A consumer products organization, specializing in accessories for power motor sports, was developing a long-term strategy for changing their sales process and growth. While they had an understanding of their market, they had not formally looked into their customer base. As such, they had no clear direction on which to base their strategy.
With no formal measures of buyer behavior in the overall market, Client sought out LRC to:
- Determine how the shopping behaviors of Client’s customers are similar and dissimilar from the market;
- Identify the overall expected spend in the market over the next 12 months and on what products;
- Segment the market by preference to Client and determine what drives that preference; and
- Establish key differences of customers that prefer Client.
Client’s understanding of the market currently was that the strength of their customer base resided in people over the age of 50 that preferred messaging through store salespeople. Their current marketing was centered around relationships with stores and messaging was tailored around in-store displays.
LRC conducted a blind Brand Positioning study. From the demographic information provided in-survey, the consumers aligned with the general consumer profile that Client was expecting.
What Was Learned:
Loyalty to the brand is very strong. Nearly 50% of consumers aware of the brand AND with a current need were classified as Loyal to the brand, compared to a typical B2C Loyalty Profile with 40% Loyal. This resulted in a high number of consumers reporting Client in their consideration set for their next purchase.
When looking to understand the purchasing preferences of this market, two vastly different segments were identified. The first views the product primarily through the lens of style. To the extent that the style of the accessory fit their desires, the consumer – and the segment – have a positive valuation of the product and brand. This segment tends to be:
- Younger than the other members of the market
- Have a more positive valuation of the client’s brand
- Have a higher percentage that are Loyal to the client’s brand
- Obtain their information more from web and social media sources
- More likely to purchase online
The second major segment evaluates the product by its durability. The sturdier and more durable the accessory is perceived as being, the higher the product is evaluated. This segment tends to be:
- Views competitive brands more positively relative to the client brand
- Has a higher percentage of customers classified as being Vulnerable to the client’s brand
- Obtains information more from in-person sources – events and store experiences
Looking below to Figure 1, the differences between the segments become more pronounced when you compare them side-by-side:
Figure 1 – Segment Profiles and Comparison
Obviously, the Style segment does not want a product that will easily break. The Durability segment does not want an accessory that has no style at all. These segments do not make their decisions exclusively on these criteria – they’re simply weighted far more.
Client’s Loyal customer base resides much more strongly with the Style segment than the Durability segment and should be the focus of their strategy moving forward. This is a younger segment than was previously thought and required a change in the Client’s marketing strategy. LRC recommended that they focus on solidifying their stance with this group of Loyal customers moving forward.
Figure 2 – Loyalty by Segment
As seen in Figure 2, the Style Segment is far more Loyal than the Durability Segment. Messaging should change to reflect the preferences of this group, which are more digital marketing and social media-driven. Since this is counter to the current communication plan, it will take the majority of resources to strengthen messaging in these channels.
These results have a multitude of implications that drive decisions pertaining to product innovation, messaging, media selection, distribution, and merchandising. The client’s strategy and tactics will change radically and be more focused on their core customers.
There are two pieces of good news related to this. First, their decisions are now based on market knowledge as opposed to intuition. These radical changes can be made with more confidence. Second, their beliefs prior to this work included the belief that their core customer was over 50 years old. With the new information that their core customer is younger, they can develop strategies to nurture these customers through their lifetime.