INTERNATIONAL MARKETING

DECISIONS
Session 3
International segmentation,
targeting, positioning (STP)

Prof. Dr. Nathalie Prime

MIXED-UP SENTENCES
Key Learning Outcomes (from Session 2)

1 Culture is composed of explicit and implicit elements, in which cultural

values play an important role in international marketing as “non-
negotiables”

Today, hybridization of consumption cultures is the dominant trend to be

2 observed at a worldwide scale

Successful multinational B2C companies are usually more adapted

3
than we tend to think

4 Modern consumption cultures are Western by essence

The international marketing strategy will be sub-optimal if not supported

5 by a good alignment with the structure and the culture of the
organization

© Nathalie Prime
2
 3 Agenda:
International segmentation, targeting, positioning (STP)

Part 1 Part 3

Researching international markets: Core decisions to be made:

why and how? Targeting and positioning

Part 2

Plenary case discussion: SONY target

Segmenting international markets
laptop consumers in China: Segment,
local or global?

© Nathalie Prime
 PART 1
-
Researching international markets: why and how?

Why study international markets?

What are the pitfalls and protocols in international market research?

© Nathalie Prime
WHAT is “international” marketing research compared to “domestic”
marketing research?
Obviously, “international” as opposed to “domestic” marketing research has a
broader scope
3 research types
 General macro-  Consumption-related
environment data (e.g., penetration of
information countries digital media; sustainability
(e.g., population; issues; habits; trends of
income distribution) convergence/divergence/hy
bridization
 Country-specific
information directly
applicable / useful to
develop 4P decisions
(e.g., local distributors in
a specific category; price
consciousness)
© Nathalie Prime
5
WHY? International market studies provide support
for three important steps of decision-making

Regionalization/
First Landing Go native
Globalization

1. How to assess and 2. How to design local 3. How to identify

select foreign marketing? similarities between
country markets country markets?

 Existing vs. new  Local STP  Identifying transnational

products into (segmentation – segments (consumer ×
existing vs. new targeting – positioning) product) across country
markets  Local mix marketing markets in an attempt to
reach economies of
scale
© Nathalie Prime
6
HOW: Potential pitfalls of international market research

Data collection,
Topic and research Research design
measurement
problem and plan
and analysis

1. Research problem 2. Time and cost 4. Problems with secondary

formulation across data research
country markets  Great variation of costs
in EU and in the rest of  Accuracy, age of data,
 Ability to manage the world reliability over time,
the risk of comparability, lumping of data
ethnocentrism in the 3. Using the Internet for
research problem international market 5. Respondents’ cultural
definition across research norms creating research
country markets biases
 Digital divide
 Benefits and limits  Social norms, impact of social
status, language

Source: Adapted from Ghauri, P.N. & Cateora, Ph. (2011), p. 154, Exhibit 7-2 © Nathalie Prime
7
Pitfall #1:
Research problem formulation across country markets

Example P&G: Ace detergent research in Mexico

 Wrong question at first: What about Mexican washing machines?

 Right question: How do Mexicans wash their clothes? What are

their habits / customs?

vs.

© Nathalie Prime
8
Pitfall #1:
Possible Solution: Decentering Method

The problem is called “Self-reference criterion” (SRC)

(refers to managers’ unconscious tendency to resort to their own cultural experience
and value systems to interpret a given business situation)

1 Define the business problem in terms of your own cultural traits.

2 Define the business problem in terms of your host cultural traits.

Protocol

3 Isolate the SRC influence in the problem and see how it interferes.

4 Redefine the business problem without the SRC influence and

solve the optimal business issue.

Source: Lee (1966) © Nathalie Prime

9
Pitfall #2 and Protocol:
Time and Costs

[CATI= Computer Assisted Telephone

1 Be prepared: analyze costs on a country-level. Interviewing]
Protocol

Make trade-off between research costs and research benefits on a country-

2 specific level.

