By John Karolefski
Through a special arrangement, presented here for discussion is an excerpt of a current article from the monthly e-zine, CPGmatters.
In an ambitious move notable for its wide scope and marketing implications, The Coca-Cola Company is rolling out a shopper segmentation protocol that can be applied around the world. This sweeping global tool has been launched in multiple countries across Europe, Asia, Africa, and the Americas, with more in planning for 2009.
The reason for the global protocol, said Karen Gryson, director of marketing strategy & insights, is that local markets were each developing their own tools. These different methods not only represented redundant development efforts, but also would make cross-country comparisons difficult for the $29 billion company that markets 2,800 beverages and 450 brands in over 200 countries.
“Development of a standardized global protocol would therefore not only improve productivity, but would also enable a common language for shopper understanding across the company and facilitate cross-country opportunity identification,” said Ms. Gryson in a presentation at the Shopper Insights Conference. “The challenge, though, is how do you balance the global needs and the need for commonality and comparability with the need for local actionability?”
Ms. Gryson said the goal was a common global approach for shopper understanding that would enable Coca-Cola to identify not only the local opportunities, but also regionally or globally scaleable opportunities.
“These opportunities might be at a channel level or for a particular retail customer,” she explained. “So we needed a standardized, yet flexible, Best Practice protocol that could be implemented in any market around the world without local reinvention.”
“When we looked at all the work that had been done locally around the world,” she went on to say, “we found that fundamentally people shop for the same reasons regardless of where they live. Relative importance of the various missions may differ from market to market, and the channels may differ, but fundamentally the needs are similar. This gave us reason to believe that a global segmentation would be feasible.”
Discussion Questions: What do you think of Coke’s move to globally standardize its shopper segmentation protocol? Do you agree that local market segmentation is often a redundant exercise and complicates cross-country comparisons? How do you the balance this global desire for “commonality and comparability” with the need for distinct local approaches?
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Global standards will make it easier for Coke to have a go-to-market strategy that is easily adapted to any locale. This will mean that some locales will get treated incorrectly and Coke will initially miss the mark.
The good news is the Coke is agile and will adjust where necessary. More importantly, Coke will still be right in 90% of their markets 90% of the time and achieve that success at a much lower cost than any competitor.
In the most positive way, my response to Coke’s move is No, No, No. Good grief, Charlie Brown!, have we learned nothing from failed, one-size-fits-all, global marketing efforts for automobiles? Or McDonald’s? Or Disneyland? Or Budweiser? Additionally, the failure of such efforts register only several years down the line, when it’s too late to do anything but start all over. Incremental success gauges are rarely enforced (or even put into place), and negative readings are systemically pooh-poohed as anomalies due to the newness of the effort.
Segmentation is just another term for top-down marketing. When did this become the best way to develop unique new (successful) grass-roots marketing efforts? “Fundamentally people shop for the same reasons regardless of where they live” is marketing pabulum, designed to shift marketing power away from boots-on-the-ground facilitators to office personnel. When was micromarketing replaced with macromarketing?
Following the same protocol throughout the world makes sense. Internally, it produces the same language, same objectives, the same measurements and a common way to look at the business. The caution must be though that one can’t let this commonality dictate the same marketing, positioning and messaging throughout the world. The heavy user in the U.S. could very well be drinking the brand for very different reasons than the heavy user in India, China or the UK.
I’m a big proponent of catering to your local market. When I advise clients on marketing issues, I always start with the question: What is the pulse of the community? It is always important for retailers to cater to the locals.
I would say the same applies for brands. Coke has many different brands in other countries. While Coca-Cola is a huge brand with a huge customer following and is pretty much the same the world over, I think it would be better for Coke to keep the local variants as a responsible corporation. If anything, it keeps things interesting for tourists!
Everything Coca-Cola said makes sense. Protocols for segmentation can be used to do local marketing. They’re just standardizing and streamlining, from what I can see. Or did I miss something?
As a long-standing practitioner in shopper marketing, the strategies and activities I’ve seen over the years from Coca-Cola are consistently not only best-in-class, but also brave.
To paraphrase author Gary Hamel, we need more than incrementalism, we need industry revolution in order to prosper. Coke is one of the companies that is capable of delivering.
(…And no, they are not a client of mine.)
Very smart on Coke’s part! The first step towards winning is understanding the rules and how the game is scored. If you can help establish the rules and how the game is scored, you have a tremendous advantage, especially if they take your strengths into account. Coke has always been a very strong marketing company and this demonstrates that they are still on top of their game.
There is no other way to manage a global brand franchise like KO’s without a common customer language so the company should be applauded for its investment.
The real key is how they are going to use, track and measure its results to both validate their segmentation scheme and understand how it varies in application from market to market.
Slowly but surely companies are coming to terms with the reality that mass marketing is not the answer and being relevant to customers is more than a global tagline.
You cannot manage a global brand without acknowledging differences in local tastes. Well, you can manage the brand, but you won’t necessarily be successful.
Of course, Coke is a one-item band (more or less). But for retailers who can put thousands of SKUs in their assortments, the world is very very different.
I think that conceptually, it is a great idea. There are definitely ways to integrate commonalities while leveraging the differences in local markets. If the data model is developed correctly, there is no reason they can’t look at the overall shopper as well as segment them to understand how they vary.
My concern would be that Coca-Cola will emphasize the end results and minimize the technical aspects and importance of data integration and data modeling. Every technical implementation requires business sponsorship to be successful. All too often we have seen business users focus on end reports that look sexy and rush into development with a company that provides a pretty interface. I can’t stress enough the importance of data integration and the data model in this scenario. Unfortunately, most of these implementations fail because too little emphasis is placed on the all important architecture.
Think Global, Act Local. Coke is putting that maxim to work. Of course there will be many local differences in the world’s markets, but Coca-Cola is smart to raise shopper segmentation to a sufficiently abstract level that it can describe shoppers everywhere with an authoritative system. A brand-loyal shopper in the U.S. may be brand loyal for different reasons than a brand-loyal shopper in India, for example, and different marketing tactics may be work best in each market, but the observed behavior of the brand-loyal shopper is likely to be the same. Having a common vocabulary globally will facilitate the sharing of knowledge across the corporation, which is even more important than cost-savings on systems.
Global segmentation makes so much sense from a managerial and strategy perspective! Many companies have tried it. Similarities across markets, countries, and ethnic groups do exist. Differences also exist.
Companies who have used this approach in the past realized that there are opportunities for local companies to exploit the local differences that are ignored by large companies.
Every company makes a choice. For those of us making comments, we can enjoy watching to see what happens.
Again, it is hard to paint with a broad brush across all product segments. There are products where global standardization makes sense. However, these products would tend to be lower in SKU count variations to begin with.
To me a SKU-intense category will always benefit from local market strategies. A perfect example is in an article from RetailForward titled “Home Depot Learns to Go Local.” The lawn mower and the power tools examples are excellent. The strategy has to drive from consumer understanding and in particular the local demand rate.
I am amazed at how often the local demand rate for products is ignored in the merchandising strategy. It is the premise of managing categories – it establishes the role that a category plays. From there strategies like local market segmentation versus global standardization take shape
Having a global segmentation framework is a good strategy, but the challenge will remain as to how Coke will execute this strategy in the marketplace. They will need to make sure that what is planned for the segmentation can be applied at market. Coke did it well in some countries but is still having difficulty in some markets because the basics of execution were not in place.