International Marketing Efforts: International Marketing Efforts 10/24, 2007


Slide2: “To be recognized as a world wide auto maker, you have to be successful in the U.S. This is a very difficult market to sell cars in. Customers can be very picky and unforgiving.” - Y.I. Lee President, Hyundai Motor America


Slide3: “If we distributed pictures only in the United States, we’d lose money. It takes the whole world now to make the economics of movie-making work.” - William Mechanic President, 20th Century Fox


Slide4: Market Segmentation Market segmentation represents an effort to identify and categorize groups of customers and countries according to various characteristics Global market segmentation is the process of dividing the world market into distinct subsets of customers that behave in the same way or have similar needs “Pluralization of consumption” and “Segment simultaneity” (Levitt)


Contrasting Views of Global Segmentation: Contrasting Views of Global Segmentation Conventional Wisdom Assume heterogeneity between countries Focuses heavily on cultural differences at a macro level Segmentation relies heavily on clustering of national markets Within-country micro segments are assigned secondary priority Unconventional Wisdom Assume the emergence of segments that transcend national boundaries Acknowledges the existence of within-country differences Emphasizes differences and commonalities in micro-level values, consumption patterns, etc. Segmentation relies on grouping micro markets within a country or between countries Micro segments based on consumer behavior are assigned high priority


Slide6: Global Market Segmentation Matrix Countries Product/Market Segments Countries Product/Market Segments Maximum Similarities Maximum Differences Maximum Similarities Maximum Differences


Slide7: Macrosegmentation Macrosegmentation consists of grouping countries on the basis of common characteristics deemed to be important for marketing purposes The variables typically include sociodemographic data on population size and character, disposable income levels, educational background, and primary language(s), as well as indicators of level of development, infrastructure, rate of growth in GNP, and political affiliation


Slide8: A Market-Oriented Clustering of World Markets Dependent societies Seekers Climbers Luxury and leisure societies The rocking chair Most countries in Africa, Asia, and a few in South America Most Latin America; some in Asia, and some in Africa Brazil, Venezuela, Portugal, Mexico, Taiwan, Malaysia, Turkey, South Korea United States, Canada, Japan, United Kingdom, Australia West Germany, Switzerland, Luxembourg, The Netherlands


Slide9: Diversification versus Focus Strategy Empirical research has shown that generally diversified strategies tend to lead to greater sales abroad, while concentrated or focused strategies tend to result in somewhat higher profitability Factors Diversify if: Focus if: Growth rate Demand stability Competitive lag Spillover Need to adapt product Need to adapt promotion Marginal sales Need for control Entry barriers Low Low Short High Low Low Diminishing Low Low High High Long Low High High Increasing High High


Microsegmentation: Microsegmentation In microsegmentation the global market is faced with the task of selecting similar target segments within the set of countries Targeted segments have to possess certain characteristics: Identifiable Measurable Reachable Able to buy Willing to buy


Segmentation Criteria: Segmentation Criteria Give a clue to what influences the segment’s buying behavior, both the consumption level and choice between competing brands Should be reflected in published data so that the size of the segment can be calculated Should help identify the media through which marketers can communicate with the segment Demographic (income; population; age distribution; gender; education; occupation) Psychographic (attitudes; values; lifestyles) Behavior (usage rates; user status) Benefit Ethnic


Psychographic Segmentation: Psychographic Segmentation Nokia’s mobile phone users: “poseurs,” “trendsetter,” “social contact seekers.” and “highfliers” Porsche’s American Customers Top Guns (27%): Driven and ambitious. Care about power and control. Expected to be noticed. Elitists (24%): Old-money. A car—even an expensive one—is just a car, not an extension of one’s personality. Proud Patrons (23%): Ownership is what counts. A car is a trophy, a reward for working hard. Being noticed doesn’t matter. Bon Vivants (17%): Cosmopolitan jet setters and thrill seekers. Car heightens excitement. Fantasists (9%): Car represents a form of escape. Don’t care about impressing others; may even feel guilty about owning car.


