Global Segmentation and Positioning

1
Global Segmentation and Positioning
2
The Global Marketers Mindset
The typical context for globalized marketing is
not the usual close to customer
mindset. Rather, the point is usually to
coordinate marketing activities across a wide
variety of markets where the firm does
business. A top-down approach easily leads to
insensitivity towards local customers and local
requirements, and conflicts with local
subsidiaries.
3
The Global Marketer Customer-oriented?

• Selling orientation sell what we make, the
  product line is given.
• Standardization of products as much as possible.
• Coordination via new reporting lines to make sure
  everyone is on board.
• Centralization of the marketing effort to make
  sure all speak the same language.

4
The Global Marketers Mindset

• Because of the natural inclination to ignore
  local variations in customer preferences and
  local requirements, global marketing can easily
  lead to mis-positioned products and inappropriate
  promotional appeals.
• It can also, of course, lead to local resistance
  and animosity, not good considering
  anti-globalization and anti-Americanism
  sentiments.
• The key is to strike the optimal balance between
  local adaptation and global efficiency.

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Segmentation-Targeting-Positioning

• The typical way of approaching global marketing
  strategy is similar to the so-called S-T-P
  framework
• 1. Segmentation the splitting up of the total
  market into segments of more homogeneous
  subgroups.
• 2. Targeting the selection of which one(s) of
  these subgroups the company should market its
  product to.
• 3. Positioning exactly how the company should
  present the product to the target market(s) so
  its perception is most advantageous relative to
  competition.

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Two-Stage Global Segmentation

• It is common to distinguish two stages of global
  segmentation
• 1. Macro-segmentation the division of a number
  of countries into subgroups of more similar
  clusters
• 2. Micro-segmentation the identification of
  local segments which are similar across the
  countries in a cluster.
• The micro-segmentation techniques used in
  domestic markets are also useful in global
  segmentation.

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Micro-Segmentation
TYPICAL SEGMENTATION CRITERIA

• Economic - the most basic local segmentation
  criterion is still economic development
• Demographic - the age and family structure in
  different countries play an important role in
  determining global segments
• Culture - people care about their identify even
  though a lot has been said in the media about the
  emergence of global segments of people
• Benefits - the most clear cut segmentation
  criteria focus on the benefits sought
• Lifestyle consumers start developing their own
  lifestyle with buying behavior involving more
  than simple necessities

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Micro-Segmentation
WHICH CRITERIA SHOULD YOU USE TO SPLIT UP THE
MARKET?

• Useful segmentation criteria must accomplish
  three goals
• Should show us what influences the segments
  buying behavior, both consumption level and
  choice between competing brands
• Should be reflected in published data so that the
  size of the segment can be calculated
• Should help identify the media through which
  marketers can communicate with the segment

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Micro-Segmentation
WHEN DO YOU HAVE A GOOD SEGMENTATION SCHEME?

• Useful market segments possess these
  characteristics
• IDENTIFIABLE what distinguishes them?
• MEASURABLE how many belong to each segment?
• REACHABLE how to distribute to, communicate to,
  each segment?
• ABLE TO BUY can they afford it?
• WILLING TO BUY do they want it?

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Macro-Segmentation
MACROSEGMENTATION clustering of countries on
the basis of common characteristics deemed to be
important for marketing purposes, e.g. data on

• Population size
• Population character
• Disposable income levels
• Educational background
• Primary languages

• Level of development
• Rate of growth in GNP
• Infrastructure
• Political affiliation

