Market segmentation can be defined as a technique of dividing different countries into homogeneous groups. The rationale behind the concept of market segmentation is based on the fact that the global market cannot be served on the basis of single set of policies.
The international market segmentation has its own usefulness. The strengths of international market segmentations lies in better understanding of consumer needs for making international marketing decisions and their implementations.
Learn about:-1. Introduction to International Market Segmentation 2. Characteristics of International Market Segmentation 3. Requisites of International Market Segmentation 4. Bases 5. Steps for International Positioning.
International Market Segmentation: Introduction, Characteristics, Requisites, Bases and Steps for International Positioning
International Market Segmentation – Introduction
A market segment is a concept which consists of group of customers having similar set of wants. The basic purpose of market segmentation is to satisfy the needs of customers more precisely. It is not to subdivide the market just for the sake of the segmentation.
American marketers do have the tendency to capture whole of the foreign market at once. By doing this they are overlooking two big problems. The foreign buyers may not be homogenous in their needs. Further the customer is divided on the basis of other characteristics like Urban and Rural and on the basis of income pattern etc. It is pertinent to mention here that the characteristics of the customers of one country are always different from the customers of other countries. Therefore this factor creates hurdles to the marketers.
The second factor, “Total market strategy” always places the company in a direct competition with strong and local based competitors. The Japanese business firms take their targets very carefully by making continuous attempt to segment the market. While planning to enter the U.S. markets they always avoid direct competition with local U.S. based business firms.
A Japanese based firm believes to establish a reputation for the product excellence and then gets the customers to trade up over the time. This strategy of Japanese worked very well.in the automobile industries and also in taking break through into the U.S. computer market. This strategy worked very well as it does not aware the giants like U.S. early in the entire game. It does have a great deal of strategic sense also.
The main purpose behind to take the maximum benefits of market segmentation is market homogeneity. Initially a multinational company may enter just in one or few countries and gradually develop its markets in the abroad. In order to broaden its business scope in the world market, the company must identify different countries as to target its markets.
It is evident that there is a big difference, economically, geographically, demographically, culturally and politically among different nations in the global arena. This vast difference in various environmental factors makes a company logical to employ certain workable and scientific criteria to segment the world market. The world market is segmented on the basis of such criteria, where the company’s product do have best potential for the success.
But it is considered important for the companies to make an analysis of the world market before grouping the different countries in segments. The questions which are important to arise that what is the rationale behind such market segmentation? What procedures may be followed by the company? and how in a country segmentation can be achieved?
International Market Segmentation – 6 Characteristics behind Segmenting
Market segmentation can be defined as a technique of dividing different countries into homogeneous groups. The rationale behind the concept of market segmentation is based on the fact that the global market cannot be served on the basis of single set of policies. It is because of difference in cultural, economic, geographical, political & legal and demographical parameters. The company may not be able to do business with all countries and in that case it draw certain those segments where the business potential is comparatively higher.
The real problem arises when the population is diverse and the geographical location is also diverse. In this case targeting all the economies in the world market may be risky. Therefore a business firm must determine that how a consumer is responding to the particular product, price, place and promotional efforts. It does not mean that a firm should change its focus from market segment, it originally focused.
Rather it should be further dissected into smaller niche groups as per the requirements of consumer needs. A niche may be defined as a narrowly defined group of the customers. It can be understood with an example of drinkers. For example the group of drinkers can be divided into two further subgroups (a) Heavy drinkers (b) Those who are willing and trying to stop drinking.
The niche do have following characteristics:
i. It caters those customers who do have distinct needs.
ii. It enables a customer to pay premium to those firms, who satisfy their needs.
iii. The niche never attracts other competitors in the market.
iv. It is helpful to gain certain benefits through its unique characteristics.
v. It do have substantial size.
vi. It is a profit center for the business firms and good growth potential.
The niche marketing attracts only one or two fairly small customers. Keeping in mind the characteristics if niche marketing and the benefits there after, even the big companies have changed their market strategy and have moved into niche marketing. The companies often develop an excellent understanding and opportunities by turning up their attention towards niche marketing. The niche market provides a clear vision for the overall development of business strategies and therefore initiating action plan for the fulfillment of the objectives.
