There are both positives and negatives to segmentation marketing. In a way marketers are curating products for a specific subcategory of consumers, you’re not creating a need or telling people that they need something new. Through segmentation, marketers are following Godin’s view of finding your smallest viable market and marketing product price or a method of organization of those customers. But is this helping or hurting the market?
We can look at Sephora and Ulta they organize their products by skincare or makeup and even within makeup, there are subcategories of foundations mascaras, eyeshadows, and much more. So when a consumer comes in looking for a foundation they know exactly where to go and find it. These products are also sold out at a very hype price point because they are luxury brands. Yet an expert in the field has revealed that drugstore brands and luxury brands have the same parent company, so the product is the same, the only difference is the packaging. luxury brands take a lot more time and effort into making their products look like they are better to appeal to their target audience compared to drugstore products where the formulation is not changed but the price point is much much lower. This is beneficial for the company because it can target two different markets with one product, plus and minus the packaging.
The kerin text describes this as one product and multiple market segments, by doing this the company is selling the same product at a much higher price for people who are willing to pay that but still get to benefit from selling a similar product at a lower price point to reach a market that otherwise would not have purchased this product thereby increasing their profit margin.
There are a lot of pitfalls of this as well, by creating so many choices especially because there are multiple brands trying to reach the same market you can create decision fatigue, People don’t know who to trust which brand is the right fit for them. There are simply too many options to research and find out about, so people either stick with whatever they already are using or try products that were recommended by word-of-mouth. This can be very difficult to overcome by marketing because marketing is the problem.
Trader Joe’s has done a really good job at overcoming this particular issue by decreasing the choice of products they carry in their store. When you go into the store all of the items are labeled with a cartoonish hand-drawn label saying Trader Joe’s and there’s normally one or two types of options for each item so your choice is limited therefore making it a lot easier for you to pick which item you want. This is why trader Joe has become a household name and a cult favorite.