ANNUAL REPORT 2012

MAERSK LINE CASE

CUTTING
THE
GORDIAN
KNOT
The segmentation model allows
managers to prioritise segments
according to the same principles
BY JESPER ADELTOFT
whether in London, São Paolo
or any other harbour on the map

I
magine being in charge of a Maersk Line in order to ensure COMPANY FACTS
office in, say, Brazil, having to grow a coherent commercial Maersk Line is the world’s largest shipping
market position at rates in excess of 15% focus and prioritisa- company, operating in 130 countries, with a
per annum in order to cater to market devel- tion. All attempts work force of more than 25,000 employees, a
opments and central capacity investments. of making it oper- fleet of about 650 container ships and 15 million

Which customers and areas do you target in ational have failed, containers transported annually across the globe.

order to reach the target volumes? however.

But the management was determined to cut this seemingly Gordian

MANAGEMENT was determined: knot of developing a framework that was widely accepted, simple
enough to apply in a daily setting and yet able to encompass the
Either we take it to the point where complexity of market realities. In the autumn of 2011, after nine
we believe it WILL WORK, or we months of hard work, Maersk Line was finally able to untangle
the threads and start the global roll-out of a new segmentation
drop the project entirely framework. What had made it work this time around?

Tackle and Solve

Several times over the past 10 years, Maersk To answer this question, we need to look into what segmentation is
Line has tried to develop a segmentation all about. The misunderstandings regarding segmentation are many,
model that could be made operational at and the pitfalls on the way to success even more plentiful. Put very
Group level as well as in all 130 local offices simplistically, segmentation is about prioritisation. However, when
 QUARTZ+CO

looking closer there is a need to agree on
precisely which problem the segmentation
Where efforts should solve. Is it growth or cost
to grow? cutting? Is it to regain lost market share?
To increase sales efficiency? The purpose
of the segmentation efforts will determine
STRATEGIC which different segmentation models to apply
SEGMENTATION at the different levels.
Understand the overall
market landscape
in order to identify At STRATEGIC LEVEL , the key is to create
attractive market
opportunities and
an understanding of the overall market land-
scape in order to identify attractive market
prioritise segments.
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 How
concrete action plans to realise value where to sell?
the customer meets the business. The three
levels are interconnected, and changes at one
level impact the others. Companies should
OPERATIONAL
define what they want and how to achieve SEGMENTATION
it for all three of them. Drive and manage
operations and projects
in order to realise value
In the case of Maersk Line, the segmenta- where the customer
tion was to encompass all three levels, with meets the business.
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
What model, a segmentation grid is established on
to offer? the basis of just two dimensions. This is an
oversimplification of reality that trades off
complexity for operational efficiency – but
TACTICAL
if made right, it still holds the potential to
SEGMENTATION embrace vast complexity.
Understand costumer
needs, buying criteria
and behaviour for After multiple analysis loops, the two pri-
prioritised segments mary dimensions of the model chosen in
in order to develop
Maersk Line were cargo types and routes.
attractive offerings.
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.
This is not done in a flash; 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
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
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.

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.