Segmentation

Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458

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Market Segmentation, Targeting and Positioning


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• Effective use of resources

• Gain a focus

• Create Value for a target market

• Positioning

Benefits of Segmentation


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Steps in Market Segmentation, Targeting, and Positioning

Market Segmentation

1. Identify bases for segmenting the market2. Develop segment profilesMarket Targeting

3. Develop measure of segment attractiveness4. Select target segments

Market Positioning

5. Develop positioning for target segments6. Develop a marketing mix for each segment


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Step 1. Market SegmentationLevels of Market Segmentation

Through Market Segmentation, Companies Divide Large, Heterogeneous Markets into Smaller Segments that Can be Reached

More Efficiently And Effectively With Products and Services That Match Their Unique Needs.

Mass MarketingSame product to all consumers

(no segmentation, i. e. a commodity)

Segment MarketingDifferent products to one or more segments

(some segmentation, i.e. Marriott)


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Regional/City

National

International

Step 1. Market SegmentationGeographic Segmentation

Market SegmentationGeographic Segmentation


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Geographic segmentation calls for dividing the market into different geographical units such as nations, states, regions, countries, cities or neighborhoods.

Characteristics of Indian Market• More than 5000 towns and over 638,000 villages.•Nearly 87% of these villages have a population of less than 2000 people.•About 16% of towns (out of 784 towns with a population of over 50000 people which account for 77 % of the urban population) account for 80% of the market-potential value.


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Market SegmentationDemographic Segmentation

• Dividing the market into groups based on variables such as:– Age– Gender– Family size or life cycle– Income– Occupation– Education– Religion– Generation– Nationality

Prentice-Hall, cr 20091- 8

Segmenting Consumers: Lifestyles

Psychographics

• The way we feel about ourselves

• The things we value

• The things we do in our spare time


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Market SegmentationBehavioral Segmentation

• Dividing the market into groups based on variables such as:– Occasions– Benefits– User status(Non Users, ex user, potential

users, First time users, and Regular user)

– Usage rate( Light, medium and heavy product users)

– Loyalty status (Hard core loyals ,Split Loyals ,Shifting Loyals, and Switchers)

– Readiness stage(Unaware, aware, Interested, Desire, Intend to buy)

– Attitude toward product (Enthusiastic, positive, indifferent, negative and hostile)


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Step 1. Market SegmentationSegments must respond differently to different marketing mix

elements & programs

Requirements for effective segmentation

Step 1. Market SegmentationSegments must respond differently to different marketing mix

elements & programs

Requirements for effective segmentation

• Size, purchasing power, profiles of segments can be measured.

• Segments can be effectively reached and served.

• Segments are large or profitable enough to serve.

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

ActionableActionable

• Effective programs can be designed to attract and serve the segments.


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Evaluating Market Segments

• Segment size and growth

• Segment structural attractiveness

• Company objectives and resources


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Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing Mix 1






MarketMarket

A. Undifferentiated Marketing

B. Differentiated Marketing

C. Concentrated Marketing

Step 2. Market TargetingMarket Coverage Strategies


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• Product’s PositionProduct’s Position - the way the product is defined by consumers on important attributes - the place the product occupies in consumers’ minds relative to competing products.

Marketers must:–Plan positions to give their products the

greatest advantage in selected target markets

Step 3: Positioning for Competitive Advantage


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Positioning Strategies

• Positioning by specific product attributes• Positioning by benefits• Positioning for user category• Positioning for usage occasion• Positioning against another competitors• Positioning against another product class


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• Step 1. Identifying Possible Competitive Advantages: Competitive Differentiation.

• Step 2. Selecting the Right Competitive Advantage: Unique Selling Proposition (USP).

• Step 3. Communicating and Delivering the Chosen Position.

Steps to Choosing and Implementing a Positioning Strategy


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Product Differentiation

• Physical attributes

• Service differentiation

• Personnel differentiation

• Location

• Image differentiation


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Which differences to promote?

• Important to customers• Distinctive• Superior • Communicable to customers• Preemptive• Affordable• Profitable


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Positioning map of service level versus price. Source: Lovelock, Services Marketing, Prentice Hall

Perceptual Map


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Perceptual Map

0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 -1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 -1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2

1.01.0

0.80.8

0.60.6

0.40.4

0.20.2

-0.2-0.2

-0.4-0.4

-0.6-0.6

-0.8-0.8

MagicMagicMountainMountain

JapaneseJapaneseDeer ParkDeer Park

BuschBuschGardensGardens

Knott’sKnott’sBerryBerryFarmFarm

LionLionCountryCountrySafariSafari

MarinelandMarinelandof theof thePacificPacific

DisneylandDisneyland

EconomicalEconomical

Fun ridesFun ridesExerciseExercise

FantasyFantasyGood foodGood food

Easy to reachEasy to reach

Educational,Educational,animalsanimals

Little waitingLittle waitingLive showsLive shows

Segmentation

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