CHAPTER 3

INTERNATIONAL MARKET SELECTION

VTHN
ngocvth@uel.edu.vn
01 Segmentation process 04 Market selection process,
procedure, and strategy

Regional, trans-na8onal
02 and global segments 05 Evalua8ng overall foreign
market por=olios

03 Global market segmentation

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
- Interna(onally oriented firms largely depend on resource based
advantages, high quality products (tradi(on, chance, or produc(on
philosophy), and long-term personal rela(onships and commitment in
developing their niche strategies
- can generate specializa(on.

- 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

Teenagers Technology geeks

Affluent consumers Interna/onal Similarity of needs

business travelers depends on product
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 con<nues 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 pres6gious products with an image of exclusivity”

• Increased wealth
CHARACTERISTICS • Well travelled
• Prestige products universally
• High quality products
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
- Interna0onal educa0on
- Frequent travel
CHARACTERISTICS
- Apprecia0on of future trends, fashion and music
- Self- conscious about way they look
- Role models influence choices
- Music important communica0ons 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,
Tiktok, Coca Cola …
• They wear the same clothes and want to look and feel right…
GLOBAL KIDS

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

the world becoming computer games, programmes like
more similar? download films, go to Teletubbies, Harry Potter
McDonalds/ KFC books and films, Nintendo
games, Disney
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 ambi3ous & driven individual who cares about power & control
● Eli3sts (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 seJers, excitement & adventure
● Fantasists (9%) form of escape, does not care about impressing others
(Keegan & Green, 2015)
 VALS SEGMENTATION
(Values – A4tudes – Lifestyles)
HIGH RESOURCES LOW RESOURCES

Innovators
Believers
Thinkers
Strivers
Achievers
Makers
Experiencers
Survivors
GLOBAL, LOCAL & FOREIGN

Global Consumer Culture Local Consumer Culture Foreign Consumer Culture

Posi<oning (GCCP) Posi<oning (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 dis8nc8ve, cultural resources
- Increases in GNP per capita
- Rise in life expectancy
- Increase in educa8on & literacy levels
- Growth in urbaniza8on in developing countries
- Advances in transporta8on and communica8ons
- World travel
- Global acceptance of certain consumer products (beverages,
fast food, fashion, cars, electronics)
GLOBAL CONSUMPTION TRENDS IN 2022
4.1 MARKET SELECTION PROCESS
Reactive approaches Proactive approaches
passive, informal, unsystematic, ac:ve in ini:a:ng market
responding to situation, used by small selec:on, formal process
and medium-sized exporters, short
term profit motive
influencing factors
- Psychic distance – feeling of uncertainty about foreign
markets, perceived difficulty of finding informa:on
- Cultural distance – the perceived differences between the
manager’s own and the des:na:on 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 ContracDble methods
1. Preliminary screening criteria for examining countries are iden3fied
(feasible countries)

2. Determines country characteris3cs in evalua3ng marke3ng opportuni3es and

how each should be weighted (opera3ng risks, market poten3al, costs, and
poten3al local and foreign compe33on)

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

⤑
→
EsAmaAon of profitability
→ Ranking of markets/ segments
Strategic planning Final market selecAon
⤑
Potential markets screening
Step 2: Customer segmenta1on

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
● Alloca'ng resources over large
number of markets
● Fast growth rate at early stages
of expansion
● Focus on reducing risk
● Can create entry barriers to
compe'tors
Market concentraAon
● Channelling resources into small
number of markets
● Devo'ng high levels of marke'ng
effort & resources to each market
● Slow and gradual expansion to
other countries or segments
● More intensive development can
create higher market shares and
strong compe''ve posi'on
 INFLUENCING FACTORS
Market spreading Market concentration
Company factors
High management risk-consciousness Low management risk-consciousness
Objective of growth through market development Objec<ve of growth through market penetra<on
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 compeBBve
Established competitors have large share of key markets Key markets are divided among many compeBtors
Low source loyalty High source loyalty

Marke1ng factors
Low communicaBon costs for addiBonal markets High communication costs
Low order handling costs for addiBonal markets High order handling costs
Low physical distribuBon costs for addiBonal markets High physical distribution costs
Standardized communicaBon in many markets Communication requires adaptation to
different markets
5. EVALUATING OVERALL FOREIGN MARKET PORTFOLIOS
Market/Country attractiveness
• Market size (total and segments)
• Market growth (total and segments)
• Competitive conditions
• Market uncontrollables (cultural, legal
and political environments)
• Price levels
• Profitability
Competitive strength
• Market share (achievable)
• Marke?ng ability and capacity
• Product and posi?oning fit
• Quality of distribu?on services
• Patents
• Flexibility
CompeGGve strength strength of a
product/company as compared to
compe3tors.
Invest: The market is very a.rac0ve (size & its poten0al for
growth), suitable for entry and major investment.

Divest/ license: The company will have problems or need

to make heavy investments to gain some market share.
(be.er to do through ‘licensing’ - least demanding of
resources).
Joint Venture: Market attractive but difficult, require huge
investments/resources to gain considerable/acceptable
market share

Export: The market is not attractive due to its size or segment growth, not to make
heavy investments & to sell the product through exports.

Selective strategy: fierce competition & difficult to maintain a stable market share,
could invest if product/positioning fit with the market or have a powerful brand.
 ?
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.