JOHANSSON - chap (11)

8/7/2019 JOHANSSON - chap (11)

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Global Segmentation andPositioning

C h

a p

t e r

11

© 2006 The McGraw-Hill Com anies Inc. All ri hts reserveMcGraw-Hill Irwin



Outline

The Managerial Context

Micro-Segmentation

Macro-segmentation

Targeting Segments

Global Product Positioning

Global S-T-P Strategies

Takeaways.



The Global Marketer’s Mindset

The typical context for globalized marketing is not the

usual “close to customer” mindset.

Rather, the point is usually to coordinate marketingactivities across a wide variety of markets where the

firm does business.

A top-down approach easily leads to insensitivitytowards local customers and local requirements, and

conflicts with local subsidiaries.



1. Selling orientation – sell what we make, the

product line is given.

2. Standardization of products as much as

possible.

3. Coordination via new reporting lines to

make sure everyone is on board.

4. Centralization of the marketing effort to

make sure all speak the same language.

e Global Marketer: Customer-oriente



The Global Marketer’s Mindset

Because of the natural inclination to ignore local

variations in customer preferences and local

requirements, global marketing can easily lead to mis-

positioned products and inappropriate promotional appeals.

It can also, of course, lead to local resistance and

animosity, not good considering anti-globalization and

anti-Americanism sentiments.The key is to strike the optimal balance between local

adaptation and global efficiency.



Segmentation-Targeting-Positioning

The typical way of approaching global marketing

strategy is similar to the so-called S-T-P framework:

1. Segmentation – the splitting up of the total market

into segments of more homogeneous subgroups.2. Targeting – the selection of which one(s) of these

subgroups the company should market its product to.

3. Positioning – exactly how the company should present

the product to the target market(s) so its perception is

most advantageous relative to competition.



Two-Stage Global Segmentation

It is common to distinguish two stages of global segmentation

1. Macro-segmentation – the division of a number of countries into

subgroups of more similar clusters

2. Micro-segmentation – the identification of local segments which

are similar across the countries in a cluster.

The micro-segmentation techniques used in domestic markets are

also useful in global segmentation.



TYPICAL SEGMENTATION CRITERIA

• Economic - the most basic local segmentation criterion is still

economic development

• Demographic - the age and family structure in different countriesplay an important role in determining global segments

• Culture - people care about their identify even though a lot has

been said in the media about the emergence of global segments of

people

• Benefits - the most clear cut segmentation criteria focus on the

benefits sought

• Lifestyle – consumers start developing their own lifestyle with

buying behavior involving more than simple necessities

Micro-Segmentation



WHICH CRITERIA SHOULD YOU USE TO SPLIT UP THE MARKET?

Useful segmentation criteria must accomplish three

goals:

1. Should show us what influences the segment’s

buying behavior , both consumption level and choice

between competing brands

2. Should be reflected in published data so that the size

of the segment can be calculated

3. Should help identify the media through which

marketers can communicate with the segment

Micro-Segmentation



WHEN DO YOU HAVE A GOOD SEGMENTATION SCHEME?

Useful market segments possess these characteristics:

• IDENTIFIABLE – what distinguishes them?

• MEASURABLE – how many belong to each segment?

• REACHABLE – how to distribute to, communicate to,

each segment?

• ABLE TO BUY – can they afford it?

• WILLING TO BUY – do they want it?

Micro-Segmentation



MACROSEGMENTATION – clustering of countries on the basis of

common characteristics deemed to be important for marketing

purposes, e.g. data on:

• Population size

• Population character

• Disposable income levels

• Educational background• Primary languages

•Level of development

• Rate of growth in GNP

• Infrastructure

• Political affiliation

Macro-Segmentation



Factor number

Name and number of descriptors

Selected descriptors

I. Aggregate economic, of level of development (47)

Gross national product, radios in use,passenger kilometers flown.

II. Population size (31) Total midyear population

III. Personal economic, or

standard of living (32)

Income per capita, newsprint consumption

per capita, birth rate (negatively related)IV. Canada—conditions on which

Canada ranks highest (12)Newsprint production, visitor arrivals inthe U.S. geographic area

V. Linguistic affinity (10) Adults who read English or speak it

VI. YC—Code for privatedescriptors (11)

Brand and industry sales of a consumer product, number of Roman Catholics

VII. International participation (22) Membership in international organizations ,

foreign tourist arrivals, airfare to TokyoVIII. Trade capacity (12) Exports, number of Protestants

