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Case Example • Cigarettes are one of the most widely distributed and profitable global consumer products. However, as the number of smokers in high-income countries declines due to heightened antismoking sentiment and health concerns, tobacco industry • giants such as Britain's B. A. T. Industries PLC and America's Philip Morris Company have set their sights on new market opportunities. In particular, tobacco companies are targeting smokers in developing countries such as China; Thailand, India, and Russia.
• These are nations in which a combination of forces-rising incomes in some countries and challenging economic conditions in others, smoking is fashionableness, and the status assigned to Western cigarette brands interacts to expand the smoking market and brand share of the leading global brands. • Moreover, because many women in these countries view smoking as a symbol of their improving status in society, the tobacco companies are aggressively targeting women.
• Market segmentation represents an effort to identify and categorize groups of customers and countries according to various characteristics. • Targeting is the process of evaluating the segments and focusing marketing efforts on a country, region, or group of people that has significant potential to respond. Such targeting reflects • the reality that a company should identify those consumers it can reach most effectively and efficiently.
MARKET SEGMENTATION • MARKET SEGMENTATION is the process of subdividing a market into distinct subsets of customers that behave in the same way or have similar needs. • Each subset may conceivably be chosen as a market target to be reached with a distinctive marketing strategy. • The process begins with the basis of segmentation a product specific factor that reflects differences in customers’ requirements or responsiveness to marketing variables.
Global market segmentation • Global market segmentation is a process of dividing the world market into distinct subsets of customers that behave in the same way or have similar needs, or, as one author put it, • it is “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 behaviour”.
GEOGRAPHIC SEGMENTATION • The advantage of geography is proximity: markets in geographic segments are closer to each other and easier to visit on same trip or to call on during the same time window. • LIMITATIONS • The mere fact that markets are in the same world geographic does not meant that they are similar. Japan and Vietnam are both in East Asia, but one is high income, post industrial society and the other is an emerging less developed, pre industrial society.
DEMOGRAPHIC SEGMENTATION • Demographic segmentation is based on measureable characteristics of population such as age, gender, income, education and occupation. • A number of demographic trends-aging population, fewer children, more women working outside the home and higher income and living standards suggest the emergence of global segment. • For most consumer and industrial products, national income is the single most important segmentation variable and indicator of market potential. Annual per capita income varies widely in world markets, from a low of $81 in the Congo to the high of $38, 587 in Luxembourg. • The U. S. market, with per capita income of $29, 953, more than $8. 3 trillion in 2000 national income and a population of more than 275 million people is enormous. Thus, Americans are the favourite target market. • Many global companies also realize that for products with a low enough price-e. g. cigarettes, soft drinks and some packaged goods-population is a more important segmentation variable than income. Thus, China and India with respective population of about 1. 3 billion and 1. 0 billion might represent attractive target markets.
• To know the standard of living of people in a country, it is necessary to determine the purchasing power of the local currency. In low income countries the actual purchasing power of the local currency is much higher than the implied by exchange values. • Age is another useful demographic variable. One global segment based on demographics is global teenagers-young people between the ages of 12 and 19. Teens, by virtue of their interest in fashion, music and a youthful life style, exhibit consumption behaviour that is remarkably consistent across borders.
• Another global segment is so called elite: older, more affluent consumers who are well travelled and have the money to spend on prestigious products with an image of exclusivity. This segment’s needs and wants are spread over various product categories: • Durable goods e. g. luxury automobiles • Non durables e. g. upscale beverages such as rare wines and champagne • Financial services e. g. American express gold and platinum cards
PSYCHOGRAPHIC SEGMENTATION • Psychographic segmentation involves grouping people in terms of their attitudes, values and lifestyles. • Data are obtained from questionnaires that requires respondents to indicate the extent to which they agree or disagree with series of statements.
Backer’s Spielvogel & Bates’s Global Scan • Global scan is a study that encompasses 18 countries, mostly located in the Triad. To identity attitudes that could help explain and predict purchase behaviour for different product categories, the researchers studied consumer. • Combining all the country data yielded a segmentation study known as Target Scan, a description of five global psychographic segments that BSB claims represent 95% of the adult populations in the 18 countries surveyed. BSB has labelled the segments as follows
D’arcy Massius Benton & Bowler’s Euroconsumer Study • DMBB’s research team focused on Europe and produced a 15 -country study titled “The Euroconsumer: Marketing Myth or Cultural Certainty? ” The researches identified four lifestyle groups:
Young & Rubicam’s Cross Cultural Consumer Characterizations (4 Cs) • Young & Rubicam’s 4 Cs is a 20 -country psychographic segmentation study focusing on goals, motivations, and values that help to determine consumer choice. The research is based on the assumption that “there are underlying psychological processes involved in human behaviour that are culture free and so basic that they can be found all over the globe”. • There are three groups which are further subdivided into seven segments: • Constrained (Resigned Poor and Struggling Poor) • Middle Majority(Mainstreamers, Aspirers and Succeeders) • Innovators (Transitional and Reformers)
Psikografis Indonesia, 8 Segmen (MCI)
BEHAVIOUR SEGMENTATION • Behaviour segmentation focuses on whether people buy and use a product, as well as how often and how much they use it. • Consumers can be categorized in terms of usage rates e. g. heavy, medium, light and nonuser. • Consumers can also be segmented according to user status: potential users, non users, ex users, regulars, first-timers and users of competitors, products. • 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. Tobacco companies are targeting China because the Chinese are heavy smokers
BENEFIT SEGMENTATION • Global benefit segmentation focuses on the numerator of the value equation-the B in V=B/P. This approach can achieve excellent results by virtue of markerters’ superior understanding of the problem a product solves or the benefit it offers, regardless of geography. e. g. nestle discovers that cat owners attitude toward feeding heir are same everywhere.
VERTICAL VERSUS HORIZONTAL SEGMENTATION • Vertical segmentation is based on product category or modality and price points. • E. g. , in medical imaging there is X-ray, computed axial tomography(CAT) scan, magnetic resonance imaging(MRI) and so on. Each modality has its own price points.
GLOBAL TARGETING • Targeting is the act of evaluating and comparing the identified groups and then selecting one or more of them as the prospect(s) with the highest potential. • CRITERIA FOR TARGETING • The three basic criteria for assessing opportunity in global target markets are the same as in single country targeting
SELECTING A GLOBAL TARGET MARKET STRATEGY
GLOBAL PRODUCT POSITIONING
High-Tech Positioning • Personal computers, video and stereo equipment and automobiles are examples of product cateogries in which high tech positioning has proven effective. Such products are frequently purchased on the basis of concrete product features, although image may also be important. • 1. Technical Products • Computers, chemicals, tires and financial services are just a sample of product cateogries whose buyers have specialized needs, require a great deal of product information and share a common “language” • 2. Special Interest Products • Although less technical and more leisure or recreation oriented, special interest product are also characterized by a shared experience and high involvement among users. Again, the common language and symbols associated with such products can transcend language and cultural barriers.
High-Touch Positioning • Marketing of high touch products requires less emphasis on specialized information and more emphasis on image. High touch products highly involve customers. Buyers of high touch products also share a common language and set of symbols relating to themes of wealth, materialism and romance.