Segmentation Builds Effective Brands

The year was 1996. Mission Impossible had just released, The Fresh Prince of Bel-Air had just aired its final episode, and pop culture was first introduced to Michael Jordan’s heroics in Space Jam (Buzzfeed).

That year, another hero was born. A brand so fearless that it entered a market space already saturated with dominant players to build a name for itself. Nike and Adidas were building their empires, and many argued there wasn’t room for another contender. Under Armour understood that in order to join the competition, they had to stand for something different.

The company’s first product was affectionately named “The Shorty”. This shirt’s wicking technology allowed athletes to stay comfortable and dry despite their intense workouts. Follow up products included gear designed to support athletes during colder weather and the “in-between” seasons (UnderArmour).

By gathering insights about the market and segmenting effectively, Under Armour was able to build a profitable and competitive brand.

What is Segmentation?

Segmentation is the process of looking at your market and dividing them into groups. An effective segmentation strategy is foundational for building a strong brand.

Segmentation is the first step in what is known by marketers as the STP model (ie. segmentation, targeting, positioning). Within this model, a company will divide potential consumers into groups, select a group that they want to appeal to (or target), and then position their brand to appeal to that segment. The goal of the STP model is to help companies make their brands attractive to the right customers.

As the first step in the model, segmentation is arguably the most important step and the one that is often underinvested in. Any mistakes made in the segmentation stage will be compounded in subsequent stages.

Ways to Segment

There are many ways to segment such as geographic, demographic, psychographic, or behavioral segmentation. [See Competitive Analysis]

Geographic segmentation occurs when a market is divided by city, state, or even country. Demographic segmentation occurs when a population is divided based upon factors such as age, income, or occupation. Psychographic segmentation relies on traits such as the consumer’s mental attitudes, personality, and values. Behavioral segmentation relates to when the consumer uses the product or what benefit they want from the product.

Despite the importance of this step, many company’s rely on “intuition” or incomplete data to perform their segmentation strategy. Other organizations utilize demographic and geographic segmentation because of how easy they are to conduct. We would caution that easy isn’t always better.

Take BIC for example. In 2012, BIC released their “BIC For Her” pens. One variation featured a pink and purple pen with packaging that read “designed to fit a woman’s hand”. BIC’s simplistic demographic segmentation resulted in a public out lash from talk show host Ellen DeGeneres and many negative reviews on Amazon.

Behavioral and psychographic approaches may be more complicated to develop but can lead to more relatable brands. Consider Gap’s Old Navy brand. Old Navy utilized a psychographic segmentation strategy to develop its image as the “fun brand”. In an interview with Forbes, vice president of global creative services and store design at Gap Inc. said, “Our core brand tenets are fashion, fun, family, and value – those pillars have always been at the core of our store designs.” Their psychographic segmentation strategy has helped the brand to stand out in Gap’s retail portfolio.

How to Segment 

At the marketing lab, we have had the privilege of working with several brands to help them develop effective and comprehensive segmentation strategies. Our analytics team utilizes proven statistical strategies to look past the surface correlations and determine viable segments that your company can choose to target.

Our team is composed of the Marriott School of Business’s best and brightest students under the guidance of experienced faculty member Matt Madden. Matt brings decades of analytics and consulting experience to the lab. Our uniquely structured team allows us to provide clients with innovative solutions for a fraction of the cost.

Are you ready to jump-start your segmentation strategy? Let’s talk.

Click here to contact our team!