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MARKET SEGMENTATION is the process of subdividing a market into distinct subsets of customers that behave in the same way

or have similar needs. Each subset may conceivably be chosen as a market target to be reached with a distinctive marketing strategy. The process begins with the basis of segmentation- a product specific factor that reflects differences in customers requirements or responsiveness to marketing variables. Global market segmentation is a process of dividing the world market into distinct subsets of customers that behave in the same way or have similar needs, or, as one author put it, it is 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 buying behaviour.

Geographic segmentation is dividing the world into geographic subsets. The advantage of geography is proximity: markets in geographic segments are closer to each other and easier to visit on same trip or to call on during the same time window. LIMITATIONS The mere fact that markets are in the same world geographic does not meant that they are similar. Japan and Vietnam are both in East Asia, but one is high income, post industrial society and the other is an emerging less developed, pre industrial society. DEMOGRAPHIC SEGMENTATION Demographic segmentation is based on measureable characteristics of population such as age, gender, income, education and occupation.

A number of demographic trends-aging population, fewer children, more women working outside the home and higher income and living standards- suggest the emergence of global segment. For most consumer and industrial products, national income is the single most important segmentation variable and indicator of market potential. Annual per capita income varies widely in world markets, from a low of $81 in the Congo to the high of $38,587 in Luxembourg.

The U.S. market, with per capita income of $29,953, more than $8.3 trillion in 2000 national income and a population of more than 275 million people is enormous. Thus, Americans are the favourite target market.

Many global companies also realize that for products with a low enough price-e.g. cigarettes, soft drinks and some packaged goods-population is a more important segmentation variable than income. Thus, China and India with respective population of about 1.3billion and 1.0 billion might represent attractive target markets.

To know the standard of living of people in a country, it is necessary to determine the purchasing power of the local currency. In low income countries the actual purchasing power of the local currency is much higher than the implied by exchange values. Age is another useful demographic variable. One global segment based on demographics is global teenagersyoung people between the ages of 12 and 19. Teens, by virtue of their interest in fashion, music and a youthful life style, exhibit consumption behaviour that is remarkably consistent across borders. Another global segment is so called elite: older, more affluent consumers who are well travelled and have the money to spend on prestigious products with an image of

exclusivity. This segments needs and wants are spread over various product categories: Durable goods e.g. luxury automobiles

Non durables e.g. upscale beverages such as rare wines and champagne Financial services e.g. American express gold and platinum cards

PSYCHOGRAPHIC SEGMENTATION Psychographic segmentation involves grouping people in terms of their attitudes, values and lifestyles. Data are obtained from questionnaires that requires respondents to indicate the extent to which they agree or disagree with series of statements. Backers Spielvogel & Batess Global Scan Global scan is a study that encompasses 18 countries, mostly located in the Triad. To identity attitudes that could help explain and predict purchase behaviour for different product categories, the researchers studied consumer. Combining all the country data yielded a segmentation study known as Target Scan, a description of five global psychographic segments that BSB claims represent 95% of the adult populations in the 18 countries surveyed. BSB has labelled the segments as follows: Strivers(26%). This segment consists of young people with a median age of 31 who live hectic, on the go lives. Driven to achieve success, they are materialistic pleasure seekers for whom time and money are in short supply. Achievers (22%). Older than Strivers, the affluent, assertive Achievers are upwardly mobile and already have attained a good measure of success. Achievers are status conscious consumers for whom quality is important.

Pressured(13%). The Pressured segment, largely comprised of women, cut across age groups and is characterized by constant financial and family pressures. Lifes problems overwhelm the members of this segment. Adapters(18%). This segment is composed of older people who are content with their lives and who manage to maintain their values while keeping open minds when faced to change. Traditional(16%). This segment is rooted to the past and clings to the countrys heritage and cultural values. Global scan is helpful tool for identifying consumer similarities across national boundaries as well as highlighting differences between segments in different countries. E.g. in United States, the 75 million baby boomers help swell the ranks of Strivers and Achievers to nearly half the population. Global scan also revealed the marked differences between the circumstances in which Strivers find themselves in different countries. In the United States, Strivers are chronically short of both time and money, whereas Japanese Strivers have ample monetary resources. Darcy Massius Benton & Bowlers Euroconsumer Study DMBBs research team focused on Europe and produced a 15country study titled The Euroconsumer: Marketing Myth or Cultural Certainty? The researches identified four lifestyle groups: Successful Idealists. Comprising from 5 to 20 % of the population, this segment consists of persons who have achieved professional and material success while maintaining commitment to abstract or socially responsible ideals. Affluent Materials. These status conscious up-and-comers many of whom are business professionals, use conspicuous consumption to communicate their success to others.

