Segmentation of International Markets (IM 08 Oct 2020)

Segmentation of International Markets

Market segmentation is a marketing strategy which involves separating a wide target market into subsets of customers, enterprises, or nations who have, or are perceived to have, common requirements, choices, and priorities, and then designing and executing approaches to target them.

Market segmentation approaches are basically used to identify the target clients, and provide assisting data for marketing plan components like positioning to get certain marketing plan objectives.

Businesses may discover product differentiation approaches, or an undifferentiated approach, including specific goods or product lines relying on the precise demand and attributes of the target segment.

International Market Segmentation refer to the process of dividing its totoal international market into one or more parts (segments or submarket) each of which tends to be homogeneous in all significant aspects.

Market segmentation occurs when a company divides all of its customers into market segments to make sure that marketing efforts can be more targeted and focused.

The segments that are created via market segmentation can be based on many different characteristics like behavior, age, and income levels. If the marketing campaigns that you create are targeted to very specific subsets of customers, you should be able to obtain a better response rate when compared to a broad marketing campaign that advertises to the masses. The same is true when you’re developing a product that you hope to bring to the market.

There are four key types of market segmentation that you should be aware of, which include demographic, geographic, psychographic, and behavioral segmentations. It’s important to understand what these four segmentations are if you want your company to garner lasting success. Each segment of consumers that you create will have specific wants and needs, which you can effectively accommodate once you’ve performed the proper research. By making use of market segmentation, your company should benefit from being able to use its resources more efficiently and from making more informed marketing decisions.

The 4 Types of Market Segmentation

While there are dozens of subcategories and traits that can be used to identify different markets, there are only four types of market segmentation. The dozens of separate subcategories are placed under each of these four types of segmentation. The purpose of breaking the market up into four types of segments is that businesses can more accurately achieve similarity in each segment.

For instance, all of the subcategories that are placed under the demographic segment are similar to one another, which provides companies with the information they need to precisely target a specific customer-base. When performing market segmentation, make sure that you avoid combining two of the segmentations into a single one. Even though the demographic and geographic segmentations are similar, a combination of these variables is exceedingly difficult to create.

1. Geographic Segmentation

Dealers can segment market according to geographic criterion that is nations, states, regions, countries, cities, neighborhoods, or postal codes. The geo-cluster strategy blends demographic information with geographic data to discover a more precise or specific profile. For example, in rainy areas dealers can easily sell raincoats, umbrellas and gumboots. In winter regions, one can sell warm clothing.

A small business product store focuses on customers from the local neighborhood, while a larger departmental store focuses its marketing towards different localities in a larger city or region. They neglect customers in other continents. This segmentation is very essential and is marked as the initial step to international marketing, followed by demographic and psychographic segmentation.

The geographic market segmentation allows you to effectively split your entire audience based on where they are located, which is useful when the location of the customers plays a part in their overall purchase decision. The core traits and segments that can be used with the geographic segmentation include region, continent, country, city, and district.

This is an exceedingly popular type of segmentation because most customers are influenced at least partly based on where they live. If a significant amount of your audience lives in the United Kingdom, you can use this information to create a co.uk website. This form of segmentation is considered to be ideal for international companies. Customers who live in different countries will have different wants and needs, which can be precisely targeted in a marketing campaign. This is considered by many companies to be the simplest form of market segmentation. It’s also highly beneficial for small businesses with a limited budget. If your main geographic segment responds better to online ads than TV and print ads, this information should help you use your resources wisely.

2. Demographic Segmentation

Segmentation on the basis of demography relies on variables like age, gender, occupation and education level or according to perceived advantages which an item or service may provide.

An alternative of this strategy is called firmographic or character-based segmentation. This segmentation is widely used in business to business market. It’s estimated that 81% of business to business dealers use this segmentation.

According to firmographic or character-based segmentation, the target market is segmented based on characteristics like size of the firm in terms of revenue or number of employees, sector of business or location like place, country and region.

The demographic market segmentation is focused entirely on who the customer is. However, the traits that are placed into the demographic market segment depend on whether you run a B2B or B2C business. If you run a B2B company, the traits that you would likely include in this segment extend to industry type, company size, time in position, and role within the company. On the other hand, a B2C company would include such demographic traits as age, education, gender, occupation, family status, and income.

