International Market Segmentation and Product Positioning.

Marketing functions are often summarized as "the 4Ps": product, price, promotion, and place (distribution). The functions involved in international marketing are often complicated by environmental differences in the countries served by the MNE. The marketing functions include 1 identification of the needs of potential and actual customers (the function of marketing research), 2) the design of products and/or services to fill these needs (product planning with emphasis on the balance between standardization and differentiation), 3) the pricing and promotion of the offering (including advertising and personal selling), 4) the selection and coordination of channels of distribution, and the provision of follow-

up services. The two cornerstones of international marketing strategy are market segmentation and foreign product positioning.

Market segmentation. International market segmentation is used to adapt to customer heterogeneity both between nations and within countries. When we compare a single-country market and a multi-country market we usually face considerable heterogeneity among the buyers across and within countries.

Demographics (such as age, number of children, marital status, gender), socioeconomics (such as income, social class), and geographical location serve together as strong criteria for segmentation in many countries. The chosen segmentation variables and the consequent division of the total market into subgroups should satisfy the following criteria.

First, the segments should be "measurable". It is necessary to measure the size and purchasing power of each segment.

Second, the segments should be accessible. That is, the identified subgroups should be reachable in terms of both communication and physical distribution. The infrastructure of the country determines whether this requirement can be met.

Third, the target should be substantial. It makes little sense to target a segment with few members or very low potential. The potential sales volume in a segment needs to be substantial enough.

Once the segments have been identified in the host-country market, the targeting strategies available to the marketer involve a "no-target" approach (usually only in the initial stages of involvement), a "concentrated" approach where only one or two segments are targeted, or a "differential" approach where most of the uncovered segments are adapted. In the international arena, the concentrated approach is often the most profitable one, since it allows a focused attempt to sell in a relatively homogeneous subset of the market.

Foreign Product Positioning. To target a specific segment, the international marketer needs to be skillful at developing the marketing mix. This task is referred to as foreign product positioning.

The concept of foreign positioning is based on the idea that products consist of bundles of attributes that generate benefits to the buyer and user. In the product space a product is graphically represented as a point defined by its attribute scores. Other products are represented by other points. If the points are close, the products tend to have similar attributes and are substitutes, i.e. they compete heavily. The farther away a point is from another (i.e. their attributes differ considerably), the less the direct competition is. The location of a product's point in this product space is its positioning.

The international marketer needs to be skillful at determining the exact segment of the population that is likely to buy a product, and then developing a marketing campaign to enhance the product's image to fit that particular segment. The most characteristic feature of foreign product positioning is that the country of origin of a product is identified with.the label on the product, equivalent to a branding of the product. Sellers have the option either to make such branding the cornerstone of their marketing campaign as in the case with world-known brands that carry positive stereotypes (Nissan cars, L'Oreal cosmetics, Coca-Cola soft drinks),or,

conversely, to attempt to avoid the label to hide the country of origin as in the case of less-known producers from the countries, evoking negative stereotypes.

Another characteristic feature of foreign product positioning is balancing (he desire for standardization against the need for adaptation of the product to the specific needs of the foreign market. Successful application of the concept of foreign product positioning ensures that the MNE would use its firm-specific advantages to sell its product to a well-defined target market, where the direct competition from domestic and foreign competitors is minimized.