Here is a market segmentation example for retailers, with a focus on large supermarkets.
As you probably know, supermarkets are classified as service firms. As a result, their marketing mix extends to the 7P’s. Although almost all consumers will visit supermarkets, there are a range of different market segments all with different needs, as shown in the following diagram.
- Click on image to enlarge it.
The challenge for developing the marketing strategy and marketing mix for larger supermarkets is how they can meet the needs of multiple segments within the same physical facilities.
The marketing challenge for smaller supermarkets is to determine the most appropriate consumer segment to choose as their target market, which in turn will determine the best marketing mix design.
In this market segmentation example for supermarkets, seven possible market segments have been identified. A brief segment profile, along with suggestions for key elements to consider in structuring a suitable marketing mix is included in the table below.
Market Segmentation Example for Supermarkets
Description of Segment
What are their needs
Marketing mix design
Fast and furious
These consumers want to complete their shopping as quickly as possible.
They are habitual buyers and are loyal to the supermarket and brands, due to their need to make their supermarket experience highly time-efficient.
They tend to be busy people (perhaps with family or career – making them mostly in the 30-50 years age range).
This segment wants to find items quickly and be able to get in and out of the supermarket as fast as possible.
Therefore, their prime need is for convenience.
As a result, they are more likely than other segments to also frequent convenience stores.
Clear aisle design
Logical and structured merchandise displays and signage
Fast, efficient check-out options, including self-check-out
Consistency of product offerings and no stock-out situations
Home shopping option
Easy/fast nearby parking
Extended shopping hours
|Budget conscious consumers are limited to a fixed budget for their shopping purchases. And, as a result, tend to seek out lower priced an discounted items.They tend to be somewhat loyal to lower-priced brands, which often happen to be private label brands. However, they are happy to switch for discounted brands (to take advantage of sales promotions).
They are more likely to be low-income families (or middle-income families with a large home loan) and retirees.
|This market segment is highly price-sensitive and they seek out retailers who are discounters and retailers that adopt an everyday low pricing (EDLP) structure.They are less likely to frequent convenience stores and value savings over time.They tend to be significant users of coupons and loyalty programs.
| Everyday low pricing (EDLP)Clear pricing (easy to identify)
Consistent approach to pricing
A good selection of brands, including private label brands
Frequent sales promotions (discounts, coupons, buy one, get one free)
A day out
|These consumers enjoy shopping and are happy to spend large amounts of their time browsing and looking through stores.In particular, they enjoy bargains and finding new and unusual merchandise.They vary by demographic profile, but are generally more likely to be female and often will shop in social groups.
|This group of consumers like stores that are interesting in their layout and design.An array and variety of merchandise (product mix) is highly important to this target market as they seek out new products (and are less likely to be habitual purchasers as a result).
They also desire refreshment facilities (such as cafes) as they spend long periods shopping.
|Interesting store servicescape (that is, look, design, atmosphere)Changing and variety of merchandise, along with a good supply of new product lines
Occasional bargains (sales promotions)Friendly and helpful sales staff
Nearby or in-store facilities, such as seating and cafes
|This target market are seeking higher quality products (and foods in supermarkets) and are willing to pay a price premium.They tend to equate “value” with higher quality and some of these consumers derive social status from their purchasing behavior.
Typically, these consumers are middle to upper social class, underpinned by higher levels of both education and employment status.
|This potential target market segment has a preference for higher status brands.However, in the food product category, these brands are probably not mainstream and may be considered niche brands.They also enjoy variety of products and will often experiment with purchases
.They are generally not price sensitive and are less interested in loyalty programs.
|A range of higher quality productsA range of exclusive brands (brands not available in many stores)
Higher quality store servicescape (that is, store design, atmosphere)
Friendly and helpful sales staff
|These consumers take pride in their ability to shop. They see themselves as being quite effective in determining value and “spotting a bargain”.They are not the same as the budget-conscious market segment above, as they do not always look for the cheapest product.Instead they are looking for the best value product offer. This may be a major brand on discount, or a two-for-one offer, or a larger packaging size, and so on.
|This market segment like to generate self-esteem from their shopping success of obtaining bargaining. As a result, they dislike consistent product and pricing offers.Instead, these consumers need a variety of sales promotions and price differences between stores. This allows them to seek out the best offers in the marketplace.
They are more likely than most other market segments to be online shoppers as well.
| Frequent sales promotions (discounts, coupons, special gifts)Products sold in a variety of packaging sizes
Online shopping options, along with easy to find price information
Easy to compare price tickets (such as price per serving size)
Store catalogs that highlight the store’s weekly specials
Here we go again
|This target market does not enjoy shopping. In many ways they are the opposite to the “A Day Out” market segment. Hence, their label is “Here We Go Again”, indicating their disinterest in their regular shopping tasks, which they see as a chore.Therefore, they look for their shopping to be as easy and convenient as possible. And, as a result, look for online options and avoid shopping in crowded times and usually shop in smaller quantities.They differ from the “Fast and Furious” segment as they only shop when they have to, but they do like convenience.
|This group of consumers need convenience and simplicity. In other words, they want an easy, hassle-free shopping experience.They tend to more significant users of online shopping channels and home delivery services.They also like in-store options, such as express lines and self check-outs.
|Clear aisle design and easy to read signageConsistency of product mix and pricing
Easy online shopping
Home delivery services
Broad shopping hours
Spacious (not crowded and cluttered) store layout
|This final market segment tends to consist of innovators and early adopters.This segment likes to switch around and often try new things.In a supermarket setting, they like new tastes and flavors of foods. They are quite responsive to in-store demonstrations (free samples).Typically, these consumers are younger (under 50 years) and usually of a higher social class. As a result, there is a slight overlap with the “Gourmet Focus” segment.
|Variety seeker, as their segment profile nickname suggests, like to broad range of products to choose from.They also enjoy new products and offerings.Unlike the “Gourmet Focus” segment, they are willing to buy across the full price spectrum and are not just limited to higher quality products.Therefore, they seek new products, rather than just higher quality and higher status brands.
|A variety of products within each categoryA broad mix of brands, including private label brands
A good selection of new products
In-store demonstrations and free samples
Stores with evolving merchandise
For more market segmentation examples.