Analyzing Customer Behavior and Enhancing Profitability for a Fast Food Company with the Aid of Market Segmentation Strategies
Market Segmentation Strategies for the Food Industry About the Client The client is one of the world's leading fast food store, with more than 77 outlets globally. The company sells high-quality fast food products and beverages, along with a variety of fresh food items. The Business Challenge In the last decade, consumption of fast food has [...]READ MORE >>
Market Segmentation Strategies for the Food Industry
About the Client
The client is one of the world’s leading fast food store, with more than 77 outlets globally. The company sells high-quality fast food products and beverages, along with a variety of fresh food items.
The Business Challenge
In the last decade, consumption of fast food has gone up by 20% and continues to tick upwards with each passing year. Despite there is a constant rise in the fast food industry, with customers’ expressing their desire for more wholesome and natural foods, the sales rate have been falling rapidly. Thus, in an approach to earn back customers’ trust, major players are taking an approach towards market segmentation strategies. With market segmentation strategies, major food companies are constantly looking for ways to divide a broad market comprising of prospective customers into smaller sub-groups so that seizing their attention with one marketing strategy is easier.
Business Case: With the rising competition in the market and evolving customer preferences, the client recognized the necessity for a strong targeted marketing approach and better market segmentation strategies to cater to the demands of the global customer base. So, the primary aim of the client was to develop market segmentation strategies that could meet their business goals and objectives. Moreover, with Infiniti’s market segmentation strategies, the client needed to gain a detailed understanding of the different consumer personas to ramp up their marketing initiatives. By leveraging Infiniti’s market segmentation strategies, the client also wanted to understand the importance of market segmentation in analyzing consumer behavior and preferences with regards to their food products.
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Top Challenges Faced by the Fast Food Store
Problem Statement 1
The lack of precise understanding of the target audiences ended up in the wasting of resources including time, money, and manpower for the client. Hence, with market segmentation strategies, the client wanted to effectively group a similar customer group together to target specific audiences in a cost-effective manner.
Problem Statement 2
The shrinking customer base resulted in fewer sales, which led to a direct loss of revenue. Thus, the client realized that, if no attempt is made to improve customer experience to get those lost customers back, it would even result in closure of the company. By intensely monitoring the customer preferences and choices with the aid of market segmentation strategies, the client wanted to bring up new food products in the market to satisfy their target customers’ requirement, and consequently decrease customer churn rate.
Problem Statement 3
With Infiniti’s market segmentation strategies, the client wanted to explore and analyze the characteristics of potential customers and sell their products in an agile and efficient manner, to enhance the profit margin.
Problem Statement 4
With the aid of market segmentation strategies, the fast food store wanted to focus on key customer segments to bolster growth and profitability.
Solutions Offered and Value Delivered
To help the client meet their business goals, the experts at Infiniti Research segmented the customer group into the following phases with the help of market segmentation strategies:
Phase 1: Psychographic segmentation
In the initial phase of the market segmentation strategies solutions, the customers were grouped together on the basis of their conscious and subconscious motivations, interests, their level of problem awareness and their expectations about the products.
Phase 2: Behavioral segmentation
The second phase of the market segmentation strategy solutions was behavioral segmentation. In this phase, the customers were put into certain groups depending on how they react to advertisements and offers on the food products. Moreover, elements such as customer lifestyle, buying patterns, consumption patterns, and even how consumers spend their time and money were taken into account.
Phase 3: Demographic segmentation
According to recent research, it was noted that fast food was mainly preferred by millennials in the US. Hence, the third phase of the market segmentation strategies involved classifying customers on the basis of age, gender, level of education, income, occupation, and family size.
The categorization of the customers into different subsets helped the client bring up new products into the market to meet the customer needs. This subsequently reduced the customer churn and helped the client gain a competitive advantage in the market. Infiniti’s market segmentation strategies helped the client to identify the customer’s needs and evaluate the gaps. This further helped them to better serve the target audience. Additionally, with Infiniti’s market segmentation strategies, the client was able to make necessary adjustments in their marketing initiative, which further improved company’s profit margin by 13% in a year.
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What is Market Segmentation?
In this competitive environment, running a business successfully requires a detailed understanding of the market and the needs of the customers. Market segmentation strategies is the process of dividing a large customer group into various smaller units who have more or less similar or related characteristics. Market segmentation strategies gives a company a greater ability to better satisfy the needs of their customers. Moreover, market segmentation strategies helps in implementing strategies that suit the needs of different focus groups.
What are the types of market segmentation?
Before a business decides on its promotional strategies to market a product, there are certain methods of market segmentation to categorize the customer. Let’s have a look at the types of market segmentation strategies.
Geographic segmentation: As customer preferences vary from region to region, it is significant for companies to choose that geographic segment that best aligns with their goals.
Psychographic segmentation: In this type, the factors including the lifestyle of people, interests, their activities, as well as opinions about a product or service are taken into account.
Demographic segmentation: This is one of the most widely used and simplest types of the market segmentation process. In this type of market segmentation process, the population is divided based on variables such as gender, age, nationality, income, and occupation. The demographic segmentation variables help divide a huge population into precise customer groups.
Behavioral segmentation: In this type, customers are grouped based on behavior, usage, and decision-making patterns.
What are the benefits of market segmentation?
Uncover market opportunities: With market segmentation strategies, by closely analyzing the level of satisfaction and preferences of the target customers, businesses can bring up new products to cover the gap of customer dissatisfaction.
Tailor marketing initiatives: With the help of the market segmentation strategies process, companies can understand the varied mindsets of their customers. Market segmentation strategies process helps firms to make significant adjustments in their marketing initiative.
Accurate product pricing: It is essential for companies to adopt different product pricing for different markets, considering the price sensitivity of the customers in each market. Companies can use market segmentation strategies process to identify the right prices to target new customers in various markets and fix prices for their products and services accordingly.
Product development: Market segmentation strategies helps firms understand customers’ real expectations from the brand. Companies can further identify what is working well for them and what is not in terms of their offerings to the customers. Market segmentation strategies further help in delivering better products to the customers.
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