International Marketing Management - International Marketing Research & Segmentation

MR.T.SOMASUNDARAM, ASSISTANT PROFESSOR,
DEPARTMENT OF MANAGEMENT STUIDES
KRISTU JAYANTI COLLEGE, BENGALURU
SEGMENTATION
&
UNIT 2
Unit 2 – Int. Marketing Research & Segmentation 1

Unit 2 – Int. Marketing Research & Segmentation
UNIT 2: INTERNATIONAL MARKETING
RESEARCH AND SEGMENTATION
Breadth and Scope of International
marketing research, Multicultural
research – a special problem,
Responsibility for conducting
marketing research, communicating
with decision makers, Identifying
foreign markets, Classification based
on demand, based on the stage of
development and other bases for
division of world markets. 2

Introduction:
 International marketing
managers need to constantly
monitor the different forces
affecting their international
operations.
 International marketing
research is especially complex.
 It is pertinent to a particular
marketing decision facing a
company operating internationally.
INTERNATIONAL MARKETING
RESEARCH
3

Definition:
“International Marketing research
is defined as the systematic gathering,
recording and analyzing of data about
problems relating to particular marketing decision facing a
company operating internationally or international marketing
of goods and services.”
- American Marketing Association (AMA).
“It is also defined as the systematic planning, gathering,
recording, analyzing and interpreting of data for application to
specific marketing decisions internationally”
 Marketing research may be conducted by company
concerned (in-house research) or it may be given to
external agency like marketing research consultancy
organization, advertising agency, management institute, etc.

Importance / Objectives of International Marketing Research:
 It is essential to keep pace with changing environment
characterized by such factors like –
a) increasing competition.
c) changing tastes & requirements.
 It helps the company to identify the problem areas and
environmental opportunities to monitor the environment.
 Marketing research helps to –
1. Identify the deficiencies, if any of Products, pricing, distribution
and promotion.
2. Identify existing and emerging marketing opportunities.
3. Identify the relative weakness and strengths of the company.
4. Monitor the environmental changes.
 To take appropriate measures to improve & consolidate its
position.
b) fast technological developments.
d) changing consumer attitudes.
5

Limitations of International Marketing Research:
1. Research findings are not always entirely
dependable.
2. Performance of many products have been in
contradiction to research indications.
3. It involves costs.
4. It has its own limitations arising from non –
availability of adequate and reliable data, problems in
collecting data, etc.
5. It is a time – consuming process.

Research of Industry, Market characteristics and recent
trends about International market:
1. Acquisition analysis.
2. Diversification analysis.
3. Market – share analysis.
4. Export research.
International Buyer Behaviour Research:
 Brand preferences.
 Brand attitudes.
 Brands awareness studies.
 Purchase behaviour studies.
 Consumer segmentation studies.

International Product Research:
 Concept development and testing studies.
 Brand name generation and testing.
 Product testing.
 Competitive product studies.
 Packaging design studies.
 Test marketing.

BREADTH AND SCOPE OF INTERNATIONAL
MARKETING RESEARCH
Breadth of International Marketing Research:
A basic difference between domestic and international
marketing research is the broader scope needed for foreign
research. Research can be divided into three types based on
information needs:
1. General information about the country area and or
market.
2. Information necessary to forecast future marketing
requirements by anticipating social, economic and
consumer trends within specific markets or countries, and
3. Specific market information used to make product,
promotion, distribution and price decisions and develop
marketing plans.

This broader scope of international marketing research
entails collecting and assessing the following types of
information -
a) Economic - general data on growth of the economy,
inflation, business cycle trends and the like, profitability
analysis for the division’s products, specific industry
economic studies, analysis of overseas economies and key
economic indicators for the home country and foreign
countries.
b) Sociological and political climate - general non-
economic review of conditions affecting the division’s
business. In addition to the more obvious subjects such as
cultural differences, it also covers ecology, safety, leisure
time and their potential impact on the division’s business.

c) Overview of market conditions - a detailed analysis
of market conditions the division faces, by market
segment, including international.
d) Summary of the technological environment - a
summary of the state-of-the-art technology as it
relates to the division’s business, carefully broken
down by product segments.
e) Competitors - a review of competitors market
shares, methods of market segmentation, products and
apparent strategies on an international scale.

