FASHION

MARKET
SEGMENTS
cbcs:
Fashion in Everydaylife
spring semester practical examination
INTRODUCTION

The fashion industry is a multi-billion global enterprise making, buying,

and selling clothes. Some people distinguish between the high fashion
industry and the apparel industry, but in the 1970s, the boundaries got
blurred. Fashion is best defined as a style of clothing and accessories
given to people. There might be a difference in brands from runway
clothes shown in Paris and New York to selling ordinary sportswear and
street style sold in the mall.
However, the fashion industry encompasses the design, manufacturing,
marketing, advertising, and promotion of all types of appeal, from the
most expensive and royal clothes to regular normal day clothes.
Sometimes the broader term refers to myriad industries and has
employed millions of people internationally
SEGMENTATION, TARGETING,
POSITIONING(STP)
The process of segmenting the market is deceptively simple. Seven basic steps
describe the entire process including segmentation, targeting, and positioning.
In practice, however, the task can be very laborious since it involves poring
over voluminous data, and requires a great deal of skill in analysis,
interpretation, and some judgment. Although a great deal of analysis needs to
be undertaken, and many decisions need to be made, marketers tend to use the
→ →
so-called S-T-P process, that is Segmentation Targeting Positioning, as a
broad framework for simplifying the process. Segmentation comprises
identifying the market to be segmented; identification, selection, and
application of bases to be used in that segmentation; and development of
profiles. Targeting comprises an evaluation of each segment's attractiveness
and selection of the segments to be targeted. Positioning comprises the
identification of optimal positions and the development of the marketing
program. Perhaps the most important marketing decision a firm makes is the
selection of one or more market segments on which to focus. A market segment
is a portion of a larger market whose needs differ somewhat from the larger
market.
 "The starting point in developing a firm’s value proposition, therefore, relies on analysing the fashion industry and breaking down its ‘players’
into ‘chunks’ with similar characteristics, behaviours and value offerings."

we are going to address the following topics:

1. Macro-criteria for segmenting the fashion industry

2. Price-based segmentation of the fashion industry
3. Luxury segmentation categories
4. Masstige

The importance of understanding who ‘your business is

talking to’ is echoed by the Business Model Canvas, which
pushed entrepreneurs to continually question the ‘internal
logic’ of their business.
The traditional business theory uses the STP
(Segmentation, Targeting, Positioning) framework to
identify the ‘space’ that a brand wants to take up in their
customer’s mind.
MACRO-CRITERIA FOR SEGMENTING
THE FASHION INDUSTRY

Segmentation relies on the set of variables we choose in order to create user

groups. We are going to discuss 3 of the most relevant segmentation criteria
and what kind of opportunities they provide to the final user. Each
segmentation criteria will provide us with a set variable which we’ll need to
address through our business model.
Product end users:
According to these criteria, we can create product categories such as
external clothing, underwear and beachwear. By adding the nuance of the
‘occasion of use’ we can further split products into further categories such
as sportswear and swimwear. A particular ‘use’ will inform many decisions
relative to the values that a brand wants to deliver, as an intangible added
value to the product. A company like Nike, being a sportswear company
created a brand attached to the value of great sportsmanship and athletic
accomplishment, perfectly synthesised by the popular slogan “Just Do It”.
 Groups of clients:
Groups of clients can be split into two major categories, intermediate
clients and end customers. This division relates to whether firms are
reaching their final consumer via a vertically-owned retail store or through
wholesaler intermediation. Furthermore, end customers can be divided
according to additional segmentation criteria: age, gender, geographical
location, psychographic behaviour etc. As discussed in other posts such as
“What The Fashion Industry Can Teach Us About Distribution and Retail”.

