Drivers of Export Segmentation

Effectiveness and Their Impact on

Export Performance
Adamantios Diamantopoulos, Amata Ring, Bodo B. Schlegelmilch, and Eva Doberer

ABSTRACT
In recent years, export segmentation effectiveness has attracted increasing attention in academic literature. The current
study acknowledges this constructs ability to capture the proximal outcomes of export segmentation efforts and con-
tributes to the literature by investigating its key drivers and link to export performance. The results identify export seg-
mentation commitment, export segmentation strategy, and number of segmentation bases used as the key drivers of
export segmentation effectiveness. A segments-within-countries strategy proves the most promising choice because it
affects all export segmentation dimensions, which, with the exception of cost reduction, are significantly linked to cus-
tomer satisfaction, strategic export performance, and, ultimately, financial export performance. The findings also pro-
vide support for the sequential segmentation targeting positioning process and highlight the importance of mana-
gerial commitment to export segmentation when facing heterogeneous markets.

Keywords: export segmentation effectiveness, export segmentation commitment, export segmentation strategy,
export performance

esearch has repeatedly identified export market larly important in an export context because firms

R segmentation, or the process of identifying spe-

cific segmentswhether country groups or indi-
vidual consumer groupsof potential customers with
homogeneous attributes who are likely to exhibit similar
buying behavior (Hassan and Katsanis 1991, p. 17), as
an important element of marketing strategy and a
critical factor for export success (e.g., Cooper and Klein-
schmidt 1985; Leonidou and Katsikeas 2010; Leonidou,
Katsikeas, and Samiee 2002). Segmentation is particu-
Adamantios Diamantopoulos is Chair of International Marketing,
Department of Business Administration, University of Vienna (e-mail:
adamantios.diamantopoulos@univie.ac.at). Amata Ring is Research
Fellow, Faculty of Business, Economics and Law, University of Queens-
land (e-mail: a.ring@uq.edu.au). Bodo B. Schlegelmilch is Head of the
Institute for International Marketing Management, WU Vienna, Uni-
versity of Economics and Business (e-mail: bodo.schlegelmilch@wu.
ac.at). Eva Doberer is Relationship Manager, Credite Suisse (e-mail:
eva.doberer@credit-suisse.com). The authors thank the three anony-
mous JIM reviewers for their helpful comments and suggestions on pre-
vious versions of this article. They also thank WKO Aussenwirtschaft
Austria for its help with data collection and the Australian Research
Council for contributing to the funding of one author through grant
DP110101347. Bulent Menguc served as associate editor for this article.
operating internationally face markets that are more
diverse than domestic markets; accordingly, inter-
national market segmentation is a means to manage
diversity between and within those markets (Foeder-
mayr and Diamantopoulos 2008a, p. 131). However,
notwithstanding its importance and despite several calls
for further research in this area, empirical studies of
export market segmentation have been scarce (Agarwal
2003; Agarwal, Malhotra, and Bolton 2010; Griffith,
Cavusgil, and Xu 2008; Leonidou and Katsikeas 2010;
Steenkamp and Ter Hofstede 2002). This lack of
research applies particularly to investigations focusing
on the effectiveness of segmentation endeavors in an
export context; as Foedermayr, Diamantopoulos, and
Sichtmann (2009, p. 56) observe, scant research has
investigated the effectiveness of firms export market
segmentation efforts and the resulting impact on export
performance. This is surprising, not least because seg-
Journal of International Marketing
2014, American Marketing Association
Vol. 22, No. 1, 2014, pp. 3961
ISSN 1069-0031X (print) 1547-7215 (electronic)

Drivers of Export Segmentation Effectiveness 39

mentation decisions precede virtually all marketing-mix
decisions that exporting firms must make. For example,
developing an appropriate communication and promo-
tion strategy (e.g., Hultman, Katsikeas, and Robson
2011) clearly depends on the characteristics of the spe-
cific export segments to be targeted. The same applies to
product (e.g., Hultman, Robson, and Katsikeas 2009),
price (e.g., Cavusgil, Chan, and Zhang 2003; Solberg,
Stttinger, and Yaprak 2006; Tan and Sousa 2011), and
distribution (e.g., Cavusgil, Deligonul, and Zhang 2004)
decisions. Thus, poor segmentation decisions are likely
to have negative consequences for a firms successful
export operations.
Two recent studies (i.e., Foedermayr and Diamantopou-
los 2008a; Foedermayr, Diamantopoulos, and Sicht-
mann 2009) have begun addressing this important issue
by providing a comprehensive conceptualization and
operationalization of the export segmentation effective-
ness construct. Using both qualitative and quantitative
research, the latter authors identify four dimensions of
segmentation effectiveness (i.e., targeting performance,
positioning performance, adaptability to change, and
cost reduction) and link them to export performance.
However, they do not include the drivers (i.e., antecedents)
of export segmentation effectiveness in their investiga-
tions. Consequently, little is known about the firm strate-
gies and activities that are likely to contribute to segmen-
tation success. As Foedermayr, Diamantopoulos, and
Sichtmann (2009, p. 68) themselves state, what is miss-
ing is an overall model of export market segmentation
strategy and performance [that] would help to explain
why some firms are more effective in their segmentation
efforts than others and how this ultimately affects their
overall export performance.
Against this background, the current study investigates
the key drivers of export segmentation effectiveness and
their impact on different dimensions of export perfor-
mance. To this end, we draw on Leonidou, Katsikeas,
and Samiees (2002) broader model of export perfor-
mance and embed the segmentation effectiveness con-
struct along with its antecedents and consequences in an
integrated framework. We test the latter using data
drawn from a survey of Austrian exporters. Our
intended contributions are threefold. First, we respond
to recent calls in the literature to identify key determi-
nants of export segmentation effectiveness; in doing so,
we introduce a new construct, export segmentation com-
mitment, that captures managements attitudinal and
behavioral disposition toward the segmentation process
as specifically applied to export activities. Export seg-
40 Journal of International Marketing
mentation commitment is the main driving force of a
firms export segmentation strategy and segmentation
bases used; in turn, these factors influence the firms
export segmentation effectiveness. Second, we examine
how export segmentation commitment is itself shaped
by organizational and environmental factors that
describe the overall context of export operations. Third,
we extend Foedermayr, Diamantopoulos, and Sicht-
manns (2009) study by undertaking a fine-grained
analysis of how each of the four segmentation effec-
tiveness dimensions affects different aspects of export
performancespecifically, cus tomer satisfaction,
strategic performance, and financial performance.
From a theoretical perspective, this study explicates the
complex links between and among managerial disposi-
tions (export segmentation commitment), firm practices
(export segmentation strategy and variety of segmenta-
tion bases), proximal outcomes (export segmentation
effectiveness), and bottom-line performance (export
success). From a managerial perspective, the results
highlight how export segmentation activities contribute
to the firms overall export performance and thus pro-
vide insights into the effectiveness of such activities.
Empirically based insights are particularly welcome in
this research field because many of the guidelines
offered to practitioners in the market segmentation lit-
erature are grounded more on anecdotal evidence and
common sense rather than on a solid empirical base
(Foedermayr and Diamantopoulos 2008b, p. 224).
In the section that follows, we briefly review the rele-
vant literature and develop our research framework.
Then, we describe our methodology, highlighting data
collection and construct measurement issues. Next, we
present our results and discuss their theoretical and
managerial implications. We conclude with suggestions
for further research.
CONCEPTUAL BACKGROUND
Prior Research
The bulk of the literature on export market segmenta-
tion is normative in nature, focusing on how segmenta-
tion should be carried out in international markets (Kale
and Sudharshan 1987; Kreutzer 1998; Walters 1997;
Wind and Douglas 1972) or offering illustrative seg-
mentation examples in specific settings (Day, Fox, and
Huszagh 1988; Sethi and Holton 1974; Steenkamp
2001; Ter Hofstede, Wedel, and Steenkamp 2002). In
contrast, as Table 1 shows, empirical studies are scarce,
Table 1. Empirical Studies on Export/International Segmentation

