Creating a basis for profitable success and growth

By Phil Allen, CEO & Value Creator of Customer Value Management GmbH

Based on my forty+ years of marketing and sales experience, primarily in Chemicals, Plastics and related value chains, I have reached the conclusion that there are three key and critical factors for success in any market. They are: a meaningful segmentation, a strong and sustainable differentiation and a highly effective implementation.

Meaningful segmentation
All marketers are familiar with the concept of segmentation.  Most marketers in the chemicals and plastics industry have relied on faithful old recipes for segmentation, based on industry sector, application or geography.  Whilst such segmentation schemes have had their merits in the past, I would challenge this today and argue that a meaningful segmentation has to be built around customer needs and behaviour.  In fact, in my experience the most meaningful customer segmentations are built around the key factors that contribute to the selection of a supplier (usually from a list of qualified “probables”), what we would call buying decision determinants. 

Strong and sustainable differentiation
Using need and behaviour-based segmentation provides the marketer with a direct link into the development of a strong and sustainable value proposition that is relevant to customers and therefore appealing to them.

We use a very simple model to effect this linkage.

First we take these key items from the segment profile:

• Target Customer
• Description of Customer
• Names of Customers in this segment
• Determinant Needs
• Unmet/Poorly Met Needs

Once we have this information, we can build our value proposition by focusing on developing key elements of our offering to address the determinant needs and/or the unmet and poorly met needs of the customer. These are the factors that customers in this segment will truly value and/or they are criteria that would cause customers to switch their allegiance from a competitor to our offering.

In today’s fast changing world, where competitors quickly adjust and respond to our offerings, we must strive constantly to make our offering more relevant and more attractive to the customers in a target segment than the offerings of our competitors. This requires a continuous review of customer needs and behaviour and an ongoing adjustment and fine-tuning of the value proposition to keep it sustainable. After all, marketing is a dynamic and not a static activity.

Highly effective implementation
The third leg of our modern marketing tripod is the implementation. The key to successful and effective implementation is to ensure that ONLY those actions  that are relevant and critical to the delivery of the value proposition for a target segment get implemented.

When these three elements are combined - segment → differentiate → implement, they will provide any business with a basis for profitable success and growth.  I would challenge some of the conventional wisdoms and insist that, whilst each factor is important in its own right, it is the powerful combination of the three that really brings better business results.  In fact, it is often a weakness in one of these three factors that causes a business to fail.

In short, to be successful, I would strongly recommend that you build a bridge from the needs and behaviour-based segmentation through the value proposition to the implementation plan.

Would you like to learn more? Phil Allen will present at EMG’s Value Based Marketing & Communication seminar on Wednesday 15 October at Fakuma, Friedrichshafen, Germany. For more information and reservations go to http://www.emg-pr.com/en/2014_fakuma_seminar/invitation/
 

 

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