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Chapter 2

Market Segmentation and theHospitality Industry

Marketing in the Hospitality Industry

Fifth Edition

(270TXT or 270CIN)

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Competencies for

Market Segmentation andthe Hospitality Industry

1. Describe the value of geographic segmentation for

marketing in the hospitality industry.

2. Explain how feeder cities and city pairs may help

focus a companys marketing efforts.

3. Distinguish destination cities from destination

markets.

4. Describe the value of demographic customer profiles

for marketing in the hospitality industry.

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Competencies for

Market Segmentation andthe Hospitality Industry

5. Explain how the knowledge gained from benefit and

need segmentation can bring hospitality marketers

and operations managers into close working

relationships.

6. Describe the value of psychographic segmentation

for marketing in the hospitality industry.

7. Explain how combining different market

segmentation techniques provides valuable research

tools for marketing in todays hospitality industry.3

(continued)

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What Is Geographic

Segmentation?

The division of a market generally by:

Region Zone

State

District Metropolitan statistical area

Postal code zones (zip codes)

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The Value of Establishing

Geographic Market Segments

It enables marketers to focus the following:

Sales

Advertising

Public relations

Promotional activities

in the most appropriate areas of the country.

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Regions, Zones, and Districts

Regions: Established geographic subdivisions of a country.Natural borders often define.

Example: the western region, the area of the United States

west of the Rocky Mts.

Zones: Geographic areas smaller than a region (determined by

individual companies).

Example: the Illinois-Wisconsin zone

Districts: Geographic areas with a concentration of customers;

subdivisions of a zone.

Example: Chicago, Milwaukee, and La Crosse could be

districts in an Illinois-Wisconsin zone

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Feeder Cities and City Pairs

Feeder Cities: Principal cities within a region that

tend to feed travel to each other.

Example:

Los Angeles, which feeds Palm Springs, Las Vegas,Phoenix, and San Francisco, and which in turn

feed Los Angeles.

City Pairs: Cities between which a heavy travelpattern exists.

Examples:

Boston and NYC

Washington, D.C., and NYC 7

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Some Major World Traffic Flows

East Coast of North America to Europe

Europe to East Coast of N. America

Northern Europe to Southern Europe and the

Mediterranean

West Coast of U.S. to Japan and Asia

Far East to West Coast of U.S.

North and South U.S. to Mexico and Latin America

Japan to Hawaii and West Coast of U.S.

Japan to Asia and South Pacific

United Kingdom to Germany, France, Spain 8

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Destination Cities and

Destination Markets

Destination Cities: have unique attractions unto themselves

that create demand for travel

Examples:

Orlando, Las Vegas, Acapulco, West Palm Beach, Lake

Tahoe, Atlantic City

Destination Markets: create demand for travel not only

with unique attractions they offer, but also with theirmany centers of business and commerce

Examples:

New York City, Los Angeles

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Demographic Segmentation

Demographic segmentation: the categorization of

consumers by like characteristics, such as the following:

Sex

Age

Income

Home ownership

Marital status

Occupation

Education

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Benefit and Need Segmentation

Benefit and need segmentation: the categorization

of consumers on the basis of the benefits they seek

and the needs they expect to satisfy (and, in some

cases, the factors they hope to avoid)

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Psychographic Segmentation

Psychographic segmentation: the subdivision of a

market based on like needs and psychologicalmotivations of consumer groups

Tends to focus trends into key areas such as

activities, interests, and opinions (AIO)

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Price Segmentation

Price segmentation identifies groups ofconsumers within a market whose purchase of

products or services is within the limits of certain

dollar amounts.

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