Mr Mathews
mvcmathews@hotmail.com
Is it just the same actions in different countries?
How different is international marketing from standard/national/local marketing?
Differences come from cultural differences, economic differences, legal differences, social
differences.
International marketing
It is the meeting point when we look at international economics, marketing and international
strategy of companies.
Based on international economics, same of marketing with differences, is the function of a company
strategy.
International
economies
International marketing
Marketing
International
strategy of
companies
International strategy of companies
7 billion people living of the Earth and today, for the first in the world’s history, almost every person
of the world is a part of the world economy (every country is integrated in the global economy,
except North Korea and Cuba). This means that companies can produce and sell their products
everywhere in the world for the first time (since 1989). In 1984, in china, peng went to power and
changed the economic system. He stated that “it doesn’t matter what eco system we use as long as it
put food in the tables of Chinese people”. = in the last 30 years, major changes.
In international marketing, it is difficult to isolate the marketing side from the production side.
Introduction
Global vs “regular” marketing:
A scope (range) of activities is outside the home-country market.
Product/market growth matrix (by Ansoff)
Market orientation
Existing markets
New markets
Product orientation
Existing products
New products
1/ Market penetration 2/ Product development
strategy
strategy
3/ Market
4/ Diversification strategy
development strategy
If we stay in the market we know = home market country
3/ produce products in one place and export our products to foreign countries
 4 strategies to develop activity
The 4/ is the most risky because we don’t know new markets, how our products will behave in the
new markets (we lack market knowledge = central to international marketing because we want to
learn about new markets)…
Case study 1 (flowers in Ecuador)
What is marketing?
= Creating value for the customer
2 ways of creating value:
Increasing benefits: what the customer gets from the product
Reducing price
Improve the product
Find new distribution channels
Create better communications
Cut monetary and non-monetary costs (effort the customer is to make to buy
our product) and prices
Value = benefits / price
Global industries
An industry is global to the extent that a company’s industry position in one country is
interdependent with its industry position in another country.
3 levels of globalization:
Countries
Industries
Companies
Here we focus on industries.
Industry analysis
Global industries
(drug medicine, Gillette)
Need to manage investments
and coordinate decisions
(central headquarters who
decides)
= centralizes decisions
Export industries
(cardboard for boxes)
Transnational industries
Multidomestic industries
(food)
Need to adapt to local conditions, tastes, traditions, laws …
(market knowledge)
= decentralization of ideas because countries are different
The graph makes a link between international economics, companies’ strategies and individual
companies.
In global industries, central decisions are made in one country and these decisions are applied to the
different factories all over the world. They have to organize the investments. (ex: pharmaceutical
companies)
In transnational industries, products made in china but need to make sure that it can be sold in
Europe (plugs, washing machine). We have to adapt our product to local conditions, traditions…
In export industries, we can have difficulties to sell because our product is heavy and has no added
value, the characteristics of the products may be a burden.
In multidomestic industries, the competition is country by country. There is not a lot of competition
between countries because the product can be different from one country to another (saucisson in
france, salami in Germany). If companies have to adapt their product to cultural, local conditions and
tastes, they have to get market information.
Competitive advantage, globalization and global industries
Focus
= Concentrate and attention on core business and competence.
Globalization means that the market for your product is bigger than your national market. A
company can concentrate on its core business.
Global marketing: what it is and what it isn’t
Single country marketing strategy
Target market strategy
Marketing mix:
 Product
 Price
 Promotion
 place
Global marketing strategy
Global market participation
Marketing mix development
 4P: adapt or standardize?
Concentration of marketing activities (Nike
designs shoes in the US, produces them in china
and sells them around the world = what we do
where)
Coordination of marketing activities (what kind
of industry = who does what)
Integration of competitive moves
17/09
Standardization vs Adaptation
Globalization (standardization)
Developing standardized products marketed worldwide with a standardized marketing mix
Essence of mass marketing
Ex: Gillette
Global localization (adaptation)
Mixing standardization and customization in a way that minimizes costs while maximizing
satisfaction
Essence of segmentation
Think globally, act locally
Ex: Renault – Nissan
What we need to adapt? And what we have to coordinate?
