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1.1 CUSTOMER ANALYSIS & INSIGHT

IDENTIFY THE CUSTOMER - PAST VS. PRESENT

Established by Cristobal Balenciaga in 1917, Balenciaga originated as a revolutionary haute couture atelier in San Sebastian, Spain (Kering, 2022; Judge, 2022). Historically, Balenciaga’s elite and ‘cosmopolitan clientele’ (Palmer, 2021; Cristobal Balenciaga Museoa, 2023, p.2) consisted of elegant female diplomats and aristocrats (Balda, 2022), often over the age of 25 (McDowell, 2015), with immense social and economic influence. The most notable and loyal clients of Balenciaga in the 20th century included Mona Von Bismarck (Friedman, 2021), Grace Kelly (Nicholls-Lee, 2022), Bunny Mellon (Clark, 2020, p.9), Jackie Kennedy (Sowray, 2017) and the Marchesa de Casa Torres (Fury, 2021; Balda, 2023).

 

The iconic and sculptural designs (Vives, 2020; V&A, 2017) constructed by Balenciaga appealed to the target audience of sophisticated women belonging to the ‘beau monde’ (Palmer, 2021; Dirix, 2022, p.11). In particular, the geometric and voluminous silhouettes (Pavlov, 2021) of his renowned envelope, parachute, petale, and baby-doll dresses (Borelli-Persson, 2020; Dark, 2023) enhanced the female form without restriction (Balda, 2022).

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In contrast to the previous target market of Balenciaga, the modern consumers of the luxury clothing and accessories retailer now comprise of predominantly male Generation Z (Maguire, 2023; Avallone, 2022) and millennials (Zeitune, 2021; WARC, 2021; Arpizio and Levato, 2021), aged between 18-34 (Similarweb, 2023; Klarna, 2022). The current customers of Balenciaga, mostly high net-worth individuals (HNWI’s) with a desire to purchase or invest in unique, experiential luxury fashion (Danziger and Mount, 2023; BCG and Highsnobiety, 2023), also demonstrate considerable interest in prestige streetwear (Danforth, 2020, Brain, 2022) and technological, lifestyle and cultural trends, (Bain, 2022; Hazan et al, 2021).

 

In addition to this, contemporary Balenciaga buyers associate with luxury brand collaborations (VERB Brands, 2023; Smith, 2022), celebrity endorsement (Kessler, 2022; Highsnobiety, 2023), and exploration into the metaverse (Wightman-Stone, 2022; Amed et al, 2022).

 DEMOGRAPHIC SEGMENTATION - WHO?

Demographic segmentation is important because it enables organisations to precisely analyse customer characteristics (CICA, 2023; Armstrong and Kotler, 2022) and determine appropriate messages for a specific target market (Tarver et al, 2023; Guevara, 2023).  

 

As illustrated by digital analytics and insights sourced via Similarweb (2023), the key demographic for Balenciaga  is male Generation Z and millennial consumers, aged 18-24 (30.46%) and 25-34 (33.35%).

Although Balenciaga’s audience of 3.8 million website visitors is presently composed of 56.75% male and 43.25% female consumers (Similarweb, 2023), the previous composition of Balenciaga.com consisted of a 50.2% female and 49.8% male divide (Similarweb, 2023). Therefore, it is important to acknowledge fluctuating social and demographic shifts in the luxury retail environment (PwC, 2022; Safian-Demers, 2021).

 

Further analysis into the demographic of Balenciaga customers reveals that the most resilient, optimistic consumers in the global luxury industry are affluent millennials and high-net-worth individuals (Euromonitor, 2022; Highsnobiety and BCG, 2023; Danziger, 2023). A recent Bain-Altagamma worldwide luxury study (2022) indicates that the top wealthiest customers accounted for 40% of market value in FY2022 (D’Arpizio et al, 2023). Furthermore, statistics from Bain & Company (2023) forecast that Gen Z and millennial affluent consumers will constitute ‘70% of the luxury market by 2025’ (Beauloye, 2023, p.4). Therefore, Balenciaga should consider leveraging the profitable and lucrative segment of ‘very important clients (VIC’s)’, particularly 18-34 year olds (Verb Brands, 2023; Gilesenan, 2021).