IX. Climate or price stability (10) Sunny days per year, temperatureof key city, price index (negative)

X. Mortality (5) Infant death rate, number o f Moslems

Typical Macro-Segmentation Criteria



0

.9

.8

,7

.6

.5

.4

.3

.2

.1

0

-.1

-.2 -.1 0 .1 .2 .3 .4 .5 .6 .7 .8 .9 1.0

•SOT

• UKINOR •

• SWE

• DEN

FIN•

• SWI

• AUS

•NET

•GER

•NEZ

• BEL

• AUT

•COL

• CHI• VEN• SPA

• BRA

• PER•MEX

PUE • •FRA

ITA•

•ARG

PHI •

• THI

• ISR

• JAP

• MAC

• IND

•PAK

Factor VI Religion

TUR•

Protestant

Catholic

Factor III

Standard of Living

Macro-Segmentation on Standard of Living and Religion



Macro-Segmentation on “Think” and“Feel” Dimensions



TRADITIONALIST 18%

HOMEBODY 14%

RATIONALIST 23%

PLEASURIST 17%

STRIVER 15%

TRENDSETTER 13%

6 PAN-EUROPEAN LIFESTYLE SEGMENTS

Relative size of segments in percent, of the

European Market, as developed by the RISC

research agency

Macro-Segmentation Based on Lifestyle



Targeting Segments

The choice of which countries and which segment(s) totarget involves an analysis of projected profitability overthe planning horizon.

The basic computation involves forecasting sales in a

segment and the market share that the firm can expect toachieve. These techniques were covered in theforecasting chapter (no.4).

Predicting competitive reactions is also necessary,

especially if the target segment is likely to be brand loyal.The choice of target countries should also consider the

tradeoff between focus and diversification.



Targeting Segments

Diversification versus Focus StrategyDiversification Strategy

In developing a global strategy, some companies make a

conscious effort to be a player in different countries and

different market segments. Difficulties in one market segment

or country can be offset by gains elsewhere.

Focus Strategy

Markets and segments can be given more attention and

markets positions fortified. This is particularly advantageouswhen the country or segment competitive rivalry is intense (see

hyper-competition in chapter 2, for example).



Factors Diversity if: Focus if:

Growth rate Low High

Demand stability Low HighCompetitive lag Short Long

Spillover High Low

Need to adapt product Low High

Need to adapt promo Low High

Marginal sales Diminishing Increasing

Need for control Low High

Entry barriers Low High

Diversification vs Focus




Product Positioning involves using the marketing mix

(the 4Ps) to present the product to the selected target

market(s) so that it is perceived in the most favorable

way relative to preferences and competition.

To identify the optimal position, global marketing draws

on the same techniques as domestic marketers in

mapping out a visual representation of how the

customers view the competing brands on the market.

This visual mapping is usually called “perceptual space”

or, more commonly, the “product space.”



Mercury

Cougar

Ford Mustang

Plymouth

Barracuda

AMC Javelin

SPORTY

LUXURIOUS

Jaguar Sedan

Ford Thunderbird V8

Buick Le Sabre

Lincoln

Continental

Chrysler

Imperial

Chevrolet

Corvair

Ford Falcon

Ideal point for subject I

Ideal point for subject J

U.S. Product Space of Autos 1968



Salient Attributes - data on what attributes a customer looks for in a

product

Evoked Set - identifying what brands are considered by the buyer

Attribute Ratings - how the individual rates the brands in the evokedset on salient attributes

Preferences - how the brands rank in terms of overall preferences

Four sets of data to construct the product space




Oldsmobil

e

Cadillac

MercedesBuick

Has a touch of class. Distinguished looking

BMW

Pontiac

Plymouth VW

Porsche

Ford

Sporty

looking

.

Fun todrive.

Appeals to

older people

Conservative

looking

Very practical. Gives good gas mileage.

Toyota

DatsunChevrole

t

Dodge

Chrysler

Lincoln

4 5

3

2

1

Product Space with Segment Sizes




THERE ARE THREE DIFFERENT EFFECTS ON BUYERS WHEN A

GLOBALLY STANDARDIZED PRODUCT OR BRAND IS

INTRODUCED ON A LOCAL MARKET:

1. THE NEW BRAND SIMPLY TARGETS ONE UNTAPPED

SEGMENT.

2. THE PRODUCT SPACE IS ALTERED, BY ADDING

DIMENSIONS OR EXTENDING ENDPOINTS.

3. BUYER PREFERENCES ARE CHANGED.

IN PRACTICE, ALL THREE PROCESSES ARE OFTEN AT WORK

SIMULTANEOUSLY.




IT IS RARE THAT CUSTOMERS’ PERCEPTIONS REMAIN

UNCHANGED WHEN A GLOBALLY STANDARDIZED PRODUCT

ENTERS THE MARKET.