INTERNATIONAL MARKETING RESEARCH
PROCESS (PHASES)
International Marketing Research Process should
follow these steps -
Step 1: Define International research problem.
- understanding the problem thoroughly.
- this is necessary to give a clear direction to research
and avoid confusion.
- this is necessary to collect required information,
avoid gathering irrelevant information, analyze and
interpret data in proper perspective.
- different types of research is used to identify the
problem.
12Unit 2 – Int. Marketing Research & Segmentation

a) Exploratory research – it seeks to discover new
relationships.
- it is investigative in nature & define problem which is
solved.
Exploratory research may be conducted by:
i) study of secondary data.
ii) survey of knowledgeable persons.
iii) analysis of selected cases.
b) Conclusive research – it is choose from among the
possible courses of action to make decision.
- it is new exploratory studies leading to new
hypothesis.

Conclusive research are of two types:
i) Descriptive research – it is designed to describe certain
things.
- it may be conducted by case study & statistical study.
ii) Experimentation – it is done in a laboratory situation
or in the field.
Step 2: Establish research objectives.
- it help to define the research problem more clearly.
- it may also enable the formulation of the research
hypothesis.
- the researcher set an objectives by obtaining relevant
information about company, its competitors, other
information, etc.

Step 3: Develop the International research Plan.
* Research Design:
“A Research Design is the specification of methods
and procedures for acquiring the information needed.”
- it is overall operational pattern of framework of
project that stipulates what information is to be collected
from which sources.
Research design specifies –
a) Type of information required.
b) Sources of the information.
c) The methods of techniques of data collection.

Step 4: Define the Information sources to fulfill the
research objectives.
- researchers must determine if the information is
available (secondary data) and if so, how reliable it is and
sometime researcher gather from external sources like
competitors, middlemen, advertising agencies, customers,
etc.
- internal data is useful only if company has collected
similar information from relevant respondents in a country
with similar environment.
Step 5: Design Data Collection instrument.
* Emic instruments – it measure phenomena specific to
each culture.
* Etic instruments – it measure the same phenomenon in
different cultures.Unit 2 – Int. Marketing Research & Segmentation 16

Step 6: Decide on the Sampling Plan.
- deciding on Sample Unit, Sample size & selection of Sampling
procedure.
Step 7: Collect, Analyze, Interpret Data and Summarize the
results.
- the raw data have to be processed and presented in an
appropriate form like tables to make them easily amenable to
analysis.
- it should express the findings in more meaningful terms like
percentage and charts.
Step 8: Effectively communicate the results to decision makers.
(or) Presentation of findings.
- presented in appropriate form & it depends on nature of
research, purpose & use, etc.
- it should be presented in a language that will be easily
understood by people. 17

Research Agencies:
 A firm has several constraints to conduct a market
research in foreign countries.
 Research agencies so used should be those with
professional expertise, credibility and intimate
knowledge of the marketing environment.
Advantages of Research agency:
1. Expertise – client can benefit from professional
expertise and experience of agency in undertaking
marketing research.
2. Objectivity – agency may not have any bias in favour
of or against any project, whereas certain people in
company will have bias like emotional involvements.

3. Knowledge and Familiarity – research firm would be
familiar about the market environment and good
knowledge about characteristics of industry.
- knowledge and familiarity are essential for properly
designing the research project and make it successful.
4. Cost - effectiveness – good agency would be more cost
– effective than research being done by company itself.
Selection of Agency:
 Collection of research agencies from different sources
of information like trade associations, consultants,
training or educational institutes, companies having
experience in the field, etc.
 Small number should be selected from the list of
research agencies by preliminary screening.

