Stitch Fix: Segmentation, Targeting, and Positioning Strategy

1771 words (7 pages) Business Assignment

30th Apr 2020 Business Assignment Reference this

Tags: Business AssignmentsMarketingMarket AnalysisBusiness Strategy

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Stitch Fix Customer Value Propositions

Personal Styling/Customisation

One benefit of Stitch Fix is that the company utilizes a one to one marketing strategy to offer personal styling services and wardrobe options to its customer base. After completing an initial style profile, a Stitch Fix customer is paired with a professional stylist, who then hand picks the customer’s “Fix,” – box of clothing. The items chosen to be included in the Fix where selected from recommendations provided to the stylist via the company’s algorithm that gathers data from the client’s style profile. Stitch Fix customers also experience customization when he or she chooses the frequency of the “Fix” order – Auto-ship (per week, month, quarter basis) or on-demand (one-time orders as needed) (Stitch Fix, Inc., 2018).

Convenience

Unlike the conventional shopping method, there is no need for a Stitch fix customer to leave his/her home. Stitch Fix is an online-based company. After completing the style profile and choosing an order frequency, customized fixes are delivered to the customer. The customer then has the ability to try on each item in the Fix in the comfort of their home, choose which items he or she wants to keep, and send back the unwanted items. As an online storefront, Stitch Fix gives its customers the opportunity to shop – unconventionally – for quality apparel options (Stitch Fix, Inc., 2018).

Brand Name Offerings

Through Stitch Fix, customers have access to a diverse and quality selection of merchandise. The company has collaborated with over 1,000 familiar brands, some that may or may not be physically available to individual customers via traditional brick and mortar stores due to location (Stitch Fix, Inc., 2018).

Stitch Fix Segmentation Strategy

Stitch seems to employ a segmentation strategy combination of demographic, behavior, and geographic factors.

Demographics

Gender – At the time of its inception in 2011, Stitch Fix focused on Women apparel. In 2016, the company launched its Men’s division (Mikolainis, 2019). Even farther, the company looks to cater to all men and women, offering plus size, petite, and maternity wear to woman, and big and tall wear to men (Mikolainis, 2019).

Age – In 2018, Stitch Fix began offering its services and products to children through its kids division, in addition to adult women and men (Mikolainis, 2019), now servicing the entire home.

Behaviour

Stich Fix focuses heavily on its value proposition and thereby, utilizes a benefits segmentation when segmenting its market. Its marketing professionals target those individuals who want the benefits of their offerings – an affordable, personalized, and convenient shopping experience from a trusted brand.

Geographic

From 2011 – 2019, Stith Fix serviced all of the U.S. As of May 2019, the company has expanded internationally and is now offering its services in the United Kingdom (Mikolainis, 2019).

Developing and Managing Offerings

Expanding Market Presence

Relative Advantage

Stitch Fit offering’s relative advantages is one factor that will help the company expand its market presence. The company has experienced tremendous growth since its start, recording over 2.7 million active users at the close of its 2018 fiscal year (Stitch Fix, Inc., 2019), with revenues trending in the same direction. It has built a recognizable and trusted brand. Its target market is buying into the company’s value propositions and perceive Stitch Fix’s personal styling service (and business model) as one that is innovative and beneficial.

Complexity

The level of complexity in Stitch Fix’s product/service production will also help the company its market presence. In fact, a main value proposition at the core of the company is its ability to make its clients’ shopping experience convenient, and the underlying theme in the company is customer choice. Clients access the company’s services online via its website, input their preferences, choice a delivery schedule for their potential items, and wait for the delivery of handpicked items to their homes. Once received, clients are able to again choose which handpicked they want to add to their closet, and send the items they do not want back to the company in a convenient pre-stamped bag/envelope provided by the company (Stitch Fix, Inc., n.d.).

Possible Company Growth Hindrances

Relative Advantage

Despite Stitch Fix’s current relative advantage of being a trusted brand and service, the company faces a lot of competition. The U.S. Apparel, Footwear and Apparel Accessories Market is expected to grow by 3.7% in the next five years, while the online penetration of the market is expected to grow 35.1% (Stitch Fix Inc., 2019). As more retailers enter the market and begin focusing online distribution channels, Stitch Fix stands to lose some of its relative advantage.

Adopter Categories

There are five product life cycle categories: innovators, early adopters, early majority, late majority, and laggards. Of these five, I believe the innovators, early adopters and early majority are most likely to accept Stitch Fix’s model. The consumers who are in these categories are more open to change, and one of Stitch Fix’s objectives is to reinvent the shopping experience (Stitch Fix, Inc., 2018); this is the core of the company’s business model. Innovators are risk takers and highly intriguied by new ideas and early adopters tend to embrace change opportunities (LaMorte, 2018). People within the early majority tend to adopt new ideas before the average person, as long as there is evidence that the innovation works (LaMorte, 2018). Stitch Fix’s continued growth of satisfied clientele and revenues is and will be the proof the early majority needs to adopt to Stitch Fix’s business model.

Marketing Channels

Channel Feasibility Expansion Analysis

Stitch Fix is currently utilizing the shortest marketing channel in the B2C market – direct channel in which the company is selling directly to customer with no intermediaries in between (Principles of Marketing, 2015). The company is exclusively an online retailer, meaning its customers can only purchase its offerings via the Internet, including its mobile app. The company fully handles all the functions performed by intermediary channel partners, including disseminate marketing communications and storing and managing inventory. Stitch Fix completed its first television marketing campaign in February (Pasquarelli, 2019) and is currently looking into more avenues for mass communication, as well as brand marketing, to reach new potential customers (Pasquarelli, 2019) (Hansel, 2019). Stitch Fix employs buyers its owns buyers, who are responsible for purchasing its clothing inventory from manufacturers and wholesalers, and store this inventory in one of their five warehouses across the United States. There is one intermediary, as the company relies on FedEx and USPS (US) and Hermes and Royal Mail (UK) shipments (Shipping FAQ, n.d.)(Delivery FAQs, n.d.).

As the company continue to grows, its leaders should take into account the current marketing and supply chain channels it has in place. It may need to open more warehouses (or look into leasing warehousing space) to keep up with the demands of its customers, in the US and abroad. Right now, shipping from the US warehouses might be feasible for its UK operations, but the company may need to open a warehouse in the country.

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