Handbook On Tourism Market Segmentation

HANDBOOK ON TOURISM MARKET SEGMENTATION
Maximising Marketing Effectiveness – A Report of the Market Intelligence Group of the

EUROPEAN TRAVEL COMMISSION
HANDBOOK ON TOURISM MARKET
SEGMENTATION
MAXIMISING MARKETING EFFECTIVENESS
A Report produced for the Market Intelligence Group

of the European Travel Commission (ETC)
and for the World Tourism Organization (UNWTO)
by the University of Bedfordshire
Brussels, July 2007

ETC Market Intelligence Report
N° 2007 / 1
Copyright © 2007 World Tourism Organization and European Travel Commission
Handbook on Tourism Market Segmentation – Maximising Marketing Effectiveness

ISBN: 978-92-844-1207-5 (UNWTO)
ISBN: 978-92-990034-6-6 (ETC)
Published by the World Tourism Organization and the European Travel Commission
Printed by the World Tourism Organization, Madrid, Spain
First printing 2007
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Cover design by Switch Communications, Malta
Table of Contents
Foreword ............................................................................................................................ vii
Acknowledgements .......................................................................................................... ix
Introduction ....................................................................................................................... xi
Executive Summary .......................................................................................................... xiii
Purpose of this Handbook ................................................................................................ xv
1 Segmentation Explained ................................................................................................... 1

1.1 Introduction ................................................................................................................. 1
1.2 Tourism Propensity ...................................................................................................... 1
1.3 Market Segmentation .................................................................................................. 3
1.4 Segmentation Benefits ................................................................................................ 3
1.5 Segmentation Prerequisites ......................................................................................... 5
1.6 Segmentation Approaches .......................................................................................... 5
1.7 Segmentation Typologies ............................................................................................ 7
1.8 Targeting Segments .................................................................................................... 8
2 Current NTO Segmentation Practices ............................................................................. 11

2.1 Introduction ................................................................................................................. 11
2.2 Quantitative Analysis ................................................................................................... 11
2.2.1 Quantitative Insights ........................................................................................ 13
2.3 Qualitative Analysis ...................................................................................................... 14
2.3.1 Information Sources for Segmentation ............................................................ 14
2.3.2 Identifying Segments ....................................................................................... 18
2.3.3 Identifying ‘Best Prospect’ Segments .............................................................. 19
2.3.4 Selecting ‘Target’ Segments............................................................................ 19
2.3.5 Developing Marketing Activities for Segments ................................................. 22
2.3.6 Benefits of Market Segmentation .................................................................... 23
2.4 Good Practice Examples ............................................................................................. 23
3 Segmentation Methodologies in Action .......................................................................... 25

3.1 Introduction ................................................................................................................. 25
3.2 Socio-demographic Segmentation .............................................................................. 25
3.2.1 Case Study 1: How Britain Developed a Product for Indian Visitors ................. 26
3.2.2 Case Study 2: ‘Japanese Office Ladies’ and Britain’s Lake District .................. 28
© 2007 European Travel Commission – ISBN 978-92-990034-6-6

iv Handbook on Tourism Market Segmentation
3.3 Purpose of Trip Segmentation ..................................................................................... 28

3.3.1 Case Study: Differences Between Business, VFR, Leisure Tourists –
an International Visitor Study Analysis ............................................................. 29
3.4 Visiting Friends and Relatives (VFR) Segmentation ....................................................... 32
3.4.1 Case Study: ‘UKOK’ campaign ....................................................................... 32
3.5 Trip Pattern and Structure Segmentation .................................................................... 36
3.5.1 Academic Developments in Tracking Trip Patterns and Structures................... 37
3.6 First Time’ Versus ‘Repeat Visitors’ Segmentation ....................................................... 38
3.6.1 Case Study 1: First Time Versus Repeat Visitor ............................................... 39
3.6.2 Case Study 2: First Time Versus Repeat Visitor ............................................... 39
3.7 Benefit Segmentation .................................................................................................. 40
3.7.1 Case Study: Monitoring Surfers’ Segment Benefits in Australia ....................... 41
3.8 Activity Segmentation .................................................................................................. 42
3.8.1 Case Study: How Ireland Inventories Activities and Interests as
Strategic Priorities ........................................................................................... 43
3.9 Motivation Segmentation ............................................................................................. 46
3.9.1 State-of-the-Art Academic Research on Motivation ......................................... 47
3.10 Lifestyle Segmentation ................................................................................................ 50
3.10.1 Case Study 1: United Kingdom Traveller to Australia ....................................... 52
3.10.2 Case Study 2: Massachusetts (MOTT) Lifestyle Segmentation Study .............. 55
3.11 Niche Market Segmentation ........................................................................................ 56
3.11.1 Case Study 1: ‘Book Towns’ – Niche Markets in Europe, America and Asia .... 57
3.11.2 Case Study 2: The ‘Walking’ Market in Ireland................................................. 58
3.12 Geo-demographic Segmentation ................................................................................ 59
3.12.1 Case Study 1: National Geo-demographic Typologies ..................................... 60
3.12.2 Case Study 2: Geo-demographic Analysis of Tourism South East/UK ............. 62
3.13 Price Segmentation ..................................................................................................... 65
3.13.1 Assessing the Relative Cost of Destinations .................................................... 65
3.14 Media Audience Segmentation .................................................................................... 66
3.14.1 Case Study: Sunday Times Travel Magazine ................................................... 67
3.15 Internet Segmentation ................................................................................................. 69
3.15.1 Case Study 1: How New Zealand Targets the Interactive Traveller ................... 69
3.15.2 Case Study 2: Internet Usage as an Indicator of International Market Potential
to Jordan ........................................................................................................ 71
3.16 Business to Business Segmentation ............................................................................ 72
3.16.1 Case Study 1: How New Zealand Segments the Business-to-Business
Supply Chain in the US Market........................................................................ 73
3.16.2 Case Study 2: How BTA Targeted Tourism Partnerships for its ‘UKOK’
VFR Campaign................................................................................................ 73
3.17 No Segmentation ........................................................................................................ 75
4 Practical Guide to Segmentation ..................................................................................... 77

4.1 Introduction ................................................................................................................. 77
4.2 Defining Tourism Objectives......................................................................................... 79
4.3 Tourism Trends ............................................................................................................ 80
4.3.1 Quantitative Analyses ...................................................................................... 80
Table of Contents v
4.3.2 Qualitative Analyses ........................................................................................ 81

4.4 Market Environment .................................................................................................... 83
4.5 Competitive Environment............................................................................................. 86
4.5.1 Competitive Intensity ....................................................................................... 86
4.5.2 Competitive Benchmarking ............................................................................. 87
4.6 Product Audit .............................................................................................................. 89
4.7 Brand Audit ................................................................................................................. 91
4.8 Segment Research and Intelligence............................................................................. 92
4.9 Segmenting Markets ................................................................................................... 94
4.10 Selecting Target Segments .......................................................................................... 96
4.11 Marketing Strategy ...................................................................................................... 100
4.11.1 Product ........................................................................................................... 100
4.11.2 Place .............................................................................................................. 103
4.11.3 Price ............................................................................................................... 104
4.11.4 Promotion ....................................................................................................... 104
4.11.5 Resources....................................................................................................... 104
4.12 Evaluation and Review ................................................................................................ 105
4.12.1 Evaluation ....................................................................................................... 105
4.12.2 Review ............................................................................................................ 106
5 Conclusions and Recommendations .............................................................................. 109
Appendix – Questionnaire to NTOs ................................................................................. 111
Bibliography ....................................................................................................................... 115

Foreword
This handbook is the second in a series of joint collaborations between the European Travel Commission
(ETC) and the World Tourism Organization (UNWTO) in the area of methodological manuals. The first
handbook “Evaluating NTO Marketing Activities” has been very well received by the international
tourism industry and we hope that this handbook will be equally well received. We are very pleased,
once again, to have secured the services of the University of Bedfordshire (United Kingdom) to work
with us on this project.
We expect this handbook to help fill a gap identified by many National Tourism Organizations (NTOs).
ETC and UNWTO have been often asked to provide advice and guidance on current market segmentation
techniques and best practices. There is, therefore, clearly a general desire among NTOs and Destination
Marketing Organizations (DMOs) to improve the effectiveness of their marketing so that it is more
focused on meeting objectives and targets.
We believe that the segmentation of customers and markets is an essential ingredient of marketing
effectiveness. Segmentation is not new and it need not be complex. We are confident that this handbook
will help the tourism industry, and in particular NTOs, to demystify what segmentation is and how it
can be done.
We recognise that there are significant differences in the budgets of NTOs and that this affects their
ability to devote resources to the marketing cause. This, in turn, impacts upon the degree to which NTOs
can undertake segmentation-related research to support marketing activities. Nonetheless, we believe
that segmentation techniques can be applied, to a greater or lesser extent, by all NTOs if they desire
– regardless of budget. It is therefore our intention that this handbook can be utilised by all NTOs, to
some degree, as a tool for helping to optimise the return from their marketing spend. We also consider
this handbook to be of great value to all tourism organizations, regardless of whether they operate in
international or domestic tourism markets.
Leslie Vella (Chairman of the ETC Market Intelligence Group)

and John Kester (Chief, Marketing Intelligence and Promotion Department, UNWTO)

Acknowledgements
This report was prepared by Professor Ian Woodward and Professor Tony Seaton of the University of
Bedfordshire (United Kingdom), on commission to the European Travel Commission (ETC) and the
World Tourism Organization (UNWTO).
The report, which forms part of ETC’s ongoing Market Intelligence Programme, was carried out under
the supervision of Mr Christian Ørsted Brandt, Analyst at VisitDenmark, on behalf of ETC’s Market
Intelligence Group, and by UNWTO Market Intelligence and Promotion Department.
The members of the ETC Market Intelligence Committee who contributed to this exercise are:
Mr Leslie Vella (Chairman, Malta), Ms Lisa Davies (ETC Executive Unit), Ms Gaëlle Berréhouc (France),
Mr Christian Ørrsted Brandt (Denmark), Ms Alex Flack (United Kingdom), Mr Felipe Formariz (Spain),
Mr Augusto Huescar, Ms Sandra Carvão, Mr John Kester (UNWTO), Mr Brian Maher (Ireland), Ms
Carla Matta (Sweden), Ms José Nieuwhof (Netherlands), Mr Bill Richards (ETAG), Mr Joachim Scholz
(Germany), Ms Judit Sulyok (Hungary), Mr Tom Ylkänen (Finland) and Mr Jernej Zajec (Slovenia).

Introduction
In the year 2000, there were only 11.5 international trips per 100 population. While this figure has
increased from 4.5 in 1970, it is anticipated to be still at 21 international trips generated by 100
population by 2020.
Worldwide participation in tourism
1970 2000 2020
World population (million) 3,708 6,080 7,608
International tourist arrivals generated worldwide (million) 166 700 1,600
International tourist arrivals generated per 100 population 4.5 11.5 21.0
Source data: UNWTO and US Census Bureau
In essence, this means that a still significant percentage of the world’s population is unlikely to be in
the market for international tourism (because of cost, time, inclination, visa restrictions etc.) in any
one year; and are therefore extremely unlikely to respond to marketing messages aimed at coaxing
them to visit a destination outside of their home country. Indeed, even within this figure there will be
a large proportion of independent business and visiting friends and relatives (VFR) travellers for whom
an international trip is non-discretionary i.e. they need to travel to where the work or to where their
friend/relative is based.
With only a small percentage of the world’s population actively in the ‘market’ for an international trip
at any one time, and open to persuasion on which destination to visit, the amount of competition for
this business from the 200 or so NTOs around the world is intense. NTO marketing resource – usually
Government aided – is finite and therefore needs to be focused where it will achieve the desired results.
Segmentation is about focussing resources on those potential customers who are most likely to be
persuaded to visit the destination and who fit the profile of the ‘type’ of customer the destinations wants
to attract.
There is little point in spending significant marketing resource on those who have no opportunity to visit
the destination in the short to medium term (2 to 5 years). Doubtless there may be a case for spending
some resource, for example on building your destination brand in some markets, if the longer-term
outlook looks favourable. However, taking a long-term view of markets (5 years or more), and investing
heavily, is a risky business given the volatility of international relations/politics and the impact that
this can have on the flow of international tourism. A sensible balance needs to be struck between the
amount of NTO resource spent on stimulating business ‘now’ and that spent on developing business
for the future.
Segmentation has a role to play in developing both short and longer term marketing strategies. For
example, an NTO in its core markets may have decided to focus on ‘high spenders’ or ‘off-peak’ travel
segments – or others that will help fulfil its specific tourism objectives. In developing new markets,
an NTO may wish to identify ‘trail-blazers’ who might come to its destination in advance of others.
Identifying who these people are, what products they are seeking and how best to persuade them
to come to the destination, rather than to a competitor destination, is all part of the segmentation
process.
It is not our intention that this handbook should be ‘definitive’. There are numerous ways in which
NTOs can (and do) segment their customers; and new and innovative ways in segmenting markets are

