What Theme Parks Teach Us About Market Segmentation
The Wizarding World of Harry Potter and Universal Island of Adventures have mastered the art of extracting value from customers
Editor’s Note: No Mercy/No Malice is a column from Professor Scott Galloway, where he shares various reflections on business, tech, and life on his mind each week.
Market segmentation is the process of dividing a large homogenous market into cohorts with similar needs or wants. You then design product/pricing/perception that match the preferences of that segment.
As marketing has evolved, managers had to figure out how to carve up the pig and sell different parts to different people, for various reasons and at varying prices, to capture surplus value. Differentiation of a product or service, real or perceived, is a form of price discrimination that helps maximize revenue while offering some consumers (21-day advance purchase and no cancellation) the chance to buy things for below cost.
Segmentation has become increasingly deft/daft. That’s not an exit row seat, but “Economy Plus,” worth an incremental $29. A coach seat closer to the front will set you back $40, and includes “up to” 4 inches of additional pitch. You can splurge and upgrade your hotel room from a “King” to a “Superior King,” which for another $79 includes a loveseat and table.
We segment our kids into favorites. I know how awful that sounds. We naturally begin to sort, as it helps any sentient entity, or manager, achieve success — allocate resources or capital to achieve greater return than their competitors. Note: The previous sentence was a bullshit/pedantic way of saying “prioritize.” I have a favorite son, always have. I think most parents do. That’s the bad news. The good news is it changes back and forth — we have two. We protect this secret (who is our favorite at any given moment) as if it was a nuclear launch code. Recognition you have a favorite outs you as a terrible parent, like Steve Jobs.