Finding footing in an evolving environment
The rapid growth in recent years of the Southeast Asian health and beauty industry has garnered significant attention. In addition to launching innovative new products, both global and local manufacturers have invested in their efforts to understand the needs of Asian consumers. Brands are increasingly cognizant of the rise of a knowledgeable, discerning, and critical Asian consumer with a strong sense of individuality toward their needs, preferences, and purchases.
It is also recognized that the availability of digital purchase platforms has significantly altered how consumers in Asia buy health and beauty products. Today there is a wider selection of local retailers selling a global assortment of products. With the availability of online retailers, the brand purchase funnel has seen a significant change. From experiential shopping to multi-label stores, membership reward programs, and prompt delivery service, shoppers today have never been more demanding with respect to their online and offline (O+O) shopping experience.
Case study: How did NIQ’s Segmentation Science assist an Asian retailer?
In this rapidly evolving and competitive environment, an Asian multi-label retailer used NIQ’s Segmentation Science to:
- Understand the health and beauty market to identify the most valuable shopper segments to channel and focus marketing investments on. Complementary to this was documenting their extensive loyalty database to better understand their own shopper needs, generating focus strategies for greater engagement and increase in value for the targeted business segments.
- Identify key shopper missions that accounted for the highest footfall and unit sales volume to understand their competitive position and activate these missions at the store.
NIQ Segmentation Science was used to address these questions using a combination of shopper segmentation and mission modeling. Segmentation Science is built on a framework of the individual (who are the shoppers), mindspace (what do they want), and behavior (what do they shop for), also known as the I-M-B framework.
How the I-M-B framework answered key retailer business questions
The central pillar of Segmentation Science is mindspace. Shoppers today are exposed to more influences than ever before — in terms of products, brands, channels, or banners. Therefore, their demographic profile is insufficient in understanding how shoppers shop today.
Changing context or circumstances can also impact the motivation behind why shoppers make the choices they do, which in turn influences their behavior, be it where/how they shop, what they buy, or how much they spend. Their shopping mindset rules over age, socio-economic class, or even life stage:
- Why are behaviors important?
Together with the shopping mindset, behaviors identify opportunity areas — be it category, brand, or banner.
- Where do demographics fit in?
When we overlay mindset and behavior with demographic and other identity measures like personality, it helps to target segments — in terms of both reach and resonance — be it a shopper or a mission.
Segmentation Science’s I-M-B framework is a holistic approach to decode both shoppers and missions, making it the most appropriate method to answer retailer questions.
Why was mission modeling important to the retailer?
A shopper’s mission is a goal for a particular shopping journey. Understanding them in advance helps drive marketing and operational opportunities.
A shopper’s mission subsumes both consumer and need. For example, running out of vitamin supplements is a consumption need that a particular shopping trip must fulfil. However, there might also be a shopper need to choose a store where the shopper knows her usual brand is stocked.
A shopper’s mission, therefore, is the combined goal required to satisfy both a consumption and a shopping need. A shopper’s decision on where to shop and what to buy will be made based on the best way to meet these combined needs. Therefore, to put it simply, the store, and the brand, which meets both needs best, will win.
While there may be a definitive need and a trip context — what shoppers do at the store, how they engage with the different touchpoints/prompts, and what they finally choose to buy, is their behavior.
Therefore, understanding the need and the trip context as well as shopper behaviors would help the retailer to activate key missions both pre and in-store to direct and influence purchase behaviors.
Mission modeling: Key findings and their implications
Two key missions accounted for almost 50% of all shopping trips for health and beauty stores in the Asian market:
- Trend Exploring (25%): Shoppers on this mission tend to shop for health, beauty, and skincare products. These are planned trips; however, the shopper is in an explorative mindset, spending time browsing for new products, interacting with staff, and being interested in their recommendations. While they pick up what was planned, they also tend to buy additional beauty solutions that are innovative, especially in terms of exotic ingredients.
- Resourceful Shopping (22%): These, too, are planned trips, though more anchored around personal care products relative to health. However, shoppers on these trips have a definitive list of what they want to buy and are focused on getting the best deals and promotions. They are more likely to have looked up where the best promotions are available to visit the store of their choice. If they experiment with new solutions, it’s more likely driven by convenience (perceived ease of use) than specialty ingredients.
Identifying Shopper Segments
Two key shopper segments were identified, accounting for around 50% of all shoppers:
- Contented Habituates (30%): These shoppers have a fixed repertoire of products that they use for health and beauty and are passive in respect to engaging with both pre-store and in-store communication. These shoppers tend to be more women and a little older than the median age of shoppers. They are more likely to be from middle-income households and focused on personal care products rather than products specific to beauty and skincare. They have a few shops that they regularly frequent, and are loyal to those stores.
- Decisive Influencers (22%): Comprised of both males and females, this shopper segment is more likely to be younger and from higher-income households. Almost equally interested in both health and personal care products, they tend to have a distinctive mindset as compared to the contented habituates. They see themselves as influencers, sharing their views on health and beauty with friends. While quickly checking out new channels, brands, or stores, they make quick decisions about products or stores to include in their repertoire and share them widely quite often on social media.
Segment Prioritization and Takeaways
Prioritizing two dimensions — frequency of visits per month and average spend per trip as well as the retail banner’s share of preference across missions and shopper segments, we identified two segments that the client needed to focus on. Both are high-value segments, but the retailer is clearly underleveraged vis a vis their key competition, which is identified as an opportunity.
|Retailer Client Indexed to Total Market
|Retailer Brand B (key competition) Indexed to Total Market
|Decisive Influencer Shopper (21%)
|Trend Exploring Mission (25%)
How can the retailer strengthen their position in both the identified shopper segment and mission? A qualitative deep dive among the prioritized segments and workshopping with the retailer’s team uncovered a few immediate actions.
- Engage beauty advisors, skincare, and health experts in shop to engage with shoppers on a trend exploring mission
- Monitor engagement and conversations from these interactions to identify success factors
- Create conversations around features that have the highest interest to shoppers
- Position testers and toolsfor shoppers to try out products
- Set up a beauty zone in-store with make-up artists during a product launch for an immersive experience
STRENGTHEN RELATIONSHIP WITH THIS SHOPPER PERSONA
- Product availability at all relevant retail channels (online and offline)
- With omnichannel shopping, decisive influencers want to be able to compare products. Ensure easy navigation of website for access to features, comparison, and price
- In-store, ensure merchandising has the same information as on the website to trigger recall
- Good staff training enabling staff to assist shoppers readily by presenting product features with expertise as well as personal experience to increase relatability
NIQ Segmentation Science was created to help businesses build effective segmentation strategies based on deep shopper understanding. If you’re trying to navigate your shopper strategy to deepen engagement with your shoppers or activate missions — online or offline, Segmentation Science can help.