Price:
This can be the most immediate segmentation criteria, allowing fashion
firms to identify direct price-related competitors. Creating a distinction
between products on the grounds of price, allows managers to represent the
fashion industry as a pyramid split into 5 tiers of price: couture, ready to
wear, diffusion, bridge, mass. More about this point will be discussed later.
Fashion industry segmentation allows to compare brands, rather than products, and potentially identify
what kind of value proposition is at the centre of your business model. Price and benefits, in particular, can
be compared easily by breaking them down in these 5 statements:
More for more
More for the same
More for less
The same for less
Less for much less
Pricing, according to our framework, is one of the most influential elements to inform a positioning strategy,
and it should be addressed in further detail, in the next section of this post.
2. Price-based segmentation in the fashion
industry

According to the price segmentation of the fashion industry, we can identify 5

segments of pricing in fashion apparel:
Haute Couture
Pret a Porter
Diffusion
Bridge
Mass
HAUTE COUTURE
This segment relates to only a handful of French couturiers who are able
to withstand the standards of craftsmanship required by this degree of
luxury. Haute Couture involves a high volume of skill-intensive labour to
create made-to-measure clothes which can be afforded by only a handful
of customers globally. Haute couture, is more linked to the dream factor
delivered by fashion media, then to the actual sale of the clothing itself.
Haute couture could compare it to the Formula 1 segment of the
automotive industry: the show factor of racing cars ‘trickles down’ to
lower tiers of the automotive industry, but still ignited passion and desire
into customers who may then approach much more accessible cars.
SEMI COUTURE
Unlike true couture clothing, which must be handsewn to earn the
designation, semi-couture pieces are mostly machine-made. Some
come with loose seams so they can be ripped apart and finished by a
tailor.
Like makers of other high-end goods, the designers are trying to
capitalize on consumers' thirst for exclusivity. Retail consultant Kurt
Salmon says spending on luxury apparel in the U.S. hit $10 billion last
year and projects it will rise 6% to 8% a year through 2008. But the
traditional couture business continues to shrink along with the number
of women willing to pay $100,000 for a gown.
Some say the whole idea of haute couture -- which literally means high
sewing in French and dates from the 19th century -- is outdated.
Women no longer dress up as much as they did in the 1950s and
1960s, when Audrey Hepburn was outfitted this way by Givenchy. They
also don't have the inclination or money to travel to Paris for multiple
fittings. The quality of lower-priced Italian and American ready to wear,
meanwhile, has improved, giving them an alternative.
PREMIUM FASHION
A premium brand is a brand that markets and sells its products to
customers at higher price levels in exchange for a higher quality or
better experience.
It seeks to have customers that are normally shopping at value brands
upgrade to the premium version and staying loyal to it, due to the
higher value for money.
Luxury doesn’t meet a need or solve a problem. Luxury consumers
aren’t interested in more features giving better value for money —
that’s a premium marketing angle. Luxury consumers want to know
about a brand’s heritage, prestige and uniqueness; it’s identity which
counts, rather than a competitive edge.
They are displays of wealth that revolve around strong social cues such
as social elevation, a sense of timelessness, priceless experiences and a
strong hedonistic drive.
READY TO WEAR/PRET A
PORTER.
Pret a porter is a line which was created by Italian manufacturers who wanted
to create a more accessible (yet still expensive). This clothing line would expand
the luxury market to a wider audience, by maintaining the high-end
craftsmanship at a lower entry price. In comparison to haute couture, the speed
of production and TTM (Time to Markets) is lower, as companies are able to
create more collections per each year (including two main collections, a pre-
collection, a cruise collection and flash collection). It has to be noted that even if
the price is high, pret-a-porter it’s more fashionable than luxurious as it is more
about the present than the past, it’s more up-to-date than timeless.
DIFFUSION.
This line is where companies try to find a sweet spot between
following the trends and using fashion to make iconic
statements. Fashion inspirations are derived from higher-tier
categories but are produced via industrial manufacturing. In
this segment key success factors include the ability of a
brand to create products which are consistent with a
persuasive brand image, and the ability to leverage industrial
processes to create a higher production volume. As we follow
the price point down, we can see how fashion media comes
to ‘package’ these clothing segments with a communication
strategy aimed at ‘complementing’ the products with
additional service elements which help in increasing the
customer perceived value.
BRIDGE.

