Segmentation, Targeting, and Positioning

Segmentation, Targeting, and Positioning

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Global Marketing

Chapter 7

Market Segmentation

Represents an effort to identify and categorize groups of customers and countries according to common characteristics

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Targeting

The process of evaluating segments and focusing marketing efforts on a country, region, or group of people that has significant potential to respondFocus on the segments that can be reached most effectively, efficiently, and profitably

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Positioning

Positioning is required to differentiate the product or brand in the minds of the target market.

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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.

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Contrasting Views of Global Segmentation

Conventional WisdomAssumes heterogeneity between countriesAssumes homogeneity within a countryFocuses on macro level of cultural differencesRelies on clustering of national marketsLess emphasis on within-country segmentsUnconventional WisdomAssumes emergence of segments that transcend national boundariesRecognizes existence of within-country differencesEmphasizes micro-level differencesSegments micro markets within and between countries

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Global Market Segmentation

DemographicsPsychographicsBehavioral characteristicsBenefits sought

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Demographic Segmentation

IncomePopulationAge distributionGenderEducationOccupationWhat are the trends?

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Age Segmentation

Global Teens–young people between the ages of 12 and 19A group of teenagers randomly chosen from different parts of the world will share many of the same tastesGlobal Elite–affluent consumers who are well traveled and have the money to spend on prestigious products with an image of exclusivity

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Gender Segmentation

In focusing on the needs and wants of one gender, do not miss opportunities to serve the otherCompanies may offer product lines for both gendersNike, Levi Strauss

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Psychographic Segmentation

Grouping people according to attitudes, values, and lifestyles Porsche example from SRI InternationalTop Guns (27%): Ambition, power, control Elitists (24%): Old money, car is just a carProud Patrons (23%): Car is reward for hard workBon Vivants (17%): Car is for excitement, adventureFantasists (9%): Car is form of escape

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Behavior Segmentation

Focus on whether people purchase a product or not, how much, and how often they use itUser statusLaw of disproportionality/Pareto’s Law–80% of a company’s revenues are accounted for by 20% of the customers

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Benefit Segmentation

Benefit segmentation focuses on the value equationValue=Benefits/PriceBased on understanding the problem a product solves, the benefit it offers, or the issue it addresses

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Ethnic Segmentation

The population of many countries includes ethnic groups of significant sizeHispanic Americans40+ million Hispanic Americans (14% of total pop.) with $560 billion annual buying powerCA Mexicans have after-tax income of $100 billionThe number of Hispanic teens will rise from 12 percent of the U.S. teen population to 18 percent in the next decade

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Target Marketing Strategies

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Concentrated Marketing

The focus is acquiring a large share of one or a few segments of niches.Generally, there are fewer competitors.The Internet is ideal for targeting small niche markets.There is some risk in focusing on only one market.

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Target Market Strategy Options

Concentrated global marketingNiche marketingSingle segment of global marketLook for global depth rather than national breadthEx.: Chanel, Body ShopDifferentiated global marketingMulti-segment targetingTwo or more distinct marketsWider market coverageEx.: P&G markets Old Spice and Hugo Boss for Men

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Differentiated/ Multi segment Marketing

Firm targets several market segments and designs separate offers for each.The goal is to have higher sales and a stronger position with each market segment.This approach increases the costs of doing business.

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Positioning

Locating a brand in consumers’ minds over and against competitors in terms of attributes and benefits that the brand does and does not offerAttribute or BenefitQuality and PriceUse or UserCompetition

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Positioning Map

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Positioning Strategies

Global consumer culture positioningIdentifies the brand as a symbol of a particular global culture or segmentHigh-touch and high-tech productsForeign consumer culture positioningAssociates the brand’s users, use occasions, or product origins with a foreign country or culture

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Beer is associated with this German

’

s culture; the symbol on his shirt is not German!

