Subject :- International MarketingCourse :- MBA(III)rd semFaculty :- Ms. Parul Gupta

International market segmentation and positioning

Introduction

In global marketing, market segmentation becomes especially critical because of wide divergence in cross-border consumer needs and lifestyles.

Most companies will identify and target the most attractive market segments that they can effectively serve.

Once the management has chosen its target segments, management needs to determine a competitive positioning strategy for its products.

Bases for Global Market Segmentation

Properties of International Market Segments

Segments ideally should possess the following set of properties:1. Identifiable2. Sizable3. Accessible4. Stable5. Responsive6. Actionable

Requirements for effective segmentation

1. Measurability Degree to which size, purchasing power and profits of a market segment can be measured.

2. Accessibility Degree to which a market segment can be reached and served.

EnvironmentalVariables

EnvironmentalVariables

MarketingManagementVariables

MarketingManagementVariables

GeographicVariables

GeographicVariables Political

Variables

PoliticalVariables Economic

Variables

EconomicVariables Cultural

Variables

CulturalVariables

PromotionVariables

PromotionVariablesProduct

Variables

ProductVariables Price

Variables

PriceVariables Distribution

Variables

DistributionVariables

Bases for InternationalMarket Segmentation

Bases for InternationalMarket Segmentation

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3. Substantiality Degree to which a market segment is sufficiently large or profitable.4. Actionability Degree to which effective programmes can be designed for attracting and serving the

given market segment.

Reasons for International Market Segmentation

1. Country Screening2. Global Market Research3. Entry Decisions4. Positioning Strategy5. Resource Allocation6. Marketing Mix Policy7. Balance between standardization and customization

Market segmentationResearch based exercise that incorporates several stages:1. Qualitative research Exploratory techniques to determine motivations and attitudes.2. Quantitative research Structured questionnaire to gain information.3. Analysis Factor and cluster analysis. Automatic Interaction Detection and conjoint analysis.4 Validation Statistical validation.5. Profiling Distinguishing attitudes and behaviours.

Levels of market segmentation

Mass marketing Assumes market is homogenous and uses the same product, promotion and distribution to all consumers.Segment marketing Adapting a company’s offerings so they more closely match the needs of one or more segments.Niche marketing Adapting a company’s offerings to match the needs of one or more sub-segments more closely where there is little competition.Micro marketing Marketing programmes tailored to narrowly defined geographic, demographic, psychographic behavioural segments.

Micro marketing1. Local Marketing Tailoring brands and promotions to the needs and wants of local customer groups.2. Individual marketing Tailoring products and marketing programmes to the needs and preferences of individual customers.3. Mass customisation Preparing individually designed products and communication on a large scale.

Market segmentation

There is no single way of segmenting a market. Different market segmentation variables to develop the most effective segmentation method. Major variables used are geographic, demographic, psychographic and behavioural.

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Corporate Insight

PEARS(HLL Product)

Selecting an undeserved segment and creating differential advantage

Brand Name :- Pears Junior

Segmentation 1Geographic segmentationDividing a market into different geographical units such as countries, states, regions, towns.

Demographic segmentation Age and life-cycle segmentation. Ethnic segmentation. Gender segmentation. Income segmentation.

Geo-demographicsStudy of relationship between geographical location and demographics.

Segmentation (2)Psychographic segmentationSocial classLifestyleYoung and Rubican’s Cross-Cultural Consumer characterisation:

The constrained: limited by income, can be ‘resigned poor’ or ‘struggling poor’.The middle majority: ‘aspirers’ and ‘succeeders’.

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The innovators: ‘transitionals’ and ‘reformers’.

Behavioural segmentation Markets segmented based upon consumer knowledge, attitude, use or response to a product. Occasion segmentation Benefit segmentation User status Usage rate Loyalty status Buyer readiness stage Attitude towards product

Corporate Insight

YAMAHA MOTORS INDIA Ltd.

Benefit based and geography based segmentation consumer market

Band Name :- The Four Stroke 106cc CRUX

Benefit segmentation of the toothpaste market

Corporate Insight

INDIAN CAR MARKET

Use of behavioral segmentation in the consumer market TNS identified six need based segments in Indian

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Automotive sector1. Potency buyers2. Utility buyers3. Prestige buyers4. Adventure buyers5. Status buyers6. Liberation buyers

Segmenting business markets

Illustration no. 1Recent study by Signode Corporation (industrial packaging division)revealed the following four types of buyers:1.Programmed buyersView products as not very important to their business. Pay full price and accept little service. Highly profitable.2.Relationship buyersView products as moderately important. Small discounts and good profitability. Modest amount of service.3.Transaction buyersView products as very important to their business. Large discounts for volume. Well informed on products and competitor products.4.Bargain huntersDemand highest service and biggest discounts. Volume customers though not very profitable.

Corporate insight

HDFC BANK

Segmenting organisational market bon the basis of company size

Product :- Corporate Credit Card for SME

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Brand Name :- HBFC Bank Power Plus Business Card

Multivariate segmentation

Companies generally integrate ways of segmentation in the following manner:1.Simple multivariate segmentation

Gender and age2.Advanced multivariate segmentation

Geodemographic, lifestyle as well as behavioural3.Multistage segmentation

Use a combination of macro and micro segmentation.