A real problem in the way of market segmentation is the criteria to be used. Traditionally the world market was likely to be segmented on the basis of the geographical segmentation. The main drawback noted in this criterion is that it overlooks the possibility of economic and cultural differences among different nations.
International Market Segmentation – Top 5 Requisites
The international market segmentation has its own usefulness. The strengths of international market segmentations lies in better understanding of consumer needs for making international marketing decisions and their implementations. The weakness of segmentation is inability of a business firms to take proper care of all the segmentations.
The requisites of effective international market segmentations can be spelled out as under:
1. It should be identifiable and measurable – The segment of the consumers should be clearly defined. The size of the segment, the purchasing power of the consumers and other characteristics of the consumers must be defined clearly. The analysis of the segments should be made on the basis of geographical, demographic, social, cultural, economical and political factors.
2. Substantial – A segment should be a large possible homogeneous group. It must be followed with a sound marketing programme. It should be large and profitable.
3. Accessible – Each segment should be concentrated geographically and could be effectively approached and served.
4. Differentiate – A segment must make differential response to the marketing efforts put in. It should also respond differently to different marketing mix. The differing responses will be helpful in optimizing the international marketing operations by changing marketing efforts and there after the amount involved. For example if a married and unmarried man responds in similar fashions to sale on perfume, it means they do not constitute separate segments.
5. It should be stable over a period of time – A segment which emerge rapidly and disappear quickly do not offer very good marketing opportunities for a company. Therefore it should be relatively stable over a period of time.
International Market Segmentation – Bases for Grouping Different Countries
The countries of the world can be grouped by using a variety of criteria. A business firm may group the world countries on the basis of its per capita GNP or geographical characteristics. The socio-cultural and political environment provide a sound criteria for grouping the countries.
A company may use few variables or may use large number of variables for grouping the world economies. The choice of appropriate method of segmentation of world economy depends on the reasons for segmenting the world market. It is usually related to the nature of the product and its relative advantages.
The following criteria may be used for grouping world countries:
1. Economic Grouping:
The world countries can be divided on the basis of the GNP per individual to form different economic groups. The world countries may be segmented as high income industrialized countries, middle income countries and lower income countries with lesser GNP.
The economic division of world economies can be made easily when the relevant income data of the world is available. “Rastow has used following criteria to classify world countries on the basis of economic basis.
(a) Traditional society status
(b) Pre-take off status
(c) Take-off status
(d) Drive to maturity status, and
(e) The status of high man consumption.”
The GNP per capita basis has been used to place countries in any of these stages. The economic grouping of the world countries is useful for developing marketing strategy in the international business.
The Dichter has used following criteria for the classification of the world economies:
He has taken the relative size and the nature of a country’s middle class as a criterion to classify it in one on the following six categories:
(i) The classless societies – In stable countries, it primarily includes the Scandinavian countries.
(ii) Affluent Countries – Among these groups, the United States, West Germany, Switzerland, Holland and Canada are included.
(iii) Countries in transition – The groups are including England, France, Italy, Australia, South Africa and Japan.
(iv) Revolutionary Countries – It is including, Venezuela, Mexico, Argentina, Brazil, Spain, India, China and the Philippines.
(v) Primitive Countries – Among these, the newly liberated countries of Africa and the remaining colonial countries are grouped.
(vi) New-class societies – Among new-class societies, Russia and its satellites are grouped.
The Marketing Society Institute (MSI) has developed a very refined model, which is also a latest and most scientific one, for grouping world countries on the basis of economic parameters.
It is based upon the following factors:
(i) Total population of a country.
(ii) Density of the population.
(iii) Growth rate of the population.
(iv) Average working age of the population.
(v) Literacy rate.
(vi) Percentage of agriculture population to total population.
(vii) Percentage of urban population (cities exceeding population 20,000 people)
(viii) Percentage of the four primary cities (metropolitan cities) to the total population.
(i) Ethnographic density
(ii) Religious homogeneity
(iii) Racial homogeneity
(iv) Linguistic homogeneity.
The total world countries are divided on the basis of above parameters and there after grouped into following categories:
(i) Most highly developed countries.
(ii) Developed countries.
(iii) Semi developed countries.
(iv) Under developed countries.
(v) Most under developed countries.
The most developed nations are characterized by the higher literacy rate and high per capita GNP. Other characteristics may be including, small agriculture, popular, less growth rate of population and high percentage of working population. The less developed nations do have the characteristic opposite to the above features.
