When a firm has a product capable of being marketed to the food industry as a whole, developing a segmentation strategy is the only way to succeed. This year, a global food supplier asked us to work with them to identify the most attractive B2B customer target segments and specific firms within the global food industry.
The food supplier’s new product has a wide variety of applications in food categories in both the Food Manufacturing industry and the Foodservice industry. After examining regulatory pressure, industry consortium development, consumer trends and other underlying demand drivers in countries and key categories across the globe, we focused the segmentation on approximately fifteen specific countries in North America, Asia Pacific, Europe and Latin America.
Specific food category applications were also identified within Food Manufacturing, such as bakery and cheese. Within Foodservice, Chained Commercial operators were chosen as the primary focus since they offered the best fit with product characteristics and client capabilities.
A dramatic difference emerged between the targeting strategies for these two food food industry segments.
Within Chained Commercial Foodservice, many of the world’s largest players, including McDonald’s, Yum! Brands (Pizza Hut, Taco Bell, KFC), Doctor’s Associates (Subway), Wendy’s, Dunkin’ Brand Group, Domino’s Pizza, and Burger King, also topped the list of targets in many specific countries. Developing the global Foodservice segmentation targeting approach required additional scrutiny of the US for two reasons:
- Many of these leading global players are headquartered in the US.
- The US Commercial Chained Foodservice market required more in-depth analysis, as there are over 80 firms with revenues in excess of $100 million. After the US, Japan has the second largest number of large chained players in-country.
The conclusion drawn from this was that succeeding with the Chained Foodservice segment would require globally targeting the leading players, along with country-specific efforts in the largest markets, such as the US.
By comparison, the global Food Manufacturing segment was less concentrated in the specific product categories we studied. While there are leading global players like Nestle, Unilever, Kraft, Mondalez and PepsiCo in many markets, most countries typically also have large, locally-based manufacturers with a strong presence in key categories such as bread-based goods and dairy products, among others. These companies often deliver products that satisfy consumer demand for the unique tastes of a specific country.
Since the leading local player in categories such as bakery and dairy typically differ from one country to the next, the conclusion drawn is that more country-specific efforts would be required to reach these country-specific targets. In addition, since regulatory requirements, dietary guidelines, enforcement and monitoring all can vary considerably from country to country, the global Food Manufacturers also need to take country-specific approaches.
Meaningful B2B segmentation strategies can truly differentiate a company from its competitors, as I’ve written in a previous article, “The Case for More Meaningful B2B Market Segmentation.” In the food industry specifically, careful segmentation isn’t just a nice thing to do—it’s a critical part of the go-to-market strategy. Completing this segmentation research and combining this knowledge, along with firm capabilities and other considerations, set our client up to succeed with each segment through deploying focused targeting strategies.