Data Sample
Authors Study Focus Country Collection Size Type of Analysis

Schuster and Bodkin Use of segmentation bases; United Qualitative N = 68 Content analysis;
(1987) evaluation of segmentation States telephone descriptive statistics
interviews
Erem and Meng Use of segmentation bases Turkey Mail survey N = 74 Descriptive
(1998) statistics;
inferential statistics
Simkin and Dibb Criteria for target market United Mail survey N1 = 34 Content analysis;
(1998) evaluation and selection Kingdom N2 = 120 descriptive statistics
Dibb and Simkin Implementation barriers for United Case study N=4 Content analysis
(2001) segmentation Kingdom
Hassan, Craft, and Use of segmentation bases United Mail survey N = 112 Descriptive statistics;
Kortam (2003) States inferential statistics
Craft (2004a) Evaluation of segmentation United Caste study and N1 = 6 Content analysis;
States survey N2 = 62 descriptive statistics;
inferential statistics
Craft (2004b) Use of segmentation bases United Case study N=6 Content analysis
States
Badgett and Stone Use of segmentation bases United Online survey N = 122 Content analysis;
(2005) States descriptive statistics
Hassan and Craft Use of segmentation bases; United Mail survey N = 112 Inferential statistics
(2005) link to positioning strategies States
Craft and Hassan Use of segmentation bases United Mail survey N = 63 Inferential statistics
(2006) States
Foedermayr, Evaluation of segmentation Austria Online survey N = 86 PLS path modeling
Diamantopoulos,
and Sichtmann
(2009)

and most focus on the segmentation bases (criteria)
exporting firms use in practice. Only three studies have
addressed issues related to measuring the success of
export segmentation efforts (i.e., Craft 2004a; Foeder-
mayr, Diamantopoulos, and Sichtmann 2009; Schuster
and Bodkin 1987), and of these three, only one uses tai-
lored measures of segmentation effectiveness (i.e., Foed-
ermayr, Diamantopoulos, and Sichtmann 2009); the
other studies capture segmentation effectiveness
through bottom-line measures of performance (e.g.,
market share, profits, growth). This practice is highly
problematic because bottom-line performance meas-
ures are also influenced by a host of other variables
(such as environmental factors, firm characteristics),
which makes the isolation of the unique impact of seg-
mentation decisions on such performance measures very
difficult (Foedermayr and Diamantopoulos 2008b, p.
258, emphasis in original).
Three other aspects of prior empirical research on
export market segmentation are worth mentioning.
First, most of the studies in Table 1 focus on describing
firm practices related to a particular segmentation issue
(e.g., segmentation base selection, segment formation)
rather than on investigating the relationships between
different aspects of the export market segmentation
process (e.g., Do different segmentation strategies have
differential impacts on the various dimensions of seg-
mentation effectiveness?). Second, and related to the
first point, export segmentation research tends to be evi-

