5.01 Understand market segments within consumer and industrial markets, and how to meet the needs of domestic intercultural markets

A group of individuals or organizations that share similar characteristics

Respond in the same way to a product

Products may appeal to a different segment in foreign markets

Market Segment

Three characteristics of a qualified market segment:

Need for the product Ability to pay Authority to purchase

◦Example: in many countries only the head of household may make major purchases—other family members may not have ability to pay or the authority to buy

Qualified Market

Undifferentiated segmentation strategy Looks at all customers as one market Works when a market segment is too small to target Also works well when a brand is dominant (Coke)

Concentrated segmentation strategy Focuses on one clearly defined market segment Business looks for a segment with few competitors

Differentiated segmentation strategy Targets two or more segments with unique strategies Used for markets that are large or growing

International segmentation strategies

1. Demographic segmentation

2. Cultural segmentation

3. Geographic segmentation

4. Product usage segmentation

International consumer market segmentation characteristics

Population characteristics such as age, gender, race, income, and education

Same demographic group within a culture may react to a marketing strategy the same way

Globally, there may be differences in consumers’ needs & wants, even within same demographic group

Demographic trends used to identify new markets:

E.g., Growth in incomes or populations

Demographic segmentation

Characterized by lifestyle characteristics such as consumers’ values, activities, interests, and opinions

Advertisements designed to show how a product fits lifestyle

Many products sold to support consumers’ idealized lifestyle—the preferred lifestyle they would like to live◦ Example: although Chinese are not always

adventurous, they buy Jeeps to appear adventurous

Cultural segmentation (Psychographic)

Looks at:

Where customers are located◦ Rural versus suburban versus urban◦ Level of economic development within a country

Geographic segmentation

Related to frequency of product use or benefits derived from using the product

Heavy users purchase large amounts of a product

Many consumers use products because of the benefits they provide

Product usage segmentation

1. Organization characteristics 2. Industry factors 3. Purchasing situation 4. Trading blocs

Different marketing strategies may be needed to meet legal requirements for different countries

Industrial market segmentation characteristics

Size of the business, Ownership Geographic location Amount of product used

Large global businesses may have centralized purchasing and buy in large quantities

Small independent companies are more diverse and geographically scattered

Organization segmentation

Product categories Product benefits End market served

Global companies in the same industry often have the same types of customers who need the same benefits from the products they purchase

Industry segmentation

Stage of the buying process Other buying factors such as culture

First-time buyers have different needs than businesses that are simply reordering a product

Different cultures require different strategies for developing business relationships and selling

Purchasing situation segmentation

Enable marketers to look at industrial markets by country groups

European Union—common trading rules allow similar sales strategies across countries

NAFTA (North American Free Trade Agreement) CAFTA (Central American Free Trade Agreement)

Trading blocs

International markets may be found domestically: Large cultural groups maintain lifestyles closer to their cultural

heritage than to mainstream

Asian-Americans: Emphasis on family ties, strong work ethic, education Wealthiest cultural segment in U.S

Hispanic-Americans: Original settlers of the southwest U.S, or whose backgrounds are

from Spanish-speaking countries in Latin America Emphasis on family ties, strong religious affiliations, work ethic

Domestic intercultural markets are often geographically clustered.

Domestic Intercultural Markets