Management orientations
Ethnocentric orientation
You look at the world from your point of view and you generally think that your homecountry is superior and you think that the way to do business is the best way to do business
in the world (home-country is superior to others, you see only similarities (transnational
market segments across cultures) in other countries, you assume products and practices that
succeed at home will be successful everywhere)
 Leads to a standardized or extended approach
Ex: Louis Vuitton
Polycentric orientation
Each country is unique
Each subsidiary develops its own unique business and marketing strategies
Often referred to a multidomestic industry
 Leads to a localized or adapted approach that assumes products must be adapted to local
market conditions
Ex: kit kat (120 varieties)
Regiocentric orientation (geographic area)
A region is the relevant geographic unit
Ex: the NAFTA (USA, Can, Mex) or European Union market
Some companies serve markets throughout the world but on a regional basis
Ex: General Motors had four regions for decades
Geocentric orientation
Entire world is a potential market
Strives for integrated global strategies
Also knows as a “transnational company”
Ex: Renault – Nissan
Retains an association with the headquarters country
Pursues serving world markets from a single country or sources globally to focus on select
country markets
 Leads to a combination of extension and adaptation elements
Forces affecting global integration and global marketing
Multilateral trade agreements: EU, NAFTA = free trade agreements
Converging market needs and wants and the information revolution: emergence of
transnational market segments (youtube, iphone, starbucks…)
Transportation and communication improvements: it costs 50cents to transport a cargo of
containers full of pairs of Nike from Shanghai to Rotterdam
Product development costs
Driving forces affecting global integration and global marketing
Leverage
It’s the idea of using a resource that you have (money, knowledge) in one place to create an
advantage somewhere else. = effet de levier
Experience transfers: Dacia
Economies of scale: the main pieces of Dacia car are from older cars, not especially
designed for it
Resource utilization
Global strategy: Renault-Nissan has the resources to sell more Nissan in the US
Experience curve (economies of scale)
Unit cost
Company B
Company A
700m 1M
Volume
 The more components/products you produce, the lower you unit costs.
If company A produces 1 million, it will cost x but it will be lower than company B. company A will
produce more at a lower price.
In conclusion, company A can reduce prices or maintain profits.
It is called “experience curve” because as your workers learn to do the activity, they do it faster and
better. If there are problems, they fix them quickly.
Globalization and outsourcing (give an activity to another company to do it=soustraitance)/offshoring (the activity is in a different country=délocalisation)
The value chain (Michael Porter, 1980)
Finance
Support
functions
Human Resources
Clients
Etc
Basic functions
R&D
Marketing
Production
Sales
Porter said that a company can be considered to be a collection of activities. He made two sorts of
activities: basic functions and support functions.
In the basic functions, the product passes through a series of activities before it gets to the client.
Each of these activities adds value to the product. The more value you add to the product, the high
margin you have.
Ex: Nike applied this concept. Concentrate on R&D (in Seattle), the “core competence” (thing we
want to do best because it’s the thing that adds more value to the product, in an US point of view) is
R&D. No comparative advantage to produce shoes in the US => production activity in Taiwan, then to
China, then to Bangladesh (as time goes by, countries are getting richer so Nike found close countries
that are cheaper).
Apple: R&D in California, assembly (not production) in China, components come from Korea, Taiwan
and USA.
Apple is offshoring.
International strategy
It is constructing a competitive advantage by putting value chain activities in places to take
advantage of their comparative advantages.
Restraining forces affecting global integration and global marketing
Management myopia: Peugeot managers had not an international development (shortsighted point of view)
Organization culture: the family Peugeot runs the company
National controls: countries try to control trade (in china, car companies have to have a local
partner…)
Opposition to globalization (“démondialisation”): Montebourg
International competition keeps prices down: café, bread, autoécoles… they enjoy the fact that there
is no competition to make prices go up (not because of the euro). At the opposite, laptops,
telephones, air transport (easyjet)… have high international competition so the prices are cheaper.
What’s wrong with globalization?
Threats to national sovereignty
Economic growth and environmental stress
Offshoring (transferring of activities abroad) is controversial in terms of who benefits when
costs are reduced and whether the process exchanges good jobs for bad ones (who pays and
who benefits)
International trade theories
Trade theory
It helps managers and government policymakers focus on:
What products should we import and export and where?