 Firms may be invited to indicate their interest in research
project and to supply general background information
about themselves.
 Agencies are asked to submit a written research proposal
including research methodology, completion of time, total
cost, etc.
 Terms & conditions should be clearly laid down in
agreement to avoid any conflict.
Problems in International Research:
1. Cultural difference make foreign market research a difficult
task.
2. It is often very expensive.
3. Research methodology suitable for one market may not be
suitable for another market.

MULTICULTURAL RESEARCH: A
SPECIAL PROBLEM
 Multicultural studies are most important, as company
become global marketers and seek to standardize various
parts of marketing mix across several countries.
 It needs to determine to what extent adaptation of
marketing mix is appropriate.
 Market characteristics across diverse cultures must be
compared for similarities and differences before a company
proceeds with standardization on any aspect of marketing
strategy.
 Multicultural research involves dealing with countries that
have different languages, economies, social structures,
behavior, and attitude patterns.

 When designing multicultural studies it is essential that
these differences are taken into account.
 It is to ensure comparability and equivalency of results
when designing research to be applied across cultures .
 Different methods may have varying reliabilities in
different countries.
 These differences must be taken into account in the design
of a multicultural survey which means that different
research methods are applied in individual countries.
 The entire research design may be different between
countries to maximize the comparability of the results.
 These cross national studies serve as an examples of need
for resourcefulness in international marketing research.

Research on the Internet:
Internet provides as a important medium for conducting a
variety of international marketing research. Different uses for
internet in international research are -
a) Online Surveys and Buyer panels – it includes incentives
for participation, and have better capabilities than more
expensive mail and phone surveys.
b) Online focus groups – bulletin boards can be used for this
purpose.
c) Web visitor tracking – servers automatically track and time
visitors travel through web sites.
d) Advertising measurement – servers track links to other
sites and their usefulness are assessed.

e) Customer identification systems – many companies are
installing registration procedures that allow them to track
visits and purchases over time, creating a ‘virtual panel’.
f) E-mail marketing lists – customers can be asked to sign up
on e-mail lists to receive future direct marketing efforts via the
Internet.
g) Embedded research – internet continue to automate
traditional economic roles of customers such as searching for
information about products & services, comparison shopping
among alternatives, interacting with service providers, etc. It
provides option of custom designing products online which is
ultimate in applying research for product development
purpose.
h) Observational research – chat rooms, blogs & personal
web sites can systematically monitored to assess customer’s
opinions about products and services.

Estimating Market Demand:
 Reliable historical data is required for assessing current
product demand and forecasting future demand.
Some of the approaches to demand estimation are –
a) Expert Opinion – expert opinion is advisable for many
market estimation problems particularly in foreign countries.
- the key in using expert opinion to help in forecasting
demand is triangulation (i.e.) comparing estimates produced
by different sources.
b) Analogy – this assumes that demand for a product develops
in much the same way in all countries as comparable
economic development occurs in each country.
- a relationship must be established between item which is to
be estimated and measurable variable, which is the basis for
analogy.

Problems in Analyzing and Interpreting Research
Information:
i) Researcher must possesses a high degree of cultural
understanding of the market in which research is being
conducted.
ii) A creative talent for adapting research methods is
necessary.
iii) Social customs, semantics, current attitudes and business
customs of society must be clearly understood.
iv) A skeptical attitude in handling both primary and
secondary data is helpful.
v) At some level, researcher must be a native of the target
country involved in the interpretation of the results of any
research conducted in a foreign market.

RESPONSIBILITY FOR CONDUCTING
MARKETING RESEARCH
 Conducting a Foreign market research with the help of
outsourcing agency is depend on size and degree of
involvement in foreign market.
 It can conduct research using its own facilities or own
research force with assistance of outside agency.
 Many companies will have executive specifically assigned
to research function in foreign operations and can choose
research methods by working closely with foreign
management, staff specialists, etc.
 Some companies maintain separate research department
for foreign operations by assigning full time research
analyst.
 Decentralization of research function is apparent.