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Typical Macro-Segmentation Criteria
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Macro-Segmentation on Standard of Living and
Religion
0
SWE
.9
DEN
NOR
UKI
.8
FIN
AUS
NEZ
,7
SWI
.6
Factor III Standard of Living
NET
SOT
.5
GER
ISR
AUT
.4
BEL
PUE
JAP
FRA
.3
CHI
VEN
MAC
.2
SPA
BRA
.1
PHI
TUR
IND
PER
ITA
MEX
0
COL
ARG
PAK
THI
Protestant
-.1
Catholic
-.2
-.1
0
.1
.2
.3
.4
.5
.6
.7
.8
.9
1.0
Factor VI Religion
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Macro-Segmentation on Think and Feel
Dimensions
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Micro-Segmentation Based on Lifestyle
6 PAN-EUROPEAN LIFESTYLE SEGMENTS
TRADITIONALIST 18 HOMEBODY 14 RATIONALIST 2
3 PLEASURIST 17 STRIVER 15 TRENDSETTER 13
Relative size of segments in percent, of the
European Market, as developed by the RISC
research agency
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Targeting Segments

• The choice of which countries and which
  segment(s) to target involves an analysis of
  projected profitability over the planning
  horizon.
• The basic computation involves forecasting sales
  in a segment and the market share that the firm
  can expect to achieve. These techniques were
  covered in the forecasting chapter (no.4).
• Predicting competitive reactions is also
  necessary, especially if the target segment is
  likely to be brand loyal.
• The choice of target countries should also
  consider the tradeoff between focus and
  diversification.

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Targeting Segments

• Diversification versus Focus Strategy
• Diversification Strategy
• In developing a global strategy, some companies
  make a conscious effort to be a player in
  different countries and different market
  segments. Difficulties in one market segment or
  country can be offset by gains elsewhere.
• Focus Strategy
• Markets and segments can be given more attention
  and markets positions fortified. This is
  particularly advantageous when the country or
  segment competitive rivalry is intense (see
  hyper-competition in chapter 2, for example).

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Diversification vs Focus
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Global Product Positioning

• Product Positioning involves using the marketing
  mix (the 4Ps) to present the product to the
  selected target market(s) so that it is perceived
  in the most favorable way relative to
  preferences and competition.
• To identify the optimal position, global
  marketing draws on the same techniques as
  domestic marketers in mapping out a visual
  representation of how the customers view the
  competing brands on the market.
• This visual mapping is usually called perceptual
  space or, more commonly, the product space.

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U.S. Product Space of Autos 1968
SPORTY
Jaguar Sedan
Ford Mustang
AMC Javelin
Ideal point for subject I
Mercury Cougar
Plymouth Barracuda
Ford Thunderbird V8
LUXURIOUS
Lincoln Continental
Chevrolet Corvair
Ideal point for subject J
Chrysler Imperial
Buick Le Sabre
Ford Falcon
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Global Product Positioning
Four sets of data to construct the product space
Salient Attributes - data on what attributes a
customer looks for in a product Evoked Set -
identifying what brands are considered by the
buyer Attribute Ratings - how the individual
rates the brands in the evoked set on salient
attributes Preferences - how the brands rank in
terms of overall preferences
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Product Space with Segment Sizes
Has a touch of class. Distinguished looking
Lincoln
Porsche
Cadillac
Conservative looking
4
5
Sporty looking.
BMW
Chrysler
Mercedes
2
Buick
Pontiac
Oldsmobile
Chevrolet
Datsun
Ford
Appeals to older people
1
Toyota
Fun to drive.
3
Dodge
Plymouth
VW
Very practical. Gives good gas mileage.
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Global Product Positioning

• THERE ARE THREE DIFFERENT EFFECTS ON BUYERS WHEN
  A GLOBALLY STANDARDIZED PRODUCT OR BRAND IS
  INTRODUCED ON A LOCAL MARKET
• 1. THE NEW BRAND SIMPLY TARGETS ONE UNTAPPED
  SEGMENT.
• 2. THE PRODUCT SPACE IS ALTERED, BY ADDING
  DIMENSIONS OR EXTENDING ENDPOINTS.
• 3. BUYER PREFERENCES ARE CHANGED.
• IN PRACTICE, ALL THREE PROCESSES ARE OFTEN AT
  WORK SIMULTANEOUSLY.