xii Handbook on Tourism Market Segmentation
constantly being developed. This handbook intends to equip NTOs, but also DMOs, with the basic tools
to adopt and/or develop their own segmentation techniques.
This handbook has, therefore, been divided into four distinct sections to help the user.
• Firstly, it sets out the theory and rationale for using segmentation as an integral component of an
NTO’s marketing repertoire.
• Secondly, it examines the current segmentation methods/practices used by a variety of NTOs to help
understand the current state of the art thinking on segmentation and to identify best practices.
• Thirdly, some of the main segmentation methodologies are considered in detail.
• Finally, it suggests some practical steps that can be used in order to introduce, or develop further,
segmentation-based marketing activities. In this section, a plain language, rather than marketing-
speak, has been used so as to make the processes understandable to those with a non-marketing
background.
There may be commentators who feel that there are omissions from this book or that a favoured
segmentation technique is not given sufficient attention. For this reason, comments/feedback are most
welcomed in order that these can be considered for future editions.
Executive Summary
• Only a small percentage of the world’s population takes an international trip in any one year.
• Demand for tourism goods and services is not randomly or equally distributed throughout a
population.
• Minorities within a population are often likely to consume a disproportionately high volume of
the tourism product.
• Identifying and targeting segments most likely to purchase a destination’s tourism goods and
services, is critical to NTO marketing effectiveness.
• Each segment has its own distinct needs and/or patterns of response to varying marketing mixes.
• The most attractive segments should be targeted in line with resources available i.e. segments that
make the greatest contribution to achieving objectives.
• Identifying segments is greatly aided through access to visitor study data – often the bedrock of
segmentation planning.
• Some communication channels are more wasteful than others. As mass markets fragment and
splinter into mini-markets or segments, there is less of a requirement for mass marketing and mass
communication.
• Segmentation reduces deadweight, i.e. reduces the amount of resource spent on promotions that
reach people for whom the destination holds no interest.
• Identifying and selecting specific media outlets that match the behaviour of target segments is
increasingly important.
• The key to effective target marketing is to:
1. identify groups of people (segments) who are (or will shortly be) in the market for an international
trip;
2. decide whether these are the people who, if they visited, would help fulfil the destination’s
tourism objectives;
3. establish whether the destination has the appropriate products and services to meet their
needs;
4. assess whether people in these segments are realistically likely to consider the destination;
5. establish their motivations/triggers, buying habits, etc;
6. persuade them to visit using appropriate and targeted marketing messages and channels;
7. evaluate and review the impact of the marketing on the segments that have been targeted.
• Many NTOs already undertake some form of segmentation.

• There is no single ‘ideal’ methodology for undertaking segmentation. Nor is there an ‘ideal’ number
of segments to be targeted.
• A variety of segmentation methods has been identified (see chapter 3) and the choice of approach
will dependent upon the information, resources and skills available within the NTO.

xiv Handbook on Tourism Market Segmentation
• Each NTO should consider which approach (or combination of approaches) is the best fit for its
own purpose.
• Segmentation should be fully integrated into the strategic planning framework.

• NTOs need to be clear about their tourism objectives and policies before targeting specific
segments.
• NTOs should have rational and transparent mechanisms in place for identifying and targeting
segments.
• Segmentation, to be successful, needs to flow through to all the elements of the marketing mix,
e.g. product development, information provision, editorial and visual content in promotions, etc.
• Appropriate monitoring and evaluation mechanisms should be in place and segments reviewed
in the light of results.
Purpose of this Handbook
In commissioning this book, ETC/UNWTO set a number of specific aims and objectives i.e. that it
should:
• explain theories of market segmentation;

• outline the benefits of a ‘segmented’ approach to marketing;
• be a source of inspiration on how/why market segmentation methodology should be adopted;
• provide practical advice to NTOs;
• enable NTOs to understand the variety of segmentation methodologies and techniques available;
• provide NTOs with ready-to-use segmentation marketing tools;
• explain how NTOs can generate/analyse ‘segmented’ market intelligence in order to improve
marketing efficiency;
• help to increase the performance and professionalism of NTO marketing staff by focusing on
segmentation for marketing purposes;
• be both relevant and practical for a broad spectrum of NTO stakeholders by encompassing
methodologies of various levels of advancement, data requirements, procedures, objectives and
budgets;
• be relevant for NTOs regardless of whether their marketing strategy and activities are undertaken
in-house or out-sourced;
• include case studies.
This handbook is therefore primarily aimed at NTOs and, to an extent, to DMOs. Nonetheless, it also
has value for all organizations, public and private, involved in tourism marketing. While the focus is on
international segmented marketing, the principles involved can be applied equally to domestic tourism
marketing.
Its overall purpose is to demystify tourism market ‘segmentation’ by examining segmentation theories,
analysing and commenting on current segmentation practices by NTOs and providing practical guidance
to NTOs on how they might use segmentation methodologies. Ultimately, this handbook is intended as
a tool, for NTOs and others, to help increase marketing efficiency.

Chapter 1
Segmentation Explained
There is a wealth of material available on the subject of market segmentation and the reason for this is
not difficult to understand. Since marketing is generally viewed as identifying and meeting customer
needs, desires and expectations, it seems evident that the organisation that knows and understands
its customers (existing and potential) best, is likely to have a competitive advantage over those that
understand them less. However, comparatively little has been written on the subject of segmentation
that relates specifically to the marketing of destinations by National Tourism Organizations (NTOs)
and/or National Tourist Administrations (NTAs). This handbook aims to help fill this gap by discussing
segmentation theories and practices within the context of NTO activities.
This section looks at some of the ‘traditional’ and ‘state-of-the-art’ theories behind market segmentation.
Later, in chapter 3, the ‘pros’ and ‘cons’ of some approaches to tourist segmentation are outlined,
together with some practical steps that NTOs might wish to take in considering which is best for their
own organisation.
1.1 Introduction
Many major developments in tourism segmentation have come from concepts and principles first
developed in the general marketing theory. It is therefore not surprising that some of the techniques
described in this handbook have their origins in the market for fast moving consumer goods. Nevertheless,
tourism segmentation as a subject in its own right, has been widely researched in recent years, and there
is now a substantial body of literature on tourist market segmentation by academics, practitioners and
commentators. There are also numerous tourism-related segmentation case studies in existence. An
extensive reference and bibliography is included in the Appendix.
Clearly, a very wide range of segmentation techniques are now being used by tourism organizations
(carriers, hoteliers, travel trade, NTOs, DMOs, etc.) in developing marketing campaigns. However, less
attention has been given in case study material to why and how particular techniques were selected in
the first place. This handbook, therefore, attempts to redress this situation by considering the factors that
lie behind the choice of a particular segmentation option.
1.2 Tourism Propensity

Market segmentation is based on the simple notion that demand for goods is rarely randomly or equally
distributed throughout a population. The more common phenomenon is that minorities within a
population are often likely to consume a disproportionately high volume of the product.
This is sometimes known as the Pareto principle, after the Italian social scientist who discovered that 80%
of the wealth of Italy in the late 19th century was owned by 20% of the population. The equivalent of the
Pareto principle to tourism marketing planning is the concept of tourism propensity, i.e. considerable
variation exists between groups of people (segments) in terms of their likelihood (propensity) to travel.
For example, just three countries – the United States of America (USA), Germany and United Kingdom
(UK) – generate nearly 30% of all international tourism expenditure. Yet, collectively they have less
than 7% of the world’s population. An even within these 3 markets there are many who do not take an
overseas trip. For example, in the UK, around 40% of the population does not take any international trip

2 Handbook on Tourism Market Segmentation
in a particular year, which means that just 60% of the UK population consumes 100% of its international
outbound tourism. And, in the USA, it is estimated that just 18% of the adult population have passports
– so only a relatively small minority of Americans are responsible for the massive outbound tourism
that takes place.
Tourism propensity is, therefore, simply the recognition of unequal participation in international tourism.
Indeed, each market’s tourism propensity can be measured quite precisely, i.e. it is the number (or
percentage) of international travellers from that market as a proportion of its total population. Segment
tourism propensity can also be calculated provided appropriate information is available:
Number of tourists in a segment as a percentage of all tourists = segment tourism propensity
Segment tourism propensity can then be compared to the size of the segment in relation to the population
as a whole. Where the segment tourism propensity is higher than its proportion of the population, it has
a higher net tourism propensity.
For example:
25,000 tourists (segment)

× 100 = 2.5% tourism propensity
1 million tourists (total)
125,000 (segment)
× 100 = 0.5% of population
25 million (total population)
Tourism propensity can be applied to any kind of market segment. For instance, it is possible, in theory
at least, to calculate propensity among 18 to 25 years olds, senior citizens, women business executives
and so on, provided one knows the proportion of the total population that they represent and their
proportion of the travelling population over a specified period.
Travel propensity can also be calculated on a regional basis. For instance, in the USA, California has
a much higher international tourism propensity than, say, Indiana, and the southeast of England has a
greater tourism propensity than the northwest. Segmented tourism propensity can thus provide NTOs
with a very useful indicator of the relative travel potential of population segments – both in relation to
other segments and in relation to the market population as a whole.
A number of general socio-demographic characteristics are often associated with tourism propensity.
The table below offers examples of social groups that have been identified as exhibiting higher or lower
than average tourism propensities.
Higher Tourism Propensity Lower Tourism Propensity
Higher income groups Lower income groups

Higher education qualifications groups Secondary education only
Retired professionals Families with young children
Urban populations Rural populations
Owning one or more cars Non-executive occupational status groups
Four or more weeks paid holiday Two or less weeks paid holiday
Executive occupational status groups Populations in the developing world
West European, Australasian, American populations
Source: Seaton and Bennett 1996
Segmentation Explained 3
1.3 Market Segmentation

Differential tourism propensity brings home the fact that in any market, some people take more
international trips, travel more frequently and spend more on tourism than others. Not surprisingly,
many NTOs wishing to make the most of finite marketing resources, are striving to identify those groups
of customers (segments) that offer their destinations the best prospects for inbound tourism.
The key task for NTOs is to investigate, identify, quantify and prioritize those segments that are most likely
to help them fulfil their destination’s tourism objectives. This is the process of market segmentation.
“[…] market segmentation […] the task of breaking the total market into segments that share
common properties.” (Kotler, 1989).
In the above definition, market segmentation is seen as a type of analysis aimed at differentiating between
groups within general populations. However, in addition to analysing populations, market segmentation
should also be viewed as an action-oriented process designed to predict consumer responsiveness to
specific marketing programmes and messages – as the definition below suggests.
“A market segment refers to subgroups of consumers who respond to a given marketing-strategy

in a similar manner […] in other words, segments consists of subgroups of consumers who exhibit
differing sensitivities to some marketing-mix element.” (Dillon, Madden, Firtle, 1990)
In short, segmentation is the attempt to pinpoint specific customer groups within larger undifferentiated
populations, in order to develop and implement marketing programmes specifically designed for
their needs. Some have described this as the ‘sniper’ approach i.e. precise customer-focused targeted
marketing. This is in contrast to the ‘shotgun’ approach aimed at the wider population through mainly
generic marketing.
This is not to say that generic or non-segment specific marketing is a ‘bad’ thing. Clearly, there are some
markets, especially new and emerging markets, where an NTO’s knowledge of the local marketplace
is insufficient to allow for the identification of discrete segments to target, and broad-brush marketing
would seem an obvious option until more is known about the market. In other instances, especially for
NTOs that are newly entering markets, brand building and raising destination awareness among as wide
a swathe of the population as possible may be a legitimate marketing objective.
As a rule of thumb, one way of maintaining the balance between segmented and non-segmented
marketing is for an NTO’s pro-active marketing to be geared to best prospect customer segments
whenever possible, while offering a reactive level of service (websites, overseas offices, call centres etc)
that is suitable for all customers.
1.4 Segmentation Benefits

Even the largest and best funded of NTOs, could not afford to undertake the massive range of marketing
programmes that would be required to satisfy all of the disparate tourism needs of customers within an
entire market. Indeed, to attempt this would likely fail for two main reasons. The resultant deadweight,
i.e. promotional messages that reach people with little or no interest in your products, now or in the
foreseeable future, would be extensive and costly. Secondly, groups of customers have widely differing
needs and values. Promotional messages that might seem appropriate for some people may have a
detrimental impact on others – e.g. products that are highly suitable for families with young children
may be intensely disliked by others who wish to avoid young children while on holiday.
Segmentation enables tourism organizations to prioritise and focus their efforts on customer groups that
constitute the greatest potential. It is thus both a response to markets and a necessary form of resource
limitation, or as one academic commentator has put it:
“In one sense segmentation is a strategy used to concentrate and optimize resources within an
overall market. In another sense, it also refers to that group of techniques used for segmenting a
market.” (Mercer, 1992)
Segmentation allows NTOs to position the country’s products and services in a way that best meets
the known needs of target customers. A destination, particularly a large one, can be many things to
many people. Nonetheless, once target segments have been precisely defined, marketing activities and
messages can be geared to the specific needs of a target group. For instance, if ‘back-packers’ constitute
an important segment, it may be necessary to develop a range of promotional channels and messages
which will reach/appeal them, e.g. through student magazines, campus publicity etc.
It is equally important to ensure the provision of appropriate products when they arrive, e.g. budget
accommodation and transport. In other words, identifying segments enables NTOs to customise their
promotions and product positioning. An important role for the NTO in this respect is to advise the supply
side on the products and services they need to develop in order to attract and maintain customers from
target segments.
Segmentation also allows media choices to be made more cost-efficiently. It is very difficult to devise a
media plan without being able to brief the agency or media buyer on the target audience. Where target
segments are not known, or are vaguely defined, ad-space sellers have the upper hand.
Given that there are now many smaller-scale NTOs operating overseas, with little or no experience of
media buying and with a limited knowledge of the local marketplace, it is not surprising to learn that
many claim to have made poor media purchases at some point. Even large NTOs seldom evaluate their
media choices with the rigour of large consumer goods companies, who may have in-house specialists
to evaluate the potential effectiveness of each major advertising spot and space booked.
Perhaps the best tribute to the benefits of segmentation comes from a very reputable practitioner source.
In 2005, when unveiling its strategic plans and market targets, the Tourism Australia tabled its primary
reasons for using segmentation to underpin its marketing strategy.
Tourism Australia – Market segmentation benefits

