Market Analysis Summary
BOG will be going after two distinct market segments, individuals and corporations. Both groups buy gift baskets as a goodwill gesture, typically for different reasons. Individuals typically buy the baskets as a present with over half of sales occur during holidays. Corporations buy the baskets as presents as well, but usually for events unrelated to the holidays. By going after both of these groups, sales will be less seasonal (relative to if only the individuals were targeted).
There are many different "gift basket" retailers in Salem. BOG will differentiate themselves through the use of premium ingredients in their baskets. The gourmet baskets, coupled with a custom option and reasonable prices (attributed to low overhead) will spell success for BOG.
4.1 Market Segmentation
BOG's has two distinct groups of customers, individuals and corporate customers:
- Individuals- The individuals are people who are looking to give a friend, relative, colleague, etc., a gift basket as a gesture of goodwill. These customers typically do not have a specific type of gift basket in mind when they look at BOG's product offerings, they just want to give a gift.
- Corporate- The corporate customer is typically buying the basket for a colleague at work, either as a sign of appreciation, for a special event, or as a thank you for a customer. The corporate market can be further broken down to banks, health care, employment gifts, real estate, apartments, special events/promotions, corporate headquarters, hotels/vacation resorts, and automobile dealerships.
4.2 Target Market Segment Strategy
BOG is focusing on individuals and corporate customers because they are the largest segments of purchasers for gift baskets. Individuals are the target purchaser of gift baskets. They purchase baskets typically as a thank you in response for something the recipient did or just to be nice. The gift basket is unmistakingly a gift so upon receipt there is no ambiguity why it was sent or at least what it is trying to accomplish. Within the individual category, women are 69% more likely to be the purchaser of a gift basket compared to men. This is not to say that women more often purchase gifts, it just indicates women are more likely to buy gift baskets.
BOG is focusing on the corporate customers as they currently represent approximately a third of the purchasers of gift baskets. The corporate customer could be buying the basket for someone within their company, or they could be buying it for a customer, vendor, etc. The trend for the corporation to purchase gifts is not a new phenomenon and therefore would appear to be a solid market segment to pursue.
4.3 Industry Analysis
There are many different forms of competition in the gift basket business:
- Similar gift basket type retail stores: There are several of these stores located in Salem. These competitors offer a wide range of gift baskets, however none of them are concentrating on the higher end, gourmet product line.
- Nut/fruit companies: There are several stores that concentrate on nuts and or fruit baskets.
- Bath product gift basket companies: There is currently one gift basket company that concentrates on bath products. Bath products have a slightly smaller population of people who appreciate these products (as women predominately appreciate bath products more then men do).
- Regional gift basket: There is one retailer that sells gift baskets composed of local products. These type of baskets tend to appeal to people that are buying gifts for people that are not from this area.
- Candy gift baskets: There are several candy stores that offer, as one on their products, a candy gift basket. Similar to the bath products basket, candy typically appeals to women a bit more so then men.
- Florists: Flowers are a similar product that competes with gift baskets. Once again flowers tend to appeal to women more so then men.
The purchasing of gift baskets is very "seasonal." More than half of the gift basket purchasing occurs during a wide variety of holidays.