CHAPTER 3

MARKET SELECTION

VTHN
ngocvth@uel.edu.vn
01 Segmentation process

Regional, trans-national Market selection process,

02 and global segments 04 procedure, and strategy

03 Global market segmentation 05 Evaluating overall foreign

market portfolios
1 MARKET SEGMENTATION

The process of classifying customers into homogeneous

groups with similar demand and/or preferences
(Bruning et al ., 2009, p. 1500)

A process whereby unique customer groups can be

identified in country-based/ individual consumer-based
groups (Bruning et al ., 2009, p. 1500).
1 MARKET SEGMENTATION
- Internationally oriented firms largely depend on resource
based advantages, high quality products (tradition, chance, or
production philosophy), and long-term personal relationships
and commitment in developing their niche strategies
- can generate specialization.

- involves costs, risks, and possible weaknesses

- analysis of market behavior: channels, customer segments, or

use occasions as well as the geographic dimension
2 SEGMENTATION SCENARIOS
Country segments

Regional segments
- Similarity across regional level

Transnational segments
- Segments based on similar needs across a group of countries

- Country clusters

Global Segments
- Segments transcending national boundaries with common needs
3 GLOBAL SEGMENTS
🌎 “Homogeneous entities categorized by psychographic and behavioural
similarities” (Doole, Lowe & Kenyon, 2018)

🌎 “.. defined based upon market variables other than national boundaries (Hassan,
2011)

🌎 Share core values, attitudes and aspirations

🌎 Recognition that world markets consist of similarities and differences as
distinguishing characteristics
🌎 Segmentation across markets rather than within - consumers, not countries
🌎 Problem if geographically spread
GLOBAL MARKET SEGMENTATION
“The process of identifying specific segments,
whether they be country groups or individual
consumer groups, of potential customers with
homogeneous attributes who are likely to exhibit
similar responses to a company’s marketing mix”
(Hassan & Katsanis, 1991)
GLOBAL SEGMENTS

Technology
Teenagers
geeks

Affluent International Similarity of needs

consumers business depends on product
travelers categories e.g. high-
tech consumer durables,
travel-related products
GLOBAL SEGMENTS

“Global consumers are “China remains an engine

willing to put their money of growth for luxury goods
where their heart is when as the country’s middle
it comes to goods and class continues to grow in
services from companies size and purchasing
committed to social power”
responsibility”
(Nielsen, 2014) (Bain & Co, 2016)
“GLOBAL ELITE” SEGMENT
“Affluent consumers who are well travelled and have
the money to spend on prestigious products with an
image of exclusivity”
CHARACTERISTICS
• Increased wealth
• Well travelled
• Prestige products universally
• High quality products
PSYCHOGRAPHIC SEGMENTATION
to group prospective, current or previous customers by their shared
personality traits, beliefs, values, attitudes, interests, and lifestyles and
other factors”

Porsche Example
● Top Guns (27%) an ambitious & driven individual who cares about power & control
● Elitists (24%) individual from old money (blue blood), car is just a car
● Proud Patrons (23%) reward for hard work
● Bon Vivants (17%) thrill seekers and jet setters, excitement & adventure
● Fantasists (9%) form of escape, does not care about impressing others
(Keegan & Green, 2015)
GLOBAL TEEN SEGMENT
“Teenagers sharing memorable experiences which are reflected in their
consumption behavior. Young consumers whose cultural norms have not become
ingrained and who can share universal needs, wants and fantasies”
- Internet
- Social media
CHARACTERISTICS - International education
- Frequent travel
- Appreciation of future trends, fashion and music
- Self- conscious about way they look
- Role models influence choices
- Music important communications tool
GLOBAL TEEN SEGMENT
• As cultures converge, teenagers around the world become more similar
• They use well-known global brands like iPhone, Facebook, Nike, YouTube,
Coca Cola …
• They wear the same clothes and want to look and feel right…
GLOBAL KIDS

Are children around the Watch TV/Netflix, International success of TV

world becoming more play computer games, programmes like Teletubbies,
similar? download films, go to Harry Potter books and films,
McDonalds/ KFC Nintendo games, Disney
LIFESTYLE SEGMENTATION

VALUE SCOPE GLOBAL VALUES

MODEL SEGMENTS
Robert Starch Worldwide
Achievers Traditionalists Strivers (23%)
Survivors Nurterers Devouts (22%)
Hedonists Social-Rationals Altruists (18%)
Self-Directeds Intimates (15%)
Fun Seekers (12%)
(Roper Consulting, 2009)
Creatives (10%)
GLOBAL, LOCAL & FOREIGN

Global Consumer Culture Local Consumer Culture Foreign Consumer Culture

Positioning (GCCP) Positioning (LCCP) Positioning (FCCP)

Brand symbolic of global Brand global, but Build brand mystique

consumer culture portrayed as an intrinsic around specific foreign
part of local culture culture, usually with
positive connotations
“The fact that pizza-loving consumers are found in
many countries does not mean they are eating the
exact same thing.” (Keegan & Green, 2008)

“Globalization will probably never reduce the

complex human system to a state of homogeneity”
(Rugimbana & Nwankwo, 2003)
TRENDS INFLUENCING GLOBAL CONSUMPTION

