It's the same principle why India1 doesn't target India2 or India3 - it negatively impacts brand positioning for marginal gain.

That's why you find different companies targeting different subsegments of a market globally.

Additionally, we do live in a globalized world, so a brand that is at the lower rung in one market may try to upscale their value by targeting the upper portion of another market. You see this with Walmart which targets America2 but uses a different strategy to target China1 (Sam's Club China) and India1 (Best Price, Flipkart).

Conversely, a China1 or India1 brand can also try and successfully build market share in America2 and America3 in a manner that an America1 brand wouldn't want to do due to brand prestige implications. This is why you see SHEIN and Temu's popularity amongst America2 and America3 or Wellspun becoming the primary supplier for textile goods for Walmart and TJX.

I guess, the idea is that you cannot target both America1 and America3 with the same product. Take into account that America3 doesn't have a lot of disposable income in the first place, and going after a similar target audience in another country becomes a much more sensible choice than trying to expand into a different audience in your own.

> What's a reason that wouldn't also apply to india2,3?

If I understand correctly, it would also apply to India2-3, that's why nobody's proposing that.