Drivers of Export Segmentation Effectiveness 41

dence based rather than theory driven; comprehensive
theoretical models of export segmentation have yet to be
empirically tested. Third, the sample sizes used are small
(the largest being n = 122 in Badgett and Stones [2005]
study), adversely affecting both the power of the signifi-
cance tests conducted and the precision of the estimated
population parameters (Lohr 2010). In contrast with
prior research, we conceptually anchor this study in a
broader model of export performance and use partial
least squares (PLS) methodology and a larger sample of
exporters (n = 173) for empirical testing purposes. We
describe our research framework in the next section.
Research Framework
We based our framework on Leonidou, Katsikeas, and
Samiees (2002) broader export performance model,
which explicitly includes market segmentation as a key
construct (under its export targeting component).
According to Leonidou, Katsikeas, and Samiee (p. 52),
the basic operating mechanism of the model implies a
unidirectional causal relationship: managerial, organiza-
tional, and environmental factors influence the firms
export targeting and marketing mix, that in turn affect
export performance. We also apply this logic to our
framework (see Figure 1), the main difference being that
we focus explicitly on the market segmentation aspect of
export targeting.1 Specifically, as Figure 1 shows, we
posit that the context in which a firm operates (as
described by organizational and environmental factors)
influences its commitment to the export segmentation
task (a managerial characteristic). In turn, such commit-
ment is the main driver of export segmentation activi-
ties, notably the segmentation strategies pursued and the
segmentation bases used. The proximal outcomes of the
Figure 1. Research Framework Overview
42 Journal of International Marketing
firms export segmentation activities are captured by the
segmentation effectiveness construct, which we posit
affects the firms overall export performance. We now
elaborate on our research framework by introducing the
specific variables comprising its various parts and devel-
oping relevant propositions.
Export Context. In line with prior export research (e.g.,
Aaby and Slater 1989; Cavusgil and Zou 1994; Lages
2000; Leonidou 1998), we consider several situational
characteristics that describe a firms export context.
Such characteristics represent exogenous variables that
shape managements commitment to export segmenta-
tion and are reflected in both organizational and envi-
ronmental factors (Aaby and Slater 1989; Katsikeas,
Leonidou, and Morgan 2000; Lages 2000; Leonidou,
Katsikeas, and Samiee 2002; Navarro et al. 2010; Zou
and Stan 1998). With respect to organizational factors,
we specifically consider firm size (as a proxy for
resources; Bonaccorsi 1992), export experience (as an
indicator of a firms familiarity with and expertise in
export operations; Winklhofer and Diamantopoulos
2002), consultation of external exports, and export
dependence (as a measure of the importance of export
activity for the firms survival and success; Diaman-
topoulos and Inglis 1988). We propose that these orga-
nizational variables directly influence managerial com-
mitment to export market segmentation. However, we
expect that environmental factors also influence such
managerial commitment. Prominent among these fac-
tors are export market turbulence (capturing the rate of
change in export environment; Cadogan, Diamantopou-
los, and Siguaw 2002) and export diversity (reflecting
the geographical scope/spread of export operations;
Tallman and Li 1996).
Export Segmentation Commitment. The broader con-
struct of export commitment is well embedded in the
export literature (Aaby and Slater 1989; Cavusgil and
Zou 1994; Leonidou, Katsikeas, and Piercy 1998;
Navarro et al. 2010; Stump, Athaide, and Axinn 1998;
Zou and Stan 1998), so here we focus specifically on
managerial commitment to the export segmentation
task. We define such commitment as managements atti-
tudinal and behavioral disposition toward the market
segmentation process in export markets and identify it
as a critical force driving the firms export segmentation
strategies and choice of segmentation bases.
Because it is a managerial characteristic, we expect
export segmentation commitment to vary widely across
firms, largely because of differences in the export con-
text. First, managers in larger firms are more likely both
to recognize the importance and benefits of market seg-
mentation in general and to be able to commit more
resources to segmentation activities than managers in
smaller firms (Foedermayr and Diamantopoulos 2008b);
therefore, all else being equal,2 we propose a positive
link between firm size and export segmentation commit-
ment. Second, firms operating in export markets for a
considerable length of time are more likely to appreciate
buyer differences both between and within countries
and thus place greater emphasis on segmentation; there-
fore, we propose that export experience positively influ-
ences export segmentation commitment. Third, firms
that consult external experts (e.g., market research or
advertising agencies) are more likely to appreciate the
crucial role of market segmentation; therefore, we pro-
pose that consultation with external experts positively
influences export segmentation commitment. Fourth,
firms that are highly dependent on exporting for their
survival and/or success are more likely to demonstrate
greater commitment to all aspects of export operations
(Cadogan, Diamantopoulos, and Siguaw 2002; Dia-
mantopoulos and Inglis 1988), including segmentation;
therefore, we propose that export dependence positively
affects export segmentation commitment. Fifth, highly
turbulent export environments result in a greater rate of
change in buyer needs and preferences. Under such cir-
cumstances, effective market segmentation is critical so
that firms do not bypass potentially attractive opportu-
nities or competitors do not surpass them (Cavusgil and
Zou 1994). Therefore, we propose that export segmen-
tation commitment is greater under conditions of high
export market turbulence. Finally, we also expect that
export diversity positively affects export segmentation
commitment, because the greater the number of export
markets to be served, the greater the expected hetero-
geneity in customer needs and preferences (Steenkamp
and Ter Hofstede 2002; Zou, Fang, and Zhao 2003); a
primary purpose of segmentation is to cope with such
heterogeneity by making it more manageable (Dibb,
Stern, and Wensley 2002).
P1: Organizational factors, such as (a) firm size,
(b) export experience, (c) use of external
experts, and (d) export dependence, and envi-
ronmental factors, such as (e) export market
turbulence and (f) export diversity, positively
influence export segmentation commitment.
Export Segmentation Strategy. A review of the literature
on international market segmentation (Craft and Hassan
2006; Hassan and Craft 2004, 2005, 2011; Hassan, Craft,
and Kortam 2003; Hassan and Katsanis 1991; Hassan
and Samli 1994; Kale and Sudharshan 1987; Samli 1991;
Steenkamp and Ter Hofstede 2002; Walters 1997) reveals
three distinct strategic approaches to segmenting inter-
national markets. First, a firm can adopt a countries-as-
segments strategy, in which either each export destination
becomes a separate segment or several export countries
are placed into groups. The distinguishing characteristic of
this strategy is its focus on the macro (i.e., country) level
only, with no effort to segment at the micro (i.e., customer)
level. An advantage of this strategy is the availability of
secondary data at the country level, which facilitate the
segmentation process and reduce costs (Helsen, Jedidi, and
DeSarbo 1993). However, we question whether the result-
ing country segments can also be considered homogeneous
with respect to customer needs and preferences for the spe-
cific product or service the firm exports (Hassan and Craft
2011; Helsen, Jedidi, and DeSarbo 1993; Ter Hofstede,
Steenkamp, and Wedel 1999).
The second approach involves the adoption of a segments-
within-countries strategy, in which different customer
groups are targeted in different export countries. Under
this approach, micro- (i.e., customer-) level segmentation
takes place within countries; however, no formal attempt
is made to coordinate segmentation efforts across coun-
tries (Ter Hofstede, Steenkamp, and Wedel 1999). This
strategy permits the segmentation scheme to be tailored
to the needs of each individual country. At the same time,
the proliferation of segmentation schemes is likely to
result in increased complexity and cost, particularly
when the firm exports to a large number of countries.
Moreover, global segments may go undetected.
The third approach involves following a global segments
strategy, in which similar customer groups are identified
Drivers of Export Segmentation Effectiveness 43
across countries. Unlike in the previous two strategies,
location is no longer of major importance when segment-
ing markets. Instead, what matters is the extent to which
customers are similar enough to other customers, regard-
less of their location, in terms of needs and preferences to
be included in the same segment (Hassan and Craft
2011; Steenkamp and Ter Hofstede 2002). However,
identifying (and serving) true global segments can be
time consuming and costly and requires considerable
effort on the part of the exporting firm (Craft 2004a).
Note that the three export segmentation strategies are
not mutually exclusive, particularly for firms serving a
large number of export markets. For example, a firm
may treat some small countries as separate segments,
develop tailored segmentation plans for some major
export markets, and also pursue certain global segments
across its country portfolio. Thus, different segmenta-
tion strategies can coexist within the same firm. How-
ever, the relative emphasis placed on each strategy is
likely to be a function of the firms export segmentation
commitment. Specifically, in light of the greater effort
and resources required to pursue the segments-within-
countries and global segment strategies, we propose that
both strategies are associated with greater commitment
to export segmentation. In contrast, we expect only a
weak (or no) link between export segmentation commit-
ment and a countries-as-segments strategy, because the
adoption of this strategy does not require major
resource deployments on the part of the firm; practically
any exporter, regardless of whether it is truly committed
to export segmentation, can treat a country/country
group as a market segment (and doing so costs little).
P2: Export segmentation commitment positively
influences export segmentation strategy; this
influence is stronger with the segments-within-
countries and global segments strategy than
with the countries-as-segments strategy.
Segmentation Bases. Export segmentation strategy
describes the firms broad approach to decomposing the
entire export market into more homogeneous group-
ings, whereas segmentation bases refer to the actual cri-
teria (e.g., economic, geographic, psychographic) for
doing so. The normative segmentation literature is
replete with accounts of the benefits and drawbacks of
using different segmentation bases (for detailed discus-
sions, see McDonald and Dunbar 2012; Myers 1996;
Wedel and Kamakura 2000; Weinstein 2004). For our
purposes, we note that different firms in different indus-
tries are likely to use different segmentation bases to
44 Journal of International Marketing
generate customer segments, and therefore, it is not pos-
sible to generalize a priori about which segmentation
criteria/methods are most likely to contribute to seg-
mentation success. However, we can characterize firms
at a broader level by focusing on the variety of segmen-
tation bases they use when segmenting export markets.
Having a greater number of segmentation bases implies
that a firm considers a one-size-fits-all approach insuf-
ficient for generating robust and actionable segments.
However, because of the inevitable costs of using a large
number of different segmentation bases, we propose the
following:
P3: Export segmentation commitment positively
influences the variety of segmentation bases a
firm uses.
Export Segmentation Effectiveness. According to Foed-
ermayr and Diamantopoulos (2008b, p. 258, emphasis
in original), segmentation activities do not necessarily
directly result in increased performance in terms of
higher sales, profits or market shares. Bottom-line
measures are not adequate for isolating the contribution
of market segmentation decisions on firm perfor-
mance. In recognition of this limitation, Foedermayr,
Diamantopoulos, and Sichtmann (2009, p. 60) focus on
the proximal outcomes of segmentation activities and
conceptualize export segmentation effectiveness as a
composite of four dimensions capturing respectively the
firms ability to strengthen its targeting and positioning
efforts in export markets, enhance its potential to
achieve cost reductions and benefit from increased
adaptability to environmental change.
For our purposes, we retain the dimensionality of seg-
mentation effectiveness as Foedermayr, Diamantopou-
los, and Sichtmann (2009) proposenamely, targeting
performance, positioning performance, cost reduction,
and adaptability to change. However, drawing from the
segmentation literature, which suggests a sequential
process of segmentation targeting positioning (e.g.,
Doyle and Saunders 1985; Piercy and Morgan 1993;
Weinstein 2004; Wind 1978), we also introduce a link
between targeting performance and positioning perfor-
mance. Thus, we recognize that targeting is not an end
in itself but must be followed by appropriate positioning
to be beneficial for the firm (Doyle and Saunders 1985).
We further posit that the firms export segmentation
strategy and operation sophistication directly affect tar-
geting performance, cost reduction, and adaptability to
change but indirectly affect positioning performance
(i.e., fully mediated by targeting performance).
In light of the absence of research on the impact of dif-
ferent segmentation strategies on segmentation effective-
ness (Foedermayr, Diamantopoulos, and Sichtmann
2009), it is difficult to predict which of the three seg-
mentation strategies has the strongest impact on the
various effectiveness dimensions. We could speculate
that targeting (and, thus, positioning) performance and
adaptability to change are likely to be greater when a
firm follows a segments-within-countries strategy. Con-
versely, we might expect the countries-as-segments and
global segments strategies to have a stronger impact on
the cost reduction dimension of segmentation effective-
ness. Moreover, export segmentation commitment may
moderate the relationship between the export segmenta-
tion strategy adopted and segmentation effectiveness,
such that under high (low) commitment, the impact of
strategy on effectiveness is stronger (weaker).
Regarding a firms segmentation bases, we also expect
two effects. First, we expect segmentation bases to
directly influence segmentation effectiveness; the greater
the variety of segmentation bases the exporter uses, the
more likely that the export segmentation process will be
successful. Second, we expect the variety of segmenta-
tion bases to moderate the influence of segmentation
strategies on segmentation effectiveness. Specifically,
when a firm employs a greater number of segmentation
bases, the impact of segmentation strategies on effective-
ness should be stronger than when a firm uses only a
few bases. Thus, we propose that the variety of segmen-
tation bases positively leverages the effects of the
adopted segmentation strategies on segmentation suc-
cess, apart from its direct impact on the latter.
P4: (a) Export segmentation strategies and (b) the
variety of segmentation bases positively influ-
ence export segmentation effectiveness. Fur-
thermore, (c) export segmentation commit-
ment and (d) the variety of segmentation bases
both positively moderate the segmentation
strategyeffectiveness link.
Export Performance. The exporting literature evidences
broad consensus that export performance is a multifac-
eted construct that can be defined in various ways (Al-
Khalifa and Morgan 1995; Diamantopoulos 1999; Kat-
sikeas, Leonidou, and Morgan 2000; Matthyssens and
Pauwels 1996; Oliveira, Cadogan, and Souchon 2012;
Sousa 2004). Here, we draw on the work of Hooley et
al. (2005) and distinguish three aspects of export perfor-
mance: customer satisfaction, strategic performance,
and financial performance (see also Katsikeas, Samiee,
and Theodosiou 2006). Customer satisfaction as a part of
(export) performance emphasizes that the goal of market-
ing activities is often to establish satisfied and loyal cus-
tomers (Hooley, Broderick, and Mller 1998). We con-
sider customer satisfaction a key aspect of export
performance influenced by segmentation effectiveness
because the demand side of market conditions requires
the transformation of any firms resources into an offering
that customers can view and experience and determine
whether or not they wish to purchase it (Srivastava,
Fahey, and Christensen 2001, p. 783). Furthermore, mar-
ket segmentation can improve customer understanding
and customer orientation (Dibb and Simkin 2009; Dibb,
Stern, and Wensley 2002) and enhance relationship
building (Craft 2004a). Consequently, we propose that
the targeting performance, positioning performance,
and adaptability to change dimensions all affect cus-
tomer satisfaction. However, we posit no such effect for
the cost reduction dimension. Instead, we propose that
the latter directly influences financial export perfor-
mance (which is also a function of both customer satis-
faction and strategic performance; Anderson, Fornell,
and Lehmann 1994; Hooley et al. 2005; Rust and
Zahorik 1993; Zou and Cavusgil 2002).
Segmentation effectiveness measures the outcomes of a
successful implementation of a marketing strategy, and
thus, Morgan, Katsikeas, and Vorhiess (2012) recent
demonstration of implementations influence on strategic
export performance leads us to expect an impact of tar-
geting performance, positioning performance, and
adaptability to change on strategic export perfor-
mancethat is, on the firms global market share and
competitive position relative to major rivals (Zou and
Cavusgil 2002, p. 45). Note that we expect the impact of
targeting performance on both customer satisfaction and
strategic performance to be indirectthat is, mediated
through the positioning performance dimension
because of the causal link between targeting and posi-
tioning performance for reasons we previously discussed.
P5: Perceived customer satisfaction and strategic
export performance are directly and positively
influenced by (a) positioning performance and
(b) adaptability to change and indirectly by
(c) targeting performance. Financial export
performance is directly and positively influ-
enced by (d) cost reduction.3
Figure 2 shows the expected relationships among the
variables in our research framework and thus offers a
navigation chart for the research results.
Drivers of Export Segmentation Effectiveness 45
Figure 2. Research Framework: Variable Relationships
RESEARCH METHOD
Data Collection and Sample Description
The data were provided by Auenwirtschaft sterreich,
a branch of the Austrian Chamber of Commerce that
supports export efforts, and consisted of 194 exporting
firms that had completed an online questionnaire; the
respondents were all senior executives (e.g., chief execu-
tive officers, export directors, export department heads)
with direct responsibility for export decisions. We
excluded 21 firms because of poorly completed ques-
tionnaires, resulting in 173 fully usable responses. Of
the responding companies, 80% were independent com-
panies (either privately owned or public limited compa-
nies), and 12% were part of a global company; the rest
had other corporate structures. Half the companies were
founded in the preceding 20 years, and their export
experience ranged from 1 to 125 years, with a median
of 12 (M = 20, SD = 21) years. On average, the firms
had 191 full-time employees (range from 1 to 7,800).
Almost all (95%) exported to the European Union, 64%
to other European countries, 38% to Asia, 36% to
Africa and/or the Middle East, 29% to North America,
20% to South or Central America, and 19% to Aus-
tralia and/or New Zealand. Half the companies
exported to 10 countries or fewer (M = 20, SD = 25),
and the average export dependence (i.e., export-to-total
sales ratio) was 53% (SD = 33%).
46 Journal of International Marketing
To judge the representativeness of our sample, we com-
pared it with official statistical data on exporting.
According to Statistik Austria, the national statistics
office, 43% of all Austrian exporters sell to a single
country only; however, the volume of exports accounted
for by this group is only 2% (Hodel 2004, 2012). This
group is of little relevance for the current study because
firms with a single export destination are unlikely to
engage in systematic segmentation activities (or to par-
ticipate in a study on export segmentation). This is
indeed reflected in the composition of our sample: only
2% of the respondent firms export to a single country
only. The majority of our respondents export to
between 2 and 19 countries (66%) and the rest (32%)
to 20+ countries. The corresponding groups in the
population are 52% and 6% and account for 30% and
68% of all exports, respectively (Hodel 2012). Thus,
our sample seems well representative of the Austrian
companies that are responsible for the bulk of the coun-
trys export activity and for which export segmentation
is likely to be important, considering the large number
of export markets served.4
Construct Measurement
Table 2 lists the measurements of all constructs in our
model, together with relevant psychometric information.
We measured firm size by the log-transformed number of
Table 2. Construct Measurement

