zealand global workshop - startvaekst.dk · customer segmentation, market & partner strategy...

Anders Kjøller 03 04 17

Zealand Global Workshop

CUSTOMER SEGMENTATION, MARKET & PARTNER STRATEGY

Anders Kjøller, Dansk Industri

Anders Kjøller

| 2| 2

Market

SelectionAnalysis Strategy

“A Success aboard starts with a dialogue at home”

DI's department for international

business consultancy (DIBD)

Experts in strategic business development in

emerging and developing markets

Experience from more than 700 projects in

more than 40 countries

Offices in China, Russia, India, Brazil, USA,

Mexico, and Kenya.

67 employees in Denmark and the DI's foreign

offices

Global network of sister organizations and

partners

Implementation /

market entry

Home Aboard

Export & Internationalization ConsultancyComparative market and location studiesMarket StudiesFeasibility studies / business plansMarket entry strategyDistributor Management Tools"Own Man In" market start-up solutionOutsourced Subsidiary Administration

Anders Kjøller

| 3


Customer Segmentation, Market & Partner Strategy

Anders Kjøller

| 4

Højreklik på billedet, vælg ”Skift

dette layout:

For at få et baggrundsbillede:

PREPARATION

Anders Kjøller

| 5

DI tools for International Partnerships

Value-based Customer Segmentation

Structured Market Selection

Partner Search

Partner Management Guide

Link: http://di.dk/Marked/Eksport/vaerktoejertilinternationalisering/Pages/eksportrvaerktoejer.aspx

Operational tools developed by DI in close cooperation with selected member companies

Anders Kjøller

| 6

Internationalization

1

2

3

Customer Segmentation

Which customer segment does the company serve best?


Which markets to enter?

Market Entry Mode

Select suitable market entry modeStrategic importance vs. company’s resources & risk profilePriority of markets, assessment of market potential

Prior to expansion into foreign markets consider:

Anders Kjøller

| 7

Structure of each of the 3 modules today

Presentation of the tool(s)

Work with the tool related to your own company

Questions & follow-up


1: Customer Segmentation

Anders Kjøller, DI International

Anders Kjøller

| 9


1

2

3





Market Entry Mode



Anders Kjøller

| 10

How does this fit into my Export Road Map?

Anders Kjøller

| 12

Anders Kjøller

| 12

Customer Segments & Value Propositions

How to link your customer segments with matching value propositions

Anders Kjøller

| 13

Value Proposition

What The Customer

Needs

Your Offering

The Marketplace

Offerings

Your Value

Proposition

Anders Kjøller

| 14

Anders Kjøller

| 15

Observe and decode the customer’s perspective

Value Proposition Canvas

Source: Value Proposition Canvas, Strategyzer

Anders Kjøller

| 16Source: Value Proposition Canvas, Strategyzer

Anders Kjøller

| 17

Anders Kjøller

| 18


Value Based Customer Segmentation

Anders Kjøller

| 20

Know your customers’ purchasing criteria

$

Customers

demand?

Do your

customers

have similar

needs?

Do your

customers

seek the same

value solution?

Anders Kjøller

| 21

Value Based Customer Segmentation

3 advantages

1. Optimal Resource

Allocation

2. Increased Profit

3. Market Selection

Understand the customers needs, collect information about your customers, examine in detail how your company creates value for the each of your customers

Group customers based on similar customer needs

The more precise the definition of the customer segments, the more efficiently the marketing can be designed

Consciously deselected irrelevant customer segments based on insight into which type of customers you serve best.

Anders Kjøller

| 22

Priority: Choice of key customer segment

ToFocus on few

selected

Customer

Segments

FromServing All

Customer

Segments

Randomly

Anders Kjøller

| 23

Anders Kjøller

| 23

How it’s done…

Anders Kjøller

| 24

Value Based Segmentation: The 3 Steps

2 Customer segments are formed

CS1 CS4CS2 CS3

Selection of segmentation variablesV1, V2, V3 … V81

3Selection of target group

CS5 CS6

CS5CS1

6-8 variables are selected.

Customer profiles are prepared from knowledge on existing customers. Based on the profiles, customer groups are created.

Based upon an internal analysis, focus segments are chosen.

Anders Kjøller

| 25

Anders Kjøller

| 25

Variables

Step 1

Anders Kjøller

| 26

Step 1: Selected Segmentation Variables

Price

Customer Relationship

Advisory

After Sales Service

Product and quality

Considerations when

the variables are

selected

• Its impossible to cover everything, select 6-8 variables at most, and stick with them

• Stay focused! - what are the key factors why the customers select you?

