Global Consumer Segmentation versus Local Market Orientation: Empirical Findings

Ugur Yavas, Professor of Marketing, East Tennessee State University, Johnson City, TN, U.S.A. Bronislaw J. Verhage, Professor of Marketing, Georgia State University, Atlanta, GA, U.S.A. Robert T. Green, Professor of Marketing, University of Texas at Austin, Austin, TX, U.S.A. Introduction The relative efficacy of a global marketing strategy vis-a-vis a tailored marketing strategy remains one of the hotly debated issues of international marketing. As is the case in any debate, polarizing arguments in favor of (or against) each abound. Proponents of a global strategy point to the increasing homogenization of customer tastes and preferences and suggest that significant economies of scale can be attained by marketing standardized products world wide (Levitt 1983). Critics, on the other hand, dismiss the potential of a global strategy and underscore economic, cultural and other environmental differences among nations as impediments to its implementation. They argue that tailoring strategy to reflect country-market differences will generate improved response (Kotler 1986). Often overlooked in this fierce debate is a middle ground approach that takes into account not only differences or similarities among markets but both. As Quelch and Hoff (1986) point out, the real issue is not whether to standardize but rather how to tailor the global marketing strategy. Indeed, reliance on a global strategy can result in missing out on important target markets and inappropriate positioning. Likewise customizing marketing strategy to individual countries implies loss of potential economies of scale as well as opportunities for exploiting product ideas on a wider scale (Whitelock and Chung 1989). The recent genre of writings suggest that global and tailored strategies are not necessarily mutually exclusive and that they can be used in tandem to reap the maximum benefits. In this vein, Jain (1989) and Kale and Sudharshan (1987) propose an intermarket segmentation approach to world markets and point to the feasibility of identifying homogenous segments that transcend national boundaries. Once identified these so-called strategically equivalent segments (Kale and Sudharshan 1987) can be reached via global marketing strategies aimed at different cross-national segments (Verhage, Dahringer and Cundiff 1989). The idea of reconciling the different viewpoints of global and tailored marketing strategies is intuitively appealing and certainly represents a significant forward link in the design of multinational marketing strategies. However, empirical support to the viability of this middle ground approach is scanty and evidence to its efficacy comes mainly in the form of anecdotes (Ohmae 1985, Whitelock 1987). The study reported here is intended to partially fill in this void. Specifically, consumers in six countries including the United States, Mexico, The Netherlands, Turkey, Thailand and Saudi Arabia were studied for intermarket segmentation on the basis of two criteria, perceived risk and brand loyalty (Kreutzer 1988). Consumers were questioned about their degree of perceived risk and brand loyalty for two products, bath soap and toothpaste. These products were chosen since they are widely available in different brands and are purchased on a frequent basis by the consumers in these countries. It was maintained that if the consumers in these countries are not sufficiently similar regarding the effects of risk perception on brand loyalty, the underlying rationale for a single global marketing strategy at least within the context of products surveyed here would disappear. On the contrary, such a circumstance would render the middle ground approach viable. Method Because the primary purpose of the study was to identify cross-national segments on the basis of behavioral measures, data were collected from demographically parallel samples of consumers. This was done by controlling for sex, social class and rural-urban residency across samples. …