The Importance Of Market Segmentation

The Importance Of Market SegmentationMarket sectionalization is superstar of the roughly measurable concept in marketing and backing (Bowen, 1998). It is relyd that air division is the most powerful tool to develop strategies and to understand market (Richard and Sundaram, 1994). Segmentation that carried come forward properly de develop actually boost up sales and meshwork (Reid, 1983). However in contrary, the perseverance players which in this case eatery seems to believe that by segmenting their market depart actually narrow down their business, they tend to believe that price is the most effective tool to attract and win the market (Crawdford-Welch, 1994). Finally, looking to the reasons of the pro and contra, the researcher decided to segmenting the market further which argon by psychographic or the life bearing and conductistic or the purchase occasion. It is because the researcher believed that by segmenting the market whitethorn lead to understand the market deep er and thusly put forward perform out with right strategies. To this end, the following section will reviews the literature on market sectionalisation which focus on coevals Y, psychographic and behaviouristic, next will too review roughly the instruments influencing extension Y in choosing eating place and last that non least type of consumers by psychographic class.2.2 The importance of market dividerMarket sectionalization does exist because it is believed that market is non similar (Beane and Ennis, 2007) and it is very important as this is a marketing strategy that contri thoes to business or effort players (Bowen, 1998).Segmentation can actually act as a key to enhance sales and profits while it can dish out to maximize the us mature of facilities by the specific target market, besides that, it as wholesome help to penetrate advanced market segment and to maintain repeater (Reid, 1983). Besides that, it is as good open up new chances to create new intersec tion point and advertising strategy (Beane and Ennis, 2007). Kotler (1980) believed that in order for cleavage to be useful and effective, it must be measurable, accessible and substantiable. Kotler (1980, pp.308) menti nonpareild that a segment should be the largest possible homogeneous group of buyers that it pays to go after with a specially designed marketing program. Segment is luck (Beane and Ennis, 2007). For instance, senior customers bring forth type of food as their first maintenance (Knutson and Patton, 1993). While for young customers, food feature is not the most important divisor in choosing restaurant (Soriano, 2002). These show that antithetic generation has different demand and need, consequently it is necessary for industry players to understand clearly the characteristics and the trends of separately generation. However, industry players in this case restaurants seem to believe that by focusing on one market, it is not effective as it may reduce the sal es volume. Most of the industries players accent on price while they believe it may attract and retain customers scarce at last it actually drive to less profit (Crawford-Welch, 1994). It is not a false to target to a greater extent than a market segment, however, different segment has different characteristic, and hence it is unnecessary to abide all discount or price reduction while it is not the most important thing for some market segment. On the some other(a) hand, a theory of restaurant tax management believed that it is important to maximize revenue by keeping the balance of demand and supply but without putting aside customer satisfaction (Kimes, 2004).2.2.1 quadruple major markets segmentationKotler divided market into quad main areas which are geographic, demographic, psychographic and behaviouristic. Geographic segmentation is the simplest segmentation. It is to differentiate customers by region, climate and population density. Demographic segmentation in the ot her hand is the most common segmentation. This is perhaps because demographic segmentation provides the easiest information and allows it to be transferred from one playing area to another contain (Beane and Ennis, 2007). The segmentation divided by age, sex, income, education level, type of family, nationality and race (Beane and Ennis, 2007). Psychographic segmentation or known as lifestyle segmentation is a complicated segmentation as it demands way of life and social class. fit to Plummer (1974) psychographic segmentation gives better answer in describing segments compare to demographic segmentation. Last but not least is behaviouristic segmentation, it consists of purchase occasion, benefits sought, user status, degree of usage, degree of loyalty, readiness stage, and marketing factor sensitivity (Kotler, 1980). In this watch, the researcher will go through demographic segmentation which is focusing on Generation Y and psychographic segmentation which will divide Generation Y match to their specific character and last behaviouristic which will look into the occasion they have for dine in restaurant.2.2.1.1 Demographic segmentationKivela (1997) studied about types of restaurants and he constitute that factors such as eat occasion, age and