International marketing to China

SEGMENTATION, TARGETING AND POSITIONING

The positioning strategy is the promise that you make to your target consumers in order to convince them to buy your product instead of competitive product.

What is segmentation, targeting and positioning (STP)?

Segmentation: segmenting the market and profiling the different segments.

Targeting: used to evaluate the segments attractiveness and competitive position for a specific target segment.

Positioning: develop positioning for different target segments. Communicating target segments to show competitive advantage to competitors' product.

When the STP process is used properly, it allows the company to create a marketing mix for each segment.

Market segment:

Segmentation is when you take the entire market and you split consumers in different groups that have common needs, expecting similar benefits, responding similarly to marketing action, it doesn't mean that they have exactly the same need, but that's quite similar, the segment is quite.

homogenous but is different from other groups of buyers.They have to be different enough to justify the development of a different marketing mix.

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Micro-segmentation: based on demand and product group

There are many variables for segmentation, but first of all you can make a segmentation that can be based on the product group or it is based on the demand.

Segmentation by product group: the segmentation is based on the type of product because there is the hypothesis that behind a specific product there is a specific consumer. Segmentation can be based starting on the product category like the catalog of a company or you can make the segmentation considering the final consumer. The segmentation by product group is based on the assumption that behind some product groups there are some segments of consumers.

Segmentation based on demand: you make a segmentation that is based on individuals, on companies or on channel of distribution. Individuals means for example you

that they buy only online is impacting on your marketing strategy. You can have different segmentation inside the company you can also have a different types of segmentation when you think about developing a product or developing a communication, so you have to develop an advertising so sometimes you have to decide to do another segmentation to analyze you the target for your advertising strategy, so segmentation is an important part of the market strategy.

Multinational segmentation

When companies target China you can have two types of companies: one is the multinational company and one is the global company or you can have also the export company, but the export company basically is just selling to China and they try to sell usually the same product that they are selling in the domestic market. Multinational companies are companies with subsidiaries in all the markets, it means that when they target China what they do is they open a subsidiary in China and if for example China is country A they

Make a segmentation of the Chinese market, so they identify different segments in the Chinese market, if the same company is operating for example in Germany and Germany is country E, in Germany they have another type of segmentation and in fact you see that this type of segment is different. Global segmentation is different, is targeting the horizontal segment, they use the same type of segmentation country by country, then they put all these segments altogether and they develop a product and a global marketing strategy that is working well for all the segment in every country.

Criteria for good segmentation:

• Homogeneous within the segment: the segment has to be homogenous, consumers inside are similar
• Heterogeneous between the segments: the consumers of the segment and consumers of another segment have to be really different.
• Measurable: you need to have measurable statement that means that when you identify a segment it means that you have to develop a strategy, you have to develop a marketing plan.

The marketing plan is expensive for the company, with the marketing plan you have the cost of marketing research, the cost of communication, the cost of the product, the cost of distribution. It is possible to calculate market potential.

- Substantial: it has to be large enough to be profitable.

- Operational: are you able to reach this consumers? Dimensions of segment allow ease with identifying consumers and help formulate an effective marketing mix decision.

How can I identify global segments? Which kind of variables I can use?

VALS 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 Insight (SBI). The basic tenet of VALS is that people express their personalities through their behaviors.

You can find VALS segmentation applied in different countries, one of these countries is China. You can find in China the same segments as in the United States, but also you.

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.

Targeting strategies:

You can decide that you do a big analysis of the market, you get homogeneous marketing, this is China for example, I don't care about segments, I have the same marketing strategy to all the consumers or for my product a segmentation doesn't make sense.

You can decide to differentiate a little bit, this is called a multi segment proposal that means that you identify different segments, you modify something but not a lot.

Differentiated marketing is when you really find out different segments and you develop different marketing plans for each segment.

Focused

Marketing is when you identify different segments and you focus only on one segment.

Positioning concept

Positioning is the promise that you develop to target consumers to convince them to buy your product instead of a competitive product. It is the space occupied by a product/brand in the consumer's mind, in comparison with spaces occupied by other products/brands perceived by a specific group of consumers (segment). You can work on functional aspects, emotional aspects, or competitive aspects.

Brand positioning strategy

It's a proposal, typically used by some consultancy companies. The positioning strategy has to be developed in this way: first of all, you have to know who is in front of you or you have to know who are the clients that you are targeting very well, you have to know everything about them. You have to distinguish the product type, the product type is identifying the competitive arena of the company, this is impacting in your competitive arena. Then you have to define first of

All what is your point of difference, why are the differences with other brands? And this difference which kind of benefits will provide to you as a consumer? You have to give a supporting evidence, you have to give data, information. You have to say the brand personality, which kind of personality you want to give (for example elegant and dynamic). And then USP (unique selling proposition) that is what make the brand different from the other brand.

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Perceptual map: an example in the fashion industry

There is a promise in terms of products and there is a promise in terms of brand. Positioning at brand level is often conceptualized with a positioning map, also called perceptual map. Brands are positioned in the map in relation to positioning bases (in this example price and style).

The map clearly points out the position occupied by the brand (for example Brand A) and by competitive brands in the mind of consumers. In different countries, due for example to cultural differences,

consumers’ perception can be different, and also competitive brands can vary.

In the map it is also possible to identify what is the position of the ideal brand for the target segment.

A company can also plan a repositioning strategy in order to move closer to the ideal product. Repositioning strategies can be very expensive, especially if carried out at a global level.

Point of difference (POD)

Positioning requires the identification and communication of the POD (Point of Difference) that will be operationalized through the USP (Unique Selling Proposition).

Not is always done with a promise of an attribute of the product, it can also be developed in a different way, can be based on one or more of the following different criteria:

• Benefit, attribute, or price
• Usage situation
• Product use
• Users