Chapter 7 - Segmentation, Targeting and Positioning Flashcards
Describe Global Market Segmentation
- The process of dividing the world market into distinct subsets of customers that have similar needs (for example, country groups or individual interest groups).
- Pluralization of Consumption or segment simultaneity theory was advanced by Professor Theodore Levitt 4 decades ago stating that consumers seek variety and new segments will appear in many national markets. i.e., sushi, pizza
Describe Types of segmentation methods
- Demographic segmentation
- Psychographic segmentation
- Behavior segmentation
- Benefit segmentation
Describe Geographic Segmentation
- Dividing the world into geographic subgroups
- The advantage of geography is proximity
- However, just because people are in close proximity does not mean they are similar
Describe Demographic Segmentation
Based on measurable population characteristics
– Age
– Income
– Gender
– Age distribution
– Education
– Occupation
Generally, national income is the most important variable
Give examples of countries with regard to demographic segmentation
- 500 million Asian consumers aged 16 and younger
- India has the youngest demographic profile among the world’s large nations; half are younger than 25, 14 yr. olds & younger equal the entire U.S. population
- Half of Japanese will be 50+ yrs. by 2025 * 20% of Americans (70 million) will be 65+ by 2030
- U.S. Ethnic groups—African/Black, Hispanics, & Asian Americans have a combined annual buying power of $233 billion
Describe Income & Population Segmentation
- 2/3 world GNI in the Triad, 12% o population
- Don’t use income as the only variable for assessing market opportunity
- Use Purchasing Power Parity
- 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
Describe Market Segments by Income & Population
Global Teens
‐12 and 19 yr. olds
“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
Describe Gender Segmentation
- Gender segmentation is an obvious choice for some companies
- Fashion designers & cosmetic companies focus on women but may also offer men’s products
– Nike is opening shops for women
– Levi Strauss opened Levis for Girls in Paris
Describe Psychographic Segmentation
- Based on attitudes, values and lifestyle
- Lifestyle surveys
– SRI International’s Values and Life Styles, VALS & 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
What are Euroconsumers?
The Euroconsumer:
Successful Idealists – 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 Materialists
– Status‐conscious ‘up‐andcomers’– many of whom are business professionals – use conspicuous consumption to communicate their success to others
Subdive Euroconsumers into comfortable belongers and disaffected survivors
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 highcrime urban inner city
– attitudes tend to affect the rest of society
Describe Behavior Segmentation
- Focus on whether people purchase a product or not, how much, and how often they use it
- User status
- 80/2 Rule or Law of Disproportionality or Pareto’s Law–80% of a company’s revenues are accounted for by 20% of the customers
Describe 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
Describe Ethnic Segmentation and give and example of the U.S.
The population of many countries includes ethnic groups of significant size
Three main groups in the U.S. include AfricanAmericans, AsianAmericans, 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
How to: Assessing Market Potential, what to be mindful about
Be mindful of the pitfalls
– Tendency to overstate the size and short‐term attractiveness of individual country markets
– The company does not want to ‘miss out’ on a strategic opportunity
– Management’s network of contacts will emerge as a primary criterion for targeting
