Market Segmentation

Separating customers into market groups provides the basis for successful strategy development in marketing a restaurant. Market segmentation is the process of dividing a total market into groups of people with similar needs, wants, values, and purchasing behaviors. A market is not a place, but rather a group of people, as individuals or organizations. The group needs products and possesses the ability, willingness, and authority to purchase them. A market segmentation is a mixture of individuals, groups, or organizations that share one or more characteristics, which causes them to have similar product needs.

In a homogenous market, a marketing mix is easier to design than one in a heterogeneous group with dissimilar needs. Choosing the correct variable for segmenting market is important in developing a successful strategy. Variables are often broken down into 4 categories for the segmentation process: geographic, demographic, psychographic, and behavioristic.

Variable: Geographic

          Region:

o   Pacific, Mountain, West North Central, West South Central, East North Central, East

          City/metro population:

o   Under 5,000; 5,000-20,000; 20,000-50,000; 50,000-100,000; 100,000-250,000; 250,000-500,000; 500,000-1,000,000; 1,000,000-400,000; 4,000,000 or over

          Density

o   Urban, suburban, rural

          Family life cycle

o   Northern, southern

Variable: Demographic

          Age:

o   Under 6, 6-11, 12-19, 20-34, 35-49, 50-64, 65+

          Gender:

o   Male, female

          Family size:

o   1-2, 3-4, 5+

          Family life cycle:

o   Young, single; young, married, no children; young, married, youngest child under 6; young, married, youngest child 6 or over; older, married, with children; older, married, no children under 18; older, single; other

          Income:

o   Under $10,000; $10,000-$15,000; $15,000-$20,000; $20,000-$30,000; $30,000-$50,000; $50,000-$100,000, $100,000 and over

          Occupation:

o   Professional and technician; managers, officials, and proprietors; clerical, sales; craftspeople, foreman; operatives; farmers; retired; students; housewives; unemployed

          Education:

o   Grade school or less; some high school; high school graduate; some college; college, graduate

          Religion:

o   Catholic, Protestant, Jewish, Muslim, Hindu, other

          Race:

o   White, Black, Asian, Hispanic

          Nationality:

o   American, British, French, German, Italian, Japanese

Variable: Psychographic

          Social class:

o   Lower lowers; upper lowers; working class, middle class, upper middles, lower uppers, upper uppers

          Lifestyle:

o   Straights, swingers, longhairs

          Personality:

o   Compulsive, gregarious, authoritarian, ambitious

Variable: Behavioristic

          Occasions:

o   Regular occasion, special occasion

          Benefits:

o   Quality, service, economy, speed

          User status:

o   Nonuser, ex-user, potential user, regular user

          Usage rate:

o   Light user, medium user, heavy user

          Loyalty status:

o   None, medium, strong, absolute

          Readiness stage:

o   Unaware, aware, informed, interested, eager, intending to buy

          Attitude toward product:

o   Enthusiastic, positive, indifferent, negative, hostile

Geographic variables include climate, terrain, natural resources, population density, and subculture values that influence customers’ product needs. Demographic variables consist of population characteristics that might influence product selection like age, gender, race, ethnicity, income, education, occupation, family size, family life cycle, religion, social class, and price sensitivity. Psychographic variables include many factors that can be used for segmenting the market, but the most common are motives and lifestyle. Lifestyle segmentation categorizes people according to what is important to them and their mode of living. A classification system for segmenting customers in terms of lifestyle factors is the VALS: Values and Life-Styles research program. The VALS model is broken down into 3 parts:

          Ideals:

o   Consumers make choices based on their knowledge and principles.

          Achievement:

o   Consumers make choices based on what they perceive will show their success to their peers.

          Self-expression:

o   Consumers make choices based on a desire for social or physical activity, variety, or risk.

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The Marketing Mix

As a part of my business class/Institutional Foodservice, Production, and Management dietetic internship rotation, we are required to develop a breakfast marketing campaign. The reason for this project is to incorporate the marketing mix and to essentially improve breakfast sales at the Taziki’s Mediterranean café in the WVU Mountainlair. We are required to speak with the management for advice on what’s working and what’s not working within their breakfast menu and customer foundation. As an ISPP dietetic intern and graduate student, I am also required to apply this information to my Management Quality and Process/Performance Improvement Project, as well.

So, to manage marketing activities, managers must deal with variables relating to the marketing mix and the marketing environment. The marketing mix is defined as the specific combination of marketing elements used to achieve an organization’s objectives and to satisfy the target market. The marketing mix decision variables are product, price, place, and promotion. The marketing environment variables are political, legal, regulatory, societal, economic, competitive, and technological forces.

