DDBA 4990 Week 5 Segmentation Brief Example

Bare Lots and First Springs: A Segmentation Brief for an Independent Garden Center, Defining Households in Newly Built Homes Precisely Enough to Sort Any Buyer and Showing That They Buy Differently

Student Name

Walden University

DDBA 4990: Business Essentials

Instructor Name

Month Day, Year

Bare Lots and First Springs: A Segmentation Brief for an Independent Garden Center, Defining Households in Newly Built Homes Precisely Enough to Sort Any Buyer and Showing That They Buy Differently

The Segment

Hollins Garden Center, a composite independent garden center on the southern edge of Boise, should treat new-home households as a distinct segment. Membership rule: a household belongs to the segment if it closed on a newly constructed single-family home within the past 24 months and its yard has no established planting beyond what the builder installed. A store clerk can apply that rule with two questions at checkout: "Did you buy a new-build in the last two years?" and "Is the yard still mostly bare?"

What a Segment Is

Smith (1956) described segmentation as treating one market as several smaller markets whose demand differs, so that a firm adjusts its offering to each rather than pushing one offering on everyone. Dickson and Ginter (1987) sharpened the point: a segment is defined by differences in demand or response, not by differences in who people are. The test for Hollins is therefore not whether new-home households are a recognizable group, which they obviously are, but whether they buy differently from the garden center's other customers in ways that would justify a different offer.

Evidence the Segment Exists in the Trading Area

In this composite case, county building permit records show 2,940 single-family new-construction permits finaled within an eight-mile radius of the store over the past two years, most of them in four subdivisions south and west of the store. Builders in those subdivisions install front-yard sod and two or three trees; back yards are typically graded soil. On those figures, the segment numbers roughly 2,900 households within the store's trading area, against an estimated 21,000 established households in the same radius.

Evidence That the Segment Buys Differently

Hollins has run a loyalty program for three years, and members give a ZIP code and, since last spring, answer an optional question about whether they moved in the past two years. Of 4,120 active members, 386 answered yes and live in the four new subdivisions. Comparing their receipts over the spring and summer season with those of other members shows three differences.

New-home households spend more per visit, buy far more soil, amendments and large plants, and visit less often. They are also seven times as likely to ask for design advice. Established households, by contrast, visit often and buy annuals, replacement perennials and supplies in smaller amounts. Wedel and Kamakura (2000) note that a useful segment must be identifiable, substantial, accessible and responsive to a distinct offer; this one is identifiable by the two checkout questions, substantial at nearly 3,000 households, accessible through permit data and builders' closing packets, and the receipts suggest it responds differently.

Table 1

Spring and Summer Purchases, New-Home Members Compared With Other Members

From loyalty program receipts, April through August; design-advice requests from the help-desk log matched to member numbers.

What the Evidence Does Not Show

The 386 members who answered the question are self-selected; new-home buyers who never joined the program may buy differently. The comparison also cannot show that the difference comes from the bare yard rather than from income, since new homes in these subdivisions sell above the county median. A household with a large budget and an established yard might buy similarly. For the segment to be the right one, the bare yard should be the reason, and the design-advice requests, which mention starting from nothing, suggest it is.

Checking the Rule at the Register

Before relying on the rule, the store tested it for two Saturdays in September. Cashiers asked the two checkout questions of every loyalty member and recorded the answers; a manager then compared them with the member's address against the subdivision list. Of 212 members asked, the questions and the address check agreed for 204. The eight disagreements were households in new homes that had already hired a landscaper, which the second question correctly placed outside the segment.

What Hollins Could Do With It

An offer shaped for this segment might bundle soil preparation, a planting plan and installation of trees in one first-season package, marketed through builders' closing packets. That is a marketing decision for a later week. The brief's job is narrower: to show that the segment can be sorted, that it is large enough to matter and that it buys differently.

References

Dickson, P. R., & Ginter, J. L. (1987). Market segmentation, product differentiation, and marketing strategy. Journal of Marketing, 51(2), 1-10. https://doi.org/10.1177/002224298705100201

Smith, W. R. (1956). Product differentiation and market segmentation as alternative marketing strategies. Journal of Marketing, 21(1), 3-8. https://doi.org/10.1177/002224295602100102

Wedel, M., & Kamakura, W. A. (2000). Market segmentation: Conceptual and methodological foundations (2nd ed.). Kluwer Academic Publishers.