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Linking global market segmentation decisions with strategic positioning options Salah S. Hassan School of Business, The George Washington University, Washington, DC, USA, and

Stephen H. Craft Birmingham-Southern College, Birmingham, Alabama, USA Abstract Purpose – The purpose of this paper is to examine empirically the relationship between positioning strategies and bases of segmentation in international markets. Design/methodology/approach – A principal component analysis was conducted to determine the major macro- as well as micro-bases of segmentation that are linked with strategic positioning decision options. Further, a regression analysis was used to examine the effect of each of the segmentation bases on the different strategic positioning options used by segmentation managers. Findings – This study suggests the combined use of both macro- and micro-bases of segmentation in order to leverage similar strategic positioning across global markets. However, micro-bases of segmentation are suggested for firms seeking differential positioning strategies. Research limitations/implications – The conceptual and empirical findings of this study pave the way for embarking on promising and relevant future research that is needed to substantiate and enrich the academic understanding and managerial practice of linking global segmentation with strategic positioning decisions. Future research should focus on the use of hybrid segmentation strategies; its logical design; implementation issues; and its evaluation mechanism. Practical implications – This study provides specific empirical evidence of the relationship between strategic use of segmentation bases and strategic positioning. An effective use of the proposed framework will have various strategic marketing implications for firms; including cost efficiencies, opportunities to transfer products globally, expansion opportunities of current operation, and development of more effective brand management decisions. Originality/value – The proposed global strategic segmentation and positioning matrix is a new tool that guides managers to position their brands effectively in world markets. Keywords International marketing, Market segmentation, Brand management, Product positioning, Strategic marketing, Globalization Paper type Research paper

achieve economies of scale. In short, the strategic necessity does not stop at the selection of desirable market segments, but also includes the need to position brands effectively relative to the market segment. Toward that end, the purpose of this paper is to examine empirically the relationship between positioning strategies and bases of segmentation in international markets. The debate over this issue has intrigued marketers since Levitt (1983) introduced the concept of “segment simultaneity” in his thought-provoking article describing the globalization of markets. He described this phenomenon as the “proletarianization” of global markets where everyone everywhere wants to have world brands. What he described, in fact, was the existence of similar market segments and consumers in different countries for whom low price and high quality would be common criteria for making buying decisions. The decision to segment world markets lies in understanding the degree of globalization achieved in a given market. If there are no more mass markets in the USA, for example, one should hardly expect a single universal marketing strategy to be effective on a worldwide basis. However, if bases exist for market segmentation that cut across national boundaries, then marketing strategies might be developed that will work for similar segments around the globe. The existence of these intra-market segments might create important opportunities and challenges for firms

An executive summary for managers and executive readers can be found at the end of this article. Can global market segmentation decisions be based solely on geopolitical and economic factors or can global segmentation decisions be based on behavioral and lifestyle variables? In an increasingly global and technology savvy marketplace where customer segments are becoming homogenized across national boundaries, behavioral and lifestyle segmentation may be necessary addition to geopolitical and economic segmentation in international markets (Aulakh and Kotabe, 1993; Helsen et al., 1993; Nachum, 1994; Luqmani et al., 1994). Complicating the segmentation issues in global markets is the need for companies to make strategic positioning decisions in an increasingly competitive and transparent marketplace in order to leverage brand equity and The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at www.emeraldinsight.com/0736-3761.htm

Journal of Consumer Marketing 22/2 (2005) 81– 89 q Emerald Group Publishing Limited [ISSN 0736-3761] [DOI 10.1108/07363760510589244]

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Linking global market segmentation decisions

Journal of Consumer Marketing

Salah S. Hassan and Stephen H. Craft

Volume 22 · Number 2 · 2005 · 81 –89

seeking to establish brand positions in multiple markets – an increasingly common strategic goal. This paper provides an empirical study of the linkages between segmentation bases and positioning strategy decision options. The key research issues addressed here are: . Would a combined use of both macro- as well as microsegmentation bases leverage similar strategic positioning across global markets? . Would limiting the use of segmentation bases to the micro level be linked to localized, strategic brand positions?

the focus of strategic response to global segments that transcend the geopolitical boundaries of nations. Global marketers often target lifestyle similarities. For example, targeting outdoor lifestyles allows Weber barbecues to enjoy great popularity in Los Angeles and Johannesburg. Those who love outdoor cooking may live in diverse regions characterized by very different value systems, but similarities should dominate comparisons of segment members. Historically, segmentation researchers have segmented the market based on objective presupposed attributes (Wind, 1978). This a priori segmentation method selects a prerecognized battery of descriptive characteristics for each country. Contemporary segmentation research calls for a micro-based measurement technique that focuses on buyer preferences. This post hoc method utilizes a battery of variables that seek to differentiate buyer preferences (Green and Krieger, 1991). This hybrid model segments the world markets based on: . similar purchase patterns exhibited in multiple countries; and . allowing countries to belong to different clusters.