 Decentralization of research function is apparent.
Advantage – control rests in hand closer to the market.
- field personnel, resident managers and customers generally
have a more intimate knowledge about market.
Disadvantage – ineffective communication with home office
executives.
- unwarranted dominance of large – market studies in
decisions about global standardization.
 Comprehensive review of different approaches to
multicounty research suggests that the ideal approach is to
have local researchers in each country with close co-
ordination between client company and local research
companies.

 Cooperation is important at two stages of analysis –
a) At individual country level – issues involved in each
country must be identified.
b) At multicountry level – the information must be distilled
into a format that addresses the client’s objectives.
- this multicultural input is essential to understand the
multicultural data.
- sometimes one’s self – reference criterion resulting in data
being interpreted in terms of one’s own cultural biases.
- self reference bias can affect the research design,
questionnaire design and interpretation of data.
 Recent issue related to international marketing research is
growing potential for government controls on activity &
consumer privacy as Internet expands companies
capabilities to gather data on consumer’s behaviours.

COMMUNICATING WITH DECISION
MAKERS
 It deals with the information about customers or customers
and competitors.
• It should be clearly recognized and getting the information
is only half the job of research process.
• Information must also be given to the decision makers in a
timely manner.
• High quality international information systems design will
be competitive tool to continue in international market and
resources must be invested accordingly.
• Decision makers should be directly involved in field work
of seeing the market and hearing the voice of the customers.

• International marketers face an additional obstacle to
obtaining the best information from customers.
• Decision makers have questions about how best to serve
customers and answered often through media of
questionnaires and research agencies.
• Sometimes language or cultural barrier can create
chance of misinformation dramatically among decision
makers or customers.
• With similar background (same language or same
culture) also the information can be misled.
• Managing cultural barrier is bridged within a company
itself in order to maximize the chances for
miscommunications.

International Marketing Research Report should
contain following key information:
i) Profile of the country (Information about
population, per capita income, languages spoken, taste
& preferences, etc.).
ii) Economic Base of country (contribution of
industry, services to GDP).
iii) Target markets (in terms of market segments,
actual users).
iv) Competitive activity (product specification must be
highlighted).
v) Entry routes & Alternatives (cost of each possible
entry route must be highlighted). 32

vi) Pricing (long term & short term pricing policies
suiting to each country).
vii) Marketing communication (various constraints on
promotion of product, availability of various media, its
tariff rates, media habits, etc. must be covered).
viii) Multi – Lateral trade agreements (impact of
various MLTA like GATT, WTO on trade must be
covered).
ix) Incentives (various export incentives, tax benefits,
subsidies, concessions in marketing research expenses,
etc. must be identified).

IDENTIFYING FOREIGN MARKETS
• Selection of markets is the first stage in
International marketing.
• The time and care taken to select the product and
the market for initial export venture can minimize
the risks and make ultimate success quicker and
more certain.
• It is easier to increase business where you have a
stronghold rather than increase business in new
areas.

Market Selection Process:
Steps involved in market selection process are –
35
Determine
International
marketing
objectives
Determine
parameters for
market
selection
Preliminary
screening
Detailed
investigation
and short -
listing
Evaluation and
Selection
Unit 2 – Int. Marketing Research & Segmentation

1. International Marketing Objectives:
- market selected to serve a particular international marketing
objective need not similar to other objectives.
- various markets have different degree of attractiveness from the
point of view of different objectives.
2. Parameters for selection:
- it is essential to follow important parameters & criteria for
evaluation and selection of market.
3. Preliminary Screening:
- the objective of screening is to eliminate the markets which are
obviously not potential enough.
- parameters used for screening may vary from product to product.
- parameters like population size, economy structure,
infrastructural factors, political conditions, etc. are commonly
used.

