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Segmentation, Targeting and Positioning


Segmentation, Targeting and Positioning Objective: Discussing the importance of segmentation, targeting and positioning in the communication process. – PowerPoint PPT presentation

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Title: Segmentation, Targeting and Positioning

Segmentation, Targeting and Positioning
  • Objective Discussing the importance of
    segmentation, targeting and positioning in the
    communication process.

Importance of Targeting
  • In order to create effective marketing
    communications, managers need to identify their
    companies target market(s) and then direct their
    communications to these people.
  • Messages need to be designed and positioned in a
    way to connect to and attact specific target

  • Originally, a market is defined as a physical
    place where buyers and sellers gather to exchange
    goods and services.
  • In marketing, a market is the set of all actual
    and potential buyers of a product or service.
  • Since peoples buying behaviors and
    characteristics differ, it is not possible to
    satisfy all consumers in the market for many
    tourism and hospitality services. Therefore, they
    need to determine target markets for their
    operations. This task involves three steps.

Steps in Target Marketing
  • 1. Market segmentation dividing a market into
    distinct groups of buyers with different needs,
    characteristics or behaviors who might require
    separate products or marketing mixes.
  • 2. Market targeting evaluating each market
    segments attractiveness and selecting one or
    more of the market segments to enter.
  • 3. Market positioning setting the competitive
    positioning (difference) for the product and
    creating a detailed marketing mix.

Market Segmentation
  • Involves the following steps
  • Identifying bases for segmenting the market
  • Developing profiles of resulting segments

Market Targeting
  • Involves the following steps
  • Developing measures of segment attractiveness
  • Selecting the target segments

Market Positioning
  • Involves the following steps
  • Developing positioning for each segment
  • Developing marketing mix for each target segment

Bases of Market Segmentation
  • There are various ways to segment a market. A
    marketer has to try different segmentation
    variables, alone and in combination to understand
    the structure of the market in the best way. The
    following are the major ones used to segment
    tourism and hospitality markets
  • demographic segmentation
  • behavioral segmentation
  • psychographic segmentation

Demographic Segmentation
  • Companies divide the market into groups based on
  • age and life stage needs and wants change with
    age, that is why, tourism and hospitality
    organizations may use different marketing
    approaches for different age and life stage. E.g.
    Families with young children have different
    requirements from a holiday compared to singles.
    Accordingly, the package holiday market is mostly
    segmented by age.

  • gender men and women have different tastes and
    values. Accordingly marketing messages should be
    designed based on the targeted gender to be
  • sexual orientation becoming a key segmentation
    variable for tourism and hospitality
    organizations and destinations. Some destinations
    are known for attracting these groups e.g.
  • ethnicity and cultural background race and
    ethnicity are also important variables as
    cultural norms and customs influence food
    choices, attitudes towards travel, holidays and
    destinations. E.g. Visiting family and relatives
    during Bayram.

  • socio economic variables include occupation,
    income, education and social class. Although
    social classes differ by country, they are quite
    useful and easy to measure. In the same social
    class, people have similar consumption patterns,
    tastes, lifestyles and values. Since people in
    different social classes differ in what they
    read, which TV programs to watch and what
    activities they take, social class is a very
    important base in seg is mainly used for
    automobiles, boats, clothing, cosmetics,
    financial servicesmentation in designing arketing
    communications. People also differ by income.
    Accordingly tourism and hospitality operations
    offer different products, e.g. Holiday Inn offers
    upscale properties Crowne Plaza, economy
    properties Hampton Inn, luxury Embassy Suites

  • geographic region can be used in terms of pure
    geographic region, or in combination with
    demographic (geodemographic) variables by tourism
    and hospitality firms, e.g. higher income
    consumers live in the European side of Istanbul.

Behavioral Segmentation
  • Companies may divide buyers into groups based on
    their knowledge, attitudes, uses or responses to
    a product.
  • benefit sought from the experience benefit
    segmentation considers the reasons why people buy
    tourism and hospitality services. While leisure
    travelers may look for otal relaxation, or
    authentic experiences, business travelers would
    be interested in the speed of service, access to
    wireless internet etc.

  • As service benefits, one of the following product
    categories can be used
  • Product benefit (core product) at the heart of
    the holiday experience, a set of values may be
    offered as the main benefit e.g. ultimate luxury,
    paradise, total pampering, economy, etc.
  • Product attributes (actual product) tangible
    features of the service, servicescape or the
    physical evidence, design, branding and packaging
    may be offered as the main benefits.
  • Marketing support services (augmented product)
    including after-sales services, guarantees,
    customer loyalty schemes, etc.These can
    contribute to the benefits sought.

  • attitudes, perceptions, values, beliefs as they
    are strongly linked to behavior, they are helpful
    to understand how customers groups view tourism
    and hospitality services. E.g. Backpackers.
  • decision-making processes brand loyalty, risk
    perception, adption of new innovations, choice
    criteria, selection variables are examples that
    influence decision making.
  • usage patterns/frequency of use purchase
    occasions and type of use are important
    segmentation variables for tourism and
    hospitality e.g. leisure, business, convention,
    special occasion, overnight, short break, etc.

