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International Marketing ­ MKT630
VU
Lesson # 36
INTERNATIONAL MARKET SEGMENTATION
International Market Targeting
International market targeting:
International marketers need to evaluate available international segments for their potential and
actionability to choose most viable market segments for targeting;
Evaluating market segments
Market segments can be evaluated on the following criteria;
­ segment size & growth
­ segment's structural analysis
· competition within the segment
· existing or potential substitute products
· relative power of buyers / suppliers
­ company's objectives & resources
· environment, social responsibility, if it is core business, can employ skills & resources
superior to those of competition
Market coverage strategy:
Factors needed to be considered when choosing a market coverage strategy
­
company resources and capabilities
­
degree of product variability
­
product's stage in the life-cycle
­
market variability
­
competitors' marketing strategies
Product differentiating variables:
· Product
­ features, performance, conformance, durability, reliability, reparability, style, design
· Services
­ ordering ease, delivery, installation, customer training, customer consulting, maintenance and
repair
· Personnel
­ competence, courtesy, credibility, reliability, responsiveness, communication
· Channel
­ coverage, expertise, performance
· Image
­ symbol, written and audiovisual media, atmosphere, events
Service differentiating variables:
·
People
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International Marketing ­ MKT630
VU
·
Physical environment
·
Process
·
Image
|Defining `Positioning':
A product's position is how potential buyers see the product. Positioning is expressed relative to the
position of competitors. The term was coined in 1969 by Al Ries and Jack Trout in the paper
"Positioning" is a game people play in today's me-too market place" in the publication Industrial
Marketing. It was then expanded into their ground-breaking first book, "Positioning: The Battle for
Your Mind".
Positioning is something (perception) that happens in the minds of the target market. It is the aggregate
perception the market has of a particular company, product or service in relation to their perceptions of
the competitors in the same category. It will happen whether or not a company's management is
proactive, reactive or passive about the on-going process of evolving a position. But a company can
positively influence the perceptions through enlightened strategic actions.
In marketing, positioning has come to mean the process by which marketers try to create an image or
identity in the minds of their target market for its product, brand, or organization. It is the 'relative
competitive comparison' their product occupies in a given market as perceived by the target market.
Re-positioning involves changing the identity of a product, relative to the identity of competing
products, in the collective minds of the target market.
De-positioning involves attempting to change the identity of competing products, relative to the identity
of your own product, in the collective minds of the target market.
Positioning in international market segments for competitive advantage:
can be positioned based on
­ product attributes
­ product benefits
­ usage occasions
­ classes of users
can also be positioned relative to competition
­ against a competition
­ away from competitors
­ against product classes
combination of above strategies
International positioning strategies:
· Developing a positioning theme involves the quest for a unique selling proposition (USP). In this
regard there are two choices: target a universal segment across countries or pursue different segments
across countries. Similarly MNC's may select same positioning world-wide or positioning themes
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International Marketing ­ MKT630
VU
that are tailored to individual markets.
- Universal Segment / Uniform Positioning Theme
The challenge is to come-up with a selling proposition that makes
consumers
tick
everywhere and that transcends local peculiarities.
- Universal Segment / Different Positioning Themes
- Different Segments / Different Positioning Themes
Choosing and implementing a positioning strategy:
Identify possible competitive advantages(offering consumers greater value)
­
product differentiation
· features, performance, style & design, consistency, durability, reliability, reparability
­
services differentiation
· delivery, installation, repair, customer training
­
personnel differentiation
­
image differentiation
Selecting the right competitive advantages
­ how many differences to promote
­ which differences to promote ­ the differences should be
important
·
distinctive
·
superior
·
communicable
·
pre-emptive
·
affordable
·
profitable
·
­ Should develop a unique selling position (USP) for a brand
­ avoid over / under / confused positioning
P
Positioning errors:
· As companies increase the number of claims for their brand, they risk disbelief and a loss of clear
positioning. In general a company must avoid four major positioning errors:
Underpositioning
­
· buyers have only a vague idea of the brand
­ Overpositioning
· buyers may have too narrow an image of the brand
­ Confused positioning
· buyers may have a confused image of the brand resulting from the company's making too
many claims or changing the brand's positioning too frequently
­ Doubtful positioning
· buyers may find it hard to believe the brand claims in view of the product's features, price, or
manufacturer
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International Marketing ­ MKT630
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Global segmentation and positioning:
· A common theme in many findings on global marketing is the growing convergence of consumer
needs.
