1. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 1 Global Marketing Management Masaaki Kotabe & Kristiaan Helsen Third Edition John Wiley & Sons, Inc., 2004

2. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 2 Chapter 7 Global Segmentation and Positioning

3. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 3 Chapter Overview 1. Reasons for International Market Segmentation 2. International Market Segmentation Approaches 3. Segmentation Scenarios 4. Bases for Country Segmentation 5. International Positioning Strategies

4. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 4 Chapter Overview (contd.) 6. Global, Foreign, and Local Consumer Culture Positioning Culture Positioning 7. Appendix

5. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 5 Introduction Variation in customer needs is the primary motive for market segmentation. Variation in customer needs is the primary motive for market segmentation. Most companies will identify and target the most attractive market segments that they can effectively serve. Most companies will identify and target the most attractive market segments that they can effectively serve. In global marketing, market segmentation becomes especially critical because of wide divergence in cross-border consumer needs and lifestyles. In global marketing, market segmentation becomes especially critical because of wide divergence in cross-border consumer needs and lifestyles.

6. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 6 Introduction (contd.) Once the management has chosen its target segments, management needs to determine a competitive positioning strategy for its products. Once the management has chosen its target segments, management needs to determine a competitive positioning strategy for its products.

7. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 7 1. Reasons for International Market Segmentation Segments ideally should possess the following set of properties: Segments ideally should possess the following set of properties: –Identifiable –Sizable –Accessible –Stable –Responsive –Actionable

8. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 8 1. Reasons for International Market Segmentation (contd.) Country Screening Country Screening Global Market Research Global Market Research Entry Decisions Entry Decisions Positioning Strategy Positioning Strategy Resource Allocation Resource Allocation Marketing Mix Policy Marketing Mix Policy –Balance between standardization and customization

9. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 9 2. International Market Segmentation Approaches International segmentation procedures: International segmentation procedures: –Country-ad-segments or aggregate segmentation –Disaggregate international consumer segmentation –Two-stage international segmentation The standard country segmentation procedure classifies prospect countries on a single dimension The standard country segmentation procedure classifies prospect countries on a single dimension

10. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 10 2. International Market Segmentation Approaches (contd.) (e.g., per capita GNP) or on a set of multiple socioeconomic, political, and cultural criteria available from secondary data sources. When there are numerous country traits, use smaller set of dimensions using data reduction techniques such as factor analysis. When there are numerous country traits, use smaller set of dimensions using data reduction techniques such as factor analysis.

11. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 11 3. Segmentation Scenarios Universal or global segments Universal or global segments Regional segments Regional segments Unique (diverse) segments Unique (diverse) segments

12. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 12 4. Bases for Country Segmentation Demographics Demographics –Demographics variables are among the most popular criteria. Socioeconomic Variables Socioeconomic Variables –Caveats in using per capita income as an economic development indicator: »Monetization of transactions within a country

13. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 13 4. Bases for Country Segmentation (contd.) »Gray and Black Market sections of the economy »Income disparities –Purchasing Power Parity (PPP) criteria –Socioeconomic Strata (SES) Analysis –Human development index (HDI) classification Behavior-Based Segmentation Behavior-Based Segmentation

14. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 14 4. Bases for Country Segmentation (contd.) Lifestyles Lifestyles –Global Values Segments; the survey investigated 1000 consumers in 35 countries (source: Robert Starch Worldwide): »Strivers (23 percent) »Devouts (22 percent) »Altruists (18 percent) »Intimates (15 percent) »Fun Seekers (12 percent) »Creatives (10 percent)

15. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 15 5. International Positioning Strategies The formulation of a positioning strategy (local or global) includes the following steps: The formulation of a positioning strategy (local or global) includes the following steps: 1. Identify the relevant set of competing products or brands. 2. Determine current perceptions held by consumers about your product/brand and the competition. 3. Develop possible positioning themes. 4. Screen the positioning alternatives and select the most appealing one.

16. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 16 5. International Positioning Strategies (contd.) 5. Develop a marketing mix strategy. 6. Over time, monitor the effectiveness of your positioning strategy and if needed, conduct an audit. Uniform vs. Localized Positioning Strategies Uniform vs. Localized Positioning Strategies Universal Positioning Appeals Universal Positioning Appeals –Positioning themes: »Specific product features/attributes »Product benefit, solutions for problems

17. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 17 5. International Positioning Strategies (contd.) »User application »Lifestyles

19. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 19 6. Global, Foreign, and Local Consumer Culture Positioning Global consumer culture positioning (GCCP) Global consumer culture positioning (GCCP) –Brand as a symbol of a given global consumer culture Local consumer culture positioning (LCCP) Local consumer culture positioning (LCCP) – Brand as an intrinsic part of the local culture. Foreign consumer culture positioning (FCCP) Foreign consumer culture positioning (FCCP) – Brand mystique built around a specific foreign culture

20. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 20 7. Appendix Segmentation techniques and tools: Segmentation techniques and tools: –Cluster Analysis: Collection of statistical procedures for dividing objects into groups (clusters). The grouping is done in such a manner that members belonging to the same group are very similar to one another but quite distinct from members of other groups. –Regression Analysis: In regression, one assumes that there exists a relationship between a response variable, Y, and one or more so- called predictor variables, X1, X2 and so on.

21. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 21 7. Appendix (contd.) –For each of the parameter estimates, the regression analysis will also produce standard error. –The higher the R2 value, the better the ability of the regression model to predict the data.

22. Chapter 7Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 22 Copyright © John Wiley & Sons, Inc. 2004