Anders Kjøller

| 27

The continuum of segmentation variables

Price


Advisory

After Sales Service

Product and Quality

Price important

Relationship orientated

Highly important

Highly Demanding

High tech / Quality Important

Price less important

Transaction orientated

Less important

Less demanding

Standard products

Anders Kjøller

| 28

Anders Kjøller

| 28

Customer Profiles

Step 2

Anders Kjøller

| 29

Step 2: Method

1. The group develops customer profiles, preferably lead by the colleague who knows the customer best. Inputs from the entire group are however important.

2. Develop customer profiles for all types of customers

3. Subsequently, customer profiles are evaluated and compared. Possible differences are discussed (this discussion is important, as this highlights how your company creates values for the customers, and your market position)

4. Collect the customer profiles in homogenous groups and subsequently describe them as customer segments

5. On the basis of interviews with the customer, test the profiles, keeping focus on where you create value, and where you do not

Anders Kjøller

| 30

Step 2: Customer profile (illustration)

Price


Advisory

After Sales Service

Product and Quality

Price important

Relationship orientated

Highly important

Highly Demanding

High tech / Quality Important

Price less important

Transaction orientated

Less important

Less demanding

Standard products

Customer: Company X

Anders Kjøller

| 32

Creating Customer Segments

CUSTOMER SEGMENT 1:

CUSTORMER SEGMENT 3

CUSTORMER SEGMENT 2

CUSTORMER SEGMENT 4

Divide the customer profiles in homogenous groups and subsequently describe them as customer segments

Anders Kjøller

| 35

Define customer segment

• “We have to know that we are price sensitive with regards to subjects and systems, but simultaneously keep a holistic perspective”

• “Be capable of delivering components or systems varying with our needs and your competitiveness”

• “Deliver counselling, sparring, and service”

• “Carry the assignment as a strategic partner, and keep in mind that we strive towards close collaboration with the customer”

• “Deliver on the agreed upon time• Offer short, competitive delivery

times on new subjects”• “Goodwill is earned through fast,

flexible and reliable deliveries and service”

Characteristics of Customer Segment X

Price sensitive large scale customer within sector XCustomer typically demands system solutions or components with special requirements Customer appreciates close cooperation and require a high level of service

Anders Kjøller

| 36

Anders Kjøller

| 36

Focus Segments

Step 3

Anders Kjøller

| 37

Step 3: Method

Deciding on a Target Groups

2

Customer segments are formed

1

3

Selection of target group

Evaluate all customer segments in two dimensions

Customer segment’s attractiveness (Market segment)The company’s ability to service the segment (company’s competiveness)

Plot the result in the evaluation matrix

Use MS Excel

Focus segments are selected

Anders Kjøller

| 38

Step 3: Deciding on Target Groups

Customer Segment's Attractiveness

The Company’s Ability to Service the Customer Segment

Access to market segmentSize of markets segmentGrowth with in market segment

Is the company able to optimally service the customer segment with the current product portfolio?Does the company’s marketing mix meet the customer segment’s needs? Does the company’s financial marketing, and personnel recourses to service the customer segment?Does the company service the customer segment better than competitors?

Anders Kjøller

| 39

Step 3: Customer Segment’s Attractiveness

Criteria Very

Poor

1

Poor

2

Medium

3

Good

4

Very

Good

5

Weight % Score

Total score 100%

Segment: _____________________________________

Anders Kjøller

| 40

Step 3: Company’s Ability to Service Segment

Criteria Very

Poor

1

Poor

2

Medium

3

Good

4

Very

Good

5

Weight % Score

Total score 100%

Segment: _____________________________________

Anders Kjøller

| 41

Step 3: Evaluation Matrix

1 2

3 4

Low

High

High

Not Attractive

The company is very good at servicing the customer

segment

The company is poor at servicing the customer

segment

Customer Segment Attractiveness

Co

mp

etitive

ne

ss

Very Attractive

Anders Kjøller

| 42

1 2

3 4

Step 3: Evaluation Matrix (illustration)

Low

High

High

Very Attractive Not Attractive


Co

mp

etitive

ne

ss

1

2

3

4

5


segment


segment

Anders Kjøller

| 43

Process

Presentation of the tools


Questions

Anders Kjøller

| 44

VHSJDI

| 44

Workshop Exercise

Customer SegmentationHow to profile customers and create customer segments How to evaluate and selected the best customer segment(s)

#1

Anders Kjøller

| 45

VA

RIA

BLE

S

Key

Variables

Anders Kjøller

| 46


Key Variables

What are the unique selling points

of your product?

