When products are launched in the market, marketers usually have an aim to target a certain set of customers who are likely to buy that product. It is practically impossible to make products which will satisfy all customers. Hence, many product variants are launched keeping in mind the preferences of different set of customers or segments of market. Segments are group of customers who have same type of wants and preferences (Kotler & Keller, 2006). The American Marketing Association (2012) describes segmentation

            “As the process of subdividing a market into distinct subsets of customers that behave in the same way or have similar needs. Each subset may conceivably be chosen as a market      target to be reached with a distinct marketing strategy. To be of strategic value, the        resulting segments must be measurable, accessible, sufficiently different to justify a    meaningful variation in strategy, substantial, and durable.”

Segments are not created by marketers. To facilitate identifying different segments, they are classified on the basis of certain factors such as geography, income, gender, social class etc. Though there are various schools of thought about which variables to be used as the basis for segmentation, the prime objective is to gauge most effective similarities or differentiations. Most widely accepted variants used to segment markets are geographic (country, region, city or state), demographic (age, gender, income, occupation, education, family size, social class), psychographic (personality, lifestyle) and behavioral (attitude, user rate and readiness).

II. International Market Segmentation

          Globalization and technology have led organizations into an era where the world has become a large global village. Organizations are increasingly surpassing the domestic markets to enter unknown markets in search of better opportunities. However, operating is an international market has some inherent challenges also. Hence, it becomes important to understand the market and the consumer. Segmentation plays a critical role in preparing an organization to foray into new markets. The role and importance of segmentation in international markets is validated by the following points:-

• Identifying target markets – Segmentation plays a vital role in relating the potential market to the company’s product offering. Segmenting the markets on the basis of tastes, cuisines and eating habits, for example, can give an insight into which markets will accept the product offering of a processed food manufacturing company.
• Deciding the positioning strategy- Once the market is identified, the company can decide about positioning the product in the market like ready-to-eat food positioned for the dual income families not having enough time to cook or as a quick fix nutritional meal for children.
• Allocating resources- Detailed segmentation can be used as a basis to allocate useful resources in terms of money and people. Information such as level of competition extent of demand is vital in allocating resources in global markets.
• Method of entrance- Depending on all the factors above, the organization may decide to enter the market in any of the methods viz, as an alliance, strategic partner , export unit, take over or mergers.

III. Variants in global segmentation

An ideal segment should be able to provide a clear picture of the market. Effective segmentation should be identifiable (measurable), sizeable, accessible, stable, responsive and actionable (Kotabe & Helson, 2010). While most of the conventional variants of segmenting the market can be generalized in a global market, a more specialized approach is preferred. ANZ Bank is an ideal organization which can be studied to identify the factors important in international market segmentation.

i. ANZ Bank – An Overview

            ANZ Bank is the largest bank in Australia and operates in 32 countries globally (ANZ, 2012). It has more than 8 million customers worldwide who are served by the network of 4100 ATMs and 1300 branches. ANZ has been vying to harness the potential of East Asian emerging markets. The resilience of these markets during the global economic slowdown has made them extremely attractive for leading organizations of the world. However, the vast geographically and culturally diverse region poses many challenges for the new entrants. Some of the important factors which are important in segmenting the markets are discussed in the next section.

ii. Factors important in segmenting markets for ANZ Bank

            ANZ is an established brand in Australia, New Zealand, USA and Europe. It now aims to enter the Asia Pacific region and increase the revenues substantially. Important factors about these markets are listed below –

• Political and legal environment – For a financial institution like ANZ, stability and flexibility in terms of politico-legal environment is very critical. Banks operate in a highly regulated market and the reforms and polices of the government are used to segment markets globally. For example, markets allowing retail investments in FDI or SEZs have an attractive appeal to the global financial institutions due to the vast opportunities they offer.
• Geography – The regions like China and India are vast in terms of geography. Building a strong network over such a large area is a challenge. The regions can be segmented on the basis of proximity to each other. However, it is worth noting that regions close to each mar vary discreetly in terms of culture. For example, though China and India share geographical boundaries, both the countries are extremely different in cultures.
• Socio-economic development – Segmenting the market on the basis of gross national product or national income will give a clear picture about the potential of the market. The family size, earning pattern (solo or dual income) and spending habits are also important in designing the market segments.
• Occupation and education – These are yet another important factors for segmentation in banking industry. The level of acceptance in technology is also important because ANZ thrives on banking technology to provide customer service.
• Lifestyle and attitude- Psychographic factors such as lifestyle and attitude are important to decide the level of customization or standardization required in services.
• Existing competitors – The number of competitors in the local market and the services they offer are also important to segment markets for new entrants. ANZ would consider entering a region where the presence of global banks in minimal so that it can leverage the first mover’s advantage to the fullest.

IV. Recommendations

              Theodore Levitt (1992) gave the theory of “pluralization of consumption” which states that

              “In all product categories and places, people increasingly occupy many and often             disparate segments, and circulate among varied brands. Customer segments are no    longer discreet or distinct. They have become porous and coincident. Customers are now   segment migrants, possessed of multiple segment preferences at the same time.”

              This theory has become extremely relevant in the contemporary global markets because of the availability of options for the consumer. The same set of variants discussed in the earlier section can be used to make different type of segments in different markets. For example, on the basis of preference of cuisine, one region can be classified into segments with spicy or mild palettes while the other region can be segmented as sea-food lovers or vegetarians.

              Segmentation analysis provides the foundation for the companies to identify trends and preferences of the market and create a pool of homogenous consumers distinct from other segments. Some important variables that ANZ can utilize to conduct an effective segmentation analysis are as follows:

• Economic performance and preference –  Identifying economic preferences of the people i.e., their saving habits, investment preferences, dependency on loans etc should be used to customize the banking products for that region such as standard banking products , loan products, high-end wealth management services.
• Occupation- Segmenting the markets on the basis of occupation such as business community, service class will be helpful to decide the products to be offered. A business community will prefer commercial banking products while people having service income will want personnel banking and small investment schemes. Also, if the business community operates in a localized market, the need for well equipped branch infrastructure would be required.
• Penetration of technology- The extent to which technology has penetrated into the market is vital in banking industry. The array of products offered through digital banking may differ on the basis of technological know-how of the people.
• Political and social stability- Political stability is an important factor to be considered by the Bank before entering a new market to mitigate the financial risks involved in operations and investments. A thorough investigation is needed about the government’s long term policies and regulations on a local and national level with regards to banks and other prime commercial activities. Global organizations are largely concerned with the social up rest in many countries. It not only poses a risk to the infrastructure and personnel, but also hinders operations leading to a direct financial loss. Hence, segmenting the markets on the basis of social stability is an important factor.

V. Conclusion

          Many countries are now opening up to the foreign entrants and the provisions provided to them are extremely lucrative. However, the dynamics are also significantly different from the domestic markets. Harvesting the complete potential of the new markets need a sound and well researched background along with a “Think Global, Act Local” attitude. The extent and method of involvement in the new markets may vary depending on the management objectives of the company, but it should create a niche for the organization and sustain it in the long term

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