Strategic Marketing Analytics During Turbulent Times
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- Emerald McBride
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1 Strategic Marketing Analytics During Turbulent Times October 2010
2 The views and content of this presentation do not represent the views of Ford Motor Company. None of this presentation can be referenced, duplicated or published without explicit permission.
3 Background
4 Life in Detroit 18 years in the Auto Industry Master s Thesis at General Motors of Canada 17 years at Ford Manufacturing Operations Research Ford Financial New Business Incubation Product Development Brand DNA Market Research
5 Consumer Segmentation and Analytics Fielding and Analyzing Ford s Proprietary Segmentation study in 17 countries on 4 continents Segmentation and Target Customer Creation for all US Vehicle Programs and many international programs Global Analytic Projects
6 The Global Crisis
7 "It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness; we had everything before us, we had nothing before us; we were all going directly to Heaven, we were all going the other way." - Charles Dickens
8 Major Corporate Bankruptcies Lehman Brothers Washington Mutual Alitalia S.p.A Circuit City Pilgrim s Pride Bally Total Fitness Tribune Company Chesapeake Corp. Nortel Networks since 9/15/2008 Trump Entertainment BearingPoint, Inc. Chrysler ION Media Networks R.H. Donnelley General Motors Six Flags Lear Corporation Reader s Digest Assoc.
9 The US Automotive Industry
10 $4.11 / gallon 17.8 Million Units US Vehicle Sales 8.25% 9.7% Prime Rate Unemployment 4.4% $1.06 / gallon Gas Prices 4% 13.8 Million Units Jan, 1999 Jan, 2000 Dec, 2000 Dec, 2001 Dec, 2002 Dec, 2003 Dec, 2004 Dec, 2005 Dec, 2006 Dec, 2007 Dec, 2008 (Sources: Ward s Automotive, Federal Reserve Board, Energy Information Administration, Bureau of Labor Statistics)
11 During the past 18 years, the Big 3 gave way to the Big 6 100% 90% 80% 70% % 50% 40% 30% 20% % 0% Memo: Traditional Domestic Traditional Import (Source: Maritz NVCS)
12 Brand Shifts CHEVY, 17% CHEVY, 10% -7% DODGE, 4% -4% OTHER, 40% DODGE, 8% OTHER, 41% FORD, 9% -9% TOYOTA, 7% NISSAN, 4% HONDA, 6% FORD, 18% TOYOTA, 18% HONDA, 12% NISSAN, 7% +3% +6% +11% *Source: NVCS Maritz
13 What that means Greater Urgency Fewer people Less Money Less Time Huge opportunity
14 Analytics and Crisis
15 There are two paths corporations can follow in a crisis 1. Panic. React. Rely on past experience and anecdotal evidence to adjust business and product plans. 2. Analyze. Assess. Understand the market and determine the impact of the crisis.
16 Operational Analytics vs. Strategic/Tactical Analytics Operational Analytics Formal Programmatic Completed independently and delivered to the teams at a regular cadence Strategic/Tactical Analytics Completed alongside the team Fast iterations 80/20 rule applies
17 Two tools for tough times Consumer Segmentation Understanding the Market Targeting Focusing your resources
18 Segmentation. Creating a Data-Driven Understanding
19 Consumer Segmentation Segmentation gives us the ability to mathematically divide a body of consumers into a discrete number of groups using a broad range of need-based or psychographic elements. These groups and their members can be described and generalized a single entity, simplifying the voice of the consumer.
20 What does Segmentation do for a company in crisis? It brings order to the chaos Provides a simplified decision-making structure It dispels myths, anecdotes and hunches about the market Creates a clear, data-driven representation of the market
21 Segmentation allows you to assess risk and opportunity for each group Conservative. Less likely to be directly impacted. Will probably exit (delay next purchase) the market. If need arises, will move down to a less-expensive product. High Income Confident. Insulated from the crisis. More likely to stay in the market as long as it doesn t get too bad. May move down to a less-expensive product. Risk Adverse Risk- Taker Concerned. Directly impacted by the financial and emotional effects of the crisis. Will exit the market as quickly as possible and be the last to Low Income return. Maxed. Directly impacted by the crisis. Will be forced to exit the market quickly possibly in a distressed manner.
22 There is a variety of Segmentations available for different purposes Used in Brand Segmentation and Targeting Attitudinal Segmentation Brand, Advertising, Design Needs-based Segmentation Engineering, Product Development Used in Vehicle Segment Segmentation and Nameplate Targeting Used to Create a Market Structure Demographic Segmentation Strategy, Volumes Planning
23 The Realities of Segmentation in Crisis You often don t have much time (days, hours) You rarely have exactly the right data Most internal customers don t understand how segmentation and clustering works You are responsible to make sure its right Junky data makes junky segmentations Sometimes the simplest segmentation is the best one. Each country needs its own segmentation. If you didn t standardize your batteries and techniques, that can be a nightmare.
24 Targeting. Focusing Resources.
25 Why is targeting important to the auto industry? When there are a very few competitors, you might be able to afford to target everyone, but as competition increases, you need to target to conquest and defend In difficult times (and good times), it allows the organization to focus its energy and resources on the right consumers for the environment
26 Getting there Targeting is the least analytic phase of the process Targeting makes marketers happy and sales people squeamish The analytics team s responsibility is to provide as much quantitative information about the alternatives as possible Size Current Share / Performance History / Trend
27 Pitfalls of Targeting Everyone wants to target the cool-interestingsexy-young-educated people. Sometimes the best targets are the ones everyone else is ignoring. Segmentation and Targeting means sacrificing some consumers for others. If you don t start with a good segmentation, you ll be chasing a mirage Creating a single global target can be challenging.
28 Example: Ford Fiesta Before Creating the Car, Ford Designs the Driver (New York Times Automobiles - 7/16/2009) Ford is using characters like Antonella to bring a human element to the dry statistical research drawn from polls and interviews. Based on psychological profiles, these characters are a more modern version of the theme boards that designers once covered with snapshots and swatches of material to inspire a design. They are also like avatars, those invented characters used in online games and forums to symbolize a participant s personality. (Source: New York Times Automobiles - 7/16/2009)
29 The Mechanics of Targeting Once a target is established, Predictive Modeling provides the bridge between the analytic world (segmentation) and the real world Modeling can be used to either single out a single target or to lay your segmentation structure on an entire population
30 Lessons Learned - Recruiting Finding the segments in the real world: If you can t find them, the whole exercise may be worthless Simplicity in the segmentation yields simplicity in recruiting Going Global can be very, very challenging Be careful if you are changing modes! (Online to Phone) Beware of the tails ( I want everything, I want nothing )
31 Conclusions Tactical, Strategic, Guerrilla Analytics are extremely valuable in good times and tough times. Segmentation and targeting provides a structure to make decisions and focus resources Analytic teams must be able to tie the math to the real world
32 Questions? Will Neafsey Ford Motor Company Global Consumer Insight Consumer Segmentation and Analytics
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