income are the main variables that contribute to decision in choosing fine eat, theme, family or truehearted food restaurant. Apart, it is believed that segmentation especially demographic segmentation plays significant subroutine to help the industry players as Shank and Nahhas (1994) found that in family dining restaurant, older and younger consumers have different preferences. One is more loyal than other and they as headspring have different habits. Similary, a study conducted by Becker-Suttle, Weaver and Crawford-Welch (1994) found that in term of menu variety and food fortune in a full-service restaurant, senior citizen has different expectation with the non-senior one. However, in contrary, Oh and Jeong (1996) believed that demographic variables are not enough to understand specific expectation. Similarly, Swinyard (1977) as well mentioned that demographic variables are the lowest between segmentations. These reasons drive the researcher to believe that it is important to segment market by demographic segmentation but it has to be contract down. Therefore, the researcher will go to more specific segmentation which is not only Generation Y in general but specific them by the psychographic as well as behaviouristic segmentation.2.2.1.2 Psychographic segmentationPsychographic segmentation is help in developing consumers profiles from psychology side base on lifestyles. (Hsu, Kang and Wolfe, 2002). It involves the evaluation of interest, activities and opinions. (Kotler, Bowen and Makens, 1998). Furthermore, psychographic segmentation is used in order to identify deeper consumers psychology and to understand consumers way of living. (Schewe and Calantone, 1978). For instance, Woodsid e and Pitts (1976) found that psychographic which include lifestyle variables are more useful and accurate than demographic. corresponding opinion mentioned by Abbey (1979) who found that lifestyle variables are more reliable and applicable rather than demographic. Moreover, Weaver et al. (1994) said that if psychographic research is carried out properly, it will have a great impact on promotional effort. Proper audience and media will be targeted by looking on their psychographic needs. Zins (1998) as well believed that psychographics segmentation is increasing because it will explain in various ways than demographic segmentation.Based on the Swinyard and Struman (1986), in that view are three customer segments in restaurant industry which are family diners, romantics and entertainers. While Oh and Jeong (1996) stated that there are four different segments which are classic diners, widget seekers, service seekers and indifferent diners. On the other hand, Bahn and Granzin (1985 ) found that there are health, gourmet, value and unconcerned segments that exist. The researchers stated that for those health concerned segments, absolutely they will not choose fast food restaurant as their main dining destination.Using cluster analysis, Yuksel and Yuksel (2002) divided market into five which are value seekers, service seekers, adventurous food-seekers, atmosphere seekers and healthy-food seekers. The researchers conducted the study because they believed that demographic variables like age, gender and income are not enough to understand market expecations (Oh and Jeong, 1996). Crawford-Welch (1991, pp.301) criticized segmenting by demographic and noted decriptive data, by their very nature, are of little analytical worth in that they are not capable of implying causality and are, in turn, poor predictors of behaviour. Demographic has low power of describing market (Swinyard, 1977). Looking for these reasons, the researcher of this study decided to not only look f or Generation Y but also narrowing the market to psychographic segmentation and behavioristic segmentation like what Yuksel and Yuksel (2002) had make in their study.2.2.1.3 Behaviouristic segmentationTo be more effective, previous researchers used consumers buying behaviour as one of the segmentation variables (Oh and Jeong, 1996). Some believed that behaviour are better determinants in order to understand the market segments (Loker and Purdue, 1992). It has been mentioned that in order to predict behaviour, benefits has to be offered rather than looking only to the lifestyle, personality, age, gender or nationality. In restaurant cases, services act as arrogates that can be called benefits (Bahn and Granzin, 1985). On the other hand, Boulding et al. (1993) mentioned about links between behaviour and service quality, customers help in word of mouth advertising. Customers do will to recommend one establisment if they get better service (Parasuraman, Zeithaml and Berry, 1994). Howe ver, service is not the only thing that sell by one establishment. Therefore, to understand better customers is a necessary.2.3 Generation YGeneration Y is people who born between 1974 and 1994 (Neuborne and Kerwin, 1999 in Hanzaee and Aghasibeig, 2010) and they are children of Baby Boomers or Generation X (Herbig, Koehler and Day, 1993). Adults Generation Y are married, but younger one are still students. Industry players are now focusing on Generation Y as their biggest target market because this generation are large in size and