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Consumer Behavior: Segmentation Analysis in the British
Travel Industry
Posted: December 10, 2011 in Academic papers
0
SEGMENTATION ANALYSIS IN THE TRAVEL INDUSTRY Written by Gilles Saraillon

table of contents

1. foreword

1. consumer behaviour & communications

I On the camel’s back

II The talk of the town

1. segmentation methods

I Generic segmentation models

II The Ark Leisure segmentation model

1. conclusions and recommendations

1. bibliography and references

1. foreword

Before attempting to address the challenges of this assignment, I’d like to point out a few issues that
I encountered while gathering informations and data in order to present a compelling perspective of
the matter at hand.

Despite hours of research on the internet and in libraries I had a hard time finding any free relevant
data regarding segmentation in theUK travel industry. As a matter of fact, numerous resources offer
insights on the subject but unfortunately, these resources come at a price (ranging from £300 to
£2,000).

In my opinion, it’s quite difficult for an individual student to paint an accurate picture and to
properly segment a whole industry without evidence-based materials such as market research
documents or similar data widely used by marketers.

That’s the reason why I had to resort to using general models from which I derived my findings and
conclusions. I’m not very keen on pure theoretical work to say the least, but to my great
disappointment, I lacked information covering the hard facts such as statistics and real-life market
survey results to back my assumptions.
Therefore, this work relies heavily on my own extrapolations and general frameworks by various
authors rather than current market research data findings emanating from primary research.

I tried my best to refrain from merely regurgitate generic informations and really emphasized on
using my own work experience and knowledge to write this report.

I hope that I succeeded in making the course material my ‘own’ so to speak and that the views
presented below are both comprehensive and representative of a good grasp of the subject matter.

______________________________________________________

2. consumer behaviour & communications

On the camel’s back

According to the World Tourism Organization (WTO) regular folks become tourists as soon as they
travel (by any transportation means) at least 160 km in any direction for a purpose other than
working or going home. This means that, distance-wise, your passport to adventure is just a stone-
throw’s away.

Modern transportation systems and infrastructures have considerably shrunken the perceived size of
the Earth. This ‘small—world syndrome’ is a blessing for millions of aspiring travelers who in the
past, didn’t dispose of the adequate resources (financial or temporal) to benefit from a nice vacation
in the sun.

Today’s tourist doesn’t have much in common with his ancestor. He generally has more time than
him, is likely to be more knowledgeable about possible travel destinations and he has greater buying
power (save currency fluctuations) because exotic places and activities have become much more
affordable than in the past.

Traveling abroad or staying in your home country to discover it (technically you can also be a
tourist in your own country) is hopefully synonymous with excitement, freedom and leisure. If it’s
not the case, then why go on vacation in the first place?

Thanks to the continuous expansion of niche services in the tourism industry, people have grown
accustomed to be offered very creative destinations and activities at any time of the year and for
almost any budget.

Cox & Kings Travel seems to be embracing this ‘shotgun’ approach with an extremely broad range
of specialized packages (shopping-centered, wine-centered, etc…), prices, services and more
generally travel ideas that span the four cardinal points, reach the poles in canoe and then go home
on a camel’s back. This is a situation of ‘consumer hyperchoice’, where options are so bountiful that
an untrained holiday-maker surfing their website might just walk away with a safari in Kenyawhen
he came to buy a cruise in the Caribbean. Having too many choices is actually detrimental to our
decision-making abilities and hinders our good judgment instead of aiding it (Mick, Broniarczyk &
Haidt, 2004)1.
This serve-all/be-all philosophy caters to a very fragmented market and the following work offers to
streamline it and make it as lean as possible, so marketing communications become easier to
perform and in return better responses will emerge.

The talk of the town

Buying a service is very different than buying a palpable product. This has to be taken into account
when trying to understand the motivations underlying the decision-making process of travel
products consumers. Besides, the ‘’high-spend aspect of tourism, means that tourism for the
consumer is a high-risk decision-making process’’ (Swarbrooke & Horner, 2007)2. In order to elicit
specific responses from the consumer, we must engage specific means. Exposing potential
consumers to a flurry of indiscriminated offers and packages won’t trigger the expected returns.

Involvement being “a person’s perceived relevance of the object based on their inherent needs,
values and interests’’ (Zaichkowski, 1985)3, it is of utmost importance to a company marketing a
product like travel packages that it does its very best to keep its customers engaged at every stage of
the purchase decision-making process.

Generally, consumer involvement rises according to the price or the complexity of the object sought
(product/service). The amount of time a prospective buyer spends gathering information about an
object is also telling. Routine purchases like food or toiletries require little to no involvement,
whereas a £2,500 travel package will have its prospect involved in a lot of information-seeking and
collecting before a purchase decision can be reached.

