Essay: International market segmentation

About forty years ago, segmentation was viewed as an imperfection in market structure rather than as a more precise adjustment to consumer or user requirements. From this time, the benefits of adapting marketing resources to the heterogeneous needs and wants of customers is recognized. Nowadays, in the context of globalization, the focus has shifted towards looking for similarities and the search for ‘global segments’. As a result of these changes, Hassan and Katsanis defined ‘(global) market segmentation’ as follows:
‘Global market segmentation is the process of identifying specific segments, whether they be country groups or individual customer groups, of potential customers with homogeneous attributes who are likely to exhibit similar behaviour’ (Hassan & Katsanis, 1991).
This trend of globalizing economies raised a new question: how should a company segment a global/international market? Segmentation of a international market implied the addition of another, country specific, dimension.
In domestic markets customer characteristics such as age, sex, social class, etc. and attitudes toward a certain product or brand are often used as bases for segmentation. In international markets an extra dimension has to be considered, i.e. country characteristics. For instance, every country has its own specific social, cultural, economic, technological, political, legal and environmental characteristics affecting marketing strategies and customer/market responses.
The different perceptions and approaches of multinational companies determined their segmentation approach. Besides the shift from looking for differences towards the focus on similarities mentioned above, one can observe the influence of the internationalizing environment and the evolvement of global strategies.
Frank, Massy and Wind proposed three approaches to international market segmentation (Frank, Massy & Wind, 1972):
– Approaching each country as a individual segment;
– Approaching groups of countries with similar characteristics as individual segments;
– Approaching the entire world as one segment.