The world countries can be further divided in the following categories on the basis of current international scenario:
However the assignment of different countries to these categories is arbitrary and there is no evidence which exist to support its validity.
i. The First World Countries:
It includes the most industrially advanced countries of the world. It also consists of the member of organization for Economic co-operation and development. In the first world countries mostly the industrial nations of North America, Asia and Europe are included. The main features of these economies are capitalistic approach and market oriented economies.
In addition to these industrial nations, other industrialized economies like Japan, New Zealand and Australia are qualifying parameters of first world countries and Spain, Singapore, Taiwan, South Korea, Greece and Argentina are also on the qualifying borderline cases.
ii. Second World Countries:
These are centrally planned communist countries with having one or two mixed economy nations.
iii. Third World Countries:
These countries are enriched with the resources or those nations who attract the foreign direct investments to their countries. The technological requirement is the prime need of these countries for their developments. Among the revenue rich nations, the OPEC nations are included and among the liberal economies for the foreign direct investments, and enriched with natural resources nations are Malaysia for tin, rubber and timber etc., Zambia for copper, Morocco for phosphate, Mexico, Brazil and India are including the group of third world countries.
iv. Fourth World Countries:
These nations do have certain commitments towards certain strategic raw materials, technologies and towards certain economic infrastructure. Peru, Egypt, Thailand, and Liberia etc. are included in this group.
v. Fifth World Nations:
There are most poor countries of the world. There large number of population is engaged in the agriculture group. The life expectancy of the people is very low in these countries. Some of the examples of these nations are Mali, Ethiopia, Somalia and Ramada etc.
2. Geographical Segmentation of the Countries:
The world market can be segmented on the basis of geographical lines. It is practically evident that so many multinational companies in the world are organizing their worldwide business operations by grouping all the potential world countries into different regions.
The geographical criterion for grouping world countries can be justified on the basis of following characteristics:
i. Easy to Manage Worldwide Market:
The geographical segmentation makes it easier to manage world market, which is grouped together. These markets can be managed from a group headquarters, situated centrally in any one of the nation of the group. Further it is easy to manage properly both the transportation and communication throughout the group countries. For example Taiwan can be grouped along with South Korea and India with having regional headquarter somewhere at the suitable destinations of these nations.
ii. Benefits of Common Socio-Cultural Traits:
It is an added advantage to the grouped nations that they can enjoy and share the benefits of their common cultural traits in the same geographic region. The firm has a benefit to formulate similar kind of market strategy for whole of region because of common cultural characteristics.
iii. Benefits of Trading Groups:
After post-world war-II, the different countries of the world grouped together and formed trading groups for their common and mutual benefits. Some of the trading groups are European Economic Community (EEC) and Latin American free Trade Association etc. These nations have grouped together to form a sound trading groups and a large economic potentials. Basically these trading groups are regional in character.
The member nations of these trading groups agreed to trade freely with each other, without having any trading restrictions. It is pertinent to mention here that if one country is entering into the trading with any one member nation of the group, it will be automatically easier for entry into another country belonging to the same trading groups.
Thus it is beneficial for the marketers to formulate a common strategy for whole of the trading group. While segmenting the world market such types of trading groups are kept into the one segment. Thus the geographical based division of countries always appears sound.
Is Geographical Division of the Nation Always Sound?
This aspect of geographical based segmentation of the world market is very important to study from marketing point of view. It is true that the geographical grouping of the nation is helpful to formulate common trading tactics with all member countries. But it does not guarantee that it will provide some opportunities of market in all the member countries of the trading groups and regional countries.
For example, in some geographical regions some countries may be economically poor whereas some may be economically very strong in those regions. It does not mean that trading opportunities will be equal in both the countries. There may also be a difference in the cultural aspects of these nations.
The Mexico geographically falls in the same continent as the United States and Canada is. But it differ both culturally as well as economically from the other two. Thus it can be concluded that geographical bases for segmenting the world market may not be always useful from marketing point of view to us.
3. Segmentation of World Market on the Basis of Political Perspectives:
The world market can be grouped on the basis of the political perspective of the nation.
The world markets can be categorized on the basis of following political setups:
(i) Democratic nations
(ii) Communist countries
(iii) Dictatorship nations
(iv) Monarchies.
