international market segmentation

Global market segmentation has been defined as the process of identifying specific segments – whether
they be country or individual consumer groups- of potential customers with homogeneous attributes
who exhibit similar responses to a marketing m

SUMMARY

The global environment must be analyzed before a company pursues expansion into new geographic
markets. Through global market segmentation, a company can identify and group customers or countries
according to common needs and wants. Demographic segmentation can be based on country income
and population, age, ethnic heritage, or other variables. Psychographic segmentation groups people
according to attitudes, interests, opinions, and lifestyles. Behavioral segmentation utilizes user status and
usage rate as segmentation variables. Benefits segmentation is based on the benefit buyers seek. Global
teens and global elites are two examples of global market segments.After marketers have identified
segments, the next step is targeting: The identified groups are evaluated and compared, and one or
more segments with the greatest potentialis selected from them. The groups are evaluated on the basis
of several factors, including segment size and growth potential, competition, and compatibility and
feasibility. Target market assessment also entails a thorough understanding of the product-market in
question and determining marketing model drivers and enabling conditions in the countries under study.
The timing of market entry should take into account whether a first-mover advantage is likely to be
gained. After evaluating the identified segments, marketers must decide on an appropriate targeting
strategy. The three basic categories of global target marketing strategies are standardized global
marketing, niche marketing,and differentiated multisegment marketing. Positioning a product or brand
to differentiate it in the minds of target customers can be accomplished in various ways: positioning by
attribute or benefit, positioning by quality/price, positioning by use or user, and positioning by
competition. In global marketing global consumer culture positioning (GCCP), foreign consumer culture
positioning (FCCP), and local consumer culture positioning (LCCP) are additional strategic options

OVERVIEW

The global cosmetics giants’ worldwide success is a convincing example of the power of skillful global
market segmentation and targeting. Market segmentation represents an effort to identify and categorize
groups of customers and countries according to common characteristics. Targeting is the process of
evaluating the segments and focusing marketing efforts on a country, region, or group of people that has
significant potential to respond. Such targeting reflects the reality that a company should identify those
consumers it can reach most effectively, efficiently, and profitably. Finally, proper positioning is required
to differentiate the product or brand in the minds of target customers.

Market segmentation is a marketing strategy which involves separating a wide target market into subsets
of customers, enterprises, or nations who have, or are perceived to have, common requirements,
choices, and priorities, and then designing and executing approaches to target them.

Market segmentation approaches are basically used to identify the target clients, and provide assisting
data for marketing plan components like positioning to get certain marketing plan objectives.

Businesses may discover product differentiation approaches, or an undifferentiated approach, including

specific goods or product lines relying on the precise demand and attributes of the target segment.

Market Segmentation

The most common forms of market segmentation practices are as follows −

Geographic Segmentation

Dealers can segment market according to geographic criterion that is nations, states, regions, countries,
cities, neighborhoods, or postal codes. The geo-cluster strategy blends demographic information with
geographic data to discover a more precise or specific profile. For example, in rainy areas dealers can
easily sell raincoats, umbrellas and gumboots. In winter regions, one can sell warm clothing.

A small business product store focuses on customers from the local neighborhood, while a larger
departmental store focuses its marketing towards different localities in a larger city or region. They
neglect customers in other continents. This segmentation is very essential and is marked as the initial
step to international marketing, followed by demographic and psychographic segmentation.

Demographic Segmentation

Segmentation on the basis of demography relies on variables like age, gender, occupation and education
level or according to perceived advantages which an item or service may provide.

An alternative of this strategy is called firmographic or character based segmentation. This segmentation
is widely used in business to business market. It’s estimated that 81% of business to business dealers use
this segmentation.

According to firmographic or character based segmentation, the target market is segmented based on
characteristics like size of the firm in terms of revenue or number of employees, sector of business or
location like place, country and region.

Behavioral Segmentation

This divides the market into groups based on their knowledge, attitudes, uses and responses to the
product.

Many merchants assume that behavior variables are the best beginning point for building market
segments.

Psychographic Segmentation

Psychographic segmentation calls for the division of market into segments based upon different
personality traits, values, attitudes, interests, and lifestyles of consumers.
Psychographics uses people’s lifestyle, their activities, interests as well as opinions to define a market
segment.

Mass media has a dominating impact and effect on psychographic segmentation. To the products
promoted through mass media can be high engagement items or an item of high-end luxury and thus,
influences purchase decisions.

