Segmenting, Targeting, Positioning – part 2

Ambro’s Customers

Let us take a closer look at Ambro’s customers. In our previous post we targeted them at 20-40 year old consumers. These generations are often tagged as generation X (age 35-55) and generation Y (age 15-35). Even though based solely on age, these groups sometimes have some distinct characteristics:

• Generation X (1960-1980):
  The generation X'ers usually possess more purchasing power due to their longer time in working life - and thus Ambro is interested in them. Generation X’ers are active community members but often tend to spend their money on safe investments, such as a house or on their families. The latter sounds a little bit less attractive for Ambro, since buying the product requires "taking risk" - buying something totally new. 
• Generation Y (1980-2000):
  By and large, generation Y people are characterized by a positive attitude towards change. The older end of the generation may be living the busiest time of their life: studies, stepping into the working life and young children. Many of this generation like to stay connected 24/7 through their social networks. For Ambro, it is good to notice that this generation may better fit the products’ brand image of offering a new, easy experience for eating food. (Cui et al., 2003)

Can we tell more about Ambro’s customers? Can we identify any more target groups? Because Ambro does not contain enough proteins - merely vitamins - top sporters are not a target segment. But, today we brainstormed a bit and came up with the following possible segments:

1. Single people, interested in health, who live alone and would prefer the easy alternative for a breakfast or when they are sick. Ambro could be even more convenient for them if was sold in ready-mixed packages. However, this may not be possible due to high sending costs (distribution channel discussed later) and the fact that the product contains no preservatives.
   
2. (private) Hospitals who might value the convenience of these nutritious ready-made meals, especially for patients who are only allowed to consume liquid food.

Upon closer consideration however, we think that Ambro might be too expensive for hospitals, and also not tasty or nice enough for regular patients. Next to the yoga segment that was previously mentioned by Ambro itself, our first proposal of single people might be interesting too. But then again, the this segment is very broad and therefore not as easy to reach as the (a) extremely busy people with interest in health or (b)Fitness and Yoga enthusiasts.  

So, as we said before, we believe it is the best for Ambro to focus on only one segment in the beginning.  We believe that the segment of high-earning, time-poor and extremely busy - but young - consumers would be strategically most important sector. Due to the vast size of the US working population (+/- 140 million of which 44 million in management positions) we believe the target market, even though a niche one, to be large enough. Targeting at higher income is also better suited to the premium status of Ambro since the consumers are less price sensitive (Jones et al, 1994). 

Other reasons for this segment to be strategically the most important are that they (a) are likely to be easily reached because of living/working in the large cities, (b) are likely to have more purchasing power than the fitness and yoga enthusiasts, and (c) have multiple incentives for buying the product - lacking time and needing fast meals while being perfectionists also regarding health. 

To summarize:

•  Segmenting:   Achievers and Innovators
• Targeting:       20-35 year old professionals with academic education, extremely busy (working)      lives, interested in healthy eating, and who can be segmented as achievers.
• Positioning:    Premium, healthy, easy and quick meal substitute.

However, if Ambro wishes to target two segments at once, they should consider a push-and-pull strategy. This means trying to find overlapping marketing tactics and activities which would suit both the target segment we have chosen and the Fitness & yoga enthusiasts. With this strategy, they would push their marketing activities towards the segment of extremely busy people interested in healthy eating, and at the same time pull the segment of fitness & yoga enthusiasts along. However, this requires thoroughly thought marketing tactics in order to reach both segments.

As discussed earlier, Ambro is a new product with no direct competitors. It stands out from the differently targeted Soylent through its focus on organic ingredients, and because Ambro is not meant to substitute every single meal.

Sources

Wright, R. (2006). Consumer Behaviour, Thomson Learning: London.

Jones, E., Chern, W.S. & Mustiful, B.K. (1994). Are Lower-Income Shppers as Price Sensitive as Higher-Income Ones?: A Look at Breakfast Cereals. Journal of Food Distribution Research: 82-92.
Cui, Y., Trent, E.S., and Sullivan, G.N.M. (2003). Cause-related marketing: how generation Y responds. International Journal of Retail & Distribution Management, 31(6), 310-320. 

Segmenting, Targeting, Positioning – part 1

In order for a product or company to truly succeed it is important to closely target a specific part of the market. Being a startup, Ambro faces a specific challenge here. In this post we will try to define on which segment Ambro should focus its marketing powers.

First of all, we believe that Ambro should start with targeting only one segment at first – entering a new market, especially when only launching the product for the first time, may be rather difficult if two differing segments are targeted at once. Our interest lies in the United States (we’ll specify the reasons in the later posts). If we examine this market, we soon find that no similar product actually exists. The closest competitor to Ambro might be Soylent, which operates in the supplement food market (to be examined in the later posts). In the previous post, we found out that Ambro is inspired upon this product, and therefore it may be that FDA (US Food & Drug Administration) will classify it as a Dietary Supplement. However, the essence of Ambro and the reason for its existence is that it offers a replacement for food – therefore, Ambro aims at creating the market of organic food replacements.

VALS - tool for segmentation

In order to define segments for the US market we turn to VALS, a tool developed for segmenting US adults into eight distinct types—or mindsets—using a specific set of psychological traits and key demographics that drive consumer behavior. It uses both motivations and resources of the consumer in order to understand how he expresses himself in the marketplace.

Although VALS indentifies eight distinct types, we believe the following two to appeal most to the product image of Ambro:

• Innovators: Innovators are change leaders and are the most receptive to new ideas and technologies. Ambro is a new product that would enter a yet non-existent market. Therefore it is most likely that it will appeal highly to innovators. In its marketing communication Ambro should focus on communicating the innovativeness of the product.
• Achievers:  Because of their busy lives, Achievers are often interested in a variety of time-saving devices. Since Ambro promotes itself as a quick substitute for dinner during busy periods, we believe it appeals greatly to achievers as well. Achievers may prove to be the most durable target group since their lives will continue to be busy while innovators might turn their backs to the product after an (unsatisfactionary) early adaption. 

In our interview with Tapio Melgin he identified some other segmentation characteristics. Ambro wants to focus on 20-40 year old people with academic education, with purchasing power and who are interested in nutrition. This description still would fit the so-called Achievers. In order to make it more concrete, the best segment for Ambro to target would be:

• Men and women in extremely busy jobs, such as investment bankers or lawyers. These people often want to eat healthy as they tend to be perfectionists in all areas of life; Ambro would help them to eat well and save time.

According to Tapio, this segment indeed is their target segment. Another target segment that Ambro indentifies is: 

• Fitness and Yoga enthusiast women of 20-40 years. These women are often very interested in healthy eating. 

This segment is more fractioned, because the age as well as the education level of yoga practitioners varies greatly. Surely, a great lot of them might be interested in balanced and healthy eating next to a balanced and healthy body (e.g. superfood enthusiastics). However, this segment also includes those who don’t know much about nutrition initially (e.g. which vitamins are important to get). The segment might need some education but may prove highly potential. Still, we would advice Ambro though to only focus on it after a succesful initial launch of Ambro in the US.

The ultimate goal is for the users to become either daily or occasional users (using only a few times a week). Ambro Group does not aim at people living only of Ambro, as the founders are also fans of good dinners. Instead, “Ambro is for the times food needs to work around you”.