Concept of Segmentation

Marketing in Tourism

Introduction

Market segmentation is a crucial aspect of modern marketing that involves dividing a large market into smaller, more homogeneous groups of consumers. This process allows companies to identify specific needs and characteristics of their target audience and tailor their marketing efforts to meet those needs. By focusing their marketing strategies on specific segments, businesses can improve the effectiveness of their campaigns and increase the return on their marketing investments.

There are several types of market segmentation, including demographic, geographic, psychographic, behavioral, and benefit segmentation. Demographic segmentation is based on factors such as age, gender, income, and education level, while geographic segmentation considers location and climate. Psychographic segmentation focuses on lifestyle, values, personality, and interests, while behavioral segmentation considers consumer behavior patterns and travel habits. Benefit segmentation is based on the benefits that consumers seek, such as adventure, relaxation, or cultural experiences.

Market segmentation allows businesses to understand their target audience and create targeted campaigns that resonate with them. By focusing on specific segments, companies can improve customer satisfaction, increase customer loyalty, and ultimately drive sales. Market segmentation is a key tool for companies looking to stay ahead of the competition and achieve their marketing goals.

Definition of Segmentation

Segmentation is the process of dividing a market into smaller groups of consumers with similar needs or characteristics. It is a crucial aspect of marketing that allows businesses to tailor their marketing and sales efforts to specific groups of customers, improving the effectiveness and efficiency of their marketing strategies.

According to Philip Kotler, one of the most influential marketing theorists, segmentation is “the process of dividing a market into smaller groups of consumers with similar needs or characteristics, who might require separate products or marketing programs.”

Another author, Michael Porter, defines market segmentation as “the process of dividing a market into smaller groups of buyers with distinct needs, characteristics, or behavior who might require separate products or marketing programs.”

Both authors emphasize the importance of understanding the needs and characteristics of different groups of customers, in order to effectively target and serve these groups through marketing and sales efforts. By using market segmentation, businesses can improve the return on investment in their marketing and sales efforts, increase customer satisfaction, and ultimately drive sales and revenue for the business.

Segmentation

Market segmentation is a recognized and universally accepted way of analyzing demand. Market segmentation refers to the process by which people with similar needs and wants are grouped together for the purpose of better focusing on and serving the market.

Segmentation is based on four assumptions.

• First, the market for a product or service

• Second, these potential tourists can be grouped into segments the members of which each have similar and identifiable characteristics.

• Third, a single product offering

• Fourth, firms and organizations can improve their overall marketing effort by developing specific product offerings to reach specific segments of the market.

The process of segmenting a market can lead to many strategic management decisions. Market segmentation can be more than a statistical technique used to analyse demand. It can be utilized as a management tool that leads to specific marketing decisions. The development of such a strategy begins with the identification of profiles of segments of the market. At one extreme, a firm or destination may maximize its marketing orientation by developing a unique product offering for every potential tourist. Limitations of time and money prevent this. At the other extreme, the firm or destination may save time and money by offering one basic option to everyone. Although that one option will undoubtedly appeal to some potential tourists, it will not to others. The compromise is to assemble potential tourists into segments, each segment having similar preference characteristics, and produce offerings geared to the needs of these segments.

A Segment Must Be

In order for a market segment to be effective, it must meet certain criteria. These include:

Measurable

A measurable segment is a market segment that can be quantified in terms of its size and characteristics. This means that the segment can be accurately defined and measured, allowing businesses to target their marketing efforts effectively.

Examples of measurable segments in the tourism industry include:

1. Age: The segment could be defined as people between the ages of 25 and 35, for example.
2. Income: The segment could be defined as people with an annual income of $75,000 or more.
3. Location: The segment could be defined as people who live in a specific city or region.
4. Travel behavior: The segment could be defined as people who take two or more international trips per year.

Having a measurable segment enables businesses to gather data on the size and characteristics of the segment, and use that information to create targeted marketing campaigns. This helps to increase the effectiveness of marketing efforts and improve customer satisfaction, as the marketing messages are tailored to the specific needs and preferences of the target audience.

