Globalization has created a phenomenon where many firms that used to concentrate on single regional or national markets have to change their strategies and pursue international markets. Global market has presented important opportunities for companies to reach wider market segments so as to increase their profitability (Joshi 7). However, success has not been a guarantee to all companies that pursue this venture, as the increased complexity of the international market makes the whole marketing aspect seem like a puzzle.
Maybelline is a global cosmetic manufacturing company owned by L’Oreal. Maybelline’s recent entry in the Indian market was considered long overdue. According to the CEO Geoff Skingsley, India was the only major nation within the Asian region they had not managed to access. Probably, the reason for this inability was more of an external environment rather than internal ability of the firm. Basically, Mr. Skingsley acknowledged that they needed more than just a customer focus approach to access the Indian market. Why? Issues like political, economic, social and technological factors were to be major determinants of the economic viability of the marketing strategies that they would deploy (Hunt 29). For example, national wealth determines the people’s disposable income; hence when a nation has a better balance of trade, low inflation rate and high GDP, its citizens would be able to earn enough to spend on both necessities and luxuries. In the mid 1990s, India’s economic growth meant that its people had increased earnings as well as disposable income. It subsequently led to increased demand for cosmetics and toiletries. So considering Maybelline’s case, under what circumstances should companies pursue a universal market segment? One of the main segmentation criteria is lifestyle of the target market. However, this has its weaknesses as will be discussed later in the paper.
Under what circumstances should a firm pursue Universal Market Segmentation?
Just like the case of Maybelline, it was not feasible for them to go into the Indian market before 1998 despite its brand popularity in the larger Asian regional market. However, after the Indian market became favourable in the mid 1990s, the company managed to successfully launch its products in one of the world’s most populous nations. Feasibility of a global market segment lies in the geographic, demographics, psychographics, behavioural characteristics of the population, and the political landscape of the region (Keegan 192).
Given that Maybelline had managed to access many of the Asian countries with its products, it was not difficult for them to access the Indian market due to proximity and accessibility through land, air and sea transport. Under many circumstances, it is not practical for companies to go for universal market segments when they are not able to access it adequately with their products and services (Travis 121; Schmidt & Wright 39). That is, for the companies to succeed there is a need for the market segments to be closer to each other to ease accessibility within a shorter time span. A market segment which is excluded from the rest of the world due to poor infrastructure cannot be a viable place to market products. Proximately located market segments supported by adequate infrastructure such as proper transport networks (roads, air and rail) and communication equipments will lead to successful market penetration (Schmidt & Wright 39). That is, the ability to penetrate markets is determined by the level of infrastructure development such as road networks, rail transport system, and air transport.
However, it must be noted that a geographically segmented market is not enough as it has some limitations. While countries in a particular region may be proximate to each other, other factors such as income variance may make them completely different in terms of consumption rate and ability to purchase.
By the time Maybelline was entering the Indian market, there were changes in the demography of the population. The age profile of cosmetic consumers was dominated by those aged 25 years and below (45% of the total population). Conversely, the opening of Indian cosmetic market was facilitated by crowning three Indians as Miss World and Miss Universe in a span of four years. Companies trading in certain types of goods and services can only succeed in a market segment if they are aware of the demographic nature of the target market segment (Keegan 193; Mooij 4). That is, the information on age, gender, education and occupation must be well disseminated in the information intelligence unit of companies (Keegan 193). This awareness is critical in the development of marketing strategies
Economic status of the population is another important aspect that will present either a positive or a negative outcome from a market segment. A market segment with high number of middle class population will be ready to purchase higher-priced products. However, if the market segment is dominated by low-income earning population, there would be little disposable income; hence the market becomes less viable. Although India’s population was predominantly poor especially in the rural areas, later years have seen a rise in middle class population in urban regions who have become more sensitive to the physical attributes as far as beauty is concerned.
Psychographic factors are known to affect people’s buying habits. Considering India’s strong traditional beliefs, the increased penetration of western culture among the young generation made it possible for Maybelline to get access to the market in the late 1990s. The company identified and acknowledged the presence of different psychographic populations; the urban, and rural residents. A market segment can be developed and detailed information about the feelings of the target consumers analyzed. In this perspective, the market segment will be determined by the general belief as influenced by culture, pride and environmental situations of the regions (Sutton & Klein 62).
