Segmentation, Targeting & Positioning

International Marketing AT BANZON
1
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 buying behavior”.
• In global marketing, market segmentation becomes
especially critical because of wide divergence in
cross-border consumer needs and lifestyles.

2
• The Pareto Law usually applies to international

marketing strategies with its full vigor.
• The most broad-based and well-established
international firms find that 20% of the countries
they serve generate at least 80% of the results.

3
Contrasting Views of Global Segmentation
Conventional Wisdom
Assumes heterogeneity between countries
Assumes homogeneity within a country
Focuses on macro level cultural differences
Relies on clustering 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
Emphasizes micro-level differences
Segments micro markets within and between countries
More emphasis on consumer behavior based- micro segments
4
TWO-STAGE GLOBAL SEGMENTATION
• 1. Macro-segmentation – the division of a number of

countries into subgroups of more similar clusters
• 2. Micro-segmentation – the identification of local
segments which are similar across the countries in a
cluster.
• The micro-segmentation techniques used in local
marketing are also useful in global segmentation.

5
MACRO SEGMENTATION – clustering of countries on the basis of common
characteristics deemed to be important for marketing purposes
• Population size Population character

• Disposable income levels Primary languages
• Educational background Level of development
• Rate of growth in GNP Infrastructure
• Political affiliation

6
MICRO SEGMENTATION - breaking large target market into smaller groups
based on lifestyle, demographic, geographic and behavioral differences in order
to maximize the effectiveness of contact with each customer.
• Age  Urbanization
•Occupation  Social class
•Ethnicity  Life cycle stage
•Race  Education
•Nationality

7
TOP 10 MOST EDUCATED COUNTRIES
Rank Country Name Score*

1 Singapore 6.3
2 Finland 6.2
3 Netherlands 6.1
4 Switzerland 6.0
5 Belgium 6.0
6 Denmark 5.9
7 Norway 5.9
8 United States 5.9
9 Australia 5.9
10 New Zealand 5.9
Source: CITI 10 (2017). Retrieved from https://www.citi.io/2017/01/26/ the- top-11-

most-educated-countries-of-the-world/
*1 to 7, is based on factors including secondary education enrollment rate

and tertiary education enrollment rate – which means the number of
people who studied either at university or an equivalent, such as a nursing
college. 8
Segment on a Global Scale
• Theodore Levitt advanced the thesis that

consumers in different countries increasingly seek
variety and that the same new segments are likely
to show up in multiple national markets.
• Greek salad, hamburgers, sushi might be in
demand anywhere in the world.
• The trend is known as pluralization of consumption
and segment simultaneity.

9
Segment on a Global Scale
• Global market segmentation is based on the
premise that companies should attempt to identify
consumers in different countries who share similar
needs and desires.
• It doesn’t mean that pizza-loving consumers found
in many countries eat the same thing.
• In France, Domino’s pizza has goat cheese and strips
of pork fat as toppings.
• In Taiwan, toppings include squid, crab, shrimp and
pineapple.
• Brazilians can order their pies with mashed bananas
and cinnamon.
10
• Global companies segment world markets

according to:
• geography
• demographics (including national income and
size of population)
• psychographics (values, attitudes, and lifestyles)
• behavioral characteristics
• benefits sought

11
• It is also possible to cluster different national

markets in terms of their environments (presence
or absence of government regulation in a particular
industry).
• Another powerful tool is horizontal segmentation
by user category.

12
GEOGRAPHIC SEGMENTATION
• dividing the world based on geographic subsets

• the advantage geography is proximity
• markets in geographic segments are closer to each
other and easier to visit on the same trip or call on
during the same time window

13
GEOGRAPHIC SEGMENTATION
• Limitations
• Though markets are in the same world geographic
region, they may not be similar.
• Japan and Vietnam are both in East Asia
• Japan is a high-income, post-industrial country;
Vietnam is an emerging, less developed, pre-
industrial country.

14
BUSINESS PORTFOLIO MATRIX
Country attractiveness
High Medium Low
Company’s compatibility
High
with each country
Medium
Low
Primary Secondary Tertiary

opportunity opportunity opportunity
15
• Primary opportunity
• These markets indicate the best opportunities
for long-term strategic development.
• Companies may want to establish presence and
so embark on a thorough research program.

