Description
Dont commoditize your customer.
You should not
treat every customer equally.Customers are different in many ways:Needs
Capabilities
Business economics and strategies Willingness to engage in business with you Demographic characteristics: size, profitability,
participation in various vertical markets, geographical coverage.
The First Critical
The First Critical
Task of Strategy
Task of Strategy
Customer Segmentation:
Customer Segmentation:
Reasons for Customer Segmentation
Reasons for Customer Segmentation
z z Don Don’ ’t commoditize your customer. t commoditize your customer. You should not You should not
treat every customer equally. treat every customer equally.
z z Customers are different in many ways: Customers are different in many ways:
- - Needs Needs
- - Capabilities Capabilities
- - Business economics and strategies Business economics and strategies
- - Willingness to engage in business with you Willingness to engage in business with you
- - Demographic characteristics: size, profitability, Demographic characteristics: size, profitability,
participation in various vertical markets, geographical participation in various vertical markets, geographical
coverage coverage
z z The most attractive customer usually is the one that The most attractive customer usually is the one that
has the greatest gap between its needs and your has the greatest gap between its needs and your
ability to satisfy them. ability to satisfy them.
The Key Mechanisms to Serve the
The Key Mechanisms to Serve the
Customer
Customer
z z Customer Engagement Process Customer Engagement Process - - How do you How do you
establish a proper association with the customer? establish a proper association with the customer?
z z Customer Integration Customer Integration - - The degree of value The degree of value- -added added
you provide to the customer based on the you provide to the customer based on the
knowledge and services you transfer. knowledge and services you transfer.
z z Horizontal Breadth Horizontal Breadth - - The depth of the portfolio of The depth of the portfolio of
products and services you provide. products and services you provide.
All these mechanisms have to be tailored to
each individual customer and result in very
different degrees of customer bonding.
Criteria for Customer Segmentation
Criteria for Customer Segmentation
The most critical dimensions for customer The most critical dimensions for customer
segmentation are: segmentation are:
z z Customer Attitudes Customer Attitudes
- - Castrol Castrol - - How we want to treat the customer How we want to treat the customer
z z Customer Needs and Degree of Self Customer Needs and Degree of Self- -Sufficiency Sufficiency
- - Unilever de M Unilever de Mé éxico xico - - Segmentation by channels Segmentation by channels
z z Different Degrees of Value Added Different Degrees of Value Added
- - Waste Management Co. Waste Management Co. - - Different degrees of customer Different degrees of customer
bonding bonding
z z Customer Behavior and Their Buying Practices Customer Behavior and Their Buying Practices
- - Synthes Synthes - - Different customer buying patterns Different customer buying patterns
z z Redefining Customer Experience Redefining Customer Experience
- - Telef Telefó ónica M nica Mó óviles viles /Colombia /Colombia - - Reducing customer churn Reducing customer churn
CASTROL -
DECOMMODITIZING THE CUSTOMER
Segmentation According to Customer Attitudes
Greater
Company
Success
(Primary Target Segment
Secondary Target Segment
The Least Desirable Segment
Value Proposition:
Customized lubrication
solution involving products
and services
These customers are eager
to receive support that will
These customers are concerned
new production does not neces-
Price Conscious
These customers are
lowest price.
Not all customers are equally
receptive for solutions
Castrol - Lubricants
Castrol considered three Tiers in each market segment
– Productivity Conscious Customers,
– Cost Conscious Customers,
– Price Conscious Customers)
Productivity Conscious
enhance their productivity,
reduce total costs, and
promote higher sales.
Cost Conscious
about total costs but they believe
sarily yield higher sales or
economies of scale.
basically buying from the
supplier that offers the
Do not treat customers equally
What is Castrol Logic?
A customized lubrication
solution involving products and
services that results in
documented:
Cost Reductions
&
Productivity Improvements
Source: Castrol
Documentation
Client Engagement Process
Continuous
Improvement
Initial Information
Exchange
Management
Survey
Proposal
Implementation
Transforming the Organization
Transforming the Organization
Rethink the customer engagement process Rethink the customer engagement process
Lessons from
Lessons from
Castrol
Castrol
• You cannot and should not treat every customer
equally - Differentiate a value proposition to each
relevant tier.
• Often a very insightful way to segment your
customer is by their willingness to do business
with you in a chosen way. We call it
segmentation by attitudes.
• Once you adopt a different value proposition for
each tier you should change accordingly the
customer engagement process. Remember
“Sales are too important to be left to the
salesforce.”
Unilever de México -
Segmentation According to
Channels
The Process
z z The Board spent a week with The Board spent a week with Arnoldo Arnoldo defining the strategy, defining the strategy,
using the Delta Model. using the Delta Model.
z z The The Key elements inc Key elements incl luded uded: :
Customer segmentation!!! Customer segmentation!!!
Identification of key segment interactions Identification of key segment interactions
Identification of services to offer each segment Identification of services to offer each segment
Identification of potential complementors. Identification of potential complementors.
Integration to backend systems from UL and Integration to backend systems from UL and
complementors complementors
z z We identified key insights that We identified key insights that integrated the ways we sought integrated the ways we sought
to serve the various customer segments. to serve the various customer segments.
The Customer Segments
z z Modern Trade: Modern Trade:
Large Local Chains (MT1) Large Local Chains (MT1)
Large International Chains (MT2) Large International Chains (MT2)
Smaller Local players (MT3) Smaller Local players (MT3)
z z Traditional Trade: Traditional Trade:
The 100,000 largest (TT1) The 100,000 largest (TT1)
The other 4 The other 4- -600,000 (TT2) 600,000 (TT2)
z z Wholesale Trade: Wholesale Trade:
The Biggest Players (WS1) The Biggest Players (WS1)
The Rest (WS2) The Rest (WS2)
z z Government Stores Government Stores (G) (G)
MT-2
MT-1
TT-1
WS-1
G
MT-3
WS-2
TT-2
Total Customer
Solution
Transactional
Lock-in
UdM Delta Model
Customer Segmentation
Tier
Members
MT-1
y,
WS-1
Lock-in
i
i
logi i l ies,
i
G
iconsa)
MT-2
i
i i
i
li i
Strategic Option Customer
Comex, Gigante, Soriana,
Chedraui, HEB, Casa Le
San Francisco, Calimax,
OXXO, 7 eleven
Sahuayo, Garces, Chapa,
Ibarra, Mtz Taylor
TT-1
Key Changarros (approx.
100,000)
Preferred customers focused on
growth when we provde transfer
of knowledge in category
management, ECR, efficent
stics, promot ona activit
consumer understandng
Government Stores
(IMSS, ISSTE, D
Wal-Mart, Carrefour
Relational - Support
Major international customers
with established busnesses
pract ces whom we provde
eff cient support to become their
preferred supp ers, avoidng
conflict and rivalry
Customer Segmentation
Tier
Members
MT-3
i
WS-2
Transactional
ith
l
i
TT-2
- Bank - Kimberly-Clark
Strategic Option Customer
Small Sze Locals
All other
wholesalers
Arm length relationship w
minimal leve of customized
services to cover ther specific
needs
Rest of changarros
Complementors
- Tv Azteca - Elektra
The Basis of the Key Insights
z z Wholesale Trade sales and margin Wholesale Trade sales and margins are both shrink s are both shrinking. ing. They They
need a new source of growth and profits. need a new source of growth and profits.
z z The The MT1 segment is shrinking. MT1 segment is shrinking. T They do not have the scale to hey do not have the scale to
compete with Wal compete with Wal- -Mart Mart’ ’s distribution know how and s distribution know how and
economies of scale. economies of scale.
z z TT segment feels ignored, as major supplier companies offer TT segment feels ignored, as major supplier companies offer
special deals to MT1 & 2 special deals to MT1 & 2. . TT operating costs are lower than TT operating costs are lower than
MT, but product purchase costs are higher. MT, but product purchase costs are higher.
z z Unilever Distribution costs are high. Unilever Distribution costs are high.