How much should we trade?
With whom should we trade?
= trade theory helps managers to think about what is possible/not possible in terms of imports and
exports
1/ Interventionist theories (government intervenes in trade to try to orientate/control it) = managing
trade
Mercantilist theory proposed that a country should try to achieve a favorable balance of trade
(export more than it imports)
Pb: mercantilist logic is not possible because not everybody can export more than it import + exports
are good and imports are bad because we use the economic efficiency of others.
Neomercantilist policy also seeks a favorable balance of trade but its propose is to achieve some
social or political objective, frequently full employment.
2/ Free trade theories
Absolute advantage (Smith) suggests specialization through free trade because consumers will be
better off buying foreign-made products priced more cheaply than domestic ones.
Comparative advantage (Ricardo) also proposes specialization through free trade based on the belief
that total global output can increase even if one country has an absolute advantage in the production
of all products.
= even if a country can make everything, it should still specialize in the product it is best at.
These free trade theories are static and need to be seen as more dynamic so as to help to the
development of the economy of the country.
3/ Trade Pattern theories
Theory of country size
Countries with large land areas are apt to have varied climates and natural resources.
They don’t have to import from other countries, they are generally more self-sufficient than smaller
countries.
Large countries’ production and market centers are more likely to be located at a greater distance
from other countries, raising the transport costs of foreign trade.
 Small countries always export more than large countries regarding the GDP.
The X / GDP ratio is more important for
4/ Factor-proportions theory
Factors of production: land, money, people (technology).
A country’s relative endowments (what you have been given by nature, what you are born with) of
land, labor and capital will determine the relative costs of these factors.
Ex: petrol station in Italy, someone do it for you. In France, you do it yourself and pay automatically.
This is because labor is higher in France but it is a richer country than Italy, so it is a different system.
Factors costs will determine which goods the country can produce most efficiently and where there
is a cheap labor (Bangladesh).
5/ Country-similarity theory
Most trade today occurs among high-income countries because they share similar market segments
and because they produce and consume so much more than emerging economies.
Ex: the German buy Megane and the French buy Golf. It is a contradiction because the German
should buy Gold and the French should buy Megane: they are similar cars.
Much of the pattern of two-way trading partners may be explained by cultural similarity between the
countries, political and economic agreements and by the distance between them.
6/ Product life cycle (PLC) theory
Companies will manufacture products first in the countries in which they were researched and
developed, almost always developed countries.
Over the product’s life cycle, production will shift to foreign locations, especially to developing
economies as the product reaches the stages of maturity and decline.
Ex1: Texas Instruments calculator
New products are invented in the most technology-advanced countries in the world (here in Texas,
USA). Then the two regions in the world which are economically developed but technologically and
scientifically behind manufacture the components (here Europe and Japan). Then the manufacture of
the product move to lesser developed and cheaper countries (Korea, Taiwan, China)…
Ex2: Apple
Software invented in California, components produced in Korea and Japan and components
assembled in China.
7/ The Diamond of national advantage
It tries to explain why for example Italy is such good at creating clothes and generally why a country
or a region develops a national advantage.
The sources of competitive advantage are sometimes located in one particular place.
4 conditions are important for competitive superiority:
Demand conditions: Italia like clothes more than NZ.
Factor conditions: in Italy there is a long tradition of families buying expensive clothes, so
companies do leather, hats…
Related and supporting industries: companies who make leather, hats…
Firm strategy, structure and rivalry: lots of small companies do niche products and compete
each other.
Ex: perfumes in France
8/ Factor mobility theory
Of the 3 factors of production, capital and labor move internationally to:
Gain more income or to avoid adverse political situations
Case study “Harvard”:
Companies have to think about international trade theories but also cultural, administrative,
geographical distances to export their product.
Case study “Lukoil”
Cultural aspects
3 differences between international marketing and … :

How do we organize our company so we can get the right info to the right people?