Bases for global market segmentation Most early segmentation efforts were based on macro considerations that include factors such as economic (Kotler, 1986); cultural (Whitlock, 1987); geographic (Daniels, 1987) and technological (Huszagh et al., 1986). Current research found that these pre-determined country bases are inadequate for segmentation when considered without behavioral bases (Helsen et al., 1993; Nachum, 1994). For example, pre-determined country clusters will be inadequate without a full account for the degree of homogeneity related to buyers’ responsiveness to the global marketing program. World markets have evolved to imply global segments defined based on market variables other than national boundaries. A hybrid approach that considers both country bases as well as buyer response bases is found to be more realistic (Hassan et al., 2003). This inter-market segmentation approach refers to “ways of describing and reaching market segments that transcend national boundaries or that cut across geographically defined markets” (Hassan and Blackwell, 1994). This approach emphasizes that intermarket segments are based on variables other than national boundaries. There are sizable world markets where consumer segments are converging across cultural and national boundaries. The challenge in leveraging brand equity is to identify and profile these segments on an inter-market basis and to develop strategies to reach them with globalized brands. The existence of inter-market segments is a key condition for the success of global marketing programs. Hybrid segmentation strategies were developed as frameworks to evaluate markets on a worldwide basis and to identify indicators/attributes of brands that are suitable to the implementation of global marketing programs (Helsen et al., 1993; Luqmani et al., 1994; Kale and Sudharshan, 1987; Kreutzer, 1988; Hassan and Katsanis, 1991). Market segmentation strategy must be examined to determine the best bases for global brand positioning. Global consumer markets are best understood as groups of buyers who share the need and desire for a product and the ability to pay for it, not just those who share a national border. Buyers in a segment seek similar benefits from, and exhibit similar behavior in buying a product. Although these consumers may live in different areas of the world and come from very different backgrounds and value systems, they have commonalties in association with a given global brand. Many of these similarities are associated with the brand image and the lifestyle it projects (Luqmani et al., 1994). The emergence of inter-market segments means that global firms must integrate macro-level bases with micro-level bases in their segmentation (Hassan et al., 2003). The appeal of similar brand benefits, similar patterns of purchase and consumption behavior, and specific shared values should be

Effective segmentation methods ultimately must integrate country-based factors with buyer-based variables. Figure 1 illustrates a framework of the integrated approach to segment design (Hassan et al., 2003). It is suggested that an integrated approach will be a more realistic response to forces of market globalization such as the convergence of consumer needs (Levitt, 1983). Therefore, it is proposed that effective global segmentation will be based on a hybrid bases that includes relevant macro-level factors (i.e. geopolitical and economic) as well as appropriate micro-level variables (i.e. lifestyle and behavioral). Major facets of this approach include: . integrating country variables with behavior patterns; . not assuming total homogeneity of the country segment; . acknowledging the existence of a degree of similarity across national boundaries;

Figure 1 A framework for global segmentation bases and strategic positioning

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Figure 2 Global strategic segmentation and positioning matrix

considering the bases of segmentation to be dynamic in nature; and defining market globalization as a matter of degree.

The integrated approach assumes that treating each country as a totally homogeneous market is not realistic (Jain, 1989). Also, it will be unrealistic to assume the existence of a single world segment that homogeneously responds to standardized marketing programs. The basic ideas of the integrated approach are: . it assumes various degrees of heterogeneity and homogeneity in buyers’ preferences for global brands; . any degree of preference heterogeneity or homogeneity for global brands can be attributed equally to macro-bases (i.e. country factors), micro-bases (i.e. behavioral variables), and any combinations of interactions; and . any degree of preference heterogeneity can be addressed by introducing adaptive variations in the marketing program.