It may be further explained that what are the various characteristics of each type of political setup. In democratic style one political system, two party system, one party dominance system and the multiparty system is available. On the other hand dictatorships may be military or civilian. First of all the different countries are grouped on the basis of above mentioned political setups.
The political setup of each group is considered to be homogeneous in nature as to develop marketing strategy for each group. It is pertinent to mention here that different marketing strategies are developed for the different groups. It is because of different political perspectives of the nations of different groups.
It is always beneficial for the marketer to take political base for segmenting world market. The multinational companies can look easily about the potential economies and can develop their marketing strategies accordingly.
Is Political Grouping of World Nations Always Sound?
Sometimes it may not be feasible to formulate and t design one strategy to serve all countries of one group in a similar fashion. For example three nations of the world were having military dictators in between the decade of 80s’. These nations were Nigeria, Argentina and Bangladesh. But these nations were heading towards holding free election in the respective countries as to form democratic governments.
All three nations were falling in the same group. Now if we go through with other parameters of these economies, these were having a lot of deviations with respect to other environmental factors. Argentina’s economy was much stronger and it was considered much closer to the Western European Nations. On the other hand the potential of Nigeria’s economy was totally based upon the oil prices.
As far as Bangladesh is concerned, it is one of the highly populated is ranked among the poor countries of the world. Therefore keeping in mind the economic perspectives of these three nations, it is not beneficial to segment these nations on the basis of political setups, as to form a common marketing strategy for all. Thus it can be said that one marketing strategy will not be adequate to serve and get maximum benefits out of these economies.
But on the other hand if communist nations are concerned, their centralized approach and similar principles of their political system appears most relevant. In order to develop common marketing approach as to serve all communist countries in a similar fashion. Therefore it can be concluded that a marketer must study all the factors, which may influence their marketing decisions while formulating their marketing strategies to markets, segmented on the basis of political environment.
4. Market Segmentation on the Basis of Different Religions:
Religion is said to be an important component of a society. It dominates our culture values to the great extent and also influences our life style. As a result it influences the marketing efforts of a firm in the international business. The religious factor plays an important role in the grouping of world countries on the basis of common characteristics. The major religious forces prevailing in the world are Animism, Hinduism, Buddhism, Judaism, Christians and the Islamic world.
However, the efforts have been made to make a brief attempt to discuss all these forces as under:
Animism is an ancient religion without having religious texts but with some magic. It is mostly formed in the African nations. Hinduism is mostly prevailing in India. It is also considered to be a way of life rather than a religion. It is based on certain beliefs and people do faith on these customs, which are also a way of their life style.
Buddhism is mostly prevailing in South-East Asia, Japan, China and Burma etc. The Christians are found mostly in the western world. The two types of thinkers are there in the Christianity (1) Catholicism and (2) Protestantism. Both types of thoughts are having similar values. In practice the Protestantism countries do have the highest GNP per capita in entire world. Further there are about 30 Islamic countries in the whole world.
These are geographically located mainly in the Middle East, South Asia and Northern part of African nation. The cultural values and beliefs are very hard in Islam. In Islam a total way of life is predefined. It is also including their religious values and legislation as well.
An Evaluation of Religious Factors for Market Segmentation:
The religion provides a way of life style as a whole. It also determined what to do, when to do, why to do, how to do and where to do. Thus it provides an ideal criterion for segmenting the world market. For example in Islamic nations their purchase pattern and behaviour is dominantly influenced by their religious forces. Thus it also gives its impact on the business activities. Pakistan and Saudi Arabia are both Islamic countries.
The cultural values of both nations are dominated and dictated by their religious forces. If a multinational company is planning to formulate a common marketing strategy for both countries, it will not be feasible because apart from religious factors there is a huge difference in economy of both countries. The economic perspectives are much higher in the Saudi-Arabia in comparison to Pakistan.
Moreover the political environment of Pakistan is also dominated by the military dictators from time to time. It makes a lot of difference for the multinational companies to think about the potentials in both the economies. It also helps to think Pakistan as a low potential economy for the international marketing in comparison to Saudi-Arabia.
Therefore it can be concluded that religion alone may not be a suitable criterion to segment the entire world market. However religion along with other factors like cultural forces, political forces and economical forces can play an important role in determining the life style of peoples of the different countries. Further it will also be useful to determine a sound marketing strategy by the multinational companies.