(centralization or decentralization of decision making; decentralization if different market)
Kit kat in Japan (over 100 varieties)
Task of global marketers
Study and understand the cultures of countries in which they will be doing business
Understand how an unconscious reference to their own cultural values, or self-reference
criterion, may influence their perception of the market
Incorporate this understanding into the marketing planning process
Our own cultures and values influence the way that we look at the world, our minds are shaped by
family, friends, television (socialization) and that means that we look at the world in a certain way
(hofstaeder’s “collective social program”).
Society, culture and global consumer culture
Culture
It is ways of living, built up by a group of human beings that are transmitted from one generation to
another.
Culture has both conscious and unconscious values (things we can see and things we can’t see),
ideas, attitudes and symbols = culture is dynamic.
Culture is both physical (clothing and tools) and nonphysical (religion, attitudes, beliefs, values).
Social institutions
= Family, education, religion, government, business
These institutions function is to reinforce cultural norms. Each company has its own culture.
Material and nonmaterial culture
Physical culture: clothing, tools, decorative art, body adornment, homes
Abstract culture: religion, perceptions, attitudes, beliefs, values
CCL culture: “Culture is the collective programming of the mind that distinguishes the members of
one category of people from those of another” – Geert Hofstede
A nation, an ethic group, a gender group, an organization or a family may be considered as a
category.
Global consumer cultures
They are emerging:
Persons of different nationalities/cultures who share meaningful sets of consumption-related
symbols (Starbucks, virgule Nike)
Pub culture, coffee culture, fast-food culture, credit card culture
Primarily the product of a technologically interconnected world:
Internet, satellite TV, cell phones
Attitudes, beliefs, values
Attitude
It is a learned tendency to respond in a consistent way to a given object or entity. “Learned” means it
can be unlearned. Attitudes can be modified (cosmetics for men, eat genetically modified food).
Belief
It is an organized pattern of knowledge that an individual holds to be true about the world. It is not a
tendency, it is truth (Muslims eating pigs).
 You can spend money and time to change attitudes but not beliefs.
Value
It is enduring belief or feeling that a specific mode of conduct is personally or socially preferable to
another mode of conduct. It lies somewhere between attitude and belief. It is a bit more sociallyorientated, we look to see what people are doing; it is more reflexive, not only looking at your own
group or yourself (gay marriage).
Religion
The world’s major religions include Buddhism, Christianity, Hinduism, Islam and Judaism and
are an important source of beliefs, attitudes and values.
Religious tenets, practices, holidays and history impact global marketing activities.
Ex: coca and pepsi tried to make their drinks a culture in India.
Aesthetics
= the sense of what is beautiful and what is not beautiful (women with a long neck)
It is what represents good taste as opposed to tastelessness or even obscenity
Visual-embodied in the color or shape of a product, label or package
Style-various degrees of complexity are perceived differently around the world
Aesthetics and color
Red = blood, wine-making, activity, heat, vibrancy in many countries but is poorly received in some
African countries. Signifies good luck and celebration in china
White = color of death (asia), purity, cleanliness in the west
Gray = inexpensive in japan and china, high quality and expensive in the US
Yellow = signifies a merchant in india
Ex: Ronald mc Donald was forbidden in japan because it has a white face and it is associated to
death, so Japanese children were scared.
Dietary preferences
Domino’s pizza pulled out of Italy because its products were seen as “too american” with bold
tomato sauce and heavy toppings.
Subway had to educate Indians about the benefits of sandwiches because they do not normally eat
breads.
Foie gras is illegal in many states of the US.
Language and communication
Offer a book = I hope you have bad luck in china
Marketing’s impact on culture
Universal aspects of the cultural environment represent opportunities to standardize
elements of a marketing program
Increasing travel and improved communications have contributed to a convergence of tastes
and preferences in a number of product categories
High and low context culture
High context
Information resides in context
Emphasis on background, basic values, societal
status
Less emphasis on legal paperwork
Focus on personal reputation
Low context
Messages are explicit and specific
Words carry all information
Reliance on legal paperwork
Focus on non-personal documentation of
credibility
In high contexts: The individual is very important, it is central to the activity. When doing business
with high context people, personal relationship is strong, the person wants to be your friend and get
who you are. Business is embodied in a social context.
Ex: Saudi Arabia, Japan, Greece
In low context, context is important.
