Case Abb Essay

1399 words - 6 pages

Case 1 ABB Electric Segmentation Group 7C

Context
¡  ABB is a producer of electrical equipment. ¡  ABB established a new marketing strategy based on analytical techniques (MKIS)to improve its results. ¡  ABB management segmented its marketing into 4 categories using Choice Modeling : Loyal, Competitive, Switchable and Lost. ¡  ABB has been given a budget for a supplementary direct marketing campaign aimed at 20% of the companies in the region composed of 3 districts.

Outline
1.  Customer targeting with limited data 2.  Choice-based model 3.  Limits of the model and suggestions

I. Customer targeting with limited data
•  Introduction to the market •  Limited data targeting ...view middle of the document...

¡  Customers targeted represent an annual purchase of $68 388, of which 19% are ABB’s share
Customer 35 43 44 66 32 11 84 17 74 20 53 47 12 26 16 33 23 27 Ann_Purchase $14 798 $12 514 $10 997 $9 793 $6 270 $1 722 $1 404 $1 364 $1 219 $1 009 $989 $956 $928 $899 $894 $890 $871 $871 District 2 2 2 3 1 3 3 3 1 2 2 2 1 2 3 3 2 1 Firm_Chosen D C A B C A B B B B C B D D B D D D

II. The choicebased model
•  •  •  •  •  Key drivers of choice Segmentation criteria Focus on new campaign efforts Before/after marketing analysis Sales productivity improvement

The choice-based model
Confusion matrix

¡  After running the choicebased analysis, a lot more data can be interpreted.

¡  The model is accurate since 74% of the data is correctly predicted.

KEY DRIVERS of CHOICE
¡  Running the analysis, we can highlight 6 variables that are key drivers in the process of choosing a supplier: Price, Energy loss, Warranty, Ease of Installation, Problem Solving support and Overall Quality of products. ¡  The standard deviation for each driver is well below the coefficient estimations, and each t-statistic is above 2. Thus the key drivers are validated.

Segmentation criteria
¡  Identifying the 4 segmentation criteria of ABB known as loyal, competitive, switchable and lost customers. ¡  Calculation of the difference between the probability of choosing ABB (PABB) and the probability of choosing the next preferred competitor (Pcomp). ¡  Loyal: PABB - PComp > 75% ¡  Competitive: 0% < PABB – Pcomp < 75% ¡  Lost: All customers considered loyal to competitors (determined by the same calculation from the competitors’ point of view) are considered as lost to ABB. ¡  Switchable: remaining prospects which have not already been highlighted
Lost& 57%&

Segments(market(shares(
Loyal& 8%& Comp& 11%&

Switchable& 24%&

BEFORE/AFTER MARKETING ANALYSIS
¡  Comparing them to the initial chosen list (top 20%) and thanks to the choicebased model analysis, we found out that :
¡  12 customers are lost ¡  4 customers are switchable ¡  2 customers are competitive
Customer 35 43 44 66 32 11 84 17 74 20 53 47 12 26 16 33 23 27 Ann_Purchase $14 798 $12 514 $10 997 $9 793 $6 270 $1 722 $1 404 $1 364 $1 219 $1 009 $989 $956 $928 $899 $894 $890 $871 $871 District 2 2 2 3 1 3 3 3 1 2 2 2 1 2 3 3 2 1 Firm_Chosen D C A B C A B B B B C B D D B D D D Segment Lost to Edison Lost to WH Loyal to ABB Switchable Lost to WH Switchable Competitive Switchable Lost to GE Lost to GE Lost to WE Lost to GE Lost to Edison Switchable Competitive Lost to Edison Lost to Edison Lost to Edison

¡  As expected, the choicebased model gives more accurate results and a better understanding of prospects’ intentions than the segmentation based only on annual purchase.

FOCUS of NEW CAMPAIGN EFFORTS
¡  F o c u s e f f o r t s o n c o m p e t i t i v e customers who didn’t choose ABB and on switchable customers. ¡  C a l c u l a t e a n e x p e c t e d s a l e s potential...

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