A global building products company wanted to expand its B2B organization into a B2B2C business. They needed to understand consumer demand for their products, how renovation decisions are made, and which of the company’s innovative products consumers would buy—all to decide where in the buying journey to engage each segment with their brand.
The company wanted to find each consumer segmented by their attitudes about home renovations to learn why they make improvements, how much they will pay for innovative products, and how much help they need and from whom to realize the home of their dreams.
We validated the size and characteristics of the market by collecting key demographic information that included zip+4, gender, income, and children at home, plus price sensitivity, perceived value for new product concepts, attitudes, and aspirations. These data were appended to our proprietary database of U.S consumers to further describe benefit segments.
Through our ethnographies and survey data collection, we were able to characterize four segments of U.S consumers on numerous dimensions, including
- Their attitudes about contractors
- Propensity to do the work themselves
- Premium they would pay for materials that benefit them
- The outcome they expected from renovations
Building Segment Personas
For example, one segment was of DIYers, who value being able to do more of the work themselves, giving them more control and saving them money. They would pay an approximate 25% premium on the price of building materials for that benefit. This is wholly consistent with the fact that 56% of them did or will do some of work themselves, and one-third of them will do all of the work themselves. When contractors are engaged, their workmanship and experience at competitive prices that are fair are determinant. They want to save big from their DIY role.
With that knowledge, segment personas were built to transform the data into hypothetical customers. Walking the “Halls of Personas”—six-foot cutouts of each of the four key segments with their descriptive profiles—made the demand real to the organization. But more was needed to build distinct and effective marketing campaigns for the segments. To understand a day in the life of the target, we appended what we learned from the survey to what we know about the segment living in the zip+4 area code.
We learned that these DIYers have a credit rating between ~690 and 750. There is more than a 70% probability that they will spend on their children at retailers like Abercrombie & Fitch and more than a 40% probability that they will buy at Family Dollar. They are more likely than the average person in that zip+4 to have a T-Mobile account and shop at Home Depot, rather than Lowe’s. The probability that they regularly shop at Home Depot, while above average, is not off the charts. The inference is that they like to think of themselves at DIYers, but in fact don’t really do as much of the work themselves as they would like. Knowing these characteristics (among others) at the zip+4 area code level makes targeted promotions possible. They enable strong negotiating positions with potential partners across the value chain based on specific territory coverage potential and consumer behavior otherwise unavailable. Media placement can now be cost-effective based on the right motivating messages and channel.
A new market entrant learned how to promote its new offering and where to focus its communications to reach the consumer segments who would be most receptive. The product succeeded.