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Positioning Strategies

Local consumer culture positioningIdentifies with local cultural meaningsConsumed by local peopleLocally produced for local peopleUsed frequently for food, personal, and household nondurables

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Importing, Exporting, and Sourcing

Global Marketing

Chapter 8

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25Introduction

This chapter looks at:

Export selling and export marketing

Organizational export activities

National policies on imports and exports

Tariff systems

Key export participants

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Export selling involves selling the same product, at the same price, with the same promotional tools in a different place

Export marketing tailors the marketing mix to international customers

Export

Selling vs. Export Marketing

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Requirements for Export Marketing

An understanding of the target market environment

The use of market research and identification of market potential

Decisions concerning product design, pricing, distribution and channels, advertising, and communications

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National Policies Governing Exports and Imports

Most nations encourage exports and restrict imports

Goods and services imported into the U.S. almost doubled in seven years

In 2008, the total was $2.5 trillion

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Government Programs that

Support Exports

Tax incentives

Subsidies

Governmental assistance

Free trade zones

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Governmental Actions to Discourage Imports and Block Market Access

Tariffs (

“

Three R

’

s

”

)

Nontariff barriersQuotas

Discriminatory procurement policies

Restrictive customs procedures

Arbitrary monetary policies

Restrictive regulations

Port Authority of Thailand:

Laem

Chabang

Examples of Trade Barriers

Table 8.3 p. 277EU- 16.5% antidumping tariffs on Shoes from China10% on shoes from VietnamChina- 28% on foreign made auto parts

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Governmental actions to discourage imports

A nontariff trade barrier (NTB) is any measure other than a tariff that is an obstacle to the sale of products in a foreign market. NTBs are also known as hidden trade barriers. A quota is a government-imposed limit or restriction on the number of units or the total value of a particular product or product category that can be imported. In

2005, for example, textile producers in Italy and other European countries were granted quotas on 10 categories of textile imports from China

.

Discriminatory procurement policies

can take the form of government rules and administrative regulations

that give local vendors priority.

The

Buy American Act of 1993

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33Tariff Systems

Single-column tariff

Simplest type of tariff

Schedule of duties in which rate applies to imports from all countries on the same basis

Two

-column tariff

General duties plus special duties apply

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34Tariff Systems

Sample Rates of Duty for U.S. Imports

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35Preferential Tariff

Reduced tariff rate applied to imports from certain countries

GATT prohibits the use, with three exceptions:

Historical preference arrangements already existed

Preference is part of formal economic integration treaty

Industrial countries are permitted to grant preferential market access to LDCs

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Customs Duties

Ad valorem duty

Expressed as percentage of value of goods

Specific duty

Expressed as specific amount of currency per unit of weight, volume, length, or other unit of measurement

$1 per pair of

Shoes

1000 Baht per ton of the goods imported

Compound or

mixed duties

Apply both ad valorem and specific on the same items

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Other Duties and Import Charges

Anti-dumping Duties

Dumping is the sale of merchandise in export markets at unfair prices

Special import charges equal to the dumping margin

48.5% added to tax against Chinese imports of bicycles in EU

Countervailing Duties

Added duties to offset the subsidies granted in the export countries

Temporary Surcharges

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Key Export

Participants (Self Study)

Foreign purchasing agents

Export brokers

Export merchants

Export management companies

Export distributor

Export commission representative

Cooperative exporter

Freight forwarders

Manufacturer

’

s export representatives

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Organizing for Exporting in the Market Country

Direct market representation

Advantages: control and communications

Representation by independent intermediaries

Advantages: best for situations with small sales volume

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Export Financing and

Methods of Payment

Documentary credits

(

Letter

of

Credit

)

Documentary collections

(

Bill

of

Exchange

)

Cash in advance

Sales on open account

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Flow Chart of

Documentary Credit

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Sourcing

Must emphasize benefits of sourcing from country other than home country

Must assess vision and values of company leadership

Advantage can be gained by

Concentrating some of the marketing activities in a single location

Leveraging company

’

s know-how

Tapping opportunities for product development and R&D

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46Factors that Affect Sourcing

Management vision

Factor costs and conditions

Customer needs

Logistics

Country infrastructure

Political risk

Exchange rate, availability, and convertibility of local money

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47Duty Drawback

Refunds of duties paid on imports that are processed or incorporated into other goods AND re-exported

Reduce the price of imported production inputs

Used in the U.S. to encourage exports

After NAFTA, U.S. reduced drawbacks on exports to Canada and Mexico

China had to reduce drawbacks in order to join the WTO

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48Looking Ahead to Chapter 9

Global Market Entry Strategies: Licensing, Investment, and Strategic Alliances