MARKET SEGMENTATION
TARGETING
POSITIONING
Ch. 8
KOTLER, BOWEN, AND MAKENS. MARKETING FOR HOSPITALITY AND TOURISM. 6E.
PEARSON HIGHER EDUCATION. 2014
MARKET SEGMENTATION
• Dividing a market into distinct groups who have, or are perceived to have,
common needs, interests, and priorities that might require separate
products and / or marketing mixes
• There is no single way to do this
MARKET SEGMENTATION
• Enormous variety of variables
• Really, every single consumer
is a separate market (complete
segmentation)
• This is impossible, and
inefficient, so we look for wide
groups / classes / categories /
segments of buyers who share
a relatively dependable need
or buying response
• Can’t serve all customers
equally
MARKET SEGMENTATION:
GE0GRAPHIC
• World Region or Country
• Country Region
• City or Metro Size
• Density
• Climate
• All are important in
understanding preferences,
and making marketing
decisions
Different preferences in different
regions
In the south, people tend to like
spicier foods
Bring people to you, or you to them
MARKET SEGMENTATION:
DEMOGRAPHIC
• Age
• Gender
• Family size
• Family life cycle
• Income
• Occupation
• Education
• Religion
• Race
• Generation
• Nationality
MARKET SEGMENTATION:
DEMOGRAPHIC
• Most popular bases for segmenting
• 1. strong correlation between demographic
variables and consumer needs, wants, and usage
rates
• 2. easy to measure
MARKET SEGMENTATION:
BEHAVIORAL
Buyers grouped by their knowledge, attitude, use, or response to a
product
• Occasion
• Benefits
• User status
• Usage rate
• Loyalty status
• Readiness stage
• Attitude towards product
MARKET SEGMENTATION:
BEHAVIORAL
Occasion segmentation
• Holidays
• Honeymoons
• Weddings
• Birthdays
• Concerts
• Festivals
MARKET SEGMENTATION:
BEHAVIORAL
Group guests by the product Benefits they seek
• Hotels accommodating pets
• Restaurant appeal categories
• How important is food quality, menu variety, price, atmosphere,
and convenience
• Family-style restaurants guests value convenience and menu
variety
• Atmosphere restaurant guests value food quality and
atmosphere
• Gourmet restaurant guests value food quality
MARKET SEGMENTATION:
BEHAVIORAL
User status
• Non-user
• Ex-user
• Potential user
• First-time user
• Regular user
MARKET SEGMENTATION:
BEHAVIORAL
Usage rate
• Light
• Medium
• Heavy: 80/20 rule
• Promote your loyalty program
MARKET SEGMENTATION:
BEHAVIORAL
Loyalty status
• Would you market your product the same way to a loyal guest
vs a non-loyal one?
• None
• Medium
• Strong
• Absolute
• Price sensitive  insensitive
MARKET SEGMENTATION:
PSYCHOGRAPHIC
Divides customers based on
• Social class
• Lifestyle
• Personality
REQUIREMENTS FOR EFFECTIVE SEGMENTATION
• Is every variable important?
• Can group people by hair color, but is that helpful?
• Measurability: can you determine segment size and purchasing power
• Accessibility: can you reach the segment
• 20% of a restaurant’s guests near a university were frequent users, but they
had no common characteristics
• Students, faculty, staff, part-time, full-time, 1st -4th year…how can you assess
and serve this frequent-user segment
REQUIREMENTS FOR EFFECTIVE SEGMENTATION
• Substantiality: is the segment large enough or
profitable enough to serve as a market for your
business
• You have a great concept for an Ethiopian food restaurant,
but you put it in a small town with low population and
density, not a good fit for a niche
• Actionability: degree to which effective programs can be
designed for attracting and serving segments
• Is it going to cost to much to create a marketing program
MARKET TARGETING
• You have researched
and distinguished many
different market
segments, but which
ones provide the best
opportunity
MARKET TARGETING: EVALUATION CRITERIA
• Size, growth rate, and expected profitability
• Structural attractiveness
• Lots of competitors? Buyer power? Supplier power?
Substitute goods?