Occasional Segmentation

Occasion segmentation is dividing the market into segments on the basis of the different occasions when
the buyers plan to buy the product or actually buy the product or use the product. Some products are
specifically meant for a particular time or day or event. Thus, occasion segmentation helps identify the
customers’ various reasons to buy a particular product for a particular and thus boosts the sale of the
product.

POSITIONING

Positioning refers to the act of differentiating a brand in customers’minds in relation to competitors in

terms of attributes and benefits that the brand does anddoes not offer. Put differently, positioning is the
process of developing strategies for “staking out turf” or“filling a slot” in the mind of target customers.
Positioning is frequently used in conjunction with segmentation variables and targeting strategies.

Marketers have utilized a number of general positioning strategies. These include positioning by
attribute or benefit, quality and price, use or user, and competitor. Recent research has identified
three additional positioning strategies that are particularly useful in global marketing: global
consumer culture positioning, local consumer culture positioning, and foreign consumer culture
positioning.

Attribute or Benefit

A frequently used positioning strategy exploits a particular product attribute, benefit, or feature.
Economy, reliability, and durability are frequently used attribute/benefit positions (e.g., Volvo is
known for solid construction that offers safety in the event of a crash).In global marketing, it may be
important to communicate that a brand is imported. This approach is known as foreign consumer
culture positioning (FCCP) (e.g., Visa)

Quality and Price

This strategy runs from high fashion/quality and high price to good value (rather than “low
quality”) at a reasonable price. Quality and price are used in conjunction with benefit/attribute
positioning. Marketers sometimes use the phrase “transformation advertising” to describe
advertising that seeks to change the experience of buying and using a product – the benefit – to
justify a higher price.

Use or User

Another positioning strategy represents how a product is used or associates the brand with a user
or class of users. For example, Max Factor makeup is positioned as “the makeup that makeup artists
use.”

Competition

Implicit or explicit reference to competitors can provide the basis for an effective positioning
strategy

Three types of positioning concepts are used by marketing organization.

1. Functional Positioning: Provide benefits, solve problems, obtain favorable perception from
financial Stockholders.

2. Symbolic Positioning: ego identification, self image enhancement, belongingness and social
meaningfulness.

3. Experimental Positioning: Provide sensory and cognitive stimulations.

Targeting

Target market means the market segment to which a particular good or service is marketed. It is
mainly defined by age, gender, geography, socio economic grouping, or any other demographic
combination. In general, it is studied and mapped by an organization through lists and reports
containing demographic information that may have effect on the marketing of key products or
services. Target marketing involves breaking a market into segments and then selectively putting all
marketing efforts on one or a few key segments. Target marketing provides focus to all the
marketing activities of the organization and thus makes promotion, pricing and distribution of
organization’s goods / services easier and economical. Segmentation divides the market into
different segments. Target market signifies only those segments that the organization wants to
adopt it it as market. For selecting target market, organization performs evaluation of different
segments on criteria of relevant, accessible, sizable, profitable etc and selects the most appropriate
segments.

Attractiveness of the segment and the fit between the segment and the firms objectives, resources
and capabilities are the important factors to be considered for target market selection. The
attractiveness of segment is decided upon following factors: size of the segment (number), growth
rate and competition in the segment, attainable market share depending upon promotional budget
and competitors expenditure, brand loyalty of present customers in the segment, break even
market share, sales potential and expected profit margin in segment.

Suitability of market segment depends upon: organization’s capacity in offering superior value to
the customers in the segment, impact of serving the segment on the firm’s image, access to
distribution channels, firm’s resources in relation to capital investment required to serve the
segment.

There are several target market strategies as follows:

9.5.1 Single segment strategy

Serving one market segment with one marketing mix. This strategy is adopted by smaller
companies with limited resources.

9.5.2 Selective specialization

Different marketing mixes are offered to different segments.

9.5.3 Product specialization

The organization specializes in a particular product and tailors it to different market segments.

9.5.4 Market specialization

The organization specializes in serving a particular market segment and provides different products
in the segments

9.5.5 Full market coverage

product decision ppt :-

Product Decisions-

A product is a physical good, service, idea, person or place that is capable of offering tangible and
intangible attributes that individuals or organizations regard as so necessary, worthwhile, or
satisfying that they’re prepared to exchange money, patronage or some other unit of value in order
to acquire it. Product decision represents product chrematistics and different stages of life cycle.