5. Cultural Grouping of the World Marketing:
The world market can be grouped on the basis of cultural factors. But like religion based grouping, it is not advisable to use only one criteria for the segmentation. It must be supported with some other factors like religious factors and economic forces etc. It is evident that there are so many cultural forces which are prevailing in the world. It is difficult for the marketers to formulate separate marketing strategies for each segments grouped on the basis of different cultures.
Herskovits, Melville J. has classified the different elements of culture as under:
(i) Material culture – According to Herskovits the material culture approach consists of the technological advancements and other economic factors, which divide the world countries in different perspectives.
(ii) The social institutions – The social institutions are considered to be an important element of cultural forces. These institutions are helpful in building our socio-cultural values through education to the society by providing a better political structure and contribution of the social organizations to encourage and retain our cultural values.
(iii) Man and the universe – It is based upon the belief systems of human being in the universe. The belief is said to be the basic parameter for the cultural environment.
(iv) Aesthetic – It is also a very important element of cultural forces. It is based upon the graphics and plastic arts, folklore, music, dramas and the dance culture of nation.
(v) Language – Language of a country determine its cultural values. It is helpful to predict the behaviour of the consumers of a particular culture. It is ultimately helpful to decide the marketing strategy towards particular culture, society and nation as well.
All these variables can be considered as a significant factor to segment the world market on the basis of cultural basis. It is an extensive research work which also requires tremendous efforts by the company to undertake.
6. Segmentation on the Basis of Multiple Variables:
It is evident that there is a difference among the different countries in respect of various environmental factors. These factors include cultural factors, religious factors, socio-economic factors and political factors etc.
This difference in the characteristics of different nations is the basic argument behind the use of multiple variables for grouping different nations in accordance with different factors. Therefore rather than grouping the different nation on the basis of one or two variables, it is desirable to form international segments by using multiple variables in all these areas.
A cluster analysis may be useful for grouping the world countries on the basis of multiple variables. It is assumed in the multiple variable approach that the countries having different similar perspectives should be combined together for the analysis purpose and also to formulate marketing strategy accordingly.
7. Inter Market Segmentation of the Nations:
A particular country can be divided on the basis of different market segments. The particular segments of a country may be similar in respect to every aspect of other countries. These similar segments belonging to different countries may be combined together and form inter market segment.
For example in developing countries the multinational company can make an attempt to find small farmers as to segment the world market. These farmers whether they are belonging to any developing country may represent common needs, requirements and their behavioural aspects.
The farmers of these countries are dependent mostly upon the government help. These farmers belong to different countries. They speak different languages and also have different cultural backgrounds. These farmers represent a homogeneous market segment.
8. GNP per Capita Basis Grouping of Countries:
In international market segmentation, grouping of the countries can be done on the basis of GNP per capita of the countries. It is presumed that market behaviour is directly related to the average income level of the individuals. But the sole criterion of GNP per capita is not adequate to be as a basis for grouping the international market. The currency convertibility or exchange rate is always different from one country to another country. Therefore it is advisable to take a common base currency to measure the per capita GNP.
For example it may be per capita GNP (in dollars). The Physical Quality of Life Index (PQLI) may be a better base as to segment the world countries. It is possible that GNP per capita is higher along with highest PQLI of some top ranked groups. On the other hand the PQLI of some other countries, who are not included in the top positions on GNP per capita basis may also be highest. They may be falling in the highest PQLI group countries.
Therefore while segmenting the world countries it is always advisable to take PQLI basis for the market segmentation. It is always based upon the perception that there are many other countries in the world that can provide better market potential in terms of quality of life to the marketers, who may be ignored if such classification is done only on the GNP per capita basis.
9. Strategic Planning Framework for Grouping World Countries:
This approach is given by Elias G, Rizkallah.
He has proposed to divide the nation on the basis of following three dimensions:
(a) Potential of a country
(b) Competitive strengths of a country
(c) Risk factors in a particular nation.
(a) The potential of country is measured on the basis of following factors:
i. Product/Services of a company
ii. Size of the population
iii. Growth rate of population
iv. Economic growth rate
v. GNP per capita of a country
vi. Per capita national income
vii. Production pattern
viii. Consumption pattern etc.
