A NEW APPROACH TO COUNTRY SEGMENTATION UTILIZING MULTINATIONAL DIFFUSION PATTERNS

Country segmentation has been proposed to assist in marketing strategy decisions for international marketing managers. Such schemes typicall y consist of grouping or clustering a set of specified countries on th e basis of a wide array of macroeconomic variables. The authors focus on the merits of such country classification schemes in gaining an und erstanding about multinational diffusion patterns. More specifically, they analyze the extent to which countries belonging to the same (diff erent) grouping reveal similar (dissimilar) diffusion patterns. To tha t end, they compare the results of traditional segmentation approaches with diffusion-based country segments derived for three different con sumer durable goods. For the latter, they rely on a recently developed latent-structure methodology, here modified to accommodate the Bass d iffusion model, which simultaneously determines the segments and segme nt-level estimates of the diffusion parameters. They find that the mar ket segments derived from these two approaches differ dramatically and that macro-level variables do not fully explain differences in diffus ion patterns across countries. In addition, country segments formed on the basis of diffusion patterns often differ by product. Finally, the y discuss some managerial implications and directions for future resea rch.