Abstract

The aim of this report is to measure the impact of market segmentation on the sales
volume of five restaurants products and services. Segmenting the market is essential and
necessary for any organization because it is not possible to satisfy all customers at a time. The
market for any product is normally made up of several segments. There are different factors
contributing for varying mind set of consumers. It is thus natural that many differing
segments occur within a market. In order to capture this heterogeneous market for any
product, marketers usually divide or disintegrate the market into a number of sub-markets or
segments and the process is known as market segmentation. Our study focuses on the
segmentation process and how segmentation can be used effectively to improve the sales
volume these restaurants products and services. Both primary and secondary sources of data
are used for making this report. Our research finds that effective consumer segmentation can
increase the level of demand of products and services of these restaurants. It has also been
recommended that profit making organization should always work around segmenting
customers of their product or service if they want to increase sales in their organization.

1. Introduction
Buyers in any market differ in their wants, resources, locations, buying attitudes, and buying
practices. Through market segmentation, companies divide large, heterogeneous markets into
smaller segments that can be reached more efficiently and effectively with products and
services that match their unique needs (Philip Kotler & Armstrong). Segmentation has been
viewed as a key marketing concept and has been the focus of a significant part of the
marketing research literature. The basic concept of segmentation has not been greatly altered
(as articulated, e.g. in Frank et al., 1972). Historically, marketers segment the market
according to characteristics (e.g. demographics), preferences, usage rates, etc. Increasingly, it
is difficult to fully articulate a segmentation strategy without an accompanying discussion of
customer lifetime value (CLV) and a thought process that makes the CLV calculation explicit
(see Gupta and Lehmann,2003). We can say that market segmentation is the segmentation of
markets into homogenous groups of customers, each of them reacting differently to
promotion, communication, pricing and other variables of the marketing mix. Market
segments should be formed in that way that difference between buyers within each segment is
as small as possible. Thus, every segment can be addressed with an individually targeted
Page | 1

marketing mix. The importance of market segmentation results from the fact that the buyers
of a product or a service are no homogenous group. Through segmentation, the marketer can
look at the differences among the customer groups and decide on appropriate strategies/offers
for each group. The market segmentation and product differentiation can give a firm
temporary commercial advantage.

2. Objectives of the Study

The objectives of the study are to:
1. Determine if segmenting the market of a product or service increases sales.
2. Evaluate the elements necessary for effective segmentation to be effective.
3. Know how to segment and select a potential segmented market that will increase sales of
an organization.

3. Conceptual Framework
Kotler and Keller, (2005) a market segment is a subgroup of people or organizations
sharing one or more characteristics that cause them to have similar product and/or service
needs. A true market segment meets all of the following criteria: it is distinct from other
segments (different segments have different needs), it is homogeneous within the
segment (exhibits common needs); it responds similarly to a market stimulus, and it can be
reached by a market intervention. The term is also used when consumers with
identical product and/or service needs are divided up into groups so they can be charged
different amounts. These can broadly be viewed as 'positive' and 'negative' applications of the
same idea. Ayuba ( 2005) noted that Nigeria companies marketing effort lack the knowledge
and skills of basic marketing ingredients - marketing research, marketing planning and
effective distribution network. The outcome of thesis poor quality products, unawareness of
competitors, poor promotion, poor distribution, and poor pricing methods. In a developing
country like ours with low income and high level of poverty, the need for effective
marketing segmentation of product is very imperative if an organization hope to achieve
any success.

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4. Segment Marketing
(Kotler, 2004) A market segment consists of a group of customers who share a similar set of
wants. Thus we would distinguish between car buyers who are primarily seeking low-cost
basic transportation and those seeking luxurious driving experience. We must not confuse a
segment and a sector. A car company may say that it will target young, middle-income car
buyers. The problem is that young middle-income car buyers will differ about what they want
in a car. Some will want a low-cost car and others will want an expensive car. Young, middle
income car buyers is a sector, not a segment. The Marketer does not create the segments, the
marketers task is to identify the segment and decide which one(s) to target. Segment
marketing offers several benefits over mass marketing, which includes;
The company can create a more fine-tuned product or service offering and price it
appropriately for the target segment.
The company can more easily select the best distribution and communication channels.
It will also have a clearer picture of its competitors, which are the companies
going after the same segment.
A flexible market offering consists of two parts; a naked solution containing the product and
service elements that all segment members value, and discretionary options that some
segment members value.