 

Research conducted by Statista (2023) highlights that 10.78% of luxury shoppers, who owned Balenciaga fashion items or accessories in 2018, earned an average monthly net income of $9,000-$10,000 (Kunst, 2022). In addition to this, the Mosaic segmentation report denotes that an ideal demographic profile for Balenciaga to target would be M02 or M03; affluent, degree-educated (CACI, 2020, p.39) and ‘label-conscious young male professionals with ambition (Moran, 2021) and a high personal disposable income (Experian, 2020, p.57-62).

 

Although a significant target demographic for Balenciaga is wealthy Gen Y and Gen Z clients, it is important to consider the effects of inflationary pressures on the ‘discretionary income’ of younger luxury buyers (Hall et al, 2022, p.1). Therefore, Balenciaga could also adopt an ‘inclusive marketing strategy’ (Oh, 2022) by focusing on ‘accessible and affordable’ neo-luxuries (Euromonitor, 2023, p.19; Wang, 2022) to additionally appeal to the segment of ‘aspirational’ (Danziger, 2021; Halliday, 2022) and ‘inspirational’ luxury consumers (Atti, 2022).

 GEOGRAPHIC SEGMENTATION - WHERE?

Geographic segmentation helps organisations to direct more relevant messages at prospective consumers based upon physical location, climate, and culture(Directive, 2023; Experian, 2023).

 

Geographic data collated from Similarweb (2023) highlights Balenciaga’s online traffic share by country. In April 2023, balenciaga.com received the most website visits from the United States, with 25.49% of online consumers in the US viewing Balenciaga via desktop. 

 

Another considerable geographic area for Balenciaga to target is Europe, especially with a combined 16.99% traffic share across Germany (6.98%), Italy (4.59%), and the United Kingdom (5.42%) (Similarweb, 2023). Furthermore, Kering’s annual report (2022) discovered that 26% and 27% of total revenue arose from mature markets in Western Europe and North America. Therefore, Balenciaga could optimise marketing communications to attract consumers with occidental cultural values.

 

Although US consumers were drivers for rising sales in luxury fashion in 2021 and 2022, the market has gradually declined, especially for aspirational customers (Duplaix, 2023). In addition to this, Balenciaga’s recent ad scandal supressed ‘hyper-growth’ within the US and UK markets (Socha, 2023, p.1). However, the US luxury fashion and apparel market is expected to increase annually by 1.84% CAGR between 2023-2028 (Statista, 2023), emphasising that the strong geographic segment of US luxury shoppers (Bain & Company, 2023) represents loyal consumers to Kering (Pinault, 2023). However, a study from WARC uncovers that ‘the Asia-Pacific region holds the most luxury buyers after the US’ (Wong-Chi-Man, 2023, p.3). Therefore, Balenciaga campaigns could also celebrate Eastern culture, in a way that aligns with consumer values and avoids appropriation (Teng and Kong, 2020; Martin, 2023).

 

As Balenciaga is part of the global luxury group Kering (Forbes, 2023) and is also a prestigious brand with worldwide recognition (Balenciaga, 2023), it is recommended that Balenciaga’s S/S 2023 campaign follows an international perspective.

 PSYCHOGRAPHIC SEGMENTATION - WHY?

Psychographic insight into customer lifestyles, attitudes and cognition enables organisations to optimise customisation and tailor marketing strategies to appeal to consumer personalities, motivations, and interests (Duke, 2021).

 

Balenciaga customers encapsulate an innovative, creative, and inquisitive personality (Highsnobiety, 2021; Samoylenko, 2023), reflecting the modern, bold aesthetic of the progressive fashion brand (Argawal, 2020) under the creative direction of Demna Gvasalia (Collins, 2023). In particular, Balenciaga appeals to the target segments of ‘hedonist’ and ‘omnivore’ luxury consumers (Alemendral, 2023), who purchase high-end, designer fashion and accessories to signal status and stay ahead of trends (Dubois et al, 2021; Aleem et al, 2022).

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A survey conducted by Kantar Profiles/Mintel (2022) demonstrates that 25% of consumers fit into the ‘status-seeker’ category; a consumer group that is characterised by an ‘aspirational’ concept of luxury and the perception that luxury products indicate success (Smith, 2022; Xi et al, 2022). In addition to this, 63% of males aged 16-34 believe that luxury products serve to impress others (Mintel Databook, 2022). Therefore, Balenciaga should aim to advance luxury symbolism through marketing communications to develop a positive impact on consumer purchase intention and self-congruity (Wang et al, 2022; Siahtiri, 2022).