International Targeting

Features Undifferentiated global market stg.

Concentrated global mkt. stg.

Differentiated global mkt. stg.

No. of market segments

Multiple Single Multiple

Marketing Mix Single Single MultipleNiche marketing segments

Ignored Not Applicable Detailed

Sales Moderate Limited Large

POSITIONING

Product PositioningStrengthen a brand’s current position in the mind of the consumers.Search for a new unoccupied position that is valued by enough consumers and occupy that. De-position or re-position the competition.

Choosing and implementing a positioning strategy Ad man Rosser Reeves states that every company should have a unique selling proposition (USP). The USP is the unique product benefit that a firm aggressively promotes in a consistent manner to its

target market. The benefit usually reflects functional superiority: best quality, best services, lowest price, most advanced technology.

Difficulty of maintaining functional superiority forces firms to attempt a more emotional influence by developing an emotional selling proposition (ESP).

Corporate Insight

HMSI (HONDA MOTORCYCLE AND SCOOTER INDIA)

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Gender oriented Positioning :- For womenBrand Name :- Honda Activa and Dia

HLL(HINDUSTAN LEVER LIMITED)

Benefit based PositioningBrand Name :- Clinic Plus Shampoo

Common and serious positioning errors Under-positioning A positioning error referring to failure to position a company, its product or brand.Over-positioning A positioning error referring to too narrow a picture of the company, its products or a brand being communicated to target customers.Confused positioning Leaves consumers with a confused image of the company, its product or brand.Implausible positioning Making claims that stretch the perception of the buyers too far to be believed.

Essential criteria to accomplish a good positioning strategy

1. Features and benefits must be important to the consumer.2. Must be distinctive from the competition.3. Must deliver superior quality or service.4. Difference must be communicable and visible to buyers.5. Pre-emptive and competitors unable to replicate.6. Affordable7. Profitable

International Positioning Strategies

Identify the relevant set of competing products or brands. Determine current perceptions held by consumers about your product/brand and the

competition. Develop possible positioning themes. Screen the positioning alternatives and select the most appealing one Develop a marketing mix strategy. Over time, monitor the effectiveness of your positioning strategy and if needed, conduct an

audit.

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Corporate Insight

CENTRE SHOCK “ HILA KE RAGH DE “ :- A FUN PRODUCT

Building the marketing mix around the positioning plank

International Positioning Strategies

1. Uniform vs. Localized Positioning Strategies2. Universal Positioning Appeals3. Positioning themes:4. Specific product features/attributes5. Product benefit, solutions for problems6. User application7. Lifestyles

Global, Foreign, and Local Consumer Culture Positioning

1. Global consumer culture positioning (GCCP) Brand as a symbol of a given global consumer culture2. Local consumer culture positioning (LCCP) Brand as an intrinsic part of the local culture.3. Foreign consumer culture positioning (FCCP) Brand mystique built around a specific foreign culture

Four industry types

1.Volume industries An industry characterised by few opportunities to create competitive advantages.each advantage is huge and results in a high pay-off.2.Stalemate industries An industry that produces commodities and is characterised by few opportunities to create competitive advantages, with each advantage being small.3.Fragmented industries An industry characterised by many opportunities to create competitive advantages, but each advantage is small.

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4.Specialised industries An industry where there are many opportunities for firms to create competitive advantages that are huge and give a high pay-off.

Differentiating markets Companies and their market offerings can be differentiated along the lines of products, services, personnel or image.

Corporate Insight

HINDUSTAN LEVER LIMITED

Lack of differentiation leads to failure of brand extension

Band names :- Vaseline talcum powderFair & lovely talcLifeboy hand wash

Corporate Insight

Product differentiation in low involvement product category

Brand Names :- Captin CookNaturefreshDandi and CatchTata Annapurna

1.Product differentiation

1. Features and benefits2. Quality3. Performance4. Innovation5. Consistency6. Reliability7. Style and design8. Durability9. Repairability

2.Services differentiation1. Delivery2. Installation3. Repair services4. Customer training services5. Consulting services6. Speed of service

3.Personnel differentiation1. Hiring 2. Training3. Customer focused

4.Image differentiation Images that reflect the ‘soul’ or ethos of the company

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5.Value positioning A range of positioning alternatives based on the value an offering delivers and its price.

More for more Premium product and premium price, supported by a premium image. E.g. Mont Blanc pensMore for the same Brand offering comparable quality at a lower price. E.g. Lexus versus the Mercedes-Benz.The same for less Value proposition e.g. Amazon.comLess for much less Trade off between luxury and necessity. E.g. Five star hotel versus a budget hotel. Lower performance for much lower cost.More for less No-name house brands versus the big brands.

Segmentation techniques and tools:Cluster Analysis: Collection of statistical procedures for dividing objects into groups (clusters). The grouping is done in such a manner that members belonging to the same group are very similar to one another but quite distinct from members of other groups.TOOLS

Regression Analysis: In regression, one assumes that there exists a relationship between a response variable, Y, and one or more so-called predictor variables, X1, X2 and so on.

For each of the parameter estimates, the regression analysis will also produce standard error. The higher the R2 value, the better the ability of the regression model to predict the data.

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