ANNUAL REPORT 2012

MAERSK LINE CASE

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

BY JESPER ADELTOFT

magine being in charge of a Maersk Line

office in, say, Brazil, having to grow a
market position at rates in excess of 15%
per annum in order to cater to market developments and central capacity investments.
Which customers and areas do you target in
order to reach the target volumes?

MANAGEMENT was determined:

Either we take it to the point where
we believe it WILL WORK, or we
drop the project entirely
Several times over the past 10 years, Maersk
Line has tried to develop a segmentation
model that could be made operational at
Group level as well as in all 130 local offices

in order to ensure
coherent commercial
focus and prioritisation. All attempts
of making it operational have failed,
however.

COMPANY FACTS
Maersk Line is the worlds largest shipping
company, operating in 130 countries, with a
work force of more than 25,000 employees, a
fleet of about 650 container ships and 15 million
containers transported annually across the globe.

But the management was determined to cut this seemingly Gordian

knot of developing a framework that was widely accepted, simple
enough to apply in a daily setting and yet able to encompass the
complexity of market realities. In the autumn of 2011, after nine
months of hard work, Maersk Line was finally able to untangle
the threads and start the global roll-out of a new segmentation
framework. What had made it work this time around?
Tackle and Solve

To answer this question, we need to look into what segmentation is

all about. The misunderstandings regarding segmentation are many,
and the pitfalls on the way to success even more plentiful. Put very
simplistically, segmentation is about prioritisation. However, when

QUARTZ+CO

Where
to grow?

STRATEGIC
SEGMENTATION
Understand the overall
market landscape
in order to identify
attractive market
opportunities and
prioritise segments.

looking closer there is a need to agree on

precisely which problem the segmentation
efforts should solve. Is it growth or cost
cutting? Is it to regain lost market share?
To increase sales efficiency? The purpose
of the segmentation efforts will determine
which different segmentation models to apply
at the different levels.

At STRATEGIC LEVEL , the key is to create

an understanding of the overall market landscape in order to identify attractive market
opportunities and prioritise segments accordingly. 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
where the customer
meets the business.

In the case of Maersk Line, the segmentation was to encompass all three levels, with
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.

What
to offer?

TACTICAL
SEGMENTATION
Understand costumer
needs, buying criteria
and behaviour for
prioritised segments
in order to develop
attractive offerings.

At strategic level, the first step was to develop a strategic market model. In such a
model, a segmentation grid is established on
the basis of just two dimensions. This is an
oversimplification of reality that trades off
complexity for operational efficiency but
if made right, it still holds the potential to
embrace vast complexity.

After multiple analysis loops, the two primary dimensions of the model chosen in
Maersk Line were cargo types and routes.
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.
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.

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, So 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

So 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 organisations 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 So 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.