Psychographic Segmentation
  • Companies may also divide the market into
    different groups based on
  • personality and identity very useful for tourism
    and hospitality services as these services are
    consumed as an expression of self-identity and
    personality. Participation in certain leisure
    activites are an expression of personality.
  • lifestyle this segmentation based on activities,
    interests and opinions is also common for tourism
    and hospitality. Mezzaluna targets to a business
    lifestyle, whereas the rest of the restaurants in
    Ankuva to a student lifestyle.

Target Marketing
  • After segmenting the whole market, the firm has
    to evaluate these segments and decide how many
    and which ones to target. The company should
    enter segments only where it can offer superior
    value and gain advantages over competitors.

  • In evaluating different market segments, a firm
    can look at whether the segment is
  • Attainable
  • Measurable
  • Large enough
  • Defendable
  • Sustainable

Selecting Market Segments
  • The company must decide which and how many
    segments to serve, in other words, the company
    must decide which market-coverage strategy to
  • There are three market-coverage strategies
  • undifferentiated marketing (exclusive
  • differentiated marketing (selective segmentation)
  • concentrated marketing (single segmentation)

Undifferentiated Marketing
  • A market-coverage strategy in which a firm
    decides to ignore market segment differences and
    go after the whole market with one offer.
  • Here, the offer focus on what is common in the
    needs of consumers rather than on what is
  • The company designs a product and a marketing
    program that appeal to largest number of buyers.

  • It relies on mass advertising and a superior
    image in peoples minds.
  • Provides cost effectiveness because of its low
    production, inventory, transportation,
    advertising, marketing research costs.
  • Have difficulties in (1) developing a product or
    brand that satisfies all consumers (2) keeping a
    strong place in the market and making profit,
    when several firms follow this strategy heavy
    competition develops (3) satisfying smaller

Differentiated Marketing
  • A coverage strategy in which a firm decides to
    target several market segments and designs
    separate offers for each. E.g. ETS tour offers a
    range of different products for different groups
    including cruise vacations, city breaks, culture
    tours, domestic and foreign tour packages, etc.
  • These companies hope for (1) higher sales (2) a
    strong place within each market segment (3) more
    loyal customers because the firms offerings
    match each segments desires better.

  • Creates better total sales, but increases the
    costs - developing separate marketing plans for
    the separate segments requires extra marketing
    research, sales analysis, promotional planning,
    channel management.
  • Because of the high costs involved in this
    approach, the company must compare increased
    sales with increased costs when deciding to use
    differentiated marketing strategy.

Concentrated Marketing
  • A market-coverage strategy in which a firm goes
    after a large share of one or a few submarkets.
    E.g. Saga Holidays concentrate on the over 50s
    age group, Solos Holidays targets the single
    traveler market.
  • Suitable for smaller companies to achieve a
    strong market place in the segments (or niches)
    that it serves because of its greater knowledge
    of the segments needs.

  • Involves higher-than-normal risks because the
    target may not respond or larger competitors may
    decide to enter the same market but offers
    operating economies because of specialization in
    production, distribution, and promotion.

Market Positioning
  • Once a company has decided which segments to
    enter, it must decide what positions it wants
    to occupy in those segments.
  • A products position is the place the product has
    in consumers minds relative to competing
    products. In other words, a products position is
    the set of perceptions, impressions, and feelings
    that consumers

  • hold for the product compared with competing
    products. E.g. Southwest airlines is positioned
    on economy, Ritz and Four Seasons on luxury.
  • Consumers simplify the buying process by
    categorizing products in their minds. Marketers
    do not leave their products positions to chance.
    They must plan positions that will give their
    products the greatest advantage in selected
    target markets.

  • Marketing communications are based upon
    positioning statements expressed in the slogans
    of the firms.
  • While product positioning are mostly based on
    technical features, quality, packages, design,
    etc., tourism and hospitality services are
    largely positioned on physical qualities or
    attributes of the destination based on the
    following resources
  • Culture and society, heritage, wildlife, climate,
    landscape and physical attributes.

  • In reality, marketers position their
    products/services based on any aspect of the
    marketing mix.
  • The following positioning strategies are
    particularly used for tourism and hospitality
  • image/brand
  • price/value dimension
  • referrals/testimonials/endorsements
  • physical evidence/destination resources/product
  • loyalty schemes/service guarantees/membership
  • access/place/distribution
  • people and service quality/service delivery

  • McCabe, S. (2009). Marketing Communications in
    Tourism and Hospitality Concepts, Strategies and
    Cases. Butterworth-Heinemann Oxford.
  • Kotler, P. Bowen, J. and Makens, J. (2010).
    Marketing for Hospitality and Tourism (5th. ed.).
    Prentice Hall New Jersey.
  • Kotler, P. and Armstrong, G. (2010) Principles of
    Marketing (13th ed.). Prentice Hall New Jersey.