5. Market Segmentation Procedure

(Kotler, 2004)

Market Segments can be identified by classifying consumers

demographically. A bank for example, may decide to group its customers by wealth, annual
income, and age. Suppose it distinguishes five (5) wealth classes, seven (7) income classes
and six (6) age classes. This alone would create 210 market segments (5 x 7 x 6). The real
question however is whether the customer in any one segment really has the same needs,
attitudes, and preferences. This has led market researchers to advocate a needs-based
market segmentation approach. Roger Best proposed the seven-step approach shown below:

Needs Based Segmentation: Group customers into segments based on similar needs and
benefits sought by customers in solving a particular consumption problem.
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Segment Identification: For

each

needs-based

segment,

determine

which

demographics, lifestyles, and usage behaviors make the segment distinct and

identifiable (actionable).
Segment Attractiveness: Using predetermined segment attractiveness criteria (such
as market growth, competitive intensity, and market access), determine the overall

attractiveness of each segment.

Segment Profitability: Determine segment profitability.
Segment Positioning: For each segment, create a value proposition and product-price

positioning strategy based on that segments unique customer needs and characteristics.
Segment Acid Test: Create segment storyboards to test the attractiveness of each

segments positioning strategy.

Marketing-Mix Strategy: Expand segment positioning strategy to include all
aspects of the marketing mix: product, price, promotion, and place.

Market segmentation must be done periodically because segments change. At one time
the personal computer industry segmented its products purely on speed and power.
Later, PC marketers recognized an emerging Soho market, named for small office
and home office. Mail-order companies such as Dell and Gateway appealed to this
markets

requirement

for high performance

coupled with

low

price

and user

friendliness. Shortly thereafter, PC makers began to see Shoo as comprised of smaller

segments. Small-office needs might be very different from home-office needs, says one
Dell Executive. One way to discover new segments is to investigate the hierarchy of
attributes consumers examine in choosing a brand. This process is called market partitioning.
Years ago, buyers first decided on the manufacturer and then on one of its car divisions
(brand-dominant hierarchy). Today many buyers decide first on the nation from which they
want to buy a car (nation-dominant hierarchy). Companies must monitor potential shifts in
the consumers hierarchy of attributes and adjust to changing priorities. The hierarchy of
attributes can reveal customer segments. Buyers who first decide on price are price dominant;
those who first decide on the type of car are (e.g., sports, passenger, station wagon) are type
dominant; those who first decide on the car brand are brand dominant. One can identify those
who are type/price/brand dominant as making up a segment; those who are quality/ service/
type dominant as making up another segment. Each segment may have distinct
demographics, psychographics, and media-graphics.

6. Segmentation by Demographic Characteristics:

Page | 4

(Boon

&

Kurtz,

2004)

says

that

as

with

consumer

markets,

demographic

characteristics define useful segmentation criteria for business markets. This includes:
6.1 Segmentation by Customer Type
Another useful segmentation approach groups prospects according to type of customer.
Marketer can apply this concept in several ways. They can group customers by broad
categories; manufacturers, service provider, government agency, non-profit organization,
wholesaler, or retailer, and industry.
6.2 Segmentation by End-Use Application
This focuses on the precise way in which a business purchaser will use a product.
For example a printing equipment manufacturer may serve markets ranging from a
local utility to a bicycle manufacturer to the Department of Defense. Each end user
may dictate unique specifications for performance, design, and price. Many small and
medium sized companies also segment markets according to end use application.
Instead of competing in markets dominated by large firms, they concentrate on specific
end use market segments.
6.3 Segmentation by Purchasing Situation
Yet another approach to dividing business markets centers on the purchasing situation.
Organizations use a more complicated purchasing procedure than those of consumers. Firms
also structure heir purchasing functions in specific ways, and for some business marketers,
this may be the best way to segment the market. Each of these structures results in different
buying behavior.

