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Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter
7
Local Buyer Behavior,
Segmentation, and
Positioning
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Local Culture and Buyer Behavior

Marketing and Materialism

Marketing actions are basically undertaken in the belief that more and
better goods will bring an increase in consumers’ standards of living,
an increase in their satisfaction, and perhaps even more happiness

When anticipating customers’ reactions to new products and increased
product choices, it is important to note the limits on the causal
relationship between material affluence and personal happiness

The psychologically effective impact of risking income is that of the
relative income, not the absolute income
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Local Culture and Buyer Behavior

The Meaning of a Product

A necessary preliminary step in analyzing local consumers is to
question what the product or service “means” to them



This is a question of what the product represents generically (the core benefit)

The identification of a different core benefit is a necessary first step in
analyzing local customers
The generic function of a product depends more on the local environment
than on innate individual preferences
A Universal Trait in Local Form

Consumers perceive a link between behavior and desired results

Buyers do not choose products or services without reason, even in the
most fatalistic of cultures
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Buyer Decision Making

Problem Recognition

A problem is when an individual perceives a difference between an
ideal and an actual state of affairs

New products often lead to tension and a recognized “problem”

The core benefits of the product may differ between local markets

For the local marketer it is important to recognize that education about
the core benefits might be necessary in order to create a demand for
the product
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Local Culture and Buyer Behavior

Search


A consumer’s search for alternative ways to solve the problem is
closely related to his or her level of involvement with the product
category

For product with which involvement is high, search tends to be more
comprehensive and time consuming

For convenience and habit purchases, the decision process is shorter, with
little need for extensive searches or alternative evaluations
Search intensity is dependent on the perceived availability of the
alternative

One advantage for product with high global brand awareness is that initial
distrust is easier to overcome
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Local Culture and Buyer Behavior

Evaluation of Alternatives

A new product or service is in the “consideration set”


A highly involved individual will process the available information
matching the pros and cons of the alternatives against preferences
Consumers can deal with multiattributed evaluations in several ways

They can use gradually less-important features to successively screen out
alternatives


A “hierarchical” decision rule
They can consider all features simultaneously

A “compensatory” rule
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Local Culture and Buyer Behavior

Choice

The final choice of which alternative to select or try is typically
influenced by social norms and by situational factors

Social Norms

Where group pressures to comply are strong social norms influence is
expected to override multiattributed evaluation


The social norms can be usefully analyzed by the extended Fishbein model
The social norms involve two aspects

Social forces

Motivation to comply
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Local Buyer Research

Research Objectives


It is common to distinguish between the marketing decision problem
and the marketing research problem

The decision problem might revolve around the questions of what to do about
declining sales

The research problem might be to assess customer attitudes and satisfaction levels
Qualitative Research

Focus groups have become standard for initial exploratory research

In foreign markets, focus groups have the advantage of being relatively
inexpensive, can be completed quickly, and can reach local pockets of the market

Unfortunately, they can also constitute an unrepresentative sample because typical
screening criteria are incorrect in the new environment or are not implemented
correctly
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Local Buyer Research

Consumer Surveys

Surveys of relatively large (n = 500 and above) random samples
drawn from a sampling frame of representative product users
constitute the central importance of traditional marketing research


There are many cultural aspects affecting the application of the kind of
direct questioning involved in the typical consumer survey

In high context cultures the idea that one can understand consumers from their
responses to a formal survey is naïve

Face-to-face interviews are prone to bias because of demand characteristics
Even if surveys are afflicted by a number of problems and potential
distortions in many foreign markets, they can still be useful
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Local Buyer Research

Trade Surveys


The quickest, least expensive, and most commonly used method for
learning about customers in a market

Interviewing people in the distribution channels and trade associations can
provide a good starting point for further data gathering and analysis

In the U.S., the use of middlemen for information about consumers is
usually limited to the sales and scanner records of retailers and
wholesalers

In countries with less social mobility and less diversity than the U.S., key
informants in the trade are good sources of information about buyers
Observational Studies

Research involving direct observation of customers buying and using existing
product can be very beneficial
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Local Buyer Research

Causal Research

Involves more scientific methods of research design and data analysis

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Measurement and Scaling

In attitude scaling, very basic factors can create difficulties


Typical research designs involve experimental methods and the estimation
of links in causal models
The cognitive and emotional concepts measured might not be equivalent
across cultures
Questionnaire Construction

The questionnaire employed in the typical consumer survey needs to be
carefully pretested
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Local Buyer Research

Sampling

The lack of comprehensive and reliable sampling frames has long
been a problem for marketing researchers in many countries


However, the emergence of firms that specialize in developing lists for
direct marketing and survey research is gradually resolving this problem
Fieldwork

Fieldwork will typically be handled by a subcontracting marketing
research firm, sometimes a full-service advertising agency

It is important to emphasize that as economic growth occurs, mature
markets with differentiated demand requiring formal and scientific market
research applications will emerge in many countries
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Local Microsegmentation

To be useful for marketing purposes

Targeted segments have to be

Identifiable (What distinguishes them?)
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Measurable (How many belong to each segment?)

Reachable (How do distribute to, communicate to, each segment)

Able to buy (Can they afford it?)

Willing to buy (Do they want it?)
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Local Microsegmentation

Segmentation Criteria

The most useful segmentation criteria accomplish three goals

The criteria help give a clue to what influences the segment’s buying
behavior

Both consumption level and choice between competing brands

The criteria should be reflected in published data so that the size of the
segment can be calculated

The criteria should help identify the media through which marketers can
communicate with the segment
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Local Microsegmentation
 Segmentation
Criteria

Economic - the most basic local segmentation criterion is still
economic development

Demographic - the age and family structure in different countries play
an important role in determining global segments

Culture - people care about their identify even though a lot has been
said in the media about the emergence of global segments of people

Benefits - the most clearcut segmentation criteria are those which
focus on the benefits sought

Lifestyle – consumers start developing their own lifestyle with buying
behavior involving more than simple necessities
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Local Product Positioning

The Product Space

Four sets of data constructs the product space

Salient Attributes

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Evoked Set

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Involves identifying what brands are considered by the buyer
Attribute Ratings


The data on what attributes a customer looks for in a product
Shows how the individual rates the brands in evoked set on salient attributes
Preferences

Involves how the brands rank in terms of overall preferences
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Local Product Positioning

Strategic Implications

The traditional idea of product positioning


New entries simply were added somewhere in the consumer’s existing
perceptual maps
Overcoming Mispositioning

A drawback of a global product or brand is that it is not adapted to the
actual preferences in a particular foreign market

Why would customers buy a mispositioned offering if they have
alternatives closer to their ideal?

Lower price

Brand image and status
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Local Product Positioning

Changing the Product Space


In practice it is unlikely that customers’ perceptual maps stay
unchanged when a new product or brand enters the market
Changing Preferences

The entry of a global brand might well change preferences in addition
to perceptions

In consumer psychology terms, the global brand effect on positioning
usually involves social norms which change preferences in favor of the
global brand
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Targeting Strategies

Market Segmentation Cases

Universal Segment


Unique Segment

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A segment which is the same across countries
A segment that differs across countries
Product Positioning Dimensions

Uniform Positioning


Indicates a positioning which is the same across countries
Adapted Positioning

Indicates that the positioning theme differs across countries
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.