Global Marketing Management
Masaaki Kotabe & Kristiaan Helsen
Third Edition
John Wiley & Sons, Inc., 2004
Chapter 7
Kotabe & Helsen's Global Marketing
Management, Third Edition, 2004
1
Chapter 7
Global Segmentation and
Positioning
Chapter 7
Kotabe & Helsen's Global Marketing
Management, Third Edition, 2004
2
Chapter Overview
1. Reasons for International Market
Segmentation
2. International Market Segmentation
Approaches
3. Segmentation Scenarios
4. Bases for Country Segmentation
5. International Positioning Strategies
Chapter 7
Kotabe & Helsen's Global Marketing
Management, Third Edition, 2004
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Chapter Overview (contd.)
6. Global, Foreign, and Local Consumer
Culture Positioning
7. Appendix
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Management, Third Edition, 2004
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Introduction



Variation in customer needs is the primary motive
for market segmentation.
Most companies will identify and target the most
attractive market segments that they can
effectively serve.
In global marketing, market segmentation
becomes especially critical because of wide
divergence in cross-border consumer needs and
lifestyles.
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Introduction (contd.)

Once the management has chosen its target
segments, management needs to determine a
competitive positioning strategy for its products.
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Management, Third Edition, 2004
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1. Reasons for International Market
Segmentation

Segments ideally should possess the following set
of properties:
– Identifiable
– Sizable
– Accessible
– Stable
– Responsive
– Actionable
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IDENTIFIABLE- the segments should be
easy to define and to measure. This criterion
is easily met for “objective” country traits
such as socioeconomic variables (e.g., per
capita income). However, the size of
segments based on values or lifestyle
indicators is typically much harder to gauge.
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Sizable: the segment should be large enough
to be worth going after. Note that flexible
manufacturing technologies enable
companies to relax this criterion. In fact,
many segments that might be considered
too small in a single-country context
become attractive once they are lumped
together across borders
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Management, Third Edition, 2004
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Accessible: the segments should also be
easy to reach through promotional and
distributional efforts. Differences in the
distribution quality and media infrastructure
imply that a given segment could be hard to
reach income countries and easy to target in
others.
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Stable: if target markets change their
composition or behavior over time,
marketing efforts devised for these targets
are less likely to succeed
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Management, Third Edition, 2004
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Responsive: for market segmentation to be
meaningful, it is important that the
segments respond differently from each
other to differentiated marketing mixes.
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Actionable: segments are actionable if the
marketing mix is necessary to address their
needs of consistent with the goals and the
core competencies of the company.
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Management, Third Edition, 2004
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1. Reasons for International Market
Segmentation (contd.)






Country ScreeningGlobal Market Research
Entry Decisions
Positioning Strategy
Resource Allocation
Marketing Mix Policy
– Balance between standardization and
customization
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Management, Third Edition, 2004
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Country Screening: companies usually do a
preliminary screening of countries before
indentifying attractive market opportunities
for their product or service.
 Global Market Research: companies make
an effort to design products or services that
meet the needs of the customers in different
countries.

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Management, Third Edition, 2004
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Entry Decisions: when a product or service
does well in one country, firms often hope to
replicate their success story in other countries.
 Positioning Strategy: once the firm has
selected the target segments, management
needs to develop a positioning strategy to
embrace them.
 Resource Allocation: market segmentation is
also useful in deciding how to allocate the
company’s scarce marketing resources across
different country. (Exhibit 7-1)

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Management, Third Edition, 2004
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
Marketing Mix Policy: is how to strike the
balance between standardization and
customization.
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2. International Market Segmentation
Approaches


International segmentation procedures:
– Country-ad-segments or aggregate
segmentation
– Disaggregate international consumer
segmentation
– Two-stage international segmentation
The standard country segmentation procedure
classifies prospect countries on a single dimension
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Management, Third Edition, 2004
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2. International Market Segmentation
Approaches

Country-as-segments or aggregate
segmentation: a very common international
segmentation procedure classifies prospect
countries geographically or a single
dimension or multiple socio-economic,
political, and cultural criteria available from
secondary data sources.
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Management, Third Edition, 2004
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2. International Market Segmentation
Approaches
Disaggregate international consumer
segmentation: focus on individual
consumer.
 Two-stage international segmentation: to
address the short comes of the previous two
approaches- can offer solace.

Chapter 7
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Management, Third Edition, 2004
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2. International Market Segmentation
Approaches (contd.)