The product/service quality of a company should be strong and the population growth rate should be under control. Further higher economic growth rate, higher GNP per capita, higher per capita national income and production as well as the consumption pattern are considered to be an important variable in determining the potential of a country.
(b) The competitive strength of a nation can be studied on the basis of following two factors:
(i) Internal factors
(ii) External factors
To study internal factors the following variables are considered:
i. Market share of the company
ii. Various resources of the company
iii. Facilities provided.
Among external factors the following variables are studied:
i. Competitors strengths
ii. Structure of the industry both locally and internationally.
As far as risk factors of a particular country are concerned, the following variables are studied:
i. Political risks
ii. Financial risks
iii. Other business risks.
These factors play an important role in a nation. The political risks are including, political instability and change in the government policies. It can influence the business operations in a country. The financial risks and business risks should also be studied while taking any such decision about the business operations in that particular country.
While grouping the countries, it is always considered that market potential is higher in that particular country. That nation should have enough and strong competitive strength. It represents the business houses operating business in that particular nation. The risk factor can never be ignored while grouping the world market.
After analyzing all these factors the world market can be grouped on the basis of following criterion:
By applying the above mentioned approach the following may be the benefits:
i. It divides whole of the world countries scientifically as well as equally
ii. It is helpful to the marketing
iii. It provides better bases to take marketing decision.
Thus it can be concluded that this approach presents a scientific approach for market segmentation in the world market.
10. In Country Market-Segmentation:
When the concept of market segmentation is studied within the national boundaries, is called in country market segmentation. There are number of sub markets in every country, which often differ with each other by number of variables like demographic, socio-economic, geographic and cultural bases. A marketer is to identify the potential segments and is to formulate marketing strategy accordingly.
The process of in country market segmentation can be carried out on the basis of following factor:
i. Demographical factors which includes age, sex, marital status, annual income etc.
ii. Geographical factors
iii. Socio-economic factors, which includes status, family characteristics, etc.
iv. Consumption behaviour – High, Average, Low
v. Product characteristics
vi. Psychological factors, including life style of an individual, personality etc.
After segmenting the market it is to be decided by the marketers that marketing strategy is to be applied to which market segment. The strategy development must have competitive advantages over others.
International Market Segmentation – 5 Important Steps for International Positioning (With Positioning Errors)
Positioning can be termed as a distinct image of the product or brand, established by the marketer in the mind of a customer. It is a consumer perception and it goes beyond consumer’s general perceptions and beliefs about a product. A product may be a part of number of varieties, but a marketer always tries to establish a separate and distinct image of his product or brands in the consumer’s mind.
Thus it can be said, that product positioning is an attempt to hold an important and appealing image of the product in a consumer’s mind, in comparison to the image of competitors product or brand. It is for the marketers to position the product very carefully. In case a product has not been positioned properly, the firm should reposition their product in the market.
The market segmentation and international positioning are to be used together to reinforce each other, both in theory and practice. The Japanese are very clear in their segmentation and positioning strategies. They entered to the low end of the market before approaching to the mass level and the high value added end. It is an important task with the marketers to prepare a strong positioning strategy.
The following are the main steps that can be used to prepare an international positioning strategy:
Step # 1. Market Segmentation:
This exercise is carried out as to decide that which group is to go after in the foreign market. The market is divided on the basis of homogeneous needs and requirements of the customers. The needs and requirements of the new market must be surveyed in depth. If the original product of the company requires modification, it should be added in the product accordingly.
Step # 2. To Prepare Competitors Profile:
The marketer should prepare a list of the competitors. It must be known that who are your competitors? What type of product they are making? What price they are keeping for their product? And what promotional efforts they are making in for promoting their product?
Step # 3. To Determine how Competitors are Positioned:
A marketer must know where his competitors are standing. In which are the competition can be a threat, as the position of the marketer will only have meaning relative to theirs. If the competitor is belonging to the same locality, then there can be good chances that he is already well established in that market.
The consumer may do have perceptions about the competitors. If the competitor is from another foreign company, he should collect each and every information about him. Finally it can be said that a marketer study deeply that how his competitors are positioned in the market. It will be helpful to position him well in the international market.
