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Lesson#36
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International Market Targeting
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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
• 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
Page
107
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
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 durablegoods
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.
Page
109
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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