· This phenomenon of increasing globalization is especially visible for many upscale consumer goods
and a variety of business to business goods and services that are bought by multinational customers.
· At the same time, new technological advances in interactive marketing open up many untapped
opportunities for increasingly refined segmentation.
· This paradox, the increasing homogenization of customer needs versus the possibilities offered by
micro-marketing, offers a challenge to global marketers entering the twenty first century.
Global segmentation process:
· Five procedural steps may be followed to gain information and insights into the segmentation criteria
for classifying world markets.
1.  Developing a market taxonomy for classifying world markets.
2.  Segment all countries into homogenous groups having common characteristics.
3.  Determine theoretically the most efficient method of serving each group.
4.  Choose the group in which the marketer's own perspective
(its product / service and
strengths) is in line with the requirements of the group.
5.  Adjust this ideal classification to the constraints of the real world (existing commitments, legal
and political restrictions, practicality, and so forth)
Basis for country segmentation:
The first step in doing international market segmentation is deciding which criteria to use in the task.
Literally hundreds of country characteristics could be used as inputs. However, for the segmentations to
be meaningful, there should be a linkage between the market segments and the response variable (s) the
company is interested in.
Demographics:
Demographic variables age structure, population size, degree of urbanization, ethnic composition and
death / birth rates are among the most popular segmentation criteria. They are easy to assess.
Moreover, information on population variables is mostly reasonably accurate and readily available.
The manner in which countries are to be grouped will depend, to a large extent, on the nature of
company's product or product lines. Companies marketing capital goods may find economic
variables more relevant for segmentation. On the other hand, companies in the consumer durable-
goods field may find that grouping countries by personal consumption expenditures is a more
meaningful way to study world-wide activities.
Socio-economic variables
Per capita income
The usual caveats in using per capita income as an economic development indicator apply also
when this measure is used for country segmentation.
- Monetization of transactions within a country - per capita GNP may not be a good basis of
comparing countries due to purchasing power parity (PPP)
- Grey and Black sectors of the economy - Many countries have a sizable gray sector ­ consisting
of largely untaxed or under taxed exchanges.
- Income Disparities - Per-capita GNP may be misleading due to wide income disparities.
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International Marketing ­ MKT630
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Issues in international market segmentation:
Technical Issues:
- Poor data quality
- "Noisy" Variables because of reporting errors sampling mistakes
- Presence of Outliers
Managerial Issues:
- Stability of segments overtime
- Managerial usefulness - country segmentation based on macro-economic aggregates seldom bear
any resemblance to sales-pattern-based groupings.
Effective international market segmentation:
- Market Segment is a "craft" rather than a "science".
- Guidelines for effective segmentation are:
1. Keep things simple
-
There is no need to exhaust each possible permutation & combination of variables. Ultimately,
the goal is to come up with a viable set of target markets
that will allow the company to peruse
its goals effectively.
2. Consider several levels of aggregation, not just one.
-
As more disaggregate levels of aggregations are considered, a wide range of
possible
segmentation schemes open up.
3. Two ways to fine tune an existing segmentation scheme
-
Realize that there are always two ways to augment precision; either sub-divide an
existing variable (e.g. low/high income becomes low/medium/high income) or
introduce
a
new segmentation variable.
