Retailers, Brands Chase Greater Consumer Insights

Precision micro-marketing, or researching and targeting very specific types of shoppers, is gaining momentum in the apparel business as brands and retailers search for new ways to differentiate themselves in a crowded retail environment.

Executives at marketing and consumer research firms Scarborough Research and Spectra point to a paradigm shift in the way apparel retailers view marketing. They say more apparel retailers are looking for the same data richness from their apparel vendors as they are seeing exchanged between vendors and retailers in the grocery and consumer packaged goods sectors.

"More and more retailers, through their manufacturers, are looking to use consumer segmentation and marketing insights to drive efficiencies and growth within other parts of their business," says Libbey Paul, senior vice president of product management, Spectra. "They want to take practices currently being used by consumer packaged goods companies and apply it to other parts of the store GÇö like apparel."

At the same time, some apparel retailers are beginning to do more of their own consumer research and analysis, realizing that with increased fragmentation and channel blurring, they must be more precise than ever in targeting the consumers most likely to open their wallets in their stores, says Alisa Joseph, vice president of advertiser services, Scarborough Research. Before, retailers largely relied on information from their advertising agencies, newspapers in which they advertised and vendors for market insight.

"There's been a switch in thinking about market data," says Joseph.

For instance, the board of directors of one Scarborough retail client gave the retailer's management team a directive to do its own analysis to better understand the consumer, and to use this information to achieve a better product mix and create a better store environment. Two to five years ago, the topic never would have been on the agenda

Spectra's Paul points to the increasing importance of proprietary data, or unique information that a manufacturer or retailer compiles about its customers, products and the marketplace. This information can be gathered through custom surveys and direct-to-consumer Web sales transaction analysis.

Coupled with syndicated consumer data, these unique consumer insights can be used to tailor sales and marketing strategies. Spectra, for instance, uses a proprietary segmentation platform to help businesses integrate their internal data with other information, such as consumer panel research (like that offered by The NPD Group), POS data and attitudinal studies.

Winning by understanding local preferences

In a retail world full of choices (some would argue too many choices) for the consumer, plus the usual price pressure (intensified by discounters), never has micro-targeted focus been more important when it comes to spending precious resources on marketing, especially around new product launches.

How do you ensure the best ROI from your next product introduction or promotion? The experts say it's all about thinking locally.

"On this retail battleground GÇö and it is a battle GÇö you must win on a town-by-town perspective," says Scott Bernhardt, senior vice president of Planalytics, which offers services and software designed to help apparel firms take into account the role of local weather conditions in merchandising.

Likewise, Spectra's Paul stresses the importance of finely honing your understanding of your target consumer. Knowledge of demographics, purchasing behavior, attitudes, leisure preferences and other specifics can help in creating a targeted sales and marketing program that will resonate with consumers, she says.

For example, responding to rising marketer interest in the Hispanic market, the fastest-growing demographic group in the United States, in April Spectra released HispanIQGäó, a tool that uses a new type of "acculturation" research to help marketers understand differences and preferences among Hispanic consumers. Scarborough, which gathers and analyzes consumer information in 75 local markets (including 11 strong Hispanic markets) across the United States, worked with Spectra on the development of the tool.

Market research do's and don'ts

If the prospect of precision micro-marketing seems overwhelming, and you are worried about taking the wrong path with your next move, keep in mind this advice:

DO get as much information as possible to understand the target consumer for your product. Narrowing down your target market by even one variable (i.e., older vs. younger, richer vs. poorer) can make a difference. Rarely does casting a wide net make sense anymore.

DON'T ignore the impact of local weather and how it triggers different types of consumer behavior in local markets.

DON'T put all of your marketing dollars into a media mix without first identifying if you are optimally targeting the audience you want to reach (i.e., be sure you have done your homework on the right message to send and where to deliver it).

DO ensure that the market research data you obtain from third parties can be statistically projected to make large assumptions.