Benefit Segmentation Strategy for Foreign Direct Investor Market: an instrument for aligning FDI incentives (Conceptual Study)

Abstract

Segmentation of foreign investors has not received considerable attention in the literature. For simplicity purpose most government and investment promotion organisations differentiate foreign direct investors only in terms of their country of origin and volume of investment. Additional factors such as scale of investment; numbers employed; export orientation; or sector/industry also moderately considered in determining the entitlement to incentives. Recognising the importance of segmentation for destination marketers, this conceptual study attempts to discuss the ways to align incentives for investors. By acknowledging the importance of benefit segmentation theory and discussing its possible application to the FD investor market, this paper suggests that destination incentives for FD investors should develop from an analysis of its past, existing and potential investment customers’ preferences on it. The paper concludes with a discussion on a theoretical model for developing incentives for foreign direct investors.