Introduction

Segmentation, g , Targeting, and Positioning

Chapter topics: How to identify like groups of potential customers? How to chose the groups to target? How to segment those groups? How to position the brand in the mind of the customer? 7-2

Global Marketing (Global Edition) Chapter 7

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There are 4.2 Th 4 2 million illi horseback h b k and cart riders in Great Britain
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Market Segmentation
Represents an effort to identify and categorize g groups g p of customers and countries according to common characteristics

Targeting
The process of evaluating segments and focusing marketing efforts on a country, y, region, g , or group g p of people p p that has significant potential to respond Focus on the segments that can be reached most effectively, efficiently, and profitably
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77.5 million dogs are owned in the US. Who owns whom?
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Positioning
Positioning is required to differentiate the product or brand in the minds of the target market.

Global Market Segmentation

Defined as the process of identifying specific segments whether they be country groups or individual consumer groups of potential customers with h homogeneous attributes tt ib t who h are lik likely l to exhibit similar responses to a companys marketing mix
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Contrasting Views of Global Segmentation

Conventional Wisdom Assumes heterogeneity b between countries Assumes homogeneity within a country Focuses on cultural differences at macro level Relies on clustering of national ti l markets k t Less emphasis on within-country within country segments
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Global Market Segmentation

Demographics Psychographics Behavioral characteristics Benefits sought
Skiing became a sport in Norway, where it was invented 4,000 years ago
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Unconventional Wisdom Assumes emergence of segments that transcend national boundaries Recognizes existence of within-country diffs Emphasizes micro level diffs & commonalities Segments g micro markets within and between countries Micro segments based on 7-7 CB are highest priority

Demographic Segmentation

Demographic Facts &Trends

A widening age gap exists between the older populations in the West and the large workingworking age populations in developing countries In the European Union Union, the number of consumers aged <16 is rapidly approaching the number of consumers aged 60+ Asia is home to 500 million consumers aged <16 Half of Japan Japans s population will be age 50 or older by 2025

Income Population Age distribution Gender Education Occupation

What are the trends?
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Segmenting by Income and Population

Income is a valuable segmentation variable 2/3 of f worlds ld GNP i is generated t d in i the th Triad, but only 12% of the worlds population l ti is i in i the th Triad Ti d Do not read into the numbers Some services are free in developing , so there is more purchasing p g power p nations, For products with a low enough price, population is a more important variable
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Psychographic Segmentation
Grouping people according to attitudes, values and lifestyles values, SRI International and VALS 2

Porsche P h example l
Top Guns (27%): Ambition, power, control Elitists (24%): Old money, car is just a car Proud Patrons (23%): Car is reward for hard work B Vi Bon Vivants t (17%): (17%) Car C is i for f excitement, it t adventure Fantasists (9%): Car is form of escape
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VALS (Values and Lifestyles)

Psychographic Segmentation
The Euroconsumer:
Successful S f l Idealists: Id li t
comprises from 5% to 20% of the population consists of persons who have achieved professional and material success while maintaining commitment to abstract or socially responsible ideals

Affluent Materialists:
status-conscious up-and-comers many of whom are business professionals use conspicuous consumption to communicate their success to others
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Psychographic Segmentation
The Euroconsumer (contd):
Comfortable Belongers
25% to 50% of a countrys population conservative most comfortable with the familiar content with the comfort of home, family, friends, and community

Behavior Segmentation
Focus on whether people purchase a product or not, how much, and how often they use it User status Heavy half / Iceberg principle / Law of disproportionality / Paretos Law: 80% of a companys company s revenues are accounted for by 20% of the customers
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Disaffected Di ff dS Survivors i
lack power and affluence harbor little hope for upward mobility tend to be either resentful or resigned g urban inner city y concentrated in high-crime attitudes tend to affect the rest of society
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Product Usage: Heavy Half

LIGHT LIGHT HALF HALF Colas H=22% U=0% H=59% U=0% H=67% U=0% H=27% U=0% H 34% H=34% U=0% H=2% H 2% U=0%
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Benefit Segmentation
Benefit segmentation focuses on the value equation Value l = Benefits/Price f / Based on understanding the problem a product solves, the benefit it offers, or the issue it addresses
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HEAVY HEAVY HALF HALF H=39% U=90%

H=39% U=10% H=20% U=11% H=16% U=12% H=36% U=15% H 33% H=33% U=17% H=49% H 49% U=26%

Bourbon

H=21% U=89% H=17% U=88% H=37% U=85% H 33% H=33% U=83% H=49% H 49% U=74%

Beer

Cake mixes

Power towels

Toilet tissue

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Benefit Segmentation
Benefit segment Principal benefit Demographics Behavioural chars. Brands favoured Sensory
flavour, prod appearance prod.appearance children users of spearmint Colgate, Stripe