The Insight
z z Form a network from existing Players Form a network from existing Players
Reduce # of Unilever Distribution Centers from 9 to 1 Reduce # of Unilever Distribution Centers from 9 to 1
Use Existing WS1 warehouses as DC Use Existing WS1 warehouses as DC’ ’s s
Expand WS1 relationship into logistics provider for MT1, MT3, & Expand WS1 relationship into logistics provider for MT1, MT3, & G G
Implement direct sales force for TT1, deliver through WS1 Implement direct sales force for TT1, deliver through WS1
Add Banking provider to improve Credit Add Banking provider to improve Credit
Add Media provider to provide advertising services Add Media provider to provide advertising services
Add White Goods Retailer to provide promotion fulfillment Add White Goods Retailer to provide promotion fulfillment
Add other non Add other non- -competitive suppliers to spread costs competitive suppliers to spread costs
The Delta Network Business Opportunity
EXPECTED BENEFITS TO CHANGARROS:
• Free workstation (key technnological improvement for store growth)
• Guaranteed competitive prices to modern trade (on UL and KC products)
• Access to credit line for the store (through Bank)
• Improvement of service received (more control over delivery times)
• Transfer of merchandising expertise (through sales advisor)
• Individual store management advice & training (through sales advisor)
• Direct access to promotions information (through workstation)
• Information about competitive landscape (through workstation) (e.g. average price of
changarros - for Pricing Strategy)
• Access to Business Management tools (through workstation) (e.g. Inventory & sales
statistics)
• Identification of its most valuable customers (through brand loyalty programs)
• Relative exclusivity (1 out of 6 changarros will be in the network)
The Delta Network Business Opportunity
EXPECTED BENEFITS TO WHOLESALERS: EXPECTED BENEFITS TO WHOLESALERS:
z z Ter Terr ritorial itorial exclusivity exclusivity ( (restricted restricted number number of of wholesalers wholesalers per per city city: 1 : 1 or or 2) 2)
z z Increased Increased sales & sales & order order flow flow co coming ming from from modern modern trade trade and and government government stores stores in in
its its territory territory
z z Increased Increased order order size size co coming ming from from changarros (50% changarros (50% appr appro ox x. . Abastex Abastex experience experience) )
z z Free Free dedicated dedicated sale salesforce sforce to to sell sell UL/KC UL/KC products products for for its its benefit benefit ( (additional additional source source of of
sales sales growth growth at at no no cost cost) )
z z Increased Increased inven invent tory ory turnover turnover res resu ulting lting in in less less working working cap capi ital tal being being tied tied up up
z z Operational Operational cost cost saving savings s resulting resulting from from new new order order entry entry process process
z z Direct Direct acce access ss to to competitive competitive mar mark ket et infor inform mation ation & & deep deep k kn nowledge owledge of of its its customers customers
( (through through full POS full POS system system) )
z z Categor Category y management management know know- -how how provided provided by UL & KC by UL & KC to to define define optimal optimal sku sku mix mix
z z Increased Increased loyalty loyalty from from changarr changarro os s
z z Free Free suport suport from from UL & KC UL & KC for for its its technological technological improvement improvement pr process ocess
The Delta Network Business Opportunity
EXPECTED BENEFITS TO MODERN TRADE & GOVERNMENT STORES:
• Substantial service improvement - particularly in terms of delivery times (direct delivery
from wholesaler to each individual store)
• Guaranteed prices - UL & KC will set the prices at which the wholesaler will commit to
sell their products
• Cost savings because of supply chain & inventory management improvements
• Reduced TV advertisement cost (leveraging UL & KC relationships)
• Identification & knowledge of its most valuable customers (through brand loyalty
programs)
• Free suport from UL & KC for its technological improvement process
Lessons from Unilever de M
Lessons from Unilever de M
é
é
xico
xico
z z Challenge the conventional wisdom. Challenge the conventional wisdom. Your most Your most
important customers could very well be the most important customers could very well be the most
neglected. Remember the Gospel neglected. Remember the Gospel “ “The last ones The last ones
will be the first ones will be the first ones” ”
z z A critical element of a modern strategy is to position A critical element of a modern strategy is to position
yourself within the network. Information Technology yourself within the network. Information Technology
is the key to implement this principle. is the key to implement this principle.
Waste Management
Company (WMC)-
Segmentation According to
Potentials for Customer
Lock-In
Tier 6: Small Price-Seeker
•Small, usually single waste stream
•Bidding process
•Should not require much effort from
WMC to manage these accounts
Tier 5: Big Price-Seeker
• Big, multiple waste streams
• Bidding process
• Highly demanding customer
• Require on-site personnel
• Useful as marketing tool
• Occasional special projects
Tier 4: Bidding Solution-Seeker
•Several facilities
•Bidding process
•Opportunity to develop a long term
relationship
•Occasional special projects
Tier 3: Negotiated Solution-Seeker
•Several facilities
•Negotiated process
•Long term relationship
•Willingness to open their books
•Receptive to innovations to their waste
disposal process
•Occasional special projects
Tier 1: “Key to the Kingdom”
•WMC is the link between customers
and vendors who take care of all their
non-core on-site needs
Tier 2: Total Solution-Seeker
•Several facilities
•Negotiated process
•Long term relationship
•Willing to concentrate on their core
business
•Allow WMC to apply an integral by-
product management solution
WMC
WMC
’
’
s
s
customer segmentation and its main
customer segmentation and its main
characteristics
characteristics
SLI
BP TCS
Tier 6: Small Price-Seeker
•Small, usually single waste stream
•Bidding process
•Should not require much effort from
WMC to manage these accounts
Tier 5: Big Price-Seeker
• Big, multiple waste streams
• Bidding process
• Highly demanding customer
• Require on-site personnel
• Useful as marketing tool
• Occasional special projects
Tier 1: “Key to the Kingdom”
•WMC is the link between customers
and vendors who take care of all their
non-core on-site needs
Tier 2: Total Solution-Seeker
•Several facilities
•Negotiated process
•Long term relationship
•Willing to concentrate on their core
business
•Allow WMC to apply an integral by-
product management solution
Tier 3: Negotiated Solution-Seeker
•Several facilities
•Negotiated process
•Long term relationship
•Willingness to open their books
•Receptive to innovations to their waste
disposal process
•Occasional special projects
Tier 4: Bidding Solution-Seeker
•Several facilities
•Bidding process
•Opportunity to develop a long term
relationship
•Occasional special projects
WHAT
Solutions we provide to
customers
HOW
Set of value delivery systems we use to provide our service
? Compliance with
regulations (environmental,
safety)
- Liability insurance - Personnel training
- Supplier certification process - Constant review of evolving regulations
? Reduce total cost of by-
products handling and
better customer service
- Relationships and bargaining power - Eliminate in-house vendor auditing
with vendors (low prices, better service) process
- Culture focused on customer service - Incentive systems aligned through the
system (customer/firm/vendor)
? Reduce administrative
costs and headcount
- One-stop shop - Single Points of Contact (SPOCs)
- One invoice - The WMC system provides accurate
information
? Improve productivity,
allow company to focus on
core business
- Expertise / R&D capabilities in - Leverage of group capabilities
logistics, recycling, laboratories, etc. - Knowledge of the value chain
- Constant sharing of best practices
? Total facility management
- Access to the best network of partners - Evaluation system to ensure the best
- Joint services with partners (R&D, service at the lowest cost
information, services, etc.)
