Segmenting Global Markets:

1. Segmenting Global Markets: Look Before You Leap By: V. Kumar and Anish Nagpal

2. “I am a citizen, not of Athens or Greece, but of the world.” -Socrates • Before implementing a global market segmentation strategy, it’s critical to understand both local and global issues • Global Marketing: emphasizes 4 activities • Cost efficiencies • Opportunities to transfer products, ideas, etc. • Emergence of global customers • Better links between national marketing infrastructures

3. What is GMS? • Global marketing segmentation (GMS) is the process of identifying specific segments of potential customers, across countries with similar attributes who are likely to exhibit similar buying power. • The goal of GMS is to break down the world market for a product or service into different groups of consumers that differ in their response to the firm’s marketing mix program.

4. Targeted segments in GMS should possess these properties: • Measurability: Easy to define and measure • Size: Large enough to go after • Accessibility: Easy to reach via the media • Actionability: Effective marketing programs should be easy to develop • Competitive intensity: Should not be preempted by the firm’s competition • Growth potential: High return on investment should be attainable

5. How to Implement GMS • Six step process • Identify the purpose. • Select segmentation criteria. • Collect relevant information. • Segment the countries/consumers according to criteria. • Reevaluate the fit of the segment after implementation of the intended program. • Update/reassign segment membership.

6. Categories for Selecting Segmentation Criteria • Demographics: Measurable characteristics of population. • Culture: Religion, education, and language. • Geography: World region, economic stage of development, and population. • Environment: Political, legal, and business environments.

7. 4 Critical Equivalencies

8. Construct Equivalence • Whether the segmentation basis has the same meaning and is expressed similarly in different countries and cultures. • Example: Bicycles in the U.S. are classified under the recreation-sports industry, whereas in India and China they are considered a means of transportation.

9. Scalar Equivalence • Results from marketing research should have the same meaning and interpretation in different countries. • Example: The U.S. generally uses a 5 or 7 point scale while in France the most common scale is a 20-point scale.

10. Measurement Equivalence • Whether the measures used to operationalize the segment are comparable across countries. • Example: Household income is difficult to compare across countries due to differences in tax structure and the purchasing power.

11. Sampling Equivalence • Identifies comparable populations and selects samples that are representative of other populations and comparable across countries. • Example: In the U.S., office supplies are often purchased by secretaries, while in many other countries this decision is made by a middle-level manager or CEO.

12. Think Globally, Act Locally • Segmentation allows global marketers to take advantage of standardization while addressing the needs and expectations of a specific target group. • To be successful, GMS needs to achieve a balance between the local and global concerns of the customers.