16
• Secondary opportunity
• These are markets where opportunities are identified
but political or economic risk is perceived as being too
high to make long-term irrevocable commitments.
• These markets would be handled in a more pragmatic
way due to the identified risks.
• A comprehensive market information system is
needed.

17
• Tertiary opportunity
• These are catch-what-you-can markets.
• They are perceived as high risk so allocation of
resources is minimal.
• Objectives in these markets are short-term and
opportunistic (no real commitment).
• No significant research would be carried out.

18
DEMOGRAPHIC SEGMENTATION
• World demographic facts and trends:

• Widening gap between older populations in the
West & the large working-age populations in
developing countries
• In the EU, the number of consumers 16 years
and younger is rapidly approaching the number
of consumers 60 years old and older
• Half of Japan’s population will be 50 years old or
older by 2025

19
• America’s 3 main ethnic groups (African/Black
Americans, Hispanic Americans and Asian
Americans) represent a combined annual buying
power of $1 trillion
• The US is home to 28.4 million foreign-born
residents with a combined income of $233 billion.
• By 2030, 20% of the US population (70 M
Americans) will be 65 years old or older versus 13%
(36 M) today

20

• Asia is home to 500 million consumers 16 years
old and younger
• India has the youngest demographic profile
among the world’s large nations: More than half
of its population is younger than 25 years old.

21
• Income and Population Segmentation

• Income is a valuable segmentation variable in
charting a plan for global market expansion -market
consists of those who are willing and able to buy.
• Population is often a more valuable segmentation
variable for low unit cost products (cigarettes, soft
drinks, movie tickets and other consumer goods).

22
• In 2000, the 10 most populous countries in the
world accounted for 59% of world income.
• The 5 most populous account for 48%.
• The concentration of income in the high-income
and large-population countries means that a
company can be global by targeting buyers in 10 or
fewer countries.

23

• Income is the single most valuable and
important indicator of market potential for a
vast range of industrial and consumer products
in international markets.
• In 2002, 73% of world GNP is generated in the
Triad where 13% of the world population is
located.

24

• The concentration of wealth in a handful of
industrialized countries has significant implications
for global marketers.
• Segmenting by income - a firm can reach the most
affluent markets by targeting the European Union,
North America, and Japan.
• Doing so ignores the 87% of the world’s population

25

• Triad refers to the three centers dominating the
world economy until the late 1990's: the United
States, the European Union and Japan; or,
somewhat more broadly, North America, (Western)
Europe and Japan.

26

• Since the turn of the millennium, however, the
collective economical weight of the Triad has
declined by the rapid emergence of the so-called
BRIC (Brazil, Russia, India and China - or BRICS,
including South Africa) and Next eleven (N-11)
countries (Bangladesh, Egypt, Indonesia, Iran,
Mexico, Nigeria, Pakistan, Philippines, South Korea,
Turkey, and Vietnam).
• As a result the term is now less widely used.

27
• McDonald’s global expansion illustrated the

significance of both income and population on
marketing activities.
• McDonald’s operates in >120 countries.
• 80% of McDonald’s restaurants are located in 9
country markets: Australia, Brazil, Canada, China,
France, Germany, Japan, UK and US.
• These countries generate 75% of the company’s
total revenues.

28
• GNP and other measures of national income

should be calculated on the basis of purchasing
power parities (what the currency will buy in the
country of issue) to provide an actual comparison
of the standards of living in the countries

29
GDP BASED ON PPP VALUATION
GDP CURRENT PRICES
(billion current international
(billion USD)
dollars)
COUNTRIES 2016 RANK COUNTRIES 2016