Comfortable Belongers. Comprising one quarter to one half of a countrys population, this group, like Global Scans Adapters and Traditionals, is conservative and most comfortable with the familiar. Belongers are content with the comfort of home, family, friends and community. Disaffected Survivors. Lacking power and affluence, this segment harbours little hope for upward mobility and tends to be either resentful or resigned. This segment is concentrated in high-crime, urban inner city neighborhoods. Despite Disaffected Survivors lack of societal status, their attitudes nevertheless tend to affect the rest of society. The first two groups represent the elite, the latter two, mainstream European consumers. Young & Rubicams Cross Cultural Consumer Characterizations (4Cs) Young & Rubicams 4Cs is a 20-country psychographic segmentation study focusing on goals, motivations, and values that help to determine consumer choice. The research is based on the assumption that there are underlying psychological processes involved in human behaviour that are culture free and so basic that they can be found all over the globe. There are three groups which are further subdivided into seven segments: Constrained (Resigned Poor and Struggling Poor) Middle Majority(Mainstreamers, Aspirers and Succeeders) Innovators (Transitional and Reformers) ATTITUDES Resigned Poor Unhapp y Labor Shut-in Staples WORK LIFESTYLE PURCHASE BEHAVIOUR

Distrustf Unskilled ul Struggling Poor Unhapp y Dissatisf ied Mainstreamer s Happy Belong Aspirers Unhapp y Ambitio us Succeeders Happy Industrious Transitional Rebellious Liberal Student Health field Managerial Professional Sales White collar



Labor Craftsmen

Sports Television

Price Discount stores

Craftsmen Teaching

Family Gardening

Habit Brand loyal

Trendy Sports Fashion magazines

Conspicuous consumption Credit

Travel Dining out

Luxury Quality

Arts/crafts Special interest magazines

Impulse Unique products

Reformers Inner growth Professional Reading Ecology

Improve world Entrepreneur

Cultural events


BEHAVIOUR SEGMENTATION Behaviour segmentation focuses on whether people buy and use a product, as well as how often and how much they use it.

Consumers can be categorized in terms of usage rates e.g. heavy, medium, light and nonuser. Consumers can also be segmented according to user status: potential users, non users, ex users, regulars, firsttimers and users of competitors, products. Nestle is marketing bottled water in Pakistan where there is a huge market of nonusers who, despite their low income, are willing to pay 18 rupees a bottle for clean water because of the widespread presence of arsenic poisoning in well water and the pollution of surface water. Tobacco companies are targeting China because the Chinese are heavy smokers.

BENEFIT SEGMENTATION Global benefit segmentation focuses on the numerator of the value equation-the B in V=B/P. This approach can achieve excellent results by virtue of markerters superior understanding of the problem a product solves or the benefit it offers, regardless of geography. e.g. nestle discovers that cat owners attitude toward feeding heir are same everywhere.

VERTICAL VERSUS HORIZONTAL SEGMENTATION Vertical segmentation is based on product category or modality and price points. E.g. ,in medical imaging there is X-ray,

computed axial tomography(CAT) scan, magnetic resonance imaging(MRI) and so on. Each modality has its own price points.

Targeting is the act of evaluating and comparing the identified groups and then selecting one or more of them as the prospect(s) with the highest potential. CRITERIA FOR TARGETING The three basic criteria for assessing opportunity in global target markets are the same as in single country targeting: Current Segment Size and Growth Potential Is the market segment currently large enough that it presents a company with the opportunity to make a profit? If it is not large enough or profitable enough today does it have high growth potential so that it is attractive in terms of a companys long term strategy? Indeed, one of the advantages of targeting a market segment globally is that, whereas a segment in a single country market might be too small, even a narrow segment can be served profitably with a standardized product if the segment exists in several countries. The billion plus members of the global MTV Generation constitute a huge market that, by virtue of its size, is extremely attractive to many companies. Potential Competition A market or market segment characterized by strong competition may be segment to avoid or one in which to utilize a different strategy.

