Plural’s client, a leading player in process and motion control technology in North America, wanted to expand its share of a key product category in Europe, where it currently had a limited position. However, five well established incumbents dominated the European market with entrenched market positions.
The client challenge
Our client knew that it had a colossal challenge ahead, including:
- Working out how realistic the opportunity is in face of such well-established competition,
- Strategically mapping how to access it (organically and / or inorganically), and
- Convincing internal stakeholders the strategy had legs.
Guiding the go-to-market strategy
The client recruited Plural’s help to inform and guide the strategy. Our support would include:
- Extensive analytical work on structure of the market, channels and the competitive landscape,
- Defining the client’s right to win,
- A deep understanding and segmentation of customer needs and purchasing behavior,
- A roadmap for ‘where to play’ and ‘how to win’,
- The design of winning value propositions, and
- Guidance on the go-to-market: brand strategy, customer targeting, channel approach, available partnership opportunities and potential inorganic entry points.
Mapping the industry structure and complex market dynamics
To put the opportunity into perspective, we aimed to understand:
- The size of the European market,
- The key demand sectors,
- How fragmented the buyer base was,
- How well served each customer type was and by who, and
- The channel structure.
This also formed the foundations for the rest of our work.
As with all industrial markets, buying dynamics were complex. Segmentation of the value chain and customer universe – how much demand goes through OEMs, direct to end users and through distributors for both new fit and replacement, and how much influence each has on buying decisions was essential to inform whether the strategy should be OEM-led, end user-led, distributor-led or a combination.
To analytically map the market structure, Plural combined of expert interviews, external market data and discussions with regional business leaders.
Defining our client’s right to win
With strong established competition it was critical to define our client’s ‘sweet spot’ – where it had competitive strength, customer credibility and engineering capability. Plural held several internal discussions with key business unit heads and regional and product leads across the organization in both North America and Europe. We combined this with a review of the client’s customer sales data in North America to understand where it best addresses customer needs and wins.
The combined results of the internal conversations and customer data analysis framed our hypotheses on where to play in Europe and we focused our efforts in these categories.
A deep understanding of customer needs and behavior
An essential part of the go-to-market strategy was to get deep under the skin of customers to understand their challenges, needs, loyalty, purchasing behavior and how open they would be to switching.
The answers enabled us to frame a needs and behavioral-based customer segmentation, identify underserved areas of the market and work out how our client could penetrate segments within its sweet spot. The insight also informed the start point of the go-to-market approach. This included the design of winning value propositions, appropriate routes to market, required capabilities, brand strategy and potential partnership opportunities.
Our work defined four distinct needs-based segments of buyers and users. As distributors were a key channel in certain segments, we also conducted extensive work to understand their position in the value chain, ability to drive brand and product decisions, and openness for another brand in the market.
Using customer segmentation to define a winning value proposition
Our market analysis, customer insight and segmentation led to a prioritized list of segments where our client had both the highest chance of market penetration at an attractive value opportunity. Within each prioritized segment we provided our client with clarity and insight on the size of the opportunity, where the opportunity was regionally within Europe, who the leading potential customer targets were within each segment, including where there was overlap with the client’s North American customers. Where distribution was the primary channel, we identified leading regional distributors and prioritized them based on their likelihood to carry another brand.
Once the where to play was agreed, we then established how the client could win in those segments and what it takes to serve them. This included the:
- Value proposition and differentiators,
- Go-to-market approach,
- Marketing approach,
- Sales and service structure and approach,
- Capabilities required, and
- Potential to serve different customer types through a digital channel.
Finally, we identified both partnerships and acquisition opportunities that would strengthen the likelihood of success and add value to our client’s position in prioritized segments.
Our work served as the foundation for our client to structure and refine a broad market opportunity. It provided clarity on where and how it can win (with minimal investment), supported by data and in-depth customer insight by segment.
Needs-based segmentation gave our client a new framework to understand customers and the opportunity, not only in Europe but also back on home turf in North America. It played a fundamental role in driving key decisions and framing the go-to-market strategy, including the design of specific value propositions.
The independent narrative helped the client to communicate the strategy to internal stakeholders which then led to approval and a three-year action plan.