Segmentation and Target Market 1

Market segmentation divides the market into smaller clusters to promote products and services differently for each and are specific to the target market.  It divides larger markets into smaller markets such as gender or age with shared characteristics.   Target marketing directs the marketing activities toward a group of consumers. Kate Spade’s market segmentation uses many factors that include four categories:

Geographic segmentation that divides consumers based on region, climate, domestic, international, urban, rural, and suburban. 

Demographic segment includes age, gender, ethnicity, social class, occupation, family status, education, and income.

Psychographic segmentation includes values, beliefs, attitudes, and lifestyle to group the market.

Behavior segmentation uses variables that include price, loyalty, behavioral patterns. In 1993, Kate Brosnahan and her husband Andy Spade launched Kate Spade initially specializing in women’s handbags.  The company matured establishing a recognizable brand and in 2007, the company was acquired by Liz Claiborne and increased the company’s brand globally.  Kate Spade’s market segment is identifiable, accessible, substantial, unique, and durable and results in segments that are similar within the segment and different between segments. Initially, the Kate Spade brand launched accessories only and open their first store in SoHo, New York.  The company expanded their line by including handbags, clothing, jewelry, shoes, stationery, glasses, fragrance and home décor and the brand was easily recognizable with their core values of classic shapes and graphic elements. Competitors include Coach, Michael Kors, Marc Jacobs, and Tory Burch. 

Geographic

The geographic segmentation include region, size, population, and climate.  Kate Space’s geographic segmentation is North America and four operating segments internationally that include Japan, Southeast Asia, Europe, and Latin America.  Kate Spade caters their brand to women, men, babies, and pets with 140 retail and outlet shops across in the U.S. and 175 international shops in every time zone and continent. The brand provides “crisp color, graphic prints, and playful sophistication are the hallmarks of Kate Spade”, Kate Spade (2015). 

Demographic

Demographic segmentation, according to Kotler and Keller (2006), “the market is divided into groups on the basis of variables”, p. 247.  This segment includes variables such as age, gender, income, nationality, family life cycle, race, and social class.  The purpose of demographic segmentation is to distinguish consumer groups and the segments make is easier to measure demographic variables.

Kate Spade’s demographic age is 19-29, 29-39, 39-49, and 49 plus that includes all genders.  Family size and lifecycle includes bachelorettes, married with or without children, full nest, or empty nest.  Income ranges from less than $35,000 to $100,000 and caters to all nationalities and ethnicities.  The company successfully launched Jack Spade targeting a male demographic within the same age range.

Psychographic

Psychographic segmentation, according to Kotler and Keller (2006), “is the science of using psychology and demographics to better understand consumers”, p. 252.  In psychographic segmentation buyers are grouped by their lifestyle and variables that include activities, interests, opinions, values, and attitudes that include culture, sports, and outdoor oriented consumers.  Kate Spade’s psychographic segmentation includes current and post college students, young professionals, married couples, and home makers of all generations.  They are energetic, active consumers that enjoy color, bold prints and patterns, and enjoy making fashion statements.  Identifying the ideal customer as confident and whimsical is Kate Spade’s brand for psychographic segmentation.

Behavioral Characteristics

Behavioral segmentation, according to Kotler and Keller (2006), divides groups according to their “knowledge of, attitude toward, use of, or response to a product”, p. 254.  Behavioral variables include occasions, user status, usage rate, loyalty status, readiness to purchase stage, and attitude.  Kate Spade uses behavioral segmentation by dividing groups primarily by age and gender and consumers are loyal to the brand gravitate toward specific behavior patterns.  Consumers may purchase only sale items, or use coupons provided by the company.  Consumers may only purchase products after a positive review on the Internet and monitoring those behaviors is critical to continually increase consumer purchase.  Negative reviews may impact the company, and it is critical for the brand to persistently review this data to make any necessary changes

Final Targets from the Segmentation

Kate Spade’s primary target audience is women 18-30, and are trend conscious, independent, young urban professionals, adventurous, single, and financially stable.  They gravitate toward color and prints and prefer the unusual to make a statement with fashion.  The secondary target audience is women 30-60, that are nostalgic for the classics, married with children, and professional.  This group lives in suburbia, aware of current trends but are not followers with disposable income.  Kate Spade has specific targets from segmentation and the break down includes:

Hearts –  women, current and post college student age 19-29 - the aspiring luxury consumer where the heart believes in the brand

Clubs –  professionals, non-professionals, and home makers age 29-29 -  Girl’s only clubbers that are starting careers and identifying their personal styles and loyalty to brands begin formulating

Spades – professionals, non-professionals, and home makers age 39-49 - encompasses the largest consumer segmentation who is young, vibrant, and enjoys experimenting with bold patterns and bright colors.  This consumer wears Kate Spade jewelry, accessories and limited editions.

Diamonds – professionals, non-professionals, and home makers age 49+ - the affluent consumer exudes Kate Spade from head to toe and is the most loyal consumer that includes dressing her children, friends, home, and pets with the brand

Positioning Statement

Kate Spade’s positioning statement is they are “an internationally recognized luxury brand predominantly geared toward young professionals who have an affinity for classic and timeless accessories with a modern twist”.  The company focuses on Internet presence coupled with print ads.  The current strategy, in regard to product identification, is to include stationary, home, clothing, and jewelry; however, the recommended strategy is to shift back to accessories because consumers associate the brand with accessories such as hand bags, sunglasses, and jewelry that are the “gateway” to the brand. Merging brand information and e-commerce affords an online presence to engage with the site whenever and wherever possible.  Their touch points are in store, website, print, email, and social media on a global scale.

Conclusion

Kate Spade is a luxury brand, and continues to identify and profile distinct groups of consumers that differ in needs and preferences.  Establishing and communicating these distinctive benefits of the company’s market offering positions them for continued success.  Identifying their target customers and demographics allows the company to combine fashion with functionality, to meet the consumers accessory needs.  Researching the market identifies theKate Spade customer and segmenting the market with market research ensures sustainability within the competitive market.  Forming segments allows the company to identify geographic, demographic, psychographic, and behavioral characteristics to associate different characteristics with consume response.

Kotler and Keller (2006) state, “regardless of which type of segmentation scheme is employed, the key is that the marketing program can be profitably adjusted to recognize customer differences”, p. 247.  Dividing consumers into subsets of commonality, age, culture, interests, and priorities is critical to implement strategies for targeting distinct consumers and their buying power.   Kate Spade launches “Kate Spade Saturday” to offer several price points hoping to appeal to more consumers.  However, the endeavor failed after three years because lowering prices and remaining competitive did not work because competitors can replicate fashion and offer lower prices. Customer segmentation is critical to reach customers; however, only considering the most apparent categories is not effective in today’s competitive market.