Strategic brand positioning Marketing based on a broader view of world markets requires a careful examination of complex decisions related to strategic positioning in conjunction with segmentation. Does a firm want its brand to be positioned the same way in all markets? Should uniform brand image be a goal of global marketing strategies? What portfolio of global positioning strategies can be employed?

options, meaning that the firm may seek to achieve similar or differentiated image in a given marketplace. Cell 1 offers the “focused strategy” option, that of substantially similar brand positioning to substantially similar global segments (Ries, 1996). The Body Shop developed a uniform position for its cosmetic lines among environmentally conscious consumers. This uniformed strategy helped the firm to leverage its image internationally among consumers with similar attitudes and usage patterns (Douglas and Crai, 1995). In effect, the company developed a uniform image worldwide within this focused international segment. Cell 2 represents an “optimization strategy”, where the firm develops a differentiated brand position to reach similar segments across the world. For example, Miele, the leading German appliance manufacturer that is known throughout Europe for its high-end home appliances, appeals differently to similar market segments globally. Miele targets the highend segment of the Euro-consumer market that values durability. On the other hand, in entering the American market, Miele realized that American consumers have different appliance expectations, where they treat appliances almost as “disposable”, replacing them with a new color or model when they change homes or when the appliance breaks down. An appeal to 20-year durability is unlikely to be successful with American consumers. The American consumer will desire a maintenance-free appliance with a wide variety of designs and styles. Thus, in appealing to the high-end segment of the American appliance market, Miele optimizes the brand’s upscale image differently by appealing to the needs of worry-free buyers. In this case they are marketing identical products with different positioning appeals to enhance global competitive advantage through supply-side economies. Miele would have faced great difficulty in the American market unless it modified its brand image in targeting the upscale market in a way that is consistent with its global marketing strategy. Acknowledging the cultural and behavioral differences of European and American customers was the only way for Miele to develop an effective global marketing program.

Segmentation-based strategic positioning A review of contemporary research on international segmentation reveals a considerable shortage of empirical studies that examine the link between segmentation and strategic positioning. Yet, many segmentation researchers have stressed the critical importance of the relationship between segmentation and positioning decisions (Douglas and Crai, 1995; Wind, 1986). Segmentation and positioning decisions are central to the development of global marketing strategy. The term positioning often is used to refer to the firm’s decision to determine the place that its brand and corporate image occupy in a given market including the type of benefits to be stressed and the type of segments to be targeted (Douglas and Crai, 1995; Ries and Trout, 1986; Ries, 1996). In an international marketing context, the literature is consistent with the need to base positioning decisions on a broader scope that provides an understanding of differences and similarities from one market to another. Therefore, positioning is described as strategy to identify and direct marketing resources among intended market segments. Under this strategy that we term “segmentation-based strategic positioning”, the firm would cause the development of homogeneous responses for demand that differs from responses received from other market segments. The strategic positioning options can be illustrated best in a two-dimensional representation of similarities and differences among market segments to be addressed as bases for discussion of this research agenda. Figure 2 displays the interaction of market segmentation and strategic positioning options in the two-by-two matrix. The first dimension is “same” or “different” market segments meaning that the firm may choose to target “same” or “different” segments across multiple markets. The second dimension in Figure 2 represents “same” or “different” strategic positioning 83