4. Short – listing of Markets:
- large no. of markets left even after preliminary screening
and further it is screened with help of more information than
used at preliminary screening stage.
- the objective of short listing is to distill out small no. of
markets which likely to satisfy the company’s criteria for
market selection.
5. Evaluation and Selection:
- thorough evaluation of short listed markets is done with
reference to specific parameters and criteria and markets are
ranked on basis of overall attractiveness.

Determinants of Market Selection:
The market selection is based on two factors –
a) Firm related factors:
• Firms planned business strategy.
• Company resources comprising financial, human,
technological and managerial factors.
• Dynamism and philosophy of top management and internal
power relations.
• Growth potential of the market.
Firm
related
factors
Market
related
factors
Market
Selection
decision

b) Market related factors:
It is categorized into two factors –
i) General factors:
• Economic factors & Economic policy.
• Business regulations, Currency stability & Market Hub.
• Political factors & Ethnic factors.
• Infrastructure, Bureaucracy and procedures.
ii) Specific factors:
• Trends in domestic production and consumption.
• Trends in export and import, Nature of competition.
• Government policy & regulations, infrastructure.
• Supply conditions of raw materials, trade practices &
customs.
• Cultural factors and consumer characteristics. 39

Some of the reason for seeking entry into foreign markets by the
corporate could be –
a) Global business may be more attractive.
b) Export markets may have greater growth potential.
c) Demand in home country could be sluggish.
d) In home country there could be cut throat competition.
e) Export incentives provided by government could be very
attractive.
f) Corporate may try to take advantage of monopoly status in home
country.
g) For importing capital goods at zero import duty, handsome
exports are needed for considerable amount of years.
h) Some companies have urgency towards rapid growth since
domestically it might have reached saturation.
i) For expanding size government may force to export 10% of
production. 40

Different Modes of entry into Foreign Markets:
1. Exporting:
This is best mode of entry in following situations –
 Country legal system may not allow foreign investment.
 Political risk in direct investment.
 Economically may not viable to produce in overseas
market.
 Constraints on materials, support, communication, etc.
a) Direct Exporting – it is need to develop export department
and undertakes preliminary market research and then
supplying goods to the importer.
b) Indirect Exporting – it makes use of third party such as
stock lists, wholesalers, brokers, distributors, dealers, etc. at
home country and overseas markets too. 41Unit 2 – Int. Marketing Research & Segmentation

2. Licensing:
“Licensing means sale of drawings, technical expertise,
technical assistance, patents.”
Benefits:
 Lower level of capital requirement for market entry.
 Lower risks and lower payback periods
Limitations:
 Licensor or even licensee could turn out as potential competitor.
 Limited participation of licensor in business.
 If licensee doesn’t have adequate funds it may delay the
business.
 Licensor may get royalty lately because of problem involved in
transfer of funds.
(E.g.) Kawasaki of Japan issuing license to Bajaj for
manufacturing ‘Kawasaki – Bajaj motorcycles’ in India in 1989. 42

3. Joint Ventures:
“Joint ventures means two or more economic entities
coming together to participate Equity capital, manufacturing
process, patents, trade mark, etc.”
Advantages:
 Free from political risk & financial advantage.
 Enhanced operational efficiency.
Disadvantages:
 Loss & operational control result in conflicts.
 Local government press hard for local management.
(E.g.) Indian Company Foreign Company
Tata AIG
Max New york Life
Bajai Alliance

4. Merger & Acquisitions:
“M & A strategy of market entry is followed when exporter
intends instant market information, readymade distribution
network and market share.”
Limitations:
 Evaluation of cost of acquisition, high debt burden, etc.
(E.g.)
Indian
Company
Taken over by /
Acquisition
Product
Kelvinator Electrolux Refrigerator
Tata tea Tetly Tea
Tata Motors Jaguar – Land Rover Automobile
Kwality Walls Ice Cream Ice Cream
TCS Citigroup Global services IT