Ex: Switzerland, US, Germany
Hofstede’s cultural typology
Power distance
Individualism/collectivism
Masculinity
Uncertainty avoidance (how you feel about rules), your culture prefers to have clear cultures
(France= high level of it), not initiative
Long-term orientation/short-term orientation
2 criticisms
IBM: national culture, not a representative sample of all the world’s workers
…
Self-reference criterion and perception
Unconscious reference to one’s cultural values, it creates cultural myopia = It makes us forget
that we are looking at the world from our own point of view and we are influenced by culture.
How to reduce cultural myopia:
Define the problem or goal in terms of home country cultural traits
Define the problem in terms of host-country cultural traits; make no value judgments
Isolate the self-reference criteria influence and examine it
Redefine the problem without the SRC influence and solve for the host country
situation
Ex:
In france we eat snails
In NZ they don’t eat snails
dietary preference different in france and in NZ
Case study “Disney”
Global information systems and market research
2 themes:
How we get the right market information
How we get it to the right people at the right time
Information technology for global marketing
Information technology refers to an organization’s processes for creating, storing, exchanging, using
and managing information.
Management information systems provide managers and other decision makers with a continuous
flow of information about company operations.
Pb: too much information with internet, for companies = not a pb of creating information but using
and managing the right information.
Marketing information and customer insights
Customer insights are:
Fresh and deep insights into customers’ needs and wants (they do not know what they want)
Difficult to obtain: not obvious, customers’ unsure of their behavior, do not say what they
feel (they do not how to express what they do not what they want)
Not derived from more information but better information and more effective use of existing
information (it is more important to look at existing information than to look for new information)
Marketing information system
Marketing managers and other information users
>obtaining customer and market insights from marketing information
Marketing information system
Developing needed information
Assessing info°
needs
Target markets
Internal
databases
Marketing channels
Marketing
intelligence
Marketing
research
Marketing environment
Competitors
Publics
Analizing &
using info°
Macro-environment forces
Environment:
Publics = groups of people (trade unions, media, governments…) = stakeholders (anybody who has an
interest in the activities of a company) + general public
Marketing information system:
3 steps:
Assessing information needs: the most important step. What information do we need to do
what?
Developing needed information:
Internal databases: Wal mart was the only shop where the Americans could buy
American flags on the 13th of September 2001 thanks to the internal database to know what
product has been sold at the moment.
Mkt intelligence: what information exists in the market today (internet, magazines,
newspaper). +: Cheap// -: old/not specific enough for a company.
Mkt research: What is specific to a company respect to its own market approach.
Analyzing and using information
Electronic data interchange
It allows business units to:
Submit orders
Issue invoices
Conduct business electronically
Transaction formats are universal
Allows computer from different companies to …
= Join up computers of different companies so that they can act automatically, does no need to have
a person to look after stocks, the re-order is done automatically.
Efficient consumer responses (ECR)
It is a joint initiative by members of a supply chain to work toward improving and optimizing aspects
of the supply chain to benefit customers.
This is in addition to EDI.
It is an effort for retailers and vendors to work closely on stock replenishment.
It utilizes electronic point of sale.
= As soon as the customer buys a product in a shop, the top company gets the information of where
and when it has been sold and get new product for the shop so as to not get rid of product.
Customer relationship management
New business model
Philosophy that values two-way communication between company and customer
Every point of contact with a consumer is an opportunity to collect data
= It tries to manage each customer individually. Internet helps a lot companies to communicate
cheaper, instantaneously and establish a one to one relationship. Moreover, it lets the consumer say
what he thinks of the company at zero cost (on facebook, blog, forum…). This is a good way to obtain
information of customers.
Sources of market information
Personal sources:
Company executives based abroad who have contact with distributors, consumers, suppliers
and government officials
Friends, acquaintances, professional colleagues, consultants and prospective employees
Formal market research
Global marketing research is the project-specific (company specific), systematic gathering of data in
the search scanning mode on a global basis.
Challenge is to recognize and respond to national differences that influence the way
information is obtained
Steps in the research process
1/ identify the information requirement: what information do we need and why do we need that
information?
