Chewy is the biggest online pet retailer in the United States bringing in over $11 Billion in annual revenue each year. What makes them so successful? Chewy has been incredibly successful at their marketing strategies and has found a way to harness customer loyalty that no other pet company has been able to. The pet market is an incredibly large market predicted to reach over $127 Billion by 2027. I was recently reviewing a purchase I have on Autoship from them when I started recognizing some of the marketing techniques I was seeing.
Segmentation:
Chewy uses a lot of types of segmentation in their marketing. First, they use a demographic segmentation to learn about their groups of customers. Demographics include things like age, gender, income, location, education, and family size. By segmenting marketing towards groups that are like each other, they can use marketing that targets them more directly. For example, I am a very popular demographic group on Chewy as I am a millennial who is married with no children, but three pets, and an outdoor cat that I feed. This means I am more likely to look for things of Hedonic value as well as necessities for my pets because I don’t have children that I am spending that money on. As part of this specific demographic, I am more likely to uploade profiles on my pets (which I have) and include their ages, profile pictures, and breeds. This means every time a month approaches where one of my pets has a birthday as indicated on their profile, I am sent a birthday card with a discount code from Chewy.
Another type of segmentation they use is psychographic, which focuses on the “why” of a purchase. I have an elder dog, so I make a lot of medicinal purchases to keep him comfortable as he ages. This includes things like memory foam beds, tinctures for aging joints, belly bands for bladder leaks, as well as his monthly medications. Since Chewy knows this, both from his profile and my purchasing habits, they often show me ads for items that could aid in my dog’s elder years as well as checking in on if I need a certain prescription soon that I haven’t ordered.
They also utilize bahavioral segmentation. Since Chewy knows how often I make purchases, what I buy, and things I’ve looked at, they will suggest things by similar brands or by assuming I may be interested in something because I have gotten something similar before. They also suggest autoship orders I need to review, revise, or revisit so I can make sure the things I’m purchasing are still relavant. For example, years ago when my cat Sadie died, I removed her profile from my Chewy account. Not only did I get a consolation card in the mail, but they automatically canceled my medication I had on order for her since I had to get my vet to approve a prescription for her medicine. Things like that give Chewy the feel of a small store even though they’re a multibillion dollar company.
Implimentation:
When a company implements its segmentation strategies, they need to make sure each group that is identified is measurable and acted on accordingly. As stated above, Chewy has paid attention to not only me, but everyone who falls into my demographic. Millennials and Gen Z make up the biggest portion of Chewy customers, and with 45% of Millennials not having children, it’s a large amount of their customer base who sees their furry (or scaley, feathered, or otherwise) friends as family members.
Another thing to remember when implementing segmentation markets is that there shouldn’t be too many groups because that can complicate the implementation of each and cause significant overlap. While the demographic of child-free may be large, it could also extend to empty-nesters who are focusing on their pets after their children move out as well as younger Gen Z who are not yet ready to have children. If Chewy were using that as a specific demographic (they are not, I have looked), they would likely want to add those people who are also child-free to their group and capture more of their audience.
Thirdly, it is important that a company focuses not on just the demographic but the behavior of why the customer is shopping there. Are they buying something as a one-off because they live in a rural area whose current pet store doesn’t have the presciption food that Fido needs, or are they looking there regularly because they have a grand-dog they love to spoil? Focuing on the customer’s buying journey ensures they understand what is bringing the customer there and can make each experinece more tailored to their specific needs.
Something else that can help keep people interested is by bringing in other stockholders. For example, Avengers is one of the top 10 biggest box office movies which means a lot of people have seen it. Doing a brand deal with dog toys that looks like your favorite superheros shows that not only are they investing in your likes, but they have a good partnership that other companies are interested in joining as well. This also pertains to things like other relavent brands such as Rachel Ray’s Delish pet food and carrying a vast array of brands for all types of animals. This offers the selections that people needs, and helps cater to a wide variety of pet owners.
Lastly, a company should always track consumer behaviors as they are likely to change over time. For a long time, it was thought that grain-free cat food was better for them and offered them a more stable diet than grains that fill their food with fillers and unnecessary carbohydrates. However, as time has allowed for more research, many vets don’t actually reccomend feeding cats this type of food as domesticated cats are much more used to having carbs and it provides them with needed balances as well. Research has now shown it’s not as bad for them as orginally thought which has made the interest in these types of food dwindle.
New Segment:
An emerging segment I have noticed is more care being given to small animals that were previously not catered to as much. I’ve seen things all over social media about how unfulfilling hamster cages are for what they actually need. This has prompted a lot of people to talk about what they actually need and how they should be houses instead of in tiny cages with tubes. Hamsters are naturally burrowing animals who thrive by building their own nests. Giving them stiff plastic tubes to crawl through is actually not helpful for thier natural instincts and can cause harm to their little feet. Chewy could take advantage of this very popular information and market hamster cages that are more appropriate for them to thrive in. This would show customers that they, too, are interested in making sure all animals have an ability to thrive, no matter the size.
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