Product decision should be as per the expectations of customer and as per their culture views. India
is a more cultural market, where a anti culture product will effects all of the goodwill of the
company. So, we should care about the ethical issues of India while taking product decision.

Important product decisions in international marketing management are:

A. Market segment decision.

B. Product mix decisions.

C. Product specifications.

D. Positioning and communication decisions.

A. Market Segment Decision:

The first product decision to be made is the market segment decision because all other decisions
product mix decision, product specifications, and positioning and communications decisions
depend upon the target market.

B. Product Mix Decision:

Product mix decision pertains to the type of products and product variants to be offered to the
target market.

C. Product Specifications:

This involves specification of the details of each product items in the product mix. This includes
factors like styling, shape, size and other attributes and factors like packaging and labeling.

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D. Positioning and Communications Decisions:

Positioning is the image projected for the product. For example, burger may be positioned as veg
burger, non veg burger, cream burger or egg burger. Communication refers to the promotional
message designed for the product. Obviously, both positioning and marketing communication are
very much interrelated. For the same product, sometimes the positioning and communication
strategies differ between markets. For example, non veg burger is a low priced gin in the New
Zealand(its home market); but when the company wanted to introduce it in the India it found that
there was no room in the minds of the consumers for another low priced gin. So in the India the non
veg burger was positioned as a high priced gin became very successful.

PRICING DECISION

For international markets, pricing is one of the most important elements of marketing product mix,
generates cash and determines a company’s survival. This blog post sheds light on international
pricing strategies in a global marketing environment.

Pricing, as part of the marketing mix, is essential and has been always one of the most difficult
decisions in marketing because of increased competition, counterfeit activities, regional trading
blocks and volatile exchange rates. Consumers have different perception of the products depending
on the price. Therefore, pricing products for consumers is a difficult task, mainly because a high
price may cause negative feelings about products, and also a low price can be misleading on other
products features such as quality.

There are many pricing objectives that lead to different strategies. Some of the ways of pricing a
product is: premium and penetration pricing, price skimming, economy and psychological pricing,
product bundle pricing etc. However, the situation is further complicated when it comes to pricing
for international and global markets. Setting prices for international markets is not an easy task.
Decisions with regards to product, price, and distribution for international markets are unique to
each country. Furthermore, other factors such as: the ROI, market stabilization, demand and
competition-led pricing, market penetration, early cash recovery, company and product factors,
market and environmental factors, as well as economic, political, social and cultural factors, have to
be considered in the decision-making process. This Blog post examine factors that affect pricing
decision making process for international/global marketing environment as a consumer behavior
variable.

Pricing for international markets involves other factors related to foreign customer behaviors such
as: economic and political aspect of target market, education and technological, values and
attitudes, social and cultural, language, religion and beliefs, legal as well as competitive factors to
mention a few.

Products have to be distributed through the most appropriate channels and priced according to
local market environment conditions. Local market conditions may be different and companies have
to adapt to the needs of local customers. The PEST (Political, Economic, Social, Technological)
factors have been used to analyze foreign market opportunities.

Environmental monitoring should continue throughout the business cycle. Since marketers must
comply with the law, an understanding of governmental policy and the process by which it is
created is central to effective marketing decision-making.

To operate, international firms must understand the policy-making process and different categories
of laws, and marketers must also investigate the general policy climate and local laws that affect the
operation of their business. The main objective of marketing strategy is pivotal to customer
satisfaction, financial performance, and compliance.

Political Factor

Pricing is influenced by laws and regulations which necessitate product modifications, in

compliance with health and safety standards, environmental regulations, measures systems etc.
Government policies influence the legislative and economic frameworks. Perhaps the most sinister
cloud from the political arena is the threat of wars.

Economic Factors

The level of GDP is the main measure of economic attractiveness of foreign markets. As GDP
increases, the demand for goods and services increases too. Furthermore, marketers consider the
distribution of income within a country, in order to identify niche and segment markets. Marketers
always watch not only the present economic prosperity of a country, but also its future development
in terms of population and density, inflation and economic growth, age and distribution of income,
level of urbanization as well as other economic activities that will affect markets and pricing.

The economic environment of the foreign or host country influences pricing decisions. It has a
significant impact on firm’s costs, determines demand potential for a particular product/service, in
addition to the prices that local customers can afford and are willing to pay. For example, some
products that are considered essential in western countries, are viewed as luxury items in my
country (India), and most of the Asian countries.

