Strategic Framework: Abell’s Framework for Strategic Planning
In this article, we will look at 1) what is the Abell Matrix?, 2) understanding the matrix, 3) how to apply Abell’s framework to your business, and 3) an example.
WHAT IS THE ABELL MATRIX?
The Abell matrix is a three dimensional tool most often is referred to as the three dimensional business definition model. The model is used to analyze the scope of operation for a business. This may include areas such as the technologies and products a business operates in a market or the audience that it targets. A detailed analysis of the business’s current activities can help create strategies for the future that will help the business stay tuned to the changes that may occur within the market.
The three dimensions of the business are the customer groups (who will be served by the business), customer needs (what are the customer needs that will be met) and technology or distinctive competencies (how are these needs going to be met). A major point of importance in this matrix is to focus on understanding the customer rather than the industry and its products and services. Through these three dimensions, this tool helps define a business by its competitive scope (narrow or broad) and the extent of competitive differentiation of its products/services.
UNDERSTANDING THE MATRIX
Abell described the strategic planning process as the starting principle for an organization’s business. This process in turn is driven by the mission statement which provides direction, focus and the basis for strategies to be further elaborated and driven down. Abell used three key questions as the three dimensions on his model and these are the foundation for the formulation of the mission statement itself.
- What are the customers of the organization?
- How can the organization meet the needs of its customers?
- What techniques are employed by the organization to meet these customer needs?
When plotted on a three dimensional model, the horizontal axis is taken as the customer groups, the vertical axis as their buying needs and the inclined axis is taken as the applied technologies. Taken together, a summarized version of the organization’s business model can be viewed in one glance.
This overview helps provide the company with a quick glance at the factors most important to the development of a marketing concept. The framework can be optimized by sorting the different factors that make up all three dimensions by their relative importance for the company. The most important factors should be closest to the 0 axis and should be given the highest priority and will be immediately visible to the company.
The Three Dimensions
- Customer Needs: This leg of the model identifies and lists down all the customer needs that are relevant to the company in question. Customer needs are identified based on the product offering and a link is made to customer benefits. As an example, a software developer who has studied customer needs in relation to their product will respond by providing easy to install software packages and may provide other useful options such as an anti-virus, a software cleanup option as well as manuals and tech support.
- Technologies: Unlike the name suggests, the word technologies is taken here in a broader context to describe all those technologies that are used to create a product as well as put in on the market. Issues here include things as diverse as the marketing campaign being use or the way market research must be conducted. Taking our software example further, the manufacturer will used the latest technologies in the product itself as well as proving a helpdesk which provides the best possible and most relevant information.
- Customer Groups: There would be no market without customers purchasing products on offer. This is why marketing is all about the buyers. It is vital for every organization to understand how to segment the market and which segments to target in order to successfully sell a product to them. Once the market has been segmented, the company needs to work toward acquiring as much knowledge as possible about the different target groups and offer specific products or campaigns to these segments. Our software manufacturer may choose to serve both business and customers and will need a separate strategy and account managers for its B2B and B2C lines of business.
Famous for his business definition model, Dr. Derek F Abell is the Professor Emeritus and co-founder of the European School of Management and Technology, established in Berlin, Germany. In 2012, he was also appointed the international dean at HSM Eduacao in Sao Paulo, Brazil. His work has been published as books and academic journal articles. He writes about strategic marketing, general management, leadership and executive responsibilities.
Dr. Abell obtained a bachelor’s degree in aeronautical engineering from the University of Southampton in 1960 before moving to the United Stated and pursuing a master’s degree in Industrial Management from MIT’s Sloan School of Management in 1966. He followed this with a doctorate in business administration from the Harvard Business School in 1970. He then served as the full time member of the Harvard Business School faculty until 1981. His other academic positions have included Insead in France and International Institute of Management Development in Switzerland among others.
There is a strict marketing emphasis within the Abell model, which limits the framework from being widely used and as a key approach used to define competitive strategies for a business. In addition, there is no room to accommodate external factors such as governments and other regulating bodies. The three dimensional model also makes the analysis more complex than a two dimensional one. There is only a provision for abstract growth directions and the model does not provide support to determine the appropriate size and scale of the business.
