Segmentation, Targeting and Positioning in International Markets

Developing an international marketing strategy

Segmenting Targeting Positioning

Reasons for Global Market Segmentation

Country Screening Global Market Research Entry Decisions Positioning Strategy Marketing Mix Policy

Type Of Segmentation

Grouping Countries Segments within and across Foreign

Markets

Bases for Country Segmentation

Demographics Socioeconomic Variables

– stages of economic development Per capita income Culture Political Conditions Behavior-Based Segmentation Life Style

GLOBAL INCOME AND POPULATION: 1995GLOBAL INCOME AND POPULATION: 1995GLOBAL INCOME AND POPULATION: 1995GLOBAL INCOME AND POPULATION: 1995

World (Total) $25,097 $4,678 100 5,815 100

Triad (Total) 19,119 24,203 76 790 14

North America* 7,253 24,903 29 291 5

Japan 4,247 33,748 17 126 2

EU 7,619 20,435 30 373 6

Other High Income 844 34,415 3 25 <1

Upper Middle Income 2,239 4,397 9 509 9

Lower Middle Income 2,403 1,001 10 2,401 41

Low Income 491 300 2 1,640 28

Unavailable Data N/A N/A N/A 450 8

GNP (billion)

GNPPer Capita

% ofWorldGNP

Population(million)

% ofWorld

PopulationMarket

*Not including Mexico

Country Income SegmentationCountry Income Segmentation

High Income (Advanced Countries) - Triad - Others

Upper Middle Income (NIC's)

Lower Middle Income (DC's)

Low Income (LDC's)

Basket Cases (BC's)

+ $14,000

+ $2,500

+ $500

< $500

GLOBAL INCOME AND POPULATION: 1995GLOBAL INCOME AND POPULATION: 1995GLOBAL INCOME AND POPULATION: 1995GLOBAL INCOME AND POPULATION: 1995

GNP GNPwith PPP

GNPPer

Capita

GNPPer Capitawith PPPMarket

*Not including Mexico

World (Total) $25,097 $30,783 100 100 $4,678 $5,863

Triad (Total) 19,119 16,992 76 55 24,203 21,511

North America* 7,253 7,246 29 24 24,903 24,877

Japan 4,247 2,849 17 9 33,748 22,636

EU 7,619 6,898 30 22 20,435 18,502

Other High Income 844 631 3 2 34,415 35,904

Upper Middle Income 2,239 3,504 9 11 4,397 7,604

Lower Middle Income 2,403 7,480 10 24 1,001 3,126

Low Income 491 2,176 2 7 300 1,370

Purchasing Power Parity Compared

(billion)

% ofworldGNP

% ofworldGNP

with PPP

Standard of Living Standard of Living

China 70 5 724 37.5 76.9

384,000,000

Hong Kong 77 7 933 4.0 1.6 95,000

Japan 79 11 609 1.6 1.9 130,000

U.S. 76 12 404 1.2 1.3 28,000

Russia 60 275

150,000,000

LifeExpectancy

Schooling(av. years)

Number of people per:

Doctor TV Phone McDonald’s

Sources: WEFA, AsiaWeek, McDonald’s, The New York Times

Successful Economic Union Requirements

Economic Compatibility

Political Compatibility

Geographic Proximity

Social Compatibility

Weakness in some must be balanced by strengths in others

Market Groups

Patterns of Multinational Cooperation– Regional Cooperation Groups

– Free-Trade Area

– Customs Union

– Common Market

– Political Union

New Multinational Market Groups or Trading Blocks of the 21st Century

European Union

European Economic Area (EC and EFTA)

North American Free Trade Area

Southern Cone-Mercosur

Asean Free Trade Area (AFTA)

Commonwealth of Independent States (CIS)

Central European Free Trade Area (CEFTA)

European Trade Areas

* Five founding members.** Awaiting membership.*** Seeking membership.

Belgium Italy Austria* LiechtensteinDenmark Luxembourg Finland* Norway*France The Netherlands Iceland* Sweden*Germany Portugal SwitzerlandGreece SpainIreland United Kingdom

EC Countries and EC Countries and AustriaAustria Poland*** FinlandFinland Sweden Hungary*** Iceland

NorwaySweden

European Community (EC) European Free Trade Area (EFTA)

European Unity (EU) European Economic Area (EEA)

A Comparison of the EU and NAFTA

EU 363.3 $ 7.79 $ 21,442

NAFTA 372.0 6.94 18,662

Population GNP GNP(millions) ($ trillions)* (per capita)*

* U.S. $ 1992.

Common Traits of Big Emerging Markets

Are physically large.

Have significant populations.

Represent considerable markets for a wide range of products.

Have strong rates of growth or the potential for significant growth.

Have undertaken significant programs or economic reform.

Are of major political importance within their regions.

Are "Regional Economic Drivers".

Will engender further expansion in neighboring markets as they grow.

