Content. Background and Methodology Residential Market Segmentation Business Market Segmentation Strategy Implementation into business processes

Target Marketing Project Segmenting For Success Case Study Český Telecom Ljubljana 26. 10. 2006 INCOMA Consult Martin Dokoupil

INCOMA Consult

Target Marketing – Case Study Český Telecom

19. října, 2006

Content  Background and Methodology

2

 Residential Market Segmentation  Business Market Segmentation  Strategy  Implementation into business processes

1

INCOMA Consult


19. října, 2006

Situation before the Project 3

 Technology-driven marketing planning  Mass marketing – non-targeted product campaigns  No differentiation based on customer needs  Inefficient allocation of marketing and sales resources Technology (Network)

INCOMA Consult

Product Management

Marketing


Customer

19. října, 2006

Paradigm Shift 4

 Reversing the logic: 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

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19. října, 2006

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

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19. října, 2006

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

INCOMA Consult


19. října, 2006

Making it all work  In order to design and implement the new market segmentation we had defined :

7

Target Marketing Project

INCOMA Consult


19. října, 2006

Target Marketing Project 8

Players

et rk sis a M aly An

S fo trat r m eg ula y ex and tion ec ut ion

Boxes Limitovaný Limitovanýprostor prostor

NN 1. Nerozhodný

2. Opatrný

3. Racionální

L I LI

Kompetiční Kompetičníprostor prostor

L II L II

Progresivní Progresivníprostor prostor PI PI

P II P II

32

L I - p1

L II - p1

K I - p1

K II - p1

K III p1

P I - p1

P II - p1

44

L I - p2

L II - p2

K I - p2

K II - p2

K III p2

P I - p2

P II - p2

57

L I - p3

L II - p3

K I - p3

K II - p3

K III p3

P I - p3

P II - p3

KKI I

KKII II

KKIIIIII

Implementation 4. Hýčkaný

5. Rozvažující/ ná ročný

18

L I - p4

L II - p4

K I - p4

K II - p4

K III p4

P I - p4

P II - p4

171

L I - p5

L II - p5

K I - p5

K II - p5

K III p5

P I - p5

P II - p5

Usage

ea n KKIIII

Neloajální Neloajální uživatelé uživatelé některých některých moderních moderních technologií. technologií.

PPIIII

Loajální Loajální intenzivní intenzivní uživatelé uživatelé internetu. interne tu.

např. příjem

PPIIIIII

Loajální Loajální uživatelé uživatelé internetu a interne tu a datových datových služeb služeb

např.

Neloajální Neloaj ální pouze s pouze s hlasovými hlasovými službami službami

PPI I

Loajální Loajální uživatelé uži vatelé některých některých moderních moderních technologií. technologií.

KKIIIIII

Neloajální Neloajální uživatelé uživatelé internetu a internetu a datových datových služeb služeb

typologie

M

KKI I

Demographics

Progresivní prostor

?

LLIIII

Loajální Loajální pouze s pouze s hlasovými hlasovými službami službami

ch procesů

Limitovaný prostor LLI I

Extrémně Extrémně loajální l oajální pouze s pouze s hlasovými hlasovými službami sl užbami

rozhodovací

Market

Customer

le c ve of tion nd or

in gf ul

Decision Types NT L = ANO

KABEL = NE

P C = A NO

VÝCHOZ Í

SI T UAC E

DI AL UP

Z vlá dne zapojen í? NE

ANO

M á dodav at ele za pojení? NE

A NO

Reference NE

A NO

konec

Vol ba v y táčeného čís la NE

A NO

Po so uz ení tar if ů … + .. . VÝBĚRO VÁ K RITÉRIA • p rovoz ní n ákl ad y - ta rif y • spo l eh liv ost spoj ení • ry ch lo st při pojení př i vyt áče ní • re fe rence • b ran d • o ch rana prot i virů m • o ch rana prot i spamu • o ch rana před „acti ve X“ • ano ny mita • p romo /v ýh od ná nab ídka • veliko st e- ma ilo vé schrán ky • veliko st WWW • .. .

NE

A NO

V olba vy táč eného č ís la NE

ANO

Quick I OL

Po souzení ...

Volný Volba v yt áčené ho čís la

...

Decision Process

Ac ti on a

Se

bl e

Kompetiční prostor

e tiv Ac and m De

4

INCOMA Consult


19. října, 2006

Different strategies for different boxes 9

 Sources of growth – quantification of opportunities and threats 2. Increased usage

4. Winback

5. New markets

1. Retention

3. Cross selling

INCOMA Consult


19. října, 2006

Implementation – Distinct strategies for different boxes 10

1.

5,0%

8.6%

6.5%

12.1%

6.9%

1.6%

0.8%

0.1%

6.1%

0.3%

2.