Effective Segmentation
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Measurable: The size, purchasing power, and characteristics of the segments can be
measured.
Substantial: The segments should be large and profitable enough to serve. A segment should
be the largest possible homogenous group worth going after with a tailored marketing
program.
Accessible: The segments can be effectively reached and served.
Differentiable: The segments are conceptually distinguishable and respond differently to
different marketing-mix elements and programs.
Actionable: Effective programs can be formulated for attracting and serving the segments.

Evaluating and Selecting the Market Segments

(Kotler 2004) In evaluating the market segment, the firm must look at two factors:
the segments overall attractiveness and the companys objectives and resources. Does a
potential segment have characteristics that make it generally attractive, such as size,
growth, profitability, scale economies, and low risk? Does investing in the segment make
sense given the firms objectives, competencies, and resources? Some attractive segments may
not mesh with the companys long-run objectives, or the company may lack one or more
necessary competencies to offer superior value. Having evaluated different segments, a
company can consider five (5) patterns of target market selection, which includes;

Single Segment Concentration: Volkswagen concentrates on the small-car market and

Porsche on the sports car market. Through concentrated marketing, the firm gains a
strong knowledge of the segments needs and achieves a strong market presence.
Furthermore, the firm enjoys operating economies through specializing its production,
distribution, and promotion. If it captures segment leadership, the firm can earn a high

return on its investment.

Selective Specialization: The firm selects a number of segments, each objectively
attractive and appropriate. There may be little or no synergy among the segments, but
each promises to be a moneymaker. This multi-segment strategy has an advantage of
diversifying the firms risk.

Page | 6

Product Specialization: The firm makes a certain product that it sells to several
segments. An example would be a microscope manufacturer who sells to university,
government, and commercial laboratories. The firm makes different microscopes for
the different customer groups and building a strong reputation in the specific product

area.
Market Specialization: The firm concentrates on serving many needs of a particular
customer group. An example would be a firm that sells an assortment of products only to
university laboratories. The firm gains a strong reputation is serving this customer

group and becomes a channel for additional products the customer group can use.
Full Market Specialization: The firm attempts to serve all customer groups withall the
products they might need. Only very large firms such as IBM (computer market), General
Motors (vehicle market), and Coca-Cola (drink market) can undertake a full market
coverage strategy. Large firms can cover a whole market in two broad ways: through
undifferentiated marketing or differentiated marketing. In undifferentiated marketing,
the firm ignores segment differences and goes after the whole market with one offer. It
designs a product and a marketing program that will appeal to the broadest
number

of buyers.

It relies on

mass

distribution

and

mass

advertising.

Undifferentiated marketing is the the marketing counterpart to standardization and

mass production in manufacturing the narrow product line keeps down costs of
research and development, production, inventory, transportation, marketing research,
advertising, and product management. Presumably the company can turn its lower costs
into lower prices to win the price-sensitive segment of the market. In differentiated
marketing, the firm operates in several market segments and designs different products
for each segment. General Motors does this when it says that it produces a car for every
purse, purpose, and personality. Differentiated marketing typically creates more total
sales than undifferentiated marketing. However it also increases the cost of doing
business.

7. Methodology of the Study

Page | 7

The population of the study consists of ten sales person from each restaurant the main sources
of data collection is field survey besides this we also collect data from relevant books,
journals, websites etc. to analyze data we use both qualitative and quantitative method. We
also use Microsoft excel to analyze our data.

Data Presentation & Analysis

Question 1. Which customer segment do you focus on when trying to sell your foods?
Answer
Options
Individual
Women
Individual
Men
Couple

River Cafe

BFG

Rose Garden

Garden Inn

China Palace

0%

0%

0%

0%

0%

0%

10%

20%

0%

20%

80%

70%

50%

60%

50%

Business
People
Total=

20%

20%

30%

40%

30%

100%

100%

100%

100%

100%

From the analysis made above it can be concluded that couple goes to River Caf 80% more
than others restaurant.
100%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

80%

River Cafe
20%

BFG
Rose Garden
Garden Inn
China Palace

0%

0%

Figure: 1
Question 2. Which customer segment comes to your restaurant frequently?
Page | 8