• Company objectives and resources
• Mission, vision, image
• Don’t want to overextend yourself, or go after a market
and fail
• KFC and healthy food
TARGET MARKET SELECTION STRATEGIES
Undifferentiated Marketing
• Ignore segment differences and go after the whole market
with one offering
• Marketing plan to reach the greatest number of buyers,
and focuses on the common need everyone shares
• Need a place to stay that is not my home
• Pro:
• Advertising is cheaper, research is cheaper
• Cons:
• Difficult to create a product that satisfies everyone
TARGET MARKET SELECTION STRATEGIES
Differentiated Marketing
• Target several segments and design separate products for each
• Reason why the major hotel chains have so many brands
• Typically yields more sales than undifferentiated (three brands in one
city vs 1)
•
•
•
•
•
Signature: Marriott
Luxury: Bulgari, Ritz-Carlton, JW Marriott
Lifestyle collection: Edition, Autograph Collection, Moxy, AC Hotels, Renaissance
Select service: Courtyard, Springhill Suites, Fairfield Inn
Extended Stay: Residence Inn, TownePlace Suites, Marriott Executive
Apartments
• Destination entertainment: Gaylord Hotels
TARGET MARKET SELECTION STRATEGIES
Concentrated marketing
• Pursue large share of a small market (or a few), instead of
a small share of a large market
• Good for companies with limited resources
• Less risk to go after a few markets than just one; basic
concept of diversification
MARKET POSITIONING
• You have broken down your market into segments, chosen the most
appropriate target markets, now how do you want to position your product in
the minds of these target market consumers?
• Product positioning: The way a product is defined by consumers on
important attributes, essentially meaning the place the product holds in
consumers’ minds relative to competitors
• Do not leave this to chance; plan for it
• McD: quick, low price, service with a smile
• BK: flame-broiled cooking method
• Wendy’s: only fresh meat, never frozen
• Checkers: double drive through, unique French fries
MARKET POSITIONING STRATEGIES
• Specific product attribute positioning
• Attribute MUST create a benefit for the guest
• Subway as a healthy alternative to fried fast foods
• Tag lines (Eat fresh), commercials support this (Jared), website gives nutrition info
• Stamford hotel: height
• Product class positioning
• Cruise lines typically position themselves against other forms of vacation instead
of against competitors
• How do we choose a positioning strategy?
Identifying
Competitive
Advantages
Selecting
Competitive
Advantages
Effectively
Communicate
Chosen
Position
• Better price or better bundle of benefits
• What are some potential competitive advantages a hotel can have?
MARKET POSITIONING: IDENTIFYING COMPETITIVE
ADVANTAGES
Physical attribute differentiation
• Design
• Motel/hotel “cookie-cutter” image
MARKET POSITIONING: IDENTIFYING COMPETITIVE
ADVANTAGES
• Service Differentiation
• Good reputation develops over time
• Four Seasons Istanbul Sultanahmet AND Bosphorous in
top 5 Travelandleisure.com Overall Service Rating 2013
• Personnel Differentiation
• Singapore airlines, Southwest airlinesMarket positioning:
identifying competitive advantages
MARKET POSITIONING: IDENTIFYING COMPETITIVE
ADVANTAGES
• Location differentiation
• seaside view, nearby to public transport, airport
• One block can make a difference
• Central park view in NY or not
• On Bourbon St or Frenchman St. in New Orleans
• Motel right on the highway or not
MARKET POSITIONING: IDENTIFYING COMPETITIVE
ADVANTAGES
• Image differentiation
• I don’t want to visit China or India, but I would visit Thailand
• Diyarbakir
• Celebrity Cruise: “Casual luxury”
• Sheraton hotel: “You don’t stay here, you belong”
• Ritz-Carlton: “We are ladies and gentlemen serving ladies and
gentlemen”
• Royal Caribbean: modern, technological, innovation
Identifying
Competitive
Advantages
Selecting
Competitive
Advantages
Effectively
Communicate
Chosen
Position
MARKET POSITIONING: SELECTING COMPETITIVE
ADVANTAGES
How many to choose
• 1. Choose one attribute and stick to it
• We have the lowest prices
• 2. Choose multiple
• We have the best value AND service
• As a result of increasing competition and market
fragmentation, companies tend to choose multiple
advantages
• This increases risk as well
MARKET POSITIONING: SELECTING COMPETITIVE
ADVANTAGES
Potential Mistakes
• Underpositioning: failing to position the company at all
• Customer hears the name and can’t think of anything, or just
knows what product category the company is in
• Overpositioning: giving consumers too narrow a picture of
the company
• Confused positioning: the company’s positioning is unclear
• Every restaurant in Adana
MARKET POSITIONING: SELECTING COMPETITIVE
ADVANTAGES
Which differences to choose
• Important: buyers value the difference
• Distinctive: not offered by competitors
• Superior: the difference is a better way to obtain the benefit than
other options
• Communicable: visible to buyers and easy to understand
• Preemptive: competitors can’t duplicate it
• Affordable: buyers can afford it
• Profitable
Identifying
Competitive
Advantages
Selecting
Competitive
Advantages
Effectively
Communicate
Chosen
Position
MARKET POSITIONING: EFFECTIVELY COMMUNICATE
THE CHOSEN POSITION
• Can be difficult
• Entire marketing mix and marketing strategy must
support positioning strategy
• Work with advertisers who understand and deliver your
message in the right way
• Changes in management can change strategic decisions
• Positioning takes time to develop
MARKET POSITIONING MEASUREMENT: PERCEPTUAL
MAPS