• Select the key variables which are the unique selling points of your product

• Select variables, write them on post it notes, and put them on the “Key Variables” template to be discussed in the forum

Question

1

Anders Kjøller

| 47

The continuum of segmentation variables

Price

PR

OF

IL

ES

__________

__________

__________

__________

__________

__________

__________

__________

__________

__________

__________

__________

Anders Kjøller

| 48


Questions

Prepare two customers profiles based

on two of your existing customers?

• Write the select variables (from first exercise) on the customer profile template and define the range

• Draw profiles of two of your existing customers, who have different buying patterns

Profiling customer segments2

Anders Kjøller

| 49

Customer Profiling (Examples)

Anders Kjøller

| 52

Anders Kjøller

| 52

Segments & Value Proposition

Which customer segment(s) do you serve the best?

Anders Kjøller

| 53

1 2

3 4

Evaluation Matrix (illustration)

Low

High

High



Co

mp

etitive

ne

ss


segment


segment

Anders Kjøller

| 54

Anders Kjøller

| 55

Customer Segments & Value Proposition

Source: Value Proposition Canvas, Strategyzer

Anders Kjøller

| 56


Anders Kjøller

| 57

Questions??

Anders Kjøller

| 58


Coffee Break

15 Minutes

Anders Kjøller

| 59




2: Strategisk markedsvalg

Anders Kjøller, DI International

Anders Kjøller

| 61


1

2

3





Market Entry Mode


Prior to expansion into foreign markets companies should consider:

Anders Kjøller

| 62


Anders Kjøller

| 64

Market Assessment

Total market

Irrelevant

Markets

Relevant

Markets

Wide screening

Attractive

Markets

Not able to

compete

Attractive

Market

Segments

Competitive

Attractive

Market

Segments

Fine screening

Fine screening

Best

Competitive within chosen segments

Better than the competitors within

this customer segment

Anders Kjøller

| 65

Priorities: Choice of Focus Markets

On which markets can products easily be imported?Where is distribution accessible?Few conditions apply to the market

Where do we want to sell our products?Where should our focus be?Where do we make best use of our resources?Markets chosen from objective criteria

ToStructured

Market

Selection

FromRandom

Market

Selection

Anders Kjøller

| 66

3

The Model

2

1 Wide Screening

Fine Screening

Market

AttractivenessCompetitiveness

Final Selection

External Internal

Anders Kjøller

| 67

Core

Markets

Low

(1)

High

(5)

High

(5)


Market Attractiveness

Co

mp

etitive

ne

ss

Re-distribute

Resources

Upgrade

Capacities

Non-

Interesting

Markets


Anders Kjøller

| 68

Højreklik på billedet, vælg ”Skift

dette layout:

For at få et baggrundsbillede:

Case: House of Prince

Anders Kjøller

| 69

Case: House of Prince Tobacco

Separated as independent subsidiary company in 1990International cigarette manufacture with sales in 40+ countriesCigarette production in Denmark, Norway, Latvia and PolandHouse of Prince has sales subsidiaries in Sweden, the Baltics, Czech Republic, Hungary and Greece Total sale annually of more 28 billion cigarettesNet turnover of 3 billion DKK in 2007/2008750 employees – 600 in Denmark (Søborg)Own by British American Tobacco since 2008

International Growth on

European Markets

Norway 1961

Sweden 1962

Germany 1974

Greece 1980

Czech Republic 1990

Latvia 1992

Lithuania 1994

Estonia & Poland 1995

Anders Kjøller

| 70

Case: House of Prince Tobacco

PRINCE

CHALLENGES

Decreasing total markets in the Western countries

Decreasing market share in home markets

Decreasing earnings as a result of rise in “budget cigarettes”

Increased competition as a result of consolidation within

industry

Anders Kjøller

| 71

KosovoJuli

2005

ArmeniaAug 2004

GeorgiaJuli 2006

JapanApr. 2005

BulgariaOkt. 2006

Hong K.Apr 2005

IranApr

2005

IraqAug 2004

IsraelMar

2004

LibanonApr. 2003

PortugalDec 2004

AlbaniaApr. 2005

HungaryMaj 2005

AustriaMaj 2005

SlovakiaApr. 2004

KazakhJuly 2005

SerbiaDec 2002

Ex

pan

sio

n in

to n

ew

m

ark

ets

Anders Kjøller

| 72

The Problem!

Lack of overall direction

Lack of focus and prioritization

Poor utilization of resources

!

