Answer: A market consists of people with wants and needs, money to spend, and the willingness to spend money on those wants and needs.

Answer: 

Market segmentation consists of identifying all potential customer groups that are viable for the purposes of marketing products. International market segmentation is the process of identifying specific segments – whether they are country groups, other businesses or individual consumer groups – of potential customers with homogeneous attributes across different countries, or within a single foreign market, that are likely to exhibit similar responses to a company’s marketing mix. When identifying market segments, marketers first seek to understand the cultural factors that exist across marketplaces, as well as all of the other forces in the international marketing context.

A market segment is a set of businesses or a group of individual consumers with distinct characteristics. For a market segment to be viable in the eyes of the marketing team, it must pass four tests:

1. Those within the segment should be homogenous or have similar characteristics.
2. The segment must differ from other groups and the population as a whole.
3. Sufficient demand must be present to make the segment financially feasible.
4. Methods to reach the market must exist, both in terms of physical delivery of the item and in terms of the marketing messages that would entice customers to make purchases.

Answer: Hierarchy of steps in international market segmentation for a firm with an existing product/service.

Answer: When consumers, or end users, are the primary target market for a firm’s offerings, the consumer market segmentation approaches listed in Figure 6.5 are the most common. These groups or categories may be combined in international marketing efforts.

Figure: Consumer market segmenting variables

Answer: Figure: Criteria of segmenting business-to-business markets

Answer: 

Dual channel marketing

Firms that sell virtually the same goods or services to both consumers and businesses engage in dual channel marketing. The approach fits several situations. One common scenario occurs when a product sold in business markets is then adapted to consumer markets. Products including digital cameras, calculators, computers, fax machines, and cell phones were first sold to businesses and then later to consumers. Also, when individuals who buy a particular brand at work have positive experiences and, as a result, purchase the same brand for personal use, spin-off sales occur.

One marketing decision involves how to represent the product in each channel. Similarities between the two markets may be featured unless there are significant differences. When consumers and business buyers value different product attributes or desire different benefits, the marketing team customizes messages for the separate markets. In most cases, business customers and consumers seek the same basic benefits from products.

Dual channel marketing results from economic development. Emerging economies, newly industrialized countries, and nations with more developed economic systems feature more businesses combined with a larger number of individuals with disposable incomes. An Italian sales representative who travels throughout the Eurozone may discover she enjoys lodging at the Holiday Inn. When it is time for her family to take a vacation, she might seek out that chain when making travel arrangements. The same scenario will be less likely to take place in least-developed nations. Consequently, the economic status of a country affects potential dual channel markets.

Dual channel marketing creates a major competitive advantage because products are sold in both markets, in terms of both domestic operations and international marketing. Adding customers leads to economies of scale in production expenses and synergies in messages delivered to consumers and other businesses.

Answer: 

Global consumers

Many consumers in different nations earn similar incomes and hold the same social status levels. These individuals often exhibit similar purchasing patterns, suggesting the presence of an international market segment consisting of global consumers. Global consumers typically live in developed countries; however, this segment also includes wealthy consumers in developing and even less-developed countries, especially when those consumers have access to international media and the internet.

Global consumers focus less on price and instead buy products that meet global quality standards. They are often located in urban settings and exhibit high levels of cosmopolitanism. These high-cosmopolitanism consumers consider themselves as members of a larger global community rather than as merely maintaining an allegiance to a local culture and community. Global consumers wear similar clothes, use technology in similar ways, and consume similar entertainment. They check the time for the newest American blockbuster movie at the local theatre on their iPhones while sipping Cokes and wearing designer jeans.

Glocal consumers

The word “glocal” combines the words “global” and “local.” It reflects dual consumption patterns. Glocal consumers buy global products, but the purchase represents a special occasion rather than a typical purchase. They may be inclined to purchase products that mimic global products but ones that are priced slightly lower. They may be of a lower socioeconomic status, but their purchasing preferences also reflect strong ties to the local community and local consumption. Glocal consumers might be rural migrants who are relatively new to an urban setting and to the new purchasing opportunities present in that environment.