Objective 1 – to maximize marketing return on investment: segmentation helps us to identify
segments in the UK market where the return on investment for our marketing dollar will be
greatest. By profiling the market segments, we can identify which segments will be most receptive
to what Australia has to offer, which will provide the greatest yield, and which are most likely to
disperse. Our marketing activity can then be directed at those segments, rather than at the market
as a whole and we can better direct our marketing funds by more efficient targeting
Objective 2 – to understand the market better: by segmenting the market we can understand the
travel markets better. We understand why travellers visit Australia and why they don’t. We identify
which travellers are most likely to come here, and which travellers won’t. We learn how they plan
and book their holidays, where they get information, what they like to do on holiday and much
more. All this information helps us to develop more effective marketing campaigns and more
attractive tourism products.
Objective 3 – to communicate more effectively with our customers: Developing consumer

insight based segmentation produces a huge amount of information about the emotional and
rational motivations that drive people’s travel choices. It also provides us with insight into where
the segments look for travel information and what media channels they pay most attention to. This
information enables us to develop marketing communications campaigns that are specifically
designed to reach our target segments and to communicate messages that they find powerful and
motivating.
1.5 Segmentation Prerequisites

Traditionally marketing theory suggests that for segmentation to be effective, a number of conditions
need to be met and that only after all of them have been fulfilled, can marketing action be meaningfully
planned. However, from our survey of NTOs (see chapter 2), it is clear that not all NTOs are able to
comply with these, and yet they still mount successful segmented marketing campaigns.
The conditions that academic theorists have identified as prerequisites comprise the following:
• Market segments must be discrete and differentiated from others. Market segmentation is about
planning marketing actions, targeted at specific groups, who are clearly and significantly different
and distinguishable from others. The key issues are that they must differ in their behaviour patterns,
e.g. choices and attitudes, and/or their susceptibility to different marketing mix combinations.
(Hooley and Sanders, 1993)
• It must be possible to measure the size of the market segment as a whole, and estimate what
proportion of it NTO marketing can reasonably be expected to attract. If a market cannot be
quantified, it is impossible to assess its potential. This means that the NTO must have access to, or
generate data from, surveys that profile the segment.
• In addition to knowing the number of people in a segment, it is also important to estimate the value
of the market to ensure that it is financially promising. This may seem to be an obvious point, but
it means that the cost of the research and planning of a market segment must be worth the tourism
revenue to be gained from it. Ideally market segmentation is about assessing the numerical and
financial dimensions of a tourism market and allocating a specified budget to influence it, with a
quantified set of performance targets that can later be measured.
• It must be possible to access the chosen segment by customised marketing activity. For example,
it might be that a destination decides, for whatever reason, that red haired people would constitute
an interestingly distinctive, new market to appeal to. However, it is difficult to see what media
and what marketing activities could be deployed to access this group. Thus, any potential segment
needs to be appraised, in order to anticipate how easy or difficult it may prove to access it through
promotional and other marketing activities.
• A segment must be sustainable. It must have sufficient potential to be seen as a continuing source
of tourists, and there must be sufficient marketing funds to support the activity that will help
maintain it. Market segments need to be constantly assessed in terms of the costs of servicing
them.
While the above is a useful guide, NTOs should regard these prerequisites more as good practices.
For example, many NTOs are able to successfully target segments even though they may not know the
precise size of a segment in advance of mounting campaign activities. Marketing evaluation techniques
have progressed in recent years and now allow NTOs to measure success in terms of the ‘added value’
generated by their activities, rather than relying on ‘segment penetration’ rates or ‘increased tourism
propensity’ – for more information on the evaluation of NTOs promotional activities, please refer to the
ETC/UNWTO report “Evaluating NTO Marketing Activities”1
1.6 Segmentation Approaches

There are two basic ways of approaching segmentation – a priori or post hoc. The former focuses on
tourist behaviour = what they do, whereas the latter focus on people = who they are.
A priori (forward) segmentation is where the basis for segmenting a market is specified in advance by
observation, experience or judgment of tourist behaviour patterns rather than on who they are – e.g.
1 Evaluating NTO Marketing Activities, UNWTO, 2003

purchasers of a particular product package, length of stay etc. Once the segments have been specified
and defined a priori, the analysis centres on profiling the segmented groups as fully, or as usefully,
as possible. The profile may include several dimensions – socio-demographic, attitudinal, by daily
expenditure etc. For example, an NTO might be interested in ‘short break’ visitors to a destination. In
order to profile them, a special visitor study might be mounted confined to people staying 1 to 3 nights.
This would then be analysed to find out who the respondents were in terms of such characteristics as
country of origin, age, party size, gender, etc.
It was through a priori analysis that the Singapore NTO, in the 1990s, identified a key problem
with the country’s tourist base. As a major transit hub, visitors primarily stayed only 1 to 3 nights.
The NTO identified who these key segments were and what they were doing while in Singapore.
They subsequently developed suggested itineraries, indicating what else there is to see and do
while on a short break, and successfully set about developing marketing packages to influence
them to stay an extra night.
One drawback with the a priori approach is that it is based on pre-judgement, as to what constitutes
an important or interesting market grouping, rather than an impartial assessment of the most important
segments.
A posteriori (backward or a post hoc) segmentation avoids the tendency towards premature market
selection. The basis of segmentation is not determined beforehand, but emerges from the results of
research surveys in which many tourist variables have been included, e.g. from visitor surveys. These are
analysed using clustering techniques to identify groups of people within the survey who share common
characteristics based on similarities in their responses to a number of questions. A large-scale survey
of all tourists may reveal many different segments based on many variables of age, activity, education,
length of stay, etc.
Below is a summary of some key variables used in these approaches.

Four important types of segmentation (Moscardo et al., 2001)
Category Types of variable
1. Demographic Age, gender, education, lifecylce stage, income

a priori
2. Geographic Location of reseidence
3. Psychological/lifestyle Benefits, attitudes, values, personality characteristics

a posteriori
4. Behavioural Types and frequency of use, types of info sources and
distribution channels used
In practice, the a priori and a posteriori approaches are not in conflict for most NTOs, since they are
often used in combination. For example, NTOs normally conduct annual visitor surveys and use post
hoc analysis to identify interesting or relevant consumer groupings by nationality, activity, purpose of
trip, etc. They then often follow them up with additional a priori (best judgement) analysis of the key
groupings that have emerged from the main study. Some commentators describe these approaches as
‘deductive reasoning’ (deduced from a body of evidence) and ‘inductive reasoning’ (based on intuition,
hunch or experience but where supporting evidence is sought afterwards). It is evident from the survey
results in chapter 2 that NTOs use both approaches.
Another way of viewing these different approaches is to see forward segmentation as beginning with
trip descriptors, e.g. length of stay, spend per visit, regions visited, etc. From this point, the analyst
digs down into the available socio-demographic and other data to consider the characteristics of those
who take the trips. While a posteriori segmentation focuses first on visitor descriptors and then moves
backwards to the trips taken by those visitors.
The difference between the approaches has been expressed typologically in the table below.
Segmentation approach Active variables Passive variables
A priori Buying behaviour Person variables
A posteriori Person variables Buying behaviour

Source: Evans, Moutinho and Van Raaj
1.7 Segmentation Typologies

There are numerous way of segmenting a market. Over the years, academics and marketeers have used
a variety of descriptors or types in analysing and segmenting markets.
Some of the more common examples are:
• benefits sought;
• brand loyalty;
• buying propensity;
• demographics (age, sex, marital status, number of children, etc.);
• ethnic background;
• frequency and volume of purchase;
• images or perceptions of product;
• media use;
• motives for buying;
• occupational status;
• personality characteristics;
• price sensitivity;
• product preference;
• product purchase patterns;
• product use patterns;
• product loyalty/patronage;
• psychographic/lifestyle;
• reactions to new concepts;
• social class.
Though most of these were developed in the marketing of physical products, many of them hold
relevance, either directly or in adapted form, for tourism planning and segmentation.
In preparing this handbook, a wide range of methodologies were identified as being usable for NTOs
or are, in fact, currently being used by NTOs. Rather than discuss these here, the handbook combines
the knowledge gained from both academic theory and the recent survey of NTOs. Where appropriate,
case study examples have been used to illustrate how a particular methodology has been implemented
by an NTO. For ease of reference, a list of the methodologies considered, can be found in the contents
page under chapter 3.
It is worth noting that some marketeers adopt a primarily market or customer-led approach to segmented
marketing, while others mainly use a product-led approach. It should be stressed that the segmentation
methodologies in chapter 3 are not mutually exclusive. While they may appear to be discrete forms of
segmentation, and can of course be used as such, many marketeers successfully use them in combination
to refine and develop their segments.
In chapter 3, a number of practical steps that NTOs need to take into account when considering which
methodology(ies) they wish to use, have been highlighted. Each methodology has been examined under
the following headings:
• What is it?
• Why do it?
• How to do it?
• What are the advantages and disadvantages?
• What are the resources implications?
1.8 Targeting Segments
Target marketing involves the division of a large market into smaller segments. Each segment has
its own distinct needs and/or patterns of response to varying marketing mixes. The most attractive
segments are targeted according to the organization’s resources. Attractive target segments are
those that will generally be the more profitable. Segmentation and target marketing are absolutely
fundamental approaches to marketing.
Some communication channels are more wasteful than others. As mass markets fragment and
splinter into mini markets or segments, there is less requirement for mass marketing and mass
communications. Segmenting markets into groups of buyers, and targeting those groups which
are more likely to be the best customers, is absolutely vital if marketing communications are to be
both effective and efficient.
Source: Smith, P. (1993), Marketing Communications
Having identified segments, it is for the marketeer to decide which of these offer the best marketing
opportunities. This implies the adoption of some segments for targeted marketing while others, due
to limited resources, will be discarded – at least for the time being. How are such strategic choices
made?
In situations where the marketing organization is also the goods or services supplier, this selection
procedure is not particularly difficult to make. Segments are invariably selected on the basis a ‘bottom
line’ prognosis, i.e. those that are most likely to produce the greatest financial return on the marketing
investment will normally be selected. The situation is not quite as straightforward for NTOs for several
reasons:
• NTOs do not normally own or manage the tourism goods and services that they are marketing. They
consequently have little or no control over their price, quality and availability. There is therefore no
direct organisational link between what is being supplied and how it is being marketed.
• As NTOs are normally financed by Government, through public funds, issues other than maximising
‘profit’ may be called into play, e.g. remedying market failure, giving priority to helping small
and medium size businesses, environmental considerations, improving the regional distribution of
tourists, etc. These factors cannot be ignored when selecting segments. It is highly likely that the
segments offering the greatest financial returns may not always be the ones that help fulfil the other
tourism objectives of an NTO.
• NTOs may have private sector stakeholders (carriers, hoteliers, travel trade, etc.) and rely on them,
to a greater or lesser extent, for partnership funding to mount joint marketing campaigns. Each
stakeholder will have a view about which segments are best for their particular tourism sector and
this view will not always coincide with those of other stakeholders. NTOs often act as a broker
in bringing these stakeholders together and selecting segments for targeted marketing that are
attractive to all – this may involve compromising on the segments that the NTO itself feels are the
most attractive for the destination as a whole.
Given such constraints, how do NTOs take decisions on which segments are the best for ‘targeted’
marketing?
As mentioned, there is no shortage of industry reports, marketing plans and case studies available on the
segmentation dimensions adopted by NTOs. There is, however, much less available on the processes
through which segments have been selected for targeted action by NTOs.
The typical pattern is for NTOs to inventory the tourist segments they are targeting, assert their
attractiveness in terms of their numbers, financial potential and growth possibilities, and then indicate
the marketing and promotional activities that will be directed to influence and stimulate the segments.
NTOs do not normally reveal details of rejected alternatives or the discussion processes that took place.
This is not particularly surprising as most marketing strategies focus on outcomes rather than the internal
debate that shaped the final choice of target market segments.
However, a recent survey, taken as part of this project, has added greatly to our understanding of how
NTOs identify and select market segments. The survey findings are set out in some detail in chapter 2.
Chapter 2
Current NTO Segmentation Practices
This section examines the various ways in which NTOs currently undertake segmentation. Its purpose
is to analyse the range of segmentation techniques/methodologies adopted by NTOs and to identify
examples of good practice that other NTOs or DMOs may wish to consider for inclusion in their own
marketing activities.
2.1 Introduction
The information contained in the section is based on the results from a sample survey questionnaire
that was sent to 70 NTOs – approximately 30% of all known NTOs. The survey contained a mix of
quantitative and qualitative questions (see Appendix). The NTOs chosen to participate in the survey
were pre-selected by ETC/UNWTO on the basis that they were more likely to have a certain experience
in the area of segmentation. In addition, ETC/UNWTO ensured that those NTOs chosen for inclusion in
the survey were drawn from all continents and included a mix of those with large, medium and small
marketing budgets.
Consequently, the survey is not considered to be representative of what all NTOs are doing in terms
of tourism segmentation. Rather, it is more likely that the results represent some of the best in good
practices being undertaken by NTOs regardless of budget size.
A total of 28 replies were received, representing a response rate of 40%. ETC and UNWTO would like
to express their appreciation to those NTOs who kindly participated in the survey:
Argentina Finland Kenya Seychelles

Australia Greece Macao (China) Slovenia
Austria Hong Kong (China) Maldives Spain
Cyprus Hungary Norway Sweden
Czech Republic Ireland Peru Thailand
Denmark Italy Portugal United Arab Emirates
Estonia India Saudi Arabia United Kingdom
2.2 Quantitative Analysis

The following table summarises NTO responses to the quantitative questions that were asked in the
survey. Not surprisingly, given the pre-selection undertaken by ETC/UNWTO, 26 (93%) of respondents
considered their NTO’s marketing strategies to be ‘segmentation-based’. Only two NTOs did not, and
one of these was in the process of becoming segmentation-based.

