The Pacific Brands company started out in 1883 as a manufacturer of bicycle tires. Since then the company has evolved into a large “house of brands” for consumer lifestyle products. This case deals with two sub-brands or brassier, Infinity and Timeless, both marketed under the Berlei brand. Berlei had served a wide variety of consumer preferences. However, while the brand had often self-identified as a luxury bra brand, consumers often perceived it as an economy brand. Among its competitors, Calvin Klein, offered by PBG’s closest competitor, 

Gazal Corporation, had communicated greater luxury appeal consistently to consumers and had captured two categories in the same price–fashion matrix: the high-priced traditional practical and the upper-brand functional sport. Gazal portrayed its brands with more class than Berlei did, according to the perceptions of the highly influential “fashionista” constituency at Fashion Week and other leading-edge events throughout Australia. Recently, the company faced several adverse trends: (1) Sales were down 5.2% from the fiscal year 2018 (possibly because of less consumer spending due to the COVID-19). (2) net profit was down 0.9% from FY 2018 (partly because of a devaluation of the Australian dollar), (3) competitors like Gazal were closing the gap and moving upscale, and (4) Consumers seem to be trading down to discount stores and private labels (this could be a potential long-term trend induced by the recession). The company is exploring whether there are distinct segments of brassiere consumers, and whether it needs to target either or both sub-brands to one or more market segments. 

An additional concern was that the CFO and CMO were not on the same page – the CFO did not see the value of having to support two different sub-brands, which were essentially trying to reach the same type of consumer. The company sent out a massive survey request to 1000 customers and 100 respondents completed the survey. As Berlie brand manager, your primary task is to identify and define the segments within the brassiere market and recommend cost-effective advertising and promotional activities that the Berlei team can execute to promote Infinity and Timeless. You can download the data from Blackboard. The data set contains four sheets 1) segmentation data, 2) discrimination data, 3) segmentation data description, and 4) discrimination data description. 3) and 4) provide you the survey question for each segmentation and discrimination variable.

Q.1. Run only segmentation analysis (without discrimination) on the data. How many segments do you suggest (the best choice on the number of segments)? Please explain how you arrive at the recommendation.

Q.2. Rerun the segmentation analysis using the K-means algorithm and the number of segments suggested from Q7.1. Please answer the following questions.

Answer rating: 100% (QA)

There are four primary segments of brassiere consumers identified by their purchas... View the full answer