Market Segmentation Analysis

Introduction

This paper will discuss possible segmentation bases and how each segment relates to promotional efforts. This paper will also evaluate the success factors of customer segment management initiatives. Finally, a successful customer segmentation strategy at a corporation will also be discussed.

Possible segmentation bases and how each segment relates to promotional efforts

The typical bases for segmenting the market include geographic, demographic, socioeconomic, and psychographic segmentation. Other more modern methods for segmenting the market include using a genetic algorithm technique that relies on K-means clustering (Kim & Ahn, 2007). Segmenting the market on an individualized basis is also a fairly new method of segmentation

McDonald’s in India employs a geographic segmentation strategy that is unique in the global marketplace and that effectively captures its target market, which is primarily young, urban Indian consumers (Ponnam, Sahoot & Balaji, 2011). The geographic segmentation strategy is such that restaurants are located at gasoline stations to target consumers who are among the upper class, and whom drive automobiles (Kulkarni, 2009). This strategy also includes locations in shopping malls to target upper-middle and middle class teenaged and adult consumers (Kulkarni, 2009). In addition, McDonald’s restaurants are located at cinema multiplexes as well to attract all three classes of consumers. To attract the middle class consumer, in particular, McDonald’s is also located at railway and bus stations (Kulkarni,

India was also identified as one of the top ten markets for McDonald’s with regard to the potential for expansion (Kulkarni, 2009). In addition, India’s fast food industry is growing at a rate 30-35 percent per year, which appears to be, in large part, due the segmentation strategy that has been employed in this industry (Ponnam et al., 2011). India also has a growing middle class and a young population that also accounts for this success.

In fact, McDonald’s has also identified segments of its customer population by age group with 31.8% of the market being the primary market for McDonald’s, which includes 0-14 year olds. The secondary market is 15-64 year olds and includes 63% of the population (Kulkarn, 2009). The reason that children are considered the primary market is due to the role that Happy Meals play in generating sales for McDonald’s in India (Kulkarni, 2009). In addition, in India and the United States, children are a major influence in determining where the family will eat (Kulkarni,