From “Chick Beer” to “Dryer Sheets for Men” to shampoo for “African Americans,” identity-based labeling is frequently deployed by marketers to appeal to specific target markets. Yet such identity appeals can backfire, alienating the very consumers that they aim to attract. We theorize and empirically demonstrate that identity appeals lead to consumer avoidance when they evoke a stereotype about a marginalized identity: females in studies 1–3a and racial minorities in studies 3b–5. We identify categorization threat—the feeling of being unwillingly categorized as (and reduced to) a single identity—as a critical driver underlying consumer reactions to identity appeals. The negative impact of identity appeals is mitigated in situations in which categorization threat is less likely to be activated: (a) when multiple identities are evoked, preventing consumers from feeling reduced to a single identity, and (b) when targeting by identity is seen as necessary for differentiating product offerings.