Segmenting International Markets

Segmenting International Markets

Few companies have either the resources or the will to operate in all, or even most, of the more than 170 countries that dot the globe. Although some large companies, such as Unilever or Sony, sell products in more than 100 countries, most inter­

national firms focus on a smaller set. Operating in many countries presents new challenges.•"' The different countries of the world, even those that arc close together, can vary dramatically in their economic, cultural and political make­up. Thus, just as they do within their domestic markets, international firms need to group their world markets into segments with distinct buying needs and behaviours.

Companies can segment international markets using one or a combination of several variables. They can segment by geographic location, grouping countries by regions such as western Europe, the Pacific Rim, the Middle East or Africa. Countries in many regions have already organized geographically into market groups or 'free trade zones', such as the European Union, the Association of

South­East Asian Nations and the North American Free Trade Association. These associations reduce trade barriers between member countries, creating larger and

more homogeneous markets. Geographic segmentation assumes that nations close to one another will have many common traits and behaviours. Although this is often the case, there are many exceptions. For example, although the United States and Canada have

much in common, both differ culturally and economically from neighbouring Mexico. Even within a region, consumers can differ widely:

Many marketers think everything between the Rio Grande and Tierra del Fuego at the southern tip of South America is the same, including the 400 million inhabitants. They are wrong. The Dominican Republic is no more like Argentina than Sicily is like Sweden. Many Latin Americans do not speak Spanish, including 140 million Portuguese­speaking Brazilians and the millions in other countries who speak a variety of Indian dialects.­"

404 • Chapter 9 Market Segmentation and Targeting

Some world markets segment on economicfactors. For example, countries might group by population income levels or by their overall level of economic development. Some countries, such as the so­called Group of Eight ­ the United States, the United Kingdom, France, Germany, Japan, Canada, Italy and Russia ­ have established highly industrialized economies. Other countries have newly industrialized or developing economies (Singapore, Malaysia. Taiwan, South Korea, Brazil, Mexico and now China). Still others are less developed (India, sub­ Saharan Africa). A company's economic structure shapes its population's product

Market Segmentation • 405

Figure 9.3

The UK media scene

The leading deodorant soaps also appeal differently to different age segments. For example, Dial appeals more to men aged 45 to 68 than to younger men; women aged 35 to 44, however, are more likely than the average woman to use Dial Coast

appeals much more to younger men and women than to older people ­ men and women aged IS to 24 are about a third more likely than the average to use Coast. 34

Demographic variables can also be combined with segmentation variables ­ social class, for instance. In Figure 9.3 social class and age are used to describe the UK media scene. This shows how the media is segmented, together with some

successful, and some less successful, attempts at segmentation. It is noticeable how most media appeal to older people in social classes C2, D and E. In the United

Kingdom, only cinema hits younger ABCls. Newspaper readership is clearly segmented by social elass. The Sun and Mirror are popular tabloid newspapers that focus on personal interest stories, TV, pop and sport to appeal to social

classos C2, D and E. The Daily Mail and Daily Express are mid­market news­ papers. They are tabloid in size, but focus on national and international news. The Times, Telegraph and Guardian are broadsheet quality newspapers that appeal to

A, BandCl social groups. These segments are very strongly divided. When a price war had The Times and Telegraph slashing their prices, The Times' reduction from 45p to 20p had no influence on the demand for popular tabloids.

The similarity in the appeal of the two independent television stations, ITV and Channel 4, shows little segmentation of their overall appeal. In contrast, Big Breakfast appeals to a segment quite different from the RRC's and ITV's serious

morning programmes. Its zany humoxir and regular features, such as 'the Crunch with ?,ig and Zag', 'Snap, Crackle and Pop' and 'Paula's Boudoir' interviews ­

conducted in her bed with famous people ­ appeals most to young C2DEs.