Step # 4. To Determine how the Decisions are Made by the Consumers:
After determining and identifying the competitors position in the international market, a marketers must study, how the decisions are being made by the consumers to act on the positioning. For example Singapore Airlines have made fortunes by exploiting various positions like fast, economical, luxurious, comfortable, professional and sexy etc.
Do consumers take their decisions to choose Singapore Airlines? Whatever the answer is, the competitor is to position himself accordingly. What consumer perceived about the product or services, it can be determined only by the direct contact with the consumers. For international positioning, a marketer is to study the consumer’s perception about the product.
Step # 5. Differentiate the Product to Maximize its Appeal:
Finally a marketer should differentiate the product, so as to maximize the appeal of the product. The steps are to be kept in the mind. The product must be designed as per the needs and requirements of a customer. It should be done after proper consultation and thereafter market analysis.
The marketer should not make an attempt to guess how a customer perceives about the product. It is for the marketer to position its product of a higher quality, in comparison to the competitors and a more economical. He should also be aware about the duplicacy, which can be a threat to company in the international marketing.
Positioning Errors:
A company should avoid following major positioning errors:
1. Under Positioning:
Sometime companies believe that the buyer is not having the proper idea of the brand. The brand is seen as an entry to the market place. For example in 1993, when Pepsi introduced its new brand by the name of Crystal Pepsi in 1993, the customers were not impressed differently. They were not having the clarity of the brand and the distinct knowledge of the benefits of the brand. Therefore the company should be careful about the clarity features while launching a new brand in the market.
2. Over Positioning:
The over positioning is just opposite to the under positioning. It is presumed that the buyer may have too narrow as image of the brand. The buyer do have over perception about the particular brand. For example the buyer perceives that the diamond rings start at least $5000, whereas it is now available at $1000 in the market which is considered to be the affordable amount. Thus it can be said that in international positioning sometime such kinds of errors may take place.
3. Confused Positioning:
The company can make too many claims about the product. It may also make frequent changes in the brand positioning. Thus it may lead to the confused image of the brand in the mind of the buyers. For example a software company has offered its desktop computer initially to the students, then it was positioned for the engineers and thereafter for the business community. It was positioned to various markets but finally it failed to succeed in the market place. Thus this type of positioning error has created confusion in the mind of the buyers, which ultimately resulted into the failure in the market place.
4. Doubtful Positioning:
Sometimes a company makes too many claims for its products. But the buyers may find it difficult to believe on the Co.’s claim regarding the particular brand in relation to product characteristics, pricing etc. For example, the General Motor has introduced its new model car Cimaron in the market place and it was positioned as a luxury competitor with BMW Mercedes etc. The features of this new model car seem to be similar in comparison to the other competitors. This luxury model of Cimaron was positioned as “more for move”. But the buyers rated it “less for more”. Thus this type of positioning error may also be harmful for the company.
Thus the company must care about all these errors as to solve the positioning problem. It enables the company to solve the problem of marketing mix. The question arises that how do companies select their positioning in the international market.
The following are some positioning possibilities from which a company can choose any one, to position itself in the international market:
(i) Attribute positioning – The company can position itself in the international market on the basis of the various attributes. It may be the total share in the market, the size of the company, the number of years in existence etc. The company can take this opportunity to advertise its attributes to position itself in the international market.
(ii) Benefit positioning – The company can position itself by emphasizing on comparative benefits of its products. It can be a leader in certain benefits. The more is to concentrate on the strengths of the company’s product.
(iii) Used or application based positioning – It can position itself in the international market on the basis of the product as best for some use or applications.
(iv) Competitor’s positioning – It is for the marketers to take care of competitor’s product. What he is making, how the product claims to be better in some way can be justified. For example if we take the case of two zoos, one can advertise having more varieties of animals than the other.
(v) Product category positioning – The product can also be positioned as a leader in certain product categories in the international positioning. For example, Institute of Advanced Studies which is situated at Shimla, position itself not only as an “educational institution” but also a recreational place for tourists from scenic beauty point of view and from historical movement point of view.
(vi) Quality and price position – A company can position itself in the market on the basis of its product quality and price. It can offer the best value for the money.
Thus a marketer is to select that positioning which is comparatively more beneficial. The SWOT analysis can be an important tool in this respect. S stands for the Strengths, W for Weaknesses, O for Opportunities and T for Threats. An in-depth analysis should be carried out before taking any such decision in the international market.