The GPS of Modern Business. The GPS of Modern Business

Transcription

1 The GPS of Modern Business

2 The GPS of Modern Business Imagine this situation: You wake up, blindfolded, and taken to an unknown location. The blindfold is removed. You are given a car with a full tank, some food and a compass, but nothing else. You receive the following instructions: Travel North-East in a straight line for as long as possible. No matter what roads you take, your progress will only be measured by how much you manage to advance in the general North-East direction. If you happen to reach a predefined spot North- East of you, you will find a gas station to refuel and can continue your journey. If you run out of fuel before you get to a gas station, you are out of the game. There are several others starting on the same journey with you. The winner is the one who progresses furthest. You may choose to take the same roads following your competitors, but then traffic will slow you down. If you decide to choose your own direction, there will be less traffic, but you are also taking a bigger risk, which may or may not pay-off in the end. Is this a new reality show on Netflix? No. It s the situation that most C-suite executives find themselves in when planning the growth path for their companies. Now imagine that during this competition, someone gives you a map. This map allows you to make choices about which roads to take. It will also enable you to allocate your fuel efficiently. Clearly, this would give you a significant advantage over the competition. This is how Segmentation and Portfolio strategy separates good business leaders from outstanding ones.

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4 Navigating the VUCA world We now understand we live in an increasingly VUCA world. Businesses are especially vulnerable. As markets reach maturity, long-established firms struggle to find new growth opportunities. With the decline of growth rates, there is more focus on investment efficiency, which requires increased confidence in decision-making. At the same time, new ventures are disrupting market landscapes, often redefining traditional views of how a market operates. Like the captain of a ship on uncharted waters, C-suite executives look for any stable landmark that can help them guide their companies towards sustainable growth. That is where Segmentation and Portfolio strategy can help. Our clients come to us with different types of questions: How should I position my brands to maximize share and minimize cannibalization? Where should I focus my limited resources (time, money, assets) to drive fewer, bigger initiatives that help me win in the market? How could I disrupt the market to create new growth opportunities and achieve competitive advantage? We at Kantar Vermeer have worked with companies across several industries B2C and B2B to help them answer these questions. Armed with years of experience pushing the boundaries of our client offer, we have distilled our learnings to create the Kantar Vermeer Consumer-led Value Creator (or CVC for short). The CVC is based on a few principles that have shaped how we add value for our clients: Consumer- / Customer-centric: A segmentation that at its core creates a Consumer Map based on needs

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6 and behaviours. This is the foundation that helps uncover opportunities down the road. Commercially-driven: To realize the full potential of this consumer-led growth, we integrate critical commercial factors by applying the lenses of Price, Product, Channel, Category and Geography. Future-oriented: Segmentation is by nature a snapshot of current reality. That used to be sufficient; not anymore. Now markets can change substantially within a year, which degrades the validity of a typical 3-5 year horizon for a segmentation. This is why we create a forward-looking view of the market. Together with our clients, we identify key trends, their impact on consumers, and apply that logic to our Consumer Map. Value-focused: Traditional approaches tend to focus on growth areas in the market, disregarding the cost-of-play in those opportunity spaces. This view is incomplete. It is imperative to look beyond the topline and consider the bottom-line when making investment choices. Cost-of-play can be influenced by several factors (e.g. competitive intensity, product / service characteristics, cost of distribution, etc.) Each market and business has unique factors to determine the most important costs. Linked: Given the multitude of data sources that are at the disposal of businesses today, linking segmentation work to various databases creates a deeper understanding of segments, which helps realize enormous additional value. Linking data with media, CRM or Shopper databases creates actionability that has a positive impact on Marketing ROI. Embedded: The worst that can happen (and often does) with strategy work is that it gets put in a drawer while business continues as usual. We place special emphasis on ensuring that Portfolio strategy is embedded in the company by integrating prioritized growth opportunities into Annual Planning. We also develop tailor-made training programs to ingrain the new mindset bringing life to the Portfolio strategy.

