Segmenting Global Markets:

Look Before You Leap

By: V. Kumar and Anish Nagpal

I am a citizen, not of Athens or Greece, but of the world. -Socrates

Before implementing a global market segmentation strategy, its critical to understand both local and global issues
Global Marketing: emphasizes 4 activities
Cost efficiencies Opportunities to transfer products, ideas, etc. Emergence of global customers Better links between national marketing infrastructures

What is GMS?

Global marketing segmentation (GMS) is the process of identifying specific segments of potential customers, across countries with similar attributes who are likely to exhibit similar buying power.

The goal of GMS is to break down the world market for a product or service into different groups of consumers that differ in their

Targeted segments in GMS should possess these properties:

Measurability: Easy to define and measure

Size: Large enough to go after

Accessibility: Easy to reach via the media Actionability: Effective marketing programs should be easy to develop Competitive intensity: Should not be preempted by the firms competition Growth potential: High return on investment should be attainable

How to Implement GMS

Six step process

1. 2. 3. 4. Identify the purpose. Select segmentation criteria. Collect relevant information. Segment the countries/consumers according to criteria. 5. Reevaluate the fit of the segment after implementation of the intended program. 6. Update/reassign segment membership.

Demographics: Measurable characteristics of population. Culture: Religion, education, and language. Geography: World region, economic stage of development, and population. Environment: Political, legal, and business environments.

Categories for Selecting Segmentation Criteria

4 Critical Equivalencies

Construct Equivalence

Whether the segmentation basis has the same meaning and is expressed similarly in different countries and cultures.
Example: Bicycles in the U.S. are classified under the recreation-sports industry, whereas in India and China they are considered a means of transportation.

Scalar Equivalence

Results from marketing research should have the same meaning and interpretation in different countries.
Example: The U.S. generally uses a 5 or 7 point scale while in France the most common scale is a 20-point scale.

Measurement Equivalence

Whether the measures used to operationalize the segment are comparable across countries.
Example: Household income is difficult to compare across countries due to differences in tax structure and the purchasing power.

Sampling Equivalence

Identifies comparable populations and selects samples that are representative of other populations and comparable across countries.
Example: In the U.S., office supplies are often purchased by secretaries, while in many other countries this decision is made by a middle-level manager or CEO.

Think Globally, Act Locally

Segmentation allows global marketers to take advantage of standardization while addressing the needs and expectations of a specific target group. To be successful, GMS needs to achieve a balance between the local and global concerns of the customers.