Big Emerging Markets

AsiaChina 1,188.0 $ 435.6 $ 367

$ 135.9Indonesia 191.2 126.4 661

63.0India 870.0 238.3 274

42.2South Korea 43.7 296.8 6,799

150.6

Latin AmericaMexico 89.5 333.3 3,722

85.9Argentina 33.1 228.8 6,912

21.2Brazil 156.8 409.2 2,609

55.8

AfricaSouth Africa 39.8 114.8 2,882

17.1

EuropePoland 38.4 83.6 2,178

35.6Turkey 58.8 156.0 2,747

38.9

Possible AdditionsColombia 33.4 43.5 1,303

12.3Thailand 57.8 104.0 1,801

65.1Venezuela 20.3 60.4 2,984

25.2Vietnam 69.5 17.5 252

3.2

Population GDP GDP Trade*(millions) ($ billions) (per capita) ($ billions)

* Imports and exports.SOURCES: "Big emerging Markets," Business America, Special Issue 1994, pp. 59-65 and for additional information, see "Indicators of Market Size for 115 Countries," Crossborder Monitor, August 31,1994.

“Think” and “Feel” Country Clusters

Plot of Concentration Versus Category Growth: Chocolate Industry

Chocolate Market

Two-Cluster Solution

Chocolate Market

Three-Cluster Solution

Properties of a Market Segment

Properties– Measurable– Sizable– Accessible– Actionable– Competitive Intensity– Growth Potential

Bases for Global Segments

Geographic Demographic Psychographic Behavior Benefits

Average Monthly Expenditures for Chinese Households National and Urban Areas - 1994

Food (includes eating out) $22.10 $38.00

Savings 11.40 17.00

Clothing 5.60 9.00

Child's Education 4.70 7.00

Home (includes Rent & Utilities) 4.30 8.20

Daily Goods other than Food 3.50 4.80

Medical Expenses & Drugs 2.30 4.00

Entertainment 1.30 3.20

National Urban Areas

SOURCE: Gallup China.

Group Attitudes Work Lifestyle Purchase Behavior

Resigned Poor Unhappy Labor Shut-in StaplesDistrustful Unskilled Television Price

Struggling Poor Unhappy Labor Sports PriceDissatisfied Craftsmen Television Discount Stores

Mainstreamers Happy Craftsmen Family HabitBelong Teaching Gardening Brand Loyal

Aspirers Unhappy Sales Trendy Sports Conspicuous Consumption

Ambitious White Collar Fashion magazines CreditSucceeders Happy Managerial Travel Luxury

Industrious Professional Dining out QualityTransitionals Rebellious Student Arts/crafts Impulse

Liberial Health field Special Interest Unique products magazines

Reformers Inner growth Professional Reading EcologyImprove world Entrepreneur Cultural events Homemade/grown

Y&R’s Cross-Cultural Consumer Characterizations (4Cs)

Global Scan Segmentation Study

0%

20%

40%

60%

80%

100%

Japan USA UK

Strivers

Achievers

Pressured

Traditionals

Adapters

Life Style

Exhibit : Typology of European Car Market

Roper Starch Worldwide Global Study

Shopping Styles– Deal Makers (29%) - love the buying process– Price Seekers (27%) - place primary value on the

product that they are buying– Brand Loyalists (23%) - purchase name brands and

remain true to them– Luxury Innovators (21%) - seek new, prestigious

brands

40,000 consumers in 40 countries

How the World Shops

Source: “How the World Shops,” Advertising Age, June 5, 1995, p.3.

Price Brand Luxury Deal Seekers Loyalists Innovators Makers

India 7.4 34.6 35.8 22.2Saudi Arabia 8.9 14.8 34.4 40.3Mexico 23.4 19.1 19.9 35.0China 23.4 27.9 19.1 35.0Czech Republic 26.9 23.9 25.7 22.6U.K. 27.2 28.7 17.5 25.5Spain 34.4 27.0 18.1 19.6U.S. 36.0 11.3 17.0 37.0Japan 41.0 23.5 7.9 27.1Germany 43.7 16.9 15.7 21.9France 45.5 19.5 8.5 26.6

How the World Shops

Source: “How the World Shops,” Advertising Age, June 5, 1995, p.3.

Luxury Brand Price Deal Innovators Loyalists Seekers Makers

Japan 7.9 23.5 41.0 27.1France 8.5 19.5 45.5 26.6Germany 15.7 16.9 43.7 21.9U.S. 17.0 11.3 36.0 37.0U.K. 17.5 28.7 27.2 25.5Spain 18.1 27.0 34.4 19.6China 19.1 27.9 23.4 35.0Mexico 19.9 19.1 23.4 35.0Czech Republic 25.7 23.9 26.9 22.6Saudi Arabia 34.4 14.8 8.9 40.3India 35.8 34.6 7.4 22.2

How the World Shops

Source: “How the World Shops,” Advertising Age, June 5, 1995, p.3.

Deal Luxury Brand PriceMakers Innovators Loyalists Seekers

Spain 19.6 18.1 27.0 34.4Germany 21.9 15.7 16.9 43.7India 22.2 35.8 34.6 7.4Czech Republic 22.6 25.7 23.9 26.9U.K. 25.5 17.5 28.7 27.2France 26.6 8.5 19.5 45.5Japan 27.1 7.9 23.5 41.0China 35.0 19.1 27.9 23.4Mexico 35.0 19.9 19.1 23.4U.S. 37.0 17.0 11.3 36.0Saudi Arabia 40.3 34.4 14.8 8.9

International Positioning Strategies

Global Positioning and Segmentation Strategies– Universal Segment / Uniform Positioning

Theme

– Universal Segment / Different Positioning Themes

– Different Segment / Different Positioning Themes

Global Positioning & Segmentation Strategies