3 Potentially adapt research plan on a country-level.

© Nathalie Prime
https://esomar.org/global-prices-study 1
0
Pitfall #3:
The digital divides are still very significant

The flagship International

Telecommunication
Union Facts and Figures
2021 reveals that despite
strong global growth in
#Internet use, an
estimated 37 % of the
world’s population – or
2.9 billion people – are
still offline.

https://www.youtube.com/watch?v=f2reVdL
3mbE

https://www.itu.int/en/ITU-D/Statistics/Pages/facts/default.aspx © Nathalie Prime

1
1
Pitfall #3:
Digital Access Index – Europe and US leading

© Nathalie Prime
1
2
Pitfall #3:
Digital Access Index – Europe an US leading

White many people, many IP addresses

Red few people, many IP addresses
Blue many people, few IP addresses
Source: http://old.driven-by-data.net/img/gallery/digital-divide-1.png © Nathalie Prime
1
3
Pitfall #3 and Protocol:
Digital Divide – Implications

Protocol:
1. Quantify the extent of digital divide in country markets
2. Adapt research medium according to country-specific usage
Source: http://old.driven-by-data.net/img/gallery/digital-divide-1.png © Nathalie Prime
1
4
Interesting up to date Internet Numbers

.
Source: www.internetworldstats.com © Nathalie Prime
15
Pitfall #4:
Problems with secondary data research: Poor accuracy of data linked to:

• Various definitions of some indicators (e.g. social class)

1 • Poor quality of data collection processes (e.g. international statistics do not consider cross-border
smuggling)
• Political sensitivity of data (e.g. GDP)
Age of Data:
2
 Frequency is much less outside of Triad markets
 Some important data (e.g., frequency of census taking) are not always available easily
Reliability over time:
3
 Changes in definitions of economic indicators
 E.g. statistics of unemployment, of inflation
Comparability of data:

4  For cross-country comparisons, it is important to check the conceptual equivalence and functional
equivalence of products
 Various biases in international (i.e. comparative) market research (e.g., response style, language in
questions, scales, samples)

5 Lumping of data:
© Nathalie Prime
 Statistics grouped in too broad categories for interpretation by international marketers
1
6
Pitfall #4 and Protocol:
Problems with secondary data research [example 1]
Census in India every 10
years (last 2011, postponed in
2021 because of Pandemic)

 Make sure that data from every single country is most recent
Protocol

2  Make sure that cross-country comparisons relate to data collected in the

same year across countries

© Nathalie Prime
1
7
Protocol to Pitfall #4:
Problems with secondary data research [example 2]

A British survey:
Please indicate to which degree you disagree or agree with the following statement
(-3 = “fully disagree”, … +3 = “fully agree”)…

 “We drink more wine at home these days”

 Does it make sense if this question is asked to British respondents and to

Italian respondents?

 What’s the meaning of “more”?

Protocol

1  Talk to local experts and discuss the meaning of concepts

2  Avoid ambiguous formulations, use pretests with local respondents

Source: William 1991 in Di Mooij (2010) © Nathalie Prime

1
8
Pitfall #5:
Respondents’ cultural norms creating research biases

These biases will impact the comparability of data collected

 Courtesy bias:
1 yea- or nay-saying in Asia, Middle East, India

 Social desirability bias:

2
biased response due to symbol of wealth, power

3  Non-response due to cultural biases:

social role and status, sensitive subjects, confidentiality

4
 Extreme response bias:
Tendency to over- / underestimate when answering a question
© Nathalie Prime
1
9
Example to pitfall #5:
(1) The courtesy bias

Study of consumer innovativeness in 15 countries

 They included products not launched at the time

 Ex.: Home liver testing machine

  16.5% of respondents agreed to the question “You own, you repurchased or

you have seen the product?”

Protocol
 Actually, the question mentioned above in the
1 protocol elicits the courtesy bias – it gives an
indication of the tendency to “polite” / yea-
saying answers

Source: Tellis, Yin & Bell (2009) © Nathalie Prime

2
0
Example to pitfall #5:
(2) Extreme response bias incl. protocol

“Italians like extremes, and mark toward the end of any semantic scale, whereas the
Germans are more restrained and mark toward the middle. The effect is that a
“completely agree” answer in Italy is not worth the same as a “completely agree”
answer in Germany.”