5. Strategic Alliance:
“Strategic Alliance means, two companies forge a
contract to share either resources, funding, equity or core
competencies.”
Advantages:
 Flexibility & ability to respond market quickly.
 Enhances cost reduction, allows risk sharing.
 Accelerates the speed of product development.
a) Fee based – companies coming together may charge a
specific fee for providing services. (E.g.) Whirlpool provided
services of designing washing machines on fee basis to Onida.
b) Sharing Core competencies – sharing some skill, facilities
with other company. (E.g.) Proctor & Gamble concentrating on
marketing and Godrej concentrate on manufacturing process till
1998. 45Unit 2 – Int. Marketing Research & Segmentation

INTERNATIONAL MARKET
SEGMENTATION
Meaning:
Segmentation or sub division of the market is based upon
the modern marketing concept (i.e.) market oriented
strategy and philosophy.
Segmentation gives special emphasis on demand side of the
market.
It implies bending of supply to the will of demand as far as
feasible and desirable.
Market segmentation is a method for achieving maximum
market response from limited marketing resources by
recognizing differences in various parts of market.
Market segmentation is strategy of ‘divide’ and ‘conquer’.

Market Segmentation enables the marketers to give better
attention to the selection of customers and offer an
appropriate marketing mix for each segment.
Each segment can be selected as a market target to be
reached with a distinct marketing mix.
Sellers used to identify those who are most likely to buy
their goods and services.
Customer orientation makes market segmentation as
important pillar of marketing concept and modern
marketing process.
The purpose of segmentation is to prioritize segments of
market to improve marketing profitability and to provide to
choose appropriate communication media and messages for
each segment.

Definition:
“Marketing Segmentation is the process of subdividing
a market into distinct groups of customer with similar
needs, such that subset of market (segment) can be selected
as target market and reached with distinct marketing mix.”
“It is the division of the total market into smaller,
relatively homogeneous group.”
“Market segmentation is a
marketing concept which divides
the complete market set up into
smaller subsets comprising of
consumers with a similar taste,
demand and preference.”

CHARACTERISTICS OF MARKET
SEGMENTATION
Characteristics:
 Segments must be internally homogeneous. (Consumers
within the segment will be similar).
 Segments must be identifiable. (individuals are placed
within or outside each segment).
 Segments must be accessible. (reached by media or
distribution channels).
 Segments must have an effective demand. (segment consists
of large group of consumers).

IMPORTANCE OF MARKET SEGMENTATION
 It facilitates the matching of products with consumer needs
and satisfies them.
 Firm can concentrate its efforts on most productive /
profitable segments of total market.
 It facilitates the selection of the most suitable market.
 It enables the marketer to utilize the available marketing
resources effectively.
 Firm can avoid the markets which are unprofitable and
irrelevant for its marketing purpose and concentrate on
certain segments.
 Advertising media can be more effective to reach the
segments.
 It offers special benefits to small firms. 50Unit 2 – Int. Marketing Research & Segmentation

STRATEGIC OPTIONS FOR MARKET
SEGMENTATION
Marketer has three strategic options:
1. Concentrated Marketing (Niche Marketing):
- a firm may decide to concentrate all available resources
on chosen segment.
- it selects market area where there is no competition and
can do best in that area.
- firm can be monopoly in that area, if succeeds in matching
its resources.
(E.g.) Volkswagen concentrated on small car market, while
Ford and GE were interested only in big cars.

2. Differentiated Marketing:
- under this category, organization enters many market
segments but has unique marketing mix appropriate each
segment.
- it wants to do business successfully in several segments.
- the firm can develop brand preference and repeat sales.
- this strategy offers higher sales and higher customer
satisfaction.
The major advantage of differentiated marketing is –
- higher production and higher marketing costs.
(E.g.) Hindustan Lever has one brand of bath soap for each
market segment. (i.e.) Lux, Lifebuoy, Ponds and Dove.

3. Undifferentiated Marketing:
- marketer may not prefer the idea of market segmentation
and differentiated marketing.
- in this case, it follows one marketing mix for several
market segments.
- if more specialized product in each segment will relatively
becomes weak position in all segments.
(E.g.) Coca Cola company followed such
strategy – one brand, one product, one
bottle for one big market.
- due to competition, they adopted
differential marketing and followed broad line
of products, multisized bottles and now follows differentiated
marketing.

