The $110B Baby and Kids Market Isn’t One-Size-Fits-All
The first-time parents market in the US is highly valuable, and insights from customer segmentation examples can help brands more effectively reach these desirable consumers when they are forming new habits and adopting brands.
Moreover, this market has several headwinds, which are fueling increased spending, despite declines in births. These include:
- Average age of first-time parent continues to increase. As we wrote about in 2013, this is a long term trend: first-time mom age increased to an average of 25.4 years in 2010 from 22.7 in 1980. By 2014, average age increased another year to 26.3 years. A similar trend is seen in the EU, where average age of first-time mom was reported at 29.4 years in 2019. These older parents, and their parents (the grandparents) are better established financially, and are often inclined to spend more on the child they’ve waited for.
- Tech-enabled parenting is a major trend, with brands like SNOO and Owlet tapping into an estimated $19.5B parenting and baby monitoring market. With its $1500 price point, the SNOO bassinet is focusing on upscale first-time parents.
Two Parent Customer Segmentation Examples from Buy Buy Baby
A leading brand in the baby market is “digital first” Buy Buy Baby, which reported $1B in 2020 retail sales, 50%+ of which were online. While $19.5B is a large market, it’s just a part of Buy Buy Baby’s estimated total addressable market (TAM) of $110B for baby and kids.
According to Buy Buy Baby Investor Day 2020, the largest baby categories are:
- Strollers, car seats, baby safety and travel gear, which represent an approximately $10 billion market.
- Kids’ furniture and kids’ bedding and décor add another $5 billion.
- Toys and education (for babies) and baby apparel total $2 billion.
Buy Buy Baby ranks #1 in the strollers and baby safety (i.e., baby monitor) categories and among the top five in car seats, travel gear, kids’ furniture, kids’ bedding and décor.
Buy Buy Baby and its parent company, Bed Bath and Beyond offer two customer segmentation examples in the baby and kids market.
The first customer segmentation example from Buy Buy Baby is a design segmentation for nurseries, including a range of style choices:
The second customer segmentation example is of adult consumers that Bed Bath and Beyond uses. The customer segments are defined by age, lifestyle and spending habits. They are:
- The Creative: Made up of Gen Z and Millennials ages 18-40. These consumers are higher spenders and represent around 40% of the market. This large consumer segment are younger shoppers looking to impress themselves, setting up homes more frequently. They are more likely to buy products for entertaining, home décor and storage and organization.
- The Minimizer: Another group of Gen Z and Millennials ages 18-40. These are younger adults doing the minimum to have a functional home. They are more likely to buy bedding, bath and storage and organizational products. Their spending levels are considerably lower than the Creative segment.
- The Nester: Made up of Boomers ages 55-70 years old. These are older homeowners doing more with their homes and second homes. They are more likely to buy kitchen, bedding and entertaining products. The combined size of the Nester and the Minimizer segments together is 37% of the market.
- The Innovator: Made up of Gen X consumers ages 40-55. These are novelty enthusiasts hunting for the latest and greatest. They are more likely to purchase gadgets, home tech and kitchen tools.
- The Juggler: Made up of Gen X consumers ages 40-55. These are parents balancing the needs of having a family at home. They are more likely to buy kitchen, home care and personal care items.
Looking at the Bed Bath and Beyond segments, first time parents are most likely to fall into one of the groups: The Creative, The Minimizer, The Juggler, or The Innovator. With an average age of a first time mom at 27 years old, and the corresponding dad age at 30+, this is most likely to be The Creative or The Minimizer. However, there is a segment of moms who are having their first child at age 40+. These consumers may fall into The Innovator or The Juggler segments.
Tech-Enabled Parenting Customer Segmentation Example
While age and lifestyle segmentation is a good first step, along with design preferences, Buy Buy Baby could likely benefit from a more targeted baby parent segmentation. A new segmentation dimension that may be important to understand is the consumer’s interest in tech-enabled parenting. Among $100,000 household income new parents that we’ve spoken with, we’ve seen big differences on the interest in using tools like Owlet and SNOO.
- The Tech Parenting Rejecter: For example, first-time mom Josie describes why she avoided tech enabled products.
“We bought 100% of our baby products online, including car seat, crib, and stroller. However, we decided against tech products like the heart rate socks. On first look, they are interesting. But after thinking about it, we realized could be kind of stressful, if it goes off by accident. You need to figure out how to trust your instinct. We also decided against the SNOO for the same reasons. We didn’t want to buy products we don’t need, and we have a small apartment. Still, one or two times when we were up all night we wondered if we made the right decision on the SNOO.”
- The Tech Enabled Parenting Acceptor: First-time expecting dad Arron provides a counter example:
“We are down for anything that helps. We will get the SNOO and the Owlet.”
While we’ve found so far just two groups of tech parenting acceptors and rejecters, it’s likely that there will be additional segments emerging who find tech valuable for certain parenting applications and not for others, so that a more nuanced approach will be valuable going forward.
Parent Customer Segmentation Example: 10 Approaches
We’ve identified 10 other customer segmentation examples and approaches for moms that can be considered for parents. Some of these are similar to the Bed Bath and Beyond age and lifestyle approach, in leveraging demographics, while others bring in additional variables such as shopper type or a needs-based approach. These include:
- Parents by household income level. For instance: $100,000+, $75,000-$99,999, $50,000-$74,999 and under $50,000
- First time parents vs. experienced parents
- Needs-based segmentation for a specific product category
- Shopper segments of parents, e.g., The At-Home Worker, The Care Provider, Freelance Gig-Worker, Small Business Owner, The Solitary Confined
- Single kid parents (i.e., parents with one child) vs. multi-kid parents
- Primary breadwinner parents vs. secondary breadwinner vs. non-working parents (i.e., working outside of the home for pay)
- Millennial parents vs. Gen X parents
- Parents by education level
- Parents by cultural and ethnic background,
- Single parents vs. married / partnered parents
- Parents with oldest child ages 0-2 vs. 3-5 vs. 6-9 vs. 10-12 vs. 13-17 vs. 18+ (this is the approach we recommended for segmenting moms in the book I coauthored, Tuning into Mom: America’s Most Powerful Consumer).
Baby Feeding Customer Segmentation Example
Moving away from demographics, Insight to Action worked with Beech-Nut to develop a motivational-based customer segmentation for baby feeding. While this work focused on moms, it could be adapted and updated to include dads. The ending samples included over 1,700 moms with children ages 4-36 months.
In this customer segmentation example, two of the seven segments that emerged used very little baby and toddler food, cumulatively nine percent of category. Two customer segments were not actionable targets for new products. There were five prospective segments that offered marketing targeting and growth potential:
- Premium Seekers
- Career Moms
- Child Pleasers
- Picky Eaters
- WIC Moms
Picky Eaters (moms with children who are picky eaters) primarily were parents of toddlers (ages 12-36 months), making this group a logical target for toddler foods, along with the Child Pleasers segment.
The best customer segmentation examples will depend on the brand’s category.
The last time we quantitatively studied moms and dads, we found significant differences on the importance of various parenting activities, including child’s safety, healthy food/diet and child’s education. For instance, 71% of moms felt that a healthy food/diet for their child was important, compared with 54% of dads. Today’s more involved first-time dads are playing a bigger role in decision making. Some dads are taking the lead in doing the research for purchases like car seats and strollers.