Market segmentation is fundamental to brand-business building. When creatively and intelligently managed, market segmentation can offer understanding of:
- Superior comprehension of the consumer therefore the brand-business can offer outstanding competitive advantage;
- Strategic focus that is vital for effective marketing;
- Identifying market priorities that will drive brand-business strategies.
Dollar General applied market segmentation to come up with its two-year-old pOpshelf brand-business.
Without altering its brand promise, Dollar General is leveraging market segmentation to grow its footprint with pOpshelf. Dollar General just isn’t alienating its core client base but has generated pOpshelf for a brand new client base. And, to show the appropriate differentiation of Dollar General and pOpshelf, in certain Dollar General stores you will find mini pOpshelf stores inside.
After the pandemic, Dollar General noticed a brand new market segment. But, this new market segment did actually have different needs than Dollar Generals’ core shoppers. Dollar General understood this customer as an affluent bargain shopper that is inflation weary. The affluent bargain shopper is a suburban shopper with a few children and an income between $50,000 and $125,000.
The affluent bargain shopper is interested in general merchandise than food. This shopper wants buy basics at an excellent price (such cleaning products or toothpaste) but in addition desires to buy fun items as well. A pOpshelf store has that “treasure hunt” vibe which makes shopping interesting. (The treasure hunt experience should not be underestimated: it’s also section of why is TJ Maxx so popular.) Shopping at a pOpshelf store allows affluent bargain shoppers to take care of themselves without a feeling of guilt, based on Dollar General’s Chief Merchandising Officer. She added, “pOpshelf continues to positively resonate with customers through our fun shopping experience, on-trend merchandise and relevant price points.”
In a Goldman Sachs Retail conference in September 2022, Dollar General described pOpshelf’s shopper the following, “… it is a unique customer. We’ve gone to school on that customer and made some changes accordingly, however it’s exactly the same basic need of value and convenience for an underserved customer that other retailers can’t arrive at. To ensure that makes us extremely excited. We serve a unique customer also it’s a unique occasion.”
Dollar General executives described pOpshelf in this way, in its 3rd quarter 2022 Earnings Report, “pOpshelf aims to interact customers by providing a great, affordable and differentiated treasure hunt experience delivered through continually refreshed merchandise, a differentiated in-store experience and exceptional value aided by the the greater part of our items coming in at $5 or less.”
According to CNBC, at a pOpshelf store, most of the items are ones that exist at higher-end markets such as for instance Mrs. Meyers soaps and Amy’s frozen foods. The pOpshelf shelves are filled up with a variety of holiday-themed party platters, home goods, crafts, toys, party supplies and seasonal décor with most items coming in at $5 or less.
One industry observer wrote that while the majority of pOpshelf’s shelves are filled up with “… decorative accessories and consumables, its home textiles assortment includes towels, kitchen textiles, decorative pillows and throws”. pOpshelf avoids utility items such as for instance sheets. This enables pOpshelf to “make all of it about fashion.” All of these items are own brand.
According to Dollar General, pOpshelf differs from a Dollar General for the reason that a Dollar General is especially anchored in small towns or rural areas. Dollar General customers generally have household incomes of $40,000 or less. And around 20% of items can be found at $1 or less. Executives at Dollar General inform us which they constantly talk to their core customers. These core customers need the $1 price point out survive from paycheck to paycheck.
Because pOpshelf is targeted on general merchandise over food and has now a $5 or less budget range, pOpshelf isn’t only a retail establishment for a unique segment; it really is a retail establishment which has higher sales and higher profits.
The intent behind market segmentation is identifying and understanding a brand’s customers. A brand-business could have different customers with different needs. Or, exactly the same customers that have different needs because of different situations or contexts.
At its core, market segmentation could be the proven fact that what individuals want is a function of who they really are, why they require this product or service and exactly how, when and where (context) they normally use this product or service. So, an industry is particular individuals with a specific need in a specific context. The aim is to profitably satisfy customer needs.
Satisfying customer desires and understanding occasions by which these occur is key differentiator between marketing and selling. Selling is convincing individuals to buy that which we understand how to make. Marketing is providing that which we know customers want or what solves their problems. This is the way brand-businesses leverage competitive advantage to achieve your goals. This what Dollar General is performing. And, market segmentation are at the core of its growth.
Contributed to Branding Strategy Insider by: Larry Light, writer of The Paradox Planet: Creating Brand Experiences For The chronilogical age of I
The Blake Project will help: Contact us for lots more on our segmentation research expertise.
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