BENEFITS OF MARKET SEGMENTATION
Segmentation ensures higher customer satisfaction and
improves effectiveness of the marketing programme. It offers the
following specific benefits:
1. Marketers are in a better position to locate and compare
market opportunities.
2. Marketers can effectively formulate and implement
marketing programmes which will be tuned with demands of
market.
3. Marketers can make fine adjustments in their products and
marketing communications.
4. Competitive strength & weakness can be assessed effectively
and avoid competition and use resources.
5. It leads to more effective utilization of marketing resources.

LEVELS OF MARKET SEGMENTATION

MARKET SEGMENTATION PROCESS
Steps in Market Segmentation process:
Step 1: Identify Segmented Markets.
Step 2: Analyze each Segment.
Step 3: Evaluate Market opportunities.
Step 4: Select Target Segments.

CLASSIFICATION OF INTERNATIONAL
MARKETING SEGMENTATION
Criteria for classifying International markets:
1. Classification based on demand:
a) Existing markets:
In the existing markets, consumer needs are known and are
already being serviced by some products. The market opportunities
can be assessed by estimating the consumption rate and the share
of imports in current consumption.
b) Latent markets:
Latent market is a potential market identified which is not
yet offered with the product or services needed for that market.
Latent demand from the consumers gave raise to this type of
market where when the consumer buys a product he might not
desire some features but later on he might think on those feature
and buy the product.

c) Incipient Markets:
• An incipient market is a
market that will emerge if a
particular economic, demographic,
political, or sociocultural trend
continues.
• A company is not likely to
succeed if it offers a product in an incipient market before
the trends have taken root. After the trends have had a
chance to unfold, the incipient market will become latent
and, later existing.

2. Classification based on Stages of development:
a) Industrial Economies:
• These countries lay more emphasis on research and
development and devote their resources to production of
more sophisticated products and will therefore like to
import goods of simpler technology and manufactures.
• They provide a large market as they have no import
restriction. In fact, the five major importing countries viz.,
United States, the United Kingdom, France, Japan and
Germany, account for 40 % of world imports.
Industrial
economies
More
developed
developing
countries
Raw
material
exporting
economies
Subsistence
economies.

b) More developed developing countries:
• These countries also have an acute shortage of labor and
would, therefore tend to import intensive products like
electronics and light engineering goods.
c) Raw material exporting economies:
• These economies are rich in one or more natural resources
but poor in other ways. Much of their revenue comes from
exporting these resources. (E.g.) Saudi Arabia – Oil & The
Democratic Republic of the Congo - Copper, Cobalt &
Coffee.
d) Subsistence Economies:
• In a subsistence economy the vast majority of people
engage in simple agriculture. They consume most of their
output and barter the rest for simple goods and services.
They offer few market opportunities. 60

OTHER BASES OF MARKET
SEGMENTATION
Bases for Market Segmentation
People – Oriented Approach
(Customer personal
characteristics)
Product – Oriented
Approach (Customer
response behaviour)
Geographic Characteristics
Demographic Characteristics
Socio - Economic
Characteristics
Psychographic
Characteristics
Use Pattern Benefits
Pattern
Brand
Loyalty Store
Patronage 61Unit 2 – Int. Marketing Research & Segmentation

1. People – Oriented Approach:
- it is also called customer personal characteristics
approach.
- it can classify the customer by many dimensions such as
geographic location, demography, socio-economic
characteristics and psychographic characteristics.
a) Geographic Location:
- it is the usual and popular basis for market
segmentation.
- difference between rural and urban
markets is great importance in Indian market.
- it divides based on local, urban, rural markets, regional or
state markets, national or international markets, climate,
weather & other atmospheric conditions. 62Unit 2 – Int. Marketing Research & Segmentation