Standardized Cronbachs
Constructs and Indicators Loadings t-Value a CR AVE

Firm Size
Firm size in (log-transformed) number of employees
Export Experience
Years the firm has been exporting
Export Dependence
Proportion of total sales derived from exports
External Experts
Number of external experts at least sometimes consulted
Export Market Turbulence .80 .86 .61
In the export market we operate
customers preferences of product features change very rapidly. .78* 3.86
customers preferences of brands change very rapidly. .79* 4.02
customers tend to look for new products all the time. .71* 3.41
new customers tend to have product-related needs that are differ- .83* 4.60
ent from those of our current customers.
Export Diversity
Number of countries to which the firm is exporting
Export Segmentation Commitment .94 .96 .81
Segmenting export customers is an activity of high importance in our .89* 44.66
company.
Our firm devotes a lot of resources (i.e., people, time, and money) to .83* 31.73
export market segmentation efforts.
We continuously try to improve our export customer segmentation .90* 41.52
efforts.
Segmenting export customers is extremely important to us. .94* 98.96
Accurate segmentation of export customers is crucial for the success .93* 80.29
of our export operations.
Export Segmentation Strategy
Countries-as-segments: Each of our export countries constitutes a
single segment.
Segments-within-countries: We form multiple segments in each export
country, but the segments built differ from export country to export
country.
Global segments: We form multiple segments in each export country,
and the segments built are the same in each export country.
Segmentation Bases
Number of variables at least sometimes used for segmentation
Targeting Performance .88 .91 .62
We can easily tailor our product range to the needs of our export tar- .68* 9.84
get groups.
Being knowledgeable about the different needs of our export cus- .83* 20.43
tomers enables us to adapt our offerings accordingly.
Tailoring our offerings enables us to get closer to export customers .82* 17.29
ideal constellation of attributes.
We can easily address the specificities of our export customers by .82* 18.87
drawing on the differences between and similarities among them.

