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The value of segmentation The purpose of segmentation Strategic segmentation Self-assessment Quartz+Co references


The six most common obstacles to value creating segmentation 1

Companies try to use one segmentation model for all purposes

2

Companies have multiple segmentation models without a clear and consistent link

3

Companies base the model on data at hand rather than what is necessary to make the insight relevant

4

The management is not aligned on what drives and what describes the market

5

Companies are letting the complexity of a few key clients interfere with a simple market view

6

The purpose of the segmentation is "lost in translation" when executed on an operational level


Theme and typical segmentation models

Key questions

Subquestions

Where to grow? Understand the overall market landscape in order to identify attractive market opportunities and prioritise segments

• What is the primary dimension to capture the value in our market? • How should the primary dimension be classified? • How should the primary dimension be structured? • How do we translate the segmentation model into clear and logical priorities?

2. Tactical segmentation

What to offer? Understand customer needs, buying criteria and behaviour for prioritised segments in order to develop attractive segment offerings

• What distinct need profiles can be identified in the market? • What profiles are key to the company's priorities? • What are the key differentiators to capturing those profiles? • Where and how do we need to improve/ change our offering?

3. Operational targeting and initiatives

Drive and manage operations and projects in order to realise value where the customer meets the business

1. Strategic market model Relevant model for numerous mass market companies

Market • • • • •

60+

Number of customers Value Churn Growth Competitor share

45-59

Internal

Age

• • • •

30-44

18-29 <300

300-500

500-700

>700

Market share Growth Churn Earnings, including cost to serve

Personal gross income (or assets)

Targeting model "Work horse"

"Race horse"

DKK xx thousand

Customer profitability

DKK xx thousand

"Pony"

"Youngster"

DKK xx thousand Low

Medium

Growth potential

High

Whom to call?

• What are the relevant focus areas on a local level? • What customers exist within those areas? • With whom do we not have a "fair" share of wallet?


Stakeholder alignment

Key activities

Proof of concept

Pilot

Process alignment

Roll-out

Dimensions and drivers

Data mapping and transparency

Applicability in operational environment

Small-scale execution

Supporting business processes

Full-scale execution

• Stakeholder mapping

• Alignment on primary and secondary dimensions

• Alignment on data definitions

• Testimplementation process and education

• Reducing data complexity

• Design and implement supporting business processes

• Define optimal implementation sequence and timing

• One-on-one stakeholder interviews

• Alignment on exogenous and endogenous drivers

• Testing whether the concept makes sense in the line organisation

• Number of stakeholders

• Business size and complexity

• Data availability • Data quality

• Organisational resistance

• Magnitude of local differences

• Business complexity

• Size of organisation

• Stakeholder alignment is crucial to succeed

• Market dynamics

• Number of data sources

• Business complexity

• Geographical coverage

• Process efficiency

• Geographical coverage

• Access to previous material Typical involvement split

Building contents

Purpose and expectations

• Establish baseline on previous segmentation work

Complexity drivers

Defining the model

• Mapping data sources

• Populating grid

• Aligning where and how the concept can be applied and what value it creates

• Predefined opinions

Client

• Map necessary changes in supporting business processes

• Apply supporting resources

• Execute implementation


Focus areas â&#x20AC;&#x201C; self-assessment

1

Do we have a clear understanding of value drivers and dynamics in the market?

2

Do we have a clear and aligned definition of how to cut the market and how to define attractiveness of the segments?

3

Do we have a clear and aligned view on what market segments have high and low priority respectively?

4

Do we have a clear picture of how we are positioned in each of the market segments and whether the current market position is optimal?

5

Do we have a clear process for capturing changes in market data and updating the segmentation model?

6

Do we have a clear process for translating corporate market priorities into operational actions in sales, marketing and customer service?

7

Do we have a clear understanding of what value propositions that capture the majority of our prioritised segments?

8

Do we have a clear understanding of our key differentiators and which segments are most prone to act on them?

Yes

No

?


CASE EXAMPLES

Client

Company profile

Key challenge

Market characteristics

World leading supplier of equipment to the health care industry, Turning over DKK 20 bill.

Develop a segmentation model to design f the G2Mmodel/sales force structure as well as managing the sales efforts on the most attractive customers

Two markets; Acute Care and Long Term Care with a wide range of decision makers dependant on product category

The worlds largest container carrier, present in 125 countries, turning over DKK 146 bill. In 2010

Defining a global market model that make sense on a regional and local level to support a corporate differentiation strategy

Global customers, global suppliers and large regional differences in market dynamics based on geoeconomic development

Global shoe brand with production in five countries and flagship stores in more than 50 countries, turning over DKK 6 bill. In 2010

Defining a global segmentation model, capable of driving internal efficiency, customer service offering/differentiation and sales growth

Regional and local customers. Large regional differences in market maturity, retail maturity and growth rate, based upon geoeconomic development

The worlds leading producer of wind turbines, with more than 30.000 turbines installed in 63 countries, turning over DKK 53 bill. In 2010

Defining a global segmentation model to drive efficient long term growth

Regional customers, global suppliers, and large regional differences in market dynamics based on political regimes and subsidies

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