Segmentation at Scale: Applying Segments to a Panel

At Quirks Brooklyn today, Rick Stringer, Crayola’s vice president of customer solutions, recounted “how Crayola tied consumers’ mindsets, perspectives and psychographics of 120,000 households to actual purchase behavior – gaining visibility into the multifaceted aspects that drive shopper decisions and loyalty and how Crayola has leveraged the resulting insights to help retailers close sales with key shopper groups.”

Targeting by demographics is no longer sufficient: “A shift in how we buy products and services is happening. Understanding and layering on people’s behavior with what triggers (and what are potential barriers) to purchase can give you line of sight into new segments and untapped opportunities.”

For category background: 63% of kids use Crayola products every day; it’s the #2 most-loved brand with parents, just behind Amazon. The Children’s Art & Stationary market is a $1.5 billion market in the U.S. It is occasion-based: winter boredom busters, Valentine’s Day, Easter, summer activities, back-to-school (BTS), etc. Three major trends are driving sales: creativity, adult coloring (starting in 2016 for “digital detox”), and slime (the glue category doubled in nine months because of this). Compound annual growth was 9% for four years until 2019, when it declined 6%.

The problem that needed solving was addressing this decline. Crayola engaged Numerator to understand values and beliefs, usage and occasions, and shopping behavior (longitudinally, by season, by occasions). The project started with secondary research in November 2018, primary research with 5,500 from the panel in December 2018 and January 2019, segmentation and profiling in February and March 2019, then used 10-15 key questions to profile panel across the five identified segments, tagging 35,000 households and tracking their spending throughout the year.

The five segments that emerged are ABCs (Active Busy Creatives), R&R (Relax and Recharge, adults), Work Hard/Play Hard, 4C Enthusiasts (Creative, Collaborative, Communication, Celebration), and Team STEAM (Science, Tech, Engineering, Arts, Math). Each segment was profiled by shopping behavior vs. the category average. Behavior by leading retailers was measured to diagnose conversion and leakage problems, down to the SKU level (one retailer had twice the rate of the Team STEAM segment). For back-to-school (BTS), the primary season for the market, the average basket size jumps to $81 when Crayola is being purchased. 4C Enthusiasts and ABCs purchased later in the BTS season. Crayola surveyed its panel to inform retailers about who was purchasing Parent-Teacher-Organization bundles of school supplies; ABCs were least likely to buy these, as they enjoy shopping with their child for school supplies. For Easter, arts and crafts are often a gift in the Easter basket, with this rate varying by segment.

The segments were also used in POG building. Crayola did planogram testing on segment messages: vs., “Good Clean Fun” for ABCs (who complain about messiness).

In the long term, Crayola will use the segments for product development, ongoing engagement, and sales conversions. New products based on the segments are in development.

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