A brand is defined by the market segment it is targeting.

 

January 12, 2014

How Market Segments and Brand Segments Work Together

Market segments influence brand segments through various delineations. These two segments each define a useful segment in marketing today. A market segment is an identifiable group of customers (individuals or organizations) that share similar characteristics. These groups can be defined by any characteristic. Income level is one of the most common.

By contrast, brand segments may also define income, but not directly. Brand segments cover segmentation of the products themselves, and may indirectly refer to income by creating names like luxury brands and mass brands. The price and quality of the products defines which segment they fall into. Each brand segment tends to correlate with a certain status or income, but not always.

Here are some examples and further explanation of how market segments and brand segments work together.

How Income as a Market Segment Affects Brands

When market segments are defined by income, the segments are typically split into three categories: high, middle, and low. The high income segment (or premium market) is affluent and can afford top tier and luxury brands. When luxury brands are created, they are typically tailored to meet the preferences of the people who fall into this market segment. It is a smaller group because fewer people earn enough to afford luxury brands. People who desire luxury brands strive to earn at an income level high enough to enter the premium market segment, therefore the luxury brand segment influences the market segment.

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The middle market segment includes what is commonly referred to as the middle class. This class of people can afford items that are higher quality than value brands, but still offered at affordable prices. Most of the middle class are likely to buy what are deemed mass brands because these brands are typically affordable quality. This is the largest market segment by income, and the promotion of products in this segment is typically crucial to business success.

Those in the low income market segment cannot afford luxury brands or even many mass brands. Typically, they shop for value brands. These value brands are chosen because price is more important than quality. The people in this group may be able to afford mass brands on occasion, but their income does not allow them to frequently afford these products.

Brand Segments Influence Changes in Market Segments

As you can see, brand segments will affect consumer attitudes, and in particular, market segments. Some people in a particular income market segment may not be satisfied with their status and will buy outside of their usual brand segment to impress their friends. Thus, brand segments will influence market segments. Some luxury brands may also lower their prices to reach some of these people who are concerned with this status.

With this in mind, experts have found that the mass brand is beginning to shrink. This phenomenon occurred when the middle market segment started to purchase more luxury brands. More of the lines between market segments began to blur when value brands began producing products as high in quality as the mass brands. Products these days need to be higher quality with a lower price to appeal to any market, which means that luxury brands and mass brands are sometimes promoted to more than one market segment. Branding is therefore important in today's society to appeal to proper market segment.

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