United States 18,558.10 1 China 20,853.30
China 11,383.00 2 United States 18,558.10
Japan 4,412.60 3 India 8,642.80
Germany 3,467.80 4 Japan 4,901.10
United Kingdom 2,761.00 5 Germany 3,934.70
France 2,464.80 6 Russia 3,684.60
India 2,288.70 7 Brazil 3,101.20
Italy 1,848.70 8 Indonesia 3,010.70
Brazil 1,534.80 9 United Kingdom 2,756.70
Canada 1,462.30 10 France 2,703.40
Korea 1,321.20 11 Mexico 2,303.20
Russia 1,132.70 12 Italy 2,213.10
Australia 1,200.80 13 Korea 1,916.40
Spain 1,242.40 14 Saudi Arabia 1,720.00
Mexico 1,082.40 15 Canada 1,671.90
Indonesia 937 16 Spain 1,674.00
Netherlands 762.5 17 Turkey 1,665.30
Islamic Republic
Turkey 751.2 18 1,439.30
of Iran
Switzerland 651.8 19 Australia 1,177.60
Saudi Arabia 618.3 20 Thailand 1,152.40
Source: IMF World Economic Outlook (WEO), April 2016

30
31
• Caution in using income as indicator of a nation’s

welfare and standard of living
• A mudhouse in Tanzania will reveal many things
that money can buy (radio, iron bed frame, beer,
bicycle, shoes, razor blades, corrugated metal roof,
softdrinks).

32
• What Tanzania’s per capita income of $244 does
not reflect is that instead of utility bills, Tanzanians
have the local well and the sun.
• Instead of nursing homes, tradition and custom
ensure that the elderlies are taken care of by
families.
• Instead of expensive hospitals, doctors, villagers
turn to witch doctors and healers.

33
• Age Segmentation
• Global teenagers
• Between 12 and 19, with shared interest in
fashion, music and youthful lifestyle.
• They may not yet have conformed to cultural
norms or may be rebelling against them; coupled
with shared universal wants, needs, desires and
fantasies - unified marketing program
• attractive because of its size (1.3 billion) and its
multibillion-dollar purchasing power

34
• Global teenagers
• Coca Cola, Benetton, Swatch and Sony are some of the
companies pursuing the global teenage segment
• The global telecommunications revolution (MTV) is a
critical driving force behind the emergence of this
segment.
• Global satellites such as AsiaSatI are beaming Western
programming and commercials to millions of viewers in
China, India and other countries.
35
• Global elite
• older, more affluent consumers who are well
traveled and have money to spend on prestigious
products with an image of exclusivity
• It also includes movie stars, musicians, elite
athletes, entrepreneurs and others who have
achieved great financial success at a relatively young
age.

36
• Global elite
• their needs and wants are spread over various
product categories: durable goods (luxury,
automobiles like Mercedes Benz), nondurables
(upscale beverages such as Perrier mineral water)
and financial services (American Express Gold card)

37
• Global elite
• Technological change in telecommunications makes
it easier to reach this segment.
• Telemarketing (AT&T International 800 services in
>40 countries)
• Catalog marketing by upscale retailers like Harrods,
Ferragamo and Laura Ashley

38
• Ethnic Segmentation
• The US population includes 3 important ethnic
segments:
• African Americans
• Asian Americans
• Hispanics
• African Americans are the largest but expected to be
surpassed by the Hispanics in early 21st century
• Asians, though the smallest, are the fastest growing.
39
• Gender Segmentation
• Although some companies (fashion designers and
cosmetic companies) market primarily or exclusively to
women, other companies offer different lines of
products to both genders.
• In 2000, Nike generated $1.4 B in global sales of
women’s shoes and apparel (16% of total Nike sales).
• Nike executives believe that its global women’s
business is poised for big growth.
40
• Gender Segmentation
• To make this happen, they opened concept shops
inside department stores creating free-standing
retail stores exclusively for women.
• In Europe, Levi Strauss took a similar approach in
2003 – Levi’s for Girls (“In Europe, denims is for
girls.”
• This was in response to competition from CK and
GAP in the US and Diesel in Europe.
41
PSYCHOGRAPHIC SEGMENTATION
• groups people in terms of their attitudes, values,

and lifestyles
• data are obtained from questionnaires that require
respondents to indicate the extent to which they
agree or disagree with a series of statements

42
• Porsche AG turned to psychographics when

worldwide sales declined from 50,000 units in 1986
to about 14,000 in 1993
• Porsche Cars North America already had a clear
demographic profile of its typical customer:
• a 40-plus-year-old male college graduate whose
annual income exceeded $200,000

43
Psychographic Profiles of Porsche’s American
Customers
Category Percent of Description
All Owners
Top Guns 27% Driven and ambitious. Care
about power and control.
Expect to be noticed.
Elitists 24% Old-money. A car-even an
expensive one-is just a car,
not an extension of one’s
personality.
Proud 23% Ownership is what counts.
Patrons is a trophy, a reward for
working hard. Being
noticed doesn’t matter.

