Assume you are manager of The Outback Steak House, a franchised restaurant that has opened at new location in St. Louis. Describe which segmentation base(s) and possible segmentation variable(s) you would use to segment its market and explain why each supports the appropriate market segmentation strategy.

Question

What will be an ideal response?

Answer 1

Students should choose from the segmentation base(s) may also apply segmentation variable(s). The most likely basis of segmentation would be geographic. The likely segmentation variables would be region (near St. Louis) and city size or density (more urban than rural). Demographic variables could be used based on the necessary income of at least $35,000 to afford the $10 to $25 per person cost of a meal at Outback. Although a psychographic basis of segmentation could be chosen, it would be too difficult and costly to select a psychographic variable (like personality - extroverted, gregarious) to identify and assign consumers into distinct segments and then develop marketing actions to reach them - two criteria necessary to segment markets. With respect to behavioral segmentation, usage status may be feasible if an effective customer loyalty/frequency marketing program can be easily developed to identify and classify the "heavy users" that would patronize Outback, say, more than once a month, since repeat business is the key to success in the sit-down restaurant industry.