This is a very common segmentation type that’s used within market research to determine what a company’s main target audience is. This information is also easy to obtain. All you need to do to gain this information is to pull census data. Auto dealerships can use this information to market their brand to different genders, age groups, and income levels. This has also proven to be a useful type of market segmentation because it allows you to directly respond to the wants and needs of your customers.

If your main product is a high-end item, you may want to segment your audience based on a high household income. When you use these traits to categorize your audience for marketing purposes, you should be able to increase customer retention and loyalty. You also won’t waste your resources on targeting an audience who would never be interested in the items or services that you provide. You can use several of the traits or segments within the demographic segmentation to reach a precise customer with your marketing.

The belief when using this type of market segmentation is that all of the customers within a demographic trait will have similar purchasing behaviors. For instance, customers within the 40-49 age bracket may be much more likely to purchase your product when compared to customers within the 20-24 age bracket, which is useful to know when you’re looking to create an effective and efficient marketing campaign.

3. Behavioral Segmentation

This divides the market into groups based on their knowledge, attitudes, uses and responses to the product.

Many merchants assume that behavior variables are the best beginning point for building market segments.

The behavioral market segmentation divides your whole audience based on the previous behavior that they’ve exhibited with your brand. Some of the main traits within this segmentation type include product knowledge, purchase patterns, previous purchases, awareness of your business, and product rating.

To best understand how this market segmentation is used, an example of a business that might employ this type of segmentation is a restaurant. If a restaurant has different menus for lunch and dinner, they could compare purchase patterns between the dinner audience and lunch audience. It’s possible that items on the lunch menu would be much more popular if they were instead available on the dinner menu. The restaurant could use this data to improve their menus and release new ones that would be more effective for each audience segment.

4. Psychographic Segmentation

Psychographic segmentation calls for the division of market into segments based upon different personality traits, values, attitudes, interests, and lifestyles of consumers.

Psychographics uses people’s lifestyle, their activities, interests as well as opinions to define a market segment.

Mass media has a dominating impact and effect on psychographic segmentation. To the products promoted through mass media can be high engagement items or an item of high-end luxury and thus, influences purchase decisions.

The psychographic market segmentation is aimed at separating the audience based on their personalities. The different traits within this segmentation include lifestyle, attitudes, interests, and values. However, extensive research will be necessary with this form of segmentation since identifying demographics based on personality is relatively subjective. If you find that your main audience values quality and energy-efficiency above all else, your marketing platform can be altered to account for these core values.

It’s recommended that you cover at least several psychographic traits when forming your marketing approach to ensure that you don’t miss a perspective that your audience might have. While this market segmentation is difficult to use, many companies believe that it can lead to high yields. When your marketing is targeted to someone’s personality, it’s more likely that the individuals who see this marketing will become increasingly loyal to your brand.

 

5. Occasional Segmentation

Occasion segmentation is dividing the market into segments on the basis of the different occasions when the buyers plan to buy the product or actually buy the product or use the product. Some products are specifically meant for a particular time or day or event. Thus, occasion segmentation helps identify the customers’ various reasons to buy a particular product for a particular and thus boosts the sale of the product.

 

International Marketing Planning

Any company on the marketing platform is expected to have a detailed analysis of the choices and preferences of the customers in the target market. That is where the company will be selling the products. This will help the company produce the products according to the demands of the customers and this will eventually lead to a win-win situation between the buyer and the seller.

The plan that leads to the analysis is a step by step approach wherein the analysis is done on cultural, economic, and political situation prevailing in the target market or the country.

The different steps in the planning process are as follows −

·                  Phase 1 − Identifies the target market and builds relative priorities for resource allocation.

·                  Phase 2 − Fixes the positioning approach for each target market. The aim is to match the requirements with the needs based on the analysis.

·                  Phase 3 − Includes the preparation of the marketing plan. It consists of examining the situation, aim, objectives, approach and tactics, budgets and forecasts, and action programs.

·                  Phase 4 − The plan is executed and managed. Results are checked and strategies adjusted when required to improve results.

Even though the international marketing planning process is very much similar to planning domestic marketing strategies but the environment is far more complicated, knotty and uncertain in international markets.