Unit 3 - Global Segmentation and Positioning Strategies
UNIT 3 - GLOBAL SEGMENTATION AND POSITIONING STRATEGIES
A. Introduction
S-T-P Framework: segmentation-targeting-positioning
Segmentation: identify possible segmentation variables (demographics, lifestyle, buying behavior)
Targeting: decide which segment(s) to select
Positioning: decide what image to invoke and call for development of a marketing mix strategy
B. Standardization vs. adaptation
Standardization:
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« lower prices - economies of scale in manufacturing, distribution and promotion costs
« fund new product development programs to enhance competitive position
« transfer of know-how and best practices
« develop a global corporate and brand image
« savings on global communication campaigns
« lower prices that ‘trade-off’ cultural influences will foster the development of globalization of markets
« easier to coordinate and control the international operations via uniform standards
Adaptation
û Differences in customers patterns and buying behavior
û Differences in competitive environment
û Differences in Government relations and standard
û Media and distribution channels varies
Need product modification: diff. customer preference; diff. usage conditions; diff. standards and regulations; linguistic difference and calibration systems.
Adjustment in communication strategy: diff. in media infrastructure; variations in reach, media availability, media regulations or costs
Ø The question is NOT whether or not to standardize, is the matter of DEGREE
Ø Need the balance off the benefits of “degree of modification” vs. the “adaptation costs”
Ø Standardization or customization are not mutually exclusive strategies – middle-of-the-road approach
C. Reasons for international market segmentation
Customers differ in their needs, wants, preferences, perceptions and/or buying attitudes
ð Most companies will segment their market and pick the segment that look most attractive
6 Principles from perspective of international marketer:
1. Measurable : lack of reliable, accurate info.
2. Sizeable : segment is consolidated across countries, become large enough
3. Accessible : media and distribution infrastructure
4. Actionable
5. Differentiable
6. Competition : if have been pre-empted by competition in one country
might still be up for grabs in other countries
D. International market segmentation approaches
1. Marco-level
Ø Based on buyer behavior: buying power, education, lifestyle, demographics etc.
Ø Rarely useful for international marketers : not clear which variables to include / ignore
Ø Unstable grouping : diff. groupings as a result of diff. variables included
2. Criteria development – preliminary screening – micro-segmentation
Ø Set criteria, thresholds on certain variables, examine the countries by screening the thresholds, then do micro-segmentation
Ø Focus on consumers in individual countries, know the commonalities and dissimilarities across countries
International market segmentation scenarios
Universal segments
¨ Segments transcend national boundaries
¨ Global teenager, global elites and ethnic groups
Regional segments
¨ Similarity in customer needs and preferences arise at regional level
¨ Need to decide the extent you want to differentiate your marketing mix strategies:
¨ Undifferentiated marketing strategy - economies of scale, suit high-tech companies
¨ tailor-made marketing strategies - cope with minor variations in local market conditions
Diverse segments
¨ substantial gaps in customers needs between countries – hard to derive cross-border segments
¨ need to be localized
¨ e.g. food industry : intrinsic taste preferences
E. Bases for global market segmentation
Major segmentation variables:
Ø Demographics: teenagers – a global customer group
Ø Socioeconomic variables
Ø Lifestyle and behavior-based variables
F. Global positioning strategies
Kotler - positioning : ‘act of designing the company’s offer and image so that it occupies a distinct and valued place in the target customer’s minds’
Global marketer – what extent a uniform positioning strategy could be used
Uniform positioning strategy : target customer are very similar in shared values and buying patterns worldwide
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B891/Gp 5/Oct1999/TUT2