CHAPTER THREE

Segmentation, Targeting and Positioning Strategies In

International Market

CHAPTER CONTENT
 Meaning of segmentation, targeting & positioning
 Understand the bases of segmentation in the international
market
 Identifying different market targeting strategies
 Able to identify the positioning strategies of products
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 Introduction
International market segmentation ?
Is processes of dividing heterogonous group of world
market customer on the base of different segmentation
variables and adopt different marketing strategies to the
segment.
A company that decides to operate in a broad market
recognizes that it normally cannot serve all customers
in that market. The customers are too numerous and
diverse in their buying requirements and consequently
one can find varied buyer behaviors. Instead of
competing everywhere, the company needs to identify
the market segments that it can serve more effectively.

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Target marketing involves three major decisions:
1. Market segmentation: Identify and profile distinct groups of buyers who might require
separate products and/or marketing mixes.
2. Market targeting: Select one or more market segments to enter.
3. Market positioning: establish and communicate the products’ key distinctive benefits in
the market.
Steps in market segmentation, targeting, and positioning
Market segmentation Market targeting Market positioning

1. Identify 3. Evaluate the 5. Identify possible

segmentation attractiveness of positioning concept for
variables and each segment. each target segment.
segment the
market. 4. Select the 6. Select, develop and
2. Develop profiles target segments communicate the
of resulting
chosen positioning
3 segments.
concept.
3.1. International/global marketing segmentation
Before a company involve market expansion,
opportunities are entering new geographic markets
executives and managers must first analyze the
global environment.
The company exists in a world of more than 200
counties and territories, each of which differs from
all the others in some respects.
Global market segmentation may be defined as the
process of identifying groups or sets of potential
customers at either the national or sub national level
that are likely to exhibit similar buying behavior.
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After marketers have identified segments the next steps is
targeting, and positioning that is evaluating the segments
and focusing marketing efforts on a country or group of
people that has significant potential to respond.
There are three reasons why it is important to identify
appropriate macro variables to segment international
markets.
I. International markets vary from each other with
regarded to the degree of sophistication required.
II. Separating countries into different categories allows the
firm to customize its marketing strategies and
III. A consistent umbrella strategy or positioning can be
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used across a number of markets.
International marketers search for similarities
more than difference. This is because of the fact
that similarities provide:
Economies of scale
Faster diffusion of products
Easy of operation management and control
Greater profitability
Unfortunately marketers might spend too much
time emphasis on differences between markets
countries and forget to identify the area of
similarly convergence.
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Patterns of domestic & international market segmentation
Market segments can be built in many ways. Three different patterns can
emerge.
1 Homogeneous Preference
This preference shows a market where all the customers have roughly the
same preference. The market shows no natural segments. We would
predict that existing brands would be similar and cluster around the
middle of the scale.
2 Diffused Preferences
At the other extreme, consumer preferences may be scattered throughout
the space; indicating that consumers vary greatly in their preferences.
The first brand to enter the market is likely to position center to appeal to
the most customer. A brand in the center minimizes the sum of total
customers dissatisfaction.
A second competitor could locate next to the first brand and fight for
market share. Or it could locate in a corner to attract a customer group
that
7 was not satisfied with the center brand.
 3. Clustered Preferences
The market might reveal distinct preference clusters, called
natural market segments.
The firm in this market has three options.
 It might position in the center, hoping to appeal to all
groups.
It might position in the largest market segment
(concentrated marketing).
It might develop several brands, each positioned in
different segment. If the first firm developed only one
brand, competitors would enter and introduce brands in
other segments.

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3.2. Basis of market segmentation
 Demographic segmentation
 Demographic segmentation is based on measurable characteristics of
populations such as age, gender, income, education and occupation.
 For most consumer and industrial products national income is the
single most important segmentation variable and indirect or of market
potential. Per capita income varies widely in world markets.
 International marketers should also consider the size of the
population in market segmentation. For example U.S market with
per capita income of $25.000 over $6 trillion income and a population
of over 250 million people is enormous scince2020 G.C., whereas our
country is below $ 1000 in 2024.
 In order to really understand the standard of living in a country it is
necessary to determine the purchasing power of the local currency
value.
 A more contemporary approach to demographic segmentation involves
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variables besides national income, age, for example one global
Psychographic segmentation
Psychographic segmentation is the process or grouping people in
terms of their attitudes values and lifestyle. Commonly, Psychographic
segmentation is performed by dividing the market in to sections
according to lifestyle or personally factors.
 Lifestyle segmentation methods classify people in to different
groups characterized by their opinions, activities, and interests.
Benefit segmentation
People buy products for their perceived benefits.
 Different products attributes provide different customer benefits.
The benefits demanded by customers vary by country, by culture,
and market segment.
 Companies attempt to provide differentiated products and service
for different market segments each with its own distinctive or
10 unique customer benefit.
Geographic Segmentation
Subdividing markets into segments based on geographic
distribution –the,, countries, cities, and towns where people
live and work –is usually used. The reason for this is simply
that consumers wants and products usage often are related to
one or more of these subcategories. Geographic
characteristics are also measurable and accessible–two of the
conditions for effective segmentations.
Example of Geographical bases of segmentation are:
Urban-Rural  Urban, Sub Urban, Rural
Climate  Hot, cold, sunny, rainy, cloudy etc