Answer
Options
Higher Class

River Cafe

BFG

Rose Garden

Garden Inn

China Palace

60%

10%

40%

20%

40%

Middle Class

0%

40%

10%

40%

10%

Upper Middle 40%

Class
Lower Class
0%

50%

5%

40%

50%

0%

0%

0%

0%

Total=

100%

100%

100%

100%

100%

Analyzing the question we see higher class people go to River Caf more than others is 60%,
middle class go to BFG and Garden In is 40%, upper middle class goes to Silver Spoon is
50%.
100%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

60%
40%

River Cafe
BFG
Rose Garden

0%

Garden Inn

0%

China Palace

Figure: 2
Question 3. Approximately what was the amount of sell in 2014?
Answer
Options
Below
20,00,000
20,00,00040,00,000
40,00,00070,00,000
Above
70,00,000
Total=

River Cafe

BFG

Rose Garden

Garden Inn

China Palace

0%

0%

0%

0%

0%

20%

30%

20%

80%

20%

70%

70%

80%

20%

80%

10%

0%

0%

0%

0%

100%

100%

100%

100%

100%

Page | 9

From this question we can say the sales of Garden Inn in 2014 was 20, 00,000- 40, 00,000,
River Caf, BFG, Rose Garden and Silver Spoon were 40, 00,000- 70, 00,000.
100% 100%
80%

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

70%

20%

0%

20%

River Cafe

10%

0%

BFG
Rose Garden

0%

Garden Inn
China Palace

Figure: 3
Question 4. Why customers buy foods from your restaurant?
Answer
Options
Quality

River Cafe

BFG

Rose Garden

Garden Inn

China Palace

50%

70%

40%

40%

40%

Taste

10%

20%

10%

20%

10%

Affordable
Price
Brand Name

10%

0%

40%

10%

40%

30%

10%

10%

30%

10%

Total=

100%

100%

100%

100%

100%

From this analysis we can say, customers come to River caf mostly for better quality,50%
respondents told this ,and 30% for brand name, 10% for taste and 10% for affordable price.
100%
100%
80%

70%

60%
40%

River Cafe

20%

10%

20%

BFG
Rose Garden

0%
0%

Garden Inn
China Palace

Page | 10

Figure: 4
Question 5. Market segmentation may reduce your selling.
Answer
Options
Strongly
Agree
Agree

River Cafe

BFG

Rose Garden

Garden Inn

China Palace

0%

0%

10%

0%

10%

10%

10%

0%

30%

0%

Neutral

10%

20%

50%

30%

50%

Disagree

50%

50%

40%

40%

40%

Strongly
Disagree
Total=

30%

20%

0%

0%

10%

100%

100%

100%

100%

100%

This question shows us that 50% of respondents are neutral in Rose Garden and Silver Spoon,
50 % disagree of River Caf and BFG.
50%
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%

40%

River Cafe

10%

BFG
Rose Garden
0%

0%

Garden Inn
China Palace

Figure: 5
Question 6. Marketing segmentation increases your selling.
Answer
Options
Strongly
Agree
Agree

River Cafe

BFG

Rose Garden

Garden Inn

China Palace

30%

10%

10%

40%

10%

60%

50%

70%

50%

70%

Neutral

10%

20%

20%

10%

20%

Disagree

0%

20%

0%

0%

0%

Strongly

0%

0%

0%

0%

0%
Page | 11

Disagree
Total=

100%

100%

100%

100%

100%

Analyzing the question we can see 70% agree in Rose Garden and Silver Spoon, 40%
strongly disagree in Garden In.
70%
70%
60%
50%
40%
30%
20%
10%
0%

River Cafe

20%

BFG

10%

Rose Garden
Garden Inn
0%

0%

China Palace

Figure: 6
Question 7. What was the amount of revenue in 2014?
Answer
Options
Below
10,00,000
10,00,00020,00,000
20,00,00040,00,000
Above
40,00,000
Total=

River Cafe

BFG

Rose Garden

Garden Inn

China Palace

0%

20%

20%

30%

20%

60%

60%

80%

70%

70%

40%

20%

0%

0%

10%

0%

0%

0%

0%

0%

100%

100%

100%

100%

100%

Page | 12

80%
80%
70%
60%
50%
40%
30%
20%
10%
0%

70%
60%

70%

60%

Below 10,00,000
10,00,000-20,00,000
20,00,000-40,00,000
Above 40,00,000

Figure: 7
Question 8. Which marketing strategy would be more effective in increasing sales?
Answer
Options
Mass
Marketing
Segmentation

