Segmenting Your Audience in Fashion [Video Transcript]
In this whiteboard animation, we’re going to discuss how a brand can inform its marketing strategy by dividing its customer base according to a variety of segmentation criteria. In simple terms, you should know your customer. A brand cannot be everything to everyone, in order to create an attractive value proposition it’s necessary to make your product fit a particular need in the market and to do so, selecting the customers you are willing to assist is the first step to creating a coherent strategy. A first perspective that can be adopted to qualify your audience is descriptive segmentation, focused on describing material, quantitative characteristics shared your audience.
These criteria includes:
- Geographical segmentation. According to their area of residence, customers share particular characteristics, which are a reflection of the cultural and geographical area of residence. This segmentation starts from the fundamental assumption that individual behaviour and purchase preferences are influenced by factors (such as climate and culture) which create grouping criteria.
- Socio-demographic segmentation. This criterion divides consumers on the grounds of elements such as income, age, gender, family status and life cycle stage. These factors require companies to match their product lines to particular price-points and product uses in order to become appealing to a specific customer segment.
- Age segmentation. Age is a very important element to create customer segments. Age relates specifically to the events which took place in the formative years of a generation. At the moment, we tend to identify the following age groups: pre-teens, millennials, generation X, baby boomers, new seniors. This latter category is fairly new and relates to the increase in life expectancy.
Alternatively, segmentation can decide not to focus specifically on the individual as a person, as much as an individual as a consumer. In this case, we need to understand elements which are more behavioural.
In other words, we need to clarify not who our customer is, but instead, we need to understand what pushes a consumer to make a purchase. This typology of segmentation is much harder to carry out, as we need to understand behavioural patterns and relationships of causality.
Behavioural segments instead relate to:
- User status. Users can be classified into non-users, potential users, habitual users, former users. In order to ‘speak’ to each, a company needs to use a different communicative approach. It can be noted that when we use the expression ‘disruptive innovation’ we refer to technological breakthroughs which are able to transform non-users into users, because of the lower price point that technological innovations are able to bring to the market.
- Purchase based on occasions of use. This segmentation criterion relates to the context in which customers may buy a particular product or service because of a specific circumstance or a particular situation. Some brands may decide to focus their marketing campaigns on connecting their products to a particular use rather than on a set of unique product qualities.
- Purchase based on brand loyalty. A loyal customer is someone will have grown a strong emotional attachment to the brand and will, therefore, become a returning customer by purchasing multiple times. A loyal customer has a very high lifetime value and brands need to make sure they retain this category of consumers as they are very profitable over a longer period of time.
Finally, the last category of segmentation criteria we are going to review is called psychographic segmentation. This segmentation relates to how a purchase decision is a reflection of an inner concept of self.
An example of a psychographic segmentation criteria reflects a customer’s ability to spend, according to the following segments:
- Affluent customers. Have enough resources to consider pricing just one of the variables that inform their purchase decision process. These customers, on the other hand, tend to be very considerate of their own time, so the quality of customer service is extremely important to serve them well.
- Value-oriented customers. This category of customers tends to maximise the benefits of their purchase while maintaining a lower cost threshold. These customers will respond well to promotions and sales or another time-sensitive marketing strategy to ignite their desire to strike a bargain.
- Fashion victims. This customer category will spend money, regardless of what they can really afford. These customers consider fashion products as an expression of their own personality, so they will be often over-driven by their emotions, rather than any degree of rational thinking.
Customer segmentation is also affected by new drivers connecting a firm to its audience: for example sharing and co-creation.
To some extent, as we identify who are our customers and why they buy our products, we need to understand what kind of relationship to build with them. In the past, the relationship with customers was much more hierarchical, meaning that customers could decide whether to buy or not to buy our products, but could not partake in the value creation process. Now the barrier between the brand and the customer is dissolving creating the opportunity to use a product to develop a more profound connection and relationship with our target segments.
More information about how to build a relationship with your customer and experietial-ise your brand can be found on our video on experiential branding.
Matching your products with the right customer segment, while at the same time forming shopping habits is a challenge for many brands.
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