- Spread of global consumer culture

- Global flow of distinctive, cultural resources
- Increases in GNP per capita
- Rise in life expectancy
- Increase in education & literacy levels
- Growth in urbanization in developing countries
- Advances in transportation and communications
- World travel
- Global acceptance of certain consumer products (beverages,
fast food, fashion, cars, electronics)
GLOBAL CONSUMPTION TRENDS
IN 2019

1. Older people want to feel and act as younger - and

be treated as such
2. Back to basics: less is more
3. Conscious Consumption
4. Digitally joined
5. Everyone is a specialist: knowledge is power
6. A world without plastic - Consumers more
attentive to waste
4.1 MARKET SELECTION PROCESS

Reactive approaches Proactive approaches

passive, informal, unsystematic, active in initiating market
responding to situation, used by small selection, formal process
and medium-sized exporters, short term
profit motive
influencing factors
- Psychic distance – feeling of uncertainty about foreign
markets, perceived difficulty of finding information
- Cultural distance – the perceived differences between the
manager’s own and the destination culture
- Geographic distance – proximity.
4.2 MARKET SELECTION PROCEDURES
Expansive methods
home market starting point, based
on similarities and experience, use
of market clusters selection
Contractible methods
optimal market selection, starts with
large number, systematic screening
leading to elimination
4.2 MARKET SELECTION PROCEDURES
3 stages of Contractible methods
1. Preliminary screening criteria for examining countries are identified
(feasible countries)

2. Determines country characteristics in evaluating marketing opportunities and

how each should be weighted (operating risks, market potential, costs, and
potential local and foreign competition)

3. Ranking of markets on the basis of scores derived

Potential markets screening Social-economic segmentation
Demand patterns
Step 1: Geographic segmentation Quantitative indicators
Qualitative indicators
Supply patterns
Competition
General market indicators
Product-specific market indicators
→ Distribution
⤑ Media
Prohibitive product characteristics

⤑
→
Prohibitive market characteristics
Estimation of market potentials→⇢
Estimation of sales potentials
Markets
Segments

⤑
→
Estimation of profitability
→ Ranking of markets/ segments
Strategic planning
⤑ Final market selection
Potential markets screening
Step 2: Customer segmentation

On the demand side behavior, lifestyle, attitudes, buying patterns, and decision-
making must be included for both consumer and industrial markets

On the supply side - competitors nationalities, capacities, activities

- distribution channels characteristics availability,
capacities, and activities performed
- media situation availability, costs, circulation, and
priorities.

Step 1 + 2 → estimate market share, estimate profitability

4.2 MARKET SELECTION PROCEDURES
Market spreading
● Allocating resources over large
number of markets
● Fast growth rate at early stages
of expansion
● Focus on reducing risk
● Can create entry barriers to
competitors
Market concentration
● Channelling resources into small
number of markets
● Devoting high levels of marketing
effort & resources to each market
● Slow and gradual expansion to other
countries or segments
● More intensive development can
create higher market shares and
strong competitive position
 INFLUENCING FACTORS
Market spreading Market concentration
Company factors
High management risk-consciousness Low management risk-consciousness
Objective of growth through market development Objective of growth through market penetration
Little market knowledge Ability to pick ‘best’ markets

Product factors

Limited specialist uses General uses

Low volume High volume
Nonrepeat Repeat-purchase product
Early or late in product life cycle Middle of product life cycle
Standard product saleable in many markets Product requires adaptation to different markets
 Market spreading Market concentration
Market factors
Small markets – specialized segments Large markets – high volume segments
Unstable markets Stable markets
Many similar markets Limited number of comparable markets
New or declining markets Mature markets
Low growth rate in each market High growth rate in each market
Large markets are very competitive Large markets are not excessively competitive
Established competitors have large share of key markets Key markets are divided among many competitors
Low source loyalty High source loyalty

Marketing factors
Low communication costs for additional markets High communication costs
Low order handling costs for additional markets High order handling costs
Low physical distribution costs for additional markets High physical distribution costs
Standardized communication in many markets Communication requires adaptation to
different markets
5 EVALUATING OVERALL FOREIGN
MARKET PORTFOLIOS
Market/Country attractiveness Competitive strength

Market size (total and segments) Market share

Marketing ability and capacity
Market growth (total and segments) Product fit
Contribution margin
Market seasons and fluctuations Image
Competitive conditions Technology position
(concentration, intensity, entry barriers, etc.) Product quality
Market prohibitive conditions Market support
(tariff, nontariff barriers, import restrictions, etc.)
Quality of distributors and service
Economic and political stability
The market attractiveness/ competitive strength matrix
Incorporate considerations
- Cost (transport costs, costs of product
adaptation, restrictions to competition;
Wages, inflation, exchange rates, tariffs,
and government subsidies)
- Shared cost (R&D costs, entry costs)
- Risk (The political, financial, and
commercial risks; foreign exchange,
legal and regulatory risks)
 ?
Give examples of global market segments and companies that
are marketing on that basis. Can small and medium-sized
enterprises market successfully to such segments? Explain.