The fashion industry is very competitive.
In order to stand out from a crowded marketplace, fashion companies need to invest time and money in understanding their market in order to target the right customers.
Unless companies really connect with specific customer profiles, they are going to deal with very high communication costs in order to reach an audience that is undifferentiated and unprofiled.
By applying the STP framework, or the Segmentation, Targeting, and Positioning approach, a brand can -relatively simply- understand where to focus its efforts and connect with its intended customer.
This model indicates three steps to developing a well-directed marketing strategy by going through three simple steps:
- Segmentation. Create customer groups that are clustered together on the grounds of relevant features and characteristics.
- Targeting. Identifying the most profitable\valuable customer segments, that the brand can target, based on its value proposition.
- Positioning. Developing a marketing and communication strategy designed to enhance those characteristics and qualities that better resonate with the intended audience.
For as simple as this model can look, in reality, applying it is not so simple.
Even if in fashion we can build our strategy by leveraging established customer segments, we need to remember that segmentation is a highly strategic process.
Some brands, like Pandora, have in fact been able to create a segmentation strategy that went beyond typical customer profiling in jewelry and was able to gain a competitive advantage against its competitors.
How did they do that?
They just made sure to avoid some of the common mistakes fashion brands can make when segmenting their audience.
In this post, we’re going to help you avoid the five most common mistakes brands make when segmenting their audience.
With no further ado, let’s delve right into it.
#1 Brands Rely Excessively on Personas
“Personas” is one of the most widespread and commonly used approaches to customer profiling and segmentation.
This approach requires a marketing team to create imaginary customers which fit the description of a brand’s ideal customer types.
This model allows firms to make use of market-acquired data to create segments representing different types of users that are described in minute detail.
Marketing teams try to expand on the information they have available and build insights into customers’ motivations and reasons to buy.
And here lies the problem.
Even if personas can be considered a helpful approach to “get a conversation started” on customer types and how they relate to your marketing messages, this approach cannot reliably provide helpful insights as this model build excessively on descriptive data, which is not indicative of behavior.
In simpler terms, knowing someone’s age or income, or education level does not necessarily tell us why they might want our products.
Descriptive information does not allow us to understand motivation, so if we want to learn why our customers buy our products we need to acquire better information.
That’s what we are going to discuss next.
#2 Brands Don’t Use Enough Behavioural Data
In order to understand why our customers may be interested in purchasing a product from us, we need to understand what they would be using that product for.
In many cases, companies do not know how their customers use their products.
If we don’t know how our customers use our products then we don’t know what features of the product we should communicate more.
To switch our descriptive-oriented approach to behavioral marketing, we can make use of a different framework, called Jobs To Be Done.
With Jobs to Be Done our focus becomes understanding what use customers make of our products.
In order to discover this information, we need to collect more behavioral information and use interviews and focus groups, as opposed to surveys and questionnaires to engage in meaningful conversations that shed light on what our customers expect from us.
All in all, we need to invest more time and money to acquire data that can help us avoid abstract answers and allow us to focus on better quality information.
Only when our behavioral analysis is on point, we can identify specific customer segments that are going to respond to our marketing efforts.
#3 Brands Are Not Creating Specific Customer Segments
Now that we know what customers are using our product for, we can actually pick specific customer segments.
A product value proposition can be interesting for a lot of possible customers. As brands want to bring value to the market, it’s likely this value is relevant for a large audience.
But here lies the problem.
An interesting value proposition however does not mean that everyone is going to buy a product simply because they see some of its value.
In fact, most people won’t.
People will only buy a product when they recognize that spending money on the product is a means to finding a solution to an actual, painful issue they are experiencing.
The process that leads a customer to your product is in fact led by their need to solve a challenging situation, as customer journey mapping explains in depth.
Unless we identify those specific user groups who will actually connect our product to a specific problem, we will not be able to identify a profitable customer segment to target, as our approach to the market will be too broad and generic.
An example of a successful approach to profiling specific categories of users is presented by Rent the Runway.
The company provides an online rental service that allows customers to rent clothing that they are likely to wear only once to participate in a specific event.
