Market segmentation and targeting strategies for adult pleasure products

Marketing Strategies: Adult Pleasure Toys and Lingerie

This report discusses the presence of a company that produces adult toys and lingerie. There are several parts to this analysis. First, the report examines the market segment and defines the target customer according to several types of segmentation. For a complete understanding of the targeted market, the report chose psychographic segmentation, demographic segmentation, behavioral segmentation and benefits sought segmentation.

The choice for these methods was a result of the type of product. The conclusion is that the targeted consumer is likely 20 to 45 and is driven by different motivations. In young age, the idea of experimentation is the primary motive, in the upper part of the age segment (30s and 40s) it is likely the need to experiment in the couple.

In terms of differentiation strategies, the report concludes that it is more difficult to differentiate based on the nature of the product, which is less customized, but that the company should focus on other parts of the marketing mix, including pricing strategies. It should also focus on the way the product is delivered. Here, the nature of the product implies discretion, so an online distribution system could be helpful.

Another large part of the report discusses environmental factors that could impact the business. Legal, technological, social and economic issues are discussed. The overall conclusion is that the business is more sensitive to economic issues than other products and the technology offers an opportunity in improving customer experience. As seen previously, this could also become a competitive advantage for the company.

Market segment and target customer

Marketing theory recommends several different methods that can be used to segment consumer markets. This report will focus on three particular ones, more relevant given the background of the business and the type of products it sells: psychographic segmentation, demographic segmentation, behavioral and benefits sought. As a side note to behavioral segmentation, this report will also discuss the market in terms of segmentation by occasions.

According to Fripp (2012), behavioral segmentation looks at the relationship that the client has with a certain product or service. This will likely label the user as a heavy or light user, as a loyal or occasional user etc. A particular aspect of behavioral segmentation is segmentation by occasion. This is particularly relevant, because erotic toys and lingerie are a part example of a product that is purchased primarily around certain holidays, notably St. Valentine's Day.

Taking into account some of the other variables relevant to behavioral segment, one can point out that erotic products are not necessarily the type of products that develop a following. They are more the type of product that someone tries from time to time in order to bring an additional element of novelty into one's sexual life. As a consequence, the company does not need to develop a following.

Lingerie, on the other hand, does develop a following, whether it is or not erotic lingerie. Women grow attached to a particular type of lingerie, and they use this even in conversation with their peers to promote a certain social status. This is not necessarily true only for recognized brands such as Victoria's Secret, but for European ones as well.

Segmentation by benefits is based, according to Reid (2009), on the needs of the customer and on what he perceives will bring him added value when using the product. In the case of the products that this company is commercializing, the customer is seeking to maximize his or her pleasure during a sexual act with his or her partner. This in turn can increase self-esteem, among other benefits. The lingerie part of the business could operate in a similar way, women wearing lingerie not only for the sexual act, but to feel beautiful, to feel good about them.

Demographic segmentation looks at things such as age group, sex or ethnicity. This report believes that the products address the 20 to 45 age group. The company should target females in this age category for the lingerie products and both males and females for the adult toys and other erotic products. The company could focus on married couples although, given the age segment that has been decided as a targeted market, this is not a necessity. The segment should also target individuals with medium and higher income: the products are not expensive per se, but targeted this category of consumers could ensure recurrent purchases over time, helping to build clientele.

When looking at psychographic segmentation, the most important elements to consider are lifestyle and personality. The company should target individuals that are open to sex and sexuality and who are willing to experimentation in their sex life. These individuals should also be interested in sex, although this variable should not be seen as something limitative.

Differentiation strategy

It is difficult to differentiate when it comes to adult toys and lingerie, so this subsection will discuss two different approaches that could be considered. The first is a non-product differentiation. The company will be a newcomer on the market and could innovate when it comes to pricing strategies, for example. It could decide to accompany the purchase of an adult toy with a free piece of lingerie, thus both maximizing customer satisfaction and promoting its lingerie line.

The first obvious differentiator could be diversity. Admitting that there are so many types of adult toys that can be discovered, differences can appear when it comes to the number that is available for each product category. The more diverse the product category and product lines are, the more the company is likely to access a more diverse array of potential customers.

Another differentiator could be the price itself. Certainly, when someone purchases an adult toy, the respective individual will not necessarily be looking for the cheapest product. However, being able to offer a quality-competitive product at a lower price than another company could sometimes mean that the respective client will purchase the cheaper product.

An important differentiator could be the way that the products are delivered and here discretion is an important element. So, the online aspect of things can be part of the differentiation strategy: the fact that the client can purchase the products online, in a secure and discrete manner, can greatly improve his purchasing experience.

Leader vs. follower

An initial consideration for this subsection is that whether a company is a leader or a follower does not necessarily determine the company's successfulness (McFarthing, 2013). Another important element to be mentioned is that the decision to be a leader or a follower is not only given by the moment when the company is launched, but also by the nature of the products.

If the product is a highly innovative one that is likely to be disruptive on the market, then the company can assume a leadership role on the market even it has only been created. The pharmaceutical industry or the information technology industry are examples where products can really make a difference when launched, bringing more to the market. Other products may simply not be on the cutting edge of innovation. Launching such a product should take into consideration a follower strategy.

