Market Segmentation

The Gap in Market Segmentation

What is the point of market segmentation? Really, what is the point? As my Uncle Jim used to say, "If you throw enough dirt on the wall some of it is going to stick, ain't it?" So why don't companies just throw a bunch of good products at the people and just see who buys what, if anything at all? That might have worked along time ago, but now, the answer in short, is competition. Today, there are to types of companies, those that are profitable ... and those that are profitable. My point is, companies don't have time to keep "throwin' dirt," they have to find that one piece of dirt that sticks and keep using it. Anderson and Vincze in Strategic Marketing Management, (pg 226) define market segmentation as "the process of dividing a large market into smaller groups or clusters of customers with similar characteristics." Basically, market segmentation is the filter that determines what dirt sticks, and what doesn't. In addition, if I understood one point that has been repeated over and over in class, it's that the key to success in business in the future is the relationship between the buyer and seller. Segmentation permits closer relationships between buyer and seller and the ability to identify new marketing opportunities as Gap Incorporated has done with me.

The first time that I remember being able to go shopping for my own clothes, with my own money, was when I was hired for my second job at the age of 16 (working in my grandparents' florist). Boy was I proud of myself. So, where was a 16 year old to get some cool clothes at a cheap price? Old Navy, "Duhhhhhh!" Then later as I matured in the last couple of years of high school, the Gap was "the bomb!" As college started, I began my first real office job as a stock broker (A.G. Edward's, Inc.). The guys in the office were more mature, young and preppy. I soon found myself in Banana Republic, now those clothes were "tight!" It was at this same job studying stocks that I became aware that Gap Incorporated owned all three of the clothing stores that I literally grew into. It was then that I was able to perceive the class differences at play between Old Navy, the Gap, and Banana Republic. These three companies, in addition to Gap Kids and Baby Gap, provide an excellent example of market segmentation.

How does market strategy effect market segmentation? The old saying goes that "the clothes make the man," and our concept of "materialism" is most expressively represented in the material, or fabric, that we choose to wear. Although internalized demographic notions affect most of the patterns of consumption that are analytically distinguishable, no market, except maybe housing, reflects self-identification based on internalized forms of class-consciousness more than clothing. From the uniform work clothes of the working poor to the casual elegance of the upper middle class to the high fashion of the latest designers from Italy and around the world, people define themselves by the way that they dress. Rather than micro-individuating clothing styles, buyers tend to select clothes based on what is considered desirable in the community in which they live. Even perceived miscreants and social out-liars such as "punks" and "goths" follow discernible mandates in terms of attire. Most consumers will develop a sense of brand loyalty with respect to clothes if given a chance.

Contrarily, it must be said that there must be "the man (or company) who makes the clothes that makes the man." Gap Inc.'s impact on market strategy has been to "make middle-class clothes available to the lower classes at Old Navy; solid middle to upper-middle class-type clothes at struggling middle-class prices at The Gap; and yuppie/upper-middle-class-level clothing at solid middle-class prices at its 'high-end store, Banana Republic." Even conservative analysts agree that this strategy has met with a great deal of success. iWon.com's market profile of Gap Inc. describes their market strategy succinctly, "Rather than integrating the various customers, income levels and lifestyles that the Gap, Banana Republic and Old Navy collectively target, each has thrived as a distinct entity - while avoiding the constant rumor of a sell-off." This allows Gap, Inc. to reach out to the entire retail clothing industry rather than tying itself to one demographic. iWon describes these as "three sales avenues, three growth strategies and three different audiences, putting Gap Inc. in equal competition with the sophisticated style of Ann Taylor and the bargain clothing at J.C. Penney." iWon goes on to say, "The Company now operates over 3,500 stores worldwide, and has crept into nearly every apparel niche. Its signature chain store occupies the tasteful 'middle market,' and may be found in no less than 1,767 North American locations; 393 in Canada, Europe, and Japan."

According to Parija Bhatnagar of CNN, A breakdown of the company's sales results for the last year shows that for the first time, sales at its Old Navy chain -- offering trendy, affordable items such as cotton T-shirts for $10 -- outpaced those at Gap, which was struggling to define its product mix." Old Navy is Gap, Inc.'s most profitable