Page 121 - DMGT547_INTERNATIONAL_MARKETING

International Marketing

Notes Segmentation of International Markets

There are two main approaches to global segmentation:
Macro Approach
Countries can be seen as segments.

Example: There will only be a large market for expensive pharmaceuticals in countries
with certain income levels, and entry opportunities into infant clothing will be significantly
greater in countries with large and growing birth-rates.
There are, however, significant differences within countries.

Example: Although it was thought that the Italian market would demand “no frills”
inexpensive washing machines while German consumers would insist on high quality, very
reliable ones, it was found that more units of the inexpensive kind were sold in Germany than
in Italy—although many German consumers fit the predicted profile, there were large segment
differences within that country.
Micro Approach
This approach caters to segments within countries. This can be approached in two ways:
Intra-market Segmentation: This involves segmenting each country’s markets. Here
the company entering a new market segments that market to attain greater understanding
of it.

Example: An American firm going into the Indian market would research to segment
Indian consumers without incorporating knowledge of U.S. buyers.
Here the idea is that every country’s market is different from the others and that it hence
demands to be approached differently. This approach is a long term strategy and involves
a lot of research and investment.
Inter-market Segmentation: This involves the detection of segments that exist across
borders.

Notes It may be noted that not all segments exist in one country will exist in another and
that the sizes of the segments may differ significantly.

Example: There is a huge small car segment in India; while it is considerably smaller in
the U.S. Inter-market segmentation entails several benefits.
The fact that products and promotional campaigns may be used across markets; introduces
economies of scale, and learning that has been acquired in one market may be used in another—
e.g. a firm that caters to a segment of premium quality cell phone buyers in one country can put
its experience to use in another country that features that same segment. (Even though segments
may be similar across the cultures, it should be noted that it is still necessary to learn about the
local market.

Example: For a product, although a segment common across two countries may seek the
same benefits, the cultures of each country may cause people to respond differently to it.

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