Segmentation and positioning

Increasing profit with customer segmentation
and product positioning
European Innovation Academy
Tallinn, 18th July 2013
Sandrine Vriesman
Copyright © 2013 BREADFRUIT CAPITAL AB. All Rights Reserved.

Todays presentation and workshop on market strategy and
product/service positioning
• About Sandrine
• Why market strategy?
• What is market strategy?
• What is customer segmentation?
• What is product positioning?
• Workshop introduction
• Application to your product ideas and start-up companies
TABLE OF CONTENT

About Sandrine
Partner at Breadfruit Capital and BlueLago Business Innovation
-> consumer insights, market strategy, product positioning and product launch
to drive sales.
Launch of many new products on market withing various industries
Define market startegy and product positiong start-up
Reshaped the market startegy and revise the product offer of existing
companies
INTRODUCTION

Understanding your customer is the key to building a successful
company
• A good market strategy and execution gives you information about
important business parameters:
– The right to companies existence
– Possible sales volume
– Potential (niche) market share
– Value proposition
– Positioning statement and positioning
– Possible margins
• Conclusion; Targeting the right customers with a distinct market positioning
and clear USP will enable product success and business growth.
INTRODUCTION

What is market strategy
Prerequisites:
– Aligned with overall company strategy, core business and vision
– Fit the business model
– In line with current and upcoming macro trends (market, technology, social etc)
Market Strategy cornerstones:
- Market & industry analysis
- Customer segmentation
- Consumer insight
- Product positioning (USP)
- Business case validation
MARKET STRATEGY

There is not such a thing as one single type of customer
CUSTOMER SEGMENTATION & CONSUMER INSIGHT

Identify and select your target group

Create a few CORE consumers to bring your segment alive
Needs Based Segmentation
Find Core Consumers in segments
Animate Core Consumers
Profile Core Consumers

NEEDS-based customer segmentation !!
• Customer needs are the core parameters leading to purchase and
therewith driving sales
• Independent of any ethnologic, demographic, geographic and any
other parameters

By trying to answer some key questions…
– What are the key wishes and problems consumers encounter in
our specific industry/context?
– What is the competitive set in serving these needs?
– What is the potential value creation for our company from solving
the identified problems or serving these needs?
– Is our product idea in line with the consumer’s expectations?
– Should we pursue with our product/business idea..?
How can we answer customers needs then?

– Do you think it is a good idea?
– What would you like our company to develop?
– What product would you like to solve your problem?
– How much would you pay for it?
– What functions do you like?
– …..
The way we should NOT ask..

Formulate a clear and unique
consumer INSIGHT
to understand consumer’s drivers towards decision making
Can we clearly summarise our customer’s needs ?

Examples of consumer insights

Now why did we do all that?

Targeting the right customers with a distinct market
message and clear USP will drive sales
PRODUCT POSITIONING

Volume and profit will be maximised when the
target consumer can tell why the product:
– specifically meets their needs (relevance)
– is different from competition (differentiation)
Those arguments are summarised in the USP
(Unique Selling Proposition)

What makes a great Unique Selling Proposition?
The USP should:
• be linked to the consumer insight
• solve a consumer problem
• answer a consumer need
A strong USP is:
• Relevant (to the consumer)
• Differentiated (vs. Competition)
• Single minded
• And has a strong Reason to Believe
PRODUCT POSITIONING

A USP translates FEATURES into BENEFITS !
Based on customers WANTS and DESIRES
PRODUCT POSITIONING

PRODUCT POSITIONING
• A mission statement
• A tagline
• A sales pitch
• “we’re the best”, the
biggest”, “the most…”
A USP is NOT…

PRODUCT POSITIONING
• Makes you stand out from
the pack
• Raises the bar to a level
only you can reach
• Puts you in a league of
your own
• And a USP helps you
achieve your goals
A USP distinguishes You…

26
Insight
I’m a busy person enjoying an
active life. I like to drink a lot of
water, even more so when it’s
warm outside, but often there’s no
chilled clean water at hand and I
don’t want to drink just tap-water,
especially nowadays.
Cooling water/refrigeration appliances

27
“Chilled filtered water whenever you want and where ever you go”
Product solution
The new refrigerator with the Brita® water filtration system always gives me chilled
and filtered water at an arm’s reach. When I’m on the go, I can easily fill my large
sports bottle for the gym or my bike bottle to go cycling. Now there is always
sufficient amount of chilled and filtered water available in my home and to take
outside wherever I go, whenever I want.
The dispenser nozzle is easy to access and designed to accommodate for any kind
of sizes and shapes of recipients. For example it’s so simple to fill glasses, jugs or
sports bottles of any sizes.

