Balancing the Need for Local Customization with the Need for Scale and Efficiency
By now, we all understand the importance of segmenting our customer base and selecting target segments. In this two-part post, I’ll discuss how to effectively segment in a global market.
Segmentation enables us to better customize our products, services, channels, messaging, and more to align with our target segments’ needs and better penetrate and grow with our customers. We can also better scale our company costs by focusing on a few target segments.
However, when expanding into new global markets, segmentation and the customization that accompanies segmentation, often conflicts with our company’s desire for scale. As a result, it is often tempting to apply our U.S. or W. EU segmentation to emerging growth markets. In fact, despite often producing similar end-products or leveraging a similar business model, our customers in other country markets - especially emerging - often have a very different set of needs. These different needs can be driven by a variety of factors including government regulation, government funding requirements, infrastructure limitations, lower or higher labor rates and competency levels, end-user profitability demands or budget constraints, and many, many more.
Given the number of variables at play, segmenting and customizing in each market can be cost prohibitive from a scale perspective. So when expanding globally, many companies are faced with the question: How can we balance our needs for scale and efficiency globally with the specific and differentiated needs of the local market? EMM has led global segmentation projects for several multi-national clients and we can offer solutions for managing the conflicting interests of scale and customization.
The first step is to identify the core needs that apply universally across markets and then create customization options that can be configured for like groups of global customers and further customized at the local level as needed. For example, in the industrial goods industry, customers across all countries are ultimately driving towards better uptime. Using segment-specific uptime differential needs (along with any other identified global segment needs) as the core differentiator, a base global segmentation can be drafted.
Next, countries with like regulatory needs, education needs, service needs, etc. can be grouped together. For example, Turkey and Brazil may have similar purchase process requirements while Russia and Saudi Arabia may have similar needs for education. Identifying these non-core common needs will enable the central team to identify synergies among global markets and generate customization packages which can be layered on top of the global segmentation and fulfill the need for better customization at the local country level without compromising scale.
In part two of this post, I’ll discuss specific steps on how companies can balance their needs for scale and efficiency globally with the specific and differentiated needs of the local market.
