Researching and Segmenting Global Markets

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Researching and Segmenting Global Markets
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Is Global Market Research Different?

• Concepts are different, cultural norms may not
  apply
• We may be myopic - assumption may not apply
• Broader definition of competition
• New parameters - tariffs, duties, foreign
  currencies, operating modes

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Inadequate Research Can Cause Costly Mistakes

• Examples
• US ketchup -gt Japan
• US Kentucky Fried Chicken -gt Brasil
• US Soft Drink -gt Indonesia
• D Knorr soup -gt USA
• US cake Mix -gt GB
• Thus In international marketing, information is
  critical in developing effective marketing
  strategies!

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Agenda for Global MIS

• Market Potential
• - demand estimates, consumer behaviour, review
  of products, channels, media
• Competitor Information
• - strategies, intentions, resources, intentions
• Foreign Exchange
• - BoP, interest rates, country currency, analyst
  expectations
• Prescriptive Information
• -laws, regulations, rulings on taxes, earnings,
  dividends
• Resource Information
• - availability human, financial, physical,
  information
• General Conditions
• socio-cultural, political, technological

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Benettons MIS

• Task
• key role in feeling the pulse of the
  style/fashion market and feed info to
  decision-making and production
• System
• relational databases and network for electronic
  data interchange
• How
• transmit data on each sales transaction (from
  7000 stores) via satellite to HQ data is
  analysed for trends which are conveyed to
  manufacturing

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Benettons MIS

• Some key features
• knitwear produced undyed, garments are dyed in
  batches according to fashion trends identified by
  MIS
• field agents use tracking system to follow
  outbound merchandise system shows if item is in
  production, in a warehouse, or in transit
• MIS helps designers digitized image of each
  clothing item is stored (any item from seasonal
  collections) and accessible from PC

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Benettons MIS

• Some key features
• time required from design to shipping slashed
  from 6 months to several weeks.
• re-orders from any Benetton store are filled
  within 13 27 days
• Source Global Marketing, Keegan and Green, 2nd
  Edn, p.217

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Five Rules of Global Research

• 1 - apply the what, why, where and when of
  information
• 2 - use locally available information first
• 3 - identify information sources abroad
• 4 - know where to look
• 5 - do not assume the information is comparable
  or accurate

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Different Types of Markets

• Existing Markets
• Minivan and SVU market segments
• Latent Markets
• Depends on ability to uncover opportunity and
  launch a marketing program that taps the latent
  demand
• example Chrysler created minivan market,
• Japanese created fax machines market

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Different Types of Markets

• Fax is an American innovation commercialized by
  Japanese
• survey research showed no potential demand
• Japanese reviewed early days of mainframe
  computers, photocopy machines, cell phones
• Based on initial economics of buying/using these
  products market acceptance low but each became a
  huge success after people began using them
• Japanese therefore focused on market benefits
  provided rather than the machines themselves

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Different Types of Markets

• Incipient Markets
• Emerges if particular economic, demographic,
  political, or socio-cultural trends continue
• example 1/3 of Indonesias population is under
  the age of 15 presents huge incipient market
  for cigarette marketers 4.4. Million
  teenagers become old enough each ear to smoke
• example rising per capital income in China has
  encouraged Western auto makers to produce
  cars in China

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Too much research would have led to

• The Marlboro cowboy in the U.S. would be
• Marlboro boxer in the UK
• Marlboro bullfighter in Spain
• Marlboro cyclist in France
• Marlboro Sumo wrestler in Japan

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Questions for comparative research

• who are the marketers
• what do marketers do
• how are the marketers interacting
• what is governments role
• what are the key market dimensions
• what do marketers contribute
• how does the environment affect markets

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Equivalence in Global Market Research

• National markets have different definitions
• But It is essential that data have the same
  meaning the same level of accuracy, precision
  of measurement reliability
• This aspect covers all stages of marketing
  research from problem definition to data analysis

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Pepsico Definition of Consumption

• Mexico/ of consumption occasions day prior
• Venezuela
• Argentina of drinks consumed on day prior
• Germany of respondents consuming daily or
  almost daily
• Spain of drinks consumed at least once a
  week
• Italy of respondents consuming on day prior
• Philippines of glasses on day prior
• Source Keegan Green, Global Marketing, 2nd
  Edn, p. 233

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Problem of equivalence

• Conceptual equivalence
• Functional equivalence
• Definitional equivalence
• Linguistic equivalence
• Instrument equivalence
• Temporal equivalence

• Pizza Hut in Thailand
• Bicycles in Holland
• Beer in Northern Europe and Italy
• Soft drink in Australia
• Scales, questions, concepts
• Timing, seasonality, demand evolution

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Segmenting Global Markets

• Segmenting - regional market details
• - market demographics
• - consumer psychographics
• - consumer behaviour
• Targeting - segment size and growth
• - potential competition
• - compatibility and feasibility
• Target market strategy - undifferentiated
• - concentrated
• - differentiated

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Contrasting Views of Global Segmentation

• Conventional Wisdom
• assume heterogeneity of countries
• assume homogeneity within
• focus on macro cultural differences
• Relies on clustering of national markets
• within-country micro segments assigned secondary
  priority
• Source Coskun Smli, International Consumer
  Behaviour, Quorum 1995, p.130

• Unconventional Wisdom
• emergence of segments that transcend national
  boundaries
• acknowledges existence of within-country
  differences
• emphasize differences and commonalities in
  micro-level values, consumption patterns
• grouping micro-markets within a country or
  between countries
• micro-segments based on consumer behaviour
  assigned high priority

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Time?