they have potential strike downing power (Wolburg and Pokrywczynski, 2001) and therefore they are trying to meet up the expectation of this people. Moreover, the reason why it is important to know deeply the expectation of Generation Y is because Generation Y is not easily stoop by marketing therefore it needs more effort to target this generation (Bush, Martin and Bush, 2004).It is obvious that age is a factor that makes different generation act differe ntly however it is not the only factor. Teenagers straight off are different compare to previous teenagers. Commonly, they have less financial commitments. They spend 70% of their income for food, travel and entertainment. They love to go for party, movie and listen to radio (Mark McCrindle, xxxx). He as well believed that people act different according to the age. However, he believed that it is the only reason as he mentioned that experiences play in the part. For instance, Generation X era was where AIDS, single parents, personal computer and multiculturalism took part, while Generation Y have internet, globalisation and environmentalism issues. Read BB understanding gen YGeneration Y is optimistic, energetic, technology driven, pragmatic, resilient, with high social awareness and open to and eager for new experiences (Coyeman, 1998, p.40). However, this group will be de-motivated if they are insulted especially regarding their intelligence, over-promised and over exposed (Coy eman, 1998). On the other hand, based on generational theory, different generations bring different values, beliefs, interests and expectations (Benckerdorff et al, 2010) and thus different strategy has to be used. Fields et al (2008) believed that Generation Y is more focused on brands, fun, friends and digital. Generation Y was born and raise during brands period, therefore they are used to it and have different respond compare to other generations (Merrill, 1999). They are relaxed, confident, educated but impatient and self-focused. They are multitasked that greatly enamour by friends and mates. Mark McCrindle (xxxx) also mentioned that Baby Boomers rely on data and facts in making decision while Generation Y rely more on peers. Generation Y live in community and therefore they rather make decision in group than individual. Read BB understanding gen YPrevious studies also mentioned that Generation Y are much more needy compare to other generations (Randall.S.H, 2010) and it is because Generation Y has been socialized into consuming to begin with (TRU, 1999 in Bakewell and Mitchell, 2003). Furthermore, The purchasing power of adolescents in the market cannot be underestimated. Being customers of their own, adolescents have experienced how to react when services provided were not satisfactory. (Hsu and Chiu, 2008, p.244). These prove that Generation Y are unique and they have different demand and expectation with previous generation, thus to study deeper of what needed by Generation Y is important to help in improving business.2.4 Generation Y and diningGeneration Y spend more because of unusual purchasing power (Phelps, 1999) and they have more useable income compare to previous generation (Tomkins, 1999 in Bakewell and Mitchell, 2003). They spend their income for entertainment, travel and food (McCrindle, 2002 in Hanzaee and Aghasibeig, 2010). This supported by a survey that conducted by the National eating place Association found that most of Generat ion Ys income is spent for outside food and restaurants (Brook, 2005). Another study by Auty (1992) also found that students who are in the group of Generation Y eat out for social occasions, do not really concern about others recommendation and money. These facts build curiosity of the researcher and therefore the researcher decided to conduct the study in order to find out the factors that considered by Generation Y while choosing restaurant for birthday jubilance, hence, industry players especially restaurants may know what exactly to do and what promotional tools to develop. In fact, technology departs play important office lag in causing Generation Y become more materialistic compare to previous generation. (Bakewell and Mitchell, 2003), this may means Generation Y want technology while they are eating. Hence, it is believed that marketers are existence challenged by this young generation because they keep seeking and exploring a new dining places and experience (Wishna, 2 000).2.5. Factors influencing restaurant picking criteriaConsumers choose a restaurant based on several factors and knowing what factors that may drive the success of the federation is very important in order to plan future strategy of the company (Geller, 1985).2.5.1 Menu variety and choicesFood variety involves various different items in menu. Industry players keep developing menu in order to attract consumers because it had been found that menu variety is one of a crucial factors in creating good dining experience (Kivela et al, 1999). Some concern about healthy menu natural cream and it actually gives great impact in customer perception of dining experience (Johns and Tyas, 1996). Supported by Kivela et al (1999) who mentioned that healthy food is one of the important factors in dining