Drivers of Export Segmentation Effectiveness 47

Table 2. Continued

Standardized Cronbachs
Constructs and Indicators Loadings t-Value a CR AVE

By designing marketing strategies around export target customers, we .74* 14.95

can closely align our offerings with export customers needs.
Knowledge of the various benefits different export customers seek from .83* 35.43
a product helps us to develop a tailor-made marketing strategy.
Positioning Performance .86 .90 .65
Compared to our competitors, we offer our export customers prod- .85* 29.86
ucts with unique features or attributes.
Our products have a unique standing in the marketplace. .85* 30.07
Compared to competing brands, our brands give our export cus- .86* 38.93
tomers a convincing reason to buy.
Export customers are more aware of our brands than of our main .77* 17.95
competitor brands.
When we sell a brand into different export markets, we create a .70* 14.08
brand image that transcends national borders.
Cost Reduction .89 .92 .68
Our export segmentation efforts result in
an efficient allocation of export marketing-mix expenditures. .83* 31.27
reduced export marketing-mix costs. .83* 23.48
improved controlling of export marketing expenses in accordance .85* 30.56
with export target market strategies.
lower overall costs to serve export customers. .80* 17.63
an optimization of export sales activities subject to resource .82* 23.62
capabilities.
Adaptability to Change .66 .86 .75
We rapidly respond to competitive actions that threaten us in our .87* 24.69
export target markets.
We make use of emerging market trends to offer our export cus- .87* 28.89
tomers add-on products/services to existing products which they are
already using.
Perceived Customer Satisfaction .91 .94 .85
How satisfied are your export customers
with your offerings? .93* 46.09
with how they are treated by your firm? .95* 66.44
with how their complaints are handled by your firm? .89* 26.06
Strategic Export Performance .79 .90 .83
In relation to your competitors, how would you rate the attainment of
export market share? .91* 51.86
rate of new market entry? .91* 42.81
Financial Export Performance .88 .92 .80
In relation to your competitors, how would you rate the attainment of
export sales? .93* 70.08
export profits? .84* 20.84
export growth? .91* 64.76

*p < .001 for one-tailed tests.

aMeasured on a three-point scale.
Notes: For firm size, export involvement, export experience, export diversity, and segmentation bases, exact values are used. All remaining constructs items are measured on
a seven-point scale, unless otherwise noted. Anchors are 1 = strongly disagree and 7 = strongly agree for market turbulence, export segmentation commitment, export
segmentation strategy, targeting performance, positioning performance, cost reduction, and adaptability; 1 = very disappointed and 7 = very satisfied for customer satis-
faction; and 1 = much worse and 7 = much better for strategic and financial export performance. CR = composite reliability, and AVE = average variance extracted.

48 Journal of International Marketing

employees (Erramilli 1991), export experience by the
years a firm has been exporting (Winklhofer and Dia-
mantopoulos 2002), export dependence as the export-
to-total sales ratio (Diamantopoulos and Inglis 1988;
Katsikeas 1994), export diversity by the number of
countries to which a firm exports (Dhanaraj and
Beamish 2003),5 and export market turbulence accord-
ing to Jaworski and Kohlis (1993) well-established
scale.
For export segmentation commitment, we developed
our own five-item scale, which captured managers atti-
tudes and behavior toward the market segmentation
process. For export segmentation strategy, we itemized
the three strategic options and asked respondents to
specify their agreement with each option. This approach
acknowledges that the fit of the strategy with its context
is critical (Hultman, Robson, and Katsikeas 2009). We
specified segmentation bases as the number of distinct
segmentation variables the firm used (based on a check-
list of 21 criteria for segmenting business-to-consumer
markets and 14 criteria for segmenting business-to-
business markets).
For export segmentation effectiveness, we adapted the
basic four-dimensional structure developed by Foeder-
mayr and colleagues (Foedermayr and Diamantopoulos
2008a; Foedermayr, Diamantopoulos, and Sichtmann
2009), which consisted of targeting performance, posi-
tioning performance, adaptability to change, and cost
reduction.6 Originally, the dimensions were operational-
ized with formative indicators; however, the majority of
items under each dimension in the original model seem
to share a common cause, which suggests that reflective
measurement is more appropriate. The psychometric
properties shown in Table 2 strongly support this meas-
urement respecification.
For strategic export performance and financial export
performance, we adapted items from Zou and Cavusgil
(2002) and Zou, Taylor, and Osland (1998). The indica-
tors for strategic export performance are export market
share and rate of new market entry, and export financial
performance consists of export sales, export profits, and
export growth. Customer satisfaction comprises three
items about offerings, how consumers are treated, and
how their complaints have been handled. Consistent
with other investigations of export performance (e.g.,
Hooley et al. 2005; Hultman, Robson, and Katsikeas
2009; Morgan, Kaleka, and Katsikeas 2004), we relied
on self-reported measures.
RESULTS
To estimate the hypothesized relationships outlined in
Figure 2, we applied PLS path modeling with SmartPLS
2.0 software (Ringle, Wende, and Will 2005). We opted
for the PLS approach because Reinartz, Haenlein, and
Henselers (2009) simulation study shows that PLS out-
performs covariance-based structural equation models
in parameter accuracy when the sample size has between
100 and 250 observations. Following Henseler, Ringle,
and Sinkovicss (2009) recommendations, we used
5,000 bootstrapping samples to calculate significance
levels. We report significance values based on one-tailed
tests to correctly test our hypothesized directional rela-
tionships (Mohr 1990).
Measurement Model
For all multi-item construct measures, reliability and
convergent validity are highly satisfactory (see Table 2).
To assess discriminant validity, we applied Fornell and
Larckers (1981) criterion and found it to be satisfied; all
constructs average variances extracted are higher than
the squared correlations of the relevant construct with
any other construct.
Because we obtained all our measures from the same
source, we inspected the data for possible common
method bias. While we took great care to minimize the
liability to such biases when developing the question-
naire, we also applied appropriate ex post procedures.
First, we conducted Harmans single-factor test by enter-
ing all construct indicators in an exploratory factor
analysis; the unrotated factor solution revealed that no
single factor could explain the majority of the variance
(with 25% being the most variance accounted for by
any one factor). Second, we followed Lindell and Whit-
ney (2001) and used the smallest observed correlation
among the manifest variables as a proxy for common
method variance (Podsakoff et al. 2003, p. 893). All
significant correlations between the variables remained
significant after we adjusted them downward on the
basis of this proxy, indicating that common method
variance is not a concern.
Structural Model
Table 3 reports the results of the PLS estimation, includ-
ing the standardized path coefficients (b), the correspon-
ding t-values, and the relevant effect sizes (f) based on
Cohens (1988) guidelines.7 To determine the models
Drivers of Export Segmentation Effectiveness 49
Table 3. Structural Model

Paths b t-Value f

Antecedents of Export Segmentation Commitment

Firm size export segmentation commitment .26*** 3.56 .06
Export experience export segmentation commitment .18* 2.09 .03
External experts export segmentation commitment .12* 2.10 .02
Export dependence export segmentation commitment .04 .46 .00
Export market turbulence export segmentation commitment .19** 2.34 .04
Export diversity export segmentation commitment .11* 1.70 .01
Export Segmentation Commitment Influence on Export Segmentation Strategy and Segmentation Bases
Export segmentation commitment countries-as-segments strategy .17* 2.15 .03
Export segmentation commitment segments-within-countries strategy .43*** 7.16 .23
Export segmentation commitment global segments strategy .39*** 5.82 .18
Export segmentation commitment segmentation bases .38*** 6.04 .17
Export Segmentation Strategy Influence on Export Segmentation Effectiveness
Countries-as-segments-strategy targeting performance .16* 2.20 .03
Segments-within-countries strategy targeting performance .23*** 3.70 .06
Global segments-strategy targeting performance .12* 1.68 .02
Countries-as-segments strategy adaptability .08 1.15 .01
Segments-within-countries strategy adaptability .26*** 3.92 .07
Global segments strategy adaptability .00 .08 .00
Countries-as-segments strategy cost reduction .21** 3.09 .05
Segments-within-countries strategy cost reduction .18** 2.54 .04
Global segments strategy cost reduction .15* 2.03 .03
Targeting performance positioning performance .50*** 7.10 .33
Segmentation Bases Influence on Export Segmentation Effectiveness
Segmentation bases targeting performance .17* 2.30 .04
Segmentation bases adaptability .24*** 3.45 .06
Segmentation bases cost reduction .27*** 3.84 .08
Export Segmentation Effectiveness Influence on Export Performance
Positiong performance customer satisfaction .24** 2.40 .05
Adaptability customer satisfaction .09 .95 .01
Positioning performance strategic export performance .20** 2.56 .03
Adaptability strategic export performance .20* 2.28 .03
Customer satisfaction strategic export performance .14* 1.95 .02
Customer satisfaction financial export performance .09** 2.46 .02
Strategic export performance financial export performance .80*** 24.37 1.82
Cost reduction financial export performance .01 .20 .00

*p < .05 for one-tailed tests.

**p < .01 for one-tailed tests.
*** p < .001 for one-tailed tests.
Notes: b = standardized path coefficient, and f = effect size. Nonsignificant relationships are in italics.

