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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: + 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 Differences in customers patterns and buying behavior Differences in competitive environment Differences in Government relations and standard 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 The question is NOT whether or not to standardize, is the matter of DEGREE Need the balance off the benefits of “degree of modification” vs. the “adaptation costs” Standardization or customization are not mutually exclusive strategies – middle-of-the-road approach 1 B891/Gp 5/Oct1999/TUT2 C. Reasons for international market segmentation Customers differ in their needs, wants, preferences, perceptions and/or buying attitudes 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 Based on buyer behavior: buying power, education, lifestyle, demographics etc. Rarely useful for international marketers : not clear which variables to include / ignore Unstable grouping : diff. groupings as a result of diff. variables included 2. Criteria development – preliminary screening – micro-segmentation Set criteria, thresholds on certain variables, examine the countries by screening the thresholds, then do micro-segmentation 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 2 B891/Gp 5/Oct1999/TUT2 substantial gaps in customers needs between countries – hard to derive cross-border segments need to be localized e.g. food industry : intrinsic taste preferences 3 B891/Gp 5/Oct1999/TUT2 E. Bases for global market segmentation Major segmentation variables: Demographics: teenagers – a global customer group Socioeconomic variables 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 4 B891/Gp 5/Oct1999/TUT2