- it divides the over – all market into homogenous groups
according to population locations.
- it shows the distinction between behaviour of city families
and suburban families.
* Urban people – better educated, higher incomes, greater
mobility, willing to buy new things.
* Rural people – less education, lower incomes, not
innovators.
- marketers are interested more on city and sub urban as it
has highly concentrated population in metropolitan areas.
- however, marketers are expected to have greater interest
on rural markets in country like India because 65% of
population is found in rural areas since 1980, which has
growing purchasing power.

b) Demographic characteristics:
- it is the study of population.
- it includes gender, age, marital
status, no. and age of children, religion,
nationality, income and occupation.
(i.e.) Age – teenage markets, old age, etc.
Gender – Male / Female.
Family Size – Single / Couple / Joint family, etc.
Income – higher / middle / lower.
Education – literates / illiterates.
Difference caste & religion.
Profession & occupation.

* Gender & Age – roles of men and women are considered
while segmenting markets.
- the recent changes in children, youngsters clearly
demonstrates the importance of age in market
segmentation. (E.g.) Mobile phones, gadgets, etc.
* Family life cycle – it is complex one and defined in terms of
age, marital status, age of housewife, present age of
children.
- buying behaviour changes according to the family life
cycle.
- it influence on consumer behaviour with reference to
purchase of durable as well as non – durable goods.
- market of products might be limited based on various
family life – cycles.

c) Socio – Economic Characteristics:
- it includes social class, religion, culture.
* Social Class – consumers may differ from one another in
terms of money, knowledge or skills.
- it describe the differences and it is a complex variable.
- it is relatively permanent homogeneous divisions in our
society.
- it indicates similar life styles, values, interests, etc.
- the three social classes are – upper class, middle class and
lower class in society.
* Religion, Race and Culture – it is also used as bases for
segmentation.
- it explains the regularities and diversities in human
behaviour. 66

d) Psychographic Characteristics:
- buyers are divided into different
groups based on personality, life style.
* Personality – it is the individual’s
consistent reactions to the world about him.
- it attempt to measure characteristics like dominant,
aggressive, objectivity, achievement, motivation, etc.
- this gives closer reason why people buy product.
* Life styles – it reflects overall manner in which person live
and spend time and money.
- it is interdisciplinary approach as it involves sociology,
culture, psychology and demography.
- it is measured how persons consumes, interests, opinions
and values. 67

Psychographic research is used frequently in the market
segmentation studies for four reason:
i) To find and explain markets and for target market
identification.
ii) To understand consumer behaviour as markets are
people, (E.g.) brand choice, company loyalty.
iii) To formulate marketing strategies for the firm. (E.g.)
positioning of new product, improving services,
promotion strategies, new distribution methods.
iv) To minimize risk of product failure by incorporating
psychographics into your product testing and R & D
programme.

2. Product – Oriented approach:
- it is also called customer response approach.
- customer response or buyer behaviour considered as
relation to product benefits, product usage, store
patronage and brand loyalty.
- it interested to know why consumers buy a certain
product.
- it involves psychological factors like buying motives,
attitudes, perceptions and preferences.
a) Use pattern:
- use of total consumption of a family unit for a given
product act as a basis of segmentation.
- buyer may be classified as higher, medium, light
users and non – users.
- marketers concentrate on heavy users and segment the
market.

- usage information related with other characteristics
like age, income level, life cycle, education level, etc.
b) Benefits pattern:
- it gives emphasis on wants and desire of consumers.
- this is basic reason for existence of market segment.
- people buy a product to secure expected benefits.
- customer satisfaction directly depends on product
benefits (i.e.) economy, performance, style, durability,
appearance, taste, flavour, etc.
c) Brand / Store loyalty:
- it enables marketer to tailor the promotional content
and product appeal to retain loyal customers, to attract
new customers or convert non - loyal into loyal
customers.
- it is not easy to measure brand loyalty, because some
customers buy a product due to habit or low price.

International Marketing Management - International Marketing Research & Segmentation

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