduct SymbolismPrice SensitivityRole Perceptions and ExpectationsSocio-Cultural Values


Example positioning: Peugeot 106


Example positioning: AlkaSeltzer

COUNTRY

TYPE A

COUNTRY

TYPE B

COUNTRY

TYPE C

SYMPTOMS

ADMITTED

Take pride in lifestyle that gives hangover

Admit to occasional hangover

Deny that suffer hangover

BRAND

POSITIONING

For the Morning After

For headaches and upset stomach

For upset stomach and headaches

7-*Contrasting views of global segmentationConventional WisdomAssumes heterogeneity between countriesAssumes homogeneity within a countryFocuses on macro level cultural differencesRelies on clustering of national marketsLess emphasis on within-country segmentsUnconventional WisdomAssumes emergence of segments that transcend national boundariesRecognizes existence of within-country differencesEmphasizes micro-level differencesSegments micro markets within and between countries

7-*Global Market SegmentationDemographicsPsychographicsBehavioral CharacteristicsBenefits sought

7-*Demographic SegmentationIncomePopulationsAge distributionGenderEducationOccupation

What are the trends?

7-*International Tourism MarketingWhy do we need to globally advertise?What are the differences between national tourists and international tourists?

7-*Who is traveling to Turkey?

7-*International visitorsstay longer than domestic visitors.have more paid vacation so travel more.spend more than domestic visitors.help balance domestic tourism swings.have fairly high disposable income.are not climate dependent.book further in advance.

7-*International visitors book out-of-the-way places. want to see the American way of life. enhance the experience of domestic visitors. add to the federal, state, and local tax base. give jobs to many residents. often travel in our off-seasons. offer a pathway to world peace.

7-*Demographic facts and trendsA widening age gap exists between the older populations in the West and the large working-age populations in developing countriesIn the European Union, the number of consumers aged 16 and under is rapidly approaching the number of consumers aged 60-plusAsia is home to 500 million consumers aged 16 and underHalf of Japans population will be age 50 or older by 2025

7-*Demographic facts and trendsAmericas three main ethnic groupsAfrican/Black Americans, Hispanic Americans, and Asian Americansrepresent a combined annual buying power of $1 trillionThe United States is home to 28.4 million foreign-born residents with a combined income of $233 billionBy 2030, 20 percent of the U.S. population70 million Americanswill be 65 or older versus 13 percent (36 million) todayIndia has the youngest demographic profile among the worlds large nations: More than half its population is under the age of 25

7-*Segmenting by Income and PopulationIncome is a valuable segmentation variable75% of world GNP is generated in the Triad13% of the worlds population is in the TriadDo not read into the numbersSome services are free in developing nations so there is more purchasing powerFor products whose price is low enough population is amore important variable

7-*Per Capita Income

7-*10 Most Populous Countries

7-*Segmenting by PopulationUrban 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

7-*Age SegmentationGlobal Teens young people between the ages of 12 and 19A group of teenagers randomly chosen from different parts of the world will share many of the same tastesGlobal Elite affluent consumers who are well traveled and have the money to spend on prestigious products with an image of exclusivity

7-*Psychographic SegmentationGrouping people according to attitudes, value, and lifestyles SRI International and VALS 2Porshe exampleTop Guns (27%): Ambition, power, control Elitists (24%): Old money, car is just a carProud Patrons (23%): Car is reward for hard workBon Vivants (17%): Car is for excitement, adventureFantasists (9%): Car is form of escape

7-*Global SegmentationGlobal ScanStriversMedian age of 31; hectic lives. Driven to achieve success. Materialistic pleasure seekers; time & money in short supply.AchieversOlder than strivers; affluent; assertive. Upwardly mobile, having already attained success. Status-conscious, value quality.PressuredWomen of all ages; financial and family pressures; overwhelming life problemsAdaptersOlder people; content with their lives. Maintain values while keeping an open mind about change.TraditionalsRooted to the past; clings to cultural heritage and values.

7-*Psychographic SegmentationThe 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 idealsAffluent Materialist Status-conscious up-and-comers many of whom are business professionals use conspicuous consumption to communicate their success to others

7-*Psychographic SegmentationThe Euroconsumer:Comfortable Belongers Comprising from 25% to 50% of a countrys population, they are conservative and most comfortable with the familiar. They are content with the comfort of home, family, friends, and communityDisaffected 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

7-*Psychographic Segmentation

7-*Young & Rubicams Cross-Cultural Consumer Characterizations (4Cs)

ConstrainedResigned poorStruggling poorMiddle majorityMainstreamersAspirersSucceedersInnovatorsTransitionalsReformers

7-*Behavior SegmentationHow much they use itHow often they use itUser statusLaw of disproportionality/Paretos Law 80% of a companys revenues are accounted for by 20% of the customers

7-*Benefit SegmentationBenefit segmentation focuses on the value equationValue = Benefits / PriceBased on understanding the problem a product solves, the benefit it offers, or the issue it addresses

7-*Ethnic SegmentationThe population of many countries includes ethnic groups of significant size3 main groups in the US include: African-Americans, Asian-Americans, and Hispanic AmericansMexican households in California have after-tax income of $100 billion, half the total of all Mexican Americans. The number of Hispanic teens is projected to swell from 12 percent of the U.S. teen population to 18 percent in the next decade.

