Market Segmentation | How Gymshark use Market Segmentation Explained. - YouTube

Market segmentation is a process many businesses  use to identify their target market and fully  

understand their wants and needs. This video explores the concept of  

Market Segmentation with supporting examples  by applying the process involved to Gymshark.

Market segmentation is a business tool  which aids businesses such as Gymshark  

to divide up the market or potential customers  into groups which are known as segments based  

on several key factors and characteristics. These commonly include location, demographics,  

behaviour, lifestyle, and income. The key reason for market segmentation  

is based on the vast differences  between the needs and wants of people. 

For example, if we set up a business selling  t-shirts today and just aimed to sell one  

generic design to the whole market, the chances  are we may not attract many customers at all,  

as we fail to meet anyone’s  specific needs and wants. 

Therefore, businesses segment  the market into groups of people  

according to their differing wants and needs. This allows them to effectively focus  

and tailor their products and associated  marketing campaigns at them specifically. 

Once potential customers have been split up  into segments, the business is then able to  

analyse each one in turn to assess the potential  profitability or long-term growth of each one,  

with the aim of targeting a specific segment or  collection of segments to market their products  

too and maximise sales and profitability. Once the business has decided on the specific  

segments of the market it will be  aiming its products or services at,  

it will then develop and apply an appropriate  marketing mix to attract and convert this  

specific target market into paying customers. Let’s take a look at the different types  

of market segments in more detail and some  examples of market segmentation at Gymshark.

Splitting up the market by the  location of potential customers  

is also known as geographical segmentation and is  essentially based on where the target market live. 

Businesses have a wide range of options when  it comes to the products it offers according  

to the target markets location and often  choose to alternate their product offering  

according to the location of the customers. This is more apparent in global businesses like  

McDonalds whose menu varies across the world  according to the location of their customers,  

for example in France they have the  Mc Baguette and in the Philippines  

a speciality is the Mc rice burger. Gym Shark have grown from a start-up in  

2012 where founder Ben Francis and a group  of his high-school friends got taught how  

to sow by his grandma and produced the early  products in his parent’s garage into a global  

business which now operates within 131 countries. However, unlike McDonald’s, the core products at  

Gym Shark remain the same regardless of the  customers location, the business was founded  

on a belief that young gym-goers wanted  to look and feel good going to the gym,  

so Ben Francis had a vision of providing them  with functional gym gear which performed well  

and looked very good, which remains true  regardless of where the customer is located.

Demographic segmentation is based on the  characteristics of the target market and include: 

age, gender, race, religion, and  sexual orientation amongst many others. 

Considering the demographics of the target  market and the products suitability for them  

is vital for any business. For example, McDonalds targets  

the age demographic of young children with their  happy meal option, providing a smaller quantity of  

food with healthier options such as carrot sticks  alongside a novelty item including a toy or a book  

which allows the business to attract and engage  the younger audience with the potential of turning  

them into a lifelong loyal customer. Whereas a business such as Asos which  

sells dresses and trainers amongst other  items are targeting the gender demographic  

of women looking to buy what they call the  “freshest fashion” at an affordable price. 

Gymshark has a very clear target demographic which  it aims it products at, there main target market  

in relation to demographics is based on age, with  a clear audience of 18–25-year-olds of any gender. 

Gymshark know and understand the wants and  needs of their audience and have succeeded  

in reaching them through not only developing  products to meet their wants and needs  

but by using extremely effective  promotional methods via their  

social media platforms which  have over 5 million followers,  

combined with the use of influencers which this  demographic follow and take inspiration from. 

Gymshark are famous for being one of the early  adopters of the influencer marketing model  

within the health and fitness industry, within  which they effectively targeted this demographic  

through YouTubers including Lex Griffin  and Nikki Blackketter amongst many others.

Behavioural segmentation predominately  relates to consumer buying behaviour  

and how it varies between industries  and specific segments of the market. 

For example, some businesses will see an upturn in  sales at Christmas, whilst other businesses such  

as those which specialise in gardening equipment  for example will thrive during the summer. 

It’s very important for businesses to be  aware of the behaviours of their target market  

to ensure they plan production of  their products accurately and execute  

effective marketing campaigns at the right time. Gymshark’ s products tend to sell all year round  

and experience seasonal peaks alongside the  usual peaks in the health and fitness industry. 

However, a very effective way in which Gymshark  use the behaviour of their target market to  

their advantage is through the use of sales. They typically hold two major sales each year  

and the black Friday one is arguably their most  effective and attractive to their customer base. 