Summary of responses to quantitative questions
Responses
Question
Yes No
Would you describe your current marketing strategy as ‘segmentation’
26 2
based?
Do you compile profiles of your target segments?

This question applies only to the 26 NTOs who claim to that their marketing strategy is 22 4
segmentation-based.
If yes, are these available to your stakeholders, e.g. private and public
sector partners?
20 2
This question applies only to the 22 NTOs who compile profiles of their target
segments.
Do you target your priority segments in marketing activities coordinated

with other private and public sector partners? 0
26
This question applies only to the 26 NTOs who claim to that their marketing strategy is
segmentation-based.
Do you know the current volume and value of your target segments?
segmentation-based.
Are you able to identify the market potential of your target segments?
segmentation-based.
Do you set targets (volume and/or value) for your chosen segments?
segmentation-based.
Do you feel that your organization is currently doing sufficient in terms

of ‘segmented’ marketing to ensure that your resources are focused on
customers with the greatest potential for visiting your destination? 11 17
This question applies to all 28 NTO respondents.
Do you feel your organization would benefit from knowing more about
segmentation techniques? 28 0
This question applies to all 28 NTO respondents.
Question Responses
How many segments (in total) have you prioritised for targeted 1 to 3 7
marketing activities? 4 to 6 10
This question applies only to the 26 NTOs who claim that their marketing strategy is 7 to 10 6
segmentation-based.
11 to 15 2
16 to 20 0
more than 21 1
What limitations, if any, are there on your organization doing more on None 2
segmentation? No available
15
This question applies to all 28 respondents. Please note that NTOs could select more statistics
than one reason – so the total is more than 28.
No available
21
resources
No available
10
skills
No interest in
3
segmentacion
Current NTO Segmentation Practices 13
2.2.1 Quantitative Insights

• As can be seen from the graph below, most NTOs tend to focus on a small number of segments.
23 of the 26 NTOs who use segmentation techniques are targeting 10 or fewer segments – albeit
some of these may cut across markets, e.g. ‘families with children aged under 12’ as a segment in,
say, France, Germany and the Netherlands.
Number of segments targeted by NTOs
12
10
8
Number of NTOs
0
1 to 3 4 to 6 7 to 10 11 to 15 16 to 20 21+
N = 26
• An overwhelming number (22 out of 26 NTOs) compile segment profiles of their target segments
so that they are familiar with who their target customers are, what their tourism needs are, and
how to reach them with appropriate promotional messages/propositions. Of those NTOs that
compile segment profiles, all but two share this information with their private sector partners and
other stakeholders.
• Perhaps most importantly, all ‘segmentation-based’ NTOs claim to target their chosen segments in
their promotional materials. In other words, they are taking segmentation seriously and developing
focused campaigns/strategies rather than relying on ‘generic’ campaigns in the hope that their
chosen segments will respond to broad-brush messages about their destinations.
• Interestingly, 20 out of 26 NTOs are able to identify the current tourism volume and/or value to
their destinations of their chosen segment, and 19 of them are even able to estimate their potential
value. This is particularly useful when taking strategic decisions on which segments to target. Some
NTOs (14 out of 26) have even set volume/value targets for their chosen segments as a positive sign
of their confidence in a segmented approach to marketing.
• While there are many positive aspects in terms of NTO market segmentation, only 11 of the 28
NTO respondents felt that they were doing sufficient in terms of a segmented approach to tourism
marketing. And all 28 NTOs (100%) claimed their NTO would benefit from knowing more about
segmentation.
• Clearly there are some obstacles that many NTOs need to overcome in order to improve their
segmentation techniques. The graph below indicates that a lack of resources (human and financial)
was the most cited reason for not doing more, followed by a lack of access to statistics/information
on which to segment their markets and a shortage of available skills to undertake market analysis/
strategic planning. Only three NTOs cited a lack of interest by senior management or other key
stakeholders as an obstacle.
Limitations for not doing more on segmentation
25
20
Number of NTOs
15
10
0
No available No available No available No interest in Other
statistics resources skills segmentation
N = 28
2.3 Qualitative Analysis

This survey indicates quite clearly that there are many and varied ways of segmenting tourist markets.
Each NTO has taken its own path and the route chosen is dependent upon the availability of appropriate
information, resources (funding and personnel), analytical skills, marketing expertise and a host of
other factors. However, many good practices were identified that NTOs might wish to consider when
segmenting tourist markets – many of which are relatively inexpensive and can be undertaken in-
house, i.e. without the need for employing expensive consultants/facilitators to guide the segmentation
process. Some examples of good practice are set out in section 2.4.
2.3.1 Information Sources for Segmentation

For most NTOs, the foundation for good segmentation is based on the collection and collation of robust
inbound tourism statistical data. In particular, tourism visitor surveys would appear to provide the most
fruitful source of identifying current tourism segments that visit the host destination.
The most common factors in statistical collection and analysis identified by NTOs were:
• activities undertaken (e.g. skiing, diving, golf, cycling, hiking, etc.);

• booking mechanism (e.g. Internet, travel agent, etc.);
• cohort (with whom they travel);
• contact with the NTO;
• demographic data (e.g. age, occupation, income, education, family, etc.);
• group/party size;
• length of stay;
• media habits (e.g. communication channels – TV, radio, newspapers, etc.);
• motivations (e.g. recreation, culture, adventure, sun-seeking, etc.);
• origin country/place of residence;
• other countries considered for a visit (i.e. information about competitors);
• purpose of visit (e.g. business, VFR, leisure, education, special events, etc.);
• regions/areas visited;
• repeat or first time visitor;

• sources of information when planning to visit a country;
• spending (by category, e.g. retail, accommodation, travel, etc.);
• transport into country (e.g. air, road, sea, rail, etc.);
• transport used while in the country (e.g. hire car, taxi, rail, air, etc);
• travel dates (e.g. by month to assess seasonal variations);
• trip type (e.g. independent or package);
• type of accommodation used.
Where some (or all) of this information is not collected/available from the country’s own visitor survey,
NTOs look to other data sources. For example, UNWTO, ETC, the Pacific Asia Travel Association (PATA)
and other international membership bodies, the local tourism industry (e.g. accommodation, carriers,
attractions), a trawl of NTO trade oriented websites with outbound data from a source country, ‘off-the-
shelf’ surveys such as MINTEL, European Travel Monitor, etc. and, often as a last resort, primary research
undertaken either in the destination or in the source markets.
Where primary research is necessary, data is collected by NTOs through a range of methodologies.
Those mentioned frequently by respondents included focus groups, telephone/questionnaire surveys,
visitor satisfaction surveys, hotel occupancy studies and in-depth interviews.
Other supplementary techniques mentioned by NTOs include desk research, mind mapping, unobtrusive
observation, scenario planning, data mining, special interest media research, Tourism Satellite Accounts
analysis, economic impact studies, tour operator information, Foreign Office research, customer
feedback/complaints, brand and advertising tracking surveys, tourism barometers and perceptual
mapping. Market-specific expertise, in-house and through on-territory experts such as travel writers,
can also play a significant part in helping to understand a source market and in identifying the differing
tourism needs of segments.
Where NTOs have few travellers from a particular source market, but believe it to be one with significant
inbound tourism potential for the future, e.g. China, Russia and India were often cited in this respect,
joint research with neighbouring NTOs was seen as a cost-effective option. By sharing research costs and
information, extensive data can be gathered on the demographic, lifestyle, life stage, tourist behavioural
and motivational patterns, etc. required to segment the market and to identify appropriate promotional
channels and opportunities.
In some major tourism source markets, such as the UK, there are many ‘off-the-shelf’ segmentation
reports – e.g. PINPOINT, MOSAIC, SAGACITY, SUPER PROFILES and ACORN – that NTOs are able to
access without a major financial outlay.
These ‘off-the-shelf’ segmentations, while not usually tourism-specific, can often serve as cost-effective
proxies for segment tourism habits and demand, and have the added bonus that the supplier can usually
provide postal addresses (or post-code areas) for specific segments that, in turn, allows NTOs to consider
targeted direct mail campaigns. Information on each of these is readily accessible via the Internet.
Examples of two ‘off-the-shelf’ segmentation, MOSAIC and ACORN, are set out below.
• The Great Britain MOSAIC segmentation tool categorises people (by household) into socio-
economic groups. It does so by assigning a segmented code to each GB postcode, based mainly
upon data about individuals/households drawn from the National Census. For more information:
http://census.ac.uk/cdu/Datasets/Experian_data/gbmosaic.pdf.
GB MOSAIC, 2000
Group Description Key characteristics
Are statistically more likely to:

A High income families • own a house valued at more than £120,000
• have an individual income more than £40,000 per year

B Suburban semis • have an individual income of between £30,000 and £40,000 per year
• own a house valued at between £80,000 and £120,000

C Blue collar owners • have an individual income of between £10,000 and £15,000 per year
• be employed in manufacturing

D Low rise council • be living in Council/Housing Association rented property
• have an individual income of less than £5,000 per year

E Council flats • live in multi-occupancy accommodation
• have an individual income less than £5,000 per year

F Victorian low status • belong to either an Indian, Pakistani or Bangladeshi ethnic group
• live in shared accommodation

G Town houses and flats • live in a retirement home
• have an individual income of between £20,000 and £25,000 per year

H Stylish singles • live in bed-sit or private rented accommodation
• have a family income of £40,000+

I Independent elders • live in a 1 bedroom house
• be elderly and single

J Mortgaged families • own a house built since 1980
• have an individual income between £20,000 and £40,000 per year

K Country dwellers • live on a farm
• own a 4 × 4 vehicle

L Institutional areas • live in a private rented house
• been resident at their current address for less than 2 years
Note: GB£1 = US$1.86; GB£ = € 1.45
• ACORN is a leading geo-demographic tool used to identify and understand the UK population
and the demand for products and services. Businesses use this information to improve their
understanding of customers, target markets and determine where to locate operations. Informed
decisions can be made on where direct marketing and advertising campaigns are likely to be
most effective. It segments all 1.9 million UK postcodes within England, Scotland, Wales and
Northern Ireland, using 125 demographic statistics and 287 lifestyle variables. Detailed socio-
economic profiles of all segments are produced as a means of identifying best prospect buyers for
specific goods and services, and lists of postcodes can be obtained in order to undertake targeted
campaigns. (For more information: http://www.caci.co.uk/acorn.)
ACORN, 2000
Main Sub category Segment

Wealthy achievers Wealthy executives 01 – Affluent mature professionals, large houses
02 – Affluent working families with mortgages
03 – Villages with wealthy commuters
04 – Well-off managers, larger houses
Affluent greys 05 – Older affluent professionals
06 – Farming communities
07 – Old people, detached houses
08 – Mature couples, smaller detached houses
Flourishing families 09 – Larger families, prosperous suburbs
10 – Well-off working families with mortgages
11 – Well-off managers, detached houses
12 – Large families and houses in rural areas
Urban prosperity Prosperous professionals 13 – Well-off professionals, larger houses and converted flats
14 – Older Professionals in detached houses and apartments
Educated urbanites 15 – Affluent urban professionals, flats
16 – Prosperous young professionals, flats
17 – Young educated workers, flats
18 – Multi-ethnic young, converted flats
19 – Suburban privately renting professionals
Aspiring singles 20 – Student flats and cosmopolitan sharers
21 – Singles and sharers, multi-ethnic areas
22 – Low income singles, small rented flats
23 – Student Terraces
Comfortably off Starting out 24 – Young couples, flats and terraces
25 – White collar singles/sharers, terraces
Secure families 26 – Younger white-collar couples with mortgages
27 – Middle income, home owning areas
28 – Working families with mortgages
29 – Mature families in suburban semis

