Reaching Mothers-to-Be

Kmart ran into some financial troubles in 2002, but that does not mean that we cannot learn a great deal from some of Kmart’s excellent marketing programs. One of these programs focused on prospective mothers. There is a lot of money to be made from selling to this group. Mothers-to-be spend $18 billion annually, and 80 percent of that amount is spent before the baby is born. For a 2-year period families spend thousands of dollars in a category in which they have not recently been spending and in which they are unlikely to spend again until the next child arrives. Kmart and other retailers have understood the power of this segment for some time and have made major efforts to capitalize on it.

Kmart developed a comprehensive strategy for targeting this segment. Using its database, it was able to reach one-third of all U.S. moms-to-be before the baby was born. The basic strategy was this:

• Use the database to identify moms-to-be through their purchase of maternity apparel and other prebirth items.

• Be the first to market before the baby is born, through database-targeted direct-mail communications.

• Integrate with other departments as a cross-functional team to change merchandise assortments and the arrangement of merchandise in the stores so that the items purchased by mothers-to-be are within easy reach.

Actual shopping behavior plus multiple regressions were used to determine which customers really were mothers-to-be (as opposed to grandmothers or friends shopping for a baby shower). The data explored the cross shopping of each individual, her market basket, her known age, and her previous shopping history.

Armed with this information about the moms-to-be, Kmart developed test groups that got the special promotions and control groups that did not. Comparison of the purchasing behavior of the two groups clearly showed the advantage of the special targeting.

The Results

The program increased store sales by over 15 percent while reducing mailing costs by 35 percent. In Hispanic markets, store sales of baby products increased by over 25 percent, while sales in adjacent highly cross-shopped departments increased by 35 percent over the prior year.

On a customer level, over 21 percent of the top-decile moms-to-be shopped at Kmart during the mail event, increasing their spending more than 40 percent over the prior year. Targeted customers outperformed the control groups by 4 to 1 and spent over 20 percent more per visit during the promotional event.

As a result of this experiment, the use of the database to drive promotions was expanded into many other departments at Kmart. According to Tom Lemke, vice president of database marketing at Kmart, “Our mission is to ‘Mail Less and Sell More.’ To accomplish this, we use the intelligence of customer data to create improved response rates and lowered mail volumes.”