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Segmentation and scope Successful value chain management dictates a thorough grasp of the market segments and their respective characteristics. Unlike traditional segmentation techniques, VXTConsulting’s approach embraces value– and behavioral-based dimensions of segmentation as our recommended business models allow our clients to attend, if they so choose, to the many diverse needs and behaviors of their customers while effectively handling organizational implications and efficiently managing their value chains. As with most segmentation and sizing techniques, we advise clustering of similar market characteristics to achieve optimal organizational and channel design. Our methodology yields superior results for value focused firms, the difference being: Ø In addition to the industry’s standard classification criteria, we also investigate similarities in characteristics from a customer value chain perspective. Ø We search for and focus on those segments where our clients can sustain their competitive advantage and leverage their core competencies. Ø We identify and prioritize those segments yielding the highest returns for our clients in the long run, based on our knowledge of their vision, mission and strategy, the industry structures and market trends. The scope of the firm is defined by what the firm does for its target markets. Our methodology provides the advantage of outlining a scope that is better tuned to the market needs as our segmentation has isolated, for that purpose, the target segments most sensitive to the firm’s core competencies and customer value creating abilities. Now, whereas segmentation results are purely a reflection of the market preferences and behavioral attributes, the scope, on the other hand, can be expanded or reduced as simple as setting objectives and changing policy. Here again, our methodology proves to be superior as it catches inherent weaknesses (capability gaps) from such policy changes and suggests strategies to address the gaps and regain the advantage. Interrelationships between activities, functions, business units and strategic partners, and their particular scope with respect to the various target segments, is also brought to light and supported through our approach of channel development. We provide our clients, for each of their target market segments, with strategic and organizational implications of our findings, and provide recommendations for: 1. Capturing significant market share in the segments yielding the highest returns. 2. Competitive positioning strategies, platform policy and life cycle management. 3. Value activities, functions and competencies which maximize customer value. 4. Value chain processes and organization to efficiently create customer value. 5. Channel characteristics to maximize synergy and sustain competitive advantage. 6. Interrelationships which foster specialization or favor synergy. 7. Operational capability and resource, supply and distribution requirements. |
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