Social Factors
People from different cultures have different tastes, buy different products and respond in different ways
to the same service or product. Therefore, the demographic structure of a foreign market should be
considered. The aging of population in major western markets, and the increase in population in several
countries such as India and China, is another continuing development that will affect international
marketing. As teens around the world are becoming a global market segment today, pricing strategies
will have to adapt to social factors, that is, when pricing for international markets, one has to take into
consideration of local material culture, language, aesthetics, education and religion, as well as attitudes
and values. Firms/Markets need to examine carefully target market, country’s characteristics and
purchasing behaviors, required to select appropriate pricing strategy. Price level is an important criterion
used by consumers in evaluating competing products. Other criteria such as product quality and
performance are important to customers. Thus, in developing pricing strategy, firms/organisations must
be aware of foreign consumers’ preferences, perceptions, and purchasing behaviors with respect to
various price levels.

Technological Factors

Firms/Organizations need to analyze the technological environment of foreign markets. Well-developed

communication infrastructure is an important factor to respond rapidly to customer’s needs.
International Firms/Organizations often rely on existing local distribution infrastructure in order to
transport and distribute their products to consumers. This may have significant impact on costs, and in
turn may influence price, as well as profits. Technological change is another dynamic but ongoing
phenomenon. A perfect example is the internet. Internet allows online contact with the
Firms/Organizations customers, suppliers, and partners and subsidiaries around the world, but it may
also increase the opportunities for existing competitors and openings for new competitors. Therefore,
technology provides both opportunities and challenges. Pricing is a strategic choice, and it will be
partially influenced by environmental factors.

PRICING STRATEGIES

Price is the amount of money charged for a product or service. Price is sum of product, service, profit &
brand. Price includes the cost of producing product, providing any needed services that may accompany
the product, the amount of profit in order to stay in business. Often the Firms/Organizations are trying to
portray the best quality or the lowest price. Therefore, price can be a direct reflection of quality or even
perceived quality. There are several basic pricing strategies:

Economy and Premium

Premium pricing is adopted when there is a substantial competitive advantage, and the product or
service is unique (Concord flights), and economy pricing strategy is adopted when the cost of marketing
and manufacture is kept at a minimum.

Penetration or Low Price

Low profit margin will penetrate the market. It is designed to grab market share quickly. Penetrating the
market with an exceptionally low-priced item creates a broad customer base. It also provides high value-
for-the-dollar to the customer. Penetration is used when prices are set first low in order to attract new
customers and to gain market share, and then the price is increased after the market share has been
achieved. To penetrate the market and gain market share, international businesses set a low price in
comparison to other competitors. Note that also low price is sometimes perceived as indication of low-
quality product. It may also be difficult to increase price in the future without incurring loss.

Skimming

This is appropriate for some product to be priced as high as the market will bear. However, few buyers
are attracted, and lower sales volumes can be achieved when price is such high. This strategy is often
used when a new product is introduced into the market, and is in great demand. For this strategy, the
product or service is charged high because of a substantial competitive advantage. This high price tends
to attract new customers into the market, and then falls due to lower unit cost as economies of scale are
achieved. Skimming is the opposite of penetration. The idea behind this pricing strategy is to return high
profits, even at the cost of losing a large number of customers. Typically, when a company launches a
new product, they charge higher prices in the beginning to help recoup R&D expenditures as fast as
possible. To be successful, Firms/Organizations must have a unique product that’s in demand. For
example, “chip manufacturers” often use this methodology during the introductory phase of a new
proprietary product. Another aspect that closely resembles “skimming the cream,” is the high cost
option. Companies like Mercedes-Benz or BMW are good examples. Customers purchase products from
them knowing they probably paid too much. But these companies have the prestigious reputation of
high-quality products and customer service.

Competitor’s Pricing

To attract the largest number of customers and generate consistent turnover, it may be necessary to set
price not too high, not too low, just in line with other competitors. Prices are tagged to the competition
and profits are acceptable. In the long run, no single pricing strategy will always work best, and producers
should be prepared to adjust to any opportunities or threats that may arise in the ever-changing market.

Marginal Costing

In highly competitive markets, some companies may want to consider turning to marginal costing in
order to ensure that their products are competitively priced. Marginal costing ignores the fixed cost
incurred by companies, on the assumption that these costs will be incurred by domestic sales anyway
and therefore, only variable costs need to be considered in pricing. Ignoring fixed costs will naturally
reduce total costs, enabling lower prices to be set. Where possible, however, companies should not
resort to this method of pricing.