Glocal consumers are likely to shop at the neighbourhood corner market, drink traditional beverages, and enjoy local cultural entertainment. They occasionally go to KFC for a meal or watch an American film. Glocals are more likely to purchase local versions of foreign goods and services, such as staying at a local hotel that mimics a Western chain. International marketers can devise advertisements with glocal themes that appeal to these markets.

Local consumers

Local consumers rarely consume foreign products. For either economic or taste reasons, these consumers maintain traditional consumption patterns. Many local consumers live in rural settings where they only infrequently have the opportunity to purchase foreign goods. These consumers often exhibit high levels of ethnocentrism, or the strongly held belief that one’s culture is superior to others. Ethnocentrism is, in many ways, the opposite of cosmopolitanism. Ethnocentric consumers generally exhibit a tendency to avoid purchasing foreign-produced products.

The country of Uganda has one of the highest rates of alcohol consumption in the world. For many locals, the drink of preference is not foreign but local drafts made from some combination of distilled sorghum, millet, maize, sugar, bananas, and pineapples. Even the local word for any sort of alcoholic drink, waragi, is a corruption of the colonialist British “war gin” into a more inclusive, Ugandan word. The preference for local spirits then reflects a typical local consumer consumption pattern.

Answer: 

Ethnocentrism is, in many ways, the opposite of cosmopolitanism. Ethnocentric consumers generally exhibit a tendency to avoid purchasing foreign-produced products. Ethnocentrism is the strongly held belief that one’s culture is superior to others.

High-cosmopolitanism consumers view themselves as members of a larger global community rather than as merely maintaining an allegiance to a local culture and community.

Answer: 

Segmentation and the bottom-of-the-pyramid

The final global segment consists of the 4 billion people worldwide that live on $2 per day or less, the bottom-of-the-pyramid consumers (see Figure 6.7 in the textbook). These individuals experience wants and needs but with only limited money to spend. Still, opportunities do exist. Even with a small profit margin, the large size and equivalent large potential volume makes this segment increasingly attractive. A $0.01 margin might result in millions of dollars in profit. To segment this group effectively, the marketing mix must be adjusted, including changes in products, prices, and delivery systems, and, in some cases, brands. The goal of these changes is to create the capacity to consume by lowering the barriers to purchase.

Products

One approach to marketing to bottom-of-the-pyramid consumers involves changing the product, either in terms of the design of the item to meet a slightly different need or by simply lowering the quantity offered per purchase. In India, for example, local companies produce more eco-friendly, single-usage packages or sachets of laundry detergents; foreign multinational corporations now also produce these items. This packaging lowers the price, allowing consumers with limited incomes to purchase it.

Pricing

Pricing may be adjusted to match a market segment. While it is important to lower the price to allow for expression of demand, some evidence suggests that persons at the bottom-of-the-pyramid are also brand conscious. Therefore, pricing based on price-quality relationships remains viable.

Exchange systems, or the methods of facilitating payment, vary within the economies of bottom-of-the-pyramid countries. For example, more extensive use of barter whereby an individual trades one good or service for another often takes place. Use of money or currency will be limited to the customers who are able to accumulate sufficient amounts to make payments. Further, debit cards rather than actual currency are the norm in many countries. The use of credit may be more dependent on individual relationships than on any company offering such a service (credit cards) to facilitate purchases. Providing credit for purchases that seem relatively small, the equivalent of $10 to $15, can help create the capacity to consume.

Exchange systems, or the methods of facilitating payment, may vary within the economies of bottom-of-the-pyramid countries.

Companies targeting the bottom-of-the-pyramid market often focus on cutting costs to create price reductions. Cost-cutting results from changes in product design. Hindustan Unilever Ltd.’s marketing team set the goal of cutting the price of ice cream in India in order to reach low-income consumers. Realizing that refrigeration constitutes 40% of the cost, the company introduced a salt-based heat shield that was less expensive to produce, provided more insulation, and contained fewer pollutants, which reduced costs and the price.