44
Psychographic Profiles of Porsche’s American
Customers
Category Percent of Description
All Owners
Bon 17% Cosmopolitan jet setters
Vivants and thrill seekers. Car
heightens excitement.
Fantasists 9% Car represents a form of
escape. Don’t care about
impressing others; may
even feel guilty about
owning a car.

45
• Richard Ford, Porsche VP of Sales and Marketing

noted:
• “We were selling to people whose profiles were
diametrically opposed. You wouldn’t want to tell
an elitist how good he looks in the car or how
fast he could go.”
• Sales went up by nearly 50% in 1994.

46
BEHAVIOR SEGMENTATION
• focuses on whether people buy and use a product,

how often, and how much they use or consume
• consumers can be categorized in terms of:
• usage rate - heavy, medium, light, or nonuser
• user status - potential users, regulars, ex-users,
nonusers, first timers and users of competitors’
products

47
• Nestle is marketing bottled water in Pakistan

where there is a huge market of nonusers, who,
despite their low income, are willing to pay 18
rupees a bottle for clean water because of the
widespread presence of arsenic poisoning in well
water and the pollution of surface water.
• Campbell Soup Company targeted China primarily
because the Chinese have the highest per capita
consumption of soup in the world.

48
• Behavior toward spending and saving

• Japan has the highest number of cash dispensers
(1,115/million population) followed by
Switzerland, Canada and US where average is
slightly > 600.
• Average dollar withdrawn: Japan $289,
Switzerland $187, Italy $185, US $68

49
• In 1996, marketers of Tampax Tampons began segmenting
the market in terms of how resistant women are to using
tampons:
• Cluster 1 (US, UK, Australia) - women who use tampons
and believe themselves to be well informed about them
• Cluster 2 (France, Israel and South Africa) - tampon use is
limited to about 50% of women; some are concerned that
tampons may result in a loss of virginity
• Cluster 3 (Brazil, China, Russia) - women with little or no
experience using tampons, virginity concerns
50
BENEFIT SEGMENTATION
• focuses on the numerator of the value equation :

V = B/P
• this approach can achieve excellent results by
virtue of marketers’ superior understanding of the
problem a product solves or the benefit it offers,
regardless of geography.

51
BENEFIT SEGMENTATION
• Campbell soup made significant inroads into

Japan’s $500 million soup market as time-pressed
homemakers place a premium on convenience.
• Many toothpaste brands are straightforward cavity
fighters, as such, they reach a very broad market.

52
GLOBAL TARGETING
• act of evaluating and comparing the identified

groups (segmenting) and then selecting one or
more of them as the prospect(s) with the highest
potential
• a marketing mix is then formulated that will
provide the firm with the best sales return while
simultaneously creating the maximum amount of
value to consumers

53
GLOBAL TARGETING
• With the product-market profile in hand, marketers

utilize 3 basic criteria for assessing opportunity in global
target markets:
• current size of the segment and anticipated growth
potential
• competition
• compatibility with the company’s overall objectives
and feasibility of successfully reaching a designated
target

54
GLOBAL TARGETING
• Current Segment Size and Growth Potential

• Is the market segment currently large enough to
present a company with the opportunity to make a
profit?
• If not large enough nor profitable enough today, does
it have high growth potential to make it attractive in
terms of a company’s long-term strategy?

55
GLOBAL TARGETING

• One of the advantages of global targeting is that
while a single-country segment might be too small,
even a narrow segment can be served profitably with
a standardized product if the segment exists in
several countries.