2/ define the problem
3/ choose a unit of analysis: a city, a region, a country…
4/ examine data availability: look at the information we have in the company and does this
information correspond to the problem?
5/ assess value of research
6/ design the research
7/ analyze the data
8/ present the findings
Step 1:
What information do I need?
Existing market: customer needs already being served by ne or more companies; information
may be readily available
Potential market
Latent market: an undiscovered market; demand would be there if product was there
Incipient market: market will emerge as macro environmental trends continue (the
country keep growing economically); linked to country similarity
Why do I need this information? I need this information to answer this research question.
Step 2: problem definition and overcoming the SRC
Self-reference criterion occurs when a person’s values and beliefs intrude on the assessment fo a
foreign culture. In some countries, there is taboo talking about hair and shampoo.
Must be aware of SRC’s
Enhances management’s willingness to conduct market research
Ensures that research design has minimal home-country bias (in America they are talkative
about how much money they make, not the same in France so it might be perceived as impersonal
question on a survey = realize and think with a multicultural point of view)
Increases management’s receptiveness to findings
Step 3: choose a unit of analysis
Will the market be:
Global
A region (groups of countries)
A country
A province
A state
A city
Step 4: examine data availability (it is about economic efficiency, how much we gonna spend)
Sources may be:
Company’s records
Secondary records
Trade journals
Government sources like National Trade Data Base, Bureau of Economic Analysis,
Eurostat (EU), Foreign Commercial Service, Virtual Trade Commissioner (Canada)
Commercial sources like The Economist and Financial Times, Marketresearch.com
Step 5: assess value of research (motivated by financial considerations, how much we gonna spend
and how much we will get back)
What is the information worth VS what it will cost to collect? Companies will stop looking for
information when it will have cost too much to them but we do not know the limit
What will it cost if the data are not collected?
What will the company gain with this information?
Step 6: research design / data collection
Develop customized indicators specific to the industry, product market or business model
Do not assess a market in isolation
= we want to frame information so that we can understand it, information is organized data
in the way that we understand it.
Data = 1.4, 5, 10 (the figures)
Information = 1.4% growth of the French economy (give meaning to the figures)
Knowledge = my education and my experience give me knowledge that when the French
economy grows by 1.4%, there is no creation of jobs and when it grows slower than 1.4% it
starts to destroy jobs.
Observation of purchasing behavior/patterns is more important than reports of purchase intention
or price sensitivity
We want to know how people behave. There is a difference between intentions and
behavior. Be careful of declarations of intentions, they are not the reality, they are what
people would do, not what they actually do: people who want to buy products 100% made in
France, people who want to buy electric cars…
Primary data collection methods:
Survey research: Likert (strongly agree -> strongly disagree)
Interviews: quantitative
Consumer panels: Nielsen (look at consumption for a range of products)
Observation: ethnographic research, toys (how children play)
Focus groups: 6 people in a room and they are talking about their feelings
Special considerations for surveys
Benefits
Data collection from a large sample
Both quantitative and qualitative data possible
Issues
Subjects may not want to answer or intentionally give inaccurate response
Translation may be difficult: use back and parallel translations to ensure accuracy and validity
Case study “Whirlpool”
Segmentation, Targeting and Positioning
Central part of marketing
Introduction
How to identify groups of potential customers?
How to choose the groups to target?
How to segment those groups?
How to position the brand in the mind of the customer?
Market segmentation
Represents an effort to identify and categorize groups of customers and countries according to
common characteristics = do we start with countries or with consumers?
Ex: 77.5 million dogs are owned in the US = reference of the country rather than the consumer.
Targeting
It is the process of evaluating segments and focusing marketing efforts on a country, region or group
of people that has significant potential.
It focuses on the segments that can be reached most effectively, efficiently and profitably.
Positioning
It is required to differentiate the product or brand in the minds of the target market from other
competitors = making sure that your customer has one central idea of what your product is about =>
the art of helping your customer summarize and resume your product in one idea/phrase.
Global market segmentation
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.