Protocol
 Consider centered scores, i.e., the raw score
1 minus the mean score; and then compare
countries on the basis of percent of
respondents whose centered score is above
mean and under mean
Source: Di Mooij (2004 p. 309) © Nathalie Prime
2
1
Protocols to pitfall #5:New methodologies to reduce cultural bias
(1) Face reader

Ethnographic research based on in-depth

observations in situ = in context

New research methods based on observations such

as Eye Tracking, Face Reader, or Neuromarketing

Demo: Noldus Face Reader

© Nathalie Prime
2
2
Protocols to pitfall #5:New methodologies to reduce cultural bias
(2) Eye tracking
Eye Tracking
 Measures attention and allows a dynamic understanding of behavior in a specific
environment.

https://www.youtube.com/watch?v=VCf3L4pUpOg

© Nathalie Prime
2
3
Protocols to pitfall #5:New methodologies to reduce cultural bias
(3) Neuromarketing
Neuromarketing : functional Magnetic Resonance Imaging (fMRI),
electroencephalogram (EEG) and magnetoencephalogram (MEG) methods

 By looking at the brain one can get information that is not accessible even to the
subject. For example, an activation of a given area of the brain might provide relevant
information

© Nathalie Prime
2
4
 PART 2
-
Segmenting international markets

How to identify international consumers? [country cluster, consumer clusters]

Hopw to identify cross-national consumer segments?

© Nathalie Prime
The generic marketing strategic approach: « STP »
• Segmentation
consists of:
Segmenting Targeting Positioning –splitting the market of
potential customers into
homogeneous
1.Selection of 3. Evaluation subgroups
5. Positioning
segmentation of the relative working out
criteria attractiveness –which can be
of the segments distinguished
reasonably using
6. Corresponding observable criteria
2. Analysis
Marketing Mix
of the segment
4. Choose the design - and can be satisfied
profiles using a specific value
Target (s)
proposition

© Nathalie Prime
Example: Segmentation for Air Transportation

Business
Senior citizens (speed, comfort)
(not too expensive,
comfort)

Students
(not expensive,
peak periods)

© Nathalie Prime
Market clustering – two methods

Market clustering:
 Statistical procedure for dividing countries into groups (clusters)
 Countries belonging to the same group are very similar to one another but quite distinct from
members of other groups
 The most popular technique is to use some type of distance measure
 Squared distances are computed for each pair of countries in the set

1 Macro-segmentation of countries 2 Micro-segmentation across countries

 Geographical segmentation on macro
variables to identify geographic
segments (regions, countries) with
homogeneous characteristics that are
attractive to the company
 Segmentation on the micro level, on the
level of customers in the selected
countries
 Classical segmentation at the
country level
 Research for transnational
segments

Leads to clusters of countries Leads to clusters of consumers

© Nathalie Prime
2
8
In practice: The ‘Two stages approach’ (1/2)

MACRO-SEGMENTATION
 managers start by a macro-
segmentation, helping them
to create regions (e.g.,
Scandinavia; Middle East).

 Sometimes (e.g., in “universal”

product categories such as
sport shoes), segments are
identified on the consumer level
and then aggregated to country
clusters of similar consumer
segment structures
 Then they try to identify
segments across countries
and local segments in each
country thanks to micro-
segmentation.
MICRO-SEGMENTATION
Source: Steenkampf & Hostede (2002) © Nathalie Prime
2
9
Classic country-level micro-segmentation

Descriptive Psychographic Behavioral

criteria criteria criteria

• Geographic • Lifestyle and Values • Needs to be satisfied Benefits

– Country – Dynamic
– Region – Altruistic • Purchase occasion  Tailored to the
– Habitat (urban – rural) – Hedonistic local market for
– Climate – … • Consumption occasion multi-local
– … • Personality marketing
• Degree of loyalty
• Demographic characteristics
– Age – Ambition
• Recommendations
– Gender – Authority
– Income – Generosity people like more NGOs
Downsides
• …
– Lifecycle – …
– Socio-economic status • Motivations
– …
 Complex and costly:
STP strategy and 4
• Physical characteristics
Ps for each country
– Weight
– Height
– Hair type
– …
© Nathalie Prime
30
EXAMPLE: VOX Cinema segmentation in the UAE using the criteria of « Experience
sought » (i.e. a combination of Who? Why-When? What?)

