International Marketing

Micro Segmentation and Sellout Price

Sellout price is the price that retailers offer to consumers. Micro segmentation defines the different segments in the most interesting countries, and it is done in different ways depending on the type of companies (shower or waterfall approach). After identifying the target countries, the following steps are taken:

1. Estimate demand
2. Make segmentation
3. Analyze each marketing segment

Segmentation can be done by product group, where different product categories in the market are identified and the company chooses to operate with some of these products, each connected to different customers. This approach is frequently used for industrial companies as it associates products with segments of consumers. However, it is not enough as it doesn't provide information about the consumers themselves.

Another approach is segmentation by demand, which includes:

1. Demand made by individuals (B2C)
2. Demand made by businesses (B2B)
3. Channels of distribution: Today, consumers have different checkpoints such as the internet, stores, retailers, etc. This is an emerging topic that needs to be considered.

• geographic (region, country, city, rural areas, urban areas, country, climate)
• demographic (age, gender, nationality, race, ethnic origin)
• socio-economic (income/turnover, family/company size and lifecycle, occupation/population density)
• psychographic (lifestyle, personality, interests, value, attitudes, opinions)
• behavioral (shopping habits, product use, frequency of use, loyalty) -> very difficult to use because if you ask info about shopping habits (f.ex) since they are very different
• benefit sought (product features, price, experience, status)

which one to target.Þ

Quantitative approach: need to use a software for your analysis.

Multinational and global segmentation

• Multinational Segmentation consists of a company identifying different segments within a country and then developing a targeting strategy country by country.
• Countries will try to find similarities to help group different markets but sometimes they are completely different
• Global Segmentation aims to target segments that are similar between certain countries.
• The best variables for global segmentation are psychographic and benefit segmentation
• Remember: For international market segmentation, the variables vary with the type of products

12VALS System with the Current US Market

• One of the most long-lived and authoritative systems that segment people on the basis of personality traits is VALS, owned and operated by Strategic Business Insights (SBI);
• The basic tenet of VALS is that people express their personalities through their behaviors.

VALS specifically defines eight consumer segments on the basis of those personality traits that affect behavior in the marketplace:

• Innovators
• Thinkers
• Believers
• Achievers
• Strivers
• Experiencers
• Makers
• Survivors

Targeting

Once all viable segments have been identified in the targeted markets, the process of selecting the most promising segments—those with the highest potential to generate sales and profits for the company—and deciding how to address their needs begins.

Main criteria for targeting:

• Market size—the larger the segment, the more sustainable and profitable it is likely to be. How much time to reach the breakeven.
• Growth rate—the faster a segment is growing, the more sales it is likely to generate
• Competitive position—the less competitive offerings are available for the target segment, the more likely the company is to gain large market share
• Market accessibility—the more cost-effectively and quickly a segment can be reached,

the more attractive it will be• Customer fit—the more compatible the segment is with the company’s brand and resources, the more likely it is that sales will follow. Cost of adaptation is quite high (impact on economy of scale). Concentration vs Diversification Strategies A company can target one segment or more segments. Diversification more than one segment. Waterfall approach and shower approach.• Given a fixed amount of resources, the amount assigned to each market in a diversification strategy would be less than for concentration. Therefore, for SMEs, which are often characterized by small amounts of resources, concentrating marketing effort and resources in one or a few markets should determine larger market share and, subsequently, higher profits. If you invest a lot: best to concentrate in one country. If you invest in many countries you risk to fail in all of them.• However, if competition is intense, then small firms should avoid direct competition with

Larger firms. In this case, it would be preferable to have small market shares in a larger number of markets. If competition is high, it is better to concentrate.

There are market factors such as growth rates and sales stability in each market. If sales are not stable and/or the market growth is limited, it is risky to concentrate only in one country and it is better to diversify. If one country has sales that are risky, you risk too much to invest in only one country.

Another factor is the need for standardization or adaptation: if entering in a foreign market requires adaptation of the product or the advertising (higher costs), the company will probably opt for concentrating all its efforts in one country and only later expanding in other markets.

The shape of the sales response function, that relates the value of investment in marketing effort to the revenue generated (or profit, units sold, etc.), is another influencing factor. The sales curve can be S-shaped or

1. Additional factors are short competitive lead time (which makes it important to enter markets quickly) indicates where you cannot protect your product, is the time that other companies have to lunch a similar product to yours, if its short is better to enter everywhere. better a diversification. , high spillover effects between countries (e.g. the use of the same patents) better to diversify, and little gain from distribution economies of scale. In reality, these factors are not dichotomous (either high or low), but somewhat in between. If you don't have a lot of economy of scale better to concentrate in one country.
2. Sales Response Function
1. If I have an s shape I need to invest a lot before reaching a good level of sales —> concentrated strategy.
2. If the line is concave you need diversification.
3. Undifferentiated Approach
1. Assume that consumers are very similar. We can sell the same product. The company identifies the characteristics that are similar for all.

• Also called mass marketing or standardized marketing
• Assumes that customer segments across the world will accept the same product with no regard of their cultural, behavioral, or socio-economic differences.
• Marketing on the common needs of its customers are the base of the company instead of on the differences.
• Typical of commodities and business to business market

• The differentiated approach aims to adapt the product and the marketing mix to each target market segment
• Most brands use this approach to stay competitive and to appeal to more market segments
• Concentrated can also be called niche targeting.
• Focuses only on one segment and tailors their market specifically for that segment

• Micro: segment with one consumer
• Deeper segmentation of products for very specific sub-segments.
• One ♥ prime example of a market that is very

small and specific is the “I New York” market.• The online environment has played a key role in the growth of the marketing customization trend. 14• Efforts have increased for GPS, Internet cookies, and direct mail to make this type of marketing more costeffective.

PositioningThe company has the decide to target a specific segment, then it has to convince it to buy its productsinstead of others. Positioning, therefore, it is an effort to influence consumer perception of a brand orproduct relative to the perception of competing brands or products. Its objective is to occupy a clear,unique, and advantageous position in the consumer's mind.

The term “positioning” really refers to the position that the company occupies in the consumer’s mind. Acompany must ask itself: What is the promise that we provide to the final consumers? Do competitorspromise the same things?

The risk is that sometimes companies just think about their price policy, and their

positioning from that point of view (Ex. I offer cheap products, so I'm better than others). However, the real question is: among companies that are offering a product with a low price, what is your positioning? What is the promise that makes the difference? This is the big difficulty of positioning: you have to find something different and original.

The promise is implemented through the marketing mix and the perceived promise represents the positioning in the mind of consumers.

Planned Positioning (promise written in the marketing plan) -> Marketing Mix -> Perceived Positioning.

This is the process that occurs and sometimes some mistakes can happen, specially in the advertising section - marketing mix (Ex. Dolce and Gabbana - Advertising in China).

You can have perception on the brand but also on the type of product. Position will be the promise of the company to target consumers and convince them to buy your product instead of the one of your competitors.

Problems: same

Strategy for consumers of different segments? You find different local brands, even if the consumers are similar, you have a change in the consumers.

Problem of the promise. In many cases the perception change. The position can be lost in the channel of distribution. The value can be lost through the channel of distribution due to the different perceptions.

• It is uncontrollable by marketers due to perceptions of customers since it represents "the way consumers, users, buyers, and others view competitive brands or types of products," meaning it happens in the minds of consumers. (the position that a group of brand reflects on your mind).
• Marketers try to control this through planned positioning (their positioning strategy, i.e. their promise to the consumers) and perceived positioning (the opinion of consumers mentally). When done successfully consumers should have strong, long-term emotional ties to the brand.