Chapter 8 : Segmenting and Targeting Markets

       When taking a look at Banana Republic and their marketing strategy, it is evident that the company is in transition from more of a concentrated targeting strategy to a multi-segment targeting strategy. This means that Banana Republic is no longer focusing on just one specific market segment but rather two or more well-defined market segments.  Banana Republic does this by no longer just focusing on demographic segments; they are also taking into consideration psychographic segments as well. In the past, Banana Republic focused mainly on middle aged professionals with a higher income to purchase their product. Now, they are trying to reposition themselves as a brand and expanding their target market to include millennials, or young professionals. This means they are taking into consideration the lifestyle, motives, personality, etc. of their younger customers so that they can cater to people of a different age demographic. 

Banana Republic's Spring 2014 ad showing younger models in a carefree setting, appealing to a younger demographic

       This poses a potential problem for the future of the company because they run the risk of losing their first target group, however, it seems beneficial for the company to expand who they aim their product at. By adding a younger group to its target market, the older group might start to seek elsewhere for  their clothing since they see the company as changing and becoming “too young.”  This can be avoided though with a marketing mix that will satisfy both target markets. Another potential risk of this new segmentation is that the sales of the new product (should Banana Republic design clothing specifically aimed at the younger customers) can cut into sales of the old product. This is better known as cannibalization. It isn’t necessarily a bad thing for the company, but it could effect the original target market in that they don’t feel like the company is really considering their needs any longer.  

       The most beneficial consequence of this target market expansion is that sales will increase because more people will be interested in buying Banana Republic product. With more consumers to target, the company needs more production of product made for both age groups and a new marketing mix in order to satisfy the entire target market.