Main Sub category Segment

Comfortably off Secure families 30 – Established home owning workers
31 – Home owning Asian family areas
Settled suburbia 32 – Retired home owners
33 – Middle income, older couples
34 – Lower income people, semis
Prudent pensioners 35 – Elderly singles, purpose built flats
36 – Older people, flats
Moderate means Asian communities 37 – Crowded Asian terraces
38 – Low income Asian families
Post industrial families 39 – Skilled older family terraces
40 – Young family workers
Blue collar roots 41 – Skilled workers, semis and terraces
42 – Home owning, terraces
43 – Older rented terraces
Hard pressed Struggling families 44 – Low income larger families, semis
45 – Older people, low income, small semis
46 – Low income, routine jobs, unemployment
47 – Low rise terraced estates of poorly-off workers
48 – Low incomes, high unemployment, single parents
49 – Large families, many children, poorly educated
Burdened singles 50 – Council flats, single elderly people
51 – Council terraces, unemployment, many singles
52 – Council flats, single parents, unemployment
High rise hardship 53 – Old people in high rise flats
54 – Singles and single parents, high rise estates
Inner city adversity 55 – Multi-ethnic purpose built estates
56 – Multi-ethnic, crowded flats
2.3.2 Identifying Segments

Once an NTO is in possession of the basic statistical and qualitative data required to disaggregate its
source market(s), it is in a position to begin the process of segmentation, i.e. identifying those groups
of customers within a market(s) that share a range of common characteristics, and selecting those that
it wishes to target. Most NTOs begin the segmentation process by manipulating their tourism data
(quantitative and qualitative) into meaningful groupings by market. Chapter 3 sets out in detail a range
of the methodologies discovered in preparing this handbook.
2.3.3 Identifying ‘Best Prospect’ Segments

Having identified a range of segments, NTOs are faced with the challenge of deciding which of these
offer the best prospects for contributing to the tourism objectives of their destinations. To do this, some
NTOs use a range of factors to compare the relative attractiveness of segments, while others use a single
factor approach. Below some of the factors most commonly used as a basis for comparing segments
have been highlighted:
• access to the product (physical and booking);

• accommodation capacity;
• awareness and image of the destination;
• carrier capacity;
• income and education levels;
• market share;
• media usage and availability of promotional opportunities;
• product fit;
• regional spread;
• seasonal spread;
• size of segment and growth trends;
• value/spend (current and forecast);
• visits (current and forecast).
2.3.4 Selecting ‘Target’ Segments

Once NTOs are clear about the factors upon which to compare segments, they need to take decisions
on which ones to target (within the resources available) as part of their marketing strategy. A range of
techniques/processes have been identified through the survey – supplemented by the knowledge and
experience gained by the authors of this handbook in working directly with a wide range of NTOs and
DMOs. A brief description of the main processes identified is set out below, together with comments on
their ‘pros’ and ‘cons’ where applicable.
• Advice: some NTOs rely heavily on trade partners and stakeholders (tour operators, carriers,
hoteliers, restaurateurs, attractions etc) to recommend which segments the NTO should target
according to their first-hand experience in the market place. This approach helps to foster good
relations between the stakeholders and the NTO and helps lever partnership funding for joint
campaigns. There is, however, a danger that stakeholders with the loudest voice or greatest resource
may dominate discussions, and possibly advocate targeting those segments that are best for their
own business, rather than for the destination as a whole.
• Backing Winners: selecting target segments, based on their current performance, is a common
approach. Destinations that monitor the characteristics of tourists, e.g. through visitor surveys,
will usually know their best segment performers – albeit they may be defined in a variety of
ways. Catering for existing customers is important, and it is therefore understandable why ‘backing
winners’ is popular. Nonetheless, NTOs pursuing this policy should at least consider that:
– the segments selected may not necessarily need to be persuaded to visit as they are already
consuming the destination’s products and services, i.e. the NTO may be ‘preaching to the
converted’ and wasting resources;
– private sector investment in ‘winners’ may be sufficient to maintain these market segments
without NTO support, thereby potentially freeing up NTO resources with which to nurture new
segments;
– there may be other segments that offer a better return on marketing investment;
– the strategy may be risky should international events suddenly turn off the flow of visitors from
these segments.
• Bottom-Up: on-territory staff/experts identify segments from their own sources and knowledge
of the marketplace and propose these to senior management as candidates for target marketing.
Suggestions from the range of source markets then compete for NTO resources in a ‘bidding’
system with each market manager having to demonstrate the likely value/return on investment
of their suggested segments. In this scenario, those managers that are the most convincing and
forecast the greatest returns, are usually given most resources. A variation on this approach is
for senior management to allocate a level of resource to a source market. It is then left to the
on-territory manager and staff to select whichever segments they feel offer the best marketing
opportunities.
• Commonality: some NTOs choose to target segments that behave in a similar way across markets
or have similar consumption patterns, e.g. one of the surveyed NTOs is targeting just one global
segment called the “experienced seeker”. While this segment exhibits similar tourism habits, the
triggers and promotional messages may vary across markets.
• Customary Practice: based largely on emulating what other NTOs are doing, i.e. examining the
markets/segments/promotional media where other NTOs are operational and following their lead.
The underlying assumption is that if the leading NTOs, with large research and marketing budgets,
have already undertaken assessments about market potential and promotional outlets, then NTOs
with less resources can avoid exploratory research by ‘following the leader’. This is probably most
evident in attendance at travel trade fairs. Many NTOs attend the larger of these – World Travel
Market (London), ITB Berlin, FITUR (Madrid), etc. – at great expense without having articulated
a sound rationale for actually being there. There are potential problems with this approach – the
most obvious being that the products, services and brands of each destination are not the same.
Therefore, copying NTO market leaders may result in marketing to inappropriate segments and/or
using inappropriate communication channels.
• Default: only those segments that the NTO can afford to target are chosen. Some NTOs have very
small marketing budgets and accessing low-cost promotional media becomes more important
than the segment, e.g. the cost of reaching a Japanese family through advertising may be much
higher than reaching, say, a Spanish family even though the former may potentially be a higher
priority segment for the NTO.
• Delphic: in this approach, NTO management, and possibly external partners/ stakeholders, discuss
and debate the relative merits of targeting each of the segments identified earlier in the process.
The ‘pros’ and ‘cons’ of each are carefully considered in detail, e.g. communication cost, media
availability, etc. and a consensus is then reached as to which segments potentially offer the best
returns. Discussions often include the amount of marketing resource that is appropriate to each
segment selected.
• Development Stage: some NTOs have grouped segments into categories, e.g. developed, emerging,
incubating or primary, secondary and tertiary segments. Segments and resources are often targeted
at those that are most developed – usually on the basis that tackling emerging and/or incubating
segments is often more costly. A variation is to allocate a percentage of resource, e.g. 60% for
developed, 30% for emerging and 10% for incubating.
• Market Value: segments are sometimes designated as targets because the overall value of a
particular source market in total (or average expenditure per day) is high. For example, if US
visitors are high value to a destination and the product on offer is appropriate to, say, families,
then US families becomes the targeted segment. The market values in this case are, in effect, proxy
measures for the segment values. This process is mainly used in situations where an NTO has
insufficient resource/skills/expertise to identify the characteristics of segments below the macro
market level. Such an approach might, on the surface, seem reasonable.
However, there are some potential problems:
– it may be that the designated target segment is not interested, in sufficient volumes anyway, in
the products/brand of the host destination;
– some NTOs will not have sufficient resources to access and persuade the segment, especially if
there is strong competition;
– an NTO might end up targeting very diffuse segments across several markets without an overall
marketing and product development strategy.
• Modelling: input-output econometric or statistical models have been experimented by some NTOs.
Most models use past performance as a guide to (or predictor of) future performance. This initially
entails the identification and quantification of a range of key economic, statistical and tourism-
specific variables for each segment, e.g. length of stay, average expenditure per visit, disposable
income, size of segment, tourism growth rate, etc.
Each segment’s performance is then projected forward, based on a theoretical injection of NTO
marketing funding, to calculate how it is likely to react to the marketing stimulus – based largely
on past performance. Those segments that are predicted to perform best (often in ‘return on
investment’ value terms) are selected. Where new segments are being modelled, and there is little
or no past performance to use, proxy measures and/or assumptions about segment behaviour
have to be made. Such models are sometimes also used as a basis for guiding the allocation of
NTO marketing resource. Sophisticated modelling software has been developed which attempts
to indicate what the optimal allocation of resource is for a segment before the law of diminishing
returns takes effect.
In modelling, the quality of outputs is dependent upon the quality of the inputs. Segments are
not always so easy to quantify for many NTOs. Also, the behaviour of tourism segments is not
straightforward to predict – e.g. some segments react more strongly to product price changes,
international crises, domestic events, etc. than others. Distinguishing the variable impact of such
exogenous factors on individual segments is extremely difficult. And, predicting the influence that
NTO marketing activities have upon segments, as opposed to a total market, is not easy for many
NTOs to estimate.
• Portfolio Analysis: one way of selecting segments is through a ‘portfolio analysis’ – a technique
called the ‘Boston Matrix Segmentation Strategy’ named after the US academics that developed it.
The basic idea is that markets can be assessed in terms of three key variables – numerical volume,
profitability and growth trend. The NTO must analyse the main market alternatives, and then give
priority values to each.
The matrix below presents some of the interactions between growth, volume and value and the decisions
in terms of priority that might be the result in market planning terms.
Current segment size

Growth status of segment
Low volume/value High volume/value
Growing Possibly invest Prioritise
Static Probably ignore Support
Declining Ignore Prioritise for immediate remedial activity
Such an approach is reasonable provided the primary consideration for an NTO is high volume or
value business. However, as seen in the survey results, not all NTOs have tourist volume and value
objectives/targets.
• Scoring mechanism: in this process, all potential segments for targeting are examined in detail
relative to the others. Each segment is compared across a range of factors and/or in terms of its
relative contribution to achieving NTO corporate objectives and scored (usually on a spreadsheet)
accordingly. Some factors may even be weighted if they are particularly important. At the end of
this process, the ‘top’ segments are selected for targeting. Further details on this technique can be
found in section 4.10, where this has been used as an example of best practice.
• Strategic importance: a similar approach to ‘backing winners’. Some NTOs have identified those
segments that currently generate the greatest levels of income for the host destination (or make
the greatest contribution to its other strategic objectives) and focus their activities on the most
important of these segments. Segments are sometimes ranked in terms of high, medium and low
strategic importance.
• Strategic objectives: each segment is examined solely in terms of its real and potential contribution
to achieving an NTO’s strategic objectives and targets. The greater the contribution, the higher
is its priority for being allocated marketing resources. This approach lends itself well to being
combined with a scoring mechanism (see above) as presented in section 4.10 as an example of
best practice.
• SWOT: a SWOT analysis (strengths/weaknesses/opportunities/threats) of segments is sometimes

undertaken to match products/services to segment demand. Segments with the greatest strengths
and opportunities are selected for targeting.
• Top down: there exists, in some NTOs, a rigid line-management decision-making process. Decisions
on which segments to target are taken almost exclusively by politicians/senior management, e.g.
based on intuition, personal preference and little discussion or debate takes place.
Once again, these techniques are not mutually exclusive. It is common for NTOs to use a combination
of these. Each NTO that responded to the survey has developed its own mechanism for selecting target
segments based on available information, skills, resources and corporate objectives.
2.3.5 Developing Marketing Activities for Segments

Having selected target segments, NTOs were asked to describe how they go about marketing to these
segments. The results from the survey indicate that some NTOs run campaigns/activities aimed at
similar segments in different markets, while others adapt their campaigns to market-specific segments
accordingly – this depends mainly on resource availability. Where possible, segment-specific audio-
visuals and editorial are used.
It was clear from the survey that nearly all NTOs rely heavily upon third parties to advise them on
appropriate communication channels and imagery/messages with which to reach targeted segments.
Below is a sample of the sources that were mentioned regularly:
• advice from advertising and Public Relations (PR) agencies;

• advice from travel writers/journalists;
• advice from marketing experts;
• advice from on-territory NTO staff;
• advice from research agencies;
• advice from the retail travel trade;
• advice from tour operators;
• advice from trade publications – especially for niche segments;
• commissioned and in-house research into customer media habits;
• competitor analyses, i.e. where other NTOs advertise;
• consumer exhibitions/shows;
• customer feedback;
• demographic analyses – mainly through desk research;
• evaluation study results;
• focus groups;
• image studies;
• statistical analyses of base segment information;

• supplier (carriers/hoteliers) feedback;
• trade fairs.
2.3.6 Benefits of Market Segmentation

NTOs who considered themselves ‘segmentation-based’ were asked what benefits they felt had been
achieved as a direct result of using segmentation as a basis for their marketing activities. The results
showed that, without exception, the gains had far outweighed any additional costs that may have been
incurred in terms of extra staffing or research costs.
Many NTOs cited similar benefits, so those mentioned most are highlighted below:
• better allocation of resources;

• better dispersal of tourists around the destination;
• better idea of which trade fairs to attend;
• better strategic and tactical decision taking;
• better understanding of the market and customer groupings;
• brand consistency through consistent customer targeting;
• higher efficiency;
• encouraged longer stays;
• established rational approach to marketing;
• generated higher spending per visitor;
• greater contribution to achieving corporate objectives;
• helped structure website portal;
• higher return on investment (ROI);
• improved results;
• increased first-time visitors;
• increased leverage of private sector funding;
• increased repeat visits;
• increased visitor satisfaction;
• more cost-effective;
• more focused campaigns, images and messages;
• more off season business;
• more public/private sector joint marketing;
• more targeted media usage;
• product improvements to meet needs of target segments.
2.4 Good Practice Examples

