International marketing requires even more segmenting

Success in international marketing requires even more attention to segmenting. There are over 140 nations with their own unique differences! There can be big differences in language, customs, beliefs, religions, race, and income distribution patterns from one country to another. This obviously complicates the segmenting process. But what makes it even worse is that there’s less dependable data as firms move into international markets. While the number of variables increases, the quantity and quality of data go down. This is one reason why some multinational firms insist that local operations be handled by natives. They at least have a feel for their markets.

In the rest of this text we’ll emphasize final consumer differences, because they’re likely to be greater than intermediate customer differences. Also we’ll consider regional groupings and stages of economic development, which can aid your segmenting.

Regional groupings may mean more than national boundaries

Consumers in the same country often share a common culture, and other uncontrollable variables may be homogeneous. For this reason it may be logical to treat consumers’ countries as a dimension for segmenting markets. But sometimes it makes more sense to treat several nearby countries with similar cultures as one region (Central America or Latin America, for example). Or several nations that have banded together to have common economic boundaries can be treated as a unit. The outstanding example is the movement toward economic unification of the European Community (EC) countries.

The countries that form the European Community have dared to abandon old squabbles and nationalistic prejudices in favor of cooperative efforts to reduce taxes and other controls commonly applied at national boundaries.

In the past, each country has had its own trade rules and regulations. These differences made it difficult to move products from one country to the other or to develop economies of scale. Now a commission with representatives from each nation has developed a plan to reshape the individual countries into a unified economic superpower that some have called the «United States of Europe.»

The plan will eliminate nearly 300 separate barriers to inter-European trade. Trucks are able to move from Denmark to Belgium and dentists from Belgium to Greece. Products spill across the European continent and Britain. The increased efficiency that comes from eliminating these barriers is expected to cut consumer prices in Europe by 6 percent and create 5 million new jobs.

What’s more, with 320 million prospering consumers, Europe will become the world’s richest market. Of course, centuries of cultural differences won’t instantly disappear, and they may never disappear. So removal of economic barriers won’t eliminate the need to adjust strategies to reach submarkets of European consumers. Yet the cooperative arrangement will give firms that operate in Europe easier access to larger markets, and the European countries will have a more powerful voice in protecting their own interests.

These cooperative arrangements are very important. Taxes and restrictions at national or regional borders aren’t only annoying but also can greatly reduce marketing opportunities. Tariffs (taxes on imported products) vary, depending on whether the country is trying to raise revenue or limit trade. Restrictive tariffs often block all movement. But even revenue-producing tariffs cause red tape and dis­courage free movement of products.

Quotas act like restrictive tariffs. Quotas set the specific quantities of products that can move into or out of a country. Great market opportunities may exist in a unified Europe, for example, but import quotas (or export controls applied against a specific country) may discourage outsiders from entering. The Canadian government, for example, has controlled Japan’s export of shoes, textiles, and TVs to Canada. Otherwise even more Japanese products would have entered Canada.