(e.g., per capita GNP) or on a set of multiple
socioeconomic, political, and cultural criteria
available from secondary data sources.
When there are numerous country traits, use
smaller set of dimensions using data reduction
techniques such as factor analysis.
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3. Segmentation Scenarios
Universal or global segments: that transcend
national boundaries. They are universal in the
sense that customers belonging to such segments
have common needs.
 Regional segments: here the similarity in
customer needs and preferences exists at the
regional level rather than globally.
 Unique (diverse) segments: are the norms when
gaps in cross-country customer needs and
preferences are so substantial that it becomes very
Chapter
7
hard
to derive meaningful cross –border segments.22

4. Bases for Country Segmentation
Demographics: are among the most popular
criteria and easy to access .
 Socioeconomic Variables: caveats in using
per capita income as an economic
development indicator.

Chapter 7
» Monetization of transactions within a country: to
compare measures such as per capita GNP across
countries. (local currency should be translated into
common currency.
» Gray and Black Market sections of the economy:
national income figures only record transactions that
occur in legitimate
sector of country’s economy. 23
Kotabe & Helsen's Global Marketing
Management, Third Edition, 2004
» Income disparities:
figures such as per capita GNP
4. Bases for Country Segmentation
(contd.)
» Gray and Black Market sections of the economy:
national income figures only record transactions that
occur in legitimate sector of country’s economy.
» Income disparities: figures such as per capita GNP
tell only part of the story.
– Purchasing Power Parity (PPP) criteria:
reflects how much a household in each country
has to spend to buy a standard basket of goods.
– Human development index (HDI)
classification: released every year by United
Nations. HDI widens the notion of economic
developmentKotabe
by&looking
at a country’s
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Helsen's Global Marketing
24
Edition, 2004
achievement Management,
in threeThird
areas:
life expectancy at
4. Bases for Country Segmentation
(contd.)
– Human development index (HDI)
classification: released every year by United
Nations. HDI widens the notion of economic
development by looking at a country’s
achievement in three areas: life expectancy at
birth, knowledge, and decent standard of living.
– Socioeconomic Strata (SES) Analysis:
alternative for analyzing buying power in a se
of countries (Exhibit 7-6).
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Management, Third Edition, 2004
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
Behavior-based segmentation: based on
behavioral response variables. (Exhibit 7-7)
–
–
–
–
Chapter 7
Brand loyalty
Usage rate
Product penetration
Benefits
Kotabe & Helsen's Global Marketing
Management, Third Edition, 2004
26

Lifestyles: Roper Consulting’s Valuescope
Model. 30,000 interviews around the
world. (This is based on 5th edition the 4th
has different variables so this updated in
the new book)
–
–
–
–
–
–
Achievers
Traditionals
Survivors
Nurturers
Hedonists
Social-Rationals
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5. International Positioning Strategies

The formulation of a positioning strategy (local or
global) includes the following steps:
1. Identify the relevant set of competing
products or brands.
2. Determine current perceptions held by
consumers about your product/brand and the
competition.
3. Develop possible positioning themes.
4. Screen the positioning alternatives and select
the most appealing one.
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Kotabe & Helsen's Global Marketing
Management, Third Edition, 2004
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5. International Positioning Strategies
(contd.)


5. Develop a marketing mix strategy.
6. Over time, monitor the effectiveness of your
positioning strategy and if needed, conduct an
audit.
Uniform vs. Localized Positioning Strategies
Universal Positioning Appeals
– Positioning themes:
» Specific product features/attributes
» Product benefit, solutions for problems
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Kotabe & Helsen's Global Marketing
Management, Third Edition, 2004
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5. International Positioning Strategies
(contd.)
» User application
» Lifestyles
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Management, Third Edition, 2004
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6. Global, Foreign, and Local Consumer
Culture Positioning


Global consumer culture positioning (GCCP):
brand managers can position their brand as a
symbolic of a global consumer culture, a “foreign”
culture, or a local culture.
Local consumer culture positioning (LCCP): the
brand may be global; it is portrayed as an intrinsic
part of the local culture. (Some brands have
achieved a multilocal culture.
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
Foreign consumer culture positioning
(FCCP): here the goal is to build up a brand
mystique built around a specific foreign
culture, usually one that has highly positive
connotations for the product. (e.g. Swiss for
watches, Germany for household
appliances…etc)
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Management, Third Edition, 2004
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7. Appendix

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.
– Regression Analysis: In regression, one
assumes that there exists a relationship between
a response variable, Y, and one or more socalled predictor variables, X1, X2 and so on.
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7. Appendix (contd.)
– 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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Kotabe & Helsen's Global Marketing
Management, Third Edition, 2004
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Copyright © John Wiley & Sons, Inc. 2004
Chapter 7
Kotabe & Helsen's Global Marketing
Management, Third Edition, 2004
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