While not all NTOs have embraced segmentation as a basis for underpinning their marketing strategies,
the majority has done so, and claims to be reaping the rewards of this approach.
Some examples of good practice have arisen as part of this survey and a few are worth highlighting:
• accessing freely available research and statistical data on segments from Internet sites;
• analyzing customer feedback on such things as product and service needs, desires and satisfaction
levels;
• collaboration with other NTOs in undertaking expensive market research – especially in emerging
markets;
• collaboration with the private sector in undertaking primary research;
• comparing and contrasting the relative contribution that segments make to an NTO’s strategic
objectives and selecting target segments accordingly;
• ensuring that marketing activities match what is known about the segment;
• maximising the data available from visitor and accommodation surveys;
• obtaining information on tourist behaviour/consumption from the tourism industry;
• only selecting those segments for which there is adequate resource to target, i.e. do not under-fund
a target segment simply to spread the net further;
• seeking expert advice on how to reach chosen segments and what messages/visuals should be
used.
Chapter 3
Segmentation Methodologies in Action
This chapter describes a range of segmentation methodologies. It does not aim to portray every available
methodology, but to indicate a representative range that can be used by NTOs and other organizations
involved in destination marketing.
3.1 Introduction
Inclusion of a segmentation methodology in this handbook, for illustrative purposes, is not necessarily
a guarantee of success. Even successfully executed methodologies may not have operated at an optimal
level, i.e. there might have been better ways of identifying and targeting customers than the one selected.
To discover an ‘optimal’ level of segmentation would require split-run testing in which different kinds
of segmentation are tested against each other and the results systematically compared. This is a costly
and highly sophisticated procedure that, as far as is known, has never been attempted. Nonetheless,
in general terms segmented marketing does tend to produce better results, and operates more cost-
effectively than non-segmented marketing.
Segmented marketing can be measured and evaluated, e.g. using conversion or other evaluation
techniques. Also, an indicator of performance can be achieved through analysing the performance
of segments through time-series visitor study data – if a target segment has been defined in terms of
variables such as age, education, occupation, etc. – then visitor study data should be able to reveal
trends in arrivals, spend and other outputs relating to the target segment.
To help understand the methodologies, case studies have been used throughout this chapter to highlight
their practical applications. An analysis of case study material, undertaken in preparing this handbook,
indicates that:
• what might appear to be discrete or distinct methodologies often share underlying similarities, e.g.
geo-demographics may be seen as a variant of lifestyle segmentation, except that geographical
location is the main variable;
• the dominant approach by many NTOs is lifestyle or life stage segmentation;
• lifestyle/life stage segmentation is often developed using a combination of purpose of trip and
socio-demographic data, e.g. age, family, occupation, education, etc. NTOs frequently utilise the
data to perform creative statistical analyses that enable clustered groups to emerge as segments.
3.2 Socio-demographic Segmentation

What is it? Socio-demographic segmentation is the earliest and one of the most useful forms
of tourist segmentation. It involves analysing source markets in terms of socio-
demographic features that may include gender, age, family life cycle, income,
occupational status, education, nationality and geographic location. The term
life stage is often used to describe the differing stages of socio-demographic
development.

Why do it? Socio-demographic categories can be illuminating in suggesting the kind of tourists
who are, or are likely to be, attracted to a destination.
How to do it? Socio-demographic segmentation depends upon the acquisition of up-to-date

visitor study information that marries tourist behaviour to socio-demographic
categories.
Typically this is based on a quantitative survey of visitors to a destination, using
a questionnaire that tracks tourism behaviour and trip details (party size and
composition, expenditure, itineraries and activities, length of stay, daily or total trip
expenditure while in country, etc.) and a range of questions about personal details
that constitute socio-demographic features.
The more extensive the questionnaire, the greater the variety of cross-tabulated
analysis/profiling that is possible from the results.
Advantages Once socio-demographic profiles of visitors have been determined, it is possible

to identify their key segment dimensions. Three categories have been found to be
particularly significant in profiling tourist segments:
• Income and occupation: as a luxury good, tourism is a discretionary item often
influenced by income and status. These, in turn, are frequently associated with
levels of education.
• Life stage: traditionally examples include young singles, young couples without
children, couples with children, ‘empty nesters’, whose children have left home,
and older (retired) couples.
• Geographical residence: usually includes where a source market is based and
the travelling time required to access destinations. Most countries generate a
large part of their tourism revenue from the countries that are closest to them
and/or with easy access.
Disadvantages No single socio-demographic variable is likely to provide an adequate basis for

market segmentation and targeting. Conversely, a visitor study may include so many
variables that the NTO does not analyse it exhaustively.
Visitor surveys invariably generate data for many cross tabulation possibilities. NTOs
may conduct only a limited number of analyses from the raw data because of limited
resources/skills or a failure to recognise the tourist profiling options embedded in
the data.
Resource implications The most important prerequisite is the resource necessary for undertaking a
comprehensive visitor study – ideally conducted annually. Costs include the agency
that conducts the study and the cost of fieldwork, analysis and publication. The more
questions there are in a visitor study, the greater are the costs of conducting the
study and undertaking analyses. In analysing visitor studies, NTOs may benefit from
using specialists who are expert in ‘mining’ quantitative surveys and experienced in
appropriate statistical techniques.
3.2.1 Case Study 1: How Britain Developed a Product for Indian Visitors
Although the Indian market is not one of the UK’s largest source markets, it has special features that
make it important – e.g. the post-colonial cultural ties that link the UK and India. In addition, there are
a number of specific features of the Indian market that made it attractive. For example:
• Indian outbound visits are growing at a healthy rate;

• Britain receives around a quarter of a million visits from India each year;
• Indian visitors to the UK account for around 6 million nights;
• average length of stay is 27 nights per visit – three times the average;
• total spend is over £200 million per year;
• many people of Indian descent live in the UK – a driver of VFR travel;
Segmentation Methodologies in Action 27
• VFR accounts for 37% of visits;

• Britain is India’s second most important export market.
The programme
In the context of these distinctive market features, it was decided in 2002 to mount a special marketing
activity targeting the Indian visitor. The vehicle for this was the promotion of places in Britain that
had been used by Indian film directors as locations for their productions. This ‘Bollywood’ product
development was seen as promising for several reasons:
a) The main Indian market is composed of young visitors: over half of visitors are aged 25 – 44 and
about another third are aged 45 – 64. Between 1999 and 2002 these two groups were the fastest
growing markets and between them accounted for almost two thirds of tourist spend from India.
The ‘Bollywood’ product was seen as an attractive product for this age group and the family visitor.
Indians, like the French, are particularly enthusiastic film fans.
b) It capitalised on the observable trends in travel patterns regarding the effect of films: Crocodile
Dundee on Australian tourism, Braveheart and Rob Roy on Scottish tourism, and more recently,
the Lord of the Rings trilogy on New Zealand travel from 2002 onwards.
c) It was seen to provide additional itineraries for the repeat visitor: it was known that 60% of Indian
visitors had visited before in the previous ten years. As a new product with a strong targeted appeal
it was exclusive and glamorous.
d) If successful, it offered a touring activity that was within the average stay capability of the Indian
visitor.
e) It would realise the long-standing aims of the British Tourism Authority (BTA)/VisitBritain to increase
geographic dispersion of tourists.
How the product was developed

BTA decided to mount a campaign that promoted UK locations, featured in films made by the Indian
film industry to the Indian visitor. The main vehicle for this was a promotional leaflet that acted as a
guide to the locations. It was in full colour and folded down into a 16-panel guide.
The main feature of the leaflet was a map that indicated sites and locations where ‘Bollywood’ film
productions had been shot. They comprised 22 films that had been made between 1994 and 2001.
They were all thus recent productions that the visitors, particularly the younger film enthusiast, could
be expected to have seen recently. The descriptions attached to each
location provided a detailed listing of places and attractions that
read almost like mini-gazetteer of Britain’s best attractions.
Though London had been most frequently featured in the films,

there was a good variety of locations that were outside the capital,
including the West Country, Oxfordshire, and also Wales and
Scotland.
The leaflet showed stills from some of the films, and included an
interesting testimonial device called, “‘Post cards from the stars’
which featured some of the actors endorsing Britain and telling
anecdotes about their and their families” association with the
country.
Cover for the ‘Bollywood’ movie map

Comments: The Indian campaign suggests the continuing importance of geography as a factor
in tourist sourcing. It also demonstrates how, once a significant geographical segment has been
targeted, marketing actions can be closely focused to address its specific features.
3.2.2 Case Study 2: ‘Japanese Office Ladies’ and Britain’s Lake District
This case illustrates the use of three socio-demographic variables – occupation, life stage and gender. It
is based on a campaign mounted by the BTA in the mid-1990s.
In 1993, BTA analysed Japanese tourism to the United Kingdom and discovered that women constituted
80% of the market. Further analysis found that these were mainly single women with good jobs, high
discretionary income and a high travel propensity. This segment was subsequently labelled Japanese
‘young single office ladies’.
Product development
In order to develop this segment further, BTA looked at the main products that Japanese women were
interested in, and concluded that the Lake District was one tourist region particularly well situated for
further development. The main problem was that, as a location characterized by a physical environment
of mountains, wild fells and lakes and unpredictable climate, it was perceived as too masculine in its
image. The need was to seek a positioning that was more feminine in its appeal to the Japanese ‘office
lady’.
The vehicle for achieving this revised positioning was a product package promoted to the target group
that included a visit to the house of Beatrix Potter, the famous Edwardian children’s author, whose books
about Peter Rabbit and his friends are well-known in Japan – particularly among women.
The package also promoted afternoon tea stops at quaint country house hotels, because, as a BTA
spokesperson commented, “afternoon tea is the ideal vehicle because it has become very fashionable
in Japan”. In addition, the promotion emphasised the green aspects of the Lake District, rather than its
rugged features, and sought a kind of ‘soft’ Laura Ashley design style in associated publicity.
Comments: The case illustrates the links between precise market segmentation – using geography,
life stage, income, occupation and gender as the key profile dimensions – and marketing action,
through the innovation and promotion of a product, custom-designed to address the known
predispositions of the target group.
3.3 Purpose of Trip Segmentation

What is it? Purpose of trip segmentation is unique to tourism. Visitors are differentiated by
the main reasons for which they are taking the trip.
For example:
• Recreational, also known as ‘holiday’ or ‘leisure’
• Business – trips associated with work
• Visiting friends and relatives (VFRs)
• Education
• Religious/pilgrimage
• Special events – e.g. World Cup, Olympics, etc.
Note: some NTOs may use additional classifications
Why do it? This typology provides insight into the underlying nature of tourism to a
destination. Both practitioners and academics agree that these categories are
often sharply differentiated in terms of length of trip, expenditure, accommodation
used, activities undertaken, etc. Yet, some NTOs still combine all ‘tourists’, failing
to discriminate between types.
How to do it? Like socio-demographic segmentation, segmentation by purpose of trip depends

upon up-to-date detailed quantitative visitor information.
If this is not an affordable option, NTOs can devise low-cost ways for estimating the
approximate balance of tourism by purpose. This may be gathered by using travel
industry representatives as ‘key informants’, by observation or through secondary
data sources – e.g. government data, outbound source market data, etc.
Advantages Purpose of visit classification enables NTOs to identify the nature of its visitor
base and to plan activities accordingly. It also enables the identification of
geographical/seasonal variations in tourism by purpose.
Disadvantages There are no disadvantages to this typology provided it is used with other variables.
However, there is a growing tendency for purpose of visit categories to merge
– e.g. business travellers may choose to add on recreational time to business trips
or VFRs may use friends and relatives as a basis for recreational trips.
Resource implications The most important prerequisite is the resource necessary for undertaking a visitor
study – ideally conducted annually. Costs include the market research agency to
conduct the study and the cost of fieldwork, analysis and publication. The more
questions there are in a study, the greater will be the cost of conducting the study
and analysing results. In analysing visitor studies, NTOs may benefit from using
specialists who are expert in ‘mining’ quantitative surveys and experienced in
appropriate statistical techniques.
3.3.1 Case Study: Differences Between Business, VFR, Leisure Tourists – an