River Cafe

BFG

Rose Garden

Garden Inn

China Palace

20%

10%

20%

20%

20%

40%

10%

80%

50%

70%

Promotional
Strategy
Sales
Representativ
e
Total=

30%

40%

0%

30%

10%

10%

40%

0%

0%

0%

100%

100%

100%

100%

100%

This question show us 80% respondents of Rose Garden say segmentation increases sales.
80%
80%
70%
60%
50%
40%
30%
20%
10%
0%

70%
50%
40%
Mass Marketing
Segmentation

10%

Promotional Strategy
Sales Representative

Figure: 8
Page | 13

Question 9. Marketing segmentation is necessary for increasing sales.

Answer
Options
Strongly
Agree
Agree

River Cafe

BFG

Rose Garden

Garden Inn

China Palace

70%

40%

50%

20%

50%

20%

30%

30%

70%

30%

Neutral

10%

30%

20%

10%

20%

Disagree

0%

0%

0%

0%

0%

Strongly
Disagree
Total=

0%

0%

0%

0%

0%

100%

100%

100%

100%

100%

70% respondents say segmentation is necessary for increasing sales.

70%

70%

70%
60%
50%
40%
30%
20%

20%

River Cafe

20%

BFG

10% 10%

Rose Garden

10%

Garden Inn

0%
0%

0%

0%

0%

China Palace

Figure: 9

Page | 14

8. Conclusion & Recommendation

From the data analyzed above, it has been concluded that marketing segmentation has
great significance in affecting the level of sales of an organization. But still now many dont
practice the market segmentation strategy. So we conclude this paper with a suggestion to
move from mass marketing to marketing segmentation to achieve an increase in sales.
Beside these we also give some recommendation for them:
1. Organization should emphasize on internal marketing strategy to improve the
performance of their sales people.
2. Organization should train their employees.
3. Organizations need to determine who their target customers are, and make sure
that the organizations resources are focused on the most viable and profitable of the
target customers from that segment.
4. Organization need to get professional marketers that can enlighten and train
their organization as a whole on marketing segmentation, and marketing strategies
as a whole.

Page | 15

References.
Kotler P. (2004), Marketing Management. India, Pearson Education Ltd.
Chisnall P. M. (2004), Consumer Behavior. London, Mcgraw-Hill Book Company.
Iyanda O. (2004), Marketing Theory for Practitioners. Lagos, Nigeria Institute of
Management Press.
Onah J. O. And Thomas M. J. (2004), The Structure of Distribution: Marketing
Management Strategies and Cases.
Levin, N. and Zahavi, J. (2001) Predictive modeling using segmentation, Journal of
Interactive Marketing, 15(2), Spring, 222

Page | 16

Appendix

Name:

Gender:

Contact no:

1. Which customer segment do you focus on when trying to sell your foods?
a) Individual Woman

b) Individual Man

c) Couple

d) Business People

2. Which customer segment comes to your restaurant frequently?

a) Higher Class

b) Middle Class

c) Upper Middle Class

d) Lower Class

3. Approximately what was the amount of sell in 2014?

a) Below 20,00,000 taka b) 20,00,000- 40,00,000 taka c) 40,00,000- 70,00,000 taka d)
Above 70,00,000 taka
4. Why customers buy foods from your restaurant?
a) Quality b) Taste c) Affordable Price d) Brand Name d) Others
5. Market segmentation may reduce your selling.
a) Strongly agree

b) Agree

c) Neutral

d) Disagree

e) Strongly Disagree

6. Market segmentation increases your sell.

a) Strongly Agree

b) Agree

c) Neutral

d) Disagree

e) Strongly Disagree

7. What was the amount of revenue in 2014?

a) Below 10,00,000 taka b) 10,00,000-20,00,000 taka c) 20,00,000-40,00,000 taka d)
Above 40,00,000 taka.
8. Which marketing strategy would be more effective in increasing sales?
a) Mass Marketing

b) Segmentation

c) Promotional Strategy d) Sales Representative

9. Marketing segmentation is necessary for increasing sales.

a) Strongly Agree

b) Agree

c) Neutral

d) Disagree

e) Strongly Disagree

Page | 17