Global Marketing Targeting etc. · Positioning • Positioning is required to differentiate the...

Global MarketingTargeting etc.

Lorna Valdes GlobalMarket 41

Lorna Valdes

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Global Market 4

Global Marketing

ABS MKT 350

Segmentation, Targeting & Positioning

Session 4

Prof. Lorna Valdes

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Global Market 4

Mid Term Exam 20 October

• Review Chapters 1, 2, and 4 and -

• The case studies presented in class

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Revision Chapter 4

• What are the characteristics of a High Content society?

• Of a Low Context society?

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High- and Low-Context Cultures

• High Context– Information resides in

context– Emphasis on

background, basic values, societal status

– Less emphasis on legal paperwork

– Focus on personal reputation

Saudi Arabia, Japan

• Low Context– Messages are explicit and

specific– Words carry all

information– Reliance on legal

paperwork– Focus on non-personal

documentation of credibility

Switzerland, U.S., Germany

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Revision Chapter 4

• Briefly describe the 3 parts of the Diffusion Theory

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Diffusion Theory: The Adoption Process

• The mental stages through which an individual passes from the time of his/her first knowledge of an innovation to the time of product adoption or purchase

– Awareness

– Interest

– Evaluation

– Trial

– Adoption



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Characteristics of Innovations

• Innovation is something new, five factors that affect the rate at which innovations are adopted include:– Relative advantage- over existing products

– Compatibility– with consumers past experience & values and with existing products

– Complexity- too complex to understand & use?

– Divisibility – adapting products to different target markets

– Communicability- how well the product’s advantages are communicated to consumers

(Observability – how visible is the innovation to others?)

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Diffusion Theory:Adopter Categories

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Diffusion Theory: The Adoption Process

• The mental stages through which an individual passes from the time of his/her first knowledge of an innovation to the time of product adoption or purchase

– Awareness

– Interest

– Evaluation

– Trial

– Adoption

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Characteristics of Innovations

• Innovation is something new, five factors that affect the rate at which innovations are adopted include:– Relative advantage- over existing products

– Compatibility– with consumers past experience & values and with existing products

– Complexity- too complex to understand & use?

– Divisibility – adapting products to different target markets

– Communicability- how well the product’s advantages are communicated to consumers

(Observability – how visible is the innovation to others?)

Global Marketing

Global EditionWarren J. Keegan Mark C. Green

Segmentation, Targeting, and

PositioningChapter 7

Copyright 2013, Pearson Education 11

Global Marketing

Warren J. Keegan Mark C. Green

Global Marketing

Segmentation, Targeting, and

PositioningChapter 7

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Introduction

• How to identify like groups of potential customers?

• How to chose the groups to target?

• How to segment those groups?

• How to position the brand in the mind of the customer?



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Introduction

We have different customers. Each customer is free to have her own aspirations. Our intention is to respond as well as possible to each customer aspiration. Some want to be gorgeous, some want to be natural, and we just have to offer them the best quality and the best product to satisfy their wishes and their dreams.

—L’Oreal CEO Jean-Paul Agon

On understanding segmentation

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Market Segmentation

• Represents an effort to identify and categorize groups of customers and countries according to common characteristics

77.5 million dogs are owned in the U.S.

Who owns whom?

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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

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Positioning

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

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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.

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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



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Global Market Segmentation

• Demographics

• Psychographics

• Behavioral characteristics

• Benefits sought

Skiing became a sport in

Norway where it was

invented 4,000 years ago.

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Demographic Segmentation

• Income

• Population

• Age distribution

• Gender

• Education

• Occupation

What are the trends?

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Demographic Facts and Trends

• A widening age gap exists between the older populations in the West and the large working-age populations in developing countries

• In the European Union, the number of consumers aged 16 and under is rapidly approaching the number of consumers aged 60-plus

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Demographic Facts and Trends

• In India the number of people under the age of 14 is greater than the entire US population

• America’s three main ethnic groups—African/Black Americans, Hispanic Americans, and Asian Americans—represent a combined annual buying power of $1 trillion

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Segmenting by Incomeand Population

• Income is a valuable segmentation variable

– 2/3s of world’s GNP is generated in the Triad but only 12% of the world’s population is in the Triad

• Do not read into the numbers

– 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

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Per Capita Income



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10 Most Populous Countries

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Demographic Segmentation – Income & Social Class

•General economic conditions affect the way we allocate our money•A person’s social class determines how much we spend and how we spend it•Consumption choices reflect one’s place in society•Products are status symbols•Social class is determined by income, family background, and occupation

–What consumption cues do you use (e.g., clothing, speech, cars, etc.) to determine social standing?

