Market Analysis in Greater China: First Milestone Successfully Accomplished

Published by on 1. Jul 2015 in category Concepts
Market Analysis in Greater China: First Milestone Successfully Accomplished

In June 2014 SEDLÁK & PARTNER began a market analyses for a long-standing customer in China. The research focused on assessing the customer’s market segments. At the same time the opportunities and threats for the future success of the company were identified.

Evaluating Market Segments

An intense discussion of the findings with the responsible market experts took place. It resulted in a portfolio approach to identify the most attractive market segments for the company. This helped determine which segments were to be treated with the highest priority perspectively and which were to be neglected.

Neutralized Exemplary Illustration of Market Segments

Figure 1: Neutralized Exemplary Illustration of Market Segments

With this, a collective and valid answer was found to the questions: “Where can we grow and where do we want to grow?
However, this was only one aspect to be dealt with. It was also important to find answers to the question: “With which customers or customer segments could the existing potential of the company be uplifted?” This is where ICS – The Innovative Customer Segmentation – was employed.

Determining Customer Segments

Neutralized Exemplary Image of the Customer Segmentation Map

Figure 2: Customer Segmentation Map

Identifying the Threshold Level of Customer Segments

In parallel with the market analysis a tailor-made customer survey was developed in order to determine the specific minimum requirements and differentiation potential for each customer segment.
The questionnaire was then made available on an online platform. In close collaboration with our customer about 400 key players, who influence the purchase decision, were identified out of 100 existing and potential customers.

First, the key players were called personally in order to explain the aim and purpose of the survey. This was done to make sure that they could be won over to participate. Subsequently to the phone call a link to the online platform was provided electronically.
The initial expectations concerning the participation in the survey were highly exceeded. With a participation rate of 70 % valuable data was generated with which a determination of the special characteristics of each customer segment was possible.

Innovative Customer Segmentation

The results were surprising. In the prioritized market segments 8 different customer segments, each with special characteristics, were identified.
Every customer segment has different expectations regarding product portfolio, time critical processes, pricing conditions, maximum deviation tolerance with respect to free service features, relationship management as well as brand and image. With the presentation of the results it became clear, which potentials exist and how they can be used by the organization.

 

Neutralized Explanary Illustration of a Value PropositionFigure 3: Neutralized Exemplary Illustration of a Value Proposition

Developing Strategy Map

After the Value Propositions were defined for each customer segment it was time to develop the Strategy Map. This tool was much appreciated because it helped to develop the cause and effect correlations between the financial perspective, the customer perspective (incl. market and customer segments) and the internal process perspective (incl. operations management-, customer management-, innovation- and social processes as well as legal requirements).

Strategy Map

Figure 4: Strategy Map*

The first milestone was reached by finding clear answers to the following questions:

  1. Which market segments have the highest potential?
  2. Which are the market segments that the organization is competitive in?
  3. Which customer segments exist throughout the market segments with different minimum expectations and differentiation potential?
  4. Which market and customer segments are to be treated with high priority?
  5. How should the benefits regarding product portfolio, time critical processes, pricing conditions, maximum deviation tolerance with respect to free service features, relationship management as well as brand and image look like?
  6. What has to be done to handle the different customer segments successfully as part of the customer management?
  7. What has to be done internally to render the expected performance for each customer segment?
  8. Who has to do What until When in order to reach the set objectives?

One of the most important realizations for the management in the process was that the existing market potential is by far higher than it was expected. It became clear how the different customer segments in the different markets are to be managed. All workshops were held in English but simultaneously translated into Chinese. The Chinese key players highly valued the fact that they were able to discuss challenging topics in their own language.

An intensive implementation process will follow with the aim of at least doubling turnover and profit until the end of 2017.

Want to know more?

Are you interested in further details about successfully completed projects? Simply reach out to us by filling out the contact form below. We will gladly inform you about our experiences with the Innovative Customer Segmentation.

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* Own Illustration According to Kaplan, R. S. & Norton, D. P. (2004). Strategy Maps. Der Weg von immateriellen Werten zum materiellen Erfolg. Boston: Schäffer-Poeschel.