International Visitor Study Analysis
Below is a composite case study based on data, derived from a number of annual visitor studies,
conducted by NTOs in developed Western countries. It highlights some of the differences regularly
found between ‘business’, ‘VFR’ and ‘leisure visitors’.
Leisure visitors Business visitors VFR visitors
Daily Moderate expenditure, Highest expenditure on Low in total, but

expenditure especially for families. a daily basis, especially moderate to high when
for international business accommodation and
travellers. package costs are excluded.
Business travellers may VFRs are known to spend
spend freely on expense- freely on gifts, attractions,
account financed and hospitality. Also the
subsistence, and also on cost to hosts of entertaining
personal gifts for family and friends and relatives is
friends while on a trip. known to benefit local and
regional economies in the
host country.
Length of trip Medium term stayers: with Short term stayers: the Long term stayers
average length of trip of typical length of a business internationally, particularly
5 to 7 days and with an trip may vary from a few for long haul stays.
increasing trend across hours in a domestic location With increasing global
the developed world for to 2 to 3 days abroad. mobility and immigration/
shorter holidays and more emigration patterns VFR
short breaks. travel will grow.
Leisure visitors Business visitors VFR visitors
Main Wide variety used, Premium accommodation Staying with friends

accommodation according to socio- for executive travellers, often and relatives is the main
economic status: bed 5 stars hotels, with which accommodation, but around
and breakfast, camp- large companies may have 10% may stay in commercial
sites, self-catering, etc., secured frequent stayers accommodation for some of
but low use of premium discounts or negotiated the time.
accommodation by special rates. Use of commercial
average families. There is also a less often accommodation is due
emphasized non-executive to the ‘overspill’ factor for
travel segment, made up of certain obligatory family
labourers/skilled and semi- events, e.g. weddings and
skilled workers who work at funerals, and to possible trip
home and abroad. add-ons, which suggests the
importance of ‘educating
the host’ about tourism
attractions in, and around
their areas.
Travel form Most likely to travel on Premium travel, often First or Budget travel forms often
inclusive packages with Business Class air and train used – e.g. budget airlines,
charter flight transport. travel. car or cheap train. However,
cheap options may not be
available when VFRs most
want to travel (for seasonal
festivals and important
national occasions).
Party size Variable party size that Single travellers may be Large. Some visitor studies,
typically ranges from the basis of routine, non- e.g. in Northern Ireland,
couples to large family discretionary business trips. suggest that about 80%
parties. For conferences and events of VFRs are actually VRs-
Family party size varies parties may be larger. families and/or relatives,
by countries, e.g. Italians rather than friends, travelling
travel in larger parties than in groups.
Belgians.
Seasonality Highly seasonal, following Less seasonal than any other Less seasonal than
cultural patterns form. Mainstream business recreational travel, but
determined by school meetings are unavoidable strongly seasonal culturally,
holidays provision, and not determined by due to family obligations
holiday-with-pay time calendar factors (see to reunite for religious and
allowances, relative discussion of Involuntary other seasonal festivals,
weather conditions in and Discretionary Business and important national
source and host countries, travel below). occasions (see discussion of
etc. VFs and VRs below).
Note: These broad generalisations are derived from typical findings from annual visitor studies, conducted in the UK over the last
decade, but many of them marry with characteristics of the three types of traveller elicited in other countries (e.g. Australia
and USA).
This table of contrasts, drawn from a selective range of visitor studies, will not be the same at every
destination. Its purpose is to illustrate the importance of compiling a detailed profile of the differences
between the three categories of travel, in order that effective marketing efforts may be planned for
each.
Nor should each category always be seen as a market segment, in that each of the three traveller
categories may be further segmented to reveal sub-categories. It is evident that recreational travel is
a vast field that constitutes a wide range of different travel segments. However, it is also important
to look at some of the sub-segments variations that are often subsumed within the VFR and business
categories.
Business travel
Sub-categories of business travel are important – e.g. the involuntary, discretionary and incentive
sectors.
• Involuntary business travel comprises the business meetings that executives and employees
undertake as part of the day-to-day management of companies. It cannot easily be induced by
NTOs since meetings only happen as and when they are necessary. The main responsibility of
NTOs, and the tourism industry, is to be aware of the volume/value of this business and coordinate
with the industry ‘on the ground’ to make sure that this sector needs are being met.
• The second sub-category of business travel is the voluntary or discretionary sector which comprises
conferences, conventions, association meetings, academic conferences, and many other kind of
collective occasions when large professional, occupational, interest or other associational groups
hold meetings, often annual or periodic. Though the nature and timing of these high profile
occasions cannot be influenced, the venue can. This is normally the responsibility of convention
bureaux, but in some instances it may involve NTO support.
• Business travel includes incentive travel taken by company executives and staff. This kind of travel
may be offered by companies as a prize to their employees for achievement – e.g. reaching or
exceeding sales targets, managing the launch of a new product. etc. – or used as means of team-
building and training. In some cases, it may have several goals. It is also worth mentioning that
there is a general increase in female business travellers and developing appropriate provision,
such as appropriate and secure accommodation, may provide a competitive advantage.
In addition, business travel also includes a segment that is seldom studied or considered in NTO
planning – the non-executive traveller. This largely ‘hidden’ market consists of unskilled, semi-skilled
and skilled workers who travel to perform manual tasks as electricians, shop-fitters, building labourers,
lorry drivers, agricultural workers, road makers and many other kinds of temporary worker in a region.
Little research has been conducted into their numbers, needs or behaviour, but it is clearly obvious that
they are very different from executive travellers. It remains an undeveloped segment and would benefit
from further research.
Visiting friends and relatives (VFR )

For many years, VFR was seen as one category and was, to a large extent ignored by many NTOs and
other tourism planners since it was thought to be worth little and hard to affect through marketing
activity.
In the last decade, the category has received much more attention as accelerating population movements
globally have precipitated increasing rates of VFR tourism in many countries, and research has revealed
that it has greater economic effects than was originally thought.
One of the research findings has been that it is not one segment but two, which have very different
features. This was first demonstrated in Northern Ireland where disaggregation of the VFR category
suggested that it comprised two groups: those visiting friends (VFs) and those visiting relatives (VRs).
VRs were found to be approximately four times as numerous as VFs and the profiles of the two groups
differed. VRs tended to be older, family parties with children, while VFs were younger, travelled in smaller
parties and stayed for shorter periods (see Seaton and Tagg 1995 and Seaton and Palmer 1997).
Because of the likely continuing importance of VFR tourism, as an effect of increases in global
immigration and emigration flows, the category is considered in more detail in a separate section with
a recent NTO case history (section 3.4.1).
Comments: This section has reviewed the three primary categories of tourist by purpose of trip.
It emphasises the need for NTOs to monitor the categories in detail, and highlighted some key
differences between the visitor types. Some organizations also include other visitor types in their
statistics – e.g. education and religious tourists. The principles underlying their identification and
analysis remain the same as for the major categories of purpose of visit.
3.4 Visiting Friends and Relatives (VFR) Segmentation

What is it? Visiting friends and relatives is one of the main categories that constitute purpose-
of-trip segments. It was often ignored by NTOs because it was thought to be worth
little and difficult to influence. In the last ten years, it has been radically re-assessed
and is now seen as a major source of international tourism revenue (see case study
below) and is set to increase due to the radical population shifts (immigration and
emigration changes) affecting the modern world.
Why do it? The VFR category is worthy of attention for several reasons:
• If accommodation and package costs are excluded from tourism costs, VFR travellers
are known to spend as much on other tourism products as other travellers;
• International VFRs, particularly those taking long-haul trips, often stay longer than
any other category of visitor;
• VFR tourism stimulates host economies in two ways – through direct tourist
revenue and through the additional expenditure made by friends and relatives in
hosting guests;
• A percentage of VFRs are also now known to use commercial, serviced
accommodation during VFR trips (see following VisitBritain case study).
How to do it? Like other purpose-of-trip segmentation, data for assessing VFR tourists depends
upon quantitative, up-to-date visitor study information. There are still NTOs and
regional tourist boards that do not disaggregate VFR trips from tourism data, which
means that a significant volume of tourism that looks like recreational, business or
religious tourism may in fact be VFR.
Advantages VFR tourism bestows a number of benefits. It tends to be more evenly spread
geographically and seasonally. In addition, VFR is often concentrated in urban areas
– many of which may have a low recreational tourism base. VFR tourism may be a
platform for recreational tourism since visitors may use friends/relatives as a base for
part of their stay, but then visit other areas using commercial accommodation.
Disadvantages It is often stated that VFR is not a segment that can be stimulated through marketing
activity – it is travel that will happen anyway, e.g. to attend weddings, funerals, etc.
However, this assumption is now being seriously questioned by some NTOs (see
VisitBritain case study below).
Resource implications As with socio-demographic and other purpose of trip segmentation, collating data
is important. A resource prerequisite is the funding necessary to undertake a visitor
study – ideally conducted annually. If a comprehensive survey is already conducted,
the only additional resources necessary are those needed to analysis VFR traffic flows
and determining the marketing decisions/action that emerge.
3.4.1 Case Study: ‘UKOK’ Campaign

One common assumption about VFR travellers, even among those who recognise their importance and
revenue potential, is that the market cannot be affected by marketing efforts – i.e. it will happen anyway
and/or it is already catered for through other NTO activities that promote a destination to holiday
visitors. These two views reflect an interesting contradiction, since they simultaneously assume that
there is nothing that can be done to affect the VFR market, and that it is already being done anyway.
The case study below shows how one NTO started to re-think old prejudices about the importance and
‘influenceability’ of VFR traffic.
In 2001, the BTA was confronting a downturn in international tourism to the UK created by two tourism
crises – the Foot and Mouth epidemic and the aftermath of September 11. Accordingly, it received
additional funding to conduct a campaign to win back its market. The overall campaign concept,
‘UKOK’, set out to reassure potential visitors that the UK was open for business again, offered great
attractions and was safe and secure.
For the first time, BTA seriously targeted the international VFR market. The reason for this was that two
research initiatives had suggested that the segment could be high in potential.
• Quantitative research had shown that the VFR market was an increasingly significant portion of
total inbound tourism. In fact, while the UK’s inbound tourism had generally declined, the VFR
market was bucking the trend and was one of only two growth sectors between 1995 and 2000.
It was the largest growth area in terms of visitor spend (+31%) and equal to business tourism in
terms of visitor growth. As the underlying premise of the ‘UKOK’ campaign was to attract the ‘low-
hanging fruit’ – i.e. visitors with the highest propensity to travel to the UK, and the VFR market was
an attractive one.
• Qualitative research also suggested strong possibilities for the VFR market. Following September
11, focus group research, particularly in the USA, showed that the order of priorities for potential
visitors had changed and they now needed:
– to be among ‘friends’ – either actual or symbolic friends;

– to go somewhere different, but not too different;
– a destination that could provide personal safety;
– a destination that could provide good value for money;
– a destination with good communications to stay in touch with relatives back home.
It was therefore decided to mount a VFR campaign that would capitalise on the possibilities indicated
by the research. In the USA, the campaign comprised an invitation to visit a country that had been
a symbolic friend. In Europe, the value for money message of staying with friends and relatives or in
budget hotels was the major promotional angle.
The campaign
In order to implement the campaign the BTA mounted a two-prong strategy:
• Domestic marketing to British residents so that they would nominate and invite their friends and
relatives.
• Follow up with tailored VFR messages from overseas BTA offices.
The BTA targeted two basic audiences – consumers and the travel trade in the UK that it wished to
involve in the campaign.
1. Consumer groups
BTA identified three groups who, it believed, would carry influence in encouraging friends overseas
to visit.
a) ‘Ambassadors’: this group was identified as predominantly female, 35 to 65 years, housewives

or retired, with an ABC1 bias and friends and relatives living overseas. To reach them, public
relations (PR) and media promotions were placed in national and consumer media, together
with field marketing heritage sites and events like the Ideal Home Exhibition. This audience
was also receptive to a competition-based direct marketing campaign – aimed at women aged
more than 35 years who regularly make telephone calls abroad. Promotions were not exclusive
to women, but in general it was women who maintained the relationships with friends and
relatives overseas and took the time to send response cards to BTA.
b) ‘Foreign nationals’: the second target group were British or foreign people working in large
international companies based in the UK, who had friends and family living overseas. To reach
this group, competition-based promotions were placed on the Intranet of Price Waterhouse
Coopers, a large global management consultancy, in The Wharf newspaper, serving employees
of firms throughout London’s Docklands, and via ‘Homebase Holiday’s’ e-newsletter. Viral
e-marketing campaigns used databases of foreign nationals such as TNT magazine’s 30,000
Australian ‘backpackers’. Foreign visitors already in the UK were asked to nominate friends and
relatives who could be interested in visiting via a large display at the Britain Visitor Centre in
London.
c) ‘Ex-pats’: the third group were ex-pats living abroad. The Weekly Telegraph, an international
version of the British broadsheet newspaper, carried editorial promotions to directly entice
ex-pats to the UK with special deals. Once again, databases from Anglophile websites such as
www.missingbritain.com were utilised for viral e-marketing campaigns.
2. UK Travel trade
BTA also involved the UK travel trade, and non-tourism companies, in the campaign. A detailed
account of this can be found in the second part of this case study that is included later in the
“Business-to-Business” segmentation.
Budget and resources

The budget for the campaign was US$576,000 (€643,000). Two thirds of the budget was spent in the
first phase – the largest cost being for creating VFR ‘packs’. The two phases were:
• Phase 1 ran from February to mid-April and concentrated on distributing 200,000 ‘VFR packs’
containing all the tools UK residents might need to invite their friends and relatives. The packs
comprised country versions of postcards, VisitBritain CD-ROM, a ‘UKOK’ pen, a ‘UKOK’ ‘Hidden
Britain’ brochure and covering letter from BTA and the relevant national tourist board. These were
mainly distributed via requests to a national phone hotline promoted via editorial promotions
and PR. Online marketing, field marketing and direct marketing were also used. Response cards
were returned to BTA with the names of overseas friends/relatives. Responses were incentivised
via prize draws.
• Phase 2 ran from the end of April to November. A smaller budget meant that the main thrust of
this phase was to create 500,000 postcard sets and ensure direct distribution via as many outlets
– both travel and non-travel related – as possible. This was supplemented by field marketing and
further editorial promotions. Additional online marketing and direct marketing gave a final fillip to
the campaign. The campaign was supported at fairs, by viral ads, and media publicity.
Public relations
PR played a big part in the campaign. Prime Minister Tony Blair was filmed for a video news release at
Downing Street. He endorsed the campaign by signing a giant version of one of the VFR postcards with
the message to potential overseas visitors – ‘Wish You Were Here’. BTA staff undertook 40 national/
regional radio interviews from the studios of radio marketing agency 4DC Marketiers.
Evaluation
The primary objectives of the VFR campaign were:
• To rebuild Britain’s overseas visitor market, post Foot and Mouth and September 11.
• To maximise customer acquisition of friends’ and relatives’ visits to the UK.
The secondary objectives of the VFR campaign were:
• To test new methods of domestic marketing for possible future use.