We would like to structure our value proposition as
We would like to structure our value proposition as
of today by clearly stating what we offer and how
of today by clearly stating what we offer and how
WHAT
Solutions we provide to
customers
?Compliance with
regulations (environmental,
safety)
?Reduce total cost of by-
products handling and
better customer service
?Reduce administrative
costs and headcount
?Improve productivity,
allow company to focus on
core business
?Total facility management
HOW
Set of value delivery systems we use to provide our service
- Liability insurance - Personnel training
- Supplier certification process - Constant review of evolving regulations
- Relationships and bargaining power - Eliminate in-house vendor auditing
with vendors (low prices, better service) process
- Culture focused on customer service - Incentive systems aligned through the
system (customer/firm/vendor)
- One-stop shop - Single Points of Contact (SPOCs)
- One invoice - The WMC system provides accurate
information
- Expertise / R&D capabilities in - Leverage of group capabilities
logistics, recycling, laboratories, etc. - Knowledge of the value chain
- Constant sharing of best practices
- Access to the best network of partners - Evaluation system to ensure the best
- Joint services with partners (R&D, service at the lowest cost
information, services, etc.)
C
O
M
P
L
E
X
I
T
Y
C
O
M
P
L
E
X
I
T
Y
Tier
Small
Price
Seeker
Solutions we provide
•Compliance with regulations
•Lowest cost in by-product handling
•Keep track of activities
•If profitable, look for improvements
Big Price
Seeker
•Handle multiple waste streams
Bidding
Solution
Seeker
•Reduce administrative costs and
headcount
Negotiated
Solution
Seeker
•Improve productivity, allow
company to focus on core business
Total
Solution
Seeker
•Total facility management
Key to the
Kingdom
•Total facility management
Benefits for Customer Benefits for WMC
•Lowest cost
available in the
market
•Small margin gains in
bided activities
•One-time-events with
potentially high
margins
•Better customer
service
•Expertise
•“Looks good in our
resume”
•Opportunity to learn
best practices and new
processes
•Additional services
& improvement
projects if
relationship develops
•Step-up of customer
tier if able to develop
relationship
•Additional cost
savings from non-
waste processes
•Long term relationship
•Higher margins
•WMC as an on-site
partner
•Concentrate in core
business
•Customer lock-in
•One-stop solution •System lock-in
Our value proposition should be tailored to efficiently and Our value proposition should be tailored to efficiently and
profitably serve the different tiers of customers profitably serve the different tiers of customers
Tier
Small
Price
Seeker
Solutions we provide
•Compliance with regulations
•Lowest cost in by-product handling
•Keep track of activities
•If profitable, look for improvements
Big Price
Seeker
•Handle multiple waste streams
Bidding
Solution
Seeker
•Reduce administrative costs and
headcount
Negotiated
Solution
Seeker
•Improve productivity, allow
company to focus on core business
Total
Solution
Seeker
•Total facility management
Key to the
Kingdom
•Total facility management
6
6
5
5
4
4
3
3
2
2
1
1
Benefits for Customer Benefits for WMC
•Lowest cost
available in the
market
•Small margin gains in
bided activities
•One-time-events with
potentially high
margins
•Better customer
service
•Expertise
•“Looks good in our
resume”
•Opportunity to learn
best practices and new
processes
•Additional services
& improvement
projects if
relationship develops
•Step-up of customer
tier if able to develop
relationship
•Additional cost
savings from non-
waste processes
•Long term relationship
•Higher margins
•WMC as an on-site
partner
•Concentrate in core
business
•Customer lock-in
•One-stop solution •System lock-in
Lessons from WMC
Lessons from WMC
z z A power A power segmentation is based on increasing degrees of segmentation is based on increasing degrees of
customer bonding, resulting from increasing value added customer bonding, resulting from increasing value added
provided to the customer. provided to the customer.
z z The The progression of increasing value added implies greater progression of increasing value added implies greater
knowledge transfer, greater margins and profitability, knowledge transfer, greater margins and profitability,
greater complexity in the relations, and greater bonding. greater complexity in the relations, and greater bonding.
z z System Lock System Lock- -In is not necessarily a feasible option to In is not necessarily a feasible option to
pursue for many businesses. However, the Dominant pursue for many businesses. However, the Dominant
Exchange is often the most relevant form of System Lock Exchange is often the most relevant form of System Lock- -
In. In.
z z The lesson of WMC is to seg The lesson of WMC is to segment to customer ment to customer base in base in
increasing degrees of the Systems Lock increasing degrees of the Systems Lock- -In culminating in In culminating in
the achievement of Dominant Exchange. If you can gain the achievement of Dominant Exchange. If you can gain
that position the potential rewards are immense. that position the potential rewards are immense.
Segmentation According to Customer
Behavior and Their Buying Practices
Synthes -
Synthes Synthes
Hospital Hospital
Administration Administration
Patient Patient
Service and Service and
Sterilization Sterilization
Department Staff Department Staff
Insurance Insurance
Surgeon Surgeon
OR Staff OR Staff
Buyer Groups Buyer Groups
Synthes
therapeutic areas
Low Cost
excellence
Horizontal Breadth
• Coverage of all
Proprietary Standards
• AO Foundation
Dominant Exchange
• Role of IT in hospitals
• Manufacturing
Customer Engagement and
Differentiation
Customer Integration
• Continuous New
• Role of Consultants
Product Development
• Education
• Intimacy
Synthes Customer Segmentation
• • Innovative Innovative
• • Ambitious; Go beyond daily business Ambitious; Go beyond daily business
• • Interested in research & publication Interested in research & publication
• • Looking for recognition from: Looking for recognition from:
– – Opinion leaders/professors Opinion leaders/professors
– – Peers Peers
– – Industry (financial sponsoring) Industry (financial sponsoring)
• • Need to have a Need to have a “ “godfather godfather” ”
• • Preparing/Learning to be a specialist Preparing/Learning to be a specialist
• • Looking for R&D support (financial, implants, etc.) Looking for R&D support (financial, implants, etc.)
(3) (3)
Young High Potential Young High Potential
• • Bond to competition Bond to competition
• • For reasons of: For reasons of:
– – Strict budget control Strict budget control
– – Clinical practice/teaching schools Clinical practice/teaching schools
• • Using high volume of implants Using high volume of implants
(2) (2)
Non Non- -User User
(high volume) (high volume)
• • Working at University Hospital, Teaching Working at University Hospital, Teaching
• • High number of procedures High number of procedures
• • Active surgeon with own core specialty Active surgeon with own core specialty
– – Large segments of specialty within his/her influence Large segments of specialty within his/her influence
• • Respected among peers Respected among peers
• • Active in research & development Active in research & development
– – Publications Publications
– – Active as scientific speaker Active as scientific speaker
• • Independent! Independent!
• • Loyal because he/she is convinced of superiority of products Loyal because he/she is convinced of superiority of products
• • Respected by hospital administration Respected by hospital administration
• • Key decision maker regarding implant suppliers Key decision maker regarding implant suppliers
(1) (1)
Professors & Opinion Leaders Professors & Opinion Leaders
Description Description Customer Tier Customer Tier
Synthes Customer Segmentation
• • Community Community hospital hospital
• • Use Use commodities commodities/ /standard standard products products
• • Buy Buy single single items items from from all all products products
(6) (6)
Low Volume & Local Hospital Low Volume & Local Hospital
• • High High volume volume
• • Stratec Stratec makes makes high high turnover turnover with with them them
• • Broad Broad range range of of procedures procedures
• • Mostly Mostly large large public public hospitals hospitals
(5) (5)
“ “Massmarket Massmarket” ” Surgeon Surgeon
• • Negotiating Negotiating body body for for a a group group of of hospitals hospitals
• • An An organization organization designed designed to to increase increase the the purchasing purchasing
power power of of hospitals hospitals and and to to optimize optimize purchasing purchasing and and
administration administration costs costs for for hospitals hospitals
• • The The one one paying paying the the bill bill
• • Focus Focus on on bundling bundling ( (products products, , logistcs logistcs, , tenders tenders) )
(4) (4)
Buyer Groups Buyer Groups
Description Description Customer Tier Customer Tier
• • E.g E.g., ., Education Education of of projected projected end end users users
(7) (7)
Patient Patient
(undergoing elective surgery) (undergoing elective surgery)
Who Who is is our our customer customer? ?