satisfaction. On the other hand, Auty (1992) mentioned that food type and food quality are the most important factors that determine the restaurant choice but when it comes to dining out for c elebration or social night, atmosphere is the most important factors. Supported by Lewis (1981) who found that food quality, menu variety, price, atmosphere and convenience are the most important factors. To discuss deeply about menu, West and Olsen (1990) said that menu innovation is very important in order to deterrent competitive and the researchers also said that to maintain reputation and efficiency of operation are the important factors.HA1 Menu variety and choices have decreed relation with restaurant selection criteria2.5.2 Value for moneyMarketing tools such as sales promotion including discounts and special offers act as tools that motivate consumers (Mill, 2007). This researcher as well believed that when consumers perceived the value got less than the price given, they will not be satisfied. Some of them that price to assume the quality of the restaurant (Muller and Woods, 1994). File from mei incompatible literature has different opinion, according to GeorgeCurasi, Bellenger and Danny (2003) discount are major factors that influence restaurant selection. Apart, another study by Mohsin, Mclnthos and Cave (2005) mentioned that general customers choose a restaurant in New Zealand due to value for money, offer variety and quality of food, own skilled and mannered faculty and has well timed service. This study was conducted for general customers not Generation Y and this show a contrast with other studies that mentioned money is not the most important factor.HA2 Value for money has a positive relation with restaurant selection criteria2.5.3 AmbiencePhysical environment such as ambience, decoration and atmosphere have a great influence on the dining experience (Sloan, 2004) and behavioural intentions (Ryu and Jang, 2007). Ambience or known as atmosphere is an element that plays an important role to customers. It involves design, space and layout, textures and patterns and building style (Collins, 2010). Mehrabian Russell (1974) believed that envi ronment affect feelings that can cause one to stay longer even remain. Lighting and music influence customers senses (Baker Cameron, 1996). Music is frequently used nowadays whether it is in restaurant or shopping center, Smith Curnow (1966) found that shop with loud music indirectly chase customers. This study also has been study deeper by Milliman (1986), the researcher found that they are music volume and tempo that affect time and money spent by consumers.Furthermore, Zopiatis and Pribic (2007) who did their study among students in Cyprus as well mentioned that atmosphere as one of most influencing concern. Supported by Jang Namkung (2009) who found three main factors and one of them is atmosphere of the dining place itself. Obviousily, the design of the dining place itself is very important to generate sales of restaurant. To support this, there was a study which found that design in a store has a significant effect on customer it influence the decision of customer to approa ch, explore even purchase (Mehrabian and Russell, 1974). Even if the customers perceive the environment as a pleasure, customer will spend more time and money for it (Donovan et al, 1994). Hence, it is obvious that design of ambience plays a very significant role in bear on customers choices.HA3 Ambience has a positive relation with restaurant selection criteria2.5.4 PeersDecision makers tend to decide something with regard to consequences of their choices in future, however the future is uncertainty, hence it can be concluded that the decision is a process (March, 1997 in Maitlis and Ozcelik, 2004). Furthermore, during the decision process, one decision is closely fixd to others decision (Dewey and Bentley, 1949 in Langley, A et al., 1995). To relate to this study, in celebrating birthday, friends and parents may as well play role in deciding the venue, thus, ones decision is made by interference of others. This supported by the conclusion of GeorgeCurasi, Bellenger and Danny ( 2003) who found that recommendation from peers are one of the factors that lead customers in choosing restaurant. Although in contrary, Auty (1992) found that young generation does not really concern about others recommendation, but it is still a possibility that one individuals decision is built from others interference.Furthermore, a recommendation from a friend influences significantly in decision to choose a restaurant (Sweeney et al., 1992). Mill (2007) believed that because recommendation from friends is not profitable and it different from advertising thus consumers will believe more and make decision in choosing the restaurant. According to Devine et al., (2003), social influences bring great impact to food choice, because they believed it shows berth and habits. Apart, consumers heard the dining experience from friends and it help them to judge one restaurant better (Zeithaml and Bitner, 2003). Bailey and Tian (2002) did their study at Indian restaurant and they found that recommendations from friends greatly influence the decision.HA4 Peers has a positive