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Cell 3 represents similar strategic positioning across different world segments or “geo-centric strategy”. Many European firms choose different positioning strategies for products marketed to US consumers to leverage global brand leadership or unique image. BMW and Mercedes Benz position their products as high quality, expensive, prestige brands. However, prestige image may not always be what consumers want. Gillette adopted this brand leveraging strategy (cell 3) that provided a worldwide appeal based on stimulating primary market demand for shaving through providing a host of products for different segments. This geo-centric strategy of Gillette has been attributed to enhancing the company’s performance in dominating the market worldwide. Also, other companies like Coca-Cola, Kodak and Nike provide a portfolio of products for different segments worldwide. Cell 4 is the “localization” option and probably exists only as an entry strategy rather than a market expansion strategy (Douglas and Crai, 1995). New market entry or investment in different products marketed to different segments would probably be the only justification for such a strategy. For example, when Nestle´ globalized its Nescafe´ coffee brand, they recognized that “what coffee means to a culture, when it is consumed and how often it is consumed, varies throughout different cultures”. Distributed almost everywhere, coffee plays different roles around the world. Coffee cultures such as the USA and Germany did not automatically accept instant coffee. In some countries, Nescafe´ marketing efforts concentrated on overcoming the mistaken belief that instant coffee is made from synthetic materials instead of real coffee. Nescafe´’s competitive success against European leaders, such as Jacobs and Tschibo, is based on understanding how aroma, warmth, and the ritual of coffee drinking touch deeply-held consumer values. Conscious effort to relate Nescafe´ “coffeeness” to different types of coffee drinkers and usage occasions allowed consumers to determine the brand’s meaning and appeal in many regions around the globe. Firms that chose to position brands differently in accordance with local market realities may represent future challenges to the organization. As the brand matures in the market, the organization finds itself in need to optimize the success achieved in one market to reach more global consumers. In this case, to target similar market segments elsewhere, creating a broader market position in other markets requires more research and development. For Nestle´ to build a successful brand in the US market meant focusing on loyalty as a primary segmentation base. Instant coffee by Nestle´ leveraged its success in non-coffee consuming cultures to appeal to attitude and usage patterns of other world cultures. As previously stated, there is a clear connection between brand positioning and segmentation in international markets. In order to define better the parameters of the relationship, an empirical study was conducted to examine the interaction of brand positioning and segmentation decisions in international markets.

International Research. The contact names were selected at random from a listing of over 150,000 managers who are listed in the segmentation section of the Institute’s database. Respondents received a three-step integrative mailing beginning with a warning letter asking for participation, a letter accompanying the questionnaire, and a postcard reminder. Respondents were provided with a postage-paid business reply envelope. As an incentive, a charitable contribution of one dollar was made to the respondent’s choice of three charitable organizations for each completion. In addition, the respondents could request a summary report of the results of the data collection. The study resulted in 112 completions for a response rate of 10.2 percent. Key measures The study captured the degree of use of macro country level of segment bases. The questionnaire utilized 14 macro-level segmentation bases from the literature (see list in Table I). The respondents were asked to rate each factor on a seven-point scale with 1 representing “never used” and 7 representing “always used”. The study (n ¼ 107) established the scale as having high reliability with a Cronbach’s alpha score of 0.9040. The questionnaire utilized 22 micro behavioral level segmentation bases drawn from the literature (see list in Table I Factor loadings of macro-level segment bases – rotated component matrix Questionnaire items Country level of economic development Country legal/ regulatory environment Level of industrialization Form of government Political stability Country level of technological innovation Country per-capita income Communication infrastructure Market-orientation of economy Type of dominant religion Language of country Cultural identity Geographic location Population demographics Reliability measure (alpha)

Research study The current research study consisted of a mail survey targeted to high-level managers involved in segmentation decisions with a focus on the international arena. A structured questionnaire was mailed to 1,097 segmentation decision makers drawn from a list provided by the Institute for

Macro- Macro-cultural Geoeconomic factors demographics

0.848 0.789 0.777 0.759 0.755

0.730 0.651 0.618 0.597 0.811 0.718 0.576 0.775 0.714 0.9148

0.6621

0.4678

Notes: Extraction method: principal component analysis. Rotation method: Varimax with Kaiser Normalization. A rotation converged in six iterations. Loadings below 0.46 have been suppressed

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Table II). The respondents were asked to rate each withincountry bases on a seven-point scale with 1 representing “never used” and 7 representing “always used”. The study (n ¼ 98) established the scale as having high reliability with a Cronbach alpha score of 0.9217. In addition, the study captured the utilization of the four brand positioning strategies corresponding to the matrix in Figure 2. The respondents were asked to rate each brand positioning strategy on a seven-point scale with 1 representing “never used” and 7 representing “always used”.

