Target Marketing Project - Segmenting For Success Case Study Český Telecom Ljubljana 26. 10. 2006 Martin Dokoupil Content Background and Methodology Residential Market Segmentation Business Market Segmentation Strategy mplementation into business processes 2 1
Situation before the Project Technology-driven marketing planning Mass marketing non-targeted product campaigns No differentiation based on customer needs nefficient allocation of marketing and sales resources 3 Technology (Network) Product Management Marketing Customer Paradigm Shift Reversing the logic: 4 Customer Marketing Product Management Technology (Network) How: Understanding customers marketing strategy retention, up-sell, cross-sell, winback (resource allocation based on quantified opportunities) Process re-engineering 2
Understanding Customers The new approach needs market segmentation/subsegmentation (so-called customer boxes) which supports: 5 a) Customer typology b) Formulation of specific Value Propositions c) Communication and Sales Strategy Making it all work The new segmentation must be translated into key processes in order to achieve benefits. We implemented the segmentation approach in the following processes: 6 a) Strategic Marketing Planning b) Product Life-cycle management c) Design of targeted campaigns d) Product modification and development e) Market Analysis f) Sales and customer care 3
Limitovaný prostor L Extrémně Extrémně loajální l oajální pouze s pouze s hlasovými hlasovými službami službami L L pouze s pouze s hlasovými hlasovými službami službami Neloajální Neloaj ální pouze s pouze s hlasovými hlasovými službami službami Neloajální Neloajální některých některých moderních moderních technologií. technologií. Neloajální Neloajální internetu a internetu a datových datových služeb služeb ompetiční prostor Progresivní prostor P P uži vatelé některých některých moderních moderních technologií. technologií. P P intenzivní intenzivní internetu. internetu. P P internetu a internetu a datových datových služeb služeb 1. Nerozhodný 2. Opatrný 3. Racionální 4. Hýčkaný 5. Rozvažující/ náročný NT L = ANO ABEL = NE PC = A NO konec VÝBĚROVÁ RTÉRA provozní nákl ady - ta rify spol ehliv ost spoj ení Má dodavatele za pojení? NE rychlost připojení při vytáčení re fe rence brand ochrana proti virům ochrana proti spamu ochrana před acti ve X anony mita promo/v ýhodná nabídka velikost e-mailové schránky velikost WWW... NN 32 44 57 18 171 Limitovaný Limitovaný prostor prostor L L L - p1 L - p2 L - p3 L - p4 L - p5 NE L L L - p1 L - p2 L - p3 L - p4 L - p5 ANO NE DAL UP Z vlá dne zapojen í? NE Po so uzení tarifů +... Po souzení... ompetiční ompetiční prostor prostor VÝCHOZÍ S TUACE ANO Reference ANO - p1 - p2 - p3 - p4 - p5 ANO Volba vytáčeného čísla NE Volba vytáčeného čísla NE ANO Volba vytáčeného čísla - p1 - p2 - p3 - p4 - p5 ANO - p1 - p2 - p3 - p4 - p5 Progresivní Progresivní prostor prostor Quick OL Volný... P P P - p1 P - p2 P - p3 P - p4 P - p5 P P P - p1 P - p2 P - p3 P - p4 P - p5 Making it all work n order to design and implement the new market segmentation we had defined : 7 Target Marketing Project Target Marketing Project Market Analysis Players Boxes Strategy formulation and execution 8 mplementation Market Usage? Demographics např. typologie rozhodovací ch procesů např. příjem Customer Meaningful Selection of vendor Decision Types Decision Process Actionable Active Demand 4
