Blog 5: Segmentation and Success

How does one company go about segmenting its markets efficiently to make the most profits? While satisfying their target market? They do this by aiming to satisfy the right amount of target markets while not exhausting their spending. By definition segmenting is:

“Aggregating prospective buyers into groups that have common needs and will respond similarly to a marketing action.”(Kerin, 220).

There are five key steps in which a company does this:

1. Group potential buyers into segments
2. Group products to be sold into categories
3. Develop market products to be sold in categories
4. Select target markets
5. Take marketing actions to reach target markets

By taking these key steps, a company can organize their tactics to hit more than one target market without it being too costly. There are some examples of this through the ownership of multiple entities. Main examples of this would be larger companies that own multiple stores/chains. The way this works is the segment a certain one of the stores to match a certain target market.

The first example would be the Gap – Old Navy – Banana Republic relationship by the company Gap Inc.. Old Navy sells clothing at a much cheaper price that targets all ages from kids to adults. Gap on the other hand is a little bit more pricey than Old Navy and has two sections, Gap baby and regular Gap where they cater more clothes to a similar target market as Old Navy. On the other hand Banana Republic mainly caters to women and has clothing that is priced higher, also catering more business and fashion-wear clothes. The three stores cater to similar but different markets that also cater to different economic levels. These are the main three that Gap Inc.  as well as smaller brands such as Piperlime (online boutique), Athleta (exercise gear) and Intermix (sought out designer style). These last three are for the most part only available online while the first three cater to both physical stores and the online market.

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Another example is within say Wendy’s and other fast food competitors. They may not own similar chains, but they cater their products to different markets. Their goals as a company are:

“When everyday people sort through all the ‘spin’ there is one quick-service restaurant that is ‘A Cut Above’… that’s Wendy’s … we stand for honest food … higher quality, fresh, wholesome food … prepared when you order it … prepared by Wendy’s kind of people … people that believe this is My Wendy’s … we do it Dave’s Way … we don’t cut corners.” (via).

Wendy’s does this from the variety of options they have on their menu targeting multiple markets. They have the meals for daytime lunch meals, breakfast meals, and also dinner. There is also a section for night commuters and the fast food restaurant through its extensive menu is able to target multiple markets. They did this not just through segmenting their target markets but by doing that through what they serve on the menu. Other fast food restaurants such as McDonald’s and Burger King have similar strategies as well.

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In both these examples, you can see through different segmenting tactics both companies were able to segment their target markets and cater to multiple markets in effective ways. Sometimes targeting multiple markets can become expensive and consuming, but when gone about efficiently it creates successful results.