Market Segmentation Essay
INTRODUCTION : As we all know each and everyone in this world has their own needs and wants and from that we can tell that people’s needs and wants are met in different ways. Therefore in this situation, companies have to make desicions on how to attract their target customers. This can be done through market segmentation in order for the company to achieve their target. Market segmentation refers to a marketing concept which divides complete market into smaller segments.
One market segment is totally distint from the other segment, therefore each company has to design a business tool or known as marketing mix that precisely matches the expectations of consumers in the targeted segments. All together, there are four basic market segmentation-strategies which are behavioral, demographic, psychographic and geographical. Next step which will bring us to the part where a company have to select their target market. Target market is a group of people that share the same needs that the company decides to provide.
Therefore, identifying the target market is one of the step to develope a marketing plan. Targeting strategies are divided into four categories which are undifferentiated marketing, differentiated marketing, concentrated marketing and the last one will be micromarketing. By using this strategies, a company can decide whether to target very broadly, very narrowly or somewhere in between. The last step will be positioning strategies. The full positioning of a brand is called the brand’s value proposition.
There are five value proposition which are more price for more benefits, same price for more benefits, less price for more benefits, less price for same benefits and less price for less benefits. Next we will come in detail on how company apply these strategies in real market. I have chosen TGI Fridays for TGI FRIDAYS Market Segmentation * Behavioral Segmentation This segmentation divides customers into groups based on the way they respond to, use or know a product, I will describe in detail on how this behavioral segmentation works in TGI Fridays.
Behavioral segmentations can be divided into a few categories such as occasions, benefits and user status. In terms of occasions, TGI Fridays serves customers in regular occasion and special occasions. As we all know regular occasion is a daily basis on serving the customers as stated in the tagline of the company itself “In Here It’s Always Friday”. Special occasion also known as special event such as birthday party that TGI Fridays provided for their special customers, they will celebrate together and entertain their customer who decided to celebrate at TGI Fridays.
In terms of benefits, TGI Fridays concentrate more on quality, service and convenience. TGI Fridays is one of the food and beverage company that provides high quality of food, they serve fresh appetizers, juicy burgers and delicious desserts. Instead of providing a high quality of food, TGI Fridays has done a god job in terms of service. They serve their customers well as other companies in food and beverage. Besides that, TGI Fridays is one of the top western restaurant that provides a convenience place for their customers to rest or relax with family or friends while having their meal.
The last categories will be user status. TGI Fridays is known as one of the best restaurant around the world, and what mostly this kind of restaurant will do is that they will try to retain their regular customers and focus more to attract potential customer. * Demographic Segmentation This segmentation divides the market into segments based on variables such as age, income and family life cycle. As you might expect, this segmentation are amongst the most popular segmentation, this is obviously because customers wants are closely linked to variables such as income and age.
Let’s take a closer look on how company such as TGI Fridays target in terms of age. As we can see age can be divided into a few categories mainly, 12-19, 20-34 and 35-49. These group of ages in the modern days, they are more attracted to western food despite their own cultural food. Therefore, these range of ages are included in the target of western restaurant like TGI Fridays. Besides age, income plays a vital part in demographic segmentation and as we look closer into the range of income for customers of TGI Fridays are mostly customers with income above RM 6000 a month.
From that we can conclude that TGI Fridays target customers with high level of income. The last part that comes into picture for demographic segmentation will be family life cycle. In this kind of situation, TGI Fridays will target mostly customers that are married, married with children and couple and the reason is so that they can have their meal together with their love ones in a relaxing situation after tiring day of work. * Psychographic Segmentation Psychographic segmentation is one which uses people’s lifestyle, social class and personality to define a market segment.
Psychographic segmentation is quite similar to behavioral segmentation but psychographic segmentations takes the psychological aspects of consumer buying behavior into picture. In terms of lifestyle, everyone has different eating habit based on their own lifestyle. The customers might be more to Chinese food, Indian food or maybe western food. In this case, obviously we know that TGI Fridays will target customers that are more to western food because that is what they serve for their customers. When we talk about social class, we can say that different customers falls in different social classes. This depends mainly on their purchasing power.
The purchasing power is affected by the background of the customers, his income as well as his spending habits. The customers of TGI Fridays are mostly people in middle class and upper class because this people are afford to pay for such high class restaurant. * Geographic Segmentation Geographical segmentation divides customers into segments based on geographical areas such as world region or country, city or metro size and density. A company can target one or more areas, it is important to segment according to geographic due to the fact that the purchasing behavior of the customers are influenced on where they live or work.
