Presentation on theme: "Define market segmentation."— Presentation transcript:
1Learning Objectives Chapter 7: Marketing Strategy: Market Segmentation and Trends Define market segmentation.Explain the importance of segmentation to effective marketing.Explain the benefits and limitations of market segmentation.List the eight criteria used to determine the viability of market segments.List the bases for segmenting hospitality and travel markets.
2Learning Objectives Chapter 7: Marketing Strategy: Market Segmentation and Trends Describe the major demand and supply trends influencing today’s hospitality and travel industry.Describe the recent trends in the segmentation practices of the hospitality and travel industry.
3Market Segmentation“The division of the overall market for a service into groups with common characteristics.”
4Benefits of Market Segmentation 1. More effective use of marketing dollars.2. Clearer understanding of the needs and wants of selected customer groups.3. More effective positioning.4. Greater precision in selecting promotional vehicles and techniques.
5Limitations of Market Segmentation 1. More expensive than using a non-segmented approach.2. Difficult to select the best base for segmenting a market.3. Difficult to know how finely or broadly to segment.4. Tendency to appeal to markets that are not viable.
6Market Segmentation Analysis: Two Steps Step 1 SEGMENTING the MarketDividing the overall market into subgroups (“market segments”) using one or more factors.Step 2 SELECTING Target MarketsSelecting those market segments (“target markets”) that the organization is best able to serve and appeal to.
7Eight Criteria for Effective Segmentation The target markets must be: MeasurableSubstantialAccessibleDefensibleDurableCompetitiveHomogeneousCompatible
8Seven Segmentation Bases: Seven Segmentation Bases GeographyDemographicsPurpose of tripPsychographicsBehaviorProduct-relatedChannel of distribution
9Segmentation Approaches Depends on number of bases (factors) applied:Single-stage segmentation (one base).Two-stage segmentation (two bases).Multi-stage segmentation (three or more bases).
10Trends in Market Segmentation Usage in the Hospitality and Travel Industry Becoming increasingly sophisticated.Computer programs and databases assisting with more thorough segmentation analysis.Switching from “traditional” segmentation bases to more sophisticated bases such as behavioral and psychographic.
11Changing age structures. Demand-led TrendsChanging age structures.Changing household structures.Changing household roles and responsibilities.Increasing importance of minorities.Changing social/cultural patterns and lifestyles.Increased demand for specific travel alternatives.
12More emphasis on the frequent traveler. Supply-side TrendsMore emphasis on the frequent traveler.More attention to fitness and health needs.More attention to luxury/executive travelers.Increased emphasis on longer-stay travelers.Greater variety of ethnic food offerings.
13Supply-side TrendsIncreased supply of cruises, gambling, travel agencies, special-interest travel, etc.Increased emphasis on weekend packages and other “mini-vacations.”More emphasis on female travelers.Greater emphasis on convenience in services and on service quality.