Plan Ahead: Product Category Segmentation Can Aid Mailing and Merchandising Strategies

In my 13-year career of marketing program planning for clients, I have never seen so many “what-if” scenarios run in the planning process as I see now. With daily market swings in the 3% to 7% range no longer rare and consumer spending news dominating the 24-hour news cycles, our planning compasses seem to have become demagnetized.

It is in these times, however, that it is most critical to remember the value of leveraging what you know works best, and testing new concepts carefully before implementing significant strategic or tactical changes.

In the case of one client, we looked at its RFM results and merchandise selection and identified what we believed to be an opportunity to add product category to our house file segmentation strategy. There were two compelling reasons to do this: many products being sold were consumables, and although the core customers were hobbyists, they could be partitioned into distinctly different subsets. This latter point could obviously have an influence on merchandising strategy if results indicated large differences.

In this example, we are showing results for just two seasons although we are tracking performance throughout the year.

We found, not surprisingly, that customers who bought across multiple categories were the strongest customers with relatively little variation between fall and holiday. Logically, we assume these are frequent users of the title’s consumable goods. It is true that we can, and do, mail deeper in these segments throughout the year.

A second layer of analysis in a study such as this would be to corroborate these findings with a merchandise analysis by book and by customer segment. As we examine results by product category divisions over time, we will be watching for similar patterns in the results.

Jude Hoffner is director of marketing and e-commerce services for consultancy Lenser.

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