Who Who makes makes the the decisions decisions for for traumatology traumatology implants implants and and instruments instruments? ?
Tier 1
Tier 1
Business Scope
Business Scope
Business Dimension Business Dimension Tier 1: Professors/opinion leaders Tier 1: Professors/opinion leaders
Products Products
Services Services
• • Full range, pioneer products Full range, pioneer products
• • Facilitate education, provide and support access to AO Facilitate education, provide and support access to AO
• • Support for R&D (financial,implements, documentati Support for R&D (financial,implements, documentation & engineer neer on & engi ing) ing)
Customers Customers • • 250 250 approximatel approximatel (list requested from the countries)) (list requested from the countries))
Channels Channels
End users End users
• • Direct Direct
• • - - Sales consultant and sa Sales consultant and sal les manager relationship es manager relationship
• • - - Project leaders Project leaders
• • - - Support CEO, Senior Mgmt (occasionally) Support CEO, Senior Mgmt (occasionally)
• • Polytrauma Polytrauma and high degree of complication and high degree of complication
Complementors Complementors
• • AO Network AO Network
• • Power tool business Power tool business
• • Access to reference hospitals Access to reference hospitals
• • Software provider (documentation, dig Software provider (documentation, digi ital services) tal services)
• • ORP staff ORP staff
• • Scientific publications Scientific publications
• • High High- -end products end products
Unique Competencies Unique Competencies
• • Development and engineering capability Development and engineering capability
• • Technical education at all levels (from sterilization departmen Technical education at all levels (from sterilization departments to surgeons) ts to surgeons)
• • Logistics/loan sets Logistics/loan sets
• • Highly Highly- -trained consultants (clinical and product specific) trained consultants (clinical and product specific)
Customer Value Proposition
Customer Tier 1 Professors Customer Tier 1 Professors
and opinion leaders and opinion leaders
Value Proposition Value Proposition
Set of Set of experiences experiences we will we will
provide to the tier provide to the tier
Provide latest innovative clinic Provide latest innovative clinical solutions in a collaborative al solutions in a collaborative spirit spirit
Set of Set of value delivery systems value delivery systems
needed to provide the needed to provide the
experiences experiences
• • Sales force (experienced & highly qualifi Sales force (experienced & highly qualified) ed)
• • Innovative products Innovative products
• • AO networking AO networking
• • Davos Davos course experience and AO research center course experience and AO research center
• • Engineering development capacity and know Engineering development capacity and know- -how how
Value appropriation Value appropriation
• • Value gained by the customers: Value gained by the customers:
- - Recognition by peers patient and industry Recognition by peers patient and industry
• • Value gained by us: Value gained by us:
- - loyalty & input loyalty & input
- - support for development & sales/teaching support for development & sales/teaching
• • Value shared by both: Value shared by both:
- - productive partnership productive partnership
Lessons from
Lessons from
Synthes
Synthes
z z
The customers
The customers
’
’
behaviors and buying
behaviors and buying
practices often provide relevant criteria for
practices often provide relevant criteria for
segmentation.
segmentation.
z z
This allows you to detect the special needs
This allows you to detect the special needs
of each customer tier, which are translated
of each customer tier, which are translated
into specific value propositions.
into specific value propositions.
z z
Your segmentation does not need to be
Your segmentation does not need to be
limited to the actual customer (the one who
limited to the actual customer (the one who
pays). It might also include relevant
pays). It might also include relevant
implementors
implementors
.
.
Increasing Customer Bonding
Increasing Customer Bonding
(Reducing Churn) and Redefining
(Reducing Churn) and Redefining
Customer Experience
Customer Experience
Telef
Telef
ó
ó
nica M
nica M
ó
ó
viles
viles
-
-
Colombia
Colombia
Telef
Telef
ó
ó
nica M
nica M
ó
ó
viles
viles
-
-
Colombia
Colombia
CUSTOMER SEGMENTATION
Tier Tier Value Added Value Added Channels Channels
Corporations Corporations
High Value Added High Value Added
Increase customer bonding by Increase customer bonding by
developing customized value developing customized value- -added added
business applications. business applications.
Corporation Corporation
Multifunctional Team Multifunctional Team
Medium Value Added Medium Value Added
Basic Needs Basic Needs
Small Small & Medium Size Firms & Medium Size Firms
Improve managerial capabilities and Improve managerial capabilities and
business performance business performance
Professionals Professionals
Professional Professional
Independents Independents
Expert Plus Expert Plus
Traditional Trade ( Traditional Trade (Tenderos Tenderos” ”) )
Individual/Consumer Individual/Consumer
Basic Basic
BOP (bottom of the Pyramid) BOP (bottom of the Pyramid)
Enrich the experience of use by Enrich the experience of use by
relating to affinity groups. relating to affinity groups.
Individuals Individuals
Telemarketing and Telemarketing and e e- -business business
Fashion/Entertainment Fashion/Entertainment
Add value to
increase
bonding (*)
Extend the
Customer
Base
Corporations
High Value
Professionals
Corporations
Medium Value
Small and
Medium Firms
Traditional
Trade
BOP
Fashion/Enter.
Basic
(Individual &
Corporate)
Redefine the Value Proposition
Decommoditization Decommoditization = = Learning + Customization + Value Added Learning + Customization + Value Added
(*) (*) Restricted Access = Increase barriers to entry for competitors a Restricted Access = Increase barriers to entry for competitors and increase nd increase
barriers to exit barriers to exit for customers for customers
Dominant Exchange = By mining the extraordinary information acce Dominant Exchange = By mining the extraordinary information access and ss and
data bank data bank
Strategic Agenda
Strategic Agenda
1. 1. The The Full Development of the Country Network Full Development of the Country Network
2. 2. IT Platform IT Platform
3. 3. Individual Individual- -Basic Service Basic Service
4. 4. Corporations Corporations
5. 5. Sales Sales- -Force Development Force Development
6. 6. Traditional Trade Traditional Trade
7. 7. Small and Medium Size Firms Small and Medium Size Firms
8. 8. Colombians Abroad Colombians Abroad
9. 9. Complementors Complementors
10. 10. Alignment of Firm Alignment of Firm Infr Infrastruct astructure ure
11. 11. Broad Ba Broad Band nd
12. 12. Suppliers Suppliers
Lessons from
Lessons from
Telef
Telef
ó
ó
nica M
nica M
ó
ó
viles
viles
z z
Don
Don
’
’
t ever accept a commodity mentality.
t ever accept a commodity mentality.
Be always ready to challenge that.
Be always ready to challenge that.
z z
Individualized information on consumer
Individualized information on consumer
behavior can be the key to provide a
behavior can be the key to provide a
customized offer.
customized offer.
z z
Fragmented
Fragmented
consumer markets would offer a
consumer markets would offer a
wealth of potential expansion.
wealth of potential expansion.
z z
Unattended corporate customers can be
Unattended corporate customers can be
enriched with knowledge transfer.
enriched with knowledge transfer.
Who is the best customer?
Who is the best customer?
z z
The one who receives the highest value
The one who receives the highest value
added
added
z z
The one who has the most positive attitude
The one who has the most positive attitude
towards you
towards you
z z
The one who you can serve most effectively
The one who you can serve most effectively
z z
The one with whom you can jointly define a
The one with whom you can jointly define a
unique, sustainable, differentiated value
unique, sustainable, differentiated value
proposition.
proposition.
If these conditions are met, that customer
If these conditions are met, that customer
should also be the most profitable.
should also be the most profitable.
doc_334181007.pdf
Dont commoditize your customer.
