Indicators for each of the six variables goes beyond the scope of this paper.

Importantly, IL has developed a systematic methodology, unlike domestic place

rating services.
Kotabe and gelsen (1998) have discussed technical issues usually encountered in
cross country segmentation. Poor data quality, noisy variables, and presence of
outliers are these technical issues. ILs approach of having a panel of experts
distributed around the world who can give direct updates to secondary data, and a
veteran staff familiar with the variances in data quality addresses these first two
issues. In this way, the validity of QoL is advanced by multiple methods used the
measures the multiple traits of QoL (bagozzi, 1994a). the presence of outliers in the
IL data was addressed in a longitudinal data analysis covering five years (malholtra
et al,1998). In this study using multivariate outliers analysis, only two countries
were identified as outliers. Intability of clusters would not result so few outlier cases
with the IL ratings. In these ways, the IL methodology overcomes the usual
technical challenges researchers face in cross country segmentation.
In term of substantive contributions to theory development, previous analysis of ILs
rating brought forth evidence for the internal consistency of these measures, and
for the convergent and discriminant validity of the costs, benefits, and
sustainability constructs (malholtra, 1997). Our present study begins by
presenting evidence for the content validity of ILs six measures of objective QoL.

purpose of the current study

the purpose of this is to base country segmentation on a comprehensive theoretical
foundation. to this end, this study evaluates a set of six commonly derived
measures for objective Qol- or material conditions of living - across 165 countries of
the world. figure 1 depicts the plan of our data analysis. following IL's rating Qol,
test-retest reabilities will be computed across the three years of data 1990-1992.
Then, confirmatory factor analysis will assess the underlying dimensions of
objective Qol, so that construct consistency can be gauged through a comparison
with previous studies using objective Qol measures. Finnaly, tandem clustering
analysis using both hierarchical and non-hierarchical methods will be used of
identify strategic classifications of the 165 countries. The results of this study will
enable both international marketers and national policy markers to make more
sound constributions to the updated strategic planning process which taylor (1997)
terms strategic leadership, characterized by a continuing strategy development
dialogue.
Analysis

As a first view of ILs consistency of measurement in rating 165 countries of the

word on six variables across three years, the test-retest reability(or stability) using
corelations between the same variabels in two different years was computed for
each of the six variabels. All of these reabilities exceeded 0,80 with most exceeding
0,09, p<0,05.
Exploratory common factor analysis using the maximum likelihood technique with a
minimum eigenvalue for extraction of 1.0 found two factors for each year (SPSS,
1990). Congruent with the earlier work of peterson and malhotra (1993) this
common factor analysis with oblique rotation of each years data produced a
dominant factor interpreted as the benefits of living variabel along with a second
interpreted as the cost of living in a society. Table II depicts each years correlation
matrix, while table III depicts the rotated factors pattern matrix for each years.
Following the exploratory factors analysis, a confirmatory factors analysis using
structural equations (CFA) confirmed the composition of the two dimensions of
quality of life in countries around the world in three different years. All estimated
parameters in each years post t-values significant an the 0,05 level. Using the chisquare test to assess the over identifying conditions of each model, the fixed
parameters of 1990s CFA were accepted (chi-square with 5 df= 2.27, P= 0,744).
This model also attained a GFI of 0.995. in short, the model fit was excellent.
Figure 2 shows the two factor model for the 1990 data. The CFA for 1991 also
resulted in acceptance of the selected fixed parameters (chi-square with 5 df= 8,01,
P= 0,155). This model posted a GFI of 0,984. Using the chi square test of model fit,
the selected fixed parameters of the CFA for 1992 failed to be accepted using the
threshold criterion of p= 0,05 ((chi-square with 4 df= 16,42, P= 0,002). While fewer
fixed parameters for the 1992 CFA appear to be in order, the entire 1992 CFA model
still posts a high GFI of 0,969, thereby indicating the overall soundness of the model
(bollen, 1989).

Cluster analysis
Next, cluster analysis using wards method(hierarchical clustering) showed 12
cluster solutions to be evident in each years survey (SPSS, 1990). Non hierarchical
clustering using 12 seed points for clustering was the employed using quick cluster
in SPSS(Punj and Stewart, 1983; Malhotra, 1997). Standardized scores on the six Qol
variables served as the inputs to the quick cluster procedure. Nine iterations of the
quick cluster procedure were made in order to stabilize results (SPSS, 1990). Results
stabilized no later than the eighth run. Table IV presents cluster size and cluster
center coordinates, while table V presents the cluster membership for 1990. Figures
3a,3b, and 3c each depict the cluster means for a pair of the objective QoL
measures for 1990. The tick marks on the axes respresent one unit increments for
the standardizwd score. The origin of the charts represents a value of -3.0 and the

