By Chron Contributor Updated August 25, 2020
Even the biggest food companies categorize their offerings into difference customer segments to more effectively meet the needs of the marketplace. Segmentation helps businesses large and small market their wares effectively and devise a corporate strategy that gears their products towards the right audience. Among the categories that food companies use to segment their products are price, location, cuisine and product lines.
Food Segments by Price
Food companies segment their audience based on the price the customer will pay. This is a type of behavioral segmentation, which divides markets by customer decision-making patterns based around price, consumption and usage, reports Qualtriks. For a restaurant, price categories might be $15 or less, $16 to $25, $26 to $50 and $50-plus. Food vendors have their own standards based on industry norms for their individual product categories.
One example of this type of segmentation comes from the increasingly significant line of store-branded products. Companies may have two or more store brands serving a particular product line, one geared towards customers who make purchasing decisions based solely on price and another for those more willing to spend more for items of actual or perceived higher quality.
Segmentation by Location
Segmentation by location allows food companies and food service industry companies to align themselves with smaller local audiences, or serve regional or national audiences more efficiently. This takes into account both regional preferences and distribution concerns.
Companies may find their products do better in certain areas and adjust their product distribution accordingly. Others go so far as to change their brand names based on location. For example, when Dreyer’s ice cream expanded to the East Coast, it used the Edy’s brand name instead to avoid confusion with Breyer’s ice cream, a popular regional dessert.
Segmentation by Cuisine
One of the more obvious catering market segments is based around the type of cuisine a business is offering, which leads to more effective positioning in the marketplace. Both restaurants and commercial food companies can choose to identify themselves as belonging to a particular genre. For example, a quick service restaurant might segment itself by whether it serves burgers, chicken, Mexican food, pizza, sandwiches or other foods common in that industry. Food products may be designated in similar categories on grocery store shelves, choosing to appear in the kosher foods section or with the ingredients found in Caribbean food.
Segmentation Around Product Lines
Food service distributors segment based on the products they carry and the categories they fit in. Beverages, baked goods, dairy, meat, organic produce and seafood are among the relevant categories here. Some foods can belong to more than one segment; for example, for brands like Gortons, their fish sticks could be considered part of both the seafood and frozen food product lines. Similarly, restaurants can be divided into lines like full-service, quick-service and fast food.
FAQs
Food Segments by Price
What type of segmentation is used by food companies? ›
Behavioral segmentation is a marketing method used by businesses in the food industry to group customers based on their past purchase behaviors and patterns.
How do you segment the food industry? ›
[Guide] Market Segmentation in the Food Industry
- Price.
- Habits.
- Efficiency.
- Cohabitation.
- Brand Loyalty.
- Health-consciousness.
- Luxuriousness.
- Responsibility.
Psychographic Segmentation: Based on lifestyle, values, attitudes, and interests. A health food brand may target consumers who value fitness and wellness. Behavioral Segmentation: Focuses on consumer behaviors such as purchase history, benefits sought, usage rate, and brand loyalty.
What are the 4 types of segmentation group of answer choices? ›
Demographic, psychographic, behavioral and geographic segmentation are considered the four main types of market segmentation, but there are also many other strategies you can use, including numerous variations on the four main types.
What are the two major segments of the food industry? ›
Deriving from the agriculture industry in our definition, the food and beverage industry is divided into two major segments. Those two segments are production and distribution of edible goods.
What is behavioral segmentation in the food industry? ›
Types of Behavioral Segmentation:
Occasion-oriented, usage-oriented, benefit-oriented, and loyalty-oriented segmentation are common types of behavioral segmentation used in the fast-food industry. Each type allows businesses to tailor strategies and offerings to meet specific customer needs and preferences.
What are the food system segments? ›
These steps consist of agricultural production, storage and distribution, processing and packaging, and retail and marketing, among others and involve farmers, processors, wholesalers, transporters, and retailers. The steps in the food supply chain are all connected.
What are the main segments of the food box market? ›
Food Box Service Market Segment Overview
Based on the Type, the market is segmented based on Meal and Baking Products. The Meal segment is anticipated to account for the large market share because this is due to the significant rise in disposable income and health-conscious population.
What are the segments of the fast food market? ›
On the basis of Product, the market is segmented into Pizza/Pasta, Burgers/Sandwich, Chicken, Asian/Latin American, Seafood, and Others. On the basis of End Users, the market is segmented into Quick Service Restaurants, Fast Casual Restaurants, and Others.
Restaurant customer segmentation is the act of categorizing your customers into groups based on shared characteristics, traits or behaviors. For example, restaurant owners might divide customers based on family size, spending habits, frequency of visits or preferences like gluten-free or vegetarian.
Why do companies use segmentation? ›
Marketing segmentation allows management to focus on certain demographics or customers. Instead of trying to promote products to the entire market, marketing segmentation allows a focused, precise approach that often costs less compared to a broad reach approach.
What are the 4 main segments? ›
There are four key types of market segmentation that you should be aware of, which include demographic, geographic, psychographic, and behavioral segmentations. It's important to understand what these four segmentations are if you want your company to garner lasting success.
What are the types of segmentation? ›
9 types of market segmentation
- Behavioral segmentation. Behavioral segmentation helps companies determine buyers' purchasing habits and behaviors. ...
- Intent segmentation. ...
- Geographic segmentation. ...
- Firmographic segmentation. ...
- Demographic segmentation. ...
- Persona segmentation. ...
- Psychographic segmentation. ...
- Technographic segmentation.
Demographic Segmentation
Children form a key demographic segment for McDonald's. With products like Happy Meals featuring popular toys and play zones in its outlets, McDonald's strategically appeals to children and consequently their families. Young adults are another focus demographic for McDonald's.
What market segmentation does McDonald's use? ›
Table of McDonald's Segmentation, Targeting, and Placement
| Segmentation criteria | McDonald's target segment |
|---|
| Gender | Males & Females |
| Life-cycle stage | Married couples, single people, friends, old age |
| Income | Middle class |
| Occupation | Students, employees, teachers, regulars |
9 more rowsMcDonald's has successfully used geographic segmentation to target specific regions. For example, in India, McDonald's offers a range of vegetarian options, such as the McAloo Tikki burger, to cater to the country's large vegetarian population.
What kind of segmentation are fast food chains using? ›
Market Segmentation:
The Fast Food Market is segmented on the basis of Product and End User. On the basis of Product, the market is segmented into Pizza/Pasta, Burgers/Sandwich, Chicken, Asian/Latin American, Seafood, and Others.