 

According to a ‘Nouveau Luxe’ segmentation framework devised by Ipsos (2023), other customer personas that exhibit the ‘extroverted’ brand personality of Balenciaga include affluent ‘fashionistas’ and ‘indulgents’ (Wong-Chi-Man, 2023, p.3); luxury buyers who identify with a desire to stand out and portray individuality (WARC, 2023). A report by Mintel (2022) states that 49% of adults believe that luxury products promote a visual form self-expression (Mintel, 2023) through ‘original, unique styles’ (Smith, 2022, p.4). Therefore, Balenciaga could address the consumer trend of hyper-personalisation to engage Gen Z and millennial luxury buyers (Sender Ceron, 2022; Beauloye, 2022).

 

Balenciaga is a notoriously disruptive and experimental brand that redefines and revolutionises luxury (Matches, 2023; Danziger, 2022) through references to hype-culture (Martino, 2021), ‘fashion-tainment’ (Gallagher, 2022), and unexpected collaborations (Spinks, 2021; Northman, 2022). Demna’s unique and unconventional vision of hybrid meme-art (Danforth, 2020) at Balenciaga intrigues consumers who resonate with the rebel brand archetype (Martin-Isaacs, 2022).

 

However, the recent controversies surrounding Balenciaga (Clark, 2022; Issawi, 2023), highlights that the luxury brand violated cultural boundaries and outraged fans (Kostov, 2022; Danziger, 2022). Therefore, it is essential that Balenciaga revitalises its brand image by fostering a transparent emotional connection with consumers (Pastore, 2022) in order to alter negative perceptions and demonstrate accountability (Sender Ceron, 2022).

BEHAVIOURAL SEGMENTATION - HOW?

Behavioural segmentation is an integral marketing asset (Smith, 2022) that helps to improve customer targeting, acquisition, and retention (WARC, 2022).

 

According to data sourced by Mintel (2022), 81% of Generation Z and 68% of millennials purchased a luxury product or service in the past year, with 53% of luxury shoppers aged 16-24 having purchased a luxury product online via a brand store (Smith, 2022). Although online remains the preferred channel for Balenciaga customers to visit, signified by a 44.53% increase in website traffic (Similarweb, 2023), 63% of Gen Z and millennial males purchase clothing in-store (Mintel Databook, 2023).

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However, a repertoire analysis conducted by Kantar Profiles/Mintel (2023) reveals that 58% of young male millennials prefer to purchase clothing online through a smartphone. In addition to this, a combined 68% of male Gen Z and millennials browse and buy luxury clothing through 3 or more channels (Mintel Databook, 2023). Therefore, it is recommended that Balenciaga creates a unified, agile, and highly-personalised phygital retail experience (Son et al, 2023) to attract ‘digitally-savvy’ luxury consumers (Skyes, 2023).

 

Further insight into the behaviours and spending habits of luxury consumers is provided by the Saks ‘Luxury Pulse’ survey (2023), which finds that 62% of respondents intend to spend the same or more on luxury in the next 3 months. In particular, male luxury shoppers plan to embrace sophisticated attire, through clean trainers and tailored suits (Business Wire, 2023). Although 30% of males and 41% of millennials and Gen Z increased their budget for designer fashion labels over the past 6 months (Vogue Business for Rakuten, 2022), a Global Consumer Insight study by PwC (2023) conveys that 53% of consumers plan to limit spending on premium products.

 

However, young men aged 16-24 in particular, appear to be less impacted by inflation, as 48% of male Generation Z consumers prioritised buying new clothes in the past 3 months (Sender Ceron, 2023). Despite, consumer confidence within certain target segments, it is evident that macro-economic realities could negatively impact luxury brand loyalty. Data collated by Vogue Business x Rakuten (2022) uncovers that 37% of luxury shoppers switched brands in the past 6 months. Therefore, Balenciaga should focus on enhancing and retaining customers through valuable and authentic brand-dialogue behaviours (Spiegel-Medill, 2021).

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