MARKETING & SALES

Consumer Segmentation

In our opinion, consumer segmentation is the first step towards creating a consumer centric DNA in any company and this approach must not just be aligned with market opportunities, strategic definitions and the company´s vocation but also embedded in its day-to-day activities.

What challenge(s) do our clients face?

Companies sometimes see consumers as numbers and not people. By neglecting their needs and desires, companies struggle to create real connections along the consumer journey which can lead to top line growth problems, marketing inefficiencies and poor retention rates.

In practical terms, consumer centricity is no more complex than turning an organisation’s focus towards consumer needs and desires instead of focusing solely on products, channels and marketing. However, this is not an easy process and many companies get caught in “one size fits all” approaches which lead to different challenges:

Low Marketing ROI: Tracking and improving marketing ROI is a challenge in any company, including those in digital channels. It is hard to become more efficient in media production and communication by finding the perfect balance between volume (lead generation) and margin (acquisition cost). Indeed, it is impossible to strike this balance without knowing with whom you are communicating and what they want to hear.

Difficulty growing: This “one size fits all” approach can damage companies from a channel perspective as well, limiting top-line growth rates. Without understanding each consumer group’s purchasing patterns, you cannot get the best out of each channel and this is especially true when it comes to merchandising and promotion, even in e-commerce.

High churn rates: Different consumers need and want different service levels when it comes to experience. Despite the challenge in differentiating delivery models, service channels and communication platforms to keep your consumer active and interested in your brand, it is ever more important in the digital era.

How do we help?

We ensure that your organization can streamline its efforts through a framework that aligns and drives strategy, planning, resources and execution towards the most important direction for your business: your consumer.

Improving efficiency: We support companies to improve their marketing funnel efficiency, commercial team performance and logistics service level by converting “one size fits all” processes into tailored ones. This is done by relating to the consumer at all steps of their journey, from inspiration to experience and loyalty.

We don’t rely on copy & paste:  we aim to understand the specificities of each value chain’s DNA by segment, including cultural aspects, to tailor our solutions. Whilst we have extensive experience and benchmarks across various industries, they only provide a reference for helping to tackle your unique context.

Creating a living segmentation: we understand that if the consumer centricity mindset is not embedded inside the company and its true value not grasped by the team, then the segmentation will not generate maximum value. Therefore, as our goal is to leave a positive legacy, we strive not only to translate strategy and analysis into tactical and implementable plans, but also to create the governance and processes necessary for longevity by working hand-in-hand with you.

What are the benefits?

The outcome of this approach is a living segmentation and governance that will:

  • Improve resource allocation by giving clarity on the right consumer clusters to focus on, considering market opportunities, your company’s vocation, strategic drivers and resources availability
  • Increase your ability to win in competitive markets by differentiating the way you relate to different consumers based on their needs and desires, avoiding “one size fits all” approaches and standing out from the competition. That means identifying which levers are drivers for tailored communication and promotion plans, differentiation in service level and adjustments in the Go-to-Market strategy
  • Drive innovation and growth by identifying new market segments and consumer clusters to target

How does it work?

Only by ensuring that the consumer centricity mindset is embedded in the company’s day-to-day activities can the real value of the Consumer Segmentation be harnessed.

From a strategic perspective, we connect the consumer segmentation to your industry, context and business objectives including: growth avenues, targeted consumers, communities, channel discussions, digital, portfolio, culture, etc. This is why, whilst our consumer segmentation support can be stand-alone, it is often embedded in other projects such as Go-to-Market Strategy, Strategic Roadmap, Portfolio Management, Omnichannel, Category Management etc.

Regardless of the context, our consumer segmentation methodology has 3 main deliverables that provide the platform for ongoing success:

  1. The Consumer Segmentation: Integration has a team of data science experts, with cross industry experience and state-of-the-art analytics tools. They are fully integrated with the project team to provide the data intelligence boost the project needs. This allows us to create, combine and evaluate different types of consumer segmentations and provide a comprehensive understanding of each consumer group, from both a qualitative (behaviour, journeys, needs, aspirations etc.) and quantitative perspective (expenditure, age, gender, geography, etc).
  2. The Strategy & Value Proposition Matrix: We define which consumer segments to focus on and create realistic implementable action plans for targeting each one. This matrix achieves two important things:
    • It connects strategy and execution: by translating the more theoretical strategy discussions (consumer behavior, preferences etc.) into clear value generating actions (portfolio, pricing, communication and experience, loyalty drivers etc).
    • It defines where to focus: by clarifying the needs of each consumer group in the market and prioritizing based on your business’s vocation, strategic plan and resources. This generates a structured decision making process for defining and taking priority actions.
  3. The Governance: to bring the Matrix to life and harness its value, it is essential to tie it to a well-structured and balanced governance. It defines the roles and responsibilities of each area for the prioritized actions, making sure there is a responsible defined, a tactical plan and KPIs for tracking progress.