Accessible

Can these tourists be reached through promotion’ and through existing or potential methods of distribution? How easy will this be?

An accessible segment is a market segment that can be reached through marketing channels such as advertising, promotions, or public relations. This means that the segment is within reach of the business and can be effectively targeted through marketing efforts.

Examples of accessible segments in the tourism industry include:

1. Online users: This segment can be reached through digital marketing channels such as search engine optimization (SEO), search engine marketing (SEM), and social media marketing.
2. Television viewers: This segment can be reached through television advertising.
3. Magazine subscribers: This segment can be reached through print advertising in magazines.
4. Event attendees: This segment can be reached through events and promotions.

Having an accessible segment is crucial for businesses, as it allows them to reach their target audience through marketing channels that are effective and cost-efficient. This helps to increase the effectiveness of marketing efforts, improve customer satisfaction, and ultimately drive sales.

Substantial

Are there sufficient numbers of tourists in this segment to support a marketing effort aimed specifically at them?

A substantial segment is a market segment that is large enough to make it economically feasible to target. This means that the segment is significant enough in terms of size and potential revenue to justify the investment of marketing resources.

Examples of substantial segments in the tourism industry include:

1. High-end travelers: This segment includes people who are willing to spend a significant amount of money on travel, and may make multiple trips per year.
2. Adventure travelers: This segment includes people who are interested in adventure activities such as hiking, rafting, and rock climbing.
3. Family travelers: This segment includes people who are traveling with children, and may be looking for family-friendly destinations and activities.

Having a substantial segment is important for businesses, as it allows them to allocate marketing resources to reach the largest potential customer base, and maximize the return on investment in marketing efforts. This helps to increase customer satisfaction, build brand loyalty, and drive sales and revenue.

Differentiable

The segment must have unique needs and preferences that can be addressed through targeted marketing efforts.

A differentiable segment is a market segment that has unique needs and preferences that can be addressed through targeted marketing efforts. This means that the segment is distinct from other segments in terms of their motivations, behavior patterns, and buying habits.

Examples of differentiable segments in the tourism industry include:

1. Cultural travelers: This segment includes people who are interested in exploring different cultures, visiting historical sites, and experiencing local customs.
2. Luxury travelers: This segment includes people who are looking for high-end, luxurious travel experiences, such as five-star hotels, private tours, and gourmet dining.
3. Environmental travelers: This segment includes people who are environmentally conscious and are looking for sustainable, eco-friendly travel options.

Having a differentiable segment allows businesses to create targeted marketing campaigns that resonate with the unique needs and preferences of their target audience. This helps to increase customer satisfaction, improve brand loyalty, and drive sales and revenue, as the marketing messages are tailored to the specific needs and interests of the target segment.

Defensible

Are the tourist characteristics unique enough to justify a separate programme targeted at them? Is such a programme immune to the mass marketing approach of competitors?

A defensible segment is a market segment that can be effectively defended able against competitors. This means that the segment is unique and not easily replicated by competitors, allowing the business to maintain its position as the leader in the market.

Examples of defensible segments in the tourism industry include:

1. Niche destinations: This segment includes travelers interested in visiting specific, unique destinations that are not commonly found in popular tourist destinations.
2. Exclusive experiences: This segment includes travelers looking for exclusive, one-of-a-kind travel experiences, such as private tours or unique cultural activities.
3. Premium products: This segment includes travelers looking for high-end, premium travel products and services, such as luxury hotels or first-class air travel.

Having a defensible segment allows businesses to differentiate themselves from their competitors, and position themselves as the leader in their market. This helps to increase customer loyalty, improve brand recognition, and ultimately drive sales and revenue. It also provides a barrier of entry for competitors, making it difficult for them to enter the market and gain a significant market share.

Durable

As the market develops, will this segment maintain its differences, or will these differences disappear?

A durable segment is a market segment that is stable over time, and is not likely to change rapidly or unpredictably. This means that the segment is resistant to external factors such as economic conditions, technological advancements, and market trends, and is therefore a reliable source of revenue for the business.