Different strategies for different boxes Sources of growth quantification of opportunities and threats 9 2. ncreased usage 4. Winback 1. Retention 5. New markets 3. Cross selling mplementation Distinct strategies for different boxes 10 1. 5,0% 8.6% 6.5% 12.1% 6.9% 1.6% 0.8% 6.1% 0.3% 2. 3,0% 5.1% 5.5% 11.5% 1.7% 0.6% 0.2% 0.0% 2.7% 3. 1,0% 2.0% 2.0% 6.7% 2.3% 1.2% 1.1% 4.2% 4. 0,0% 0.7% 1.0% 4.1% 6.3% 0.6% 0.6% 2.6% 5. 0,0% 0.8% 1.2% 5.3% 30.0% 1.4% 1.3% 5.0% 5
Content Background and Methodology Residential Market Segmentation Business Market Segmentation Strategy mplementation into business processes 11 Axis X usage typology L Extremelly loyal customers Extremelly loyal customers L, intensive, intensive users of modern technologies users of modern technologies P P, intensive users, intensive users of modern technologies of modern technologies Share of internet on telco spendings=0 No OLO Share of mobile voice on telco spendings=0 Share of internet on telco spendings =0 No OLO Share of mobile voice on telco spendings less than 50% Share of internet on telco spendings =0 Share of OLO or mobile voice more than 50% Use internet. Do not use SDN nor ADSL. Use OLO. Use internet. Use SDN or ADSL. Use OLO. Use internet. Do not use SDN nor ADSL. Do not use OLO. Use internet. Use SDN or ADSL. Do not use OLO. 12 6
Axis Y Decision processes - residential 13 1. No interest No clear reasons for decisions 2. Thrifty Price always comes first 3. Rational Value-for-money buyers 4. Demanding Demanding customer service, appreciates image factors 5. now-it-all Requires highest standards in all aspects of his purchase Residential Segment - Boxes Residential Boxes 14 Basic Advanced Competitive Arena ZERO L L M M + P P 9.0% 17.2% 16.2% 39.7% 47,2% 5.2% 3.9% 0.3% 19.6% 0.7% 1. No interest 2. Thrifty 3. Rational 35,3% (+12,7%) 25,6% (+4,9%) 16,3% (+4,4%) 5,0% 3,0% 1,0% 1. 8.6% 5.1% 2.0% 6.5% 5.5% 2.0% 12.1% 6. 11.5% 6.7% 5. 7. 6.9% 1.7% 2.3% 1.6% 0.6% 1.2% 0.8% 0.2% 1.1% 8. 0.0% 6.1% 2.7% 4.2% 4. 6. 5. 0.3% 4. Demanding 5. now-it-all 9,0% (+6,9%) 13,7% (+31,3%) 0,0% 0,0% 0.7% 0.8% 1.0% 4.1% 1.2% 5.3% 6.3% 0.6% 0.6% 2.6% 2. 3. 4. 4. 30.0% 1.4% 1.3% 5.0% 7
Content Background and Methodology Residential Market Segmentation Business Market Segmentation Strategy mplementation into business processes 15 Axis X Usage Typology L L Extremelly loyal customers Extremelly loyal customers L L, users of nternet, users of nternet and Data Services and Data Services P P, intensive users of, intensive users of nternet. nternet. P using nternet and using nternet and Data Services Data Services Do not use nternet. Do not use Data Services Do not use mobile phones nor OLO. Do not use nternet. Do not use Data Services Do not use No OLO. Do not use nternet. Do not use Data Services Use OLO Use nternet or Data Services Use OLO for nternet or Data Services Use nternet and Data Services Use OLO for nternet or Data Services Use nternet or Data Services Do not use OLO for nternet or Data Services. nternet or data services represent more than 10% of total telco spendings. Do not use OLO for nternet or Data Services. Use nternet and Data Services. Do not use OLO for nternet or Data Services 16 8
Axis Y Decision processes 17 1. No interest 2. Thrifty 3. Rational 4. Demanding Market research shows patterns similar to residential segment However, practical use is limited We had to find alternative attributes 5. now-it-all Decision process characteristics Different point of view Can we describe decision processes with hard criteria? Relationship to decision processes Company attributes industry legal form involvement of foreign capital company size branch network relationship to key decision maker position in the company education gender 18 9