Communicating and delivering the chosen positioning:
­
It is easier to come up with a good positioning strategy than to implement it
­
establishing a position or changing one is difficult & takes a long time but can quickly be lost
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Table of Contents:
  1. OVERVIEW OF INTERNATIONAL MARKETING:Domestic marketing, Multinational marketing, Globalization of markets
  2. INETRNATIONAL MARKETING PROCESS:Situation Analysis, Implementation and Control, Relationship
  3. INETRNATIONAL MARKETING PROCESS:The Product Concept, The Societal Marketing Concept
  4. INETRNATIONAL MARKETING PROCESS
  5. ENGAGING IN INETRNATIONAL MARKETS:Expansion of technology, Merchandize export and import
  6. INTERNATIONAL TRADE & INVESTMENT THEORIES:Theory of Comparative Advantage, Country Similarity Theory
  7. INTERNATIONAL TRADE & INVESTMENT THEORIES:Global Strategic Rivalry Theory,
  8. INTERNATIONAL MARKETING INFORMATION REQUIREMENTS:Foreign exchange info
  9. INTERNATIONAL MARKETING INFORMATION REQUIREMENTS:The Product
  10. FOREIGN NATIONAL ENVIRONMENTS:Political systems in the world, Political risks in international markets
  11. FOREIGN NATIONAL ENVIRONMENTS:Types of legal systems,
  12. FOREIGN NATIONAL ENVIRONMENTS:Conciliation, Mediation, Global relevance
  13. ROLE OF GOVERNMENTS IN INTERNATIONAL MARKETS:Industry-level needs, Promotion of exports by governments
  14. INTERNATIONAL CULTURAL AND SOCIAL ENVIRONMENTS:The concept of culture, Attitudes & beliefs,
  15. INTERNATIONAL CULTURAL AND SOCIAL ENVIRONMENTS:Culture is a human medium
  16. DETERMINING EXPORT POTENTIAL IN INTERNATIONAL MARKETS:Political Environment
  17. DETERMINING EXPORT POTENTIAL IN INTERNATIONAL MARKETS:Product Potential
  18. INTERNATIONAL MARKETING RESEARCH PROCESS:market structure, Implementing the research plan
  19. INTERNATIONAL MARKETING RESEARCH PROCESS:Identify alternative information sources
  20. INTERNATIONAL MARKETING RESEARCH PROCESS:Issues with primary global research:
  21. INTERNATIONAL MARKETING RESEARCH PROCESS:Problems with data, Comparative Analysis
  22. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Export intermediaries, Export and import management
  23. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Licensing contract, Licensing risks
  24. MODES OF ENTRY INTO INTERNATIONAL MARKETS:The franchiser’s balance,
  25. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Forms of countertrade, Specialized entry modes
  26. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Demand factors, Political factors
  27. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Drivers behind successful joint ventures
  28. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Distribution agreements, Critical mass & optimism traps
  29. INTERNATIONAL STRATEGIC ALLIANCES:Impetus for international alliances, Management of strategic alliances
  30. INTERNATIONAL CONSUMER MARKETS:Model of Consumer BehaviorThe Buyer Decision Process
  31. INTERNATIONAL BUSINESS MARKETS:Nature of buying unit, Major influences on international business buyers
  32. INTERNATIONAL TARGET MARKETING:Market segmentation, Market positioning
  33. INTERNATIONAL MARKET SEGMENTATION:Geographic, Behavioral, Situational factors
  34. INTERNATIONAL MARKET SEGMENTATION:Basis for country segmentation, Stages of economics development
  35. INTERNATIONAL MARKET SEGMENTATION:Cultural Variables,
  36. INTERNATIONAL MARKET SEGMENTATION:Market coverage strategy, Socio-economic variables
  37. INTERNATIONAL MARKETING MIX - PRODUCT POLICY:Individual product decisions, Branding
  38. INTERNATIONAL MARKETING MIX – PRODUCT POLICY:
  39. INTERNATIONAL MARKETING MIX - PRODUCT POLICY:Modular Approach
  40. INTERNATIONAL MARKETING MIX – PRODUCT POLICY:Issues in labeling, Pricing, Distribution
  41. INTRODUCING NEW PRODUCTS IN INTERNATIONAL MARKETS:The new product development process
  42. PRICING IN INTERNATIONAL MARKETS:Factors influencing international pricing,
  43. ITERNATIONAL MARKETING CHANNELS:Channel membership, Vertical marketing, Control over distribution
  44. PROMOTING IN INTERNATIONAL MARKETS:Advertising, Direct marketing, Public Relationing
  45. REVISION