The next step in the analysis was to determine the role of the segment bases in the product/segment positioning for study organizations. Towards that end, four regression models were constructed utilizing the seven segmentation bases derived from the factor analysis as the independent variables and each strategic positioning option presented in Figure 2 as dependent variables. The results of the regression analyses are presented in Table III. There is a clear relationship between the choice of positioning strategy and the choice of bases on which to form market segments. Figure 3 overlays the statistically significant segment bases (Table III) within the appropriate cells based on the four strategic positioning options. Comparing the brand positioning strategy with segment bases yields some important insights. For example, in cells 1 and 3 that represent the two global segmentation approaches with the objective of achieving similar strategic market positions, hybrid segmentation bases that include macroeconomics, geo-demographics, micro-demographics, and attitude and usage were all significant. In effect, the firms that are aiming to achieve unified strategic positions in world markets are using both macro-level segmentation bases as well as micro-level segmentation bases. Therefore, firms with similar brand positioning are using both macro-country segmentation bases as well as behavioral bases. Across cells 2 and 4, which represent different strategic positions, microlevel bases of segmentation were the only significant factors. The data suggests that a firm’s decision regarding the types of bases to be utilized in segmentation may in fact indicate the positioning strategy that this particular firm is undertaking. Consequently, firms must evaluate the types of segmentation bases utilized in order to have a better emphasis on the intended strategic market position.

Analyses The first step in the data analysis was conducted via principal components analysis – a form of factor analysis. The resulting factors were rotated via Varimax rotation and Kaiser Normalization for the purpose of aiding analysis. As a condition of running the factor analysis, coefficient alpha was used to assure internal reliability. The current research identified three underlying macrolevel segmentation bases including macroeconomics, geodemographics, and macro-cultural factors. In addition, there appear to be four underlying micro-level segment bases including demographics, attitude and usage, micro-culture, and brand loyalty. As will be discussed, the results of the current research holds important implications for understanding segmentation in the global market and for the positioning of products relative to defined market segments. Table II Factor loadings of micro-level segment bases – rotated component matrix

Questionnaire items Age Income Gender Education Family size Lifestyle Occupation Buyer needs Buyer wants Segment size Product benefits Attitude toward product Religion Ethnicity Regional identity Urbanization of dwellings Language Social class Degree of existing loyalty Degree of potential loyalty Frequency of product use Personality Reliability measure (alpha)

Attitude Microand Micro- Brand demographics usage culture loyalty

Discussion

0.850 0.815 0.781 0.768 0.747 0.708 0.651

Global market segmentation can be viewed as the process of identifying segments whether they are country groups or individual buyer groups, of potential customers with homogeneous attributes who are likely to exhibit similar buying behavior patterns. There are four different approaches for global segmentation: (1) Identifying clusters of countries that demand similar products (that is, regional selling giving more weight to geopolitical and economic segmentation factors). (2) Targeting different segments in different countries with the same product (that is, differentiated selling emphasizing behavioral and lifestyle segmentation factors) (Takeuchi and Porter, 1986). (3) Identifying segments present in many or most countries (that is, universal selling striking a hybrid balance between various macro and micro segmentation factors). (4) Focusing on similar segments that demand similar products (that is, niche selling with a focus on crossnational similarities in need for unique product attributes and usage patterns).

0.877 0.867 0.676 0.674 0.631 0.838 0.771 0.721 0.583 0.528 0.472

0.8646

0.7470

0.843 0.823 0.651 0.467 0.3673 0.8233

Of the four segmentation approaches, universal segmentation and global niching are argued to be the most innovative and also the most likely to give the firm a significant competitive advantage, because brand image can be leveraged across markets (that is, globally transcending distinctive competency). This gives the brand a reputation and

Notes: Extraction method: principal component analysis. Rotation method: Varimax with Kaiser Normalization. Rotation converged in seven iterations. Loadings below 0.46 have been suppressed

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Table III Regression analysis of strategic positioning options and segmentation bases Independent variables (standardized beta coefficient)

Similar positioning to similar segments (focused strategy)

Macroeconomic Macro-cultural factors Geo-demographics Micro-demographics Attitude and usage Micro-culture Brand loyalty R2 F df

0.240 20.181 20.006 0.018 0.241 0.307 0.135 0.247 3.935 7

Notes: Significant at 0.05;

Dependent variable Similar positioning to Different positioning to different segments similar segments (geo-centric strategy) (optimization strategy) 0.065 20.021 20.239 0.208 0.426 0.071 0.092 0.210 3.187 7

0.011 20.203 20.005 0.132 0.259 0.199 0.147 0.128 1.760 7

Different positioning to different segments (localization strategy) 20.145 0.073 20.036 0.176 0.192 0.036 0.105 0.081 1.056 7