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 3.2. Global targeting
 Targeting is the act of evaluating and comparing identified groups
and then selecting one or more of them as the prospect (s) with
highest potential.
 Criteria for targeting
 The three basic criteria for assessing opportunity in global target
markets are the same as in single-country targeting.
I. Current segment size and growth potential: is the market segment,
currently large enough that it presents a company with the opportunity
to make profit.
II. Potential competition: A market or market segment characterized by
strong competition may be segment to avoid competition.
III. Compatibility and feasibility: if a global target market is large enough
and if strong competitors either absent or not deemed to represent
12 uneatable obstacles then the final consideration is whether a company
can and should target that market.
Selecting the market segments
Having evaluated different segments, the company must decide
which and how many segments to serve. It must decide which
segments to target based on the evaluation results above.
There are five patterns of target market selection based on
number of product & market.
Single segment concentration: After segmenting the market
into different segments, the company selects only one the most
attractive segment in this case.
Selective Specialization: Here the firm selects a number of
segments, each objectively attractive and appropriate, given
the firm’s objectives and resources. Each segment should
promise to be a money maker.
Product specialization: Here the firm concentrates on making
a certain product that it sells to several segments.
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Market Specialization: Here the firm concentrates on serving
Full Market coverage: Here a firm attempts to serve all
customers with all the products that they might need. Only very
large firms can undertake a full market coverage strategy.
Example include IBM (computer market), General motors
(vehicle market), and Coca-cola (soft drink market).

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 Selecting a global target market strategy
There are three basic categories of target marketing
I. undifferentiated global marketing: undifferentiated are
analogues to mass marketing in a single country. Strictly speaking
it involves creating the same marketing mix product, price,
distribution, and communications for a broad mass Market of
potential buyers.
II. Concentrated global marketing: the second global targeting
strategy involves dividing a marketing mixes to reach a single
segment of the global market.
III. Differentiated global marketing: third target marketing strategy
represents a more ambitious approach than concentrated target
marketing. It entails targeting two or more distinct market
segments with multiple marketing mixes offerings.
 This strategy allows organizations to achieve wider market
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coverage.
3.3. International/Global Product Positioning
 After the global market has been segment and one or more
segments have been targeted it is essential to plan a way to
reach the targets. To achieve this task, marketers use
positioning, a process whereby a company established an
image for its product in the minds of consumers
relative to the image competitors’ product offerings.
 Positioning is, finding a way to fix the product in the
minds of potential buyers in the target market by devising
the appropriate marketing mix.

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3.3.1 Tools for competitive differentiations
 A company must try to identify the specific way it can differentiate its products
to obtain a competitive advantage in international market. Differentiation is
the act of designing a set of meaningful differences to distinguish the
company’s offering from competitors offering.
The differentiation should fulfill the following criteria to be succeeded over
competitors:
 Important: The difference should deliver highly valued benefits to sufficient
number of buyers.
 Distinctive: The difference either is not offered by others or is offered in a
more distinctive way by the company.
 Superior: The difference should be superior to other ways of obtaining the
same benefit.
 Communicable: The difference should be communicable and visible to
buyers.
 Pre-emptive: The difference cannot easily copied by competitors.
 Affordable: The difference should be in such a way that the buyers can afford

