Examining World Market Segmentation and Brand Positioning Strategies Salah S
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Journal of Consumer Marketing Examining world market segmentation and brand positioning strategies Salah S. Hassan Stephen Craft Article information: To cite this document: Salah S. Hassan Stephen Craft, (2012),"Examining world market segmentation and brand positioning strategies", Journal of Consumer Marketing, Vol. 29 Iss 5 pp. 344 - 356 Permanent link to this document: http://dx.doi.org/10.1108/07363761211247460 Downloaded on: 05 October 2016, At: 11:41 (PT) References: this document contains references to 58 other documents. 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Hassan The George Washington University, Washington, DC, USA, and Stephen Craft University of Montevallo, Montevallo, Alabama, USA Abstract Purpose – This paper aims to examine the conceptual as well as empirical linkages between segmentation bases and brand positioning strategies in the context of discussing practical implications for firms operating in increasingly globalizing markets. Design/methodology/approach – This paper empirically examines an inventory of market segmentation factors in relation to four global strategic positioning decision options. Findings – The two studies reported suggest that a combined use of macro and micro-bases to segment world markets is significantly linked to the perceived positioning strategies of global top brands, whereas firms seeking more localized positioning strategies use only micro-bases to segment. Practical implications – The conceptual and empirical findings reported in this paper 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 segmentation and strategic brand positioning decisions in world markets. Originality/value – This paper is unique in identifying a link between global brand positioning and segmentation factors. Keywords Market segmentation, Brand positioning strategy, Global marketing, Brand management, International marketing, Globalization Paper type Research paper An executive summary for managers and executive the need for companies to make strategic positioning readers can be found at the end of this article. decisions on leveraging brand equity and achieving economies of scale. In short, the strategic necessity does not Segmentation of world markets is a frequent topic of stop at the selection of desirable market segments, but also discussion and research among both marketing academics includes the need to effectively position brands relative to and practitioners. The increasing importance of segmentation market segments. Toward that end, the purpose of this paper decisions is attributed, at least in part, to its ability to enhance is to empirically examine the relationship between bases of the strategic position of the brand. There is consensus among segmentation and strategic brand positioning strategies in practitioners and academics that the time and expense of world markets. Additionally, this paper explores appropriate conducting segmentation studies and implementing scenarios where a company would use different segmentation Downloaded by USP At 11:41 05 October 2016 (PT) international segmentation systems is justified by the and positioning strategies. contribution of segmentation to effective brand positioning The decision to segment world markets lies in and performance (O¨ zsomer and Prussia, 2000; Aurifeille et al., understanding the degree of globalization achieved in a 2002; Schuiling and Kapferer, 2004; Cova et al., 2007; Hung given market. If there are no more mass markets in most et al., 2007). However, there has been limited attention given individual countries one should hardly expect a single in the literature to identifying the dimensions used to form universal marketing strategy to be effective in worldwide international market segments (Steenkamp and Hofstede, markets (Schuiling and Kapferer, 2004; Cova et al., 2007; 2002). For example, can world markets be segmented based Hung et al., 2007). However, if segmentation criteria or bases on geographical factors alone or just on behavioral and exist for market segmentation that cut across national lifestyle variables? In an increasingly global and technology boundaries, then marketing strategies might be developed savvy marketplace where customer segments are becoming that will work for similar segments around the globe (Solberg, homogenized across national boundaries, behavioral and 2002; Wright and Nancarrow, 1999; Aurifeille et al., 2002). lifestyle segmentation may be a necessary addition to The existence of these inter-market segments might create geographical segmentation in world markets (Aulakh and important opportunities and challenges for firms seeking to Kotabe, 1993; Helsen et al., 1993; Nachum, 1994). establish brand positions in multiple markets – an Complicating the segmentation issues in world markets is increasingly common strategic goal. The current issue and full text archive of this journal is available at www.emeraldinsight.com/0736-3761.htm Literature on segmentation of world markets Most early segmentation research efforts were based on macro considerations that include factors such as economic (Kotler, Journal of Consumer Marketing 1986); cultural (Whitlock, 1987; Hofstede, 2001); geographic 29/5 (2012) 344–356 q Emerald Group Publishing Limited [ISSN 0736-3761] (Daniels, 1987) and technological (Huszagh et al., 1986). [DOI 10.1108/07363761211247460] Current research found that these pre-determined country 344 Examining world market segmentation and brand positioning strategies Journal of Consumer Marketing Salah S. Hassan and Stephen Craft Volume 29 · Number 5 · 2012 · 344–356 bases are inadequate for segmentation when considered recent study, Hofstede et al. (1999) empirically verified that a without behavioral bases (Helsen et al., 1993; Nachum, segmentation model can integrate both country factors and 1994). For example, pre-determined country clusters will be consumer characteristics to better form segments that share inadequate without a full account for the degree of consumption patterns versus traditional models employing homogeneity related to buyers’ responsiveness to the global country factors alone. However, the study stopped well short marketing program (Agarwal, 2003). Several segmentation of addressing the nature of segmentation bases or the linkage studies criticized limiting segmentation decisions to macro between segmentation bases and brand positioning. While bases alone. For example, Hassan and Katsanis (1991) their research did not seek empirical support for or document suggested that world market segmentation based on macro- the international segmentation decision process, the findings bases has three major limitations: reinforce within-country examination of market segment 1 segmentation decision is based on country-specific bases as a key step in the international segmentation strategy geographical variables not consumer-behavior variables; decision process. Steenkamp and Hofstede (2002) proposed a 2 it assumes total homogeneity of consumer behavior within similar two-step process of first clustering countries by their country segments; and cultural and socio-economic traits, then grouping individuals 3 it overlooks the existence of homogeneous segments that within these clusters, but selecting customers without regard transcend across national boundaries. to geographic boundaries. This inter-market segmentation approach refers to “ways of Wind and Douglas (1972) described “macro” segmentation describing and reaching market segments that transcend as groups of countries that are classified and targeted based on national boundaries or that cut across geographically defined national market characteristics while “micro” segmentation is markets” (Hassan and Blackwell, 1994). This approach based on analyzing and sub-dividing each qualifying target emphasizes that inter-market