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Posted: November 19th, 2022
The purpose of this report is to analyze and explain how the food delivery company Deliveroo operates. Deliveroo's segmentation, targeting, and positioning strategies will be described and evaluated using practical examples. Furthermore, the four marketing mix Ps (product, promotion, price, and place) will be discussed, with examples of how Deliveroo uses them in their strategies. [Continue reading]
In the last decade, the food delivery industry has grown at an exponential rate. Factors such as technological advancement and increased demand for restaurant consumption increased its popularity (Pang et al). (2022). According to Pang et al. (2022), following the COVID-19 outbreak in 2020, most governments decided to go into lockdown for varying periods of time in order to slow the spread of the disease. Restaurants were unable to welcome guests through their doors during the lockdown, so takeout was the only option available to businesses and customers. According to Statista (2022), the foodservice delivery market in the United Kingdom was valued at approximately 10.5 billion British pounds in 2021, with this figure expected to rise to 14.6 billion British pounds by 2024.
Will Shu founded Deliveroo in London in 2013 with the goal of bringing the best local restaurants directly to people's doors. According to the official website of Deliveroo (2022), the company now operates in 11 markets around the world, collaborating with 160,000 restaurant and grocery partners. On March 31, 2021, Deliveroo was listed on the London Stock Exchange, becoming the largest listed technology stock, which was extremely important to the United Kingdom following Brexit (Pang et all 2022). [Continue reading]
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SEGMENTATION
Market segmentation is the process of identifying market segments and dividing a large customer base into subgroups of current and prospective customers. Researchers typically look for shared characteristics such as common demands, similar hobbies, comparable lifestyles, or even similar demographic characteristics such as age, gender, religion, income, and race when separating or segmenting markets. As a result of market segmentation, different groups require different marketing strategies, as clients are typically targeted through varying offers, prices, promotions, distributions, or combinations of marketing characteristics (Kotler et all., 2019).
There are four types of segmentation: geographic, demographic, behavioral, and psychographic (Kotler et all., 20219).
"Geographic segmentation divides the market into geographic units such as nations, states, regions, countries, cities, or neighborhoods," according to Kotler et al. (2019). This is beneficial because it allows businesses to understand what customers from various areas require, allowing them to tailor their services and products to meet all demands. Deliveroo has a strong urban segmentation; in fact, its product offerings vary depending on location, and it is only available in large cities where the dense population benefits from a wider range of options. As shown in the diagram below, when a customer visits the Deliveroo Official website, they must enter their postcode in order to access the restaurant selection in their area.
1st Figure
Furthermore, demographic segmentation appears to be critical when analyzing the market. According to Kotler (2019), marketers frequently segment customers based on their age; each generation is influenced by the times in which they grow. Customers with similar political, cultural, and economic experiences often have similar ethics and prospects. Customers are classified by Deliveroo based on their age and occupation. The first group consists of adult employees, with the company emphasizing dependability and speed because these customers are more likely to have a limited amount of time available to consume their meals. The second group consists of teenagers and students who are looking for more affordable solutions; the company's marketing focuses on providing discounts. If the price is lower, students and teenagers are more likely to wait for their meal. [quotation?]
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Furthermore, marketers categorize customers based on their actions. According to Kotler (2019), companies can study their customers based on their 'user status,' which includes their prior experience with the company. Understanding consumers' interactions with the company is critical because each type of interaction necessitates a different marketing strategy. Deliveroo employs this strategy by arranging the algorithm based on previous orders placed by customers. The app will present consumers' favorite restaurants and will generate a personal recommendation for the best restaurant in the area, broadening their options. As a result, the app will be more appealing, relevant, and the overall experience will be enhanced, and consumers will be motivated to use it on a regular basis.
Finally, psychographic segmentation divides customers into groups based on psychological traits, values, or lifestyle. According to Kotler et al. (2019), this market segmentation is extremely useful because consumers' demographic, behavioral, and geographic characteristics do not always accurately reflect their essential needs. Furthermore, psychographic segmentation can be based on a consumer's gender or sexual orientation. According to the ONS (Office for National Statistics, 2022), "an estimated 3.1% of the UK population aged 16 years and over identifies as lesbian, gay, bisexual, or transgender (LGB) in 2020, up from 2.7% in 2019 and nearly double the percentage from 2014 (1.6%)." According to Kotler et al. (2022), the LGBT market is worth $917 billion in purchasing power, and 75% of LGBT adults, as well as their family, friends, and relatives, said they would switch to LGBT-friendly brands. Deliveroo has a campaign launched in June 2021 named “deLOVEroo’s School for Allies” with the purpose of supporting LGBT communities, from riders to partners and customers by educating people about the LGBTQ+ history (Deliveroo Full Life, 2021). Therefore, Deliveroo is targeting this market by raising awareness about this subject.
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