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Bases for Global Segmentation

Bases for Global Segmentation. Market Size & Growth GDP Rate of projected growth in income Population size and growth Demographics Geography Cultural/Psychological characteristics Usage/Consumption patterns Benefits – needs people have for the product vs. comparable products (substitutes).

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Bases for Global Segmentation

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  1. Bases for Global Segmentation • Market Size & Growth • GDP • Rate of projected growth in income • Population size and growth • Demographics • Geography • Cultural/Psychological characteristics • Usage/Consumption patterns • Benefits – needs people have for the product vs. comparable products (substitutes)

  2. Computers Sales in the United Arab Emirates Computer sales in U.S. $ millions e – estimated; * projected Source: WWW.usatrade.gov Report CGG-UAE2002-CH—001F5639

  3. Estimated market potential for personal computers in UAE • $614.48/$0.002* = 307,240 units • Personal computers account for $76.46 million (15%) of $509.71 mil in 2001; 38,230 units • If home pc market grows at same rate as total market, 2002 demand should be $76.45 mil x 1.2056 = $92,168, or 46,085 units. (less than 1% of the total pop of 3.1 billion people living in UAE). • Assuming we can acquire 5% market share in 2002, that’s 2,305 machines • * Assumes avg price = $2000

  4. Market Conditions favoring U.S. entry into UAE pc market • Law requiring compulsory IT education in schools expected shortly • Growth in construction, hotel, oil & gas industries; pc’s are used by all. • U.S. made pc’s are perceived as top quality in UAE • U.S. companies currently have 21% share of all pc imports (not including imports from U.S. factories located in non-U.S. locations). • UAE market has a per capita income of US $ 19,700. • U.S. has strong trade history & relationship with UAE. • Foreigners account for approx. 85% of the UAE population • UAE imposes no income taxes, no corporate taxes, and no foreign exchange controls

  5. Demographics & Usage* Usage data for network software provides a rough profile of UAE pc users… • There are 52,000 internet subscribers, and 143,000 internet users • User base composition (network software): • Individuals (40%) • Universities/schools (20%) • Companies (30%) • Government (10%) • Officials estimate that 20% of all UAE HHs will be connected by 2000.

  6. Psychographic/Benefit Characteristics* • Strong preference for U.S. computer products • Price important, but will pay for quality (U.S. perceived as higher quality than European; Asian countries viewed as lowest quality) • Low value placed on after-sales service. *Source: Computer Networking, Industry Sector Analysis, April 1, 2000, U.S. Department of State, Brent Greenfield, author

  7. Geography • UAE viewed as gateway to other Arab markets, especially Saudi Arabia, Kuwait, Oman, Qatar and Bahrain

  8. Industrial Sector Oil & Gas Industry Hotel & Tourism Industry Education Companies Home Sector Expatriate professionals (85% of pop) Nationals – with kids (compulsory IT) University Students Market Segmentation for PCs in UAE

  9. How to select target market(s): • Criteria for targeting (9 W’s, p. 257) • Segment size & growth potential • Potential competition • Company/market fit Select one or more segment to target based on above criteria.

  10. Nine W’s • Who buys our product? • Who doesn’t? • What need or function does our product serve? • What problem does our product solve? • What competing products address same problems/needs. • What price are customers paying? • When is product purchased? • Where is it purchased? • Why is it purchased?

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