MARKET SEGMENTATION
LO 7-1
Explain the importance of and criteria for effective market segmentation.
The days of one mass marketing are largely over. Marketers who try to be all things to all people typically end up serving no one well.
Market segmentationQ Is the process of dividing a larger market into smaller groups, or market segments, based on meaningfully shared characteristics. Market segmentsQ are the relatively homogeneous groups of consumers that result from the segmentation process.
There are over 7 billion people in the world with different needs and wants that are Impossible to attract with a single marketing mix. Market segmentation plays an important role in the success of almost every organization in the U.S. and throughout the world.
The Importance of Market Segmentation
Imagine going into a restaurant that has 85 items on the menu, featuring everything from hamburgers to pasta to sushi.
You might suspect that a restaurant offering such a wide range of diverse choices does not prepare any of them very well. Compare this strategy with that of restaurant chain Five Guys Burgers and Fries, which has consistently offered a very limited menu.
Potential customers have a wide variety of tastes and preferences, but Five Guys focuses on serving what works best for its specific business, which is the “better-burger segment” of the market.
When Five Guys first opened, people asked for coffee, so the company’s restaurants began to serve it.
Unfortunately, the young people working at the restaurants knew little about coffee. The coffee they made tasted terrible, and Five Guys became concerned that negative word-of-mouth commmcation would hurt its core business.
Five Guys stopped serving coffee. The company tried a chicken sandwich once, too, but took that off the menu as well when sales failed to materialize.
The menu does include hot dogs, which have been profitable, but other than that, all you can get at Five Guys Burgers and Fries is… burgers and fnes. It became the fastest growingrestaurant chain in North America serving a limited menu of quality food.,
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