In the case of holidays, the seller has to make sure in every step of the buying process that relevant
and compelling informations are made available to the prospective buyer. Equally important is the
post-purchase assessment phase where, as we’ll see in figure 1.1, the feedback given by the seller
contributes to the overall experience and comforts the consumer in his choice.

The well-known buyer’s remorse effect takes place when there’s insufficient response or feedback
from the seller, plunging the consumer into an uncomfortable state where despite having been
convinced and having willingly purchased an item, and also probably being satisfied by it, he stills
needs input from the seller to comfort him once and for all in his choice. This is especially true with
pricey products or services like travel packages.

As we will see in the segmentation section of this work, behaviouristics, psychographics,
demographics or geographics also play a large role when it comes to buying and being. Many
external aspects are to be taken in consideration as well as internal aspects like personality traits,
lifestyle or social background just to name a few.

This model of purchase decision-making process was chosen for its clarity and because it illustrates
quite well where the challenges for Cox & Kings Travel lie. Having an internet website as a store-
front has obvious advantages but also hinders Cox & Kings’ ability to maximize their reach and
communicate in ways other than those offered by a direct marketing communications channel
(newsletters, banner ads, etc…).

Marketing budget and scope is unknown at the time of writing, but it is assumed that such a
company would greatly benefit from other ‘talking tools’ in order to engage its customers in
collaborative exchanges rather than mere transactional exchanges that occur independently of any
previous or subsequent exchange (Bagozzi, 1978 ; Houston and Gassenheimer, 1987)4.
In other words, these exchanges shouldn’t happen in a vacuum ; they should be conveyed through
different integrated and intertwined channels to maximize their effectiveness.

Figure 1.2 below depicts the ‘spectrum of marketing exchanges’ and sustains the view that in order
to build tight bonds with its customers, Cox & Kings should diversify its range of communications
tools. Engaged consumers are more likely to ‘feel at home’ if a particular company gives them the
latitude to express themselves by means other than those involving reaching their pockets or
swiping their credit cards.

This customer-centric approach is relatively recent and therefore it’s no surprise that many
companies are still lagging behind in this area. The concept of ‘pushing/pulling’ products or
services is old hat in an age where every effort is made to let the customer express his needs, wants
and demands more freely and more directly than ever.

Consumers are no longer passive recipients of marketing communications slavishly modeling their
behaviour in response to a unilateral flux of information. Consumer behaviour is “in fact an ongoing
process, not merely what happens at the moment a consumer hands over money […] and in turns
receives some good or service’’ (Solomon, 2009)5.

Without emphasizing too much on the marketing communications aspects, we see that consumer
behaviour for the tourist industry is positively affected by five major communications tools, as
evidenced by the ‘communication channels’ section of figure 1.1.

These tools are surprisingly absent from Cox & Kings’ arsenal, which mostly relies on direct
marketing to engage in communications with its customers.

It is the view of the author that glaring weaknesses exist in this area, and that positive attitude and
perception changes could be achieved provided that the proper course of action is taken.

A more thorough review of these means will be conducted in task II (renovation of website).

3. segmentation methods

Generic segmentation models

Below we’ll discuss the pros and cons of the generic segmentation models notably used in the travel
industry in an attempt to ‘pigeonhole’ consumers and hence make them more controllable and more
persuadable.

This figure takes a look a the four mainstays of market segmentation with a tourist industry
approach :

Figure 2.1 : Classic segmentation techniques (reviewed by Horner and Swarbrooke, 1998)

GeographicalAt a basic level, defines tourist DemographicAttempts to define tourist
consumers according to their geographic location consumers’ behaviour in relation to age, sex,
on the assumption that behaviour is influenced by family lifecycle stage, social class, income and
where people live. other such criteria.
BehaviouristicFocuses on tourist’s behaviour in
relation to a particular tourism product, and
PsychographicAssumes that tourist’s purchasing attempts to segment the market based on
behaviour is related to their personality or lifestyle. differences in behaviour, for example the
benefits sought, buying patterns and trends, or
degree of loyalty.

Geographic and demographic segmentation

At first glance, segmenting consumers using their geographic position seems like a seducing option.
As a matter of fact, most people nowadays are easily located. Whether by using the traditional
phone or business directory method or through various websites, most notably the social ones,
where most people are more than happy to share personal and confidential information with the rest
of the world.

