Market segmentation is identifying the smaller market within the larger market in order to focus market strategies on the appropriate customer base for a business. Since a business cannot target every individual in a market it is important to breakdown the larger market into segments that would be best suited for the product or the service. At Chucky E. Cheese the market has been broken down to clearly identify the target market which in this case is families with younger aged children. Chucky E. Cheese was created as a place for family fun and entertainment. In order to ensure the right segment of the market is alerted to the presence of this establishment the marketing plan must target the right audience.
In order for Chucky E. Cheese to be a success the company must first identify the correct section of the market, understand the size of the market, make the targeted market accessible through promotion efforts, and assess the appropriateness of the policies and resources of the company (Moyaras, 2007). Chucky E. Cheese has been a success in part due to their ability to properly identify their target market and then create marketing strategies that target the parent by first attracting the child. While parents take the child to Chucky E. Cheese targeting the child as well as the parent has resulted in a larger customer base. For example if a parent asks their child “where would you like to go this weekend”, targeting the child gets the response, “Chucky E. Cheese”.
Chuck E. Cheese operates kid-friendly themed restaurants catering to families with children between 2-9 years old (Mayoras, 2007). Understanding the age group requires the deployment of a demographic market segmentation strategy. Older children are less interested in going to an establishment where the games and entertainment is geared for a younger age group. Teenagers would not be an appropriate market for this business because the entertainment includes tunnels, video games for younger children, big furry, robotic characters, and prizes suited for children under the age of ten. While older children may enjoy this setting the goal is to attract a younger child age group.
Demographic market segmentation is a common approach to segmenting the market. With this strategy, a company simply divides the larger market into groups based on several defined traits (Kokemuller, 2014). Applying a demographic segmentation strategy includes determining what ways will most effectively identify the market this company wants to target. To establish this target market was a part of the business model of Chucky E. Cheese making this marketing approach essential to their success. The demographic segmentation strategy applied was developing research on games and attractions children ages 2-9 would be most attracted to.
One major attraction for this age group is tunnels and play areas where children can climb. In order attract the target market; Chuck E. Cheese created an elaborate tunnel and play area in their locations. The location of Chucky E. Cheese was also an important consideration of the company. While the company understood their target market it was also important to identify the best geographic segmentation strategies. Geographic segmentation is the division of the market according to different geographical units like continents, countries, regions, counties or neighborhoods (Kokemuller, 2014).
At Chucky E. Cheese the family will spend at the very minimum $30 dollars in order to eat pizza and play the games available at the establishment (Moyaras, 2007). This is the low end of what will be spent in the establishment and in truth $100 or higher is the higher end of what a family will spend. Using this information, Chucky E. Cheese locations have been established in middle to upper class communities to ensure consumers in the area can afford the cost of visiting this type of entertainment venue. Establishing Chucky E. Cheese locations in markets where customers may not be able to afford the cost of the entertainment can result in lower sales for that particular location.
Psycho-demographic segmentation refers to the why a certain part of the market would be interested in the product or service being provided by the businesses. Chucky E. Cheese provides parents with a place to bring their children where they will be entertained and allow free. Parents can relax over some pizza while their children run around enjoying play areas or video games. Chucky E. Cheese is also a great place for parents to hold birthday parties for their younger children. Each Chucky E. Cheese location provides a party area for families wanting to celebrate their child’s birthday.
Behavioral segmentation is based on user behaviors, including patterns of use, price sensitivity, brand loyalty and benefits sought (Kokemuller, 2014). In the case of Chucky E. Cheese parents are offered free token for games if they purchase the pizza available at the establishment. These tokens can be used by the children saving parents money. The locations offer all types of specials to attract parents to the establishment as well as rewards for parents that repeatedly visit the establishment. Children that use the token for games will receive tickets that can be used for prizes. Children are excited about the prizes they can win resulting in the company generating more money for video games in order to get enough tickets.
The positioning strategy or brand strategy of a company is a comprehensive description of the core target audience to whom a brand is directed, and a compelling picture of how the marketer wants them to view the brand (Nielsen, 2010). In the case of Chucky E. Cheese the core target audiences are parents with small children and the target geographic location are middle to upper middle class communities. The four elements of the positioning statement include target audience, frame of reference, benefit/point of difference, and reason to believe. The target audience has been established while the frame of reference is the category in which the brand competes.
In this case Chucky E. Cheese competes in family fun and entertainment category successfully. The company has become a familiar staple for families seeking to entertain small children or to celebrate a child’s birthday. The benefit/point of difference for Chucky E. Cheese is the importance is plays in the memories of parents and children. Many children have had or have attended birthday parties at Chucky E. Cheese creating special memories. While other businesses similar to Chucky Cheese have been established for many the memory of childhood fun at Chucky cheese is an important childhood memory. Lastly is reason to believe. In this case Chucky E. Cheese has delivered for decade’s fun for the parent and the child. it has delivered on it mission that everyone leaves happy.
The positioning statement for this business could be “For parents and children, Chucky E. Cheese is an entertainment/arcade business that delivers a place of family fun because only Chucky E. Cheese is the place where lasting childhood memories are made”.
Kokemuller, N. (2014). Examples of Marketing Segmentation Strategies. Retrieved November 2,
2014 from http://smallbusiness.chron.com/examples-market-segmentation-14403.html
Mayoras, T. (2007). Chuck E. Cheese: Long Term Value Thanks To Demographics. Retrieved
November 2, 2014 from http://seekingalpha.com/article/40697-chuck-e-cheese-long-term-
Nielsen, L. (2010). What Is a Brand Positioning Statement? Retrieved November 2, 2014 from