This is the line of pricing usually associated with fast

fashion. Despite being associated with lower-quality
products, companies can still be very successful in
delivering up-to-date clothing, capable of following
fads and trends with little gap time between creation
and sales.
This is a category of products that resents from two
types of competition, the tiers above, with a better
quality product, and the tier below, with more
convenient price points. It can be noted that in any
case, fashion is a competitive industry and no segment
is easy to approach.
MASS.

At this stage, products become increasingly basic and

undifferentiated. In this tier, only affordable brands
compete, together with private labels and unbranded
products. This segment does not qualify for fashion, as
the types of items sold are more ‘useful’ than
‘fashionable’ and do not resent from trends.
HIGH STREET FASHION

Street fashion is fashion that is considered to have

emerged not from studios, but from the grassroots
streetwear. Street fashion is generally associated with
youth culture, and is most often seen in major urban
centers. Magazines and Newspapers like the New York.
Times and Elle commonly feature candid photographs
of individuals wearing urban, stylish clothing. Japanese
street fashion sustains multiple simultaneous highly
diverse fashion movements at any given time.
Mainstream fashion often appropriates street fashion
trends as influences. Nowadays, street fashion is
getting more and more popular. Most major youth
subcultures have had an associated street fashion.
Streetstyle is different all around the globe.
FAST FASHION
Fast fashion grew during the late 20th century as manufacturing of
clothing became less expensive — the result of more efficient supply
chains and new quick response manufacturing methods, and greater
reliance on low-cost labour from the apparel manufacturing industries of
South, Southeast, and East Asia, where women make up 85-90% of the
garment work-force. Labour practices of fast-fashion are often
exploitative, and due to the gender concentration of the garment
industry, women are more vulnerable Retailers who employ the fast
fashion strategy include Primark, H&M, Shein, and Zara, all of which have
become large multinationals by driving high turnover of inexpensive
seasonal and trendy clothing that appeals to fashion-conscious
consumers. Fast fashion greatly impacts the environment. The global
fashion industry is responsible for ~8–10% of global carbon emissions
per year, which fast fashion is a large contributor of, especially as the
low-cost of production favors synthetic materials, chemicals, minimal
pollution abatement measures, with quick turnover leading to excess
waste.
3. LUXURY SEGMENTATION
CATEGORIES

If fashion apparel provides a high degree of complexity, the same can be

said about the luxury industry. In this article we focus on the concept of
luxury to clarify how it relates to the concept of fashion: The Value of Luxury
in the Fashion Industry. Segmentation of luxury products calls for a very
articulate marketing strategy. Luxury as a concept can in itself be
differentiated in several tiers:
Supreme Luxury
Lifestyle Luxury
Accessible Luxury
Masstige
 Supreme Luxury:
This category comprehends unique pieces, which are made to measure,
handcrafted with precious metals, sold – or better yet – unveiled only for
an exclusive audience (e.g. Chanel). Very few brands can be ascribed to
this category of products and as a result, the marketing strategies used to
maintain this privileged position are usually quite unique.
Lifestyle Luxury:
In this category we find a series production (within limited editions) of
products which are high quality and very fashionable, featuring heritage
branding and a clear product identity, distributed selectively (e.g.
Salvatore Ferragamo). This segment tries to strike a balance between
being luxurious but achievable.
 Accessible Luxury:
This category is for high fashion content, with a good pricequality ratio, made accessible and
desirable through powerful communication (e.g. Swarowsky). As in the diffusion line for the fashion
apparel segmentation, the role of communication in this category of products is focused on delivering
an element of exclusivity to an otherwise widely available item.
Masstige:
The items belonging to this category are sold at the price of ordinary consumer goods, while
attempting to emulate the style, communication aesthetics and distribution visibility of luxury
goods (Chanel limited editions by H&M). This is a unique marketing strategy devised by fashion
companies which are capable to exchange the luxury allure (Chanel) with the H&M Cool Factor.
The last category of luxury provides additional subdivisions, which we’ll look into with more detail
in the next section. Masstige is in fact short for Mass-Prestige and is a unique product category
which strives to hit a perfect balance between a lower-quality product and a luxury experience
markup.
 4. MASSTIGE

