ANNUAL REPORT 2012

in order to ensure coherent commercial focus and prioritisa-tion. All attempts of making it oper-ational have failed, however.

But the management was determined to cut this seemingly Gordian knot of developing a framework that was widely accepted, simple enough to apply in a daily setting and yet able to encompass the complexity of market realities. In the autumn of 2011, after nine months of hard work, Maersk Line was finally able to untangle the threads and start the global roll-out of a new segmentation framework. What had made it work this time around?

Tackle and Solve

To answer this question, we need to look into what segmentation is all about. The misunderstandings regarding segmentation are many, and the pitfalls on the way to success even more plentiful. Put very simplistically, segmentation is about prioritisation. However, when

Imagine being in charge of a Maersk Line office in, say, Brazil, having to grow a market position at rates in excess of 15%

per annum in order to cater to market devel-opments and central capacity investments. Which customers and areas do you target in order to reach the target volumes?

Several times over the past 10 years, Maersk Line has tried to develop a segmentation model that could be made operational at Group level as well as in all 130 local offices

MAERSK LINE CASE

CUTTING THE

GORDIANKNOT

BY JESPER ADELTOFT

The segmentation model allows managers to prioritise segments according to the same principles whether in London, São Paolo or any other harbour on the map

MANAGEMENT was determined: Either we take it to the point where we believe it WILL WORK, or we

drop the project entirely

COMPANY FACTS

Maersk Line is the world’s largest shipping

company, operating in 130 countries, with a

work force of more than 25,000 employees, a

fleet of about 650 container ships and 15 million

containers transported annually across the globe.

QUARTZ+CO

looking closer there is a need to agree on precisely which problem the segmentation efforts should solve. Is it growth or cost cutting? Is it to regain lost market share? To increase sales efficiency? The purpose of the segmentation efforts will determine which different segmentation models to apply at the different levels.

At STRATEGIC LEVEL, the key is to create an understanding of the overall market land-scape in order to identify attractive market opportunities and prioritise segments ac-cordingly. The TACTICAL LEVEL determines

what to offer customers by examining the needs, buying criteria and behaviour of the prioritised segments. And at OPERATIONAL

LEVEL, the segmentation is translated into concrete action plans to realise value where the customer meets the business. The three levels are interconnected, and changes at one level impact the others. Companies should define what they want and how to achieve it for all three of them.

In the case of Maersk Line, the segmenta-tion was to encompass all three levels, with distinct focus on defining and connecting the strategic and operational levels as a reshaping of the value proposition – i.e. the tactical level – had recently been scrutinised with the Daily Maersk product.

At strategic level, the first step was to de-velop a strategic market model. In such a model, a segmentation grid is established on the basis of just two dimensions. This is an oversimplification of reality that trades off complexity for operational efficiency – but if made right, it still holds the potential to embrace vast complexity.

After multiple analysis loops, the two pri-mary dimensions of the model chosen in Maersk Line were cargo types and routes. The next exercise was to define groups of cargo types with the same characteristics

that represented different value to Maersk Line. An entanglement of 600-800 cargo types and 250+ routes was transformed into a segmentation grid consisting of 144 prioritised fields. Each field was broken down according to the same logic, allowing every part of the organisation to find itself and to know which cargo types to focus on in which routes and corridors.

Engage and Mobilise

This case story promised to reveal what made the segmentation project work for Maersk Line this time around. The answer to this question can be found in the process leading to the segmentation model and its implementation.

To make the defined segments of the model operational at all levels, not only must a logic model be defined with the right dimensions, but it must also be populated with the right data – not just the available data. And just as importantly, a common language to talk about segmentation and to agree on the priorities must be established.

STRATEGIC SEGMENTATION

Understand the overall market landscape in order to identify attractive market opportunities and

prioritise segments.

TACTICAL SEGMENTATION

Understand costumer needs, buying criteria

and behaviour for prioritised segments in order to develop attractive offerings.

Where to grow?

What to offer?

OPERATIONAL SEGMENTATION

Drive and manage operations and projects in order to realise value

where the customer meets the business.

How to sell?

Today, the manager in São Paolo MAKES DECISIONS ACCORDING to the same logic

as the manager in London, or in any other MAERSK Line office

This is not done in a f lash; however, when done right, it enables the organisation to rank and prioritise segments according to the same principles, whether in London, São Paolo or any other harbour on the map. One of the simple reasons why the previous segmentation efforts had failed was the fact

that Maersk Line had not aligned the purpose of the model and dimensions or the priorities and focus with all stakeholders involved. This time, months were spent discussing the dimensions. There were 16 to begin with and everyone needed to agree on just two. Nonetheless, management was determined: Either we take it to the point where we believe it will work, or we drop the project entirely.

So, what did it take to reach this point? The project group included all commercial departments as well as the local sales organi-sations and ensured an open and widespread dialogue with all major stakeholders. Five pilot implementations were carried out on four continents, ensuring proof of concept, local adaptability and adjusting supporting business processes – admittedly a quite lengthy process. But this meant that the segmentation could be made operational and rolled out quickly. The regional clusters made their own segmentation grid following the logic of the overall model, determining how to prioritise resources, what types of cargo to focus on, and the model gave everyone the same frame of work. Today, the manager in São Paolo makes decisions according to the same logic – the same understanding of segments and an aligned prioritisation between them – as the manager in London, or in any other Maersk Line office.