Global Marketing Warren J Keegan Mark C Green

Global Marketing Warren J. Keegan Mark C. Green Segmentation, Targeting, and Positioning Chapter 7 11/25/2020 Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall 1

Introduction • • 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? Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Market Segmentation • Represents an effort to identify and categorize groups of customers and countries according to common characteristics Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Targeting • The process of evaluating segments and focusing marketing efforts on a country, region, or group of people that has significant potential to respond • Focus on the segments that can be reached most effectively, efficiently, and profitably Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Positioning • Positioning is required to differentiate the product or brand in the minds of the target market. Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Global Market Segmentation • Defined as 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. Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Contrasting Views of Global Segmentation • Conventional Wisdom – Assumes heterogeneity between countries – Assumes homogeneity within a country – Focuses on macro level of cultural differences – Relies on clustering of national markets – Less emphasis on withincountry segments • Unconventional Wisdom – Assumes emergence of segments that transcend national boundaries – Recognizes existence of within-country differences – Emphasizes micro-level differences – Segments micro markets within and between countries Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Global Market Segmentation • • Demographics Psychographics Behavioral characteristics Benefits sought Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Demographic Segmentation • • • Income Population Age distribution Gender Education Occupation What are the trends? Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Demographic Facts and Trends • In India the number of people under the age of 14 is greater than the entire US population • In the EU, the number of consumers aged 16 and under is rapidly approaching the number of consumers aged 60 -plus • Asia is home to 500 million consumers aged 16 and under • Half of Japan’s population will be age 50 or older by 2025 Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Demographic Segmentation • A widening age gap exists between the older populations in the West and the large workingage populations in developing countries • In the European Union, the number of consumers aged 16 and under is rapidly approaching the number of consumers aged 60 plus • Asia is home to 500 million consumers aged 16 and under • Half of Japan’s population will be age 50 or older by 2025 Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Segmenting by Income and Population • Income is a valuable segmentation variable – 2/3 s of world’s GNP is generated in the Triad but only 12% of the world’s population is in the Triad • Do not read into the numbers – Some services are free in developing nations so there is more purchasing power • For products with low enough price, population is a more important variable Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Per Capita Income Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

10 Most Populous Countries Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Age Segmentation • Global Teens-between the ages of 12 and 19 – A group of teenagers randomly chosen from different parts of the world will share many of the same tastes • Global Elite–affluent consumers who are well traveled and have the money to spend on prestigious products with an image of exclusivity Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Gender Segmentation • In focusing on the needs and wants of one gender, do not miss opportunities to serve the other • Companies may offer product lines for both genders – Nike, Levi Strauss Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Psychographic Segmentation • Grouping people according to attitudes, values, and lifestyles – SRI International and VALS 2 • Porsche example – – – Top Guns (27%): Ambition, power, control Elitists (24%): Old money, car is just a car Proud Patrons (23%): Car is reward for hard work Bon Vivants (17%): Car is for excitement, adventure Fantasists (9%): Car is form of escape Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Psychographic Segmentation • The Euroconsumer: – Successful Idealist–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 Materialist–Status-conscious ‘up-andcomers’– many of whom are business professionals – use conspicuous consumption to communicate their success to others Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Psychographic Segmentation • The Euroconsumer: – Comfortable Belongers – Disaffected Survivors • 25% to 50% of a country’s population • conservative • most comfortable with the familiar • content with the comfort of home, family, friends, and community • lack power and affluence • harbor little hope for upward mobility • tend to be either resentful or resigned • concentrated in high-crime urban inner city • attitudes tend to affect the rest of society Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Psychographic Segmentation: Sony’s U. S. Consumer Segments Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Behavior Segmentation • Focus on whether people purchase a product or not, how much, and how often they use it • User status • Law of disproportionality/Pareto’s Law– 80% of a company’s revenues are accounted for by 20% of the customers Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Benefit Segmentation • Benefit segmentation focuses on the value equation – Value=Benefits/Price • Based on understanding the problem a product solves, the benefit it offers, or the issue it addresses Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Ethnic Segmentation • Hispanic Americans • The population of – 50 million Hispanic many countries Americans (14% of total includes ethnic groups pop. ) with $978 billion of significant size annual buying power • Three main groups in the U. S. include African-Americans, Asian-Americans, and Hispanic Americans – “$1 trillion Latina” 24 million Hispanic women: 42% single, 35% HOH, 54% working Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Assessing Market Potential • Be mindful of the pitfalls – Tendency to overstate the size and short-term attractiveness of individual country markets – The company does not want to ‘miss out’ on a strategic opportunity – Management’s network of contacts will emerge as a primary criterion for targeting Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Assessing Market Potential • Three basic criteria: – Current size of the segment and anticipated growth potential – Potential competition – Compatibility with company’s overall objectives and the feasibility of successfully reaching the target audience Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

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 company’s long-term strategy? Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Potential Competition • Is there currently strong competition in the market segment? • Is the competition vulnerable in terms of price or quality? Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

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? Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Feasibility and Compatibility • Is it advisable to source locally? Would it make sense to source products in the country for export elsewhere in the region? • Is targeting a particular segment compatible with the company’s goals, brand image, or established sources of competitive advantage? Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Framework for Selecting Target Markets • Demographic information is a starting point but not the decision factor • Product-Market must be considered – Market defined by product category • Marketing model drivers must be considered – Factors required for a business to take root and grow • Are there any enabling conditions present? – Conditions whose presence or absence will determine success of the marketing model Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

9 Questions for Creating a Product-Market Profile 1. 2. 3. 4. 5. 6. 7. 8. 9. Who buys our product? Who does not buy it? What need or function does it serve? Is there a market need that is not being met by current product/brand offerings? What problem does our product solve? What are customers buying to satisfy the need for which our product is targeted? What price are they paying? When is the product purchased? Where is it purchased? Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Target Market Strategy Options • Standardized global marketing – Mass marketing on a global scale – Undifferentiated target marketing – Standardized marketing mix – Minimal product adaptation – Intensive distribution – Lower production costs – Lower communication costs Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Target Market Strategy Options • Concentrated global marketing – Niche marketing – Single segment of global market – Look for global depth rather than national breadth – Ex. : Chanel, Estee Lauder • 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 Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

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 • Foreign consumer culture positioning – Associates the brand’s users, use occasions, or product origins with a foreign country or culture Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

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 – – Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall

Looking Ahead to Chapter 8 Importing, Exporting, and Sourcing Copyright 2013, Pearson Education Inc. , Publishing as Prentice-Hall