7 So what is the Consumer-led Value Creator? It is ultimately the Art & Science of making choices. 1. Brands we need: We identify opportunities in the market and analyse what it takes to address them whether with one brand or a portfolio of brands. 2. Brands we feed: We recognize the availability of resources to make choices about optimal investment to maximize value. DISCOVERING OPTIONS MAKING CHOICES MAKING IT HAPPEN KEY DELIVERABLES WHERE TO PLAY Opportunity identification & prioritization HOW TO WIN Resource allocation brands & investment WHAT TO DELIVER Equity & financial KPIs WHAT TO DO Embedding & aligning the organization Scenario planning A B C D Consumer segmentation Brand implications Commercial + Cost to play lenses - = Brand strategy Brand equity KPIs Innovation Investment allocation Volume & financial KPIs Integration to strategic planning Value pools Embedding & capability building

8 The Kantar Vermeer CVC consists of 3 bigger phases: Discovering options WHERE TO PLAY: This is about identifying the consumer and commercial opportunities and modelling the cost to play to arrive at the Value pools in the market. The next step is to prioritize the opportunities by evaluating their attractiveness (should we do it) and our ability to win (can we do it). The resulting matrix helps us make the choices about where we focus our business efforts. Making choices HOW TO WIN: The process of assigning brands to opportunities and allocating investments. Once a brand is assigned to a bull s eye target, the drivers of the target segment determine the brand positioning guardrails required to win. Brand equity and financial KPIs help translate these decisions into guiding metrics. Making it happen WHAT TO DO: The steps required to embed Segmentation and Strategy in the organization. This phase is crucial to ensure that everyone has the necessary capabilities and is aligned to work towards the goals set out in the Portfolio strategy. One of the central tools: The Consumer Map Of all the phases in the CVC, creating the Consumer Map at the start requires the most co-creation between consultant and client. There is no rule to what the ideal Consumer Map looks like. We believe it should fit into the client s strategic consideration of the market in question. Usually a Consumer Map is made up of 1 or 2 key dimensions. The primary dimension will often be consumer-led and include attitudinal (WHO?), motivational (WHY?) or behavioural (WHAT?, WHEN?, WHERE?, WITH WHOM?) aspects. The characteristics of the market to be segmented will often intuitively imply one or the other as primary dimension, nevertheless, even the same market can be segmented differently depending on the strategic intent of the client. The secondary dimension, if relevant, can provide additional context or nuance for the segments. This can

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10 be one of the W s (as above), but it can also be other dimensions, like price-tiers, product categories, category involvement, etc. The value of the Consumer Map is ultimately determined by how opportunities can be identified and differentiated with the use of the 1-2 dimensions. The after-life of Portfolio strategy (Include pictures of consumer maps) While arriving at a sound Portfolio strategy is a process in itself, it is actually just the trigger for other crucial business processes. The consumer insights and prioritization established by Portfolio strategy will feed Portfolio and Brand Management considerations, Brand and Trade activation, as well as Product development. Ultimately, the implications can reach further, identifying the need to create a new business model, a whitespace that can be filled by leading-edge innovation, or the requirement to upgrade or redesign a company s technology infrastructure. To summarize: Navigating today s dynamic markets requires strategy that is entrenched in consumer / customer understanding. With customer centricity at the core, this strategy must also integrate the consumer lens with commercial considerations ensuring an actionable Portfolio strategy optimized for market performance. Segmentation helps make sense of the market by creating a Consumer Map that can be used to identify opportunities and make choices. Finally, to enable the execution of Strategy, it is important to create a plan for embedding across the organization. If you are interested to learn more the Kantar Vermeer Consumer-led Value Creator, please don t hesitate to reach out to:

11 The Kantar Vermeer factor Actionable Portfolio strategy brings together two key Factors of a business: Consumers and Commercials. At Kantar Vermeer we combine people with different Backgrounds: Marketing practitioners and Management Consultants, to ensure we can speak across the spectrum from Brand teams to the C-suite. Our client-side experience also enables us to anticipate client needs and understand client perspectives. When delivering Portfolio strategy, we aim to keep things simple - we say it as it is, because complex does not have to be complicated. As part of the bigger Kantar family, we bring together specialist expertise that can add to creating cutting edge Portfolio strategies: Excellence in consumer research: Kantar is the largest Insights organization, bringing together best practice in research, large data bases, pockets of excellence and specialization. Leaders in analytics: We have the world s most advanced analytics capability including academia and industry titans. Future-proofing: Kantar Futures is unparalleled in consistently uncovering, tracking and understanding the impact of consumer trends. Translation to Retail: Kantar Retail are experts at translating Consumer / Shopper needs to implications for the shop floor. Cultural foundation: Kantar Added Value emphasizes Cultural insights to drive a deeper level of consumer understanding.

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