The company will aim to be a follower. The follower strategy has several important advantages from which a company such as this one can benefit. The first advantage is that it is less exposed to threats on the market than a leader. For an incipient company that has just been launched, this is very important and allows it to develop and become better prepared to handle condition on the market.

The second advantage is that the company can benefit from this time to study and learn from the leader. Some of the leaders in this industry are established players, with a large market share. Victoria's Secret, for example, is not a simple lingerie producer. It is a recognized leader in this market, creating trends, defining how women should look and dress. It is a business model from which the company can learn and understand what they did in order to reach this level.

Another motivation for being a follower in this case is that the products that the company is launching on the market are not the actual elements of differentiation. As previously shown, there are other areas whether a differentiation strategy can be implemented and not in the product field. Adult toys, erotic objects and lingerie are not objects that can benefit from cutting-edge innovation processes. The company needs to embrace the idea that it will produce, more or less, similar things to what is already on the market. There are ways of making them differently, but the way they look and the way they function will resemble what already exists on the market.

So, the company does not only choose to be a follower, but, indeed, it has no other option at the very beginning, when the best strategy will likely be a niche strategy. Such as strategy could develop as a way of gradually building market share, while at the same time learning more from the competitors on the market that have more experience.

Macro-environmental issues or trends facing the company

Legal issues/trends. The legal issue is an important one and has been previously mentioned in this report. The problems with the legal aspect of things include the fact that (1) legislation is particular when applied to the type of products that this company proposes to commercialize and (2) that legislation on this type of products varies from country to country and, within the United States, from state to state.

The company needs to take into consideration the fact that the type of products it sells could, at some time or other, be banned in some of the countries where these are commercialized. If banning does not take place, there may be rules and regulations as to how these are commercialized. For example, the company will not be able to sell them in hypermarkets, a location that would otherwise have brought a lot of potential customers.

The company will either decide on opening its own line of stores or it can use existing sex shops and build deals with these to sell its products. The sex shops operate with their own set of rules and regulations that do not always make business so easy. For example, sex shops have to cover their windows, so that a person walking on the street cannot see inside.

All these are examples of things that impede the business process for the company and for the products it sells. While in the case of other products, part of the marketing is substituted with simply walking by a product and noticing its quality, this will not be available for this company.

The company should also recognize the fact that it will never be able to sell its product in some of the religiously conservative countries because of legal issues. Its market is thus not a global market, it is more of a geographical targeted market. Its market is also easily influenced by potential future legal trends. Legislation can always be introduced to limit the area where adult toys can be sold, to increase the age of people who are allowed to purchase them etc. From this point-of-view, the company's products remain sensitive to such potential changes.

These aspects do not cover the lingerie part of the company's business. There are few limitations from a legal perspective here and one can assume that this part of the business will not be affected by legal issues. Lingerie can be assimilated to any other object of clothing, so legal issues here will be reduced to administrative aspects that refer to the company overall.

Technological issues/trends. One of the technology aspects that can be discussed is the way that technology can be used to improve operations, as well as the overall customer experience. The Internet offers tremendous opportunities, so one of the technological issues that the company should consider is launching and caring for a website. The website should implement a payment system that would help the potential customer purchase products online.

Purchasing online is particularly important for the category of products discussed here. There is a certain degree of awkwardness when buying adult toys or lingerie products. Buying online would remove that potential barrier, because nobody will see the client as he finalizes the purchases. The client may thus be encouraged to purchase more than he would otherwise and, potentially, a more diverse array of products.

The online environment also offers important marketing opportunities and the company should consider using social networks such as Facebook and Twitter in order to promote the products. One can assume that, as a trend, social networking will remain an important part of every day life. Certainly, social networks are no longer what they used to be several years ago, but they remain an essential form of communication and it is very unlikely that they will disappear at any given point in the future.

One important technology issue is the fact that individuals are very mobile today. So, the company should also take into consideration launching a mobile version for the website, something that potential customers can operate from their iPhones, tablets etc. This is the type of product that is viable to be purchased without a preliminary analysis of its benefits, perhaps as a surprise for the partner etc.

Social issues/trends. Social issues are likely to affect the business, but only to a limited degree. This is not the type of products that are sold depending on a fashion or a certain social trend. Individuals buy them for their personal use and are not likely to boast to their friends about a certain particularity of the product. The company should only consider potential social issues that could play a role in its marketing campaigns etc.

Economic issues/trends. As any business, the company is affected by the amount of revenue that a potential customer is willing to spend on the type of products that the company sells. The disadvantage that the company sells is that these are pleasure products. On a scale of Maslow's Hierarchy of Needs, pleasure is not one of the first needs that the individual cares about. He will aim to satisfy needs such as the need for food and shelter before thinking of pleasure, particularly sexual pleasure.

What this argumentation plans to show is that the residual monthly revenue an individual uses for his pleasure is limited and, usually, small. If revenues decline, then one of the first things that the customer will be willing to give up on is purchasing adult toys and lingerie. Decreasing individual revenues can be associated with a worsening economic condition. So, the economic condition is correlated with the company's business activity. Moreover, its products are sensitive to changes in the economic state.

It is thus reasonable to believe that future crisis such as the financial and economic crisis of 2008-2009 will have a direct impact on the company's revenues. Such potential changes in the economic landscape should thus be properly monitored.