50 Journal of International Marketing

predictive ability, in addition to the R, we computed the
StoneGeisser Q (Geisser 1975; Stone 1974) for all
endogenous constructs by means of blindfolding (Tenen-
haus et al. 2005); Table 4 reports the results.
Impact of Organizational and Environmental Factors.
Consistent with expectations, firm size (b = .26, p <
.001, f = .06), consultation of external experts (b = .12,
p < .05, f = .02), export market turbulence (b = .19,
p < .01, f =.04), and export diversity (b = .11, p < .05,
f = .01) all have positive effects on export segmentation
commitment. Export dependence has no significant
impact, while, contrary to expectations, export experi-
ence registers a negative impact on commitment. Thus,
the results lend support to P1a, P1c, P1e, and P1f but not
to P1b and P1d. In total, the export context variables
explain 14% of the variance in export segmentation
commitment, with a predictive ability (Q) of .11.
segments strategy (b = .17, p < .05, f = .03) is reflected
in the low R (.03) and Q (.03) values compared with
the segments-within-countries (R = .19, Q = .19) and
global segments (R = .15, Q = .15) strategies. In addi-
tion, consistent with P3, export segmentation commit-
ment affects the variety of segmentation bases signifi-
cantly and substantially (b = .38, p < .001, f = .17).
Calculation of the total effects further underscores the
importance of export segmentation commitment on
both proximal outcomes of segmentation endeavors and
bottom-line performance measures. The total effects are
.24 (p < .001) on targeting performance, .12 (p < .001)
on positioning performance, .27 (p < .001) on cost
reduction, .22 (p < .001) on adaptability to change, .05
(p < .05) on customer satisfaction, .07 (p < .01) on
strategic export performance, and .06 (p < .05) on
financial export performance.

Impact of Export Segmentation Commitment. The Impact of Export Segmentation Strategy. The different
expected influence of export segmentation commitment export segmentation strategies show distinct influences
as a driver of the firms export segmentation strategy and on the various export segmentation effectiveness dimen-
variety of segmentation bases is fully confirmed. Export sions. Specifically, the countries-as-segments strategy
segmentation commitment significantly influences all the positively and directly affects both targeting perfor-
segmentation strategy options but has a particularly mance (b = .16, p < .05, f = .03) and cost reduction
strong impact on the segments-within-countries strategy (b = .21, p < .01, f = .05). Its impact on positioning
(b = .43, p < .001, f = .23) and the global segments performance is also significant but indirect (mediated
strategy (b = .39, p < .001, f = .18), which is fully in line through targeting performance, which positively affects
with P2. The (much) weaker influence on countries-as- positioning performance; b = .50, p < .001, f = .33). We
report the formal mediation analysis based on Preacher
and Hayess (2004, 2008) procedures subsequently. The
segments-within-countries strategy positively influences
Table 4. Variance Explained and Predictive Ability for targeting performance (b = .23, p < .001, f = .06) and,
the Endogenous Constructs through it, positioning performance, as well as adapt-
ability to change (b = .26, p < .001, f = .07) and cost
reduction (b = .18, p < .01, f = .04). Finally, the global
Construct R Q
segments strategy has a positive effect on targeting
Export segmentation commitment .14 .11 performance (b = .12, p < .05, f = .02) and cost reduc-
Segmentation bases .15 .13 tion (b = .15, p < .05, f = .03) but no effect on adapt-
ability. These results are consistent with P4a.
Countries-as-segments strategy .03 .03
Global segments strategy .15 .15
Impact of Segmentation Bases. The variety of segmenta-
Segments-within-countries strategy .19 .19 tion bases the firm uses is directly and positively linked
Targeting performance .18 .10 to all export segmentation effectiveness dimensions: tar-
Positioning performance .25 .15 geting performance (b = .17, p <.05, f = .04), cost
reduction (b = .27, p < .001, f = .08), and adaptability
Cost reduction .24 .16
to change (b = .24, p < .001, f = .06). It is also indirectly
Adaptability .17 .11
linked to positioning performance. Thus, the results
Customer satisfaction .09 .06 provide support for P4b.
Strategic export performance .17 .13
Financial export performance .68 .52 To examine the hypothesized moderating influences of
export commitment and variety of segmentation bases

Drivers of Export Segmentation Effectiveness 51

on the relationship between export segmentation strate-
gies and segmentation effectiveness, we applied the
product-term approach (Henseler and Fassott 2010). To
do so, we calculated separate models for each of the
three segmentation strategies as (exogenous) predictors,
export segmentation commitment (or variety of segmen-
tation bases) as the moderator, and the three segmenta-
tion effectiveness dimensions, which are directly influ-
enced by export segmentation commitment and variety
of segmentation bases, as the dependent variables.
As the results in Table 5 show, the hypothesized moder-
ating effects do not hold for any of the segmentation
effectiveness dimensions, offering no support for P4c
and P4d.8 Thus, export segmentation strategy and
export segmentation commitment have independent,
additive effects on segmentation effectiveness but do not
interact. The same applies to the number of segmenta-
tion bases.
Impact of Export Segmentation Effectiveness. Of the
three export segmentation effectiveness dimensions we
expected to directly influence export outcomes, posi-
tioning performance affects both strategic export perfor-
mance (b = .20, p < .01, f = .03) and customer satisfac-
tion (b = .24, p < .01, f = .05). Strategic export

Table 5. Moderation Hypotheses

Moderating Influence of Export Segmentation Commitment b t-Value

Countries-as-Segments Strategy
Export segmentation commitment targeting performance .44*** 6.97
Export segmentation commitment adaptability .39*** 5.74
Export segmentation commitment cost reduction .46*** 8.21
Export segmentation commitment countries-as-segments .17* 2.18
Countries-as-segments targeting performance .13* 1.96
Countries-as-segments adaptability .07 1.03
Countries-as-segments cost reduction .17** 2.60
Countries-as-segments export segmentation commitment targeting performance .02 .17
Countries-as-segments export segmentation commitment adaptability .03 .28
Countries-as-segments export segmentation commitment cost reduction .00 .05
Segments-Within-Countries Strategy
Export segmentation commitment targeting performance .40*** 5.27
Export segmentation commitment adaptability .29*** 4.24
Export segmentation commitment cost reduction .45*** 6.20
Export segmentation commitment segments-within-countries .43*** 7.21
Segments-within-countries targeting performance .15* 1.93
Segments-within-countries adaptability .22** 2.80
Segments-within-countries cost reduction .10 1.30
Segments-within-countries export segmentation commitment targeting performance .00 .02
Segments-within-countries export segmentation commitment adaptability .05 .40
Segments-within-countries export segmentation commitment cost reduction .01 .05
Global Segments Strategy
Export segmentation commitment targeting performance .47*** 6.45
Export segmentation commitment adaptability .44*** 5.15
Export segmentation commitment cost reduction .47*** 7.54
Export segmentation commitment global segments .39*** 5.70
Global segments targeting performance .02 .34
Global segments adaptability .06 .73
Global segments cost reduction .06 .87
Global segments export segmentation commitment targeting performance .02 .18
Global segments export segmentation commitment adaptability .01 .07
Global segments export segmentation commitment cost reduction .01 .17

52 Journal of International Marketing

Table 5. Continued

Moderating Influence of Segmentation Bases b t-Value

Countries-as-Segments Strategy
Segmentation bases targeting performance .30*** 4.53
Segmentation bases adaptability .30*** 4.75
Segmentation bases cost reduction .35*** 6.33
Countries-as-segments targeting performance .18*** 2.48
Countries-as-segments adaptability .12* 1.67
Countries-as-segments cost reduction .22*** 3.32
Countries-as-segments segmentation bases targeting performance .03 .43
Countries-as-segments segmentation bases adaptability .02 .32
Countries-as-segments segmentation bases cost reduction .06 .88
Segments-Within-Countries Strategy
Segmentation bases targeting performance .42*** 3.03
Segmentation bases adaptability .26*** 3.94
Segmentation bases cost reduction .32*** 5.30
Segments-within-countries targeting performance .46*** 3.39
Segments-within-countries adaptability .28*** 4.27
Segments-within-countries cost reduction .22*** 3.07
Segments-within-countries segmentation bases targeting performance .31 1.63
Segments-within-countries segmentation bases adaptability .09 1.39
Segments-within-countries segmentation bases cost reduction .05 .72
Global Segments Strategy
Segmentation bases targeting performance .30*** 4.40
Segmentation bases adaptability .32*** 4.72
Segmentation bases cost reduction .34*** 5.38
Global segments targeting performance .16** 2.26
Global segments adaptability .02 .27
Global segments cost reduction .16** 2.08
Global segments segmentation bases targeting performance .10 1.39
Global segments segmentation bases adaptability .09 1.32
Global segments segmentation bases cost reduction .07 0.86

*p < .05 for one-tailed tests.

