Learning Objectives
Chapter 7: Marketing Strategy: Market
Segmentation and Trends
1. Define market segmentation.
2. Explain the importance of segmentation to
effective marketing.
3. Explain the benefits and limitations of
market segmentation.
4. List the eight criteria used to determine the
viability of market segments.
5. List the bases for segmenting hospitality
and travel markets.
Learning Objectives
Chapter 7: Marketing Strategy: Market
Segmentation and Trends
6.
7.
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.
Market Segmentation
“The division of the overall market for a
service into groups with common
characteristics.”
Benefits 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.
Limitations 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.
Market Segmentation Analysis:
Two Steps
Step 1 SEGMENTING the Market
Dividing the overall market into
subgroups (“market segments”)
using one or more factors.
Step 2 SELECTING Target Markets
Selecting those market segments
(“target markets”) that the
organization is best able to serve and
appeal to.
Eight Criteria for
Effective Segmentation
The target markets must be:
 Measurable
 Substantial
 Accessible
 Defensible
 Durable
 Competitive
 Homogeneous
 Compatible
Seven Segmentation Bases
 Geography
 Demographics
 Purpose of trip
 Psychographics
 Behavior
 Product-related
 Channel of
distribution
Segmentation 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).
Trends 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.
Demand-led Trends
 Changing 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.




Supply-side Trends
 More 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.
Supply-side Trends
 Increased 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.