7-*Assessing Market PotentialBe mindful of the pitfallsTendency to overstate the size and short-term attractiveness of individual country marketsThe company doesnt want to miss-out on a strategic opportunityManagements network of contacts will emerge as a primary criterion for targeting

7-*Assessing Market PotentialThree basic criteriaCurrent size of the segment and anticipated growth potentialCompetitionCompatibility with the companys overall objectives/feasibility of reaching a designated target

7-*Framework for Selecting Target MarketsDemographic information is a starting point but not the decision factorProduct-Market must be consideredMarket defined by product categoryMarketing model drivers must be consideredFactors required for a business to take root and growAre there any enabling conditions present?Conditions whose presence or absence will determine success of the marketing model

7-*Example:To young, active soft-drink consumers who have little time for sleep, Mountain Dew is the soft drink that gives you more energy than any other brand because it has the highest level of caffeine. With Mountain Dew, you can stay alert and keep going even when you havent been able to get a good nights sleep.

7-*9 QuestionsWho 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?

7-*Target Market Strategy OptionsStandardized global marketingMass marketing on a global scaleUndifferentiated target marketingConcentrated global marketingNiche marketingSingle segment of global marketDifferentiated global marketingMulti-segment targetingTwo or more distinct markets

7-*PositioningLocating a brand in consumers minds over and against competitors in terms of attributes and benefits that the brand does and does not offerAttribute or BenefitQuality and PriceUse or UserCompetition

7-*What is Nokias position in different markets?

7-*Positioning StrategiesGlobal consumer culture positioningIdentifies the brand as a symbol of a particular global culture or segmentForeign consumer culture positioningAssociates the brands users, use occasions, or product origins with a foreign country or culture

7-*Positioning Strategies

7-*Looking AheadChapter 8 Importing, Exporting and Sourcing

7-*Current Segment Size and GrowthIs the market segment currently large enough to present a company with the opportunity to make a profit?If the answer is no, does it have significant growth potential to make it attractive in terms of a companys long-term strategy?Return

7-*Potential CompetitionIs there strong competition in the market segment currently?Is the competition vulnerable in terms of price or quality?Return

7-*Feasibility and CompatibilityWill adaptation be required? If so, is this economically justifiable in terms of expected sales?Will import restrictions, high tariffs, or a strong home country currency drive up the price of the product in the target market currency and effectively dampen demand?Is it advisable to source locally? Would it make sense to source products in the country for export elsewhere in the region?Return

*The first few slides are added to ensure that the students have an understanding of the basic terms that will be discussed in the chaper.*As noted in earlier chapters, two decades ago Professor Theodore Levitt advanced the thesis that consumers in different countries increasingly seek variety, and that the same new segments are likely to show up in multiple national markets. Thus, ethnic or regional foods such as sushi, falafel, or pizza might be in demand anywhere in the world. Levitt suggested that this trend, known variously as the pluralization of consumption and segment simultaneity, provides an opportunity for marketers to pursue one or more segments on a global scale.

Global market segmentation is based on the premise that companies should attempt to identify consumers in different countries who share similar needs and desires. A. Coskun Samli has developed a useful approach to global market segmentation that compares and contrasts conventional versus unconventional wisdom. This is shown on the next slide

*Today, global companies (and the research and advertising agencies that serve them) use market segmentation to identify, define, understand, and respond to customer wants and needs on a worldwide, rather than strictly local, basis. As we have noted many times in this book, global marketers must determine whether a standarized or adapted marketing mix is required to best serve those wants and needs. By performing market segmentation, marketers can generate the insights needed to devise the most effective approach. The process of global market segmentation begins with the choice of one or more variables to use as a basis for grouping customers. This slide shows the most common segmentation categories. The following slides will discuss them more deeply.

***Young consumers may not yet have conformed to cultural norms; indeed, they may be rebelling against them. This fact, combined with shared universal wants, needs, desires, and fantasies (for name brands, novelty, entertainment, trendy, and image-oriented products), make it possible to reach the global teen segment with a unified marketing program. This segment is attractive both in terms of its size (about 1.3 billion) and its multi-billion dollar purchasing power. Coca-Cola, Benetton, Swatch, and Sony are some of the companies pursuing the global teenage segment.

The global elite is normally associated with older individuals who have accumulated wealth over the course of a long career, it also includes movie stars, musicians, elite athletes, and others who have achieved great financial success at a relatively young age.*Data are obtained from questionnaires that require respondents to indicate the extent to which they agree or disagree with a series of statements. Psychographics is primarily associated with SRI International, a market research organization whose original VALS and updated VALS 2 analyses of consumers are widely known.

*The following characteristics come from a research team at Darcy Massius Benton & Bowles. They focused on Europe and produced a 15-country study entitled: The Euroconsumer: Marketing Myth or Cultural Certainty? They identified four lifestyle groups which are highlighted on the next two slides.*Behavior segmentation focuses on whether or not people buy and use a product, as well as how often, and how much they use or consume. Consumers can be categorized in terms of usage rates: for example, heavy, medium, light, and non-user. Consumers can also be segmented according to user status: potential users, non-users, ex-users, regulars, first-timers, and users of competitors products.

*From a marketing point of view, these groups offer great opportunity. Companies in a variety of industry sectors, including food and beverages, consumer durables, and leisure and financial services are recognizing the need to include these segments when preparing marketing programs for the United States.

*After segmenting the market by one or more of the criteria just discussed, the next step is to assess the attractiveness of the identified segments. This part of the process is especially important when sizing up emerging country markets as potential targets. It is at this stage that global marketers should be mindful of several potential pitfalls associated with the market segmentation process.

*Global marketing expert David Arnold has developed a framework that goes beyond demographic data and considers other, marketing-oriented assessments of market size and growth potential. Instead of a top-down segmentation analysis beginning with, say, income or population data from a particular country, Arnolds framework is based on a bottom-up analysis that begins at the product-market level. After marketing-model drivers and enabling conditions have been identified, the third step is for management to weigh the estimated costs associated with entering and serving the market with potential short- and long-term revenue streams. Does this segment or country market merit entry now? Or, would it be better to wait until, say, specific enabling conditions are established?

*iPod positioned to the global consumer culture as both a high-tech and high touch product.

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