You should not
treat every customer equally.Customers are different in many ways:Needs
Capabilities
Business economics and strategies Willingness to engage in business with you Demographic characteristics: size, profitability,
participation in various vertical markets, geographical coverage.
The First Critical
The First Critical
Task of Strategy
Task of Strategy
Customer Segmentation:
Customer Segmentation:
Reasons for Customer Segmentation
Reasons for Customer Segmentation
z z Don Don’ ’t commoditize your customer. t commoditize your customer. You should not You should not
treat every customer equally. treat every customer equally.
z z Customers are different in many ways: Customers are different in many ways:
- - Needs Needs
- - Capabilities Capabilities
- - Business economics and strategies Business economics and strategies
- - Willingness to engage in business with you Willingness to engage in business with you
- - Demographic characteristics: size, profitability, Demographic characteristics: size, profitability,
participation in various vertical markets, geographical participation in various vertical markets, geographical
coverage coverage
z z The most attractive customer usually is the one that The most attractive customer usually is the one that
has the greatest gap between its needs and your has the greatest gap between its needs and your
ability to satisfy them. ability to satisfy them.
The Key Mechanisms to Serve the
The Key Mechanisms to Serve the
Customer
Customer
z z Customer Engagement Process Customer Engagement Process - - How do you How do you
establish a proper association with the customer? establish a proper association with the customer?
z z Customer Integration Customer Integration - - The degree of value The degree of value- -added added
you provide to the customer based on the you provide to the customer based on the
knowledge and services you transfer. knowledge and services you transfer.
z z Horizontal Breadth Horizontal Breadth - - The depth of the portfolio of The depth of the portfolio of
products and services you provide. products and services you provide.
All these mechanisms have to be tailored to
each individual customer and result in very
different degrees of customer bonding.
Criteria for Customer Segmentation
Criteria for Customer Segmentation
The most critical dimensions for customer The most critical dimensions for customer
segmentation are: segmentation are:
z z Customer Attitudes Customer Attitudes
- - Castrol Castrol - - How we want to treat the customer How we want to treat the customer
z z Customer Needs and Degree of Self Customer Needs and Degree of Self- -Sufficiency Sufficiency
- - Unilever de M Unilever de Mé éxico xico - - Segmentation by channels Segmentation by channels
z z Different Degrees of Value Added Different Degrees of Value Added
- - Waste Management Co. Waste Management Co. - - Different degrees of customer Different degrees of customer
bonding bonding
z z Customer Behavior and Their Buying Practices Customer Behavior and Their Buying Practices
- - Synthes Synthes - - Different customer buying patterns Different customer buying patterns
z z Redefining Customer Experience Redefining Customer Experience
- - Telef Telefó ónica M nica Mó óviles viles /Colombia /Colombia - - Reducing customer churn Reducing customer churn
CASTROL -
DECOMMODITIZING THE CUSTOMER
Segmentation According to Customer Attitudes
Greater
Company
Success
(Primary Target Segment
Secondary Target Segment
The Least Desirable Segment
Value Proposition:
Customized lubrication
solution involving products
and services
These customers are eager
to receive support that will
These customers are concerned
new production does not neces-
Price Conscious
These customers are
lowest price.
Not all customers are equally
receptive for solutions
Castrol - Lubricants
Castrol considered three Tiers in each market segment
– Productivity Conscious Customers,
– Cost Conscious Customers,
– Price Conscious Customers)
Productivity Conscious
enhance their productivity,
reduce total costs, and
promote higher sales.
Cost Conscious
about total costs but they believe
sarily yield higher sales or
economies of scale.
basically buying from the
supplier that offers the
Do not treat customers equally
What is Castrol Logic?
A customized lubrication
solution involving products and
services that results in
documented:
Cost Reductions
&
Productivity Improvements
Source: Castrol
Documentation
Client Engagement Process
Continuous
Improvement
Initial Information
Exchange
Management
Survey
Proposal
Implementation
Transforming the Organization
Transforming the Organization
Rethink the customer engagement process Rethink the customer engagement process
Lessons from
Lessons from
Castrol
Castrol
• You cannot and should not treat every customer
equally - Differentiate a value proposition to each
relevant tier.
• Often a very insightful way to segment your
customer is by their willingness to do business
with you in a chosen way. We call it
segmentation by attitudes.
• Once you adopt a different value proposition for
each tier you should change accordingly the
customer engagement process. Remember
“Sales are too important to be left to the
salesforce.”
Unilever de México -
Segmentation According to
Channels
The Process
z z The Board spent a week with The Board spent a week with Arnoldo Arnoldo defining the strategy, defining the strategy,
using the Delta Model. using the Delta Model.
z z The The Key elements inc Key elements incl luded uded: :
Customer segmentation!!! Customer segmentation!!!
Identification of key segment interactions Identification of key segment interactions
Identification of services to offer each segment Identification of services to offer each segment
Identification of potential complementors. Identification of potential complementors.
Integration to backend systems from UL and Integration to backend systems from UL and
complementors complementors
z z We identified key insights that We identified key insights that integrated the ways we sought integrated the ways we sought
to serve the various customer segments. to serve the various customer segments.
The Customer Segments
z z Modern Trade: Modern Trade:
Large Local Chains (MT1) Large Local Chains (MT1)
Large International Chains (MT2) Large International Chains (MT2)
Smaller Local players (MT3) Smaller Local players (MT3)
z z Traditional Trade: Traditional Trade:
The 100,000 largest (TT1) The 100,000 largest (TT1)
The other 4 The other 4- -600,000 (TT2) 600,000 (TT2)
z z Wholesale Trade: Wholesale Trade:
The Biggest Players (WS1) The Biggest Players (WS1)
The Rest (WS2) The Rest (WS2)
z z Government Stores Government Stores (G) (G)
MT-2
MT-1
TT-1
WS-1
G
MT-3
WS-2
TT-2
Total Customer
Solution
Transactional
Lock-in
UdM Delta Model
Customer Segmentation
Tier
Members
MT-1
y,
WS-1
Lock-in
i
i
logi i l ies,
i
G
iconsa)
MT-2
i
i i
i
li i
Strategic Option Customer
Comex, Gigante, Soriana,
Chedraui, HEB, Casa Le
San Francisco, Calimax,
OXXO, 7 eleven
Sahuayo, Garces, Chapa,
Ibarra, Mtz Taylor
TT-1
Key Changarros (approx.
100,000)
Preferred customers focused on
growth when we provde transfer
of knowledge in category
management, ECR, efficent
stics, promot ona activit
consumer understandng
Government Stores
(IMSS, ISSTE, D
Wal-Mart, Carrefour
Relational - Support
Major international customers
with established busnesses
pract ces whom we provde
eff cient support to become their
preferred supp ers, avoidng
conflict and rivalry
Customer Segmentation
Tier
Members
MT-3
i
WS-2
Transactional
ith
l
i
TT-2
- Bank - Kimberly-Clark
Strategic Option Customer
Small Sze Locals
All other
wholesalers
Arm length relationship w
minimal leve of customized
services to cover ther specific
needs
Rest of changarros
Complementors
- Tv Azteca - Elektra
The Basis of the Key Insights
z z Wholesale Trade sales and margin Wholesale Trade sales and margins are both shrink s are both shrinking. ing. They They
need a new source of growth and profits. need a new source of growth and profits.
z z The The MT1 segment is shrinking. MT1 segment is shrinking. T They do not have the scale to hey do not have the scale to
compete with Wal compete with Wal- -Mart Mart’ ’s distribution know how and s distribution know how and
economies of scale. economies of scale.
z z TT segment feels ignored, as major supplier companies offer TT segment feels ignored, as major supplier companies offer
special deals to MT1 & 2 special deals to MT1 & 2. . TT operating costs are lower than TT operating costs are lower than
MT, but product purchase costs are higher. MT, but product purchase costs are higher.
z z Unilever Distribution costs are high. Unilever Distribution costs are high.