NEED: Structured Market Selection

Anders Kjøller

| 73

Priorities: Choice of Focus Markets

On which markets can products easily be imported?Where is distribution accessible?Few conditions apply to the market

Where do we want to sell our products?Where should our focus be?Where do we make best use of our resources?Markets chosen based on same criteria

ToStructured

Market

Selection

FromRandom

Market

Selection

Anders Kjøller

| 74

Anders Kjøller

| 74

How it is done…

Anders Kjøller

| 75

3

The Model

2

1Wide Screening

Fine Screening

Market

AttractivenessCompetitiveness

Final Selection

External Internal

Anders Kjøller

| 76

Step 1: Wide Screening

Screening Criteria

General market data

Purchasing power

Buyer patterns and trends

Infrastructure (e.g. access to harbor, storage, distribution structure)

Presence of core customers

Political & economic stability

Language (ability to communicate in English)

Anders Kjøller

| 77

Step 2: Fine Screening - 2 Dimensions

Market

Attractiveness

Company

Competitiveness

Market growthPurchasing powerCustomers in focus segmentCompetition (No. of competitors)Price sensitivenessSubstitutesCustoms and import restrictions

Branding and image strengthDeliveries and logisticsCompetitiveness Quality Competitiveness PriceAccess to technical serviceAbility to invest in capacity building

Anders Kjøller

| 78

How to do it?

1

2

3

4

5

Define Questions

Decide On Weights

Market Attractiveness is Evaluated for

Each Market

Company Competitiveness in Each

Market is Evaluated

The Selected Markets Are

Placed in the Evaluation Matrix

Anders Kjøller

| 80

Anders Kjøller

| 80

Define assessment questions

Define the questions which will serve as assessment criteria for each market in the two dimensions (market attractiveness and competitiveness)

Anders Kjøller

| 85

Core

Markets

Low

High

High

Very

Attractive Not Attractive


Co

mp

etitive

ne

ss

Re-distribute

Resources

Upgrade

Capacities

Non-

Interesting

Markets


Market

Market Z

Market X

Anders Kjøller

| 86

Process



Questions

Anders Kjøller

| 87

VHSJDI

| 87

Workshop Exercise

Target Markets Structured Market Selection

#3

Anders Kjøller

| 88

Core

Markets

Low

High

High



Co

mp

an

y’s C

om

pe

titive

ne

ss

Re-distribute

Resources

Upgrade

Capacities

Non-

Interesting

Markets


MA

RK

ET

S

Anders Kjøller

| 89

Core

Markets

Low

High

High

Very



Co

mp

etitive

ne

ss

Re-distribute

Resources

Upgrade

Capacities

Non-

Interesting

Markets

Structured Market Selection (Example)

Egypt

Germany

Sweden

ArgentinaUK

Spain

Potential markets

Selected markets

China

Anders Kjøller

| 90

Core

Markets

Low

High

High

Very



Co

mp

etitive

ne

ss

Re-distribute

Resources

Upgrade

Capacities

Non-

Interesting

Markets


__________

__________

____________________

_____________________

___________

Your Markets?

Anders Kjøller

| 92

Market Selection

Market Selection

Market

• Which markets are you currently considering to enter into?

• Place the selected markets in the matrix, thereby assessing each market both in terms of “market attractiveness” (X axis) and your own “company’s competitiveness” (Y axis)

• Use the template

Questions

1

Anders Kjøller

| 93


Anders Kjøller

| 94

Questions??

Anders Kjøller

| 95


Lunch

45 minutes

Start

12:45

Anders Kjøller

| 96




Valg af etableringsform (Entry Mode)

Hvad er fordelene og ulemperne ved de forskellige etableringsformer

Skitsér din etableringsform

Anders Kjøller

| 98


1

2

3





Market Entry Mode



Anders Kjøller

| 99


Anders Kjøller

| 100

Anders Kjøller

| 102

Different types of entry modes

Direct Export

Management Agreements

Rep. office

Agent / Distributor

Licensing

Franchising

WFOE / Subsidiary (100%)

