The market for cereal can be divided into segments, each with its own needs and wants. The key to successful marketing is understanding these different segments and targeting them with the right products.
One of the most popular methods for performing market segmentation uses demographic factors like age, gender and income.
Other methods use psychographic factors like lifestyle, motivations, values, likes and dislikes as well as behavioral factors like purchasing habits, how someone intends to use a product or service, how often they will use it, the benefits they seek, or brand preference that they have.
In this article, we will segment the market for cereal using the following 7 variables: type of cereal, price range, ingredients, taste/flavor, organic (or not), health benefits, and brand.
But first, let’s start by understanding why cereal market segmentation is important.
The Importance of Segmentation of the Market for Cereal
The segmentation of the target market for cereal is essential because it allows cereal makers and grocery stores to target specific groups of consumers with laser precision.
By understanding the needs and wants of different segments, businesses can create cereal products that are more likely to appeal to them and grocery stores can stock cereals that their customers are most likely to buy.
The market for cereal ranges from those looking for simple everyday breakfast cereal to those seeking an organic cereal with specific health benefits.
Similarly, some people may look for a cereal that is high in fiber while others may want one that is low in sugar.
There exist a cereal for every budget and every dietary need, but not all types of cereals are popular with all consumers.
By segmenting the cereal market, businesses can identify which type of cereals are most popular with each group and target their marketing and sales efforts accordingly.
Variables for Cereal Market Segmentation
Cereal market segmentation can be performed along the following 7 axes:
- Type of cereal
- Price range
- Ingredients
- Taste/flavor
- Organic (or not)
- Health benefits and
- Brand.
Different people have different needs, wants and motivations for purchasing cereal.
And so most cereal manufacturers do not cater to all buyers. Instead, they focus on those segments of the market that are most likely to buy their products.
With market segmentation, they can target specific groups of consumers with products that satisfy their needs.
It is therefore essential that businesses decide which segments they want to target and then design their cereal products, marketing, and sales strategy accordingly.
Let’s now look in detail at each of the 7 variables used in cereal market segmentation.
#1. Segmentation Based on Type of Cereal
The type of cereal is the biggest driving factor when a consumer buys cereal. This is because people are very loyal to their tastes. This means if someone likes a certain type of cereal, say, Oats, they are likely to purchase the same cereal every time they go grocery shopping.
There are broadly two types of cereal that people consume: hot cereal and cold cereal. Hot cereal includes oats, porridge, and muesli while cold cereal includes cornflakes, Special K, and granola.
There are also a few sub-categories within these two main types. For instance, hot cereal can be further divided into oatmeal, cream of wheat, farina, etc. Similarly, cold cereal can be divided into cereal bars, puffed cereal, flakes, etc.
Other types of cereal include whole-grain cereal, bran cereal, organic cereal, and cereal with added health benefits like fiber or protein.
Each type of cereal appeals to a different segment of the market and so businesses need to decide which of their products is made for which customer segment.
#2. Cereal Market Segmentation Based on Price range
Price is, of course, always a factor that influences consumer behavior.
When it comes to cereals, there are products available at all price points, from inexpensive cereals to premium products like organic cereal or cereals made for people looking for specific health benefits.
However, not all consumers are willing to spend a lot of money on a box of cereal, even if they like it.
For instance, a cereal that is perceived as being healthy may be more expensive than a cereal that is not, but the health-conscious consumer may not be willing to pay the premium.
On the other hand, a cereal that is not perceived as being healthy may be less expensive, but the price-conscious consumer may not be willing to buy it.
Cereal manufacturers need to understand the price sensitivity of different segments of the cereal market in order to set the right price for their products.
Cereal manufacturers and grocery stores often use price segmentation techniques to maximize their revenue and profit by extracting the most revenue out of each customer based on their willingness to pay.
#3. Segmentation Based on Cereal Ingredients
Many people believe that you are what you eat and so cereal ingredients are an important consideration for many cereal buyers.
There are a few different types of cereal ingredients that people look for:
- Whole grains: cereal made with whole grains is perceived to be healthier than cereal made with refined grains.
- Refined grains: cereal made with refined grains is generally less expensive than cereal made with whole grains.
- Organic ingredients: organic cereal is seen as being more natural and healthier than non-organic cereal.
- Added health benefits: some cereals have added health benefits like fiber or protein and people will look for these ingredients when looking for specialty cereals.
#4. Segmentation Based on Taste / Flavor of Cereal
As with any other food, the taste and flavor of cereal are important factors affecting consumer purchase decisions, and so are included in cereal market segmentation.
Here are some examples of cereal flavors that people look for:
- Fruity flavors: cereal with fruity flavors like berries or citrus is generally seen as being healthier than other cereal flavors.
- Chocolate / Sweet flavors: cereal with chocolate or sweet flavors are generally seen as being less healthy than other cereal flavors.
- Savory flavors: cereal with savory flavors like cheese or herbs is generally seen as being less healthy than other cereal flavors.
- Spicy flavors: cereal with spicy flavors like chili or ginger is generally seen as being less healthy than other cereal flavors.
The taste and flavor of cereal also affect the price segment that it appeals to.
For instance, a cereal with premium ingredients and a unique flavor profile may be more expensive than cereals with more basic ingredients and a more average taste.
#5. Segmentation Based on Organic (or not)
A growing number of people are interested in buying organic food, and cereal is no exception.
Organic cereal is seen as being healthier than non-organic cereal because no pesticides or other chemicals are used during its production.
Organic cereal is also generally more expensive than non-organic cereal.
Not all consumers are willing to pay the premium for organic cereal, but those who are looking for healthy cereal options will be willing to spend the extra money.
#6. Cereal Market Segmentation Segmentation Based on Health Benefits
Some of the loudest marketing claims that cereal manufacturers make usually revolve around the health benefits of their products.
For instance, cereals with added fiber, protein or fruit are seen as being healthier than cereal without these added ingredients.
Similarly, cereal with no added sugar is seen as being healthier than cereal with sugar.
Cereal manufacturers often use these health claims to segment the cereal market and appeal to people who are looking for healthy cereal options and are willing to pay a premium for the perceived health benefits.
#7. Cereal Market Segmentation Based on Brand
Finally, the brand of cereal is also an important consideration in cereal market segmentation.
People often have strong brand loyalty when it comes to cereal and will only purchase cereal from brands that they trust.
Cereal manufacturers often use marketing and advertising to build strong relationships with their consumers and create a sense of brand loyalty.
Also, humans are creatures of habit. This means if they like a particular cereal they will stick to it and not venture out and risk their breakfast on an unknown brand or product.
Conclusion
As you can see, the target market for cereal can be segmented using many variables and can be analyzed from different angles.
In this article, we performed cereal market segmentation following these 7 factors: type of cereal, price range, ingredients, taste/flavor, organic (or not), health benefits, and brand.
Cereal makers and grocery stores often use market segmentation to better understand their customers and figure out how to appeal to them.
With cereal market segmentation, they can better understand which of their products are likely to sell well and can target their audiences more effectively.