Company attributes vs. Decision processes ndustry Zemědělství, lesnictví, rybářství, myslivost 0-100% 19 Školství, věda a výzkum, zdravotnoctví, státní správa Těžký průmysl, strojírenství, energetika Velko- a malo-obchod, motorizmus Služby v pohostinství, dopravě a cestování Finanční služby, poradenství, nemovitosti Stavebnictví Pošty, telekomunikace, T The greatest differences in decision processes Company Size Legal form 0-5 6-19 20-199 200 a více 0 10 Podnikatel S.r.o Akciová společnost Státní podnik/instituce Jiná právní forma 0 5 10 15 20 25 30 35 40 45 Relatively small differences in these categories 0 5 10 15 Axis Y decision processes through a combination of industries R 1 Telco and T Services and financial services with branch networks Services and financial services owned by foreign capital 20 R 2 State companies and nstitutions (education, healthcare etc.) Agriculture R 3 Manufacturing and trading companies with more than 5 employees with no branches abroad and with no ownership by foreign capital R 4 Services and financial services with no branch networks and no ownership by foreign capital R 5 Construction Manufacturing or trading companies with branches abroad or with foreign capital participation Manufacturing or trading companies with less than 5 employees 10
Marketing space companies (only ČTc) # of customers in thousands L / L L / L Basic Basic Competitive Competitive Arena Arena MT MT only only OLO OLO Advanced Advanced P P P P P P 21 20,0 9,8 25,0 11,1? 0,2 28,0 28,2 1,3? 1,0 0,6() 0,2() 0.1 () 0() 0.4 () 0,5 () 0.0 (). 8,4 1,5 () 0.9() 0,3 0.8 () 8,4 0.0 () 2,6 () 2,3 () 0.3 ().. V. V. 17,8 20,4 20,2 30,3 3,1 () 2,9 () 5,0 () 7,0 () 2,2 () 2.3 () 1.7 () 21,3 2,6 () 6,7 2.7 () 8,3 3,0 () 3,8 1.5 () 17,8 7,6 0.1 () 4,7 () 4,7 () 0.2() 0.1 () 6,1 () 5,6 () 12,2 0.4 () 0.0 () 6,2 () 5,7 () 12,0 0.1 () 17,8 5,9 2.9 () 0.0 () 8,1 () 9,4 () 0.3 () Content Background and Methodology Residential Market Segmentation Business Market Segmentation Strategy mplementation into business processes 22 11
Strategy development nowledge Quantification Strategy Opportunity Opportunity Making a identification quantification choice 23 nowing the boxes Relevant benefits Triggers that work Right triggers Selection of triggers Quantification Quantification Prioritization Strategy formulation Benefit- reason to buy a product Trigger - specific benefit that drives a decision process toward a purchase Formulation of marketing strategy nowledge Quantification Strategy 24 box1 box2 box3 box4 box5 box6 box7 A TRGGER B C D TRGGER A B C D box1 box2 a b g box3 box4 box5 d e f h i j box6 c k box7 l TRGGER A B C D box1 box2 a b g box3 box4 box5 d e f h i j box6 c k box7 m l Competitive forces 12
Product plan vs. Marketing plan box1 box2 box3 box4 box5 box6 box7 STRATEGY A a b c m B d e f C l D g h i j k PRODUCT PLAN Products A B C D box1 box2 box3 box4 box5 box6 box7 25 box1 box2 box3 box4 box5 box6 box7 MARETNG PLAN Campaigns A B C D BUSNESS PLAN 1 2 3 A B C D E F Content Background and Methodology Residential Market Segmentation Business Market Segmentation Strategy mplementation into business processes 26 13
Marketing Cycle of Delivered Value 27 dentify Value! Create the value! Communicate the value! Customer (BOX) Thank you 28 14