Segmentation, Targeting, and Positioning

1. Segmentation, Targeting, and Positioning Global Marketing Chapter 7

2. Market Segmentation • Represents an effort to identify and categorize groups of customers and countries according to common characteristics

3. Targeting • The process of evaluating segments and focusing marketing efforts on a country, region, or group of people that has significant potential to respond • Focus on the segments that can be reached most effectively, efficiently, and profitably

4. Positioning • Positioning is required to differentiate the product or brand in the minds of the target market.

5. Global Market Segmentation • Defined as 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 responses to a company’s marketing mix.

6. Contrasting Views of Global Segmentation • Conventional Wisdom • Assumes heterogeneity between countries • Assumes homogeneity within a country • Focuses on macro level of 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

7. Global Market Segmentation • Demographics • Psychographics • Behavioral characteristics • Benefits sought

8. Demographic Segmentation • Income • Population • Age distribution • Gender • Education • Occupation What are the trends?

9. Age Segmentation • Global Teens–youngpeople between the ages of 12 and 19 • 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

10. Gender Segmentation • In focusing on the needs and wants of one gender, do not miss opportunities to serve the other • Companies may offer product lines for both genders • Nike, Levi Strauss

11. Psychographic Segmentation • Grouping people according to attitudes, values, and lifestyles Porsche example from SRI International • Top Guns (27%): Ambition, power, control • Elitists (24%): Old money, car is just a car • Proud Patrons (23%): Car is reward for hard work • Bon Vivants (17%): Car is for excitement, adventure • Fantasists (9%): Car is form of escape

12. Behavior Segmentation • Focus on whether people purchase a product or not, how much, and how often they use it • User status • Law of disproportionality/Pareto’s Law–80% of a company’s revenues are accounted for by 20% of the customers

13. Benefit Segmentation • Benefit segmentation focuses on the value equation • Value=Benefits/Price • Based on understanding the problem a product solves, the benefit it offers, or the issue it addresses

14. Ethnic Segmentation • The population of many countries includes ethnic groups of significant size • Hispanic Americans • 40+ million Hispanic Americans (14% of total pop.) with $560 billion annual buying power • CA Mexicans have after-tax income of $100 billion • The number of Hispanic teens will rise from 12 percent of the U.S. teen population to 18 percent in the next decade

15. Target Marketing Strategies

16. Concentrated Marketing • The focus is acquiring a large share of one or a few segments of niches. • Generally, there are fewer competitors. • The Internet is ideal for targeting small niche markets. • There is some risk in focusing on only one market.

17. Target Market Strategy Options • Concentrated global marketing • Niche marketing • Single segment of global market • Look for global depth rather than national breadth • Ex.: Chanel, Body Shop • Differentiated global marketing • Multi-segment targeting • Two or more distinct markets • Wider market coverage • Ex.: P&G markets Old Spice and Hugo Boss for Men

18. Differentiated/ Multi segment Marketing • Firm targets several market segments and designs separate offers for each. • The goal is to have higher sales and a stronger position with each market segment. • This approach increases the costs of doing business.

19. Positioning • Locating a brand in consumers’ minds over and against competitors in terms of attributes and benefits that the brand does and does not offer • Attribute or Benefit • Quality and Price • Use or User • Competition

20. Positioning Map

21. Positioning Strategies • Global consumer culture positioning • Identifies the brand as a symbol of a particular global culture or segment • High-touch and high-tech products • Foreign consumer culture positioning • Associates the brand’s users, use occasions, or product origins with a foreign country or culture Beer is associated with this German’s culture; the symbol on his shirt is not German!

