5. Analysis
5.2 Host Market Analysis
5.2.2 Lifestyle
these trends would have a strong positive impact on the likely reception of Irma’s offering and brand relative to potential market entry into Sweden.
5.2.2.2 Fast Meal Solutions
Fast meal solutions continued to grow in importance in 2008 mainly due to a number of ongoing changes in Swedish society (social and demographic shifts) that have lead to an increase in the number of single‐people combined with longer work hours and a shorter lunch break. Therefore, the time available for cooking a homemade meal is limited. Due to these changes there is an increasing demand for easy to prepare food.
Within this category, consumers tend to prefer chilled food since it is generally considered fresher and healthier than frozen or dried food (Euromonitor International 2008). Experts (ibid) foresee that the demand for convenient, healthy meal solutions will continue to increase in the future. They base this on the fact that the number of single people will continue to increase and that people will continue to lead busy lives with little time for meal preparation.
5.2.2.3 Segmentation
The intention of this section is not to fully or definitively determine Irma’s target consumer group. Rather, we first wish to challenge whether the demographically‐
based segmentation described by Matzen (2009) is likely to be the most plausible when it comes to classifying Irma’s potential customers and meeting the distinct needs of each segment. Indeed, we go on to suggest a complementary and potentially more useful lifestyle‐based segmentation using the VALS model (Cahill 2006, Gilbert 2003).
As has previously been stated, Irma utilizes demographic characteristics as a means of segmenting the retailer’s customers (Matzen 2009). Irma defines the target segment as “purchasing responsible persons in the age of 30 to 60, full‐time permanent employees or self‐employed with an annual income above 400.000 DKR with economic latitude and who do their grocery shopping in Irma at least twice a year” (Matzen 2009). From the theory review, segmenting consumers on basis of personality traits that drive their behavior may be of greater utility to Irma. We base this claim on the fact that many of the broader societal trends that link to and support a significant portion of Irma’s assortment, such as an interest in organic products, fair‐trade,
healthy lifestyles and even global warming, transcend simple demographic boundaries.
For instance, Beckmann et al. (2001) have conducted a study that shows that there is no stereotypical organic customer with set demographic characteristics. Such an insight is particularly relevant for Irma and this study as not only are Denmark and Sweden both leading markets with respect to organic products, but these products currently makeup 21,4% of Irma’s total turnover (www.irma.dk). In fact, applying the same logic to other similar categories of products that are quite important to Irma’s offering, such as fair‐trade, overall we find it difficult to understand the relevance of a demographic segmentation in attempting to define Irma’s target customers.
Rather, a segmentation model, such as the VALS model, that combines behavioral motivation, consumer personality traits and demographics would appear to be much more relevant. For example, in examining the various VALS types, it’s possible that
“thinkers”, as affluent, well‐informed, rational decision makers whose activities are centered on the home, could well be Irma customers. As idealists, members of this group could well also value the larger systemic benefits of organic and free‐trade products. Clearly in terms of both self‐image and reflection, “achievers” would also be another strong target segment. These successful, career‐oriented consumers would appreciate both the ability to purchase quality for themselves and the opportunity to have their ability to do so envied by others. According to Copenhagen Institute of Future Studies (www.cifs.dk), the goods that we buy are increasingly being used as self representation/expression. Therefore lifestyle consumption, and consumption in general, come to depend on much more than just the material benefits of a product, since it is increasingly through the products we buy that we express who we are and what we stand for. In part because of Irma’s outstanding reputation (www.techmedia.dk), these factors are more likely to link them ever more strongly to the “achievers”. In addition, although traditional and conservative, the “achievers’”
focus on family might well also lead them to appreciate Irma’s organic and health oriented products for the positive impact that they will have on their families. Finally,
“actualizers” might well appreciate the broad range of specialty and more ‘cultivated’
products that Irma offers as part of its assortment.
The VALS model can likewise be used to rule out certain segments so that Irma can focus on those segments where their branding efforts are likely to both find the greatest resonance and produce the greatest payoff. For example, while “strivers”
might occasionally shop at Irma for special occasions when seeking peer approval, they are unlikely to ever become repeat shoppers. Similarly, very few “makers” are likely to be attracted to Irma’s offering in the first place as they typically show little concern for what is going on in the world around them and Irma’s positioning relative to many of these issues makes up a large part of the firm’s value proposition.
Despite the usefulness of any single segmentation model, it is also important to note that there may potentially be important consumer segments that are not well captured by the model and in some sense are invisible within the given segmentation.
For instance, the results of our Irma “personality test”, which were described in the first part of the analysis, would seem to indicate that Irma clearly represents certain values (again based on quality, a commitment to organic products and fair‐trade, etc.) and that the stores are likely to attract consumers that share these values, even if they don’t always have the means to shop at Irma on a regular basis. For example, such segments might include young couples or even students that are firmly committed to green causes or social justice. In fact, such commitment, as already mentioned, is likely to span arbitrary age, income, or even psychographic segmentations and be driven much more concretely by a specific world view and a correspondingly strong attachment to certain related values.
Nevertheless, despite the insights provided by the VALS segmentation, it is important to also recognize that Irma is both perceived to be and is in fact more expensive than other similar grocery stores (Matzen 2009; www.jp.dk). Thus, while we do not necessarily disagree with some of the conclusions of the income and age segmentation currently employed by Irma, we nonetheless believe that it likely misses several other key elements of a fuller understanding of those consumers likely to be committed Irma customers. Ultimately, our recommendation would be to employ several segmentation models based on an intimate understanding of Irma’s differentiating factors in order to
arrive at an equally intimate understanding of the motivations and behavior of potentially relevant and important consumer segments.
5.2.2.4 Lifestyle in Relation to Irma
These trends of increasingly busy everyday lives and enhanced demand for convenience when it comes to food, illustrate common characteristics of our lifestyles (GAIN Report 2008). From these trends it is also evident that there is a substantial overlap between the lifestyle and product element of the PLIN model. Despite our busy lifestyles and long working hours, consumers still value high quality products, fair trade and healthy eating habits, which of course is a good match to Irma’s product offering and underlying business values. Furthermore, as presented above the increasing interest in and awareness of organic products, environmental concerns and animal welfare express strong customer values which are surfaced through the customer’s product choice. In this manner, the products customers purchase become an expression of their lifestyle choices and the values that they adhere to, and these lifestyles and values, and the consumer behavior that is linked to them, express how consumers both view themselves and wish to be viewed by others.