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3 Steps and Methodologies of International Market Segmentation Analysis Zentrales Prüfungsamt Postfach 330440, 28334 Bremen Für Sozial- und Geisteswissenschaften Bibliothekstraße, 28359 Bremen Promotionsausschuss Tel: 0421/218-2177 – Fax: 218-7518 Dr. rer. pol. eMail: [email protected] Gebäude GW 2, Raum B 2325 Sachbearbeitung: Carmen Ohlsen Gesch.-Z.: 62-10 Fachbereich Wirtschaftswissenschaft Methodological Options in International Market Segmentation Dissertation zur Erlangung der Doktorwürde durch den Promotionsausschuss Dr. rer. pol. der Universität Bremen Vorgelegt von Iryna Bastian Bremen, den 1.11.2006 Erstgutachter: Prof. Dr. Erich Bauer Zweitgutachter: Prof. Dr. Martin Missong Contents Contents List of Figures.......................................................................................................... V List of Tables.........................................................................................................VII List of Abbreviations............................................................................................... X 1 Introduction ...................................................................................................... 1 1.1 Problematic Issues.................................................................................... 1 1.2 Research Objectives ................................................................................. 3 1.3 Thesis Structure........................................................................................ 5 2 International Business and Market Segmentation ............................................ 8 2.1 Internationalization of Business – International Management – International Marketing ........................................................................................ 8 2.2 Standardization and Differentiation in the Context of International Marketing ........................................................................................................... 11 2.3 International Market Segmentation ........................................................ 18 2.3.1 Concept of Market Segmentation................................................... 18 2.3.1.1 Market Segmentation Analysis............................................... 21 2.3.1.2 Market Segmentation Strategy ............................................... 25 2.3.2 Segmenting International Markets.................................................. 27 2.3.2.1 Exclusively Country-Related Market Segmentation .............. 28 2.3.2.2 Country- and Consumer-Related Market Segmentation ........ 30 2.3.2.3 Exclusively Consumer-Related Market Segmentation........... 37 3 Steps and Methodologies of International Market Segmentation Analysis ... 39 3.1 Defining Relevant Market...................................................................... 40 3.2 Deciding on Segmentation Approach and Methodology ....................... 40 3.3 Procuring Data........................................................................................ 41 3.4 Selecting Basis and Descriptor Variables............................................... 48 3.4.1 Choice of Basis Variables .............................................................. 48 3.4.1.1 Study Goals............................................................................ 49 3.4.1.2 Quality of Basis Variables...................................................... 50 3.4.2 Choice of Descriptor Variables ...................................................... 53 3.5 Conducting Analysis.............................................................................. 54 3.5.1 Data Preparation............................................................................. 54 3.5.1.1 Preliminary Data Standardization........................................... 54 I Contents 3.5.1.2 Data Preprocessing Using Factor Analysis ............................ 55 3.5.1.2.1 Constructing Correlation Matrix......................................... 56 3.5.1.2.2 Extracting Factors ............................................................... 58 3.5.1.2.3 Rotating and Interpreting Factors ....................................... 65 3.5.1.2.4 Calculating Factor Values................................................... 67 3.5.2 Finding Cluster Solution................................................................. 68 3.5.2.1 Cluster Analysis...................................................................... 69 3.5.2.1.1 Proximity Measures............................................................ 70 3.5.2.1.2 Grouping Methods.............................................................. 76 3.5.2.1.2.1 Ward’s Method............................................................ 77 3.5.2.1.2.2 K-means Method......................................................... 82 3.5.2.2 Self-Organizing Map.............................................................. 85 3.5.2.2.1 Biological Origin................................................................ 86 3.5.2.2.2 Theoretical Model............................................................... 89 3.5.2.2.3 Visualization of Results ...................................................... 99 3.5.2.2.4 Assessment of Topology-Preserving Map ........................ 102 3.5.3 Validation of Cluster Solution...................................................... 104 3.5.3.1 Assessment of Cluster Solution’s Stability Using Results of Several Clustering Methods ..................................................................... 104 3.5.3.2 Assessment of Homogeneity within Clusters Using F-Values... .............................................................................................. 104 3.5.3.3 Assessment of Heterogeneity between Clusters Using t-Values .............................................................................................. 105 3.5.3.4 Assessment of Heterogeneity between Clusters and of Cluster Solution Reliability Using Discriminant Analysis ................................... 106 3.5.3.4.1 Derivation of Discriminant Functions............................... 106 3.5.3.4.2 Testing Performance of Discriminant Functions .............. 110 3.5.4 Description and Interpretation of Cluster Solution ...................... 114 4 International Market Segmentation Study.................................................... 116 4.1 Study Purpose and Design.................................................................... 116 4.2 Defining Relevant Market.................................................................... 116 4.2.1 Essence of Study Initiator’s Business........................................... 117 4.2.1.1 Portrayal of Beiersdorf ......................................................... 117 4.2.1.2 Portrayal of Umbrella Brand NIVEA................................... 119 II Contents 4.2.2 Skin and Body Care Product Categories ...................................... 120 4.2.3 Geographical and Temporal Market Boundaries ......................... 121 4.3 Deciding on Segmentation Approach and Methodology ..................... 123 4.4 Procuring Data...................................................................................... 123 4.4.1 Fieldwork Dates............................................................................ 124 4.4.2 Fieldwork Locations..................................................................... 125 4.4.3 Fieldwork Methodology, Sample Definition, and Questionnaire Contents ...................................................................................................... 127 4.5 Selecting Basis and Descriptor Variables............................................. 130 4.6 Conducting Analysis............................................................................ 135 4.6.1 Additive Intranational Market Segmentation ............................... 135 4.6.1.1 Data Preparation Using Factor Analysis .............................. 135 4.6.1.2 Finding Cluster Solutions ..................................................... 138 4.6.1.2.1 Segmentation Approach Based on Ward’s Method.......... 138 4.6.1.2.2 Segmentation Approach Based on K-means Method ....... 140 4.6.1.2.3 Segmentation Approach Based on Self-Organizing Map. 142 4.6.1.3 Validation of Cluster Solutions ............................................ 145 4.6.1.4 Description and Interpretation of Cluster Solutions............. 148 4.6.1.5 Finding Transnational Segments .......................................... 149 4.6.1.5.1 Identification of Common Features .................................. 149 4.6.1.5.2 Examples of Regional/Country-Specific Peculiarities...... 173 4.6.1.5.2.1 Differences in Demographic Characteristics, Brand Assessments, and Behavioral Characteristics................................... 173 4.6.1.5.2.2 Differences in Character/Structure of Cluster Solution... ................................................................................... 174 4.6.1.6 Assessment of Segmentation Approaches............................ 176 4.6.1.6.1 Application Convenience.................................................. 176 4.6.1.6.2 Structure, Meaningfulness and Coherency of Cluster Solution ........................................................................................... 177 4.6.1.6.3 Basis for International Market Segmentation Strategies .. 178 4.6.2 Integral Market Segmentation ...................................................... 180 4.6.2.1 Data Preparation................................................................... 180 4.6.2.1.1 Defining Sample Size ....................................................... 180 4.6.2.1.2 Factor Analysis................................................................
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