The Insight
z z Form a network from existing Players Form a network from existing Players
Reduce # of Unilever Distribution Centers from 9 to 1 Reduce # of Unilever Distribution Centers from 9 to 1
Use Existing WS1 warehouses as DC Use Existing WS1 warehouses as DC’ ’s s
Expand WS1 relationship into logistics provider for MT1, MT3, & Expand WS1 relationship into logistics provider for MT1, MT3, & G G
Implement direct sales force for TT1, deliver through WS1 Implement direct sales force for TT1, deliver through WS1
Add Banking provider to improve Credit Add Banking provider to improve Credit
Add Media provider to provide advertising services Add Media provider to provide advertising services
Add White Goods Retailer to provide promotion fulfillment Add White Goods Retailer to provide promotion fulfillment
Add other non Add other non- -competitive suppliers to spread costs competitive suppliers to spread costs
The Delta Network Business Opportunity
EXPECTED BENEFITS TO CHANGARROS:
• Free workstation (key technnological improvement for store growth)
• Guaranteed competitive prices to modern trade (on UL and KC products)
• Access to credit line for the store (through Bank)
• Improvement of service received (more control over delivery times)
• Transfer of merchandising expertise (through sales advisor)
• Individual store management advice & training (through sales advisor)
• Direct access to promotions information (through workstation)
• Information about competitive landscape (through workstation) (e.g. average price of
changarros - for Pricing Strategy)
• Access to Business Management tools (through workstation) (e.g. Inventory & sales
statistics)
• Identification of its most valuable customers (through brand loyalty programs)
• Relative exclusivity (1 out of 6 changarros will be in the network)
The Delta Network Business Opportunity
EXPECTED BENEFITS TO WHOLESALERS: EXPECTED BENEFITS TO WHOLESALERS:
z z Ter Terr ritorial itorial exclusivity exclusivity ( (restricted restricted number number of of wholesalers wholesalers per per city city: 1 : 1 or or 2) 2)
z z Increased Increased sales & sales & order order flow flow co coming ming from from modern modern trade trade and and government government stores stores in in
its its territory territory
z z Increased Increased order order size size co coming ming from from changarros (50% changarros (50% appr appro ox x. . Abastex Abastex experience experience) )
z z Free Free dedicated dedicated sale salesforce sforce to to sell sell UL/KC UL/KC products products for for its its benefit benefit ( (additional additional source source of of
sales sales growth growth at at no no cost cost) )
z z Increased Increased inven invent tory ory turnover turnover res resu ulting lting in in less less working working cap capi ital tal being being tied tied up up
z z Operational Operational cost cost saving savings s resulting resulting from from new new order order entry entry process process
z z Direct Direct acce access ss to to competitive competitive mar mark ket et infor inform mation ation & & deep deep k kn nowledge owledge of of its its customers customers
( (through through full POS full POS system system) )
z z Categor Category y management management know know- -how how provided provided by UL & KC by UL & KC to to define define optimal optimal sku sku mix mix
z z Increased Increased loyalty loyalty from from changarr changarro os s
z z Free Free suport suport from from UL & KC UL & KC for for its its technological technological improvement improvement pr process ocess
The Delta Network Business Opportunity
EXPECTED BENEFITS TO MODERN TRADE & GOVERNMENT STORES:
• Substantial service improvement - particularly in terms of delivery times (direct delivery
from wholesaler to each individual store)
• Guaranteed prices - UL & KC will set the prices at which the wholesaler will commit to
sell their products
• Cost savings because of supply chain & inventory management improvements
• Reduced TV advertisement cost (leveraging UL & KC relationships)
• Identification & knowledge of its most valuable customers (through brand loyalty
programs)
• Free suport from UL & KC for its technological improvement process
Lessons from Unilever de M
Lessons from Unilever de M
é
é
xico
xico
z z Challenge the conventional wisdom. Challenge the conventional wisdom. Your most Your most
important customers could very well be the most important customers could very well be the most
neglected. Remember the Gospel neglected. Remember the Gospel “ “The last ones The last ones
will be the first ones will be the first ones” ”
z z A critical element of a modern strategy is to position A critical element of a modern strategy is to position
yourself within the network. Information Technology yourself within the network. Information Technology
is the key to implement this principle. is the key to implement this principle.
Waste Management
Company (WMC)-
Segmentation According to
Potentials for Customer
Lock-In
Tier 6: Small Price-Seeker
•Small, usually single waste stream
•Bidding process
•Should not require much effort from
WMC to manage these accounts
Tier 5: Big Price-Seeker
• Big, multiple waste streams
• Bidding process
• Highly demanding customer
• Require on-site personnel
• Useful as marketing tool
• Occasional special projects
Tier 4: Bidding Solution-Seeker
•Several facilities
•Bidding process
•Opportunity to develop a long term
relationship
•Occasional special projects
Tier 3: Negotiated Solution-Seeker
•Several facilities
•Negotiated process
•Long term relationship
•Willingness to open their books
•Receptive to innovations to their waste
disposal process
•Occasional special projects
Tier 1: “Key to the Kingdom”
•WMC is the link between customers
and vendors who take care of all their
non-core on-site needs
Tier 2: Total Solution-Seeker
•Several facilities
•Negotiated process
•Long term relationship
•Willing to concentrate on their core
business
•Allow WMC to apply an integral by-
product management solution
WMC
WMC
’
’
s
s
customer segmentation and its main
customer segmentation and its main
characteristics
characteristics
SLI
BP TCS
Tier 6: Small Price-Seeker
•Small, usually single waste stream
•Bidding process
•Should not require much effort from
WMC to manage these accounts
Tier 5: Big Price-Seeker
• Big, multiple waste streams
• Bidding process
• Highly demanding customer
• Require on-site personnel
• Useful as marketing tool
• Occasional special projects
Tier 1: “Key to the Kingdom”
•WMC is the link between customers
and vendors who take care of all their
non-core on-site needs
Tier 2: Total Solution-Seeker
•Several facilities
•Negotiated process
•Long term relationship
•Willing to concentrate on their core
business
•Allow WMC to apply an integral by-
product management solution
Tier 3: Negotiated Solution-Seeker
•Several facilities
•Negotiated process
•Long term relationship
•Willingness to open their books
•Receptive to innovations to their waste
disposal process
•Occasional special projects
Tier 4: Bidding Solution-Seeker
•Several facilities
•Bidding process
•Opportunity to develop a long term
relationship
•Occasional special projects
WHAT
Solutions we provide to
customers
HOW
Set of value delivery systems we use to provide our service
? Compliance with
regulations (environmental,
safety)
- Liability insurance - Personnel training
- Supplier certification process - Constant review of evolving regulations
? Reduce total cost of by-
products handling and
better customer service
- Relationships and bargaining power - Eliminate in-house vendor auditing
with vendors (low prices, better service) process
- Culture focused on customer service - Incentive systems aligned through the
system (customer/firm/vendor)
? Reduce administrative
costs and headcount
- One-stop shop - Single Points of Contact (SPOCs)
- One invoice - The WMC system provides accurate
information
? Improve productivity,
allow company to focus on
core business
- Expertise / R&D capabilities in - Leverage of group capabilities
logistics, recycling, laboratories, etc. - Knowledge of the value chain
- Constant sharing of best practices
? Total facility management
- Access to the best network of partners - Evaluation system to ensure the best
- Joint services with partners (R&D, service at the lowest cost
information, services, etc.)