Social networks, for better or worse, foster transparency and the need of belongingness. This results
in having people gratuitously give precise information regarding not only their gender, age or even
sexual preferences, but about their income, the make of their car or their favorite brand of toilet
paper.

A marketer’s dream some would say. Unfortunately, consumer behaviour is as complex and hard to
define as the human brain commandeering the behaviour itself. Therefore, marketers must be able
to point the finger on what really makes people ‘tick’ in order to achieve a somewhat accurate
result, and can no longer afford to rely exclusively on the yellow pages to build their marketing
campaigns.

Horner & Swarbrooke implicitly challenge the relevance of these methods by basically saying that a
sensible parallel cannot be drawn between the location of an individual and his/her predictable
behaviour in the context or role of a tourist consumer.

The two went as far as saying that geographic and demographic segmentation were ‘‘yesterday’s
techniques’’ when they critically wrote about it back in 1998! (Williams, 2008)6.

Another technique would be to hybridize geographic and demographic methods to create a more
refined way of segmenting consumers. However, geodemographics, are accordings to Williams,
‘’still relatively poor predictors of visitors’ leisure interests and associated touristic behaviour’’
(Williams, 2008)7.

This is probably due to the fact that despite quantitatively knowing more about consumers, we still
don’t know more about them qualitatively. This stresses the importance of having different
segmentation models to use and juggle with rather than a couple of inflexible ones that paint a
somewhat accurate picture, yet don’t make good use of ‘pigments’ to color the findings properly.

In other words, geographic and demographic segmentation might be a viable starting point and a
useful base of investigation but proves too narrow-sighted to procure the type of data modern
marketers need.

Psychographic segmentation

‘’Fashionable but too difficult to implement’’ (Horner & Swarbrooke, 1998)8. In just a short
sentence this segmentation method is swept away and deemed as unpractical. When looking at it a
bit closer it makes sense because it would be difficult to tie someone’s lifestyle to a predictable
consumer behaviour toward tourism.

To be extremely concrete and to the point : would it be possible to predict – with a fair amount of
accuracy – the expected behaviour of a prospective holiday-maker passionate about mountaineering
using only psychographics ? Probably not, because a lifestyle, and the opinions or attitudes
attached to it doesn’t do a good job of telling us what this person values. As we’ll see with the Ark
Leisure segmentation model, which blends three main elements of measures, values play a central
role in the definition of a precise segmentation.

Behaviouristic segmentation

This method focuses solely on discovering the behaviour of consumers in relation with a tourist
destination or product and categorizes them in term of visits (first-timers/returners), attitudes
towards the destination, etc…(Williams, 2008)9

Again, here it seems that using a behaviouristic segmentation along with the other models
mentioned above is still insufficient in the quest of reaching the heart of consumers and learning
about their values as a whole, not by ‘segmenting the segments’ so to speak.

The Ark Leisure segmentation model

This model was developed by Arkenford, a market research company that was commissioned by
Visit Britain and tasked to come up with a segmentation method that would no longer rely on data
about locations, populations and their psychographics or behaviours, but rather provide a solution
able to highlight the beliefs and values of holiday-makers in order to sell them not only a
destination product but also an experience relevant to their aspirations.

The Ark Leisure model consists of three elements :

Aspirations (value statements that identifiy segments on the basis of perceptions and judgements of
quality).

Life factors and choice drivers (such as income and stage in the family lifecycle).

Tourism purchase scenarios (eg accommodation and attraction preferences, purpose of trip,
satisfaction with choices previously made, and other purchase drivers and determinants).

(Williams, 2008)

As we can see from the elements chosen to form the model, a delicate blend of ‘soft’ (aspirations)
and ‘hard’ (income) factors are taken into account in order to produce more nuanced profiles that
hopefully are better suited to address modern tourism industry offerings.

Marketing to niches of consumers has become extremely popular lately with the advent of small
companies operating on well-defined markets with highly targeted offers.
This is especially true in the case of Cox & Kings given the constellation of offers and packages
they propose. It would be of great help if they could use the profiles below to provide a more
refined value tourism proposition.

Using this figure as a means to establish Cox & Kings’ current customer base would probably lead
to the realization that their offers and products could potentially cater to most of the value-based
segments above.

Indeed, if we take a closer look (figure 2.3 below) at the characteristics of the eight segments
composing this model, it’s rather easy to correlate a tourism product currently offered by Cox &
Kings.

This further demonstrates that the company tries to accommodate a wide spectrum of possible
clientele and by doing so paradoxically reduces its chance to address the needs of the most
financially attractive segments.

Furthermore, this generalist positioning might hurt them in the long run in a market where
consumers expect innovation, specific product knowledge and sophisticated offerings from
companies.

