Global Market segmentation is in many respects a logical outgrowth of the marketing concept. International market segmentation may be defined as the process of identifying groups or set of potential customers at either the national or sub national level that are likely to exhibit similar buying behaviour. Given the heterogeneity of most markets, segmentation in both domestic and international markets entails breaking down the market for a particular product or service into segments of customers which differ in terms of their response to marketing strategies.
Companies can segment international markets using one or a combination of several variables. They can segment by geographic location, Demographic Segmentation, Behavioral Segmentation, Psychographic Segmentation, Occasional Segmentation.
Basis for Global Market Segmentation
- Geographic Segmentation: 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 Ex: in rainy areas dealers can easily sell raincoats, umbrellas and gumboots. In winter regions, one can sell warm clothing. This segmentation is very essential and is marked as the initial step to international marketing, followed by demographic and psychographic segmentation.
- 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.
- 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.
- 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.
- 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.
Factors Influencing Global Market Segmentation
- Size, Objectives and Resources of the Company.
- Type of Product and Market.
- Competitive Structure of the Industry.
- Nature and Cultural of International Market.
- International Product Life Cycle Stage.
- Competitive Strategy of Firm.