Lee Valley Segmentation

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Lee Valley Segmentation:

Gardening

Introduction

Background
Lee Valley——a family-owned business which has been providing customers of woodworking and gardening tools since 1978.Their reputation is based on three principles: 1. Customer satisfaction: Any product may be returned within 3 months and no cost to the customer (for shipments within North America, they will refund your return parcel post costs). 2. Integrity: Product descriptions are matched with the product——even if the product is roughly made, they will give you accurate descriptions. 3. Treat the customer like a friend.

“About one third of their total sales volume is in products of their own design. The vast majority of these are Veritas® brand products made by Veritas Tools Inc., their manufacturing arm. They have a research and development team of 11 people and 130 more in manufacturing. And, to reinforce the part about listening to customers, they have a number of customers earning royalties on products that they manufacture based on designs received from them” (Lee Valley).

Objective
Both woodworking and gardening must have a 2.5% increase in total sales in the next fiscal year. To achieve this goal, management has allocated a budget of $500,000—exclusive of the cost of printing and mailing the catalogues. This budget is intended to fund the prospecting activities of both product lines.

Current Situation Analysis

Since Lee Valley launched its e-Commerce site in 2000, internet sales have been an increasing percentage of total sales. When launched, the site generated about 20% of total sales, with phone sales being 70% and sales from mail at 10%.By 2010, Internet sales have reached 70% of total sales, which phone sales at 25% and mail at 5%.

[pic]Fig. 1. Percentage of total orders generated by e-commerce from Lee Valley Tools Ltd. [pic] Fig. 2. Percentage of total orders generated by e-commerce from Lee Valley Tools Ltd.

According to the pie charts illustrate above, Internet sales have already dominated the total sales of Lee Valley since its e-Commerce site launched in 2000.About 70% of the total customers obtain their products online in 2010 which means that new market segmentation and promotion which focus on online shopping must be generated to accommodate the needs of existing customers as well as new customers.

Customer Segmentation——who the firm will serve

Geographic Variables
In views of the database surveyed by Euromonitor International in 2012, Home and Garden reveals emerging markets and are growing in popularity, developed countries remain, by far, the highest spenders on gardening products. Higher levels of urbanization and incomes, combined with greater access to a wider range of goods and services in cities, are key factors underpinning demand.

-All countries with per household expenditure higher than US$1,000 have more than three quarters of their population. -Economic growth and urbanization are the main forces behind the growth in home and garden in developing countries. Demographic Variables

According to the Gardening Market Research, the most popular lawn and garden activities included lawn care (48% of households), growing indoor houseplants (31% of households), flower gardening (30% of households), and landscaping (27% of households).

The customer profile indicated from Lee Valley shows that the average gardening buyer characteristics are as follows: -Age: average 47
-Gender: 65% female
-Income: average household income $72,017
-Education: 60% have a college education
-68% are married
-82% are homeowners
Psychographic Variables
In general, gardening enthusiasts also have their distinguishing lifestyles and personality traits, such as: -Environmental friendly
-Family-oriented
-Seeking freedom and relaxation
-Living a simple and peaceful life
-Retired, enjoy DIY and private time
-Focus...
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