23. Positioning Strategies • Local consumer culture positioning • Identifies with local cultural meanings • Consumed by local people • Locally produced for local people • Used frequently for food, personal, and household nondurables

24. Importing, Exporting, and Sourcing Global Marketing Chapter 8

25. This chapter looks at: Export selling and export marketing Organizational export activities National policies on imports and exports Tariff systems Key export participants Introduction

26. ExportSelling vs. Export Marketing • Export selling involves selling the same product, at the same price, with the same promotional tools in a different place • Export marketing tailors the marketing mix to international customers

27. Requirements for Export Marketing • An understanding of the target market environment • The use of market research and identification of market potential • Decisions concerning product design, pricing, distribution and channels, advertising, and communications

28. National Policies Governing Exports and Imports • Most nations encourage exports and restrict imports • Goods and services imported into the U.S. almost doubled in seven years • In 2008, the total was $2.5 trillion

29. Government Programs that Support Exports • Tax incentives • Subsidies • Governmental assistance • Free trade zones

30. Governmental Actions to Discourage Imports and Block Market Access • Tariffs ( “Three R’s”) • Nontariff barriers • Quotas • Discriminatory procurement policies • Restrictive customs procedures • Arbitrary monetary policies • Restrictive regulations Port Authority of Thailand: LaemChabang

31. Examples of Trade Barriers • Table 8.3 p. 277 • EU- 16.5% antidumping tariffs on Shoes from China • 10% on shoes from Vietnam • China- 28% on foreign made auto parts

32. Governmental actions to discourage imports • A nontariff trade barrier (NTB) is any measure other than a tariff that is an obstacle to the sale of products in a foreign market. NTBs are also known as hidden trade barriers. • A quota is a government-imposed limit or restriction on the number of units or the total value of a particular product or product category that can be imported. • In 2005, for example, textile producers in Italy and other European countries were granted quotas on 10 categories of textile imports from China. • Discriminatory procurement policies can take the form of government rules and administrative regulationsthat give local vendors priority. • The Buy American Act of 1993

33. Tariff Systems • Single-column tariff • Simplest type of tariff • Schedule of duties in which rate applies to imports from all countries on the same basis • Two-column tariff • General duties plus special duties apply

34. Tariff Systems Sample Rates of Duty for U.S. Imports

35. Preferential Tariff • Reduced tariff rate applied to imports from certain countries • GATT prohibits the use, with three exceptions: • Historical preference arrangements already existed • Preference is part of formal economic integration treaty • Industrial countries are permitted to grant preferential market access to LDCs

36. Customs Duties • Ad valorem duty • Expressed as percentage of value of goods • Specific duty • Expressed as specific amount of currency per unit of weight, volume, length, or other unit of measurement • $1 per pair of Shoes • 1000 Baht per ton of the goods imported • Compound or mixed duties • Apply both ad valorem and specific on the same items

37. Other Duties and Import Charges • Anti-dumping Duties • Dumping is the sale of merchandise in export markets at unfair prices • Special import charges equal to the dumping margin • 48.5% added to tax against Chinese imports of bicycles in EU • Countervailing Duties • Added duties to offset the subsidies granted in the export countries • Temporary Surcharges

38. Key Export Participants (Self Study) • Foreign purchasing agents • Export brokers • Export merchants • Export management companies • Export distributor • Export commission representative • Cooperative exporter • Freight forwarders • Manufacturer’s export representatives

39. Organizing for Exporting in the Market Country • Direct market representation • Advantages: control and communications • Representation by independent intermediaries • Advantages: best for situations with small sales volume

40. Export Financing and Methods of Payment • Documentary credits (Letter of Credit) • Documentary collections (Bill of Exchange) • Cash in advance • Sales on open account

41. Flow Chart of Documentary Credit

44. Sourcing • Must emphasize benefits of sourcing from country other than home country • Must assess vision and values of company leadership • Advantage can be gained by • Concentrating some of the marketing activities in a single location • Leveraging company’s know-how • Tapping opportunities for product development and R&D

46. Factors that Affect Sourcing • Management vision • Factor costs and conditions • Customer needs • Logistics • Country infrastructure • Political risk • Exchange rate, availability, and convertibility of local money

47. Duty Drawback • Refunds of duties paid on imports that are processed or incorporated into other goods AND re-exported • Reduce the price of imported production inputs • Used in the U.S. to encourage exports • After NAFTA, U.S. reduced drawbacks on exports to Canada and Mexico • China had to reduce drawbacks in order to join the WTO

48. Looking Ahead to Chapter 9 • Global Market Entry Strategies: Licensing, Investment, and Strategic Alliances