Examples of durable segments in the tourism industry include:

1. Baby boomers: This segment includes people born between 1946 and 1964, who are reaching retirement age and have more time and disposable income for travel.
2. Repeat customers: This segment includes travelers who have visited a destination before and are likely to return, providing a stable source of revenue for the business.
3. Family travelers: This segment includes families with children, who are likely to travel regularly and provide a stable source of revenue for the business.

Having a durable segment allows businesses to plan their marketing and sales efforts with confidence, as they have a reliable source of revenue that is resistant to external factors. This helps to increase customer satisfaction, improve brand loyalty, and ultimately drive sales and revenue for the business.

Competitive

Do we have a relative advantage over the competition in our attempts to serve this market segment?

A competitive segment is a market segment that is characterized by intense competition among businesses for the customer’s attention and business. This means that there are many businesses offering similar products and services, and the competition for customers is high.

Examples of competitive segments in the tourism industry include:

1. Popular tourist destinations: This segment includes destinations that are well-known and widely visited, and therefore highly competitive in terms of attracting tourists.
2. Online travel bookings: This segment includes the online travel booking market, which is highly competitive with many businesses offering similar services.
3. Budget travelers: This segment includes travelers looking for affordable travel options, and is therefore highly competitive in terms of price.

Having a competitive segment can be challenging for businesses, as they must work harder to differentiate themselves from their competitors and attract customers. This often involves investing in marketing and sales efforts, improving customer service, and offering unique or competitive pricing and promotions. However, competition can also drive innovation, improve the quality of products and services, and ultimately benefit the customer.

Actionable

An actionable segment is a market segment that can be effectively targeted and served through marketing and sales efforts. This means that the segment is reachable, and businesses can effectively communicate with and sell to the customers in this segment.

Examples of actionable segments in the tourism industry include:

1. Social media users: This segment includes travelers who are active on social media, and can be reached through social media advertising and marketing efforts.
2. Email subscribers: This segment includes travelers who have subscribed to a business’s email list, and can be reached through email marketing campaigns.
3. Local travelers: This segment includes travelers who live within a certain proximity to a destination, and can be effectively targeted through local advertising and marketing efforts.

Having an actionable segment allows businesses to effectively reach and communicate with their target customers, and drive sales and revenue. By focusing on actionable segments, businesses can improve the return on investment in their marketing and sales efforts, and increase customer satisfaction and loyalty.

Stable

A stable segment is a market segment that does not experience significant changes or fluctuations over time. This means that the needs and preferences of the customers in the segment remain consistent, providing a reliable source of revenue for the business.

Examples of stable segments in the tourism industry include:

1. Religious travelers: This segment includes travelers who are looking for destinations and experiences related to their religious beliefs, and their needs and preferences are unlikely to change significantly over time.
2. Adventure travelers: This segment includes travelers who are looking for adventurous travel experiences, such as outdoor activities, and their needs and preferences are unlikely to change significantly over time.
3. Business travelers: This segment includes travelers who are traveling for business purposes, and their needs and preferences are unlikely to change significantly over time.

Having a stable segment allows businesses to plan their marketing and sales efforts with confidence, as they have a reliable source of revenue that is not subject to significant changes or fluctuations. This helps to increase customer satisfaction, improve brand loyalty, and ultimately drive sales and revenue for the business.

A market segment that meets these criteria is referred to as a target market, and can be effectively targeted through focused and tailored marketing efforts. This can result in increased customer satisfaction, improved brand loyalty, and increased sales and revenue for the business.

Conclusion

market segmentation is a critical aspect of marketing that allows businesses to understand and target specific groups of customers with similar needs and characteristics. By dividing a market into smaller groups, businesses can tailor their marketing and sales efforts to effectively reach and serve these customers, improving the return on investment in their marketing strategies.

Market segmentation involves considering various factors, including demographic, geographic, psychographic, and behavioral factors, to identify and target specific segments of the market. To be effective, a segment must be measurable, accessible, substantial, differentiable, defensible, durable, competitive, and actionable.

By understanding the importance and process of market segmentation, businesses can improve their marketing strategies and drive sales and revenue for the business.