Factfile 44
Market mapping in practice
Three market maps are used to illustrate market mapping in practice. It should be noted, however, that all of them have been modified in one way or another in order to protect the commercial insights they provided to their originating companies.
1. The first map is for an agricultural product used by farmers. It illustrates the link between a top line map as depicted in Figure 14 and the greater detail to which a market map should be taken.
This example also shows that a market map is far more than a distribution map as it includes the role of consultants and the role of influential editorials in specialist publications, both of which were used by some final users when deciding what product to buy.
Figure 14: Market map for an agricultural product used by farmers
© Malcolm McDonald and Ian Dunbar 2002
Also illustrated in Figure 15 is the decision-making power of the final users in this particular market - their decisions account for 60% of the market volume. A company that focuses all its sales and marketing effort at the final users is therefore overlooking decision makers that account for 40% of the market.
In addition to re-drawing this market map to depict what it was believed the market would look like in three years time, this company also looked at how their target segments operated in the market as this would enable them to draw up their segment strategies.
Some segments were of no interest to the company in question, therefore building strategies for the market as a whole was not an appropriate route.
2. The following is an extract from a market map focusing on the customer-facing channels for a product in general use by company employees. Whenever the detail of a particular part of a market map is quite complex, separating it out this way can make it more manageable.
This extract shows how customers in the market as a whole sourced their products and how the products of the company for whom this map was developed reached their customers.
There is clearly a misalignment and when the map was re-drawn to represent the situation in three years time based on interviews with customers about their future intentions, this misalignment was forecast to get much worse.
Figure 15: How customers in the market as a whole as a whole sourced products and how the products reached their customers
© Malcolm McDonald and Ian Dunbar 2002.
Action taken: The direct sales activity was reduced and re-directed to serve other channels. Resource was also taken out of direct sales and put into a new telesales unit as direct response using the telephone was forecast to more than double during the planning horizon.
3. The third map is for a market whose needs are met by employing very expensive, specialised technical equipment. As well as illustrating the current routes to market, this map also highlights where decisions are made, how many units the various decision makers decide upon, and the company?s share of the market along the various routes and with the various decision makers.
The company can therefore clearly see where it is doing well and where it is performing badly. The map was originally put together during an in-company workshop and all the figures were estimates, the primary interest of the workshop being to illustrate the relative importance of the different parts of the market to each other and the company?s performance. More accurate figures were developed as part of a follow-up programme.
Figure 16: How market mapping in a b2b market can help a segmentation project
© Malcolm McDonald and Ian Dunbar 2002.
The map in Figure 16 illustrates how market mapping in a b2b market can help a segmentation project.
To explain what is being revealed on this market map, two of the stages (referred to as ?junctions?) are explained below.
Buying Groups
A total of 140 units involve individuals found in buying groups. In fact, all of these 140 units are decided on by these individuals. As buying groups don?t use the product in question, this means that some users have delegated this decision to the buying groups (in fact, these buying groups were set up by customers to act on their behalf).
Although the number of units controlled by buying groups account for 10.7% of the market, the company constructing this market map has 0% share of their business. Either this company?s sales and marketing resources are totally ineffective when it comes to buying groups or they have failed to target these individuals (it was the latter).
Action taken: The company took some members of its sales force away from calling on other parts of the market (where they were spending more time than was justified - see next point), trained them on how to sell to buying groups (once their buying criteria had been understood) and built buying groups into their calling schedules.
Technicians
A total of 620 units involve individuals known as technicians (and with only 240 units decided on by technicians this means that 380 only involve technicians as a procedural requirement).
Of this total, 240 come direct from the sales forces of the manufacturers (of which this example company has a 17% share), 60 units come direct from buying groups (0% share), 300 come through administration (7% share) and 20 through leading institutions (0% share).
It would, of course, have been helpful if the company knew what its share was of the units decided on by technicians, but it didn?t know this figure and estimated it to be around 16-18%. What they could work out, however, was the proportion of its sales and marketing resources spent on this decision making group and it was far above the relative importance of this group in the market (which stood at 18% based on the number of units this group decided on). This misalignment of company resources was also seen to occur with final users (who decided on 460 units, representing 35% of the market).
The focus of the sales and marketing on the technicians and final users was not surprising as the majority of employees in these functions had at one stage in their careers been technicians and/or final users. They knew these people and how to sell to them.
This had worked well in the past as the technicians and final users had made the vast majority of purchase decisions, but decision-making responsibilities had changed and the role of technicians and final users was forecast to fall even further.
Action taken: The company re-drew the market map to represent how they believed the market would look in three years time and took resources away from the technicians and final users and re-directed them to buying groups, leading institutions and administration in order to reflect the current decision making structure of the market and the forecast decision making trends.
The material in this factfile has been contributed by Professor Malcolm McDonald and Ian Dunbar of The Market Segmentation Company. A joint authored book - Market Segmentation: How to do it; How to profit from it (2nd edition) Palgrave, 1998, ISBN 0-333-73369-X - takes an in-depth look at this topic. For more information see www.MarketSegmentation.co.uk.