relation with restaurant selection criteria2.5.5 serve qualityTucci and Talaga (2000) mentioned that service quality affect the customers most in choosing restaurant. Service quality includes staff and physical environment. Human resources are the main key to success. (Enz, 2004). Therefore to have good staff is to start with success. As what had been mentioned by Jang and Namkung (2009) one of the main factors is service quality, which in restaurant case means staff and their services. A staff attitude may harass ones sattisfaction (Oliver, 1981). However, in contary, Clark and Wood (1999) mentioned that tangible factors like food influence more than intangible factors such as friendliness of staff. But that study against by study of GeorgeCurasi, Bellenger and Danny (2003) who found that customers want personalized service which indirectly means they want good staff. In Cyprus, a study has been conducted by Zopiatis and Pribic (2007), the researchers also mentioned that staffs attitude and professionalism are the main factors that influence the student criteria in choosing dining place. During the time period of the study conducted, students are the Generation Y, therefore those factors are being consider.Moreover, aloofness of waiting time on restaurant service is one factor that concern by customers too (Richarme Colias, 2007) because service time is a very reasonable issue for customers (Christopher, 1999). This supported by Jang Namkung (2009) who found service quality as attribute that influence customers in choosing restaurants. And more, GeorgeCurasi, Bellenger and Danny (2003) did mention about fast check-out as one of the factors that influencing the most.HA5 Service has a postive relation with restaurant selection criteria2.5.6 Food qualityFood is the fundemental of restaurant. There should be no doubt that food is one of the major factor that give impact on restaurant. Food should be fresh and tasty in order to maintain the quality and this is one of the factor that plays role in succeed of a restaurant. (Namkung and Jang, 2007). Even some studies had already focused on the food presentation, variety, healthy, taste, freshness and temperature. Kivela et al., (1999) focused on taste and they took it as the attribute in dining experience. It is believed that taste of food is very essential to customers (Cortese, 2003) and it gives impact to future behaviour (Kivela et al., 1999). Fu and Parks (2001) examined quality of food as one of the factors in choosing restaurant. MacLaurin and MacLaurin (2000) did the study on theme restaurants at Singapore and found food quality as one of the most important elements. Same goes to Clark and Wood (1998), they as well found food quality as the most influential factor in restaurant choices. Last but not least, Jang and Namkung (2009) found that product quality is important as one attribute that deter mine the choices of the restaurants consumers. Even Soriano (2002) believed that this is one of the factors that can attract customers to return to the restaurant. However, apart from all those studies, Cullen (2004) added that the attributes will change depends on demographic variables, experience, mood and dining occasion.File food qualityHA6 Food quality has a positive relation with restaurant selection criteria2.6 variant expectation for different types of restaurantMany previous researchers did not concern about type of restaurant in conducting their study while it is believed that type of restaurant has significant influence on customers perception and expectation (Kim and Moon, 2009). According to Lewis (1981), there are three types of restaurant, family, atmosphere and gourmet restaurants.Different expectation will be bring by customers depends on the restaurant. For example, cleanliness as major factor has been mentioned by Knutson (2000) who did the study in fast food r estaurant among Generation Y, followed by staff friendliness, price, service speed and consistency. The researcher as well found that atmosphere, promotional items, discount coupons and drive-through availability are the minor factors that affect the decision in choosing fast food restaurant. While in the study of Kivela (1997) mentioned that for fine dining restaurants, customers wish for good food quality and friendliness of staff, but in casual dining restaurants, they preferred speed of service to be improved and value-for-money food. Noone et al (2007) have done their study and found that customers show unsatisfied when they are rushed in a fine dining restaurant rather than in casual dining restaurant. Other findings as well mentioned by Sulek Hensley (2004), according to them, food quality is a must to full-service restaurants, while the most important factor for fast-food restaurants is waiting time (David Vollmann, 1990). Kim, Lee and Yoo (2006) believed that staff perfo rmance plays very essential role in a luxury restaurant. In fact, by considering those factors, therefore this study is conducted in order to find out what factors actually play roles for Generation Y in choosing restaurant for their birthday celebration, as it has been mentioned that different expectation will be bring by customers depends on