The figure has been annoted to show real cases of products matching possible segments.

Figure 2.3: Ark Leisure Segment Descriptors (Arkenford, 2008)

Cosmopolitansè example of product match :  Strong,
active,
Brazil in Style confident

(http://www.coxandkings.co.uk/tourdetails.aspx?  Style and
tourcode=bia2011&type=private&int=la) brand
important,
but as an
expression
of their
self-made
identity
 High
spenders
especially
on
innovation
and
technology
 Looking for
new
challenges,
new
experiences

 Globetrott
ers
 Independen
t in mind
and action
 Little
influenced
by style or
brand but
interested in
Discoverersè example of product match :
new options
Jidai Festival of Kyoto  Buy on
function
(http://www.coxandkings.co.uk/ideas-month.aspx?month=10) and value to
them

 Looking for
new and
educationa
l
experience
s
 Self-reliant,
internally
referenced
 Slow to
adopt new
Traditionalsè example of product match : options

Paris  Strong
orientation
(http://www.coxandkings.co.uk/citybreak.aspx? towards
tourcode=prt2008&type=short&int=ee) traditional
values

 Value
individual
attention
and service
Functionalsè example of product match :  Self-reliant

Barcelona  Price-
driven
(http://www.coxandkings.co.uk/citybreak.aspx?  Value
tourcode=bcs2010&type=short&int=ee) function
over style

 Traditional
values, but
interested in
new
experiences
, not risk
averse
 Largely
inactive,
low
spending
group
Habitualsè example of product match :  Very
traditional,
Malaga strongly
resistant to
(http://www.coxandkings.co.uk/citybreak.aspx? change
tourcode=pmg2010&type=short&int=ee)
 Risk averse

 Value
relaxation,
peace and
quiet
 Strongly
influenced
by what
others will
think
Followersè example of product match :
 Don’t want
Florence, Lucca & Pisa to be seen
as old
(http://www.coxandkings.co.uk/tourdetails.aspx? fashioned
tourcode=flp2011&type=private&int=ee)  Less active
 Slow to
adopt

 Avoid risk
High Streetè example of product match :  Mainstrea
m early
Bangkok & Koh Phangan adopters

(http://www.coxandkings.co.uk/tourdetails.aspx?  Followers
tourcode=gbth2&type=private&int=fe) of high
street
fashion
 Care what
others think
 Happy to
buy
packaged
options
 ‘Young
Free
Single’,
impulsive
 Fashion
Style Houndsè example of product match : counts
 Brand
Bordeaux Wine Tour counts
(http://www.coxandkings.co.uk/tourdetails.aspx?  Looking
tourcode=ckb2011&type=group&int=ee&tourtypesub=w) for fun
with
friends

 Most not
seriously
sporty

As further evidenced here, there really is ‘something for everyone’ in Cox & Kings’ catalog of
products. A typical gut-reaction would tell that the wider the selection the wider the reach.

This is not necessarily the case. As discussed before, wanting to cater to every segment possible is
commendable, but superfluous and counterproductive. Bargain shoppers don’t mix with high-end
boutique lovers, and the same can be said for the travel industry.

The Ark Leisure segmentation model is now ‘’extensively used by regional agencies and strategic
tourism bodies’’ (Williams, 2008)10, because of its effectiveness in detecting the most attractive
segments and its flexibility.

Although other segmentation models exist, it is the view of the author that if Cox & Kings is to
succeed in an increasingly competitive and targeted market, the adoption of the Ark Leisure model
seems inevitable.

According to what has been demonstrated it would be advisable for Cox & Kings to focus on three
main segments, namely the cosmopolitans, the style hounds and the discoverers. Their respective
social classes and relatively close situations in terms or age groups, cultural backgrounds and
attitudes make them attractive segments to cater to.

Besides, as we’ll see with the website renovation task, cosmopolitans are sensitive to technology in
a broad sense, so the opportunity to influence them with a sleeker, more current website design
proposition is definitely there. Positive forays could also be made by designing and promoting high-
tech destinations like Hong Kong, Taiwan or California. A trip to San Francisco tied-in with a
detour to the Silicon Valley for a ‘tech visit’ would work well in their case.
For the stylehounds segment, some thinking could be made in respects of strategic partnerships with
winemakers for example. A tie-in with strong brands like Curious Grape or Davenport would help
influence their choice and perception towards Cox & Kings as an innovative travel company daring
to brand their travel packages.

As for the discoverers, most of the offer is already there. What Cox & Kings need to do though, is
take those adventure-packed travel offers to the forefront and expose them in a much clearer,
assumed way. This would translate into an improved perception and a firmer attitude towards the
company’s offerings.

