Tuesday, April 3, 2012

Working Smarter: Dangers of Mixed Market Segments

I read recently about the unintended consequences a hotel owner had experienced when she provided both low cost alcohol and a children friendly restaurant environment. By trying to be all things to all customers, or to capture two entirely different markets, the hotel owner set up a failing business model. The chosen markets were essentially mutually exclusive.

Can you guess what the problem was?

Here's a clue: Young people (not all) like to whoop it up drinking, preferably cheap booze, and in the process they often use obscene language and occasionally gestures. Language and gestures that no parent would want their children to witness.

Ahh. There's the problem; the cheap booze brought to the hotel a crowd of people who drank too much, became boisterous and rude and frightened off the families who had come to share a nice night out with their kids.

The person who bought the hotel immediately increased the price of the liquor and finished up with a more upmarket clientele, middle-aged business people who wanted to have a social drink and a chat without drinking themselves to oblivion and without becoming loud and rude.

The families with children returned and although the volume of liquor purchased dropped, the price increase more than accommodated it. It was a win-win for customers and the business owner.

Think through your business model and ask if there are any hidden traps that might cause it to fail. If you have mixed market segmentation of your products or services, ask whether any segments are complementing or detracting from any others.

Share with us all what you find.

Robin


Working Smarter - Helping You Improve Business Performance

3 comments:

  1. Anonymous10:48 AM

    I know just how the clients with kids feel ... been there, done that.

    Good post. thanks.

    ReplyDelete
  2. Thanks for your comment.

    Robin

    ReplyDelete
  3. Anonymous5:31 AM

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    He always kept talking about this. I will forward this write-up to him.
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    ReplyDelete

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