« Private cinema » « Kids’ cinema »

« IMax cinema » « Outdoor cinema »

© Nathalie Prime
EXAMPLE: VOX Cinema segmentation in the UAE using the criteria of « Experience
sought » (i.e. a combination of Who? Why-When? What?)

« 4DX cinema »

And now, the « Distraction free

cinema »!!!

© Nathalie Prime
(International) micro segmentation:
Searching for transnational segments

Based on micro-variables describing a consumer:

 Demographics
 Socio-economics
 Behavior-based
 Psychographics

 Search of transnational segments:

 On the country level: Key segmentation criteria
 Aggregation across countries: Identification of consumer segments
across countries

Benefits Downsides

 Put in evidence a  For operations, similar

transnational (sometimes segments are geographically
“global”) segment apart
 Actionable for marketing a
product category
internationally © Nathalie Prime
3
3
Transnational segments based on psychographic variables

Cross-country (micro) + Across countries (macro): The BtC Accenture example

Global USA France Germany Middle East

Consumer Type: Balanced Optimist 7.8 25.3 0 0 23.4
Consumer Type: Impulsive Spender 4.7 0 0 0 0
Consumer Type: Cautious Planner 9.8 0 25 25.7 0
Consumer Type: Undaunted Striver 14.1 12.8 15.5 10.2 14.5
Consumer Type: Inspired Adventurer 14.3 0 0 24.8 0
Consumer Type: Conservative Homebody 18.7 27.6 24.8 0 24.6
Consumer Type: Secure Traditionalist 15.9 14.6 14.8 18.2 15.3

Source: Euromonitor 2016 © Nathalie Prime

3
4
Transnational segments based on psychographic variables

Acculturation:
It’s the process of cultural change resulting from enduring cultural contact

Varieties for ADAPTATION

depending on contexts

Source: Berry, J. W. (2003). Conceptual approaches to acculturation. In K. M. Chun, P. Balls Organista, & G. Marín (Eds.), Acculturation:
Advances in theory, measurement, and applied research (pp. 17–37). Washington, DC: American Psychological Association.

© Nathalie Prime
Transnational segments based on income levels

The DOLLAR
STREET project

https://www.youtube.com/watch?v https://www.gapminder.org/for-
=u4L130DkdOw teachers/

© Nathalie Prime
3
6
 READ
4 levels of income, the majority in the middle THIS

Source: Hans Rosling, Ola Rosling and Anna Rosling Rönnlund (2018), Factfulness, Flatiron Books, NY, pp. ©
34-35
Nathalie Prime
Transnational segments of « Middle-Class » in emerging markets

1) The « New middle-class » (emerging markets) vs. « the Traditional (or

established) middle-class »:
 Emerged in the past couple of decades
 Consumers who have been able to upgrade their disposable income
(« wealth effect »)
 Result of recent market liberalization ad market reforms in emerging
markets
 I contrast with old middle-class: they exhibit distinct educational,
occupational, attitudinal and political attributes

2) While the precise cutoff of diaposable income is subject to argumentation,

most international marketing practitionners consider a person must have
at least 30% of his/her gross income available for discretionary
consumption

Source: Cavusgil, S. Tamer, Deligonul, Seyda, Kardes, Ilke and Cavusgil, Erin (2018), “Middle-Class Consumers in Emerging Markets:
Conceptualization, Propositions, and Implications for International Marketers”, Journal of International Marketing, Vol. 26, No. 3,
2018, pp. 94–108. © Nathalie Prime
Transnational segments based on self perception after Covid19