56
GLOBAL TARGETING

• India is an individual geographic market that offers
attractive opportunities in many industries.
• It is the world’s fastest growing cell phone market,
expanding at a rate of 50% annually, with 5 million
new subscribers.
• The 60 million middle class men and women who
earn >$275/month is growing rapidly.
• They are brand conscious, buying $100 Tommy
Hilfiger jeans and $700 LV bags

57
GLOBAL TARGETING
• Potential Competition
• a market segment characterized by strong
competition may be a segment to avoid
• a local brand may compete with an entering
multinational
• Peru – Inca Cola
• India – Thumbs Cola
• may opt to buy local firm or form alliance

58
GLOBAL TARGETING
• Potential Competition
• discussions with exporters, bankers and industry
executives are extremely useful in appraising the level
and quality of competition in the potential market

59
GLOBAL TARGETING
• Compatibility and Feasibility

• the company must decide how well a company’s
product fits the market in question using the
following criteria:
• Does the product create value for the target
customers?
• Is adaptation required?
• If so, is it economically justifiable in terms of the
expected sales volume?

60
GLOBAL TARGETING

• Is the cost of assembling sales literature, catalogs,
and technical bulletins feasible in view of the
market potential.
• Is the pursuit of a particular segment compatible
with the company’s overall goals and established
sources of competitive advantage?

61
GLOBAL TARGETING

• Should BMW add a minivan to its product lineup?
• BMW CEO said: “There is a segment in the market
which BMW is not catering to and that is the
minivan or MPV segment. We don’t have a van
because a van as it is in the market today does not
fulfill any of the BMW group brand values. We all
as a team said ‘no’.”

62
SELECTING A TARGET MARKET STRATEGY
• Three categories of target marketing strategies:

• Standardized marketing
• Concentrated marketing
• Differentiated marketing

63
• Standardized Global Marketing

• also known as undifferentiated target marketing
• analogous to mass marketing in a single country
• creating the same marketing mix for a broad
mass market of potential buyers

64
• Standardized Global Marketing

• based on the premise that a mass market exists
around the world and it could be served with a
standardized marketing mix
• product adaptation is minimized, a strategy of
intensive distribution ensures the availability of
the product

65
• Concentrated Global Marketing

• involves devising a marketing mix to reach a niche
(a single segment of the global market)
• Chanel targets the upscale, prestige segment of
the cosmetics market
• Body Shop caters to consumers who want
“natural” beauty aids and cosmetics that have
not been tested on animals

66

• defines markets narrowly
• go for global depth rather than national breadth
• German company Winterhalter is a hidden
champion in the dishwasher market
• it has never sold a dishwasher to a consumer

67

• go for global depth rather than national breadth
• it focuses exclusively on dishwashers for hotels and
restaurants
• it offers dishwashers, detergents, water conditioners
and service

68
• Differentiated Global Marketing

• also known as multi-segment targeting
• entails targeting two or more distinct market
segments with multiple marketing mix offerings
• allows a company to achieve wider market
coverage

69

• Rover has a $50,000 Range Rover for the high end
market, a scaled-down Land Rover Discoverer for
under $35,000 competing directly with the Jeep
Grand Cherokee
• Unilever and Cosmair target both ends of the
perfume market

70

• Unilever targets the luxury market with Calvin
Klein and Liz Taylor’s Passion
• Unilever’s mass market brands are Wind Song and
Brut
• Cosmair sells Giorgio Armani Gio to the upper end
market and Gloria Vanderbilt to the lower end

71
POSITIONING
• act of locating a brand in customers’ minds over

and against other products in terms of product
attributes and benefits that the brand does and
does not offer
• “staking out turf”or “filling a slot” in the mind of
target customers

72
POSITIONING
• Unilever offers a full range of brands within a given

product category
• It has 10 detergent brands positioned slightly
differently
• Crest toothpaste is positioned as an all-around
cavity fighter
• Closeup contains breath freshener

73
GENERAL STRATEGIES FOR POSITIONING
• by attribute or benefit
• In global marketing, the fact that a product is
“imported” can itself represent a benefit
positioning.
• Economy, reliability and durability are other
frequently used attributes.
• Volvo cars are known for solid construction that
offers safety in case of a crash.

74
• by attribute or benefit
• BMW is known as the “ultimate driving
machine”.
• The ads for Visa credit card focuses on the
benefit of worldwide merchant acceptance.

