In March 2013 Under Armors rival Adidas was ranked second in the U.S. sportswear market. At this time Under Armor sales were primarily coming from male athletes, out of their $2.3 billion dollars in sales only $500 million of that was due to women’s apparel. After watching Adidas try to target their female market and fail Under Armors CEO Kevin Plank knew he had to do something to break into this female market segment. Plank launched a $15 million dollar campaign called “I Will What I Want” using a Concentrated Niche Segmentation. This campaign featured women who had struggled in their careers to be successful or had critics knocking them down, in the end the women had become successful. The campaign took off and ended up bringing in a 28% increase in women’s sales and 42% increase in traffic to Under Armors website.
4 important things to remember when implementing segmentation strategies:
- Consumers preferences may vary, so you need to focus on segments where the majority would be and not focus on the minority consumers that may like something completely different. If you target your larger market the campaign is likely to be more successful rather than focusing on smaller segments.
- You want to keep in mind the risk of cannibalization which is when a company has products that are similar to each other that you end up making them compete against each other. This can be bad for a company when they have two many selections of a certain product, sometimes its better to simplify the product line and only stick to a certain amount of options.
- Sales-cost trade-off is when a segmentation increases which makes sales increase because what you are offering aligns with more consumers. The trade-off to this is costs also go up because you are using a multi product strategy which is more expensive than focusing on one project.
- Differentiated Segmentation can work if you are trying to target multiple market segments with the goal of sharing the market in each of the segments.
A new market segment that I have recently noticed is companies running quick ads on a new popular app called Tik Tok. It is an app when kids, adults, and celebrities make 15 second videos typically dancing or acting out certain lines from movies. Walmart used the app during the holiday season to promote their in store app that will let you know where things are located making your shopping trip faster. A segmentation strategy I would use is reaching out to the influencers on the app and have them use the product in one of their videos. I think using someone who is popular on the app opposed to a celebrity will bring more success because they already have this fan base. When these influencers endorse something all of their followers feel the need to than rush out and pick it up. I know when I see someone on their using a new beauty product and in 15 seconds seeing the result it has I am quick to than go and purchase it.
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