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Chapter 7

Segmentation, Targeting,

and Positioning

 The variables used to segment global markets

 The criteria used to choose specific markets

 Product-market grid

 Target market strategies

 Positioning strategies

Agenda

 Segmentation Variables

 (^) Geographic segmentation  (^) Demographic segmentation  (^) Psychographic segmentation  (^) Behaviour segmentation  (^) Benefit segmentation Global Market Segmentation

 Geographic Segmentation

 (^) Should we focus on country as the primary segmentation variable to segment the global market?  (^) What are the pros & cons of focusing primarily on country base? Global Market Segmentation

 A Better Approach to China’s Markets (HBR March 2010)

 Most companies segment Chinese cities by size and affluence.

 Among China’s 800-plus cities, 200 of them with populations over 1

million, are growing at different rates and changing in different ways.

 Ones have similar numbers of people can be as different as France &

Germany in demographics and consumer attitudes.

 Solution: organize markets as clusters – groups of cities located within

300 km, each represent at least 1% of GDP, sharing similarities in

consumer preference.

Differences among Chinese Cities

 Based on measurable population characteristics

 (^) Age  (^) Age distribution  (^) Income  (^) Gender  (^) Education  (^) Occupation

 National income is an important variable

 (^) 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 Demographic Segmentation

• (^) Global Teens -12 and 19 yr. olds “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.

Income & Population Segmentation

 (^) Successful Idealists  (^) 5% to 20% of the population  (^) consists of persons who have achieved professional and material success while maintaining commitment to abstract or socially responsible ideals  (^) Affluent Materialists  (^) Status-conscious ‘up-and-comers’– many of whom are business professionals – use conspicuous consumption to communicate their success to others  (^) Comfortable Belongers  (^) 25% to 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  (^) harbor little hope for upward mobility  (^) tend to be either resentful or resigned  (^) concentrated in high-crime urban inner city  (^) attitudes tend to affect the rest of society Euroconsumers

 whether buy/use, how much, how often

 Usage rates

 (^) heavy, medium, light, nonuser

 User status

 (^) nonusers, potential, ex-users, regulars, first-timers, users of competitors’ products Behavior Segmentation

 The population of many countries includes ethnic groups of significant

size

 Three main groups in the U.S. include African-Americans, Asian-

Americans, and Hispanic Americans

Ethnic Segmentation

 Sweden based home appliance company. Currently 2nd^ largest after

Whirlpool.

 By late 1980s, through acquisition, Electrolux’s portfolio included more

than 20 brands sold in some 40 countries.

 (^) Zanussi: Italian brand  (^) Arthur Martin: France  (^) Zopaas: Italy

 What do you think of this situation?

Electrolux

 (^) Converge of segments across national markets  (^) Consumers perceived “localness” mainly in terms of how a product was “sold” (local retailer, local media, local brand name) instead of how it was designed or what features it offered  (^) Two full-line regional brands  (^) Electrolux: cross-market segment for high prestige (customers characterized as conservatives)  (^) Zanussi: innovative products (for trendsetters)  (^) Local brands for  (^) Yuppies: young & aggressive urban professionals  (^) Environmentalists: warm & friendly people interested in basic-value products Electrolux

 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

 Three basic criteria:

 (^) Current size of the segment and growth potential  (^) Potential competition  (^) Compatibility and feasibility Assessing Market Potential