A great example was through a marketing campaign  named ‘blackout’ which utilised their target  

markets fear of missing out by running a  weeklong sale starting on Monday at 3pm  

until the end of a week with a countdown  timer showing how long the sale had left,  

which influenced their behaviour  and increased impulse purchases. 

These types of sales have led to Gym Shark selling  90% of their products in just one day in the past.

Segmenting the market by lifestyle is  focused on the hobbies and interests  

of people, alongside their wants and needs  according to the type of life they lead. 

The rapid rise of veganism and increase of  vegan options available at restaurants and  

supermarkets to customers is a clear example  of businesses identifying a recent change  

in the lifestyle choices of many of their  customers in specific segments of the market. 

With many businesses reacting to and targeting  this audience, such as Subway releasing  

plant-based products which include the ‘Meatless  Meatball Marinara’ and ‘Tastes Like Chicken’ Subs. 

The market segment of lifestyle is one  of the most important characteristics of  

a customer at Gymshark and focusing on  this segment has arguably been the main  

factor in their growth and success to date. Gymshark have a clear target audience of  

18–25-year-olds whose lifestyles revolve  around fitness, fashion, and music. 

Once Gymshark identified the lifestyle  choices of its target audience,  

the business was able to effectively target  their products at them through a series of well  

executed marketing strategies based around their  lifestyle choices, hobbies, and areas of interest.

The final market segment which is  commonly assessed by businesses is income. 

This segment is focused on how  much the typical person earns  

and how much disposable income they have. Which is a crucial factor for any business  

to consider before launching their product or  targeting a specific segment of the market. 

For example, businesses such as Tesla  and Rolex clearly target a segment of the  

market which have high earning potential  and a high amount of disposable income. 

Whereas businesses such as Aldi targets a segment  of the market which mainly have a lower earning  

potential and not as much disposable income  as customers of competitors such as Waitrose. 

Gymshark targets a market of customers who  have higher levels of disposable income,  

but not necessarily higher earning potential due  to the age of their target market being younger. 

Although their gym wear is pitched  as affordable it is still at the  

higher end of the market in line  with competitors such as Nike,  

in comparison to businesses which target their  gym wear products to customers with lower levels  

of disposable income such as Boohoo or Primark. Gymshark have been very successful when targeting  

this segment of the market as they are willing to  pay the premium price due to the high-end quality,  

fashionable gym wear, which is  designed to shape to fit, slimming,  

and be tight in all the right places, effectively  meeting the needs and wants of the target market. 

Now that we have looked at various examples of  market segmentation in action, it’s important  

to understand the potential benefits and  drawbacks of conducting market segmentation.

Let’s start with the benefits. The key benefit of using market  

segmentation for a business such as Gymshark is  the process enables them to understand and meet  

the needs of their customers more effectively. This is very clear at Gymshark as the business  

clearly meets the needs and wants of  its target market and act upon these. 

By doing so, it has led to Gymshark achieving  increased brand loyalty and repeat custom. 

Whilst at same time reducing price sensitivity  around the brand, allowing Gymshark to charge  

a higher price for their products and  the target market being happy to pay it. 

Which has ultimately increased the revenue  and profitability of the business which has  

grown from a start-up in 2012 to a  reported $1.3 billion brand in 2020.

However, it’s important to understand  some of the potential drawbacks of  

conducting market segmentation. A key drawback is the potential  

for increased costs, not just whilst conducting  the analysis of the market initially, but the  

increased research and development costs involved  when developing and producing products to meet the  

wants and needs of various segments of the market. Alongside this, marketing to a wider audience and  

more segments over time will also cost more money  as the message communicated is likely to alter  

according to the varying wants and needs  of the target market as the business aims  

at different segments, which will increase  the amount of marketing activities required. 

Market segmentation can also lead to a bigger  product range as the business tries to meet the  

wants and needs of more people within various  segments of the market, which can cause a  

business to lose sight of its core purpose  or values and cause confusion for customers,  

potentially leading the brand to lose its identity  and be less able to exploit economies of scale.

Gymshark are a fantastic example of  market segmentation being conducted  

and executed effectively by a business  to support the growth of their brand. 

They have focused purely on just a few specific  segments of the market with age and lifestyle  

being the most notable characteristics of its  target market, once these were identified,  

they targeted them with well executed marketing  mainly through social media and influencers,  

offering products which met their wants and  needs in terms of both quality and style  

at a price they are willing to pay due to  their pay and disposable income levels. 

So that’s it, market segmentation, I  hope you’ve found the video useful,  

and if you have don’t forget to give it a like  and subscribe to Two Teachers YouTube channel  

for lots more Business Studies content. All the best.