Significant at 0.10

Figure 3 Global strategic segmentation and positioning matrix

coherence in image and positioning which is internationally reinforced. The other two diverse segmentation approaches have the merit of taking into consideration differences among countries and of introducing adaptations to accommodate these differences or focusing their marketing offerings to excel in a specific segment(s) (Lambin, 1997). Nevertheless, the later segmentation strategies could exhibit disadvantages of either high cost of differentiation or limited economies of scale of focusing along with running the risk of vulnerability to drastic local market changes. Therefore, the hybrid approach that integrates country level and behavioral characteristics is viewed as the preferred segmentation strategy. The universal (hybrid) segmentation as a global market strategy looks for similarities across world markets. The traditional segmentation that emphasizes differentiation strategies is multi-domestic (i.e. they tend to minimize similarities and highlight differences). The universal or hybrid approach to global market segmentation actively seeks

homogeneity in brand, image, marketing tools and advertising message, while the multi-domestic approaches to global market segmentation maintains emphasis on differences from market to market. The ultimate agenda, however, is not to have an identically uniform brand positioning worldwide, rather the strategic marketing end is to come up with a brand positioning that is as standardized as possible, while recognizing that allowances for some local conditions are sometimes both necessary and desirable (Keegan and Schlegelmich, 1999).

Managerial implications The reported study has clear managerial implications for firms involved in marketing outside of their home country. First, the literature reviewed and the current study are consistent in the assessment that buyer needs are converging in key markets. This represents both a challenge and 86




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opportunity for marketing organizations. One means to address this convergence is to target cross-national groups of buyers who share important characteristics relative to the firms’ products and brands. The current study clearly suggests to managers that these “inter-market” segments might best be empirically identified and targeted through the integration of macro and micro segmentation bases as demonstrated through the framework. The current study also provides specific empirical evidence of a relationship between the strategic use of segmentation and strategic positioning. Many managers involved in segmentation use a single set of segmentation basis when making segmentation decisions. The current study clearly demonstrates that there is every reason to not limit segmentation design to a single type of variable and to integrate multidimensional criteria such as in the framework presented. A segmentation scheme based solely on a single strategic basis may have comparatively limited utility to the firm. The effective use of hybrid bases or inter-market segmentation in conjunction with an appropriate corollary product/brand positioning may have clear positive economic implications to the firm. The economic implications of effective inter-market segmentation to managers in marketing organizations are fourfold. First, effective segmentation will lead to cost efficiencies resulting from reduced duplication of effort in multiple markets where similar segment members are represented. Second, segmentation can be the means for opportunities to transfer products, brands, and ideas across subsidiaries in different countries or world regions. Third, significant market expansion opportunities result with the emergence of inter-market segments such as global teenagers and socioeconomic e´ lite. Finally, enhancing our understanding of global market segmentation strategies will pave the way for more effective brand management decisions that may result in better market performance.

market segmentation. Such research efforts should strive to pinpoint how the features of segmentation bases, targeting agendas, and targeting techniques can be conceptualized and adopted on empirically-grounded policy guidelines to augment positioning decisions made and translated into a relevant and effective marketing mix designs. Third, what are the implementation issues relevant to the adoption of hybrid global market segmentation? Answering this research question should happen through examination of the success or failure of adopting hybrid global market segmentation strategies. Such research should be expected to raise a number of issues related to the effectiveness of global marketing research and marketing information systems that help support the implementation of segmentation and positioning strategies. Fourth, how can hybrid global market segmentation and positioning strategy be monitored, benchmarked and evaluated? This final research stream should address the vital need to measure the differing contributions of hybrid global market segmentation strategies to positioning effectiveness and the firm’s other strategic marketing ends.