EXTENDED PRODUCT SPACE THIS OCCURSWHEN

GLOBALLY STANDARDIZED PRODUCTS OFFER MORE OF

THE SALIENT FEATURES DESIRED. THE NEW FEATURES

TEND TO ENLARGE THE SPACE WHICH DEFINE THE

PRODUCT. (EX: MORE MEMORY IN PCs) ADDED DIMENSIONS THIS OCCURS WHEN THE

GLOBALLY STANDARDIZED PRODUCT OFFERS IMPORTANT

NEW FEATURES (EX: CAMERA ON A CELL-PHONE)



Datsun

200SX

Honda

Accord

VW Rabbit Toyota

Celica

ECONOMY

PERFORMANCE

BMW 320i

Mazda

Chevrolet

Citation Ford

Mustang

Audi 4000

Chrysler K-

car

Overall Rating

Honda Accord Extends the ProductSpace




WHEN PRODUCTS ARE STANDARDIZED AND NOT ADAPTEDTO THE PARTICULAR MARKET, THEY ARE OFTEN“MISPOSITIONED” (NOT HITTING THE TARGET BULLSEYE).

THERE ARE THREE REASONS WHY CONSUMERS MIGHTSTILL BUY MISPOSITIONED PRODUCTS:

BRAND IMAGE

COUNTRY OF ORIGIN LOWER PRICE



Brand Image

MISPOSITIONED PRODUCTS CAN BE ATTRACTIVE TO

POTENTIAL CUSTOMERS BECAUSE OF BRAND IMAGE AND

STATUS . GLOBAL BRANDS OFTEN DO BETTER THAN LOCAL

BRANDS THAT MAY BE BETTER SUITED TO CUSTOMER NEEDS FOR THAT AND OTHER REASONS:

CONSPICUOUS CONSUMPTION --LET EVERYONE SEE

WHAT YOU BUY AND HOW MUCH YOU BUY.

LOWER PERCEIVED RISK AND COGNITIVE DISSONANCE-- WHEN GIVING A GIFT, FOR EXAMPLE



Country-of-Origin

WHERE A PRODUCT OR BRAND COMES FROM OFTEN

COUNTS A GREAT DEAL WITH CONSUMERS.

COUNTRY-OF-ORIGIN EFFECT DEALS WITH QUALITY

PERCEPTIONS OF PRODUCTS. THIS EFFECT DIFFERS BYPRODUCT CATEGORY. ALSO, THE QUALITY LEVEL AT

WHICH A COUNTRY PRODUCES IS FACTORED IN.

COUNTRY-OF-ORIGIN BIAS CUSTOMERS TEND TO

OVERSTATE THE POSITIVE AND NEGATIVES OF PRODUCT

ATTRIBUTES AND THIS CAN CAUSE A BIAS TOWARDSPRODUCTS FROM A GIVEN COUNTRY.



Lower Price

THROUGH A REDUCED PRICE , A CUSTOMER IS OFTEN

INDUCED TO BUY A MISPOSITIONED BRAND BECAUSE

THEY FEEL THAT THEY AR GETTING A “GOOD DEAL.”

HOWEVER, THIS CAN BACKFIRE ON THE MARKETER,

SINCE THE PRICE PAID GRADUALLY LOSES

SALIENCE, WHILE THE LESS DESIRABLE BRAND

STAYS AS A REMINDER.




Market Segmentation CasesSimilar SegmentThe target segment is the same across countries

Different Segment

The target segment differs across countries

Product Positioning DimensionsSimilar PositioningIndicates a positioning which is the same across countries

Different PositioningIndicates that the positioning theme is adapted across

countries.



NikeIKEA

Mobile phones

Honda Prelude

Levi’sVolvo

Pampers

Similar

Different

Similar Different

Local Micro-Segment

Positioning




Because global marketing involves coordination of marketing

across countries, the mindset of the global marketer is

different from that of the typical domestic marketer.

It is not as customer oriented in any one local market..

It is important to strike the right balance between a global and

local orientation.

Takeaway



The typical approach to global segmentation occurs in

two stages:Macro-segmentation of countries in a first stage,

followed by

micro-segmentation where target segments in the chosencountries are identified.

Takeaway



Statistically based clustering techniques can be used

with trade regions to group the countries into macro-segments of markets with similar economic & cultural

characteristics.

Takeaway



Successful local positioning of a product or brand requires an

in-depth analysis of how the local market might react to theentry of a foreign or global brand.

Takeaway



Takeaway

Even if the target segments are the same across countries,

positioning may differ. And even where the positioning is thesame across countries, the segments might differ.

The reasons involve differing environmental conditions

surrounding product usage and different competitive

situations.

JOHANSSON - chap (11)

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