London's Hello Fresh cooks up market segmentation

Hello Fresh is for home cooks who want the convenience of receiving packages of ingredients with creative recipes every week (or one-off), for making gourmet meals in their own kitchens. Everything but the chef is the company's tag line.

The online subscription service offers packages for family meals, for vegetarian meals and for 'classic' meals (with meat). Customers can choose packages that provide multiple meals for either 2 or 4 people, with step-by-step recipes including nutritional values and cooking times.

With a lot of venture capital backing, the company is expanding rapidly and already faces competition in some of the markets it serves. To continue its success, London-based Hello Fresh is segmenting its market by geography, attitude and behaviour.

• Geographic segmentation: Hello Fresh operates in Australia, Austria, Belgium, Germany, the Netherlands, the UK and the US, adapting its recipes for local markets and sourcing ingredients from local producers. This allows the company to appeal to local tastes and preferences.
• Attitude segmentation: Cofounder Patrick Drake explains: 'There is that intimidation factor with cooking . . . "I have never tried this recipe before so I am not going to try it", an attitude that discourages experimentation. Hello Fresh targets people who want to experiment with little risk (financial or culinary), a key element in its marketing.
• Behaviour segmentation: Many people enjoy cooking at home (or want to cook at home) but don't have time to shop or don't have access to specialised shops for international ingredients. Hello Fresh addresses this segment's needs by delivering boxes with exactly the foods and extras needed for each meal.

Hello Fresh has already attracted 200,000+ Facebook likes, 7,000+ Twitter followers and 9,000 Instagram followers.

Subscription beauty boxes: Try, learn and buy

Birchbox, founded in 2010, pioneered the concept of selling a monthly subscription to samples of women's beauty products delivered by post. The concept, according to the co-founders, is 'try, learn and buy'. Once a customer has tested a sample of a new mascara or new bronzer, she'll know whether it is right for her--and be more willing to buy the full size at regular price. No wonder so many beauty brands want to participate.

Two years after it began operations in the US, Birchbox acquired JolieBox to gain entrance to the UK and European markets. Today, Birchbox has a multinational presence and faces considerable competition but continues to acquire customers. It now offers sample boxes for men as well as for women.

Nearly 900,000 people have 'liked' Birchbox UK on Facebook and the firm has posted hundreds of how-to and brand-specific videos on YouTube. To reinforce the brand's connection with style, Birchbox has (for a second year) wrapped London cabs in colourful patterns during London Fashion Week. The cabs highlighted the brand name and style connection, and distributed a free Birchbox filled with sample products at the end of every ride.

One of Birchbox's top competitors is GlossyBox, UK-based and also focusing on men's and women's personal care products. This company has customers in 16 nations and offers both monthly and limited-edition special occasion boxes by subscription. GlossyBox's Facebook page has nearly 600,000 likes. It also posts how-to videos on YouTube to encourage customers to try new techniques and new products.

Other competitors are entering the market all the time, and subscription sample boxes are popping up for many other types of products, from pet food to healthy treats. Try, learn and buy is a good way to reduce the inherent risk of new products--meaning products you've never used before. Once you know what suits your personal needs, you will buy the full size with confidence (and, just possibly, become brand loyal to this new product). 

This post updates the Birchbox feature in chapter 9 of Essential Guide to Marketing Planning.