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.

mark mix

Microsoft Word - The Marketing Mix

A SWOT Analysis for a Marketing Project

 

SWOT-Analysis

A useful method that organizations use to help them determine which goals to establish at the departmental level is called a SWOT analysis. A SWOT analysis is a tool used to identify strengths and weaknesses and to examine opportunities and threats employees face in the organization. Conducting a SWOT analysis helps management to focus on specific activities and set goals for those areas where the organization is the strongest and has the greatest opportunities to achieve success at.

This type of analysis is best conducted by a team, but can be directed by individuals as well. But, as I’ve stated in previous blog entries- “Two heads are always better than one.” Performing a SWOT analysis requires the team/individual to complete three tasks:

          Gathering facts– research what you’re doing

          Reviewing facts– go over your research you’ve compiled

          Sorting facts– organize and discard/keep useful information

Once these three activities are completed, the organization will need to answer questions about the strengths, weaknesses, opportunities, and threats. Consider strengths from your point-of-view, as well as from the points of view of the organization, customers, and stakeholders. Also, think of your organization’s strengths and weaknesses in relation to your competitor. A way to determine opportunity areas is to look at strengths with an eye for building on them, or to look at weaknesses to determine whether eliminating any of them could create opportunity.

For this rotation within the Individualized Supervised Practice Pathway (ISPP), graduate students/dietetic interns are required to review the Management Quality and Process/Performance Improvement (MQPPI) objectives. We are to discuss breakfast sales with the General Manager(s). Then, with information from these 2 sources, we are responsible to for the development of a marketing campaign to improve breakfast sales. The undergraduate students in our groups are also contributing to the project by applying the 4 P’s of marketing (Price, Product, Place, and Promotion). Overall, this project will count towards the 80 hours for my MQPPI project(s) section within this rotation.

The objectives for the ISPP MQPPI project include:

          Creating a Quality and Process/Performance Improvement analysis based on data of quality and process indicators

          Creating a Quality and Process/Performance Improvement plan based on indicators

          Managing the implementation of Quality and Process/Performance Improvement procedures

          Evaluating new Quality and Process/Performance Improvement procedures for effectiveness

          Producing a Quality and Process/Performance Improvement Report:

o   A study report of the Quality and Process/Performance Improvement project and the related culminating experience

My first plan of action for this project is to apply a SWOT analysis of the breakfast sales at Taziki’s Mediterranean Café in the WVU Mountainlair. I aim to address what the strengths and weaknesses are within the breakfast menu and its targeted audience. In addition to this, I will also address what opportunities that the breakfast menu could potentially have and how I could assist in that happening. And lastly, I will also investigate and report what the potential and/or existing threats are to the sales of breakfast. The final report is due the week of July 22nd, 2013.

Questions to ask in a SWOT analysis:

Strengths

          What does Taziki’s Mediterranean Café (including breakfast sales) do well?

          What advantages do they have?

          What relevant resources can they access?

          What do they do for their customers that exceed their expectations?

          What do they do better than their competition?

          What do other people see as their strengths?

Weaknesses

          What does Taziki’s Mediterranean Café (breakfast sales) do badly?

          What could they improve?

          What should they avoid?

          Where are they lacking in customer service?

          What does their competition do better than them?

Opportunities

          What trends do they see that could boost demand for their products/services over the next five years?

          What opportunities do they think will emerge because of what is going on in the community?

          How might technology help them?

          What change could occur in the future that could benefit Taziki’s Mediterranean Café?

Threats

          What trends do they see that might hurt demand for their products/services over the next five years?

          What obstacles are they facing?

          Do they have cash flow problems?

          What might threaten them because of what is going on in the community?

          What change could occur in the future that would hurt Taziki’s Mediterranean Café?

swot analysis marketing