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to pay for them.
 Profitable: The Company should find it profitable to introduce the difference.
How exactly can a company differentiate its market offering from
competitors? Here we will examine how a market offering can be
differentiated along time dimensions: - product, services, personnel,
channel or image.
 Product Differentiation
Product differentiation is differentiation that takes place on the physical
products. At one extreme we find highly standards products that allow little
variation. At the other extreme are products capable of high differentiation,
such as automobiles, commercial holdings, and furniture. Here the seller
faces an abundance of design parameters. The main product differentiations
are features, performance, conformance, durability, reliability, reparability,
style and design.
 Service Differentiation
In addition to differentiating its physical products, a firm can also
differentiate its services. When the physical product cannot easily be
differentiated, the key to competitive success and improving their quality is
differentiating its services. The main service differentiations are ordering
18 ease, delivery, installation, customer training, customers consulting,
maintenance and repair, and a few others.
 Personal Differentiation
Companies can gain a strong competitive advantage through hiring and
training better people than their competitions do. Better-trained personnel
exhibit six characteristics:
Competence –The employees possess the required skill and knowledge.
Courtesy –The employees are friendly, respectful and considerate.
Credibility –The employees are trust worthy.
Reliability –The employees perform the service consistently and accurately.
Responsiveness –The employees respond quickly to customer’s requests and
problems.
Communication –The employees make an effort to understand the customer and
communicate clearly.
 Channel differentiation
Companies can achieve differentiation through the way they shape their
distribution channel, particularly: channel’s coverage, expertise and
performance.
Image differentiations
Even when competing offers look the same buyers may respond differently to the
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company image or brand image. Companies can craft powerful, compelling
 Differentiating & Positioning the Market Offering
Attribute positioning:- When company’s positions itself on
attributes. E.g. Size, color. Etc.
Benefit positioning:- Here the product is positioned as the
leader on a certain benefits.
Use/ Application positioning:- Positioning the product as best
for some use or application.
User Positioning:- Positioning the product as best for some
user group.
Competitor Positioning:- Product positions itself as better in
some way than a named or implied competitor.
Product category positioning:- Product positioned as the
leader in a certain product category.
Quality/Price positioning:- Product positioned as offering the
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best value.
Review question chapter 1-3 from 2015 exit exam
Q1. Local content laws are economic risks facing international
marketers. Which is TRUE about local content law?
a. Host governments demand a certain percentage of shares of
foreign companies should belong to locals
b. Host governments demand foreign companies to bring all their
resources from their home country
c. Host governments demand a certain percentage of the products
produced by international marketers should have local inputs
d. Host government prohibits international companies not to use
local inputs in their products
Q2. Which of the following criteria requires that the market should
be sufficiently large in size and have future potential for selection
of a target market?
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a. Substantial b. Accessible c. Compatible d. Measurable
Q3. A type of market segmentation which divides buyers into
different groups based social class, lifestyle, or personality
characteristics:
a. Geographic segmentation
b. Behavioural segmentation
c. Psychographic segmentation
d. Demographic segmentation
Q4. Global marketers adopt various strategies to minimize
political risks while operating in foreign markets. If a firm is
challenged with negative attitudes towards foreign brands which
strategy you would advise them to apply?
a. Sharing ownership with locals
b. Observation of political moods and increasing exposure
c. Being engaged in foreign country's internal affairs
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d. Hiring foreigners
Q5. Find the mismatch in the international marketing
environment
a. Economy- inflation
b. Culture- customs
c. Legal- creative distraction
d. Technology- innovation
Q6.which segmentation level is appropriate when
customer have clustered performance as automobile
industry rather than diffused or homogenous preference
A. micro marketing
B. segmentation marketing
C. mass marketing
D. niche marketing
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Q7..in Ethiopian culture, communications are indirect and the
context of the message is more important than the words in
conveying meaning. Such kind of cultures is considered
as_____ in international marketing environment
A. National context culture
B. International context culture
C. High context culture
D, Low context culture
Q8.cheverolet, an American car brand while trying to enter into middle
east market, assessed the need to customize its cars 'engines to sustain
the hot weather in the region. Chevrolet is trying to complying with:
A.Legal requirement
B.Technological requirement
C.Climatic requirement

24 D.Economic requirement
Q9, if brewary company introduce non alcoholic drink to enter
into country that does not Allow the production of alcoholic it
trying to
A. technological management
B. legal requirements
C. climatic requirements
D. physical requirements
Q10. IBM, offers many hardware and software application to
different segments of the computers markets is good examples of
A, mass marketing
B. Concentrated marketing
C. differentiated marketing
D. Undifferentiated marketing

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Q11. if firm a NaCci directly engaged in manufactures
marketing products and but sell products to foreign market
the firm is used to be ____________stages.
A, regular marketing
B, infrequent marketing's
C, no direct marketing
D,Global marketing

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