3,0%

5.1%

5.5%

11.5%

1.7%

0.6%

0.2%

0.0%

2.7%

0.1%

3.

1,0%

2.0%

2.0%

6.7%

2.3%

1.2%

1.1%

0.1%

4.2%

0.1%

4.

0,0%

0.7%

1.0%

4.1%

6.3%

0.6%

0.6%

2.6%

0.1%

5.

0,0%

0.8%

1.2%

5.3%

30.0%

1.4%

1.3%

5.0%

0.1%

0.1%

5

INCOMA Consult


19. října, 2006

Content 11

 Background and Methodology  Residential Market Segmentation  Business Market Segmentation  Strategy  Implementation into business processes

INCOMA Consult


19. října, 2006

Axis X – usage typology 12

LLII Extremelly loyal customers

Share of internet on telco spendings=0 No OLO Share of mobile voice on telco spendings=0

LLIIII Loyal customers

Loyal customers Voice services only Voice services only

Share of internet on telco spendings =0 No OLO Share of mobile voice on telco spendings less than 50%

KKII Unloyal customers

Share of internet on telco spendings =0 Share of OLO or mobile voice more than 50%

KKIIII Unloyal customers

Use internet. Do not use ISDN nor ADSL. Use OLO.

KKIII III Unloyal customers, intensive

Use internet. Use ISDN or ADSL. Use OLO.

PPII Loyal customers

Use internet. Do not use ISDN nor ADSL. Do not use OLO.

PPIIII Loyal customers, intensive users

Use internet. Use ISDN or ADSL. Do not use OLO.

Extremelly loyal customers Voice services only Voice services only

Unloyal customers Voice services only Voice services only

Unloyal customers Using some modern technology Using some modern technology

Unloyal customers, intensive users of modern technologies users of modern technologies

Loyal customers Using some modern technology Using some modern technology

Loyal customers, intensive users of modern technologies of modern technologies

6

INCOMA Consult


19. října, 2006

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. Know-it-all

Requires „highest standards“ in all aspects of his purchase

INCOMA Consult


19. října, 2006

Residential Segment - Boxes 14

Residential Boxes Basic

Advanced Competitive Arena

 1. No interest

2. Thrifty

3. Rational

4. Demanding

5. Know-it-all

35,3% (+12,7%)

25,6% (+4,9%)

16,3% (+4,4%)

9,0% (+6,9%)

13,7% (+31,3%)

ZERO

LI

L II

KI

M

K II

M+I

K III

PI

P II

9.0%

17.2%

16.2%

39.7%

47,2%

5.2%

3.9%

0.3%

19.6%

0.7%

5,0%

8.6%

6.5%

12.1%

3,0%

1. 5.1%

5.5%

1,0%

2.0%

0,0%

0.7%

0,0%

0.8%

2.

76.9% .

1.6%

0.8%

0.1%

6.1%

4. 0.3%

11.5%

1.7%

0.6%

0.2%

0.0%

2.7%

6. 0.1%

2.0%

6.7%

5. 2.3%

1.2%

1.1%

8. 0.1%

4.2%

5.0.1%

1.0%

4.1%

6.3%

0.6%

0.6%

1.2%

6.

5.3%

3.

2.6%

4. 30.0%

1.4%

1.3%

0.1%

5.0%

4.

0.1%

0.1%

7

INCOMA Consult


19. října, 2006

Content 15


INCOMA Consult


19. října, 2006

Axis X – Usage Typology 16

LLI I

Do not use Internet. Do not use Data Services Do not use mobile phones nor OLO.

LLIIII

Do not use Internet. Do not use Data Services Do not use No OLO.

KKI I

Do not use Internet. Do not use Data Services Use OLO

KKIIII

Use Internet or Data Services Use OLO for Internet or Data Services

KKIIIIII

Use Internet and Data Services Use OLO for Internet or Data Services

PPI I

Use Internet or Data Services Do not use OLO for Internet or Data Services.

PPIIII

Internet or data services represent more than 10% of total telco spendings. Do not use OLO for Internet or Data Services.

PPIIIIII

Use Internet and Data Services. Do not use OLO for Internet or Data Services

Extremelly loyal customers Extremelly loyal customers Voice services only Voice services only Loyal customers Loyal customers Voice services only Voice services only Unloyal customers Unloyal customers Voice services only Voice services only Unloyal customers Unloyal customers Using some modern technology Using some modern technology Unloyal customers, users of Internet Unloyal customers, users of Internet and Data Services and Data Services Loyal customers Loyal customers Using some modern technology Using some modern technology Loyal customers, intensive users of Loyal customers, intensive users of Internet. Internet. Loyal customers using Internet and Loyal customers using Internet and Data Services Data Services