Famous USP’s
"You get fresh, hot pizza delivered to your door in 30 minutes or less -- or it's
free.”
PRODUCT POSITIONING
Single minded
Domino’s Pizza Relevant
(benefit)
Differentiator
(versus competition)
Reason to believe
(product/service promise)

Famous USP’s
”When it Absolutely, Positively has to be there overnight”
PRODUCT POSITIONING
FedEx
FedEx differentiate itself by ensuring its customers of speedy, secure, guaranteed
delivery

Famous USP’s
PRODUCT POSITIONING
BiznessApps
Website:BiznessApps.com

Famous USP’s
PRODUCT POSITIONING
M&M’s
”The chocolate milk melts in your mouth, not in your hands”

Building a USP is not as easy as one think!
“Breadfruit Capital offers complementary business competences to accelerate
its customers company growth and offers otherwise hard-to-obtain financing
opportunities to start-up and early stage companies”.
From a solid experience and with a long-term commitment we offer financing
solutions and consulting services to develop and structure businesses
with growth potential within the cleantech industry.
….
PRODUCT POSITIONING
Revised and improved…
…and still needs refinement…
Relevant
Single minded
Differentiator
Reason to believe

Marketing Guru Dan Kennedy says…
PRODUCT POSITIONING
• A USP answers the question “Why should I choose to do
business with you, over all the other choices I have,
which included the choice of doing nothing at all?”

USP
PRODUCT POSITIONING
A summary of:
• Target customer and Insight
• Product Name
• Competitive reference point
• Unique Selling Proposition
And finally, let’s formulate a positioning statement
From the
Formulating the product positioning

A real-life example of a successful product positioning
THE STORY BEHIND DAILY4TWO

Launching an upgraded version of Electrolux mini dishwasher
DAILY4TWO DISHWASHER

Are we sure we know it all?
DAILY4TWO STORY
Deep understanding of consumer needs, wants and desires…
Product Idea addressing the identified needs
Distinct positioning
Consumer value-based pricing
Solid business case



?
?

Observing the users in their homes
DAILY4TWO STORY

What is then the real benefit of this product?
”My neighbours, they are 2 people as we are, they
bought a standard dishwasher and never use it”
”We want to wash every day”
Space solution Capacity solution

Checking macro trends….
DAILY4TWO STORY
0
0,5
1
1,5
2
2,5
3
3,5
4
4,5
SE DK FI FR GR IT NL ES UK DE AT
1980
1991
2001
Source: EU, Housing statistics in the European union

Daily4Two positioning statement
PRODUCT POSITIONING
For Affirmation of self consumers who only generate
small amounts of dirty dishes and want results an
convenience of a dishwasher, Daily4Two is the small
capacity dishwasher that you can run everyday instead
of waiting for your dishwasher to fill up with dirty dishes,
so your kitchen is not clutteres or messy, and you are in
control.

Revising the USP…
DAILY4TWO STORY
Copyright © 2013 BREADFRUIT CAPITAL AB. All Rights Reserved.42
Electrolux Daily4Two dishwasher is
perfect for the small household. It’s
made to do the washes everyday, so
that you can feel good about a fresh-
looking kitchen and relax. This compact
machine fits in everywhere and can
easily take care of one day’s dishes in a
two person household. It’s user-
friendly, efficient and thrifty of energy.
…and consistently use it in
marketing & communication

WORKSHOP
PRODUCT POSITIONING

Define the positioning statement for your
product/service
WORKSHOP OBJECTIVE AND EXPECTED OUTCOME
1 Define your consumer segment
2 Validate your product idea based on your target consumer segment
3 Define your product USP
4 formulate your value proposition and define your product positioning
5 Start developing a marketing and commercialization plan of your
product idea

How to organise yourselves in the team
• Work on the two first exercise (Mood boards and COB) as a whole team, to
anchor the understanding, definition and values of your target segment in
the whole team.
• After that, divide your team into 2 sub-groups working each in paralell on
the following items:
• GROUP 1: USP definition and positioning statement formulation
• GROUP 2: Initial marketing and communication plan
PRODUCT POSITIONING WORKSHOP

Segmentation and positioning

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