Priorities help ensure the focus of the supply network is on the end customer value. Additionally, they should help the network of partners to see how the network is performing as a whole providing end customer value. Here’s how we segment the market to make it easier to supply.
Diagnose current approaches
Diagnosing the current approaches to segmentation can help discover what works and what doesn’t when driving elements of the logistic strategy. Look for links between marketing and other segments and logistics to see if they are effective.
Understand your buyer
Understanding the buyer is essential. Knowing the behaviours of the buyers and breaking them down into groups. Some examples of behaviours are margin driven behaviour and volume driven behaviour, but there are others. The main point to note is that it’s essential to characterise the different behaviours in terms of their logistics implications. The marketing and logistic perspectives are linked by using winners and qualifiers.
Carry out customer value analysis
The customers expect to gain benefits from products and/or services when comparing the cost they have paid. This is customer value. To measure this value we need to understand what aspects of the product or the service is seen as the value for the customers. We are now mainly interested in the aspects of customer value that have an impact on logistics strategy. Customer value information can be gained by surveying customers and measuring their views on: importance, performance and price level. Two of the aspects that related to buying behaviours include demand profile and competitive value.
Measure Logistics Strategy Drivers
The demand profile and competitive profile are drivers of logistics strategy. The demand profile is normally high volume products with low variety and low demand for variability. Examples are washing powders or cars. Demand variability can be created through promotion.
Competitive profile is based on the following competitive factors:
· Quality
· Time
· Cost
· Controlling variability
· Uncertainty
Deciding where to focus in order to become competitive can set the company apart. For example, BMW chose to focus on high spec cars made to customer order, while Ford competes on low-cost vehicles that are made to stock.