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Global Product Positioning

• IT IS RARE THAT CUSTOMERS PERCEPTIONS REMAIN
  UNCHANGED WHEN A GLOBALLY STANDARDIZED PRODUCT
  ENTERS THE MARKET.
• EXTENDED PRODUCT SPACE THIS OCCURSWHEN GLOBALLY
  STANDARDIZED PRODUCTS OFFER MORE OF THE SALIENT
  FEATURES DESIRED. THE NEW FEATURES TEND TO
  ENLARGE THE SPACE WHICH DEFINE THE PRODUCT. (EX
  MORE MEMORY IN PCs)
• ADDED DIMENSIONS THIS OCCURS WHEN THE GLOBALLY
  STANDARDIZED PRODUCT OFFERS IMPORTANT NEW
  FEATURES (EX CAMERA ON A CELL-PHONE)

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Honda Accord Extends the Product Space
ECONOMY
Overall Rating
Honda Accord
BMW 320i
VW Rabbit
Toyota Celica
Datsun 200SX
Audi 4000
Mazda
PERFORMANCE
Chrysler K-car
Chevrolet Citation
Ford Mustang
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Global Product Positioning

• WHEN PRODUCTS ARE STANDARDIZED AND NOT ADAPTED TO
  THE PARTICULAR MARKET, THEY ARE OFTEN
  MISPOSITIONED (NOT HITTING THE TARGET
  BULLSEYE).
• THERE ARE THREE REASONS WHY CONSUMERS MIGHT STILL
  BUY MISPOSITIONED PRODUCTS
• BRAND IMAGE
• COUNTRY OF ORIGIN
• LOWER PRICE

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Brand Image

• MISPOSITIONED PRODUCTS CAN BE ATTRACTIVE TO
  POTENTIAL CUSTOMERS BECAUSE OF BRAND IMAGE AND
  STATUS. GLOBAL BRANDS OFTEN DO BETTER THAN LOCAL
  BRANDS THAT MAY BE BETTER SUITED TO CUSTOMER
  NEEDS FOR THAT AND OTHER REASONS
• CONSPICUOUS CONSUMPTION --LET EVERYONE SEE WHAT
  YOU BUY AND HOW MUCH YOU BUY.
• LOWER PERCEIVED RISK AND COGNITIVE DISSONANCE --
  WHEN GIVING A GIFT, FOR EXAMPLE

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Country-of-Origin

• WHERE A PRODUCT OR BRAND COMES FROM OFTEN COUNTS
  A GREAT DEAL WITH CONSUMERS.
• COUNTRY-OF-ORIGIN EFFECT DEALS WITH QUALITY
  PERCEPTIONS OF PRODUCTS. THIS EFFECT DIFFERS BY
  PRODUCT CATEGORY. ALSO, THE QUALITY LEVEL AT
  WHICH A COUNTRY PRODUCES IS FACTORED IN.
• COUNTRY-OF-ORIGIN BIAS CUSTOMERS TEND TO
  OVERSTATE THE POSITIVE AND NEGATIVES OF PRODUCT
  ATTRIBUTES AND THIS CAN CAUSE A BIAS TOWARDS
  PRODUCTS FROM A GIVEN COUNTRY.

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Lower Price

• THROUGH A REDUCED PRICE, A CUSTOMER IS OFTEN
  INDUCED TO BUY A MISPOSITIONED BRAND BECAUSE THEY
  FEEL THAT THEY AR GETTING A GOOD DEAL.
• HOWEVER, THIS CAN BACKFIRE ON THE MARKETER, SINCE
  THE PRICE PAID GRADUALLY LOSES SALIENCE, WHILE
  THE LESS DESIRABLE BRAND STAYS AS A REMINDER.

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Global S-T-P Strategies

• Market Segmentation Cases
• Similar Segment
• The target segment is the same across countries
• Different Segment
• The target segment differs across countries
• Product Positioning Dimensions
• Similar Positioning
• Indicates a positioning which is the same across
  countries
• Different Positioning
• Indicates that the positioning theme is adapted
  across countries.

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Global S-T-P Strategies
Local Micro-Segment
Similar
Different
IKEA
Nike
Similar
Mobile phones
Positioning
Levis
Volvo
Different
Honda Prelude
Pampers