MARKET SEGMENTATION

Market segmentation is a concept to which marketers
and academics like to pay a great deal of
attention. All conceivable possibilities for segmenting
the US market have been thoroughly studied.
For example,Visa has designed its consumer credit
products and non-credit products for diverse
market segments. Some of its products are: Visa
Classic, Visa Gold, Visa Platinum, Visa Signature,
Visa Infinite,Visa check card, and Visa Buxx.
Yet on the international scale, American marketers
are prone to treat market segmentation as an
unknown and unfamiliar concept, and they apparently
leave their knowledge about market segmentation
at home when they go abroad. More often
than not, there is hardly any serious or conscious
attempt by American businessmen to segment a
foreign market. This phenomenon probably derives
from an assumption that, by going abroad, geographic
segmentation has been implemented. But
geographic segmentation, an obvious choice, is
often overemphasized and is usually inappropriate.
Marketers fail to realize that the purpose of segmentation
is to satisfy consumer needs more precisely
– not to segment the market just for the sake
of the segmentation.
Another mistake marketers make in foreign
countries is in attempting to capture the total

market at once. The resulting disappointment in
market performance demonstrates that two major
problems have been overlooked. First, consumers in
a foreign country are unlikely to be homogeneous.
Usually, marketers must distinguish urban consumers
from rural consumers. Even in largely
homogeneous Japan, American Express found it
necessary to segment Japanese consumers. It introduced
the luxury gold yen card for the affluent
segment and the green card for the middle-income
segment

Second, a “total market” strategy places the
company in head-to-head competition with strong,
local competitors.The success of Japanese products
in the USA and in many other countries may be
explained in part by the explicit and conscientious
attempt by the Japanese to segment the market.
Japanese firms usually pick their targets carefully,
avoiding head-to-head competition with major US
manufacturers in mature industries. Starting at the
low end of the product spectrum, a Japanese firm
establishes a reputation for product excellence, and
eventually gets customers to trade up over time.
The strategy has worked exceedingly well in the
automobile and consumer-electronics industries.
Japanese computer makers have used the same marketing
strategy in breaking into the US computer
market. Japanese firms market commodity products
such as personal computers, disc drives, printers,
and other peripherals before attempting to trade up
with their customers to the larger systems, which
have the highest profit margins.This strategy makes
a great deal of strategic sense because the marketer
does not arouse the US giants early in the game. US
toolmakers’ strategic mistake was their emphasis on
large machines for major users, while leaving room
at the low end for entry to foreign competitors with
product lines at the $150,000 price level.
The most important reason behind the employment
of market segmentation is market homogeneity/
heterogeneity. Based on the national boundary,
homogeneity can be vertical (i.e., homogeneous
within the same country) or horizontal (i.e., homogeneous
across countries).Therefore, two countries
exhibiting the lack of vertical homogeneity within

their borders may still be homogeneous horizontally
when a particular segment of one country is similar
to an equivalent segment of another country.
Nevertheless, market segmentation is not always
necessary or desirable. This is especially true when
either consumer needs within a country are largely
homogeneous or a mass market exists.