Often a local brand may present competition to the entering multinational. In Peru, Inca Kola is as popular as Coca-Cola. In India, Thumbs Cola is a major brand. In the

Siberian city of Krasnoyarsk, Crazy Cola has a 48% share of the market. The multinational might try more or different promotions or may acquire the local company or form an alliance with it. Compatibility and Feasibility

If a global target market is judged to be large enough, and if strong competition are either absent or not deemed to represent insurmountable obstacles, then the final consideration is whether a company can and should target that market. In many cases, reaching global market segments requires considerable resources such as expenditures for distribution and travel by company personnel. Another question is whether the pursuit of a particular segment is compatible with the companys overall goals and established sources of competitive advantage. Although Pepsi was firmly entrenched in the Russian market having entered in 1972, Coke waited 15 years to make its first move in Russia and 20 years before it decided to make major investments. At the time of Cokes entry, Pepsi had 100% of the Russian market.


There are three basic categories of target marketing strategies: Standardized Global Marketing Standardized global marketing is analogous to mass marketing in a single country. It involves creating the same marketing mix for a broad market of potential buyers. This strategy calls for existence distribution in the maximum number of retail outlets.

The appeal of standardized global marketing is clear: greater sales volume, lower production costs and greater profitability. The same is true of standardized global communications: lower production costs and if done well, higher quality and greater effectiveness of marketing communication.

Coca-Cola, one of the worlds most global brands, uses the appeal of youthful fun in its global advertising. Concentrated Global Marketing The second global targeting strategy involves devising a marketing mix to reach a single segment of the global market. In cosmetics, this approach has been used successfully by the House of Lauder, Chanel and other cosmetics houses that target the upscale, prestige segment of the market.

This is the strategy employed by the hidden champions of global marketing: companies that most people have never heard of that have adopted strategies of concentrated marketing on a global scale. These companies define their markets narrowly. They go for global depth rather than national breadth.

Differentiated Global Marketing The third target marketing strategy is a variation of concentrated global marketing. It entails targeting two or more distinct market segments with different marketing mixes. This strategy allows a company to achieve wider marker coverage.

E.g. in the segment of sports utility vehicle(SUV), Rover has a $50,000+ Range Rover at the high end of the market; a scaled down version, the Land Rover Discoverer, is priced under $35,000, which competes directly with the Jeep Grand Cherokee. These are to

different segments, and Rover has a concentrated strategy for each.


Positioning is the location of your product in the mend of your customer. Thus, one of the most powerful tools of marketing is not something that a marketer can do to the product or to any elememnt of the marketing mix: Postioninig is hat happens in the mind of the customer.

The position that a product occupies in the mind of a customer depends on the host of variables, many of which are controlled by the marketer. After the global market has been segmented and one or more segments have been targeted, it is essential to plan a way to reach the target(s). To achieve this task, marketers use positioning. In today,s global market environment , many companies find it increasingly important to have a unified global positioning strategy. Can global positioning can work for all products? One study suggest that global positioning is most effective for the product cateogries that approach eithrt end of a high-touch or high-tech continuum. Both ends of the continuum are characterized by high levels of customer involvement and by a shared language among consumers.

High-Tech Positioning
Personal computers, video and stereo equipment and automobiles are examples of product cateogries in which high tech positioning has proven effective. Such products are frequently purchased on the basis of concrete product features, although image may also be important.

High tech products can be divided into following three cateogries: 1. Technical Products Computers, chemicals, tires and financial services are just a sample of product cateogries whose buyers have specialized needs, require a great deal of product information and share a common language 2. Special Interest Products Although less technical and more leisure or recreation oriented, special interest product are also characterized by a shared experience and high involvement among users. Again, the common language and symbols associated with such products can transcend language and cultural barriers.

High-Touch Positioning
Marketing of high touch products requires less emphasis on specialized information and more emphasis on image. High touch products highly involve customers. Buyers of high touch products also share a common language and set of symbols relating to themes of wealth, materialism and romance. There are three categories of high touch products. These are: 1. Products that Solve Common Problems At the other end of the price spectrum from high tech products in this category provide benefit links to lifes little moments. Ads that show friends talking over a cup of coffee in a cafe or quenching thirst with a soft drink during a day at the beach put the product at the centre of everyday life and communicate the benefit offered in a way that is understood worldwide.

2. Global Village Products Chanel fragrances, designer fashions, mineral water and pizza are all examples of products whose positioning is strongly cosmopolitan in nature. Fragrances and fashions have travelled as a result of growing worldwide interest in high quality, highly visible, high priced products that often enhance social status. However, the lower priced food products just mentioned show that the global village category encompasses a broad price spectrum. 3. Products that Use Universal Theme There are some advertising themes and products appeals are thought to be basic enough that they are truly transnational. Additional themes are materialism( keyed to images of well being or status), heroism(themes include rugged individuals or self-sacrifice), play(leisure/recreation) and procreation(images of courtship and romance)