Strategic Segmentation Case

Strategic segmentation for a leading Latin American supermarket chain

About This Project

Our client, a major supermarket chain in Latin America, was looking for a better understanding of the target market to improve service level and adjust business positioning.

Altair’s detailed market analysis, customer segmentation strategy planning, and segment prioritization and characterization helped our client better address its consumers’ needs, and consequently grow market share and revenues.

Challenge

The supermarket chain was looking to better understand target consumers to adjust its positioning, boost the perceptions of its brand, optimize its product portfolio and service level, and ultimately drive greater sales and market share.

Approach

Together with senior management, we designed a pilot project to identify localization opportunities. The process involved four steps:

  1. Perform an in-depth assessment of the client’s market, customers, and competitors. Using this information, the team identified three key variables to consider in segmentation strategy: purchasing power, competitive profile in the area, service indicators.
  2. Lay out a quantitative study of factors affecting the key variables, calculating a series of demographic indexes and performing regression analyses of competitive landscape in terms of product quality and price point. From the results and additional qualitative studies, we build a matrix as the primary benchmark for the new segmentation strategy.
  3. Select two groups of products as indicators for “premium” and “discount” and incorporating store-level sales figures for each group into the primary segmentation benchmark to obtain a score for every single store to group them into a more precise classification: premium, medium plus, medium, discount plus and discount.
  4. Conduct customer research to learn about their preferences and needs and gather management feedback from regional and local store managers about product portfolio decision-making.

Recommendations

Business Positioning:

Altair recommends the chain to keep the price point the lowest in any given segment the company compete in. At the same time, brand, promotions and product assortment should be adjusted per segment.

Service Level:

Different look and feel for stores in different segment group; personalized services modified per customer behaviors and preferences of a certain segment.

Outcome

The client successfully implemented the new segmentation strategy. Thanks to the commitment of client executives, the performance of the stores has been very positive, with jumps in profitability and customer satisfaction as measured on a per-store basis.

Country

Mexico

Date
Category
Analytics, Retail & FMCG
Tags
Analytics, Customer Research, Retail, Segmentation Strategy

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