Therefore many restaurant like TGI Fridays customize their products, advertising, promotion and sales efforts to fit the needs of the geographical variables. In terms of world region and country, TGI Fridays expend their branch mostly in North America, Western Europe, Middle East and Asia because high percentage of people lives in those region receive high amount of income and this shows that TGI Fridays has reached their target for world region and country. Another part of geographic segmentation is density and TGI Friday focus their business more into urban areas because they can receive more customers ith high purchasing power compare to other areas. Target Market After a company has done with market segmentation process, they will proceed to the next step which is target marketing process. The beauty of target marketing is that it makes the promotion, pricing and distribution the company’s products easier and more cost-effective. Market targeting can be carried out at several different levels which are undifferentiated, differentiated, concentrated and micromarketing Looking at TGI Fridays target market, we can say that they are under undifferentiated marketing.
Surviving in the competitive food and beverage industry is tough, however TGI Fridays restaurant’s has succeeded and plan to open five new outlets locally in three years time, involving an investment of 10 million. TGI Fridays target market are mostly middle and upper middle class ages between 22-55 because TGI Fridays produce high quality of food at high prices. In this case only they are afford to pay for the prices that TGI Fridays offer. In addition, TGI Fridays business strategy is to spend 3% of its revenue for advertising and promotion.
Spreading the name in the market to improve its awareness is one of the company’s main focuses. The company is always looking to expend while maintaining the food and quality services. Differentiation and Positioning The last step for marketing strategies will be differentiation and positioning strategy. A positioning and differentiation strategy is one of the most important factors in marketing a business. Differentiation in business is simply having something that is different from others.
If your product is similar to another one the market, it should be different enough to stand out as better. Positioning is simply having something in the right place at the right time. If we look into food and beverages industries, we can say that TGI Fridays offer their product at high price but at the same time the quality of food that they provide for customers are by far one of the greatest quality for such high standard restaurant. In this case TGI Fridays is under more benefits for more price which involves the most pscale product or service and charging a higher price in order to incur the higher costs. THE RITZ-CARLTON Market Segmentation * Behavioral Segmentation This segmentation divides customers into groups based on the way they respond to, use or know a product, I will describe in detail on how this behavioral segmentation works in hotel and tourism industries such as Ritz-Carlton Hotel. Behavioral segmentations can be divided into a few categories such as occasions, benefits and loyalty. As mentioned in the above example is occasion that is the first form of behavioral segmentation.
The best example for the Ritz-Carlton Hotel is that they provide an interesting package for their customers especially on public holidays so that the customers will enjoy their stay with their loved ones at the hotel. Next step, we will proceed to benefits. Several hotel and tourism industries are targeted towards the benefits sought by the customers. Therefore Ritz-Carlton Hotel creates benefits different from other hotels in order to attract their customers to stay at their hotels. The last categories will be loyalty. There are two ways to grow a business.
First is to acquire new customers and second is to retain your existing customers. The more loyal your customer is to you, the more your customer base will increase. In Ritz-Carlton Hotel, they give their best to provide the best service possible such that they can retain their customers. * Demographic Segmentation This segmentation divides the market into segments based on variables such as age, income and family life cycle. As you might expect, this segmentation are amongst the most popular segmentation, this is obviously because customers wants are closely linked to variables such as income and age.
Let’s take a closer look on how hotel and tourism industries such as Ritz-Carlton Hotel target in terms of age. As we can see Ritz-Carlton Hotel focusses more on customers whose age are between 30-55 because this group are most probably working and afford to pay the price in order to stay at a 5-star hotel . Besides age, income plays a vital part in demographic segmentation and as we look closer into the range of income for customers of Ritz-Carlton Hotel are mostly customers with income above RM 10000 a month.
From that we can conclude that Ritz-Carlton Hotel target customers with high level of income because of the high standard of services that they provide for their customers. The last part that comes into picture for demographic segmentation will be family life cycle. In this kind of situation, Ritz-Carlton Hotel will focuses more to customers that are married, married with children and couple. The best example is couple that is just married. Ritz-Carlton provide the best room to stay and the best quality of service for them to enjoy their honeymoon.