**p < .01 for one-tailed tests.
***p < .001 for one-tailed tests.
Notes: b = standardized path coefficient. Nonsignificant relationships are in italics.

performance is further affected by adaptability to
change (b = .20, p < .05, f = .03)9 and indirectly by tar-
geting performance (see Table 6). These results offer
support for P5aP5c. For financial export performance,
positioning performance again proves the most impor-
tant of all segmentation effectiveness dimensions, with
the highest total effect of .21 (p < .001). The total effects
of adaptability and targeting performance on financial
performance are .17 (p < .01) and .11 (p < .01), respec-
tively. Surprisingly, cost reduction has no significant
effect on financial export performance, thus providing
no support for P5d.
Mediation Analysis. To formally test the hypothesized
segmentation targeting positioning sequence, we
used Preacher and Hayess (2004, 2008) bootstrapping
approach for determining the significance of the indirect
effects. Following Zhao, Lynch, and Chen (2010), we
accept a mediation hypothesis as soon as the indirect
path is significantthat is, its empirical confidence

Drivers of Export Segmentation Effectiveness 53

Table 6. Mediation Hypotheses

Indirect Direct Path

IV M DV Effect Lower CI Upper CI IV DV

Countries-as-segments strategy targeting performance positioning

performance .10* .03 .20 .10
Segments-within-countries strategy targeting performance positioning
performance .15** .07 .26 .10
Global segments strategy targeting performance positioning performance .10* .03 .20 .01
Targeting performance positioning performance customer satisfaction .12** .03 .23 .11
Targeting performance positioning performance strategic export
performance .09* .02 20 .21*

*p < .05 for one-tailed tests.

**p < .01 for one-tailed tests.
Notes: Nonsignificant relationships are in italics. IV = independent variable, M = mediator, DV = dependent variable, CI = confidence interval.

interval does not include zero. To calculate significance
values and confidence intervals, we drew 5,000 boot-
strapping samples by using Preacher and Hayess (2008)
SPSS macro. As Table 6 shows, the mediation hypothe-
sis holds for all antecedents of export segmentation
effectiveness; that is, we can show that targeting perfor-
mance mediates their influence on positioning perfor-
mance. In turn, positioning performance mediates the
impact of targeting performance on both customer sat-
isfaction and strategic export performance.
Additional Analysis. As a check on the robustness of our
model specification, we estimated an alternative model
that included control paths from all exogenous variables
(i.e., the organizational and environmental factors) to
export performance. Only firm size returned a significant
path (b = .10, p < .05) on financial export performance,
and we observed no material changes on the other path
coefficients as a result of specifying these controls.
We also sought to confirm the unique contribution of
the segmentation effectiveness construct on financial
export performance (beyond the impact of segmentation
strategy) by comparing two models. The first model
included only direct paths from the three segmentation
strategies to financial export performance and resulted
in an R2 of .10. The second model also incorporated the
four segmentation effectiveness dimensions and pro-
duced an R2 of .17. These results show that there is a
substantial improvement in explanatory power when
the segmentation effectiveness dimensions are taken into
account (DR2 = .07).
DISCUSSION AND IMPLICATIONS
This study adds to the limited body of empirical
research on export market segmentation by building on
the export segmentation effectiveness construct recently
introduced by Foedermayr and colleagues (Foedermayr
and Diamantopoulos 2008a; Foedermayr, Diaman-
topoulos, and Sichtmann 2009). By not only linking this
construct to export performance but also embedding it
in a broader research framework, we shift the focus to
the constructs main driversnamely, export segmenta-
tion strategy and variety of segmentation basesboth of
which are, in turn, strongly influenced by the firms
export segmentation commitment. We contribute to lit-
erature in several ways.
First, and perhaps most important from both a theoreti-
cal and a managerial point of view, our findings show
that being effective in export segmentation matters.
Three of the four segmentation effectiveness dimensions
significantly influenced (directly and/or indirectly)
export performance; the only exception was cost reduc-
tion, which failed to register a significant link. The
managerial implication of these results is that effective
segmentation in the export field does pay off; enhanced
targeting, positioning, and adaptability to change result-
ing from segmentation activities do contribute to the
firms export success and therefore should serve as eval-
uative criteria of segmentation efforts.
Second, our findings reveal that not all export segmen-
tation strategies are equally effective. Specifically,
whereas a segments-within-countries strategy positively