Divide the market into segments => we segment groups of similar people
Each segment has a product => we talk about product segment = result of segmenting the market
Segmentation never stops (companies have to systematically go back and look at how to segment
markets regularly) because:
Technology changes
Segmentation is measuring demand and demand changes because of fashion and society
changes => people relationships/attitudes with products change
We might find a market segment that has been neglected.
Contrasting views of global segmentation
Conventional wisdom
Starting with a country as your framework (work
country by country) = assumes heterogeneity
between countries (a country has a culture and
cultures are different from a country to another
=> similarity < differences)
Assumes homogeneity within a country
Relies on clustering (group together) of national
markets
Less emphasis on within-country segments
Unconventional wisdom
Assumes emergence of segments that transcend
national boundaries
Recognizes existence of within-country
differences (some groups are different)
Emphasizes micro-level differences
Segments micro markets within and between
countries
Basically based on differences
Basically based on similarities
Global market segmentation
Demographics
Psychographics
Behavioral characteristics: what people do
Benefits sought
Demographic segmentation: what are the trends? Who people are?
Income, population, age distribution, gender, education, occupation = useful but do not tell about
behavior, believes, attitudes, personality of an individual
Segmenting by income and population
Income is a valuable segmentation variable
2/3 of world’s GNP is generated in the Triad but only 12% of the world’s population is in the
Triad
Do not read into the numbers
Some services are free in developing nations so there is more purchasing power
For products with low enough price, population is a more important variable
Age segmentation
Global teen: between 12 and 19
A group of teenagers randomly chosen from different parts of the world will share many of
the same tastes
Global elite: affluent consumers who are well traveled and have the money to spend on prestigious
products with an image of exclusivity.
Gender segmentation
In focusing on the needs and wants of one gender, do not miss opportunities to serve the other
Companies may offer product lines for both genders: Nike, Levi Strauss
Psychographic segmentation: why people do things?
It should give us a better approach/segmentation basis because it gives us the underline reasons for
people behavior.
Grouping people according to attitudes, values and lifestyles
Ex: Porsche
The Euroconsumer:
Successful idealist:
5-20% of the population; consists of persons who have achieved professional and
material success while maintaining commitment to abstract or socially responsible
ideals
Affluent materialist:
status-conscious “up-and-comers” (business professionals), use conspicuous
consumption to communicate their success to others
comfortable belongers:
25-50% of a country’s population, conservative, most comfortable with the familiar,
content with the comfort of home, family, friends and community
Disaffected survivors:
Lack power and affluence, little hope for upward mobility, tend to be either resentful
or resigned, attitudes tend to affect the rest of society
Behavior segmentation: how you use the product/relationship with the product
Focus on whether people purchase a product or not, how much and how often they use it
User status
Law of disproportionality/Pareto’s law: 80% of a company’s revenues are accounted for by 20% of
the customers. CRM is based on this because it is about identifying the 20% of customers who give
you the best income/profitability and making them loyal and spend their money on your product.
Benefit segmentation: what problem does a product solve?
Why do people buy a vacuum cleaner? It is a product that solves the problem of having a cleaned
house. The problem is not to clean the house but to have a cleaned house.
Focuses on the value equation: value = benefits/price
Based on understanding the problem a product solves, the benefit it offers or the issue it addresses.
Targeting: Assessing segment potential
Be mindful of the pitfalls
Tendency to overstate the size and short-term attractiveness of individual country markets
The company does not want to “miss out” on a strategic opportunity
Management’s network of contacts will emerge as a primary criterion for targeting
3 basis criteria:
Current size of the segment and growth potential
Potential competition
Compatibility with company’s overall objectives and the feasibility of successfully reaching
the target audience
Current segment size and growth potential
Is the market segment currently large enough to make a profit?
If the answer is “no”, does it have significant growth potential to make it attractive in terms of a
company’s long-term strategy?
Target market strategy options
Standardized global marketing
Mass marketing on a global scale
Undifferentiated target marketing
Standardized marketing mix
Minimal product adaptation
Intensive distribution
Lower production costs
Lower communication costs
Concentrated global marketing
Niche marketing
Single segment of global market
Look for global depth rather than national
breadth
Ex: chanel, estée lauder
Case study: L’Oréal
Differentiated global marketing
Multi-segment targeting
Two or more distinct markets
Wider market coverage