Although targeted marketing approaches seem to make sense for restaurant marketers, a new study from the Cornell Center for Hospitality Research (CHR) finds that mass marketing strategies would be the best approach for increasing business.
The study, “The Target Market Misapprehension: Lessons from Restaurant Duplication of Purchase Data,” by Michael Lynn, is available at no charge from the CHR.
“The conventional wisdom among both researchers and operators is that target marketing is the way to boost market share,” said Lynn, who is the Burton M. Sack ’61 Professor in Food and Beverage Management at the Cornell School of Hotel Administration. “However, my study found that the market is not that diversified—that is, the customers move from one restaurant type to another more or less in proportion to a brand’s market share, and one restaurant’s customers are not all that different from another restaurant’s customers. For this reason, I believe that mass marketing strategies will be more successful than targeted approaches in bringing in customers.”
Lynn’s study sought to test the effectiveness of target marketing by determining the extent to which a particular restaurant brand shares its customers with other restaurant brands. The analysis found that the extent of sharing is almost completely explained by the restaurants’ market share, rather than by their market targets, even among restaurants that have very different price points and concepts.
Each restaurant brand shared its customers with the other brands in proportion to the other brands’ shares of customers and in inverse proportion to its own share of customers. Thus, big brands like McDonald’s and Subway tend not to share customers as much as small brands. This pattern of data suggests that the different restaurant brands do not attract substantially different types of consumers, which in turn suggests that restaurant brands should aim most of their marketing efforts at increasing their appeal to all restaurant customers.
About The Center for Hospitality Research
A unit of the Cornell School of Hotel Administration, The Center for Hospitality Research (CHR) sponsors research designed to improve practices in the hospitality industry. Under the lead of the center's 75 corporate affiliates, experienced scholars work closely with business executives to discover new insights into strategic, managerial and operating practices. The center also publishes the award-winning hospitality journal, the Cornell Hospitality Quarterly. To learn more about the center and its projects, visit www.chr.cornell.edu.
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