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Demographic Segmentation – Age Categories

• A consumer’s age exerts a significant influence on his/her identity– We are more likely to have things in

common and speak in a common language with others of our own age

• Age cohort (“my generation”)– Marketers target specific age cohorts

• Feelings of nostalgia

– Our possessions & memories let us identify with others of a certain age

life stage

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Demographic Segmentation – Age Categories• Puberty/adolescence

= uncertainty, need to belong, finding unique identity– Choices of activities, friends, and clothes = social acceptance– Advertising: group of “in” teens using product

Four basic teen conflicts:– Autonomy vs. belonging– Rebellion vs. conformity– Idealism vs. pragmatism– Narcissism vs. intimacy

Teens as “consumers-in-training”– Brand loyalty develops during adolescence– Teen influence of family purchase decisions

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Demographic Segmentation – Age CategoriesGen Y – born early 80’s to late 90’s

• “Echo Boomers” and “Millennials” make up one-third of U.S. population– Global purchasing power of $2 trillion a year– First to grow up with computers and cell phones in a 500-channel

TV universe– Gen Y kids crave constant communication and connection with

their peers – They tend to be much more confident and socially aware, valuing

equality and social responsibility over the quick wins and thoughtless consumerism that typified the 1980’s of the Boomers.

– Overall, this generation of people prefers to communicate through e-mail and text messages rather than actual face-to-face contact.

• When it comes to convincing Millennials about a product's value, nothing beats word-of-mouth marketing. Friends are the biggest influencers for Gen Y. If their friends have something and endorse it, that's all they need.

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Demographic Segmentation – Age CategoriesBaby Boomers

• Consumer born between 1946 and 1965• “Hippie” created revolution in style, politics, and

consumer attitudes• Active and physically fit• Currently in peak earning years

– “Feathering their nests”– Food, apparel, and retirement programs

– “Midlife crisis” products (“reward cars”)



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Demographic Segmentation – Age CategoriesThe Gray Market

• Traditionally neglected by marketers

• People are now living longer/healthier lives

– “Zoomers” = active, interested in life, enthusiastic consumers with buying power

– Fastest growing group of Internet users

– Most brand loyal of any age group

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Global Consumer Segmentation

• Global Teens-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

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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

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Men Buy, Women Shop

• Researchers at Wharton found that women react more strongly than men to personal interaction with sales associates. Men are more likely to respond to more utilitarian aspects of the experience -- such as the availability of parking, whether the item they came for is in stock, and the length of the checkout line.

• When it comes to the retail experience, men and women both go into a store to buy something, only she wants more. She wants more interaction, more eye contact. He wants quick answers while she's looking for support and collaboration in the buying process

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Demographic Segmentation - Religious Subcultures

• The rise of spirituality– Explosion of religion/spirituality in

pop culture• Religious leaders can encourage and/or

discourage, even boycott, consumption• Religious themes can spill over into

everyday consumption; films, books, jewelry

• Marketing opportunity among religious subcultures. Dietary and dress requirements create demand for certain products

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Geodemographic Segmentation

• People who reside in similar areas, neighborhoods, postal codes, also share demographic and lifestyle similarities.

• Claritas’ PRIZM identifies 66 clusters of neighborhoods that share similar demographic profiles, such as: “Upper Crust”, “Big Fish Small Pond”, “Bohemian Mix”, “Heartlanders”, etc.

• http://www.tetrad.com/pcensus/usa/claritas/prizmne.html



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Psychographic Segmentation

• Grouping people according to attitudes, values, and lifestyles – SRI International and VALS 2

• Porsche example– 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

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Resources• A person's tendency to consume goods and services extends beyond age, income, and education.

• Energy, self-confidence, intellectualism, novelty seeking, innovativeness, impulsiveness, leadership, and vanity play a critical role.

• These personality traits in conjunction with key demographics determine an individual's resources.

• Different levels of resources enhance or constrain a person's expression of his or her primary motivation.

