Market Segmentation

Market Segmentation

Market segmentation is very important in marketing. Market Segmentation divides the brands market into mutually exclusive segments that help determine differences in the brand’s customer groups. Segmentation helps a company market towards specific consumers and target them individually. Segments can be divided demographically, psychographically, geographically, and behavioral characteristics. McDonald's fast food restaurant uses all four of these segmentation processes to target different areas of the market to appeal to.

History

In 1954, Ray Kroc found a restaurant that was run by two brothers, the McDonalds. The restaurant Mr. Kroc found had a limited menu and focused on the quality of each item. They had a very effective system and Mr. Kroc wanted to help them create restaurants all over the nation. In 1955, the McDonald's corporation was founded. In 1960, Ray Kroc bought exclusive rights to the McDonald's name. Mr. Kroc wanted all of the restaurants to have high quality that was uniform in each restaurant. He wanted the customers to be able to have the same experience no matter the location of the restaurant.

Ray Kroc valued innovation and allowed each franchisee to individualize their store as long as the core values were the same. According to McDonalds.com, many of McDonald’s most famous menu items such as the Big Mac, Filet-O-Fish and the Egg McMuffin, were created by franchisees (McDonalds.com).

According to McDonalds.com, McDonald's brand mission is to be the customers' favorite place and way to eat and drink. The global strategy, Plan to Win, concentrates on the customer having exceptional customer service. They focus on people, products, place, price, and promotion.

Demographic

McDonald's segments their marketing demographically. According to Bloomberg Business Week, McDonald's develops their menu and advertising toward the ethnic groups in hopes that Caucasians will catch on. This has already influenced the menu for items such as smoothies that use fruit combinations that are preferred in the minority community. Another example is when McDonald's decided to start selling guacamole and tortas in their locations in Hispanic communities. Not only did it increase sales in those locations but also increased sales in Laguna Beach and Orange County which are over 90% Caucasian demographically.

According to Bloomberg Business Week, the shift is indicative of a demographic change in the U.S. as a whole. Asian, Hispanic, and African-American populations are growing. In Texas and California white non-Hispanics make up less than 50 percent of the population.

McDonald's does not only segment demographically by race and ethnicity it also segments due to age. McDonald's targets children and young adults. This can be