References Aulakh, P.S. and Kotabe, M. (1993), “An assessment of theoretical and methodological development in international marketing: 1980-1990”, Journal of International Marketing, Vol. 1 No. 2, pp. 5-28. Daniels, J.D. (1987), “Bridging national and global marketing strategies through regional operations”, International Marketing Review, Vol. 2 No. 3, Autumn, pp. 29-44. Douglas, S.P. and Crai, C.S. (1995), Global Marketing Strategy, McGraw-Hill, New York, NY, p. 554. Green, P.E. and Krieger, A.M. (1991), “Segmentation markets with conjoint analysis”, Journal of Marketing, Vol. 55 No. 4, pp. 20-31. Hassan, S.S. and Blackwell, R. (1994), Global Marketing Perspectives and Cases, The Dryden Press, Fort Worth, TX. Hassan, S.S. and Katsanis, L.P. (1991), “Identification of global consumer segments: a behavioral framework”, Journal of International Consumer Marketing, Vol. 3 No. 2, pp. 11-28. Hassan, S.S., Craft, S.H. and Kortam, W. (2003), “Understanding the new bases for global market segmentation”, Journal of Consumer Marketing, Vol. 20 No. 5, Winter, pp. 446-60. Helsen, K., Jedidi, K. and DeSarbo, W.S. (1993), “A new approach to country segmentation utilizing multinational diffusion patterns”, Journal of Marketing, Vol. 57, October, pp. 60-71. Huszagh, S.M., Fox, R.J. and Day, E. (1986), “Global marketing: an empirical investigation”, Columbia Journal of World Business, Vol. 20 No. 4, Winter, pp. 31-43. Jain, S.C. (1989), “Standardization of international marketing strategy: some research hypothesis”, Journal of Marketing, January, pp. 70-9. Kale, S.H. and Sudharshan, D. (1987), “A strategic approach to international segmentation”, International Marketing Review, Vol. 4, Summer, pp. 60-70. Keegan, W.J. and Schlegelmich, B.B. (1999), Global Marketing Management: A European Perspective, PrenticeHall, London.

Future research The conceptual and empirical findings of this paper pave the way for embarking on promising and relevant research that is needed to substantiate and enrich the academic understanding and managerial practice of linking global market segmentation with strategic positioning decisions. Consequently, four main research frontiers can be recommended based on this study to extend the boundaries of the area of global market segmentation and address the concerns of marketing researchers and strategists aiming to comprehend and utilize effective global strategies. First, why and when should global marketers pursue hybrid segmentation strategies? This research question addresses the rationale underlying hybrid global market segmentation and would be expected to produce analytical tools for the evaluation of each market’s different needs and their corresponding product offerings. Such research ought to be conducted with a view toward making economic and managerial sense of global market segmentation strategies with special reference to the dimensions of accessibility (i.e. market segmentation transaction costs) and substantiality (i.e. segmentation-related economies of scale). Second, how can global marketers achieve the logical design of hybrid market segmentation that will facilitate establishing a coherent positioning strategy? This research stream would be expected to tackle the “know-how” issues of hybrid global 87




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Kotler, P. (1986), “Global standardization – courting danger”, Journal of Consumer Marketing, Vol. 3 No. 2, Spring, pp. 13-15. Kreutzer, R.T. (1988), “Marketing mix standardization: an integrated approach in global marketing”, European Journal of Marketing, Vol. 22 No. 10, pp. 19-30. Lambin, J.-J. (1997), Strategic Marketing Management, McGraw-Hill, London. Levitt, T. (1983), “The globalization of markets”, Harvard Business Review, Vol. 61, May-June, pp. 92-102. Luqmani, M., Yavas, U. and Quraeshi, Z.A. (1994), “A convenience-oriented approach to country segmentation”, Journal of Consumer Marketing, Vol. 11 No. 4, pp. 29-40. Nachum, L. (1994), “The choice of variables for segmentation of the international market”, International Marketing Review, Vol. 11 No. 3, pp. 54-67. Ries, A. (1996), Focus: The Future of Your Company Depends on It, Harper Collins, New York, NY. Ries, A. and Trout, J. (1986), Positioning: The Battle for Your Mind, McGraw-Hill, New York, NY. Takeuchi, H. and Porter, M.E. (1986), “Three roles of international marketing in global industries”, in Porter, M.E. (Ed.), Competition in Global Industries, The Harvard Business School Press, Boston, MA. Whitlock, J.M. (1987), “Global marketing and the case for international product standardization”, European Journal of Marketing, Vol. 21 No. 9, pp. 32-44. Wind, Y. (1978), “Issues and advances in segmentation research”, Journal of Marketing Research, Vol. XV, August, pp. 318-37. Wind, Y. (1986), “The myth of globalization”, Journal of Consumer Marketing, Vol. 3, Spring, pp. 23-6.