Product

A product can be a good, service, or an idea. Even though the manufacturing of products is not a marketing activity, research on customer needs and product design is. Product decisions focus on which products to develop, which current products to promote, and which products to discontinue. The term new product means it is a genuine innovation because it has not been served commercially yet. The term new to the chain, like McDonald’s Chicken McNuggets, are really an imitation of a successful product offered by another chain restaurant, like KFC’s chicken nuggets.

Price

Price is the amount of money charged for a product. Price competition has become very common in foodservice operations. Marketing managers usually are involved in establishing pricing policies for different products because consumers are concerned about the value obtained in the exchange. Price is a critical component of the marketing mix and often is used as a competitive tool. Price also helps establish a product’s image. The goal is to set the price at a point that customers perceive value, yet the company achieves the volume and profit it desires.

Promotion

Promotion is used to facilitate exchanges by informing prospective customers about an organization and its products. Promotion is used to increase public awareness about a new product, or to renew an interest in a product that is declining in popularity. The level of advertising in fast-casual dining, like Taziki’s Mediterranean Café, has become quite large.

Place

In marketing, place refers to the location, the place where food or services are offered. Increasingly, food is prepared somewhere else. Food manufacturers are preparing, packaging, and distributing menu items to restaurants and contract companies. Customers are noticing an increase in mobile carts and food trucks. This is giving the public more options when they are away from home- and at an affordable price as well.

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Microsoft Word - The Marketing Mix

What Does “Team Growth” Mean to You?

A team, especially one that is in a foodservice operation, has four distinct stages of group development. The four stages of group development were created by Dr. Bruce W. Tuckerman after observation of the different phases in the development and maturity of groups of people.

Forming

The first stage is forming. This is where teams are getting to know each other, as well as learning what will be required of them in order to achieve their assigned goal. This stage is defined by the way the team members approach each other and inspect the limitations of group behavior. The group is also evaluating the manager’s role and leadership. Throughout this stage, the manager takes a larger role in directing the progress of the team. Directing involves telling the group what specifically needs to be accomplished, establishing guidelines, and providing specifics on the five Ws (Who, What, Where, When, Why) and How. At this point, the team members are focusing on being part of a team.

Team Feeling:

          Excitement; Optimism; Pride in being selected; Wondering what role and influence they will have; Anxiety; Questioning why they and other team members were selected

Team Behavior:

          Friendly; Agreeable; Deciding how to accomplish tasks; Determining acceptable team behavior; Information gathering; Handling complaints about the organization; Discussing barriers to the task

Leadership Style:

          Directing

Storming

The second stage is storming. At this point, the reality of the project sets in for the team and various interpersonal struggles begin to surface. Typically, this is the most difficult stage for any team to get through, since power clashes and competition between team members are common and are easily seen here. Besides this realization, team members become impatient with their lack of progress and rely more on individual approaches instead of teamwork. At this time, the manager needs to utilize a coaching style to clarify and explain tasks repeatedly. The manager will need to persuade team members often to work together and refocus their efforts.

            Team Feeling:

          Resistance to approaches different from what the team is comfortable with; Swings in attitudes about the team and project; Questioning many aspects of the task

Team Behavior:

          Arguing; Choosing sides; Perceived “pecking order”; Increased tension; Jealousy; Power struggles; Lack of progress; Loss of interest

Leadership Style:

           Coaching

Norming

The third stage, norming, sees team member settling their differences and developing more cohesive and trusting relationships. The team realizes that they can work together and help each other achieve success. The members understand the team’s needs and accept the team ground rules and the roles that each person plays in achieving the project goals. Conflict decreases as these realizations occur and team members develop more confidence in their ability to work together and accomplish the task. At this time, the manager transitions into a leadership style of supporting the team by providing encouragement, listening more than telling, and promoting team discussions.

            Team Feeling:

          Expressing constructive criticism; Membership acceptance; Relief that things are finally going smoothly; Understanding own contribution; Acceptance of membership

Team Behavior:

          Attempts for harmony; Avoiding conflict; Discussing team dynamics; Sense of common purpose; Establishing and monitoring team rules; Expressing ideas

Leadership Style:

          Supporting

 

Performing

At last but not least, the fourth and final stage is performing. This is where team interdependence is recognized. Team members can analyze and solve problems successfully together. They have accepted each other’s strengths and weaknesses and can adapt to meet the needs of each member. The team becomes very productive and truly adds value to the organizations. At this point, the manager can use a delegating style. The manager no longer needs to provide much direction and can periodically monitor the team’s progress with update meetings.

            Team Feeling:

          Insights into group processes; Understanding of each member’s strengths and weaknesses; Satisfaction with progress; Trusting; Friendly; Having fun

Team Behavior:

          Individual behavior modification; Working through team problems; Close attachment to members; Flexibility; Humor; Ownership of results

Leadership Style:

          Delegating

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