Background and Challenge
L.E.K. Consulting’s client, a global footwear and apparel company, needed to better understand its consumer: the different segments that comprised the addressable market, their purchase behavior, why they bought particular brands, and their share of wallet. Strategically, the client needed to determine how much of a brand’s growth story was being driven by a temporary fashion fad versus a true connection with customers. And ultimately, was there further room for the brand to grow with existing or new customers, or had the brand’s market share already been maximized?
Approach and Recommendations
Using a sophisticated on-line research tool, the L.E.K. team developed a detailed customer segmentation model for the brand based on demographic, attitudinal and behavioral attributes. Using this model, L.E.K. determined each segment’s relative size, behaviors, and preferences. Most importantly, the team also examined each segment’s affinity for the company’s brand and quantified the likelihood of future growth. The analysis spanned nine countries around the world.
The L.E.K. team recommended that the company make a number of significant changes in their strategic priorities, including:
- Targeting an under-served customer segment
- Repositioning the brand messaging
- Carefully managing the brand extension ideas
Based on LEK's research, the company modified its long-term strategy for its brand, and is focusing on a portfolio of customer segments to achieve its growth targets. Furthermore, L.E.K.’s proprietary segmentation methodology helped to validate major strategic initiatives such as its retail store strategies and new apparel lines.