Effective Segmentation Criteria

Measurable Substantial Accessible Differentiable Actionable
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Sociables
brightness of teeth teens, young people smokers Macleans, Plus Whit Ultra White, Ult Brite sociability active

Worriers
decay prevention large families heavy users Crest

Independents
price men heavy users brands on sale

Personality chars. Lifestyle chars.

self-involvement hedonistic

hypochondriasis conservative

autonomy value-oriented

Russell Haley, Benefit Segmentation: A Decision-Oriented Research Tool, Journal of Marketing, July 1968, p. 33 7-19
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Assessing Market Potential

Be mindful of the pitfalls p
Tendency to overstate the size and shortterm attractiveness of individual country markets The company doesn doesnt t want to miss miss out out on a strategic opportunity Managements network of contacts will emerge as a primary criterion for targeting
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Assessing Market Potential

Three basic criteria:
Current size of the segment and anticipated growth potential Potential competition Compatibility with companys overall objectives and the feasibility of successfully reaching the target audience
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Current Segment Size and Growth

Is the market segment currently large enough to present a company with the opportunity to make a profit? If the answer is no, , does it have significant growth potential to make it attractive in terms of a companys company s longlong term strategy?
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Potential Competition
Is there currently strong competition in th market the k t segment? t? Is the competition vulnerable in terms of price or quality?

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Feasibility and Compatibility

Will adaptation be required? If so, is this economically justifiable in terms of expected sales? Will import restrictions, high tariffs, or a strong home country currency drive up the price of the product in the target market currency and effectively dampen demand? Is it advisable to source locally? Would it make sense to source products in the country for export g elsewhere in the region? Is targeting a particular segment compatible with the companys goals, brand image, or established sources of f competitive advantage? d
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Framework for Selecting Target Markets

Demographic information is a starting point but not the deciding factor Product-market must be considered
Market defined by product category

Marketing model drivers must be considered

F Factors t required i df for a b business i to t t take k root t and d grow

Are A there th any enabling bli conditions diti present? t?

Conditions whose presence or absence will d t determine i success of f the th marketing k ti model d l
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Product-Market Product Market Profile

9 basic questions for creating a product-market profile: 1. Who buys our product or brand? 2 Who does not buy our product or brand? 2. 3. What need or function does our product serve? Does our product or brand address that need? 4. Is there a market need that is not being met by current product or brand offerings? 5 What problem does our product solve? 5. 6. What are customers currently buying to satisfy the need, or solve the problem, that our product targets? 7. What price are they paying for the product they are currently buying? 8 When is our product purchased? 8. 9. Where is our product purchased? 7-27
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Target Market Strategies

Standardized global marketing
Mass marketing on a global scale Undifferentiated target g marketing g Standardized marketing mix Minimal product adaptation Intensive distribution Lower production costs Lower communication costs
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Target Market Strategies

Differentiated global marketing
Multi-segment targeting Two or more distinct markets Wider market coverage Ex: P&G markets Old Spice and Hugo Boss for Men
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Positioning
Locating a brand in consumers minds i d over and d against i t competitors in terms of attributes tt ib t and db benefits fit that th t th the brand does and does not offer Attribute or Benefit Q Quality y and Price Use or User Competition
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Concentrated global marketing

Niche marketing Single segment of global market Look for global depth rather than national breadth Ex: Chanel, Body Shop
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Positioning Strategies
Global consumer culture positioning
Identifies the brand as a symbol of a particular global culture or segment High-touch and high-tech products

Positioning Strategies
Local consumer culture positioning
Identifies with local cultural meanings Consumed by local people Locally produced for local people Used frequently for food, personal, and household nondurables Ex: Budweiser is identified with small-town America
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Foreign consumer culture positioning

Beer is associated with this Germans culture; the symbol on his shirt is not German!
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Associates the brands users, use occasions, or product origins with a f foreign country or culture l
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Clydesdale = which beer?

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Perceptual Map Beer

Light body

Global Product Positioning

Strategy options:

Miller

Low price
A D

Hamms Schlitz S hlit

#2
Prestige price

Budweiser

#1 #1

strengthen and leverage its current position in minds of consumers (7 (7-Up Up as Uncola) search for new unowned position that is y enough g consumers and grab g it valued by (look for the hole) deposition or reposition the competition Exclusive club strategy - Big Three, Big Eight, Big Ten, etc.
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Heavy body
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Perceptual Map Autos

Global Product Positioning

high-tech positioning: based on concrete product features; buyers typically already possess or wish to acquire i considerable id bl technical t h i l information i f ti high touch positioning: high involvement for high-touch consumers; requires less emphasis on specialized information and more emphasis on image; buyers of high-touch products share common language and set of symbols relating to themes of wealth, materialism, and romance bipolar positioning: both high high-tech tech and high high-touch touch (e.g., Bang & Olufsen consumer electronics)
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