Consumer segmentation for a manufacturer of home decoration products

The project involved performing a consumer segmentation study for a Quebec manufacturer of home decoration products.

Works performed: Qualitative research, quantitative research, questionnaires, consumer interviews, factor analysis, cluster analysis, segmentation, market research

 

PROJECT DESCRIPTION

Industry:                            Construction; Home decoration
Dates:                                Nov-Dec 2013
Location:                            Quebec and Ontario (Canada)

 

Context
The client has been manufacturing quality home decorating product for many years. However, it had undifferentiated offer for the whole market, whereas customers had different needs.  Some buyers wanted very simple product and they were not willing to pay more for additional features; therefore, they were choosing cheaper brands. Some customers, conversely, wanted more decorated product and they were willing to pay more for it.  In order to increase sales and maximize the company’s profit, the client decided to do a market research, reveal the needs of the customers and create differentiated product for each segment with correspondent price and promotion.

 

Objectives
• Divide all customers into several groups (segments) with similar needs
• Chose the most prospective segments to target
• Create the recommendations for each segment: what kind of product to offer, which price to chose, what language to use in the marketing materials, etc.

 

Methods used
1) Preliminary research online on the customers’ needs for developing the questionnaire;
2) Personal interviews with the customers in renovation stores in selected cities in Ontario and Quebec (RONA, IKEA, HOME DEPOT, numerous small decoration stores) – 400 respondents
3) Factor and Cluster analysis in SPSS to reveal the segments.

 

Results 
Based on the respondents’ answers, SPSS software revealed four distinctive segments of customers. Each segment was described in terms of its needs and demographic characteristics (age, sex, income, marital status, presence of kids, etc). Two segments were chosen as the most prospective targets. We provided the client with the detailed recommendations on what kind of product to develop for each segment, what type of distribution to use and what to write in the marketing materials to achieve the best sales.