Marketing ReportMarketing Reportforfor

Imaginary Wilderness ApparelImaginary Wilderness Apparel

Presented byPresented bykSquared ConsultingkSquared Consulting

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Running Time: 3 min 30 secRunning Time: 3 min 30 sec

22

The MissionThe MissionPut more customers’ feet in IWA’s premium Put more customers’ feet in IWA’s premium

hiking boot … hiking boot …

The Rock WarriorThe Rock Warrior

33

Who is the Customer?Who is the Customer?

IWA customers were segmented based on:IWA customers were segmented based on:

(1) Primary concern: Function or Fashion(1) Primary concern: Function or Fashion

(2) Relative importance of product durability(2) Relative importance of product durability

Source: October 2009 customer surveySource: October 2009 customer survey

44

Profiling the CustomerProfiling the Customer We divided IWA customers into four target groups.

Quality & It Shows Hardcore Hiker

Glitz Today, Weekend HikerGone Tomorrow

Fashion FunctionPrimary Concern

Impo

rtan

ce o

f Dur

abili

ty

Low

Hig

h

55

Finding the Right FitFinding the Right Fit

We targeted the Hardcore Hiker. This segment ranks durability higher than average in terms of importance, and is more concerned with function than fashion.

Which customer is right for Rock Warrior boots?Which customer is right for Rock Warrior boots?

Quality & It Shows Hardcore Hiker

Glitz Today, Weekend HikerGone Tomorrow

Fashion FunctionPrimary Concern

Impo

rtan

ce o

f Dur

abili

ty

Low

Hig

h

66

Campaign HistoryCampaign History

The Hardcore Hiker segment has out-responded The Hardcore Hiker segment has out-responded every other segment in past campaigns.every other segment in past campaigns.

That’s good.That’s good. But if we use a more targeted message, can we But if we use a more targeted message, can we

do even better?do even better?

Let’s find out.Let’s find out.

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The ContestThe Contest

In this corner, the Champion:

In this corner, the Challenger:Ad B, message more targeted to the Hardcore Hiker segment.

Shows the Rock Warrior in action, battling the elements.

Ad A, from the May 2009 campaign

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Rules of EngagementRules of Engagement

Test mailing to the Hardcore Hiker segmentTest mailing to the Hardcore Hiker segment

6,000 randomly selected customers6,000 randomly selected customers

5,000 received Treatment A (The Champion).5,000 received Treatment A (The Champion).

1,000 received Treatment B (The Challenger).1,000 received Treatment B (The Challenger).

How did the bout go, you ask?How did the bout go, you ask?

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The ResultsThe Results

Champion (Ad A) – 3.5% response rateChampion (Ad A) – 3.5% response rate

Challenger (Ad B) – 4.7% response rateChallenger (Ad B) – 4.7% response rate

At first glance it looks like we have a new At first glance it looks like we have a new champion. But what say the judges?champion. But what say the judges?

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Tale of the TapeTale of the Tape

Based on the sample results, how certain are we Based on the sample results, how certain are we that Ad B will do better than Ad A across the that Ad B will do better than Ad A across the entire Hardcore Hiker segment?entire Hardcore Hiker segment?

We need to determine if the difference in We need to determine if the difference in response rates is statistically significant, or if it response rates is statistically significant, or if it might just be the result of chance.might just be the result of chance.

1111

The DecisionThe Decision

We can say with 95% confidence* that the difference in We can say with 95% confidence* that the difference in response rates is statistically significant. In other response rates is statistically significant. In other words, the Challenger is for real.words, the Challenger is for real.

That means we have a new champion!That means we have a new champion!

* Using one-tail difference of proportions test* Using one-tail difference of proportions test

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RecommendationRecommendation

Based on the test results, kSquared Consulting Based on the test results, kSquared Consulting recommends a rollout of Ad B to the recommends a rollout of Ad B to the remainder of the Hardcore Hiker segment.remainder of the Hardcore Hiker segment.

That’s 80,000 customers.That’s 80,000 customers.

Expected response rate lift is:Expected response rate lift is:

4.7% minus 3.5% = 1.2 percentage points4.7% minus 3.5% = 1.2 percentage points

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$ Impact$ Impact

If the results are consistent with the test mailing, If the results are consistent with the test mailing, this will mean:this will mean:

1.2% x 80,000 = 960 additional responders.1.2% x 80,000 = 960 additional responders.

The gross margin for a pair of Rock Warriors is The gross margin for a pair of Rock Warriors is $45. So that’s a lift of 960 x $45 = $45. So that’s a lift of 960 x $45 =

Just over $43,000!Just over $43,000!

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Post Fight InterviewPost Fight Interview

Would you like kSquared Consulting in your corner?Would you like kSquared Consulting in your corner?

Email kSquared ConsultingEmail kSquared Consulting

Read the kSquared blogRead the kSquared blog

Return to kSquared websiteReturn to kSquared website

© 2010 kSquared Consulting, LLC© 2010 kSquared Consulting, LLC