Delivery

Reaching target markets involves finding delivery systems that match a local region. This includes identifying traffic systems, the presence of electricity on a routine basis, and even more basic elements such as running water. Product modifications match delivery systems when effectively reaching target markets of low-income members of a country. Bottom-of-the-pyramid segments often face problems with electricity access, which necessitates innovations in refrigeration, batteries, and more-efficient energy consumption.

Promotion

Promoting products to market segments at the bottom-of-the-pyramid creates distinct challenges. These consumers are less likely to be exposed to mass media and may not be reachable in most ways. Literacy and overall levels of education may be limiting factors. Word-of-mouth endorsements and other less-traditional promotional tactics become valuable tools to contact and persuade these customers to make purchases. At the same time, for many brands, bottom-of-the-pyramid consumers already exhibit brand awareness and demand for the product, making promotion more focused on messages that remind or inform potential customers about a new, lower price.

Answer: 

Recently, an increasing number of more environmentally friendly products have been developed in the international arena. When conducting a market segmentation program for these items, the distinction may be drawn between consumer preferences for green products when as a matter of choice versus when it becomes a matter of necessity.

Consumer preferences

One of the primary challenges facing green marketers has been consumer unwillingness to spend more for environmentally-safe products. In essence, the majority of customers only purchase green products when the item maintains the same level of price, quality, convenience, and performance.

Green by necessity

In bottom-of-the-pyramid nations, sustainability often becomes a driving force in purchases. Any item that saves or reuses water, runs on solar power or renewable batteries, or helps in some other way to preserve natural resources has a better chance of being accepted and purchased. Part of the reason is that such products also save the consumer money. A growing amount of evidence suggests that sustainable products create one of the largest marketing opportunities in nations where the majority of citizens live below the poverty line.

SC Johnson has focused on developing sustainable agricultural processes for the production of a key ingredient, pyrethrum, to the company’s botanical pesticides. The company sources much of this ingredient, which is made from chrysanthemums, from East Africa. Working with farmers in the region, the company established sustainable practices that are ensuring its own profit and long-term viability of the crop for East African farmers.

In sum, numerous forces influence segmentation processes by affecting what consumers want or need, how much money they have to spend, and subsequently the willingness to spend that money. These factors can be used to develop regional and national segmentation strategies.

Answer: 

Many of the ethical issues associated with domestic markets also appear in discussions of international segmentation. For example, one common complaint is that any segmentation program featuring demographics reinforces stereotypes. This tendency might emerge when ethnicity becomes the basis for a market segment, especially when marketing messages play to stereotypical images, both in the dominant culture and in any subculture or counterculture.

A closely related issue occurs in the area of gender discrimination. Females are confined to submissive and subservient roles in many cultures. When a company from a different country, one with opposing views, markets to women, the question arises as to which cultural customs should be observed. For instance, packages and labels for feminine hygiene products may be strongly regulated based on cultural norms; a company may at the same time wish to be able to portray the benefits of the products, however, especially when those benefits include health advantages. The package might also assist less-educated women in identifying exactly what they are buying through the use of a drawing or photo, but the problem remains that any such figure or image might be culturally objectionable to some.

Targeting lower-income segments may be viewed by some critics as being the process of creating overconsumption by people who least can afford to do so. This includes encouraging purchases of less-healthy food products such as fast food, clothes designed to create status rather than to offer functionality, and modes of transportation that are less practical but at the same time are associated with a higher social standing.

Conversely, market segmentation programs may limit access to certain goods or services, especially when the process takes places at the nation level. When only the rich are entitled to educational services or access to free Internet service, there may be ethical problems associated with a form of discrimination based solely on income or entitlement.

Answer: Many approaches are available. Depending on the specific objectives of the international marketing program, the overall business strategy or branding strategy. Usually, firms employ professionals whose experience and expertise is complementary.

Answer: 

• Industry

Car manufacturer

• Size

Supermarkets, small and medium enterprises

• Geographic location

Supermarkets

• Product usage

IT equipment

• Customer value

Telecommunications