Any of us may have to spend upwards of 1000 euros to buy a suit to attend a gala dinner, but we may want to avoid making that purchase as we’re likely to wear that suit only once.
Rent the Runway allows you to rent a high-quality designer suit for a much more affordable price so that you can get great clothing at an affordable price. Plus it’s more sustainable fashion consumption!
Even if the company’s value proposition is generally desirable, meaning that any person may gain a benefit from renting a product because of a specific occasion of use, there are two specific types of customers who are perfectly aligned with the brand:
- Fashion victims, who are always buying new clothing to stay trendy.
- High-end female professionals, who need to attend many formal events.
These two customer types would respond “inelastically” to the value offered by the brand.
What “inelastically” means is that these two specific customer categories would see so much value in what the company is offering, they would pay a much higher price than the rest.
Part of the reason why these customers would pay more is due to the value they see in the company.
In fashion, products have three types of value: functional, social, and emotional. You need to make sure your segmentation is connected to the specific values customers are buying from your brand.
We’ll explain what are these three types of values in the next section of our post.
#4 Brands Are Not Connecting Their Products with Benefits
Fashion brands are never really selling a product, they are selling a tool to solve a problem.
As we discussed in the previous paragraph it’s only by understanding what your customers’ problem is that we can create a wonderful product.
To help us with our research, we can break down customers’ problems into three categories: functional needs, social needs, and emotional needs.
As marketers, we need to make sure we are connecting our product to the need it is designed to satisfy.
Let’s look at each need in detail.
These needs are simply connected to the practical use customer make of our products and services. In the context of fashion, these products are usually mass-market products that are usually quite inexpensive and provide us with the most basic functional benefit of clothing, which is sheltering us from the weather and cold. As these needs are commodified, many brands try to increase their profit margins by providing something more enticing such as social benefits.
In this context, fashion brands fulfill a very important role, as fashion products gain value in the customer’s eyes. Customers often – if not always – use fashion products as social currency, usually for one of two reasons. To either fit in, or show belonging to a particular group, or to stand out or make ourselves get noticed. Social needs are associated with middle-tier brands such as bridge brands, and diffusion lines, which benefit either from the trickle-down value or from strong trendy communications.
These needs are satisfied through products that have such a strong reputation and heritage, that the simple fact of owning them, makes us feel proud and part of the brand’s legend. These needs are usually satisfied by luxury brands that are exclusive and aspirational, as the fact of owning these products is a strong social signal. Because of this emotional drive, these products need to be aspirational and exclusive, if they become too accessible they may completely lose their aura of prestige.
We explore these three dimensions of value in further detail in this post.
As we can see, our brand’s market gives an important coordinate to understand what needs we are likely to satisfy. Mass-market brands are more inclined versus functional needs, while haute couture is more aligned with emotional needs.
Many fashion companies fail to connect their products with the problem their customers are trying to solve and fail to understand how to communicate their value effectively.
Now for the last mistake: relying too much on your wishful thinking!
#5 Brands Rely on Wishful Thinking as Opposed to Market Evidence
As a final common mistake, we can certainly include “wishful thinking” or the idea that marketing managers may be biased in their perception of the market and follow their “gut feeling” unreasonably.
In order to do good marketing, we need to be empathetic and compassionate to our customers, as it’s only by putting ourselves in their shoes that we can understand their challenges and enhance our products to perfectly fit their needs.
In order to avoid the trap of wishful thinking, we need to remind ourselves to continuously challenge our assumptions with market research and never stop engaging in meaningful conversations with our customers to get a clear picture of the current and future fashion market.
Great, now that we’ve covered all 5 mistakes, it’s time to draw some conclusive remarks.
There you have it! In this post, we’ve discussed 5 common mistakes brands make when segmenting their audience.
As we’ve seen in our post, segmentation is not a chore, but a very strategic decision that can provide your company with a competitive advantage over the other brands.
If you’re interested in reading more about customer segmentation, take a look at our blog, where we provide a wealth of free resources for you to access in the world of fashion marketing. Enjoy!