In a society with wide-spread well-being, the desire for luxury crosses

the borders of people who can actually afford a Hermés bag. Customers
tend to seek self-gratification by indulging in daily pleasures, but in
order to be experienced ‘daily’ price points need to stay fairly low. This
sense of short-term gratification allowed for the development of
products, which despite being comparable to commodities are perceived
as luxury goods. This category of products is called Masstige as they
share a list of similar characteristics:
Masstige products are a retail category that includes brands and
products that have high-end prestigious characteristics but are sold
at prices and in locations that make them accessible to mass
consumers.
Follow the blurring division between the prestige and the mass
segments of the market. These product leverage the experience of
owning a luxury brand, within a price range which is affordable.
 Allow for brands to deliver a fashion statement that mixes both
mass-produced and prestigious clothes to obtain a mix-and-
match approach. As opposed to a “total look” customers can
decide to purchase a very high end, expensive items and pair
them to more affordable items from ‘lower’ fashion segments.
This category of luxury, in fact, was created by studying the
behaviour of rocketing consumers. Rocketing consumers trade off
the purchase of lower-end products in order to buy top-tier
products in other categories.
Masstige, therefore, is a product category which was created as a
response to the complex relationship which is being developed
between the mass market and the luxury category. Further sub-
segments can be identified in the Masstige category, based on how
these products interplay with customer motivations.
 Entry Lux (Entry Level Luxury):
This refers to entry-level, lowest-priced models for brands normally associated
with luxury, like BMW city cars. This category allows companies to have a window
of opportunity to start a relationship with a customer. By establishing this
connection early, the opportunity to maintain customer loyalty increases.
Populux (Popular Luxury):
Low-cost consumer goods, still perceived as fashionable. Examples are H&M and
Zara. In particular, in the Inditex group, we have further subdivisions, such as the
brand Massimo Dutti. Another extraordinary example of this category relates to
the Karl Lagerfeld limited edition collection sold at H&M, which we mentioned
above. This is maybe the quintessential masstige category.
Commodity Chic:
This relates to the art of making ‘special’ a product which was once differentiated.
The food industry is making this phenomenon now particularly apparent.As a
result, the mass market is no longer a monolithic category. This category fulfils
the need of customers to ‘reward’ themselves with an ordinary product is
presented in a more appealing way.
 As compared to true luxury, however, masstige brands
compete primarily on communication. This is achieved by
elevating the perceived value of a product by associating it with
celebrities and testimonial campaigns, creating (artificially)
limited editions.
Masstige does not engage with the real jet society which instead
looks for an opportunity for true differentiation from any form of
mass experience.
 CONCLUSION
Because of what we have discussed, we can better understand how companies make use of
this information to adopt an STP (segmentation, targeting, positioning) framework and
deliver a unique value proposition to its customers.
Thanks to segmentation analysis fashion firms can:
Pursue market positioning strategies
Identify growth strategies (within a chosen market segment)
Define what level of integration and control should be implemented in their distribution
channels
Clarify the degree of business complexity pursued by the company in order to fulfil the
needs of their customer segment
Develop new collections which are better aligned with an overarching company strategy
All in all, firms need to understand and map the associations of their brands and relate it to
their market customer behaviour to inform their strategic decision-making processes.
 presentation by:
Prakriti Kulshrestha
branch: btech cse core
en. no: 210078