outermost tick-mark represents a value of +3.0. the mean value of 0.0 would be the
third tick mark form the origin. A pattern of developed-country advantage in
material conditions of living can be seen across these three radar charts.
Noticeably, the clusters respresenting the developed or first world countries (at the
11 and 12 oclock positions of figures 3a,3b,and 3c) outperform the other clusters.
Looking across all of the radar charts, a compelling picture of haves and have nots
among the worlds countries emerges with the clusters in the top half of the charts
(clock positions nine through three) being the haves and the bottom half (clock
positions four through eight) being the haves nots.
Beginning at clock position four of the radar charts, worst health characterizes the
cluster of 25 marked by the worst cluster-center for the health variable (figure 3b).
civil war afflicts many of these countries, such as Afghanistan, Ethiopia, and
Somalia. At clock position five, next to the bottom describes the location of a five
member cluster including Senegal, Cameroon, gabon, sierra leone, and French
Guiana. It carries negative cluster-center coordinates for each variable (figures 3a3c), and has the second worst overall quality of life in the world.
at the bottom marks the fifth cluster of 18 countries with the most negative
cluster center coordinates for infrastructure, culturtainment, and a close second for
the worst coordinates of health (figures 3a-3c). Burkina faso chad, and the sudan
are examples from this cluster. Based on these coordinates, this cluster arguably
has the worst overall conditions of living among all clusters.
worst cost of living and freedom captures the dominant characteristics of the
cluster at clock position seven (figure 3a). this cluster comprises three countries
(congo, iran, Iraq) with the worst cluster- center coordinates for cost of living and
freedom. These countries have a totalitarian political structure where one party has
absolute control over all spheres of human endeavor- including market exchanges.
Without freedom to develop exchanges, prices for goods become extremely
expensive.
The last have not cluster is located at clock position eight. Poor freedom
characterizes this cluster of 18 countries and has the second worst cluster center
coordinate for freedom (figure 3a). Albania, Libya, and north korea are some of
these police states.
Continuing at clock position nine, small but rich marks a cluster of three wealthy
countries. Oil kingdoms of Bahrain, and brunei, along with the phosphate-endowed
pacific island of Nauru comprise this cluster. These countries contribute to the
second-most favorable cluster-center coordinated for economic prosperity (figure
3b). best cost of living described the cluster of 13 countries at clock positions ten,
such ad mexico, Poland, and china. This cluster has the most favorable clustercenter coordinate for the cost of living variable (figure 3a).

The developed countries are captures in the clusters at clock positions 11 and 12.
Twenty countries cluster together in the first world- cost of living OK cluster which
includes the USA, while six countries group together in the first world- cost of
living not OK cluster at clock position 12. Switzerland,

Liechtenstein, japan, and the Scandinavian countries comprise this cluster. While
this cluster boasts the most favorable cluster center coordinates for four variableseconomy, freedom, infrastructure, and culturtainment it has an unfavorable cost
of living (figure 3a).
At clock position one, sun coasts marks a group of 19 countries, such as Antigua,
Greece, and Uruguay, eith well known coasts and with positive cluster-center
coordinates for all variables except the economy variable (figure 3b). cost of living
and freedom OK marks the largest cluster of 27 which carriers the second most
favorable cluster- center coordinate for cost of living (figure 3a). india, Colombia and
morocco are example from this cluster at clock position two. Finally outposts
describes the cluster of nine countries at clock position three. Countries such as
Taiwan, Ireland, Israel, Kuwait, and Singapore comprise this cluster of small
countries which are geographically or culturally distant from their neighboring
countries.
Discussion
The lack of stability in domestic place rating services critized by kotler et al. did not
manifest itself in the international place ratings of quality of life done annually by IL
in 1990-1992. The test-retest reability of the six QoL variables exceeded 0.80 in all
pairwise matching of years. This becomes more impressive when remembering that
variables such as cost of living can change markedly over three years.
The results of the three confirmatory factor analyses provides longitudinal evidence
for the consistency of the construct validity for the benefits and costs
constructs. In addition, these two construct were found in a previous study of the
indrustrialized countries of the world (Peterson and malhotra, 1993). Because
benefits and costs represent the two sides of exchange where utilities of the
exchange participants come together, the theoretical base for objective QoL
appears to be broadened to exchange theory (bagozzi, 1975). This is a valuable
substantive finding.
Non-hirarchical clustering produced 12 clusters in each year of the study. In
genereal, the same groupings of countries could be seen in each years cluster
memberships. A pattern of the cluster means on the measures of objective Qol
depicted in figures 3a,3b,3c is that of haves and have nots. This pattern
corresponds to extant theory about the development process for nations as no
advanced nations cluster into problem ridden country cluster of the third world. In