We would like to structure our value proposition as
We would like to structure our value proposition as
of today by clearly stating what we offer and how
of today by clearly stating what we offer and how
WHAT
Solutions we provide to
customers
?Compliance with
regulations (environmental,
safety)
?Reduce total cost of by-
products handling and
better customer service
?Reduce administrative
costs and headcount
?Improve productivity,
allow company to focus on
core business
?Total facility management
HOW
Set of value delivery systems we use to provide our service
- Liability insurance - Personnel training
- Supplier certification process - Constant review of evolving regulations
- Relationships and bargaining power - Eliminate in-house vendor auditing
with vendors (low prices, better service) process
- Culture focused on customer service - Incentive systems aligned through the
system (customer/firm/vendor)
- One-stop shop - Single Points of Contact (SPOCs)
- One invoice - The WMC system provides accurate
information
- Expertise / R&D capabilities in - Leverage of group capabilities
logistics, recycling, laboratories, etc. - Knowledge of the value chain
- Constant sharing of best practices
- Access to the best network of partners - Evaluation system to ensure the best
- Joint services with partners (R&D, service at the lowest cost
information, services, etc.)
C
O
M
P
L
E
X
I
T
Y
C
O
M
P
L
E
X
I
T
Y
Tier
Small
Price
Seeker
Solutions we provide
•Compliance with regulations
•Lowest cost in by-product handling
•Keep track of activities
•If profitable, look for improvements
Big Price
Seeker
•Handle multiple waste streams
Bidding
Solution
Seeker
•Reduce administrative costs and
headcount
Negotiated
Solution
Seeker
•Improve productivity, allow
company to focus on core business
Total
Solution
Seeker
•Total facility management
Key to the
Kingdom
•Total facility management
Benefits for Customer Benefits for WMC
•Lowest cost
available in the
market
•Small margin gains in
bided activities
•One-time-events with
potentially high
margins
•Better customer
service
•Expertise
•“Looks good in our
resume”
•Opportunity to learn
best practices and new
processes
•Additional services
& improvement
projects if
relationship develops
•Step-up of customer
tier if able to develop
relationship
•Additional cost
savings from non-
waste processes
•Long term relationship
•Higher margins
•WMC as an on-site
partner
•Concentrate in core
business
•Customer lock-in
•One-stop solution •System lock-in
Our value proposition should be tailored to efficiently and Our value proposition should be tailored to efficiently and
profitably serve the different tiers of customers profitably serve the different tiers of customers
Tier
Small
Price
Seeker
Solutions we provide
•Compliance with regulations
•Lowest cost in by-product handling
•Keep track of activities
•If profitable, look for improvements
Big Price
Seeker
•Handle multiple waste streams
Bidding
Solution
Seeker
•Reduce administrative costs and
headcount
Negotiated
Solution
Seeker
•Improve productivity, allow
company to focus on core business
Total
Solution
Seeker
•Total facility management
Key to the
Kingdom
•Total facility management
6
6
5
5
4
4
3
3
2
2
1
1
Benefits for Customer Benefits for WMC
•Lowest cost
available in the
market
•Small margin gains in
bided activities
•One-time-events with
potentially high
margins
•Better customer
service
•Expertise
•“Looks good in our
resume”
•Opportunity to learn
best practices and new
processes
•Additional services
& improvement
projects if
relationship develops
•Step-up of customer
tier if able to develop
relationship
•Additional cost
savings from non-
waste processes
•Long term relationship
•Higher margins
•WMC as an on-site
partner
•Concentrate in core
business
•Customer lock-in
•One-stop solution •System lock-in
Lessons from WMC
Lessons from WMC
z z A power A power segmentation is based on increasing degrees of segmentation is based on increasing degrees of
customer bonding, resulting from increasing value added customer bonding, resulting from increasing value added
provided to the customer. provided to the customer.
z z The The progression of increasing value added implies greater progression of increasing value added implies greater
knowledge transfer, greater margins and profitability, knowledge transfer, greater margins and profitability,
greater complexity in the relations, and greater bonding. greater complexity in the relations, and greater bonding.
z z System Lock System Lock- -In is not necessarily a feasible option to In is not necessarily a feasible option to
pursue for many businesses. However, the Dominant pursue for many businesses. However, the Dominant
Exchange is often the most relevant form of System Lock Exchange is often the most relevant form of System Lock- -
In. In.
z z The lesson of WMC is to seg The lesson of WMC is to segment to customer ment to customer base in base in
increasing degrees of the Systems Lock increasing degrees of the Systems Lock- -In culminating in In culminating in
the achievement of Dominant Exchange. If you can gain the achievement of Dominant Exchange. If you can gain
that position the potential rewards are immense. that position the potential rewards are immense.
Segmentation According to Customer
Behavior and Their Buying Practices
Synthes -
Synthes Synthes
Hospital Hospital
Administration Administration
Patient Patient
Service and Service and
Sterilization Sterilization
Department Staff Department Staff
Insurance Insurance
Surgeon Surgeon
OR Staff OR Staff
Buyer Groups Buyer Groups
Synthes
therapeutic areas
Low Cost
excellence
Horizontal Breadth
• Coverage of all
Proprietary Standards
• AO Foundation
Dominant Exchange
• Role of IT in hospitals
• Manufacturing
Customer Engagement and
Differentiation
Customer Integration
• Continuous New
• Role of Consultants
Product Development
• Education
• Intimacy
Synthes Customer Segmentation
• • Innovative Innovative
• • Ambitious; Go beyond daily business Ambitious; Go beyond daily business
• • Interested in research & publication Interested in research & publication
• • Looking for recognition from: Looking for recognition from:
– – Opinion leaders/professors Opinion leaders/professors
– – Peers Peers
– – Industry (financial sponsoring) Industry (financial sponsoring)
• • Need to have a Need to have a “ “godfather godfather” ”
• • Preparing/Learning to be a specialist Preparing/Learning to be a specialist
• • Looking for R&D support (financial, implants, etc.) Looking for R&D support (financial, implants, etc.)
(3) (3)
Young High Potential Young High Potential
• • Bond to competition Bond to competition
• • For reasons of: For reasons of:
– – Strict budget control Strict budget control
– – Clinical practice/teaching schools Clinical practice/teaching schools
• • Using high volume of implants Using high volume of implants
(2) (2)
Non Non- -User User
(high volume) (high volume)
• • Working at University Hospital, Teaching Working at University Hospital, Teaching
• • High number of procedures High number of procedures
• • Active surgeon with own core specialty Active surgeon with own core specialty
– – Large segments of specialty within his/her influence Large segments of specialty within his/her influence
• • Respected among peers Respected among peers
• • Active in research & development Active in research & development
– – Publications Publications
– – Active as scientific speaker Active as scientific speaker
• • Independent! Independent!
• • Loyal because he/she is convinced of superiority of products Loyal because he/she is convinced of superiority of products
• • Respected by hospital administration Respected by hospital administration
• • Key decision maker regarding implant suppliers Key decision maker regarding implant suppliers
(1) (1)
Professors & Opinion Leaders Professors & Opinion Leaders
Description Description Customer Tier Customer Tier
Synthes Customer Segmentation
• • Community Community hospital hospital
• • Use Use commodities commodities/ /standard standard products products
• • Buy Buy single single items items from from all all products products
(6) (6)
Low Volume & Local Hospital Low Volume & Local Hospital
• • High High volume volume
• • Stratec Stratec makes makes high high turnover turnover with with them them
• • Broad Broad range range of of procedures procedures
• • Mostly Mostly large large public public hospitals hospitals
(5) (5)
“ “Massmarket Massmarket” ” Surgeon Surgeon
• • Negotiating Negotiating body body for for a a group group of of hospitals hospitals
• • An An organization organization designed designed to to increase increase the the purchasing purchasing
power power of of hospitals hospitals and and to to optimize optimize purchasing purchasing and and
administration administration costs costs for for hospitals hospitals
• • The The one one paying paying the the bill bill
• • Focus Focus on on bundling bundling ( (products products, , logistcs logistcs, , tenders tenders) )
(4) (4)
Buyer Groups Buyer Groups
Description Description Customer Tier Customer Tier
• • E.g E.g., ., Education Education of of projected projected end end users users
(7) (7)
Patient Patient
(undergoing elective surgery) (undergoing elective surgery)
Who Who is is our our customer customer? ?
