Q1. ( Two parts in this question A and B)
- Demonstrate the international market segmentation process. To answer this part, Part A, include these points
- What do you understand by the term ‘Market segmentation’.
- What is the purpose of segmentation in international marketing?
- Demonstrate three approached to demographic segmentation?
- What do you understand by the term ‘psychographic segmentation?
- What do you understand by the term ‘benefit segmentation
- Demonstrate behavioral segmentation for a product of your choice
- Demonstrate with example ethnic segmentation
- What does ’IMS’ stand for?
- Demonstrate the first step of this process in selecting appropriate variables
- Describe a technique for screening variables
- What is targeting?
- What is positioning?
- Describe the options for organizations in terms of expansion of their market strategies?
- Evaluate a segmentation approach used by an international company of your choice. Use star bucks, for example, refer to this for information on Starbuck
The global environment must be analyzed before a company pursues expansion into new geographic markets. Through global market segmentation, a company can identify and group customers or countries according to common needs and wants. Market segmentation divides a population or market into groups with one or more common characteristics:
- Demographic segmentation: based on measurable characteristics of populations – income, population size, age, gender, occupation. A number of global demographic trends have resulted in global market segments.
- Segmenting by income & population: discuss how marketers must be careful when using income, population, and other macro-level data because they may underestimate a market’s potential if using averages alone.
- Segmenting by age: Marketers need to be aware of two global segments – Global teens and the global elite.
- Segmenting by gender
- Psychographic segmentation: involves grouping people in terms of their attitudes, values, and lifestyles. Data is obtained from questionnaires e.g The research group DMBB identified four lifestyle groups (Successful idealists, affluent materialists, comfortable belongers, and disaffected survivors).
- Benefit segmentation: focuses on the value equation e.g. marketers developing new toothpaste brands as consumers care more about whitening, gum disease, etc.
- Behavior segmentation: focuses on whether or not people buy and use a product, as well as how often and how much they use and consume.
- Ethnic segmentation: The population of many countries includes ethnic groups of significant size.
- New segmentation approaches: are being developed in response to today’s rapidly changing business environment. e.g. internet causes commonality among global consumers.
International Market segmentation process
- Select segmenatation criteria
- Development of appropriate segments. Discuss variables that can be used from general characteristics (geography, language, political factors, etc.) to specific characteristics (lifestyle personality, etc.)
- Screening of segments to narrow down the list of markets/countries: Discuss preliminary and fine-grained screening using a reference to Businesses environment risk index, the market attractiveness/competitive strength matrix.
- Microsegmentation: develop segments in each qualified country: Discuss variables to be used, factor analysis, cluster analysis. A screening example can be seen on page 175 Hollensen
After marketers have identified segments, the next step is targeting: The identified groups are evaluated and compared, and one or more segments with the greatest potential are selected from them. The groups are evaluated on the basis of several factors, including segment size and growth potential, competition, and compatibility and feasibility. Target market assessment also entails a thorough understanding of the product market in question and determining marketing model drivers and enabling conditions in the countries under study.
The timing of market entry should take into account whether a first-mover advantage is likely to be gained. After evaluating the identified segments, marketers must decide on an appropriate targeting strategy. The three basic categories of global target marketing strategies are standardized global marketing, niche marketing, and differentiated multisegment marketing.
Positioning a product or brand to differentiate it in the minds of target customers can be accomplished in various ways: positioning by attribute or benefit, positioning by quality/price, positioning by use or user, and positioning by competition. In global marketing global consumer culture positioning (GCCP), foreign consumer culture positioning (FCCP), and local consumer culture positioning (LCCP) are additional strategic options.