Segmenting International Markets

Few companies have either the resources or the will to operate in all, or even most, of the countries that dot the globe. Although some large companies, such as Coca-Cola or Sony, sell products in more than 200 countries, most international firms focus on a smaller set. Operating in many countries presents new challenges. Different countries, even those that are close together, can vary greatly in their economic, cultural, and political makeup. Thus, just as they do within their domestic markets, international firms need to group their world markets into segments with distinct buying needs and behaviors.

Companies can segment international markets using one or a combination of several variables. They can segment by geographic location, grouping countries by regions such as Western Europe, the Pacific Rim, the Middle East, or Africa. Geographic segmentation assumes that nations close to one another will have many common traits and behaviors. Although this is often the case, there are many exceptions. For example, although the United Kingdom and Scotland have much in common, both differ culturally and economically from neighboring Ireland. Even within a region, consumers can differ widely. Some marketers lump all Central and South American countries together. However, the Dominican Republic is no more like Brazil than Italy is like Sweden. Many Central and South Americans don't even speak Spanish, including 188 million Portuguese-speaking Brazilians and the millions in other countries who speak a variety of Indian dialects.

World markets can also be segmented on the basis of economic factors. For example, countries might be grouped by population income levels or by their overall level of economic development. A country's economic structure shapes its population's product and service needs and, therefore, the marketing opportunities it offers. Countries can be segmented by political and legal factors such as the type and stability of government, receptivity to foreign firms, monetary regulations, and amount of bureaucracy. Cultural factors can

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also be used, grouping markets according to common languages, religions, values and attitudes, customs, and behavioral patterns.

Segmenting international markets based on geographic, economic, political, cultural, and other factors assumes that segments should consist of clusters of countries. However, as new communications technologies, such as satellite TV and the Internet, connect consumers around the world, marketers can define and reach segments of Intermarket segmentation like-minded consumers no matter where in the world they are. Using intermarket

Forming segments of consumers who segmentation (also called cross-market segmentation), they form segments of consumers have similar needs and buying behavior wj1D ^ave simiiar needs and buying behaviors even though they are located in different even though they are located in different countries. For example, Lexus targets the world's well-to-do—the "global elite" segment-countries. regardless of their country. Swedish furniture giant IKEA targets the aspiring global middle class—it sells good-quality furniture that ordinary people worldwide can afford. And Coca-Cola creates special programs to target teens, core consumers of its soft drinks the world over.16

Coca-Cola wants to relate to the world's teens. To accomplish that, the global soft drink marketer needed to figure out what the majority of teens finds appealing. The answer: music. So, throughout the world, Coca-Cola links itself with the local pop music scene. For example, in the United States, Coke is the official sponsor of American Idol, the country's number-one television show and a teen magnet. In the Middle East, Coca-Cola commercials feature Arab pop stars, such as Nancy Ajram—Coca-Cola even sponsors her world tour. In Europe, Coke has created the Coca-Cola Music Network, which features signed and unsigned musicians online at CokeMusic.com, on stage, and in pod-casts. And in Uganda, Coca-Cola sponsored the search for a new MTV VJ. The recent winner, Carol Mugasha, became host of the weekly music chart show MTV Coca-Cola Chart Express.

Continue reading here: Requirements for Effective Segmentation

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