How The Fashion Market Is Segmented: Defining You Place
In fashion it is very important to have a well defined play area, to create a distinct identity that will resonate with both your consumers and vendors. But many starting businesses get confused with the nuances of the market. When segmenting the fashion market, there are two spectrum to consider: accessibility and trend influence. Let’s unpack it.
First, you have the more traditional spectrum, that is mostly focused (not exclusively) on price. But while the cost of a garments has great influence between exclusivity and accessibility, to categorize your brand on this spectrum you also have to consider distribution — where and how is your product being distributed — and the quality of your garments, from being made-to-measure and handmade (in the case of haute couture), to being mass produced using low cost manufacturing processes.
Thus, at the top of the pyramid you have Haute Couture, french term used to refer to the most sophisticated sewing ateliers. Technically speaking, Haute Couture refers only to a few fashion houses approved by the French High Fashion Federation, but generally speaking, professional ateliers who make made-to-measure, handcrafted, intricate garments, such as evening wear could be called couture. It is important to know that distinction because many luxury brands, including power house Louis Vuitton, are not considered Couture.
Then it comes Luxury as we know it. Like in Haute Couture, the garments have high price tags and limited distribution to maintain the exclusivity and appeal. However, they are generally “ready-to-wear” products, meaning the final products are made available in store and customers take it as it is. Obviously, to add even more value, many houses will make made to measure items to its wealthiest clients or offer customization. Usually there will be a high level of crafting to the manufacturing process to add to the uniqueness of the product. For many luxury brands, more non-seasonal items like leather goods, accessories and outwear tend to be the cash cows of the company.
Mid-level you have Diffusion and Premium brands, which are different by definition but have the same goal: provide high standards of quality to a larger number of consumers. In order to accomplish that, companies will usually source the best materials but incorporate industrial manufacturing to it, or the opposite, use less expensive material, but keep high manufacturing standards. These make for great products with a better price tag, although not necessarily cheap. Another difference is that here you see a much larger distribution than at the top of the pyramid.
And here comes the difference between the two types: diffusion brands are sub-brands of well-know designers, like See by Chloé from Chloé , or Emporio Armani from Giorgio Armani, usually created to reach a larger market. Premium brands are usually standalone and their whole premisse is to offer a balance of quality and price. Generally speaking, you will often find in the same store items in very accessible price point and close to designer prices as well.
In mass market, you have the fast-fashion brands, but not only. Like the name suggests, the goal is to serve a large audience, maximize distribution and keep prices low. Differently than premium brands, the price point span (the difference between cheapest and most expensive item) is smaller and the product mix have both breadth and depth: there are a lot of item options and large quantities for all items. There will be “more expensive” mass market brands than others, but nonetheless they have the same goals and structures. It’s the case, for instance of Gap and Old Navy.
Now, it is important to know that not every mass market clothing brand is a fast-fashion brand. The term refers to brands who don’t follow the two-to-four season per year system, and rather, launch new products frequently throughout the year based on current trends. Usually they will try to capitalize on a spiking but shorter lived demand for specific items, and when the trend fade, move on to the next fad. That is the case of Zara or Forever 21. Other brand will still bring novelty to their store frequently, but their goal is not to track fads, nor to repeatedly launch new collections. Think of Uniqlo, for example, which keep a lot of the same products in rotation while launching new collections a few times a year.
And finally, you have the Discounted segment , which build their brands around selling unsold inventory from other prestigious brands with a markdown. The most prominent in the US market is TJX Group (TJMaxx, Marshalls, HomeGoods), but there are several other companies around the globe with that goal. The focus of these companies is more logistics and distribution than anything else, as they don’t manufacture their own products.
After figuring out the pyramid organization, the second spectrum I named “Classic vs. Trendy” refers to the design approach of a company. Here I am not suggesting that the style of the brand is any of these two terms, but rather how brands approach the development of their collections every time around.
Classic is not about traditional style, but rather that the brand focus on statement designs that are repeated over and over again. The staple items will always be there, like Armani’s suits and Levi’s classic jeans. On the other side, you have brands that are constantly playing with fashion and trends, like Gautier and fast-fashion favorite, Zara. The goal with this spectrum is to identify who are truly tour competitors. Just because you have a similar company structure with a same demographic audience (spectrum one), doesn’t mean you are competing for the same pockets. Spectrum two aims to capture a bit of the emotional side of fashion, which is greatly built from design and branding, as they serve different wants and needs from consumers.
As you play around with this structure you can also continue to narrow down the segments and even select a new spectrum for the horizontal line. What is important is to understand the functioning of the system and go from there.
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