STRATEGIC MANAGEMENT

Strategic Management

Strategic Management

Introduction

In March 2007, CRH announced financial results for previous year. CRH Plc is enjoying market shares after a long history of development (1970). CRH's management believe that can global market segmentation decisions be based solely on geopolitical and economic factors or can global segmentation decisions be based on behavioral and lifestyle variables? In an increasingly global and technology savvy marketplace where customer segments are becoming homogenized across national boundaries, behavioral and lifestyle segmentation may be necessary addition to geopolitical and economic segmentation in international markets (Aulakh and Kotabe, 1993; Helsen et al., 1993; Nachum, 1994; Luqmani et al., 1994). Complicating the segmentation issues in global markets is the need for companies to make strategic positioning decisions in an increasingly competitive and transparent marketplace in order to leverage brand equity and achieve economies of scale. In short, the strategic necessity does not stop at the selection of desirable market segments, but also includes the need to position brands effectively relative to the market segment. Toward that end, the purpose of this paper is to examine empirically the relationship between positioning strategies and bases of segmentation in international markets.

The debate over this issue has intrigued marketers since Levitt (1983) introduced the concept of “segment simultaneity” in his thought-provoking article describing the globalization of markets. He described this phenomenon as the “proletarianization” of global markets where everyone everywhere wants to have world brands. What he described, in fact, was the existence of similar market segments and consumers in different countries for whom low price and high quality would be common criteria for making buying decisions.

The decision to segment world markets lies in understanding the degree of globalization achieved in a given market. If there are no more mass markets in the USA, for example, one should hardly expect a single universal marketing strategy to be effective on a worldwide basis. However, if bases exist for market segmentation that cut across national boundaries, then marketing strategies might be developed that will work for similar segments around the globe. The existence of these intra-market segments might create important opportunities and challenges for firms seeking to establish brand positions in multiple markets - an increasingly common strategic goal. This paper provides an empirical study of the linkages between segmentation bases and positioning strategy decision options. The key research issues addressed here are:

Would a combined use of both macro- as well as micro-segmentation bases leverage similar strategic positioning across global markets?

Would limiting the use of segmentation bases to the micro level be linked to localized, strategic brand positions?

Bases for global market segmentation

Most early segmentation efforts were based on macro considerations that include factors such as economic (Kotler, 1986); cultural (Whitlock, 1987); geographic (Daniels, 1987) and technological (Huszagh et al., 1986). Current research found that these pre-determined country bases are inadequate for segmentation when considered without behavioral bases (Helsen et al., 1993; Nachum, 1994). For example, pre-determined country clusters will be inadequate without a full account for the degree of homogeneity related to buyers' responsiveness to ...