addition, the clusters respresenting the first world (at the 11 and 12 oclock
positions of these figures) outperform the other clusters on each of the measures of
objective Qol. This too, corresponds to theories of economic development (todaro,
1994).
Implications for practitioners
With regard to practitioner usefulness, the IL QoL survey can be used by policy
makers to more effectively strategic advantage. When focusing on foreign direct
investment, policy markers from Barbados could leverage the two advantages of
having not only more cultural similarity to the USA and Canada, but also more
similarity in terms of objective QoL than barbados neighboring countries.
Such a strategic advantage could also be used in promotional strategy. It would not
be suprising to find an incorrect image for Barbados- a Caribbean island country of
less than 200.000 existing among potential tourists, retirees, and business
persons in the USA. Perhaps, many would think another Caribbean island would
have the problems of a Haiti. Yet, Barbados has high literacy, and uses English as its
official language.
In each year of the IL QoL Survey, Barbados clusters into the sun coasts cluster of
nations along with braxil, argentina, and Bermuda. Using these analyses, a policy
marker for Barbados could perceive that its similar cultural history with the british
colony of Bermuda is not the only thing it shares, Barbados and Bermuda have
similar living conditions as seen in their common membership in the sun coasts
cluster. By sharing such positioning, Barbados and Bermuda would likely compete
for tourism and retiretement spending by US and Canadian citizens.
Regarding foreign direct investment, Barbados would share a common positioning
with countries other than Bermuda. These countries might likely be these of latin
America who are also members of the sun coasts cluster (e.g. argentina and
brazil) in strategic planning, policy makers might identify two strategic advantages
of Barbados relative to argentina and brazil. These two advantages could be: 1.
Closer proximity to north America and 2. Closer cultural similarity.
In terms of objective QoL, Barbados would have to concede nothing to argentina
and brazil, as they share a common cluster based on objective QoL. Policy makers of
Barbados could then identify advantagenous positioning relative to argentina and
brazil attributable to lower costs for start-up, for training, and for transportation to
and from north America.
In these ways, the IL QoL survey can shape strategic planning for policy makers.
Trade and development administrators of countries can likewise use their countrys
QoL rating as an objective endorsement of tourism or immigration to the country.
Market entry

Alternatively, international marketers can use the IL QoL survey to find proximate
test markets for distant international marketing efforts. For example, a
manufacturer of upscale tableware in Pakistan could use the state of the pacificNauru and brunei. These three countries comprise the small but rich cluster in
study. In a similar way, market entry decisions for firms can be boosted by targeting
one country from an attractive cluster, and then successively entering countries of
the same cluster after achieving success in the country first targeted.
In another applications, hybrid clusters of consumers likely to be interested in
extensive travel services could be found using the results of the objective QoL
clustering (hasan and samli, 1994). For example, international tourism marketers
could use the outposts cluster to first identify countries where travel-minded
customers without nearby excursion options might reside. Then, a hybrid cluster of
affluent customers could be identified through survey metods or direct mail
methods, such as magazine subscriptions lists.
Implications for scholars
The IL QoL survey provides academic researchers in international marketing, and
related fields of international business, public policy, and economics a valuable
reference for objective QoL in countries of the world. Support for the two underlying
constructs of objective QoL in countries benefits and costs gives insight
into the possible theoretical linkage between QoL and marketing, as benefits and
costs are the two sides of any commercial exchange. This suggests a consumption
prespective for objective QoL which has substantive implications for a broad range
of marketing scholars.
Because of the inherent methodological difficulties of measuring the complex
interactions of exchange (bagozzi, 1994 b), discenering the exchange phenomenon
at the societal level is particularly valuable and suggests further research into the
nature of exchange between a society and its constituent subgroups and
individuals. For example, if the benefits of living in a society are increased, what is
the effect on costs? Does this relationship vary across stages of development? With
appropriate theory development to explain the likely reciprocal relationship between
benefits and costs for societies, a model of benefits and costs could be developed
and tested using casual modeling (bollen, 1989).
Conclusion
Responding to the need for innovative approaches for macro-level segmentation,
this study used objective QoL data from a set of 165 countries to identify 12 clusters
of the worlds countries. Because these objective QoL variables are theoreticallygrounded, and use multiple sources of secondary and primary data, the technical
challenges to country segmentation (poor data quality, noisy variables, and
presence of outliers) are minimized. With a clearer lens to view country level
phenomena, this study has identified 12 country clusters which can be used by

policy makers in developing strategic groupings of countries. International

marketers can use these clusters as the first stage of hybrid clustering when
seeking consumers of micro segments dispersed across a number of countries.
This study contributes in an important way to the substantive issue of exchange
between a country and its citizens as confirmatory factor analysis identified two
underlying dimensions- benefits and costs. Future studies using objective QoL
should develop understanding for the nature of the relationship between the
benefits and costs of living in a country.
Despite recent claims for the death of distance resulting from improved access to
telecommunications in the future (cairncross, 1997), the relationship between a
countrys benefits and the costs paid by its citizens will continue to be important as
long as countries exist. Becausr national governments can have a profound
influence on each of the six dimensions of objective QoL used in this study, deeper
understanding of the relationship between these benefits and costs will be needed
in the future. Such understanding will be valuable not only for national policy
makers, but for international marketers and scholars who must consider the past,
present, and possible actions of national governments in their work.