Tools for Building the Model
Given the relative complexity of this model because of the three dimensions, users may find is easy to access one of the many available tools to help build their own framework. One of these is:
HOW TO APPLY ABELL’S FRAMEWORK TO YOUR BUSINESS
Practical Use Tips
To begin implementing this model, it is first important to understand the dimensions and the entire model space. The three-dimensional space of the cube is the business scope of the company. The model helps identify what the company has been doing and also helps create a conceptual framework to identify opportunities for the future. Some key questions to help create this model for your company include:
- What are the current customer groups/Segments that we are serving?
- What needs are we meeting for these customers?
- What features or uses of our products are fulfilling these needs?
- Are there new customer groups with similar needs that are not being served?
- Can there be other uses of the product to fulfill other needs?
- Are there other technologies that need to be utilized to serve the needs of existing customers?
Reflecting on the Three Dimensions
The matrix is built to question the business model along three dimensions
- Here, the idea is to completely identify and understand customer profiles of those segments being served. Once the segments are identified, work can be done to retain the segments that are most relevant. Segments can be individual customers, business customers, geographical location, sedentary or nomadic, role in the industry, social professional category, purchasing power or level of education among others.
- In this dimension, the objective is to identify the needs of the consumer that are met by the product. This is done by identifying and characterizing the solution (the product or service) in terms of its features that it brings to the customer segments identified in the “who” category. These features may include improved effectiveness or efficiency, better risk management, greater well-being among others.
- At this stage, those means are identified and characterized through which the highlighted features are manufactured and delivered to customers. These means or technology include manufacturing techniques such as a choice of technical processes or a specific form of organization, distribution techniques such as home delivery, retailers, wholesalers, and large distribution and provision technologies such as user license, remote operation among others.
The matrix can be used in a number of ways by an organization. Some of these uses include:
- Defining the business scope at three business levels including the corporate level, the business level and the lower organizational levels
- Describing and communicating changes in the business definition. These changes may usually be a result of the company’s offering moving through the product life cycle
- Describing and communicating the business of any competitors in the market. This definition can be extremely helpful to the organization to better understand who they are up against
- Analyzing the growth opportunities for a business in a systematic and organized way which can help keep a track of these and implement at the right times
- Describing and communicating the evolution of markets
Starting a Car Dealership
Whether starting a new business or evaluating an existing one, the Abell business definition framework is a useful tool for stating out all the relevant information in an easy to assess format. In this example, we will consider what would need to be considered if you set out to start a car dealership.
The three dimensions of the framework will need to be identified and listed down, beginning with an understanding of who the customer is, moving on to what need are we trying to meet for one or more distinct customer groups and finally the means needed by the company to manufacture and deliver the product to customers.
The first question to ask is who will the business be serving? Businesses may choose to serve one or two segments of the potential target market or a larger group of segments. It is important to correctly identify who you are serving as information is vital to ensure that the right need is met in the right way. Often, a variation of the product or a different marketing strategy is used to target various segments. Once the segments are identified. It is vital to dig deep and understand the dynamics of each segment and what motivates them to make purchase decisions. For a car dealership, some segment options include:
- The rich and powerful executive
- The working class hero
- The urban party goer
- The suburban family
Once the segment has been identified, it is part of the study of this segment or segments to understand what need is motivating these people to make a particular purchase decisions. Some needs may be obvious as in the case of basic food items. While other needs may be unrecognized or unstated by the segment and need to be understood through research by the company. In the case of a car dealership, the need is vague and less obvious. If everyone wanted to buy a car to just meet the need to get from point A to point B, then the least expensive cars would be the ones everyone moved towards. Instead, some other reasons for buying a car may include:
- Peer pressure
- Status in an existing or aspirational peer group
- Sex Appeal
- Peace of mind and safety
- Excellent driving experience
Some questions that a customer may ask themselves when buying a car may be among the following depending on their hidden desire.
- Is it efficient and cost effective?
- Is it fast and sporty?
- Is it bold and strong?
- Is it comfortable and luxurious?
- Is it spacious and reliable?
To put this into perspective, if you picked the working class hero segment to target, their obvious needs may be to get from point A to point B, the ability to off-road if needed and have the space to carry a lot of friends, tools or other items easily. Some of the less obvious needs or hidden desires may include the need to be seen as strong, honest and courageous instead of a wimp, not be seen as putting on airs or being posh and seen as a loyal, outgoing and manly man.
By now you know that this segment requires cars that are powerful with big wheels, bold and spacious but not too fancy or expensive. Depending on the purchase power, the prime cars to sell would be muscle cars or pick-up trucks. As a dealer, your technology will be the systems needed to acquire these cars and market them in the right way, at the right time to the right people.