8

INCOMA Consult


19. října, 2006

Axis Y – Decision processes 17

1. No interest 2. Thrifty

 Market research shows patterns similar to residential segment

3. Rational

 However, practical use is limited

4. Demanding

 We had to find alternative attributes

5. Know-it-all

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19. října, 2006

Decision process characteristics Different point of view 18

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 •…

9

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19. října, 2006

Company attributes vs. Decision processes 19

0-100%

Industry Zemědělství, lesnictví, rybářství, myslivost Školství, věda a výzkum, zdravotnoctví, státní správa

The greatest differences in decision processes

Těžký průmysl, strojírenství, energetika Velko- a malo-obchod, motorizmus Služby v pohostinství, dopravě a cestování Finanční služby, poradenství, nemovitosti Stavebnictví Pošty, telekomunikace, IT 0

Company Size

0-5 6 - 19 20 - 199 200 a více

Legal form

Podnikatel

0

5 10 15 20 25 30 35 40 45

Relatively small differences in these categories

10

S.r.o

Akciová společnost Státní podnik/instituce Jiná právní forma 0 5 10 15

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19. října, 2006

Axis Y – decision processes through a combination of industries 20

R1

• Telco and IT • Services and financial services with branch networks • Services and financial services owned by foreign capital

R2

• State companies and Institutions (education, healthcare etc.) • Agriculture

R3

• Manufacturing and trading companies with more than 5 employees with no branches abroad and with no ownership by foreign capital

R4

• Services and financial services with no branch networks and no ownership by foreign capital

R5

• Construction • Manufacturing or trading companies with branches abroad or with foreign capital participation • Manufacturing or trading companies with less than 5 employees

10

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19. října, 2006

Marketing space – companies (only ČTc) Basic Basic

# of customers in thousands

21

Advanced Advanced Competitive CompetitiveArena Arena

L I / L II L I / L II

20,0

KI KI

9,8

MT MT

25,0

only only OLO OLO

K II K II

11,1

?

K III K III

PI PI

P II P II

P III P III

0,2

28,0

28,2

1,3

0()

0.4 ()

0,5 ()

0.0 ()

?

1,0

0,6()

0,2()

I.

8,4

1,5 ()

0.9()

0,3

0.8 ()

8,4

0.0 ()

2,6 ()

2,3 ()

0.3 ()

II.

17,8

3,1 ()

2,2 ()

6,7

2.7 ()

17,8

0.1 ()

4,7 ()

4,7 ()

0.2()

III.

20,4

2,9 ()

2.3 ()

8,3

3,0 ()

0.1 ()

6,1 ()

12,2 5,6 ()

0.4 ()

IV.

20,2

5,0 ()

1.7 ()

3,8

1.5 ()

0.0 ()

6,2 ()

12,0 5,7 ()

0.1 ()

V.

30,3

7,0 ()

2,6 ()

5,9

2.9 ()

0.0 ()

8,1 ()

17,8

0.3 ()

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21,3

0.1 ()

7,6


9,4 ()

19. října, 2006

Content 22


11

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19. října, 2006

Strategy development 23

Quantification

Knowledge

Opportunity identification

Opportunity quantification

• Knowing the boxes  • Relevant benefits  • Triggers that work

• Right triggers  • Selection of triggers  • Quantification

Strategy Making a choice

• Quantification  • Prioritization  • Strategy formulation

Benefit- reason to buy a product Trigger - specific benefit that drives a decision process toward a purchase

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19. října, 2006

Formulation of marketing strategy 24

Quantification

Knowledge TRIGGER box1 box2 box3 box4 box5 box6 box7

A  

B

C

D     

    

box1 box2 box3 box4 box5 box6 box7 

A a b

TRIGGER B

C

g h i j k

d e f c ___

___

D

l ___

___

 … … … … … … … ___

Strategy


A a b

TRIGGER B

C

g h i j k

d e f c m ___

___

D

l ___

___

 … … … … … … … ___

Competitive forces

12

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19. října, 2006

Product plan vs. Marketing plan 25

STRATEGY box1 box2 box3 box4 box5 box6 box7 

A a b

B

C

___

D g h i j k

d e f c m ___

Products

l ___

___

 … … … … … … …

PRODUCT PLAN

 … … … … … … … ___ ___ ___ ___ ___


C

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C

D

BUSINESS PLAN

Campaigns B

B

___

MARKETING PLAN A

 … … … … … … … ___ ___ ___ ___ ___ A


D

 … … … … … … … ___ ___ ___ ___ ___ 1

A B C D E F … 

2


3

…

19. října, 2006

Content 26


13

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19. října, 2006

Marketing Cycle of Delivered Value 27

 Identify Value!  Create the value!  Communicate the value! Customer (BOX)

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19. října, 2006

28

Thank you

 14

Content. Background and Methodology Residential Market Segmentation Business Market Segmentation Strategy Implementation into business processes

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