Fashion Market Segmentation, Types & Benefits

The term "Segmentation" indicates the process of dividing a large unit into smaller units. The process of dividing a broad target market into more defined smaller units or categories is known as Market Segmentation. In other words, it refers to the classification of prospective consumer groups, based on their requirements and their tendencies to generate a similar response to a particular marketing action.

Importance of Market Segmentation

Benefits of Market Segmentation

• More Effective Marketing
  You can provide improved and personalised customer service, as it lays the foundation to understand customer's purchase patterns, shopping habits and behaviour. This is the most obvious and biggest benefit to well-implemented market segmentation. By clearly understanding your customers requirements, you can identify more efficient tactics to reach them which makes marketing efforts easy.
• Remarkable Insights
  It is the key for Revenue Management and guides accurate & efficient forecasting.
• Increased Profitability
  Contribution by segment provides a way not just to increase revenue but also profitability across the entire operation. Optimum business mix, now consists of indicators that highlight the impact of each segment on profit performance.
• Helps to determine Market Opportunities
  We can study about various customer group and their level of satisfaction from the current offerings. Customers dissatisfaction can be observed in case of gaps and organization can take this as an opportunity to improve products and fill gaps to meet consumer requirements.

Major Types of Market Segmentation

• Geographic Segmentation
  Geographic segmentation is the simplest type of market segmentation. It categorizes customers based on geographic borders. Residing place or location of the consumer is a very powerful tool in market segmentation. The markets can be split into Region, Countries, States, Cities, Neighbourhood or Global depending on the services provided. Different locations might have different product requirements. For example, regions with rain require raincoats where as cold areas require woolen garments.
  
• Demographic Segmentation
  Age, Gender, Religion, Education, Socio-economic factors, Income are few great ways to differentiate your potential consumers. In such kind of segmentation, you may go for your customer's actual age or focus on things like the product life cycle. When consumers are segregated on basis of demographics, you can be more specific in directing your marketing strategies.
  
• Psychograhic Segmentation
  Psychographic segmentation categorizes consumers and audiences by different factors that relate to their personalities and characteristics such as Interests, Priorities, Lifestyles, Values, Personality Traits, Social Status etc. This segmentation is slightly more difficult to identify as it is subjective and it requires a lot of research to figure out.
  
• Behavioural Segmentation
  Unlike demographic and psychographic segmentation which focus on who a customer is, behavioral segmentation focuses on how a customer behaves or acts. Here we group customers with regard to their purchasing habits, shopping tendencies, spending habits, interaction with the brand and also previous product ratings. All these datas can be collected from a customer's previous interactions.
  
  Benefits of Behavioural Segmentation
  • Provide better conversion tracking
  • Improves targeting accuracy
  • Builds loyalty to your brand
  • Saves advertisement cost
  • Helps in providing better personalized experience

Fashion Market Segmentation

• Demographics
• Psychographics
• Key Influencers
• Interests
• Information Source
• Factors in purchase decision & online behaviour

• Luxury Brands
• Fashion Designer Brands
• Premium Brands
• Vertical Retailers in the Mass Market

• Haute Couture
  Haute Couture means the highest level of luxury. To create these custom made clothes it requires great attention to detail and maximum level of craftsmanship which are affordable only by a few consumers globally. The garments may be 10 times more expensive than the average products in the market. The target consumers include celebrities and royal international clients. Few such brands are Chanel, Dior, Givenchy etc...
  
• Pret a Porter / Ready to Wear
  Pret-a-porter is a term for ready-made garments which are sold in finished condition in standard measurements. The clothing line would expand the luxury market to a broader audience, by maintaining the high-end craftsmanship at a lower entry price tag. The production speed is much faster when compared to Haute Couture and companies are able to produce more products every year. Even with a high price tag, pret-a-porter is more fashionable than luxurious as it is more up to date. The garments could be 3 to 5 times more expensive than the average products in the market. Few example for brands are Ralph Lauren, Saint Laurent, Laura Biagiotti etc...
  
• Diffusion (Second Young Lines)
  These are the garments which are inspired from Pret-a-porter and are produced via industrial manufacturing. Garments are priced 2-3 times higher than the average market products. Diffusion is the line where companies try to find an optimum spot between following the trends and using fashion to make iconic statements. The ability to create products which are consistent with a persuasive brand image is the key factor for a companies success.
  
• Bridge
  The garments produced in this segment are of right value for money. Production of these garments are mostly outsourced which are intended for daily occasion. The main aim is to connect the high end market to the mass market. Insipte of being cheaper and lower quality products, companies try to deliver up to date clothing and are also capable of following the trends with very little gap between production and sales.
  
• Mass Market
  In the Mass Market segment, garments become alike and basic which comes below the average market price tag. In this tier, only affordable brands compete, with unbranded products and private brands. Key importance is given to 'usefullness' over 'latest fashion', and so this segment does not qualify for fashion.