Few phrases have as much currency in today’s business-to-consumer (B2C) companies as the customer-centric organization. Although the particulars vary widely, most companies pursuing customer-centricity rely on some form of market segmentation. Segmentation, according to strategy + business author Corey Yulinsky, provides insight into customer behaviour, habits and preferences, increasing the odds of success in marketing and experience management campaigns and driving brand positioning and product development.
Companies that have implemented segmentation successfully tend to use it as a strategic context in designing their business models, as a touchstone for branding and value proposition development and to guide processes such as customer acquisition and retention. Crucially, they know how to manage the complexity that segmentation inevitably introduces to an organization and how to capitalize on the insights it provides.
The author advises companies to take a four-step approach to segmentation, these are:
- Define the objectives clearly. The most important question for each company to ask: What is the purpose of segmentation? Understanding the purpose will enable decision makers to determine whether the segmentation effort is strategic, tactical or both.
- Design around the objectives. The key effective design is working back from the business decisions that need to be made. Once the objectives have been determined, the segmentation research itself must be rigorously designed to reflect them and to ensure that the results will be insightful, actionable and identifiable.
- Prepare a blueprint to operationalize the segmentation. As soon as the outline of the segmentation permits, begin to define these process changes, share them with affected business partners and formulate and discuss revised metrics that reflect the new capabilities.
- Manage the implementation process. Making segmentation deliver is ultimately more of a change management challenge than a technical or marketing challenge, but this point tends to be overlooked. The tools for managing change – targeted and tailored communications, sequenced to engender understanding, engagement and acceptance – need to be deployed fully.
Segmentation will be essential to the process of managing the complexity of continually evolving and fragmenting customer groups and their different demands. Companies that achieve this will have a substantial advantage in making customer-centricity more than a slogan.
Leaders of multinational corporations have lucrative opportunity on much bigger playing field: a global middle-class market. In 2011, according to strategy + business authors Edward Tse, Bill Russo and Ronald Haddock, it includes about 400 million people in the mature middle classes of the U.S., Europe, Japan and another 300 to 500 million people in emerging economies.
During the high-growth years between 1992 and 2007, the globalization of commerce galloped at a faster pace than in any period in history. Now, amid the chronic unemployment and financial crisis fall out, some observers wonder whether globalization needs a time-out.
According to Nancy Nichols (in Strategy + business) many businesspeople as well as environmentalists are converging on one new truth, and that is, the degree of change delivered by incremental solutions is not enough to address some critical environment problems. We tend to agree!
At least half of all product launches fail to live up to companies’ expectations. For every four product concepts that enter development, only one makes it to the market. We know these kind of data for a long time, but it has once again been confirmed by a recent study at Georgetown University’s McDonough School of Business.
At a time when retailers are struggling to reach customers, who have become more and more hesitant to spend in a soft economic environment, this new use of technology will divide retailers further. The early adopters of mobile commerce (m-commerce) will have greater opportunities to influence shoppers in real time as they build “in the moment” customer analytics capabilities.
Finding and developing good ideas is what corporate innovation strategy is all about. Booz & Company’s research shows that most companies with robust open innovation capabilities are seven times as effective as firms with weak capabilities, and twice as effective as those with moderate capabilities, in generating returns on their overall R&D project investment portfolio.
A new survey of 20,000 consumers in 13 Asian markets shows big shifts in banking relationships, product and service needs and channels.
How companies manage sustainability: McKinsey Global Survey results
Companies engagement in sustainability
Given sustainability’s importance, it’s surprising that only 27 percent of respondents say their CEOs or other C-level executives run their companies’ sustainability initiatives on a day-to-day basis. Thirty-one percent say business units or functional managers take on this responsibility and 25 percent say their corporate social responsibility department do so.
Around 20 percent of executives say their companies don’t engage in sustainability efforts. One potential reason is that many have no clear definition of it. Among those that do, their definition varies but the majority clearly sees sustainability as creating real value.
Uneven management efforts
Despite sustainability’s importance to various corporate activities, only 25 percent of executives say it’s a top-three priority on their CEOs’ agendas. The lack of weight in leadership’s top agenda shows in the relatively small number of activities companies actually pursue related to sustainability: only 28 percent agree that their companies actively seek opportunities to invest in sustainability, 29 percent indicate that sustainability is integrated into their companies’ business practices and a mere 16 percent say their companies actively shape relevant regulation.
What the proactive do differently
Other findings indicate how much sustainability is a part of the fabric of these companies. Their executives, for instance, are more aware than executives at other companies of the metrics their companies track. For example, 84 percent of respondents at engaged companies are aware of whether their companies measure their carbon footprint, compared with 40 percent of respondents at less engaged companies.
Dealing with regulation
Regulation, particularly environmental regulation, can have a very strong effect on companies’ sustainability activities. However, only about 35 percent of executives say their companies have quantified the potential impact of environmental and social regulation on their business; only 40 percent feel prepared to deal with regulation in the next three to five years and are personally confident about handling climate change issues.
Read the full article on McKinsey Quarterly