Across 22
countries survey,
8661 Consumers
self perception
evolved to be :

- even more
digital,
- eco-friendly,
- more price-
oriented,
- healthy,
- data-conscious
- and ‘local’

© Nathalie Prime
Methodology: 2021 Global Consumer Insights Survey, PwC

For the 2021 Global Consumer Insights Survey, PwC adopted a ‘pulse’ approach in order to
remain attuned to changes in the worldwide landscape and connected to the behaviours
of the global consumer. This semiannual study seeks to keep a closer watch on changing
consumer trends. It was put into the field in late autumn 2020 and in spring 2021.

For the second Pulse survey in the series, we polled 8,681 consumers across 22 territories
(Australia, Brazil, Canada, China, France, Germany, Hong Kong SAR, Indonesia, Japan,
Malaysia, Mexico, the Middle East, Netherlands, the Philippines, Russia, Singapore, South
Africa, South Korea, Spain, Thailand, the United States and Vietnam).

The survey was translated into 16 languages and fielded in March 2021. The respondents
were at least 18 years old and were required to have shopped online at least once in the
previous year.

© Nathalie Prime
 PART 3
-
International targeting and positioning

What are the local targeting strategies

How to segment, target and position the international offering using the acculturation
criteria ?

© Nathalie Prime
Principles of targeting
• Once the market has been segmented, all segments
need to be evaluated regarding their relative
attractiveness (e.g. size, profitability) in order to
choose one or several segments which are
subsequently targeted by a segment-specific
marketing mix

• Factors to be considered in the targeting

decision:
– The ability to respond to the needs of the target
segment
– The coherence with the overall brand image
– The financial potential of the target segment
– The importance of the target segment in the purchasing
process

© Nathalie Prime
42
5 generic targeting Strategies of Product x Market
Coverage

1. Concentration on a 2. Specialization by 3. Specialization by

product/market product market
couple (Niche Mkg) (differentiated (differentiated Mkg)
M1 M2 M3
Mkg)
M1 M2 M3 M1 M2 M3
P1
P1 P1
e.g Roll Roy
P2
P2 P2
P3 P3 P3

4. Selective 5. Global coverage

specialization (mass Mkg)
(individual mkg)
M1 M2 M3 M1 M2 M3
P1 P1 P = Product
e.g Coca Cola
P2 P2
M = Market
P3 P3

© Nathalie Prime
Positioning: The need to build a clear and
motivating personality Hyper competition
(local, international

Positioning is the place (clear, motivating, and Technological

distinctive personality) of the product or brand in the leveling
mind of consumers as compared to competition:
Autonomy of buyer
 according to objective criteria (technological quality, Mass
services associated, selling price…) distribution
 and subjective criteria (image of entreprise, prestige of Drop of commitment
the brand, comparative evaluation of the product with
competing alternatives…) E-commerce
platforms
Defined with Points of Parity (POP) and Points of Advertising
Differentiation (POD) e.g mobile phone vs. Iphone Saturation
A good positioning must be: simple, credible, Proliferation of
differentiating, difficult to imitate, consistent with products and
brands
brand values, and actionable
© Nathalie Prime
 Zara: The affordable trendy
Nike: The surpassing of oneself

Stella
McCartney:
Responsible
luxury

© Nathalie Prime
 International segmentation, targeting and positioning (STP) based on
« consumer acculturation » criteria

International Contents SuitableTarget

positioning
Global Consumer Culture Identifies the brand as a symbol Integrated consumers (global
Positioning (GCCP) of a given global culture brands with local touch, local
e.g Coca Cola brands with global touch)

Local Consumer Culture
Positioning (LCCP))
Foreign Consumer Culture
Positioning (FCCP)
Associates the brand with local
cultural meanings reflecting
local culture’s norms and
identities
Positions the brand as symbolic
of a specific foreign culture
Segregated consumers (and
MNCs tend to buy those local
brands)
Assimilated consumers more global
(standardized global brands with
positive homeland COO effect)

