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Market Segmentation: A Key Strategy for Business Success | Learn from Gymshark

Updated: Sep 19, 2023

Market segmentation is an essential strategy used by businesses to identify their target market and gain a deep understanding of their desires and requirements. In this blog post, we will explore the concept of market segmentation and its real-world application through the success story of Gymshark. Whether you are a business teacher seeking to enrich your students' knowledge or a student eager to learn about effective business strategies, this article will provide valuable insights into the power of market segmentation.


Learn more by watching the video and reading the blog post below:


Understanding Market Segmentation


Market segmentation is a dynamic tool that enables businesses like Gymshark to divide their potential customer base into distinct groups, known as segments, based on various factors and characteristics.


These factors commonly include location, demographics, behavior, lifestyle, and income. The primary objective of market segmentation is to acknowledge the significant differences among people's wants and needs. For instance, if a business were to sell generic t-shirts without catering to specific customer preferences, it would struggle to attract a substantial customer base. By segmenting the market, businesses can tailor their products and marketing campaigns to effectively meet the unique needs of each segment. This strategic approach allows them to analyse the profitability and potential for growth within each segment, enabling them to target specific markets and maximise sales and profitability.


Exploring Market Segments


To delve deeper into market segmentation, let's explore different types of segments and how Gymshark has effectively implemented them.


Geographical segmentation involves dividing the market based on the location of potential customers. Businesses often adapt their product offerings to suit the preferences and needs of customers in different regions. For example, global giants like McDonald's tailor their menus to cater to specific regional tastes. In contrast, Gymshark, a company that began as a startup in 2012, has maintained consistent core products regardless of customer location. Founded on the belief that young gym-goers worldwide aspire to look and feel good during their workouts, Gymshark provides functional and stylish gym gear designed to meet these universal desires.


Demographic segmentation focuses on the characteristics of the target market, such as age, gender, race, religion, and sexual orientation. Understanding the demographics of the target market is crucial for any business. McDonald's, for instance, caters to young children with its Happy Meals, offering smaller portions with healthier options alongside a toy or book. In contrast, fashion retailer ASOS targets women seeking affordable, trendy fashion. Gymshark's main target demographic revolves around age, particularly 18-25-year-olds of any gender. By understanding the wants and needs of this demographic, Gymshark has effectively tailored its products and marketing strategies to resonate with its target audience through social media platforms and influential personalities.


Behavioral segmentation analyses consumer buying behavior and its variations across industries and market segments. Understanding the behavior of the target market is crucial for businesses to plan their product production and execute timely marketing campaigns. Gymshark experiences year-round sales with seasonal peaks coinciding with industry trends. Leveraging the behavioral patterns of their target market, Gymshark has successfully employed sales events to create a sense of urgency and drive impulse purchases. For instance, their Black Friday sale campaign, aptly named "Blackout," utilised countdown timers and the fear of missing out to encourage their target market to make purchases, resulting in record-breaking sales.


Lifestyle segmentation revolves around the hobbies, interests, and preferences of individuals based on their way of life. Recognising shifts in consumer lifestyles can help businesses identify emerging trends and target specific market segments. For example, the rise of veganism has prompted many businesses, including Subway, to introduce plant-based options to cater to this growing segment. At Gymshark, understanding their target audience's lifestyle choices has been fundamental to their growth and success. With a clear focus on 18-25-year-olds passionate about fitness, fashion, and music, Gymshark has strategically tailored their products and marketing campaigns to align with their target market's interests and hobbies.


Income segmentation examines the earning potential and disposable income of the target market. It is essential for businesses to consider these factors before launching a product or targeting specific market segments. Luxury brands like Tesla and Rolex, for instance, target customers with high earning potential and substantial disposable income. Gymshark targets customers with higher disposable income, despite their target market's younger age and earning potential. While their gym wear is pitched as affordable, it still positions itself as a premium brand, meeting the target market's demands for high-quality, fashionable gym attire.


Benefits and Drawbacks of Market Segmentation


Using market segmentation offers several benefits to businesses, such as understanding and effectively meeting customer needs, increasing brand loyalty, reducing price sensitivity, and driving revenue and profitability. However, conducting market segmentation can also present potential drawbacks, including increased costs associated with research, development, and marketing efforts, as well as the risk of losing sight of a business's core purpose or values.

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