Market Segmentation and Targeting

Market Segmentation

• Is the process of dividing a large market into smaller groups with similar needs, characteristics, or behaviors.
• It divides a broad market into sub-groups of consumers.
• Creates subsets of a market based on demographics, needs, priorities, common interests, and other psychographic or behavioral criteria.
• 6 segments affecting firm operation: demographic, economic, political & legal, technological, business, and global.

The Advancement of Technology

• Firms and organizations develop new technology and products which provide significant advantages in market share.
• This leads to considerable market advantage.

The World of Business Segments

• Globalization creates opportunities and challenges for businesses.
• The current business scenario shows a trend of borderless flow of products and services in international trade and commerce.

What is Targeting?

• Involves selecting the most attractive market segments to focus marketing efforts.
• Involves segmenting the overall market into groups based on characteristics like demographics, interests, behaviors, and geography.
• Identifies potential customers, selects customers, and creates value.

Undifferentiated Targeting

• A single strategy for all segments.
• Also known as mass marketing.
• Aims to appeal to the largest possible audience.

Differentiated Targeting

• A unique marketing strategy for each segment.
• Known as multi-segment marketing.

Concentrated Targeting

• Focuses on a single, niche market segment.
• Also known as niche marketing.
• A company focuses on a specific target market.

What is Positioning?

• Creates a specific brand image in the minds of target consumers.
• Influences consumer perception of a brand.
• Focuses on creating a specific image of a brand in a customer's mind.

Positioning Strategies

• By Price and Quality: Budget hotels prioritize affordability, while luxury resorts emphasize exclusivity.
• By Location or Convenience: Positioning based on physical location, such as a city hotel for business travelers or a beach resort for vacationers.
• By Product Attribute: Highlighting unique features, such as an eco-friendly approach that differentiates a brand from competitors.

Product Mix

• Anything offered for use or consumption by a market.
• Includes tangible (physical) and intangible (service-related) aspects of the destination.
• Tangible elements: hotels, restaurants, and physical structures
• Intangible elements: climate, history, and destination's features
• Services: transportation, food, beverages, entertainment, and other services.

Product Levels

• Core Product: The fundamental benefit the customer gets from a product.
• Actual Product: Physical product with design, features, quality, and packaging.
• Augmented Product: Additional features that enhance the customer's experience, increasing the product value for both buyers and sellers.

Product Mix Strategies

• Expand Product Line: Offers various products to meet consumer needs.
• Contract Product Line: Reduces product offerings to focus on the most profitable.
• Alter Products: Modifies existing products to align with customer expectations and market demands.
• Differentiate Products: Highlights unique features or attributes to distinguish from competitors.

Tourism Product Development

• Market Research: Understanding customer preferences, emerging trends, and competitor offerings.
• Concept Development: Creating new or improved product ideas like excursions, themed packages, or specialized services (spa).
• Feasibility Analysis: Assessing if a product is financially, operationally, and market-viable.
• Product Design and Testing: Evaluating a product by testing it on a small scale and incorporating feedback for improvements.

Pricing Mix

• The monetary value customers pay to acquire a product/service.
• Includes costs like accommodation, travel expenses, and additional services.
• Influencing factors include cost of production, market demand, and competition.

Pricing Strategies

• Cost-Plus Pricing: Adding a fixed percentage to total production costs.
• Value-Based Pricing: Prices based on perceived value of the service.
• Dynamic Pricing Adjusted pricing based on demand, time, or bookings.
• Psychological Pricing: Setting prices slightly below whole numbers to impact customer perception.

Promotion Mix

• Communication strategies and tools used for informing, persuading, and reminding customers about products/services of a tourism or hospitality business.
• Aims to increase awareness, generate interest, and encourage bookings/purchases.
• Components include advertising, sales promotions, public relations, personal selling, and direct marketing.

Promotion Elements

• Message: The content communicated to target audiences to create interest or desire.
• Medium: The channels used to deliver the message.
• Target Audience: Specific customers most likely to benefit from the promotion.
• Timing: Aligning promotions with peak demand, peak season, or booking periods.

Developing an Advertising Campaign

• Define Objectives: Determine campaign goals like increasing bookings or awareness.
• Identify Target Audience: Understand the target audience's demographics, preferences, and behaviors.
• Craft the Message: Create compelling and engaging content.
• Choose Channels: Select appropriate media channels like social media, travel blogs or tourism magazines to reach a target audience.