Make Marketing History

The views of a marketing deviant.

Friday, December 15, 2006

Redefining Customer Value.

Electrolux CEO Hans Stråberg gives an insightful interview to McKinsey this month. He was faced with a polarised market, one in which low-cost manufacturing enhanced the quality of the value end of the industry and in which increased wealth boosted the premium end while squeezing the middle market where they had previously operated. The market had become a number of fast-moving targets and his strategic reaction echoes a number of the points I have made before.

Segment based on customer needs rather than demographics.

Move away from segmentation based on hierarchical offerings and price points. Customers aren't that homogenous - they have different value systems and different needs and you need to relate directly to those lifestyle and purchasing patterns.

Avoid Analysis Paralysis.

Rigorously determine these lifestyle patterns, but do so via observation and intuition rather than from direct questioning.

Adapt every aspect of the business model to the segment.

Each segment has different expectations of the 4 Ps and Electrolux chose to attack both ends of their market simultaneously by utilising two separately incentivised salesforces and different retail and post-sale experiences.

Difference not differentiation.

"it’s very difficult to win people over just because your products are known. What makes innovation particularly challenging is that the functional improvements that set products apart in the 1970s and 1980s... are no longer effective differentiators. But differentiation can take many forms."

Internal marketing is as crucial as external marketing.

A switch from multi-label branding to a global master brand acknowledged the trend in other industries where consumers were prepared to pay a premium for master-branded products, but also served internally to generate a global corporate culture.

In today's fast-moving marketplaces, changing one's approach to marketing isn't just an online thing.

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