Co-operative JV

Sales Subsidiary

Equity JV

Contract manufacturing

Risk

Return

Resource commitment

Control

Global Integration

Strategic FlexibilityIndirect Export

Production Investment Modes

Contractual Modes

Export Modes

Anders Kjøller

| 103

Entry Mode - comparison

ENTRY MODEFACTORS SUGGESTING THIS

ENTRY MODEADVANTAGES DISADVANTAGES

Export

• Export

• Agent

• Distributor

• Rep Office

• Sales Office

- Limited sales potential in the

target country

- Limited product adjustment

required

- Distribution channels close to

production

- Liberal import policies

- High political risk

- High value/weight relationship

- Minimum risk and investment

- Fast penetration of the market

- Maximum capacity utilisation on

existing production facilities

- Less management resources

required

- Trade barriers and import duty

increase costs

- Higher transport costs

- Limited access to local

information

- The brand and the company is

considered a foreign

brand/company

Contractual

Modes

• Licensing

• Franchising

• Contract manufacturing

• Co-operative JV

- Import and investment barriers

- Legal security possible in the

target country

- Limited sales potential

- Large cultural distance

- Partner lacks the ability to

become a competitor

- Minimise risk and investment

- Fast penetration of the market

- Possibility to evade trade barriers

- Often high ROI

- Limited control over asset use

- Partner could become a

competitor

- Contract period usually limited

- The earning potential can be

limited

Anders Kjøller

| 104

Entry Mode - comparison

ENTRY MODEFACTORS SUGGESTING

THIS ENTRY MODEADVANTAGES DISADVANTAGES

Joint Venture- Import barriers

- Large cultural distance

- High sales potential

- Some political risk

- Assets can effectively be priced

- 100% foreign owned

companies not allowed

- Local companies that can

contribute effectively to

penetrating the market

- Evade ownership restriction

and cultural distance

- Combine the resources of two

companies

- Potential for learning

- Obtain status as local

competitors

- Less investment required

- Requires significant

management resources

- Less control

- Higher risk than previous

modes

- Partner could become a

competitor

- Objectives change over time =>

not always in the same

direction

- Difficult to maintain mutual

dependence

Wholly owned

Subsidiary

- Import barriers

- High sales potential

- Low political risk

- Need for control

- Short cultural distance

- Knowledge of the market

- Easier to use special

competencies

- Obtain local status

- Highest degree of control

- High risk

- Low flexibility in abrupt market

changes

- Significant management

resources required

- Local conditions hard to handle

Anders Kjøller

| 105

Case 1: Company X’s entry mode with distributor

Payment for spare parts

Spare

parts

Company X Foreign Partner

Machine supplyForeign

Customers

Sales provision

Spare parts

Payment for

Spare parts

Anders Kjøller

| 106

Case 2: Company X’s entry mode with license + distribution

Company X A/S Foreign PartnerForeign

Customers

High Tech components for local distribution

Technology og Know-how

Royalty and payment

Local

Sub-supplier

Raw materials for

production

Sales of own and

imported products

Anders Kjøller

| 107

Case 3: Joint venture + License + Management + Distributor

Managem

ent

agre

em

ent

Local PartnerDanish Partner

Joint

Venture

Local

Customer

Local

Customer

Local

Customer

Share capital

Lic

ense

agre

em

ent

Shareholders Agreement

Anders Kjøller

| 108

Determining Factors

Legal Framework

Country Risk

General Experience

Entry Barriers

Project Orientation

Government

Policies

Infrastructure

Cultural Distance

Demand Conditions

Structural

Uncertainty

Competition

Strategic Intent

Buyer Relations

Supplier Relations

Specific Experience

Contractual Risks

Project Size

Asset Specificity

Resources

Partner Availability

Product features

Country

Factors

Firm

Factors

Industry

Factors

Project

Factors

Anders Kjøller

| 109

The Main Principle…

The marketing channel should deliver the required products and services in the right

quality at the minimum cost

Anders Kjøller

| 110

• Direct Export?

• Agent?

• Distributor?

• Joint Venture?

• Own Subsidiary?

Anders Kjøller

| 111

Process



Questions

Anders Kjøller

| 112

VHSJDI

| 112

Workshop Exercise

Relevant Entry Mode Discuss the suitable entry mode(s) related to your own company

#3

Anders Kjøller

| 113

Choice of Relevant Entry Mode

Entry Mode

What is the suitable market entry mode for your company?

• Reflect on the different types of entry modes and/or the combinations of entry modes• What is the suitable market entry mode for your company? • Sketch how you see your market entry mode• Use the template

Questions

1

Anders Kjøller

| 114

Questions??

Anders Kjøller

| 115

DI juridiske modelkontrakter

Modelkontrakter og Guides

Agenter

Forhandlere

Underleverandører

Vedligeholdelse, reparation

Konsortier

Forskning og udvikling

Ejendomsret til tegninger og teknisk dokumentation

Licens

Betalingsforhold

Konkurrenceret

Hemmeligholdelsesaftale

http://di.dk/shop/produktfamilie/Pages/produktfamilie.aspx?familyid=31

http://di.dk/shop/produktfamilie/Pages/produktfamilie.aspx?familyid=31

Anders Kjøller

| 116

Anders Kjøller

Manager

DI International Business Development E-mail: [email protected]: (+45) 33 77 37 72 / (+45) 26 20 45 60

www.di.dk/international

zealand global workshop - startvaekst.dk · customer segmentation, market & partner strategy...

Documents