Why treat foreign places differently from home? In our home market – the place we understand best and where our product, communications and distribution have been honed – the “market” is only ever part of the whole consumer universe. Only the most arrogant of marketers assumes that every consumer is a potential buyer – most of us recognize and act on the different segments that make up the total market. Market segmentation is a crucial tool for the development of strategy. In foreign parts we seem to forget what we have learned at home and segment by geography, levels of economic development and assumptions about local markets. This is wrong since international markets are just as heterogeneous as our home market, meaning that our product’s appeal still reaches to only parts of the market. As a result we have differentiated strategies at home and undifferentiated strategies in the international market. If we are to take advantage of globalization’s benefits, we have to change the approach. As Hassan and Craft point out “. . . behavioral and lifestyle segmentation may be necessary addition to geopolitical and economic segmentation in international markets”. Having established the need to segment in international marketing just as we have always done at home, we need to recognize that our marketing ceases to be targeted at an individual segment in a particular local market but at a set of consumers found in all the different local markets. This is the essence of globalization – the coming together of consumer tastes, preferences and behaviors. However, we should beware of the “one size fits all” approach. International marketing requires a hybrid strategy Hassan and Craft identify that “. . . the hybrid approach that integrates country level and behavioral characteristics is viewed as the preferred segmentation strategy”. We do not replace local variations with a set of identified global segments and then target those segments without reference to country level variations. This assumes too much international homogeneity – as our authors point out, a shared interest in high-quality home appliances does not mean a shared set of reasons for a given purchase decision. What we see here is the evolution of a set of strategies dependent on the degree to which the main drivers of consumer decision-making coincide. Hassan and Craft set this out in a 2 £ 2 grid representing four generic strategies – focused, geo-centric, optimized and localized. Each, taken in isolation, is valid for a given set of circumstances. The marketer’s task is to identify the specific circumstances for a particular brand. Thus the positioning of the brand becomes a vital element that has to link with the identification of target market segments.

Executive summary and implications for managers and executives This summary has been provided to allow managers and executives a rapid appreciation of the content of this article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefits of the material present.

Segmentation should help drive product positioning in global markets We all recognize that today’s markets are no longer limited to individual countries or regions. Despite the best efforts of protectionist governments, globalization represents reality for most of us. Our competitor is as likely to be in Singapore or Sweden as they are to be in the next town. However, marketing strategy has not kept pace with the rapid expansion of global business, international trade and new technologies. We remain – to a large part – wedded to approaches developed in the slower, quieter times past. Hassan and Craft challenge this thinking by examining the strategic realities of global marketing. We are not right to treat individual markets as discrete cells in a marketing strategy; nor is it correct to adopt a same size fits all approach. Global marketing is both subtle and complex.

Which comes first – positioning or segmentation? In many ways this is a “chicken and egg” question. For most products there are target segments inherent in the product’s characteristics. These may be simple socio-demographic considerations such as ability to afford the product or they could relate to specific lifestyle choices or preferences. However, Hassan and Craft argue that strategic positioning decisions need to be based on an understanding of market segmentation. Defining this approach to making marketing strategy choices becomes simpler when we apply the four generic strategies. We can focus on a given set of “lifestyle values” and 88




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design generic strategies with only minor local variations (the Body Shop’s concentration on environmental issues and opposition to animal testing is used by the authors to illustrate this approach). Our strategy can identify a given sociodemographic group such as up-scale homemakers and vary the strategy to match buying behavior (an optimizing approach). Our strategy can use the same positioning to reach differing market segments in different markets chiefly through a multitude of product variations (a geo-centric approach). Or we can design specific strategies for specific markets that reflect very different usage and attitudes (a localized approach). Regardless of the right choice for our brand, each of these strategies connects decisions about product positioning with decisions about which market segments to target. Our decisions about positioning affect the choices we make about market segmentation and segmentation decisions

influence the way in which we position the brand. And, although the simplicity of Hassan and Craft’s model is appealing, the result is a considerable number of choices. Despite this apparent complexity, most marketers start with a given product positioning and segmentation approach in their home market. The simplest way to extend into international markets for many is to follow inter-market segments – groups repeated across national and regional boundaries that have similar lifestyles and/or buying behavior. While consideration of local sensitivities is still needed, these segments provide the roads along which a brand travels from local to global markets. It is vital that we understand them and appreciate how they can be used to extend product reach. (A pre´cis of the article “Linking global market segmentation decisions with strategic positioning options”. Supplied by Marketing Consultants for Emerald.)

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