For some firms, psychographics has presented some of the most important information on the need to revive their market dominance and increase sales. For example, Porsche AG, a German sports car-maker had undergone a series of decline in sales before they commissioned a psychographic study that revealed areas of weaknesses in the American market (Keegan 195). The study revealed five different categories of Porsche car consumers. The top most luxurious elitists purchase the cars for pride- to assert their status in the society. In essence, consumers’ attitudes, values towards particular products, and lifestyles are essential ingredients in ensuring a decision to pursue universal market segment becomes a success.
The behaviour of the Indian consumers in reaction to economic decline presented a major problem for Maybelline. Due to decreased income of the people during the global economic slowdown, buyer loyalty also decreased and they (consumers) just waited for the promotions and cheap offers to increase their purchase volume. Markets segmented by consumer behavioural criteria relies on “whether people buy and use a product, as well as how often and how much they use it” (Keegan 198). That is, a company should be able to identify and separate various categories of users (e.g. heavy, medium, light and nonusers) in order to minimize haphazardness in market approach and focus on specific areas of demand by specific consumers. Other issues that may warrant firms’ success are their ability to identify potential users, former users, users of the competitors’ products. For example, Chinese market is a good market for tobacco companies because of their heavy smoking habit, compared to other global markets (Keegan 1989).
Maybelline’s entry into the Indian market was not very smooth despite the country’s wider democratic space. Notably, India is a large country with many political parties. However, these parties are controlled by regional castes, which in many circumstances pose many red-tapes. If a company is to pursue market segment, the political environment must be stable enough to warrant success. Additionally, flexible trade tariffs, limited barriers, and favourable taxation criteria should inform the decision to enter a global market segment. Political factors range from government imposed trade barriers and tariffs to political stability of the nation. A country with stable political environment would present better opportunity for business establishment.
Weakness of Lifestyle-based Segmentation Schemes
The Maybelline case is a typical example of life-style based segmentation criteria. For instance, when the income of the people of Gujarati Province declined due to slowdown in export to the United States in 2001, the disposable income also decreased, consequently changing the lifestyle of the people. Such behavioural shifts do affect products that rely on lifestyle criteria for marketing.
For many decades in the history of marketing, lifestyle has been applied in different areas of market segments to help companies venture more into the global markets by observing consumption characteristics of different groups. Mooij (7), states that lifestyle concept in marketing is “similar to the anthropological concept of culture- the totality of practices, meanings, beliefs, and artefacts of a social group.” Because lifestyles are deemed to cut across wider demographic scenario, its application is known to be suitable for particular age groups who tend to share uniform behavioural pattern (Kotler, Jain & Maesincee 29). For example, MTV programs that target universal youth culture are one area that has successfully applied lifestyle based-market segmentation to popularize its program. This has been a success especially considering the fact that youths coming from various backgrounds tend to exhibit common liking for hyper lifestyles, irrespective of their cultural backgrounds.
It is noted that psychological and other micro-behavioural studies are related to many lifestyle studies that have been conducted by market researchers. In this case, researchers in the field of marketing identify groups of consumers with similar characteristics in terms of attitudes towards purchase of certain products. Although studies shows that lifestyle-based segmentation has been used severally to successfully manage and penetrate global markets, it has various weaknesses in line with its inability to be applied in wide range of criteria. First, it is mostly descriptive; hence do not help the marketers establish how lifestyles emerge in the society or how the linkages between societal social structure and lifestyles are defined (Kotler & Armstrong 187; Goldblatt 48). This weakness limits its applicability in broader marketing criteria of some products. Secondly, lifestyle segmentation can easily be overshadowed by group interests and beliefs (Goldblatt 49). For example, youth lifestyle applied by MTV may be limited to certain products consumed by youth, ignoring the middle-aged or older generation who may have more disposable income.
Conditions under which companies should pursue universal market segments depend on many marketing criteria for universal markets. First, the criteria for such an entry will rely on the sustainability of the market segments, i.e. the market should be large enough to give opportunity for specially designed marketing mix. The other factor is that the market should be identifiable and measurable in terms of consumption and usage. Additionally, there is a need for the market to be accessible, i.e. geographically viable in the overall marketing communication. Lastly, the market segment must be in a position to respond to the market mix appropriately, without involving any specialized individual treatment.
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