We have applied our consumer segmentation methodology to a wide range of contexts, needs and sectors – either in standalone projects or as part of a wider turnkey solution.  Regardless of the context, there are :

ENSURING MULTIFUNCTIONAL ALIGNMENT The consumer is not a Marketing & Sales focus but a company-wide priority. Whilst it might sound simple to bring consumer centricity to all internal efforts and investments, our experience shows that different business areas may not find it easy to set their priorities, policies and plans in a way that connects to the segmentation. Our methodology therefore ensures that all multifunctional areas connect with and adjust their processes based on the new consumer strategy. We create clear connections between strategy and execution and align them across all departments at a level that truly drives change (e.g. hiring policies, KPIs, governance rituals, internal communications, tone of voice, legal procedures, sourcing priorities, IT investments, cultural shifts etc.). 1 ADAPTING TO YOUR UNIQUE CONTEXT Being ‘in the field’ is essential to understanding you operations, staff and consumers with no filter. We bring the external reality to the table with consumer surveys, customer interviews, frontline immersion and design thinking sessions, focus groups, industry expert support, interviews with influencers etc. And we do so with a single objective: to connect and adjust the segmentation, matrix and governance to YOUR business’s reality. In this way we can combine our external experience with your specific context to deliver the optimal solution. 2 BUILDING LONG-TERM CAPABILITIES Whilst a quick fix might bring short-term solutions, building a new internal capability is fundamental for long-term success. Our commitment is to deliver not only the short term insight and solution, but also to develop and nurture your internal capabilities so that the segmentation thrives and grows in your business. We do this by building understanding and buy-in with your team, so that your processes naturally keep the consumer segmentation connected to the decision-making governance. This enables the company to continuously adapt with speed as new needs arise. Only by guaranteeing this is it possible to embed a long term solution which, in our opinion, is the way to sustain your strategic differentiation. 3 Our key differentials

SUCCESS STORIES

CHALLENGE

One of the largest tourism operators in North America was performing well in brick-and-mortar retail but had a weaker digital strategy. Amid a competitive landscape (strong new entrants and consumption shifting to digital channels) and a complex internal setup (large company working in silos without deep consumer understanding) they were struggling to keep leadership and develop efficient digital and omnichannel strategies.

APPROACH

We worked hand-in-hand with their team to build a roadmap for moving towards customer centricity via a digital transformation. The roadmap identified all relevant consumer types (behaviors, ways of thinking, shopping and purchase habits, decision making factors, preferred channels etc.) through a deep consumer segmentation and defined a value proposition for each group. In doing so, we were able to identify not only targeting strategies for the most valuable customers but also new growth opportunities in the wider market.

RESULT

By translating the macro strategy per consumer group into tactical drivers and implementing these new activities alongside a companywide digital transformation, the client regained their competitiveness, resumed growth in its core consumer groups and increased market share in newly identified opportunity groups.

CHALLENGE

The Russian subsidiary of a global FMCG company was struggling to grow sales as it was not considering the heterogeneity among consumers in a country of continental proportions. It was clear that their highest focus sales channel was not appealing to all consumers and so they were restricted to the most rewarding regions (mainly Moscow and Saint Petersburg).

APPROACH

We first segmented Russian consumers by regional behavior, considering their preferences for the company´s highest focus sales channel. This view was then combined with an extensive market assessment (market size by category and region, company share per region, market growth potential in short / medium term, etc) to create a 5 year expansion plan per region with clear tactical actions for displacing competition, improving marketing ROI and boosting revenues.

RESULT

By successfully implementing these regional plans, the Russian office outpaced other EMEA subsidiaries and became a best practice reference inside the company. They overcame the downward sales trend in the market and experienced growth for the first time in regions outside Moscow and Saint Petersburg.

OUR INDUSTRY EXPERIENCE

We have an extensive track record with consumer segmentation across various sectors, helping companies to grow, increase retention, improve marketing ROI and set the stage ahead of digital transformations. We have worked in various geographies with leading global brands from Food and Beverages, Retail, Education and other industries. We also have especially deep expertise in the Consumer Goods and Pharmaceuticals & Healthcare sectors, with deep knowledge in their market and category dynamics.

TALK TO US

André Valente

André is a director at Integration and leader within the Marketing & Sales practice. Working across sectors, he is a senior specialist advising especially on the revision of Go-to-Market Models, Market Entry Strategy to new markets, Strategy and Innovation Processes and Marketing and Trade Processes. Before Integration, André worked as a Business Developer at Sandvik, [...]

Andrea Aun

Andrea is a Founding Partner at Integration and is recognized as an important female leader among Brazilian executives, participating in the LIDEM (Group of Leading Entrepreneurial Women) Executive Committee. She is an expert within the field of Marketing & Sales and Retail and has led over 100 projects in these areas. She continues to be [...]

Augusto Ribeiro

Augusto Ribeiro is a Managing Partner at Integration and has been working since 2003 in the Marketing & Sales practice. Augusto built a solid international experience, leading and implementing strategic Marketing & Sales projects in industries ranging from Consumer Goods through Construction & Property Development to the Financial Industry, especially in the Private Equity sector.

Daniel Rodrigues

Daniel is a Director within our Marketing & Sales practice and leader of Integration’s TechLab. Over the course of over 10 years with Integration, Daniel has helped clients from diverse industries and countries with digital and commercial challenges ranging from Go-to-Market Strategy to Commercial Due Diligence. Through his extensive business experience Daniel ensures that our [...]

Vinicius Olivo

Vinicius brings a broad and deep understanding of our Marketing & Sales solutions having joined Integration in 2011. He supported leading national and international organizations in Retail and Consumer Goods in building sustainable competitive advantage. His project experience ranges from Go-to-Market models, Market Scans, Customer Segmentation, Category Management and Perfect Store design.

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