• Perception and significance of time differs among
  Europeans (and other nations)
• Conscious of time (where time is linear)
• Germany, Switzerland, Sweden, Norway, Denmark,
  Great Britain
• Not conscious of time (where time is cyclical)
• Spain, Portugal, Greece, Southern Italy, South
  of France

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Clock Time or Event Time?

• A - each day is carefully divided into time
  segments
• time of the event is very important
• B - attention paid more to events than time (that
  is used or required by them)
• What are the consequences for market segments?

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Clock Time or Event Time?

• A time-based societies define it in economic
  concepts
• - time is valuable
• - time is invested
• - time is wasted
• - time is money
• B other societies do not see time as precious
• - time is plentiful
• - life has no hurry, no need for hectic
• - economic interpretation has no attraction

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Global Segmentation Issue 1

• Where to go.
• Often requires matching market opportunity with
  an existing business.
• Either extend existing strategy
• - Add elements or modify strategy, or
• - Create a new strategic position.

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Global Segmentation Issue 2

• How and when to adapt strategy to meet national
  needs and build competencies to sustain
  competitive advantage
• National strategy
• Multinational strategy
• Global Strategy

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Global Segmentation Issue 3

• How to identify new global segments that can be
  exploited by the firm
• The firms activities and competencies may have
  the potential to enable the firm to gain
  competitive advantage in global market segments
  in which it does not currently operate.

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Global Segmentation Issue 4

• Size and number of segments
• - Macro - Which countries or regions
• - Micro - National differences within global
  segments

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Core Values

• Roper Starch Worldwide
• 35 countries, adults ranking 56 values
  (important guiding principles)
• gt Strivers more emphasis on material,
  professional goals Asia, Russia (1 in 3 or 4)
• gt Devouts tradition and duty very important
  (22) most common developing Asia, Africa, ME
• gt Altruists social issues, welfare of society
  (18) older (44 median) Latin America, Russia
• gt Intimates values close personal
  relationships and family (15) Americans and
  Europeans
• gt Fun Seekers youngest group (12) especially
  in developed Asia
• gt Creatives strong interest in education,
  knowledge, technology (10) Latin America and
  Europe
• Source Albaum et al, International Marketing,
  4th Edn, Financial Times PH, 2002, p. 164-3

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Psychographic Profile Porsche in the U.S.

• TOP GUNS driven, ambitious care about power and
  (27) control expect to be noticed
• ELITISTS old-money a car is just a car, not an
  (24) extension of ones personality
• PROUD PATRONS ownership is what counts a car is
  a (23) trophy, a reward for working hard
  being notices doesnt matter
• BON VIVANTS cosmopolitan jet setters and thrill
  -(17) seekers car heightens excitement
• FANATISISTS car represents form of escape
  dont (9) care about impressing others may
  feel guilty about owning car
• Source A.Taylor Porsche Slices up its buyers,
  Fortune, Jan. 16, 1995, p.24

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Backer Spielvogel Bates Global Scan

• ... encompasses 18 countries, mostly in the Triad
• The researchers studied
• consumer attitudes values,
• media viewership/readership,
• buying patterns,
• product use.
• 5 global psychographic segments represent 95 of
  the adult populations in the countries surveyed.

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Global Scan Segments

• Strivers busy, demanding lives, push themselves,
  burdened with stress have not made it yet
• (major consumers, snack, convenience)
• Achievers prototypical baby boomers upscale,
  professional, managerial have achieved
  what strivers want (quality, sophistication)
• Pressured caught in lowly station, pressure
  obliterates joy (nutrition important, splurge,
  use convenience products)
• Adapters older, content, mainstream values but
  open to change (market for travel, continuing
  education)
• Traditionals man is the boss, woman stays home,
  pet is an animal

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Positioning Map of Fast-Food-Restaurants
in the Mind of Consumers
Source adapted from James H. Myers, Segmentation
and Positioning for Strategic Marketing Decisions
(American Marketing Association, Chicago, 1996),
S. 187
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Summary

• Assumptions, concepts, norms are different in
  global MR
• Apply the five rule first
• Address the problems of equivalence
• The role of time must be understood
• Segmentation, targeting and positioning

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Market Segments and Positioning of Scooter

• A new motor scooter is to be introduced to target
  markets in Italy and Germany (East)
• Your task is to provide a rationale for selecting
  an appropriate target segment based on the
  lifestyle/consumption profiles
• For Italy, select psychographic segments from
  Strivers, Achievers, Pressured, Adapters,
  Traditionals
• For Germany (East), select psychographic segments
  from Towards the West, Reaction to Lost Status,
  Consumption with Reservation, Ideologically
  restricted
• Prepare your recommendation to position the
  scooter (you have20 minutes)

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Club Med Inc.

• Principles
• - Customer value
• - Differential competitive advantage
• - Focus of effort
• Strategy Alternatives
• - Extend domestic mix to foreign markets
• - Adapt mix to local market
• - Develop new service to meet global need

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Club Med Inc.

• Problem, Opportunities
• Stage one focus international with French
  orientation
• Adapt strategy or adapt consumer?
• Market potential location, climate,
  affluence, short trips
• Marker Research
• Lifestyle casual, vacation concept,
  competition, image problem, brand identity?
• Poor promotion, low w-o-m, 0.7 GMs per 000
  pop.
• Uniqueness is no shelter from competition

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Club Med Inc. Directions

• Penetrate promote to and through full-service
  agencies
• improve airline schedules service
  consumer is right attitude increase
  exposure widely in US Canada
• Options American vacation concept appeal
  short, full service, luxurious
• culture, education emphasis, less sports
• resorts in USA with new brand identity
• Implications
• change in Caribbean will upset Europeans
• cannot mix concepts in same location
• US locations as JVs, protect against
  existing resorts