Slide13: VALS Based on attitudes toward issues such as the importance of work, the effectiveness of free enterprises, concentration of power, women’s role, strength of religious belief, personality, and satisfaction An analysis of 800 such measures across 2,713 consumers produced nine clusters that were labeled: Inner-directed consumers Integrated; Societally conscious; Experientials; I-am-me consumers Outer-directed consumers Achievers; Emulators; Belongers Need-driven consumers Survivors; Sustainers


Slide14: Three Categories of Consumer Values and Lifestyles Need-driven consumers: Exhibit spending driven by need rather than preference and are subdivided into survivors and sustainers, the former among the most disadvantaged people in the economy Outer-directed consumers: Are the backbone of the marketplace and generally buy with awareness of what other people will attribute to their consumption of that product Inner-directed consumers: They comprise a much smaller percentage of the population. Their lives are directed more toward their individual needs than toward values oriented to externals. Although their numbers are small, they may be important as trend setters or groups through whom successful ideas and products trickle down


VALS 2 Types: VALS 2 Types Actualizers Achievers Experiencers Fulfilleds People Oriented Believers Status Oriented Action Oriented Strivers Strugglers Makers


Y&R’s Cross-Cultural Consumer Characterizations (4Cs): Y&R’s Cross-Cultural Consumer Characterizations (4Cs) 4Cs 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 behavior that are culture-free and so basic that they can be found over the globe Seven different types grouped into three overall categories: Constrained (Resigned Poor and Struggling Poor), Middle Majority (Mainstreamers, Aspirers, and Succeeders), and Innovators (Transitionals and Reformers)


Consumer Profiles of Y&R’s 4Cs: Consumer Profiles of Y&R’s 4Cs Attitudes Work Lifestyle Purchase Behavior Resigned Poor Struggling Poor Mainstreamers Aspirers Succeeders Transitionals Reformers Unhappy Distrustful Unhappy Dissatisfied Happy Belong Unhappy Ambitious Happy Industrious Rebellious Liberal Inner growth Improved world Labor Unskilled Labor Craftsmen Craftsmen Teaching Sales White collar Managerial Professional Student Health field Professional Entrepreneur Shut-in Television Sports Television Family Gardening Trendy Sports Fashion mags Travel Dining out Arts/crafts Special int. mags Reading Cultural events Staples Price Price Discount stores Habit Brand loyal Conspicuous consumption Credit Luxury Quality Impulse Unique products Ecology Homemade/grown


Positioning: Positioning Positioning refers to the act of locating a brand in customers’ minds over and against other products in terms of product attributes and benefits that the brand does or does not offer Attribute or Benefit Quality and Price Use or User Competition


Product Space: Product Space The product space map that helps define a product’s or brand’s position is constructed from four sets of data Salient attributes Evoked set Attribute ratings Preferences In psychology, these diagrams are usually called perceptual maps


Slide20: Perceptual Map of International Airlines  SQ  CX  CI  UA  EG  MH  BR


Global Consumer Cultures: Global Consumer Cultures Shared sets of consumption-related symbols (product categories, brands, consumption activities, and so forth) Mass media programming


Consumer Culture-related Positioning: Consumer Culture-related Positioning Global consumer culture positioning (GCCP) Local consumer culture positioning (LCCP) Foreign consumer culture positioning (FCCP)


Slide25: Consumer Culture-related Positioning (I) Global consumer culture positioning (GCCP) A strategy that identifies the brand as a symbol of a particular global culture or segment Effective for communicating with global teens, cosmopolitan elites, global-trotting laptop warriors who consider themselves members of a “transnational commerce culture,” and other groups High-tech and high-touch products are both associated with high levels of customer involvement and by a shared “language” among users


GCCP: GCCP High-Tech Positioning High-tech products are sophisticated, technologically complex, and/or difficult to explain or understand Consumers often have special needs or interests and rational buying motives Frequently evaluated against established objective standards Communications emphasize performance-related attributes and features High-Touch Positioning Consumers feel an emotional or spiritual connection with high-touch products The positioning can be reinforced by the careful selection of the thematic, verbal, or visual components incorporated into advertising and other ommunications. Both high-Tech and High-Touch Satisfy buyer’s rational criteria while evoking an emotional response


Consumer Culture-related Positioning (II): Consumer Culture-related Positioning (II) Foreign consumer culture positioning (FCCP) A strategy that associates the brand’s users, use occasions, or production origins with a foreign country or culture Local consumer culture positioning (LCCP) A strategy that associates the brand with local cultural meanings, reflects the local culture’s norms, portrays the brand as consumed by local people in the national culture, or depicts the product as locally produced for local consumers Food, personal nondurables, and household nondurables The world's local bank