their needs and perception. But in this study, the researcher decides not to differentiate the respondents by different type of restaurant because there has no previous study conducted yet hence the researcher would like to find out in general which may lead to further details result that can be use for further study.2.7 Dining OccasionDining behaviour is depends on dining occasion. For instance, restaurant behaviours are lead from the occasion (Kivela, Inbakaran and Reece, 1999). According to Sweeney et al. (1992), there are two dining occasion exist which are dinner party with a group of friends and dinner with a friend. While according to J une and Smith (1987) four occasion do exist a birthday celebration, a business lunch, an intimate dinner and a family dinner. Different occasion bring different level of factors. In this study, an occasion which is birthday celebration is the main concern. By the finding of the previous studies regarding level of importance brings to different occasion, thus it is obvious that different factors and value bring by consumers while they choose their restaurant for birthday celebration.2.8 compositors case of restaurants consumersIn previous study of Yuksel and Yuksel (2002), they divided market using psychographic segmentation. The researchers used cluster analysis in order to analyze their data and they found that there are five different category of consumers.2.8.1 Value seekersThe researchers suggest that this group put high priority food quality and hygiene while choosing a restaurant. Moreover, they usually do not take location, atmosphere and service quality as their main consid eration.HB1 Value seekers are one type of restaurant consumers2.8.2 Service seekersIn this group, there are people who looking for quality of service while dining, they does not consider food quality as their preference but the price of the food is very important for them.HB2 Service seekers are one type of restaurant consumers2.8.3 Adventurous-Food seekersThey find that availability of various and interesting food is the most important factor for this group of people. They do not concern about the prices and atmosphere.HB3 Adventurous-Food seekers are one type of restaurant consumers2.8.4 Atmosphere SeekersIn contrast to other groups, this group want everything while dining, not only the atmosphere but they as well concern about prices, availability of interesting food and the location of the restaurant itself.HB4 Atmosphere seekers are one type of restaurant consumers2.8.5 Healthy-Food seekersThe researchers as well found that there are certain group of people who concern abou t the healthy and nutrious food while they dine in a restaurant. They take food quality and hygiene as the most important factors. It will be a plus point for them if they have smoking and non-smoking area in seperation. While they have these high expectations, they do not mind to spend more money as well.2.9 Hypotheses and Conceptual FrameworksBased on the literature review, sextette hypotheses appeared as factors that influence Generation Y in choosing restaurant and four other hypotheses appeared as type of restaurant consumers.Show the conceptual framework here (ramework, factors and type of consumers)The conceptual framework provided has positive relation between the factors and Generation Y in choosing restaurant. However, during birthday celebration, different factors may be arised. Moreover, consumers are not homogeneous, different type of people are expecting different. Therefore, the conceptual gaps appeared.In depth, six hypotheses that appear as factors that influence G eneration Y in choosing restaurant areHA1 Menu variety and choices have positive relation with restaurant selection criteriaHA2 Value for money has a positive relation with restaurant selection criteriaHA3 Ambience has a positive relation with restaurant selection criteriaHA4 Peers has a positive relation with restaurant selection criteriaHA5 Service has a postive relation with restaurant selection criteriaHA6 Food quality has a positive relation with restaurant selection criteriaThese six hypotheses have direct relation to Generation Y while choosing restaurant for dining but there has been no finding for birthday celebration before, hence this study helped in answering the gap. Yuksel and Yuksel (2002) by cluster analysis classified restaurant consumers into five groups, however, in this study the researcher decided to take out a group which is Healthy food seekers as the study is for occasion dining. Therefore, the researcher to not include healthy food seekers as part of t he study. The other four areHB1 Value seekers are one type of restaurant consumersHB2 Service seekers are one type of restaurant consumerHB3 Adventurous-Food seekers are one type of restaurant consumersHB4 Atmosphere seekers are one type of restaurant consumersThis study designed in order to find out the relation of each type of consumers to the factors. For instance, value seekers may do not concern about atmosphere while service seekers may do not bother about food quality. While for the behaviouristic segmentation, it came from Question 8 and 9. The researcher will further analyze the answers obtained.