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Marketing Segment Analysis for a Product Prototype
written by : William F Bryant *Market Segment, Sales and Profit
In order to approximate the market segment and corresponding market share for the product, an understanding of the characteristics of the target customer is necessary. The target customer will, in the vast majority of sales, be a member of a gym, health club or fitness club and participate in strength development, as well as, be open to the usage of wearable technology for the advancement of their fitness. This conclusion is drawn from the dual benefits of the product, the first being the wrist wraps (a weight lifting accessory) and the second from the technological capabilities added to the wrist wrap, specifically heart rate monitoring. The data was sourced from multiple institutions, but the bulk of the data for the number of potential target customers came from the Census Data and the CDC. The CDC data gives a breakdown, by segment percentage, of leisure-time participation in aerobic and muscle-strength activities that meet the federal 2008 Physical Activity Guidelines for Americans by Age. The information was broken down into age, gender, race, broad educational segmentation and poverty level participation. The next major, secondary source, the Census Bureau, makes use of customizable tools to segment population by various demographic measures. One final informational addition, that was based on the CDC data, solidified the corresponding link between occupation and income to strength, the study completed by Blackwell and Clarke* that examined the occupations of those adults that met the 2008 Physical Activity Guidelines. The study by Blackwell and Clarke mentions explicitly that occupation is now largely sedentary work and “most adults who currently meet the 2008 federal physical activity guidelines do so by participating in leisure-time physical activity” (Blackwell, Clarke) and would therefore require additional expenditures for these leisure-time activities and strength development would almost always require access to free weights. The need for leisure time expenditures in order to pass the 2008 guidelines is especially true of the demographic segments of post high school education and making over $75,000 annually that strongly suggests managerial positions. Further, the study questions were focused on frequency and intensity of physical activity by participants primarily measured in level of breathing and heart rate, the primary benefit of the product. For illustrative purposes, the CDC categorical approximations by percent of total sample population, over the age of 18, that met the following requirements was used. There were two sets, the set of those that met both the aerobic and muscle-strength requirements, in addition to those that met only muscle-strength and not the aerobic requirements. The percentage that met those requirements, age 18 or older, was 27.8% of the U.S. population (approximately 69,500,000 people). Interestingly, this population is very close to the number of gym memberships in the U.S. in the same year, 64 million members. The computation, using probability set theory such that A = meet aerobic requirements and B = meets muscle-strength requirements lead to the following breakdown, specifically the set of interest is . In order to be useful, however, the census data was actually weighted by the educational segment of the CDC data in the following paragraph. The target customer numbers, using the data directly from the Census, the following segments of
Drilling down, the very specific core target segment is the individuals age 25 to 44, college educated and earning over $50,000 per year that participate in strength activities and further strengthening this data segment is that the average age of a gym member is 40 years of age with a sigma of 15 years and average annual household income of $80,000e. However there should also be some bleed over into other segments simply due to the generational breakdown of gym members.
With the numbers of the potential expanded market, the final scaling down of the target customer would be those, of each generational segment, that would be willing to use wearable tech. A survey found that 71% of Gen Z, 48% of Millennials and 36% of Gen X own or desire wearable tech and the numbers have been correspondingly scaled down. The color coordination identifies the specific target segment in dark blue and potential additional interest in the light blue.
The market share that the product will pursue is the consumer discretionary spending on fitness. A study reported on Market Watch discussed these fitness spending habits and concluded that adults age 18 – 65 spend and average of $155/ month on health and fitness including average monthly expenditures of $33 on gym memberships, $56 on health supplements, $35 on clothing and accessories, $17 for meal plans and $14 on trainers. These numbers imply that through budgetary competition there exists, on average, $122 per month ($1464/year) that could be spent on a desired, beneficial wearable tech product or a specific $35 per month ($420/year) on clothing and accessories.
These average fitness discretionary spending numbers, of solely the target segment, approximate a market share of $5 Billon annually, and $1.4 Billion specifically on clothing and accessories. Due to the longevity of equipment, the market share designated to equipment accessories is further reduced to $200 annually providing a U.S. market share of fitness equipment fitness accessories of $687 Million. 
Because there is very little purchase data available on exact product comparables, the potential revenues and costs are work backward from different levels of captured market share to the units sold to meet this market share at different price points. This method will also allow for approximation of anticipated capacity investment at different unit levels.
The basis for the selection of the percentages of captured market share stem from the implication of sales. A 1% capture of the accessory market implies that $1 out of every $100 spent on any fitness accessory by the product’s selected target customer will go towards this product line. To further compare this measure in terms of a subsection of the ideal target markets of crossfitters, powerlifters and weightlifters; it is very roughly approximated that 300,000 people participate in crossfit, calculated from approximate number of crossfit gyms, classes offered, participants per class and days of the week. If the product line captured 1% of the total accessory market and the average relative yearly accessory spending total held for the 300,000 crossfitters, the product would have gained $600,000 in revenues from this subsection alone. This also implies that at a $60 price/unit 10,000 crossfitters, or 2 people in every crossfit gym in the U.S., would wear this specific product.
*Blackwell, Debra PhD and Clarke, Tainya PhD. Occupational Differences Among Employed Adults Who Met 2008 Federal Guidelines for Both Aerobic and Muscle-Strengthening Activities, U.S. 2008-2014. National Health Statistics Reports, Number 94, June 10,2016.
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