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metrosexualn.An urban male with a strong aesthetic sense who spends a great deal of time and money on his appearance and lifestyle.—metrosexuality n.

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• The Euroconsumer:– Successful Idealist–Comprises from 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 Materialist–Status-conscious ‘up-and-comers’ – many of whom are business professionals – use conspicuous consumption to communicate their success to others

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• The Euroconsumer:

– 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

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Behavior (usage) Segmentation

• Focus on whether people purchase a product or not, how much, and how often they use it

• User status - Behavior segmentation focuses on whether people buy and use a product, how often, and how much they use.

Consumers are categorized by:- usage rates: heavy, medium, light, and non-user - user status: potential users, non-users, ex-users, regulars, first-timers,

and users of competitors' products.

• Law of disproportionality/Pareto’s Law–80% of a company’s revenues are accounted for by 20% of the customers



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Benefit Segmentation

• Benefit segmentation focuses on the value equation

– Value = Benefits / Price

• Based on understanding the problem a product solves, the benefit it offers, its ‘job’, or the issue it addresses.

Chocolate - what different benefits could be marketed and sold?

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Benefit Segmentation

• Different people buy the same or similar products for different reasons.

• Chocolate can be a snack, a reward, an addiction, a special occasion gift, a recipe ingredient, dark chocolate is a health aid…

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Ethnic 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

• Hispanic Americans– 50 million Hispanic

Americans (14% of total pop.) with $978 billion annual buying power

– “$1 trillion Latina” 24 million Hispanic women: 42% single, 35% HOH, 54% working

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Social Technographics Profile Of Consumers

• GROUNDSWELL Forrester's Social Technographics data classifies consumers into seven overlapping levels of social technology participation.

• This tool reveals a high-level snapshot of the social technology behaviors of consumers and helps plan targeted social media strategies.

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Assessing Market Potential

• Be mindful of the pitfalls– Tendency to overstate the size and short-term attractiveness of

individual country markets

– The company doesn’t want to ‘miss out’ on a strategic opportunity

– Management’s network of contacts will emerge as a primary criterion for targeting



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Assessing Market Potential

• Three basic criteria:

– Current size of the segment and anticipated growth potential

– Potential competition

– Compatibility with company’s overall objectives and the feasibility of successfully reaching the target audience

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Current Segment Size and Growth

• Is the market segment currently large enough to present a company with the opportunity to make a profit?

• If the answer is ‘no,’ does it have significant growth potential to make it attractive in terms of a company’s long-term strategy?

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Potential Competition

• Is there currently strong competition in the market segment?

• Is the competition vulnerable in terms of price or quality?

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Feasibility and Compatibility

• Will adaptation be required? If so, is this economically justifiable in terms of expected sales?

• Will import restrictions, high tariffs, or a strong home country currency drive up the price of the product in the target market currency and effectively dampen demand?

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Feasibility and Compatibility

• Is it advisable to source locally? Would it make sense to source products in the country for export elsewhere in the region?

• Is targeting a particular segment compatible with the company’s goals, brand image, or established sources of competitive advantage?

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Framework for Selecting Target Markets

• Demographic information is a starting pointbut not the decision factor

• Product-Market must be considered– Market defined by product category

• Marketing model drivers must be considered– Factors required for a business to take root and grow

• Are there any enabling conditions present?– Conditions whose presence or absence will determine success of the

marketing model



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9 Questions for Creating a Product-Market Profile

• Who buys our product?• Who does not buy it?• What need or function does it serve?• Is there a market need that is not being met by current

product/brand offerings?• What problem does our product solve?• What are customers buying to satisfy the need for which

our product is targeted?• What price are they paying?• When is the product purchased?• Where is it purchased?

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Target MarketStrategy Options

• Standardized global marketing– Mass marketing on a global scale

– Undifferentiated target marketing

– Standardized marketing mix

– Minimal product adaptation

– Intensive distribution

– Lower production costs

– Lower communication costs

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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

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Positioning Strategies

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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

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• 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!



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• 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

– Ex.: Budweiser is identified with small-town America

Clydesdale =

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Reading & Assignment forNext Session

• Review Chap. 7 Discussion Qs

• Read Chapter 10

• Team Project –

Create a detailed Avatar of your target consumer(s) based on segmentation criteria.

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Target Consumer Avatars

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Video Case Study

The Persuaders present

A Sad Song –creating a brand

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