4. conclusions and recommendations

We have seen that Cox & Kings existing clients range from low-income, low-risk segments to the
adventurous and affluent consumer. Although this might appear as a strength, it actually is a
weakness that competitors could potentially exploit to their advantage in a market that present
multiple facets and where the consumer has grabbed the reins to make in own decisions.

It is also posited that an abundance of choices don’t necessarily translate to an abundance of sales. It
would be ill-advised to pursue divergent target markets in the hope that they’ll eventually coalesce
and form a coherent unit.

The reassuring over-simplification in offerings based on the generic segmentation models exposed
above actually serve the wrong purpose of presenting the market in a very basic way and might lure
companies into believing that simple explanations are often the truest.

The definition of future clients for Cox & Kings should be based upon the company resources and
specific knowledge as well as upon the respective attractiveness of the value-based segments
proposed by the Ark Leisure segmentation model.

Today’s tourist doesn’t have much in common with his ancestor : he is more demanding, better
informed and looking for offerings that provide high value for his money. Then it is all the more
natural that companies catch up with him, inform themselves about exactly who he is and provide in
turn what he wants.

It is thus recommended that Cox & Kings define their target consumer in a much clearer way and
learn to cater to fewer segments, according to pre-defined business objectives, whether they are
volume-based or profit-margin based.

As we’ll later see in the website renovation task, Cox & Kings’ future success heavily hinges on the
quality of their website and their capacity to engage their customers and converse with them in the
contexts exposed earlier.

A retrenchment is then in order if they want to compete with other sites that are leaner, less wordy
and less overwhelming. Less is definitely more in the age of information overload and in a context
where social networks, review sites or aggregators never cease to reinvent themselves in order to
keep up with the everlasting center of all attentions: the consumer.

5. bibliography and references

1. David Glen Mick, Susan M. Broniarczyk, and Jonathan Hait (2004). Choose, Choose, Choose,
Choose, Choose, Choose : Emerging and Prospective Research on the Deleterious Effects of
Living in Consumer Hyperchoice. Journal of Business Ethics 52: pp.207-11 ; see also Barry
Schwartz, The Paradox of Choice : Why More Is Less (New York : Ecco, 2005). Quoted in:
Michael R. Solomon (2009), Consumer Behaviour, p.332, ninth edition, New Jersey, Prentice
Hall.

2. John Swarbrooke & Susan Horner (2007). Consumer Behaviour in Tourism. Second Edition.
Oxford, Elsevier.

3. Judith Lynne Zaichkowsky. Measuring the Involvement Construct in Marketing. Journal of
Consumer Research 12 (1985) :pp.341-52. Quoted in: Michael R. Solomon (2009), Consumer
Behaviour, p.163, ninth edition, New Jersey, Prentice Hall.

4. R. Bagozzi (1978). Marketing as exchange : a theory of transactions in the marketplace.
American Behavioral Science, 21 (4), pp.257-261. F. Houston & J. Gassenheimer (1987).
Marketing and exchange. Journal of Marketing, 51, pp.13-18. Quoted in: Chris Fill (2009),
Marketing Communications – Interactivity, Communities and Content, p.8, fifth edition,
Harlow, Pearson Education Limited.

5. Michael R. Solomon (2009), Consumer Behaviour, p.34, ninth edition, New Jersey, Prentice
Hall.

6. Paul Williams (2008), Segmenting the Tourism Market, Insights.org.uk

7. Paul Williams (2008), Segmenting the Tourism Market, Insights.org.uk

8. John Swarbrokke & Susan Honer (1998). Key Issues in Market Segmentation in Tourism
Today. Insights, A7-A18 (1998), English Tourist Board. Quoted in : Paul Williams (2008),
Segmenting the Tourism Market, Insights.org.uk

9. Paul Williams (2008), Segmenting the Tourism Market, Insights.org.uk

10. Paul Williams (2008), Segmenting the Tourism Market, Insights.org.uk

Websites used :

www.arkenford.co.uk

www.insights.org.uk

www.coxandkings.co.uk

Figures :

Figure 1.1 : Middleton & Clarke (2001). Quoted in : Paul Williams (2008), Segmenting the
Tourism Market, Insights.org.uk

Figure 1.2 – Chris Fill (2009), Marketing Communications – Interactivity, Communities and
Content, p.8, fifth edition, Harlow, Pearson Education Limited.

Figure 2.1 : www.insights.org.uk
Figure 2.2-2.3 : www.arkenford.co.uk

Wordcount : 3,754 (biliography and references excluded)

____________________________________________________

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