Who Who makes makes the the decisions decisions for for traumatology traumatology implants implants and and instruments instruments? ?
Tier 1
Tier 1
Business Scope
Business Scope
Business Dimension Business Dimension Tier 1: Professors/opinion leaders Tier 1: Professors/opinion leaders
Products Products
Services Services
• • Full range, pioneer products Full range, pioneer products
• • Facilitate education, provide and support access to AO Facilitate education, provide and support access to AO
• • Support for R&D (financial,implements, documentati Support for R&D (financial,implements, documentation & engineer neer on & engi ing) ing)
Customers Customers • • 250 250 approximatel approximatel (list requested from the countries)) (list requested from the countries))
Channels Channels
End users End users
• • Direct Direct
• • - - Sales consultant and sa Sales consultant and sal les manager relationship es manager relationship
• • - - Project leaders Project leaders
• • - - Support CEO, Senior Mgmt (occasionally) Support CEO, Senior Mgmt (occasionally)
• • Polytrauma Polytrauma and high degree of complication and high degree of complication
Complementors Complementors
• • AO Network AO Network
• • Power tool business Power tool business
• • Access to reference hospitals Access to reference hospitals
• • Software provider (documentation, dig Software provider (documentation, digi ital services) tal services)
• • ORP staff ORP staff
• • Scientific publications Scientific publications
• • High High- -end products end products
Unique Competencies Unique Competencies
• • Development and engineering capability Development and engineering capability
• • Technical education at all levels (from sterilization departmen Technical education at all levels (from sterilization departments to surgeons) ts to surgeons)
• • Logistics/loan sets Logistics/loan sets
• • Highly Highly- -trained consultants (clinical and product specific) trained consultants (clinical and product specific)
Customer Value Proposition
Customer Tier 1 Professors Customer Tier 1 Professors
and opinion leaders and opinion leaders
Value Proposition Value Proposition
Set of Set of experiences experiences we will we will
provide to the tier provide to the tier
Provide latest innovative clinic Provide latest innovative clinical solutions in a collaborative al solutions in a collaborative spirit spirit
Set of Set of value delivery systems value delivery systems
needed to provide the needed to provide the
experiences experiences
• • Sales force (experienced & highly qualifi Sales force (experienced & highly qualified) ed)
• • Innovative products Innovative products
• • AO networking AO networking
• • Davos Davos course experience and AO research center course experience and AO research center
• • Engineering development capacity and know Engineering development capacity and know- -how how
Value appropriation Value appropriation
• • Value gained by the customers: Value gained by the customers:
- - Recognition by peers patient and industry Recognition by peers patient and industry
• • Value gained by us: Value gained by us:
- - loyalty & input loyalty & input
- - support for development & sales/teaching support for development & sales/teaching
• • Value shared by both: Value shared by both:
- - productive partnership productive partnership
Lessons from
Lessons from
Synthes
Synthes
z z
The customers
The customers
’
’
behaviors and buying
behaviors and buying
practices often provide relevant criteria for
practices often provide relevant criteria for
segmentation.
segmentation.
z z
This allows you to detect the special needs
This allows you to detect the special needs
of each customer tier, which are translated
of each customer tier, which are translated
into specific value propositions.
into specific value propositions.
z z
Your segmentation does not need to be
Your segmentation does not need to be
limited to the actual customer (the one who
limited to the actual customer (the one who
pays). It might also include relevant
pays). It might also include relevant
implementors
implementors
.
.
Increasing Customer Bonding
Increasing Customer Bonding
(Reducing Churn) and Redefining
(Reducing Churn) and Redefining
Customer Experience
Customer Experience
Telef
Telef
ó
ó
nica M
nica M
ó
ó
viles
viles
-
-
Colombia
Colombia
Telef
Telef
ó
ó
nica M
nica M
ó
ó
viles
viles
-
-
Colombia
Colombia
CUSTOMER SEGMENTATION
Tier Tier Value Added Value Added Channels Channels
Corporations Corporations
High Value Added High Value Added
Increase customer bonding by Increase customer bonding by
developing customized value developing customized value- -added added
business applications. business applications.
Corporation Corporation
Multifunctional Team Multifunctional Team
Medium Value Added Medium Value Added
Basic Needs Basic Needs
Small Small & Medium Size Firms & Medium Size Firms
Improve managerial capabilities and Improve managerial capabilities and
business performance business performance
Professionals Professionals
Professional Professional
Independents Independents
Expert Plus Expert Plus
Traditional Trade ( Traditional Trade (Tenderos Tenderos” ”) )
Individual/Consumer Individual/Consumer
Basic Basic
BOP (bottom of the Pyramid) BOP (bottom of the Pyramid)
Enrich the experience of use by Enrich the experience of use by
relating to affinity groups. relating to affinity groups.
Individuals Individuals
Telemarketing and Telemarketing and e e- -business business
Fashion/Entertainment Fashion/Entertainment
Add value to
increase
bonding (*)
Extend the
Customer
Base
Corporations
High Value
Professionals
Corporations
Medium Value
Small and
Medium Firms
Traditional
Trade
BOP
Fashion/Enter.
Basic
(Individual &
Corporate)
Redefine the Value Proposition
Decommoditization Decommoditization = = Learning + Customization + Value Added Learning + Customization + Value Added
(*) (*) Restricted Access = Increase barriers to entry for competitors a Restricted Access = Increase barriers to entry for competitors and increase nd increase
barriers to exit barriers to exit for customers for customers
Dominant Exchange = By mining the extraordinary information acce Dominant Exchange = By mining the extraordinary information access and ss and
data bank data bank
Strategic Agenda
Strategic Agenda
1. 1. The The Full Development of the Country Network Full Development of the Country Network
2. 2. IT Platform IT Platform
3. 3. Individual Individual- -Basic Service Basic Service
4. 4. Corporations Corporations
5. 5. Sales Sales- -Force Development Force Development
6. 6. Traditional Trade Traditional Trade
7. 7. Small and Medium Size Firms Small and Medium Size Firms
8. 8. Colombians Abroad Colombians Abroad
9. 9. Complementors Complementors
10. 10. Alignment of Firm Alignment of Firm Infr Infrastruct astructure ure
11. 11. Broad Ba Broad Band nd
12. 12. Suppliers Suppliers
Lessons from
Lessons from
Telef
Telef
ó
ó
nica M
nica M
ó
ó
viles
viles
z z
Don
Don
’
’
t ever accept a commodity mentality.
t ever accept a commodity mentality.
Be always ready to challenge that.
Be always ready to challenge that.
z z
Individualized information on consumer
Individualized information on consumer
behavior can be the key to provide a
behavior can be the key to provide a
customized offer.
customized offer.
z z
Fragmented
Fragmented
consumer markets would offer a
consumer markets would offer a
wealth of potential expansion.
wealth of potential expansion.
z z
Unattended corporate customers can be
Unattended corporate customers can be
enriched with knowledge transfer.
enriched with knowledge transfer.
Who is the best customer?
Who is the best customer?
z z
The one who receives the highest value
The one who receives the highest value
added
added
z z
The one who has the most positive attitude
The one who has the most positive attitude
towards you
towards you
z z
The one who you can serve most effectively
The one who you can serve most effectively
z z
The one with whom you can jointly define a
The one with whom you can jointly define a
unique, sustainable, differentiated value
unique, sustainable, differentiated value
proposition.
proposition.
If these conditions are met, that customer
If these conditions are met, that customer
should also be the most profitable.
should also be the most profitable.
doc_334181007.pdf