Market Segment

1. 5.01 Understand market segments within consumer and industrial markets, and how to meet the needs of domestic intercultural markets

2. Market Segment • A group of individuals or organizations that share similar characteristics • Respond in the same way to a product • Products may appeal to a different segment in foreign markets

3. Qualified Market • Three characteristics of a qualified market segment: • Need for the product • Ability to pay • Authority to purchase • Example: in many countries only the head of household may make major purchases—other family members may not have ability to pay or the authority to buy

4. International segmentation strategies • Undifferentiated segmentation strategy • Looks at all customers as one market • Works when a market segment is too small to target • Also works well when a brand is dominant (Coke) • Concentrated segmentation strategy • Focuses on one clearly defined market segment • Business looks for a segment with few competitors • Differentiated segmentation strategy • Targets two or more segments with unique strategies • Used for markets that are large or growing

5. International consumer market segmentation characteristics • Demographic segmentation • Cultural segmentation • Geographic segmentation • Product usage segmentation

6. Demographic segmentation • Population characteristics such as age, gender, race, income, and education • Same demographic group within a culture may react to a marketing strategy the same way • Globally, there may be differences in consumers’ needs & wants, even within same demographic group • Demographic trends used to identify new markets: • E.g., Growth in incomes or populations

7. Cultural segmentation (Psychographic) • Characterized by lifestyle characteristics such as consumers’ values, activities, interests, and opinions • Advertisements designed to show how a product fits lifestyle • Many products sold to support consumers’ idealized lifestyle—the preferred lifestyle they would like to live • Example: although Chinese are not always adventurous, they buy Jeeps to appear adventurous

8. Geographic segmentation • Looks at: • Where customers are located • Rural versus suburban versus urban • Level of economic development within a country

9. Product usage segmentation • Related to frequency of product use or benefits derived from using the product • Heavy users purchase large amounts of a product • Many consumers use products because of the benefits they provide

10. Industrial market segmentation characteristics • Organization characteristics • Industry factors • Purchasing situation • Trading blocs • Different marketing strategies may be needed to meet legal requirements for different countries

11. Organization segmentation • Size of the business, • Ownership • Geographic location • Amount of product used • Large global businesses may have centralized purchasing and buy in large quantities • Small independent companies are more diverse and geographically scattered

12. Industry segmentation • Product categories • Product benefits • End market served • Global companies in the same industry often have the same types of customers who need the same benefits from the products they purchase

13. Purchasing situation segmentation • Stage of the buying process • Other buying factors such as culture • First-time buyers have different needs than businesses that are simply reordering a product • Different cultures require different strategies for developing business relationships and selling

14. Trading blocs • Enable marketers to look at industrial markets by country groups • European Union—common trading rules allow similar sales strategies across countries • NAFTA (North American Free Trade Agreement) • CAFTA (Central American Free Trade Agreement)

15. Domestic Intercultural Markets • International markets may be found domestically: • Large cultural groups maintain lifestyles closer to their cultural heritage than to mainstream • Asian-Americans: • Emphasis on family ties, strong work ethic, education • Wealthiest cultural segment in U.S • Hispanic-Americans: • Original settlers of the southwest U.S, or whose backgrounds are from Spanish-speaking countries in Latin America • Emphasis on family ties, strong religious affiliations, work ethic • Domestic intercultural markets are often geographically clustered.