54 Journal of International Marketing

affects all four segmentation effectiveness dimensions
and is, ultimately, related to all three export perfor-
mance dimensions, the same cannot be said for the other
strategies. In this context, only the segments-within-
countries strategy has significant total effects on export
performance (.08 and .07 for strategic performance and
financial performance, respectively). Although both the
countries-as-segments strategy and the global segments
strategy have an impact on the segmentation effective-
ness dimensions (see Table 3), these effects are not suffi-
ciently strong to carry through to export performance.
This important finding inevitably raises questions about
the alleged benefits of particularly the global segments
strategy as discussed in the normative literature (e.g.,
Hassan and Katsanis 1991; Hassan and Samli 1994).
From a managerial perspective, the results on the impact
of segmentation strategies serve to emphasize the impor-
tance of also taking intracountry differences into account
when segmenting export markets. In line with Hassan and
Craft (2011), who advocate a hybrid segmentation
approach that includes both macro and micro bases for
international segmentation, our results suggest that the
most time-consuming and resource-intensive segmenta-
tion strategythat is, segments-within-countriespays
off the most. Especially if a firms goal is to increase adapt-
ability through segmentation, it should follow a segments-
within-countries strategy by taking into account the dif-
ferences both within and across countries, because this
strategy is the only one that leads to increased perfor-
mance in this area (in addition to positively affecting the
other segmentation effectiveness dimensions).
Third, our study reveals that not only is the choice of
segmentation strategy important but so is the variety of
segmentation bases the firm uses. We found that the lat-
ter is related to all export segmentation effectiveness
dimensions (and, ultimately, to export performance).
Although we could not establish any interaction effects
with segmentation strategies, the number of segmenta-
tion bases explains additional variance in segmentation
effectiveness (i.e., beyond that explained by the segmen-
tation strategies alone). Thus, to gain the most from
their export segmentation efforts, firms should not only
focus on the choice of segmentation strategy but also
carefully consider the specific segmentation variables to
use when implementing the strategy. A one-size-fits-
all approach is unlikely to be effective in terms of
selecting segmentation bases.
Fourth, by introducing the export segmentation commit-
ment construct to the literature, our study offers a con-
ceptual link between a firms export context on the one
hand and its export segmentation activities on the other
hand. We show that export segmentation commitment is
the key driver of both export segmentation strategy and
the segmentation bases the firm uses. The importance of
this construct is further underscored by its significant
total effects on all export segmentation effectiveness
dimensions and export performance outcomes. Conse-
quently, the general argument that managers commit-
ment to and interest in exporting is important for success
(Cavusgil and Zou 1994; Leonidou, Katsikeas, and
Piercy 1998; Zou and Stan 1998) holds for export seg-
mentation as well. High export segmentation commit-
ment is particularly prevalent among firms serving a
large number of export markets and facing a turbulent
export environment. These conditions create consider-
able market heterogeneity, and segmentation helps to
homogenize market heterogeneity and coincidentally
allow for improved organizational performance by tar-
geting specific segments of the market (Dibb, Stern, and
Wensley 2002, p. 113). Note that the less experienced
exporters seem to demonstrate greater commitment to
the export segmentation task. One explanation for this
surprising finding is that more experienced exporters
may have successfully segmented their markets in the
past and thus have little reason to pursue additional seg-
mentation efforts. Another explanation is that more
experienced exporters believe they already know their
export markets and thus put less emphasis on segmenta-
tion as a company activity. Note that the (negative) link
between export experience and commitment is independ-
ent of company size; indeed, larger firms show greater
commitment to segmentation (probably reflecting better
appreciation of segmentation benefits and greater avail-
ability of resources) than smaller firms.
Regarding export dependence, its lack of a relationship to
segmentation commitment suggests that a high export-to-
total sales ratio does not, in itself, encourage managerial
attention and willingness to commit resources to export
segmentation activities, possibly because high export
dependence does not automatically also imply a large
number of export destinations or a turbulent export envi-
ronment (both of which affect export segmentation com-
mitment). Alternatively, it may reflect a lack of interest or
motivation among firms with an already high degree of
export involvement to further increase their export opera-
tions (either by targeting new export markets or by iden-
tifying new segments in existing markets).
Fifth, our mediation analysis (see Table 6) supports the
classical segmentation targeting positioning process
Drivers of Export Segmentation Effectiveness 55
(e.g., Doyle and Saunders 1985; Piercy and Morgan
1993; Weinstein 2004), thus indicating that this sequence
can indeed occur in practice. This finding provides an
empirical challenge to the argument that the so-called
normative view of market segmentation ignores the
real world (Daneels 1996; Sausen, Tomczak, and Her-
rmann 2005). Note that our findings do not necessarily
discount the assertion that the segmentation targeting
positioning chain is an iterative, cyclical process
(Daneels 1996) but rather simply stress that companies,
to be effective in positioning, must first target effec-
tively. To formally test this causal chain, a longitudinal
analysis would be necessary. A side effect of the intro-
duction of a causal link between targeting performance
and positioning performance is the modification and
refinement of the original measurement model of export
segmentation effectiveness by Foedermayr, Diaman-
topoulos, and Sichtmann (2009). While retaining the
original construct dimensionality, our measurement
approach specifies a directional link between two of the
four construct dimensions and applies a reflective meas-
urement to each dimension. Thus, our approach moves
away from the aggregate/composite model of multi-
dimensional constructs (Law, Wong, and Mobley 1998)
toward a view of segmentation effectiveness as simply a
set of dimensions (Edwards 2001) with the additional
proviso of a specific order between two of the dimen-
sions (i.e., targeting performance preceding positioning
performance). With these caveats in mind, we venture to
slightly modify Foedermayr, Diamantopoulos, and
Sichtmanns (2009) original construct definition.
Specifically, we redefine export segmentation effective-
ness as the extent to which a firms export segmenta-
tion decisions (1) enhance the firms targeting [and
through it] (2) its positioning efforts in export markets,
(3) help achieve cost reductions, and (4) enhance the
firms ability to deal with changes in its export environ-
ment.10 In addition to being theoretically sound, this
revised definition is empirically well reflected in our
findings.
LIMITATIONS AND FURTHER RESEARCH
This study is the first to systematically examine the driv-
ers of export segmentation effectiveness as well as the
relevant organizational, environmental, and managerial
influences on these drivers. Therefore, its findings
should be considered suggestive rather than conclusive
and subjected to further research, ideally with samples
from different countries and objective measures of
export performance. However, the latter may be diffi-
56 Journal of International Marketing
cult to obtain (Katsikeas, Leonidou, and Morgan 2000).
The following issues in particular are worthy of further
attention.
First, identifying additional antecedents of export seg-
mentation commitment would help account for a
greater proportion of variance than was possible in this
study. In light of the novelty of this construct and bear-
ing in mind its strong influence on both export segmen-
tation strategies and segmentation bases, it is important
to identify other factors that influence managerial com-
mitment to the export segmentation task. Variables such
as customer orientation (Jaworski and Kohli 1993; Kirca,
Jayachandran, and Bearden 2005; Kohli, Jaworski, and
Kumar 1993; Narver and Slater 1990) and overall export
commitment (e.g., Aaby and Slater 1989; Cavusgil and
Zou 1994; Navarro et al. 2010; Stump, Athaide, and
Axinn 1998; Zou and Stan 1998) may provide a useful
starting point for such endeavors. It is equally important
to further validate the export segmentation commitment
scale in independent samples. Although the psychomet-
ric properties of the scale were excellent for the current
application (see Table 2), replication in other settings is
necessary to confirm its robustness.
Second, two unexpected findings of the study are in
need of further verification. The first finding pertains to
the impact of the global segment strategy on export seg-
mentation effectiveness (and, ultimately, export perfor-
mance). Given that internationally active firms use this
strategy extensively (Steenkamp and Ter Hofstede
2002), it is curious that it fails to influence segmenta-
tion effectiveness to a sufficient extent to also influence
export performance. Whether this result is simply idio-
syncratic to the current sample or whether it indeed
reflects an actual weakness of this strategy is something
that only additional research can answer. The second
finding pertains to the nonsignificant (and, thus,
counterintuitive) link between cost reduction and finan-
cial export performance. While this finding is consis-
tent with prior research showing that cost advantages
do not make a difference with regard to export perfor-
mance (Piercy, Kaleka, and Katsikeas 1998), it runs
counter to the results of Foedermayr, Diamantopoulos,
and Sichtmann (2009, p. 65), who find that cost
reduction has the strongest impact on export perfor-
mance. Again, further research is necessary to clarify
this (lack of) relationship.
Third, in light of the crucial role of export segmenta-
tion effectiveness as the link between export segmenta-
tion activities and export performance, attention to
additional factors potentially influencing effectiveness
is warranted. Factors such as the criteria used for seg-
ment formation (Abratt 1993; Cross, Belich, and
Rudelius 1990) or implementation barriers (Dibb 1999;
Dibb and Simkin 2001, 2009) may also influence seg-
mentation effectiveness, regardless of the chosen export
segmentation strategy or segmentation bases used.
Although these two variables already explain substan-
tial amounts of variance in all four export segmentation
effectiveness dimensions (between 17% and 25%; see
Table 4), there is scope for further increasing explana-
tory capability.
Last, further research should examine export segmenta-
tion effectivenesss relative importance compared with
other determinants of export performance, such as
export marketing-mix strategies (Leonidou, Katsikeas,
and Samiee 2002). Such an investigation would enable
researchers to assess the contribution of segmentation
activities to export success while also accounting for the
impact of other important influences on the latter.
NOTES
1. In this sense, our framework is conceptually nested
within Leonidou, Katsikeas, and Samiees (2002)
broader model.
2. The ceteris paribus assumption also applies to the
other relationships in our model.
3. Consistent with prior research, we also expect cus-
tomer satisfaction to have an influence on strategic
performance and both customer satisfaction and
strategic performance to have an influence on finan-
cial performance.
4. This representativeness is also reflected in our find-
ings, which reveal a positive relationship between
export diversity (as captured by the number of export
destinations) and export segmentation commitment
(see Table 3).
5. We also included the number of different continents/
regions the firm exports to as an additional measure
of export diversity. However, this indicator was
highly correlated with the number of export countries
variable (r = .75, p < .001), and thus, we did not use
it in the subsequent analysis to avoid multicollinear-
ity problems.
6. In accordance with Foedermayr, Diamantopoulos,
and Sichtmanns (2009) original conceptualization,
we do not estimate a (second-order) segmentation
effectiveness factor but regard it to be of a concep-
tual nature only.
7. Cohen (1988) classifies f values of .02, .15, and .35
as small, medium, and large effect sizes, respectively.
8. We exclude positioning performance from Table 5
because it is only indirectly affected by segmentation
strategy (through targeting performance).
9. Strategic export performance is also affected by cus-
tomer satisfaction (b = .14, p < .05, f = .02).
10. Italics indicate changes made to Foedermayr, Dia-
mantopoulos, and Sichtmanns (2009, p. 58) origi-
nal definition.
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Drivers of Export Segmentation Effectiveness 61
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