75
• by quality and price

• This strategy can be thought of in terms of
continuum from high fashion or quality and high
price to good value (rather than low quality) at a
low price.
• The American Express card has been positioned as
an upscale charge card rather than a credit card like
Visa or Mastercard.

76

• The Discover card is at the other end of the
continuum.
• Its value position results from no annual fee and
an annual cash rebate to cardholders.

77

• Vodkas like Absolut, Finlandia and Stolichnaya
Gold have been successfully positioned as
superpremium products at double the price of
ordinary vodka.

78
• by use or user
• Describing how a product is used by or by
associating a product with a user or class of users.
• The extraordinary success of Marlboro as a global
brand is due in part to the product’s association with
cowboys – the archetypal symbol of freedom.

79
• by use or user
• Smoking Marlboro is a way of getting in touch with a
powerful urge to be free and independent.
• The message is reinforced in advertising that urges
smokers to “join that rugged, independent cowboy in
the Old West!”

80
• by use or user
• The ad succeeds because it is very well done and
evidently addresses a deep, powerful need that is found
everywhere around the globe.
• An ad for an upscale Range Rover showing the sports
utility vehicle on a mountaintop has the headline: “The
real reason many CEOs are unavailable for comment.”

81
• by competition
• Implicit or explicit reference to competitors can
provide the basis for an effective positioning
strategy.
• The global marketing strategy for The Body Shop
emphasizes the difference between the
principles pursued by mainstream cosmetics
manufacturers and retailers and those of the
company.

82
• by competition
• The Body Shop brand stands for natural
ingredients, no animal testing and recyclable
containers.
• The Body Shop broke with the conventional
industry approach of promising miracles by
giving customers realistic expectations of what
health and beauty aids can accomplish.

83
• by competition
• Some products can be positioned the same way
in every market.
• Benetton uses the same positioning for its
clothing when it targets the global youth market.
• Marlboro cigarettes are positioned around the
world as a rugged, virile image.

84

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International Marketing AT BANZON

• “the process of identifying specific segments -

International Marketing AT BANZON

• The Pareto Law usually applies to international

International Marketing AT BANZON

• 1. Macro-segmentation – the division of a number of

International Marketing AT BANZON

• Population size Population character

International Marketing AT BANZON

International Marketing AT BANZON

Rank Country Name Score*

Source: CITI 10 (2017). Retrieved from https://www.citi.io/2017/01/26/ the- top-11-

*1 to 7, is based on factors including secondary education enrollment rate

• Theodore Levitt advanced the thesis that

International Marketing AT BANZON

• Global companies segment world markets

International Marketing AT BANZON

• It is also possible to cluster different national

International Marketing AT BANZON

• dividing the world based on geographic subsets

International Marketing AT BANZON

International Marketing AT BANZON

Primary Secondary Tertiary

International Marketing AT BANZON

International Marketing AT BANZON

International Marketing AT BANZON

• World demographic facts and trends:

International Marketing AT BANZON

International Marketing AT BANZON

• World demographic facts and trends:

International Marketing AT BANZON

• Income and Population Segmentation

International Marketing AT BANZON

International Marketing AT BANZON

• Income and Population Segmentation

International Marketing AT BANZON

• Income and Population Segmentation

International Marketing AT BANZON

• Income and Population Segmentation

International Marketing AT BANZON

• Income and Population Segmentation

International Marketing AT BANZON

• McDonald’s global expansion illustrated the

International Marketing AT BANZON

• GNP and other measures of national income

International Marketing AT BANZON

COUNTRIES 2016 RANK COUNTRIES 2016

Source: IMF World Economic Outlook (WEO), April 2016

• Caution in using income as indicator of a nation’s

International Marketing AT BANZON

International Marketing AT BANZON

International Marketing AT BANZON

International Marketing AT BANZON

International Marketing AT BANZON

International Marketing AT BANZON

• groups people in terms of their attitudes, values,

International Marketing AT BANZON

• Porsche AG turned to psychographics when

International Marketing AT BANZON

International Marketing AT BANZON

International Marketing AT BANZON

• Richard Ford, Porsche VP of Sales and Marketing