Source: Adapted from Y. Huang (2016), « Global consumer culture positioning (GCCP): review and concepual
framework », Journal of International Business Research, 15(1). © Nathalie Prime
EXAMPLE: Application to the Russian market

Consumer acculturation strategies are defined by…:

1. the relationship to social transformation: exclusion, resistance, acceptance,
adaptation;
2. the identity strategy: anomy, divergence, convergence, hybridization
3. the general and dominant form of consumption: anti-consumption, traditional
consumption, hyper-modern consumption, ecology of life consumption

Source: N. Prime & A. Triers (2012), "The Russian consumer behavior 20 years after the fall of communism: insights from
consumer acculturation theory", Proceedings of the International Marketing Trends Conference, Venice, January 19-21.

© Nathalie Prime
A model of Russian consumer acculturation strategies

Value of maintaining the link with Value of maintaining the link with the Russian tradition
foreign modernity (the past, the old, the Soviet, the pre-modern)
(the future and the new, the West) Weak Strong

Relationship to social
Weak transformation
Identity strategy
Dominant form of consumption
Strong Relationship to social
transformation
Identity strategy
Dominant form of consumption
MARGINALIZATION
Excluded from social transformation
Anomy
Anti-consumption (presentism)
ASSIMILATION
Accept social transformation
Convergence (Westernization)
Hyper-modern consumption
(always more, tailor-made, novelty)
SEGREGATION
Resist social transformation
Divergence (Nostalgia)
Traditionalist consumption (purism)
INTEGRATION
Adapt social transformation
Hybridization (Modernization)
Ecology of life consumption
(products of sustainable development,
harmony) © Nathalie Prime
Marginalized consumers

• Especially from lower socio-economic group (Lavada

Centre, Deflon 2009)

• Feelings of disillusion and distrusts towards the outside

world

• Non-violent or violent / self-destructive coping strategies

• Excluded from social trends

• Anti-consumption behavior

© Nathalie Prime
Segregated consumers

• The Nostalgic consumer claiming for

historical (soviet and Russian) ethnic identity
value (Holak et al, 2007)

• Successful return of long-forgotten historical

brands

• Traditionalist / purist / low price consumption:

E.g. Personal and beauty market:

’100 recipes of beauty’ (Kalina) with Gennady

Malachov as a spokesman (famous chaman, Russian
natural medicine) – Kalina was bought by Unilever and
it has several subrands too.
© Nathalie Prime
Assimilated consumers

• « The new Russian consumer » (Ger and Belk, 1996, Money and Colton, 2000)
• Western materialistic identity
• Earning above average income (>550 USD in Moscow 2007)
• Post-soviet cohort with strong interest in living outside Russia
• Hypermodern consumption (Lipovetsky, 2004) driving international brands :
e.g. Personal and beauty care market: L’Oréal (premium cosmetics, mass media brand, standardized packaging, claims,
ingredients)

© Nathalie Prime
Integrated consumers

• Hybridization : combining both identities by connecting tradition and modernity (« the best of
both worlds »)
• Appreciate natural products in food and cosmetics, and modern retail outlets
• Ecology of life consumption: product of harmony betw. Nature and technology
E.g.: in the personal and beauty care market: Botanic local brands positioning (Chistaya Ninia),
Global brands (Garnier) localizing the format, packaging, spokesperson

© Nathalie Prime
 Plenary CASE discussion

SONY TARGETS LAPTOP CONSUMERS

IN CHINA

Global or local segmentation for

MNCs product launch decision?

53
To CONSOLIDATE your
learning after class

 ABCD Table - Session 3

REVIEW Session 3 set of slides

GROUP BEST SUMMARY on Google Drive: Lessons learnt in Session 3 to prepare for the
exam MCQ

READ White, K., Hardisty, D.J. and Habib, R. (2019), “The elusive green consumer”, Harvard
Business Review, 125-133. --> The green gap --> Intentions/ values --> Buying

© Nathalie Prime