• To build a database of UK and overseas contacts likely to arrange VFR trips.
• To generate extra business for the campaign partners.
Primary objectives 1 and 2 were measured via an extensive research involving paper and e-mail
questionnaires to a representative sample of overseas friends/relatives in Europe and America, who had
been entered into a database via this campaign. This evaluation exercise calculated incremental visitors
and spend.
Secondary objective 2: more than 90,000 UK households and approximately 30,000 overseas
households were contacted as a direct result of this campaign – i.e. people that entered the prize draws.
In addition, there were many recipients of the VFR packs who invited their relatives without entering
the prize draw.
Secondary objective 3: a number of campaign partners reported business gains from the campaign.
BritRail reported that they had sold US$228,000 (€321,000) worth of passes as a result of the ‘Companion
Pass’ scheme created for the VFR campaign. Swiftcall, a mobile phone company, had signed up a
significant but unspecified, number of new accounts from their participation in the campaign. British
Airways also sold a ‘significant number’ of flights by offering special VFR fares to their 50,000 UK
staff.
In addition to these objectives being met, there were additional ‘spin-offs’, including: the creation of
greater awareness among UK residents of holiday ideas in Britain; new non-tourism partner contacts;
the creation of a substantial database for domestic tourism marketing and the pioneering new marketing
distribution methods – e.g. Friendsreunited.com and lastminute.com online marketing and the online
viral marketing campaigns.
Comments: The BTA campaign indicates the way in which the VFR market can be targeted through
a cooperative partnership between an NTO, the trade and the government. An interesting outcome
of this campaign was the comment, on the importance of the VFR market in general, made by BTA
in its campaign review report:
“The VFR sector had previously been dismissed by the tourism trade as a ‘non-market’ because
visits were generally thought to be low value”. Instead, the report concluded, “the value of the VFR
market had been grossly undervalued” and added the following comments:
• “Not only is it likely that some visitors mistakenly describe many VFR trips as holidays so
they have been counted incorrectly, but also the expenditure of the host is never included in
official VFR spend figures. In actual fact, the host often spends as much, if not rather more,
than the visitor.
• Social changes have led to the trend for smaller and single person households – these hosts
do not have the space to accommodate visitors. Because of this some 31% of domestic VFR
visitors said they do not always stay in the home of their friend or relative and, of these, the
vast majority stayed in a hotel or Bed&Breakfast (B&B). These findings have been echoed by
BTA research carried out among the VFR travellers from Canada.
• It is the higher economic classes who are more likely to take VFR trips and those that do
average more trips – probably reflecting the higher mobility of that group. As the global
population continues to live longer then VFR trips by older relatives or to older relatives is
expected to grow exponentially.
• VFR also helps to spread tourism, both in terms of location and timing. On location, some
three quarters of adults agreed that by going to see friends and relatives they were getting
to see parts of the country they may not otherwise visit and once there hosts try to avoid
the hotspots and overcrowded areas. The timing of VFR trips is spread much more evenly
throughout the year than holiday trips.
The Business-to-Business programme that supported this campaign is described later in this chapter in
the Business-to-Business segmentation section.
3.5 Trip Pattern and Structure Segmentation

What is it? Trip pattern and structure details consist of information about the exact way in which a tourism
trip is taken from start to finish. This might include details about booking arrangements, cost,
party size and composition, travel itinerary to, from and within the destination (including
geographical areas), length of trip and average daily expenditure – ideally itemised by
expenditure categories such as shopping, transport, attractions, etc.
Why do it? Trip structures and patterns form the heart of the tourism experience. Understanding
the travel patterns and itineraries of tourists during a trip therefore provides illuminating
information on what tourism entails at a destination. It can also reveal specific market
segments, e.g. transit passengers versus short break travellers, short break travellers versus
long stay visitors, etc Moreover, since some NTOs are required to stimulate a geographical
spread of tourism within their countries, it can be important to monitor appropriate trip
patterns.
How to do it? Data on the variables explored in this approach is dependent, like many other methodologies,
on a well-constructed visitor survey – ideally administered as close to the end of the trip
as possible while details are fresh in respondents’ minds. It can also be conducted once
tourists have returned home, but needs to be done quickly – preferably within 6 to 8
weeks – to prevent omissions/ distortions caused by memory loss. Where it is important to
acquire greater depth of data about the meaning/effects of these patterns, qualitative or
observational techniques may be used.
Advantages Trip data can generate useful information – e.g. it may reveal differences in the length of stay
and geographical dispersal. It can also reveal data on expenditure patterns that can later be
translated into total tourism revenue estimates.
Disadvantages There are no disadvantages to gathering data on these dimensions. If it can be done it
should be. There is no reason why an NTO should not want to understand the basis of the
tourism experience. Indeed, the main requirement is constantly to review the questions on
trip patterns, in order to develop more refined measures for the precise tracking of visitor
behaviour at destinations – e.g. ‘How many overnights do tourists take before arriving at
a destination?’, ‘How much time do they spend in the hotel precincts?’. It is also valuable to
track different trip structures and patterns among different kinds of tourists – e.g. by age,
special interest, cohort, etc.
Resource implications Provided the NTO has access to a rigorously conducted annual visitor survey, the resources
required may simply be the additional costs of including appropriate structure and pattern
questions.
3.5.1 Academic Developments in Tracking Trip Patterns and Structures

In this section a description of two methodologies that can contribute significantly to the way NTOs
understand their visitors is undertaken.
‘Trip Index’
The Trip Index, developed by two Australian researchers in the early 1980s (Pierce and Scott, 1983),
is based on the notion that a trip may be the composite of a number of stays in different places. For
example, in travelling to a destination, a tourist may stay overnight in one or more places en route
and, once at a destination, may move around or spend some nights away from the main place of
accommodation.
It is worth knowing about this multi-location behaviour. Pierce and Scott recommended a simple
accounting procedure – that a value should be put on each night spent at a destination as a percentage
of the whole trip. The calculation involves dividing the total length of trip by the length of individual
component overnight stays and then expressing each one as a percentage of the whole trip.
Thus, a two-night return trip to and from a destination, out of a total trip of 10 days, would be achieve a
trip index of 20%. Similarly, a three-day ‘mini-trip’ to the Opera Festival at Verona, within a total trip of
12 days stay in Umbria, would yield a trip index of 25% for the Verona Opera Festival and 75% for the
stay in Umbria. This kind of trip analysis might unveil some interesting implications.
‘Trip Pattern’
A related concept, developed by US academics at Texas A. and M. University (Lue, Crompton and
Fesenmaier, 1993), focuses not on the timing of trip components but the spatial distribution and function
of destination choices. They suggest that people choose destinations for different reasons, and this,
results in different trip patterns.
Five destination patterns have been identified:
• Single destination pattern: where the tourist stays in one place and where destination character
and quality is paramount.
• En route pattern: where destinations are seen as transit points on the way to somewhere else. The
Pas de Calais in Northern France is a good example of a region that most people pass through
on their way south; Jordan hosts many ‘no night’ and ‘one night’ transit stays by people going
elsewhere in the Middle East; and many ports receive cruise passengers who may stay for only a
matter of hours or a single night.
• Base camp pattern: where a destination is simply a convenient starting point for other places.
Some destinations with limited appeal may position themselves as convenient or cheap ‘gateways’
to other more attractive places. This is particularly common for industrial/urban destinations that
may be surrounded by attractive natural and/or heritage attractions.
• Regional tour pattern: where a destination is seen as one of several within a total itinerary. This
will be the pattern for many small, picturesque destinations that might be ‘stopovers’ for tourists.
• Trip chain pattern: where a destination is seen as joint equal with one or two other destinations
– e.g. a religious tour of Jordan and Israel, a package tour of China and Russia, etc.
Comments: Trip pattern and structure data can often be extracted from visitor studies. When
trip pattern data is combined with other factors – e.g. travel cohort, spend, length of stay, socio-
demographics etc. – the results can provide important insights into how tourists navigate to and
around destinations. Trip pattern and structure analyses are particularly helpful in understanding
how segments behave, and in developing appropriate marketing mixes and itineraries to meet
their needs.
3.6 ‘First Time’ Versus ‘Repeat Visitors’ Segmentation

What is it? The first time visitor comes to a destination with no first-hand experience, while
the repeat visitor may have considerable knowledge based on many previous trips.
The differences between first time and repeat visitors are important for destination
planners, yet some do not distinguish between the two in their visitor studies.
Why do it? The reason for treating the two groups separately, and in some cases using the
differential knowledge gained as the basis for seeing them as two segments, is that
first time visitors and repeat visitors are known often to differ in their travel behaviour
to, and at, a destination. These differences may affect:
• travel in packages – more likely for first timers, less likely for repeat travellers;
• activities – first timers may do more sightseeing than ‘old hands’;
• itineraries – repeaters are less likely to explore ‘honey-pot’ attractions;
• information requirements – repeaters may require less information to persuade
them to make a trip, but use a variety of information in travelling around a
destination;
As a result, NTOs may need to plan a different marketing mix for the two groups.
How to do it? Segmenting the visitor market by first time and repeat visitors can be achieved in
basic terms by a single question in a visitor study, “Is this your first visit to destination
X?”. However, it may be worthwhile exploring the repeat visitor further by questions
that track how many trips have been taken and also why the visitor keeps coming back
and how long they plan to do so. These, and other aspects of repeat visitor behaviour,
may be monitored by the inclusion of additional questions in the visitor survey, or by
qualitative focused groups with samples of repeat visitors and, if possible, first time
visitors. A particularly interesting group of repeaters in some countries are second
home owners, whose pattern and frequency of travel may afford niche marketing
opportunities to destinations and travel companies.
The marketing and promotional planning that follows differentiation between the
first and repeat visitor may include:
• for the repeat visitor: devising promotional materials stressing the ‘hidden’
or ‘lesser known’ aspects of a destination, materials that create trails that can be
pursued by independent travellers with the support of TICs/Welcome Centres en
route, etc;
• for the first time visitor: concentrating information and literature on ‘honey-pot’
locations, encouraging first timers to come back to see the lesser known ‘gems’
offered by a destination outside the central areas.
Advantages An advantage of knowing the difference between the first time and repeat visitor
is that it enables NTOs to focus on turning one into the other. Repeat visitors may
have greater value to a destination, since it often costs less to attract them. And,
by providing a loyal customer base, they may become not just a revenue source,
but advocates among their peer groups. In general marketing theory, it is widely
recognized that repeat business is of critical importance for successful companies
– tourism is no different.
Disadvantages There are no disadvantages to making previous visitor behaviour part of the basis
of visitor segmentation. However, one logistical factor worth noting is that because
repeat visitors are more likely to travel independently, they may be harder to access
than first timers who may be on inclusive tours and thereby accessible via the retail
trade.
Resource implications Once again, the resource implications are not great since the data required to identify
the first time and repeat traveller may be part of a regular visitor study. The more
difficult task is effective planning to tap into the markets through targeted, effective
marketing and promotion.
3.6.1 Case Study 1: First Time Versus Repeat Visitor

In the mid-1990s, the British Tourist Authority conducted analysis of their international visitor database
with a special focus on those making first time trips and those who were repeaters. The data for this
analysis was the International Passenger Study and other studies that tracked the comings and goings of
passengers into and through Britain. It included details of who the tourists were, where they visited in
the UK, accommodation they stayed in and purpose of trip details. From this exercise the BTA was able
to create a typology of tourists that partly reflected differences in previous experience of Britain. The
main groups were as follows:
• The first time visitor: stayed in London and visited the main ‘honey-pot’ attractions in the capital
– Westminster Abbey, Tower London, Buckingham Palace, etc. They occasionally visited a few
‘honey-pot’ attractions outside London including Windsor (another royal residence).
• The traditionalist: this visitor might be making a second trip and divided their time between
London and established regional locations – Oxford, Chester, Cambridge, etc – using the train and
occasionally staying in bed and breakfast accommodation. The basic goal of the tourist was an
enriching experience.
• The explorer: the main motivation of this visitor was to know the country better. Having had the
London experience on previous trips, the explorer tended to stay outside the capital for most of the
time and use big cities as a base for touring Wales, Scotland, etc.
• The Anglophile (or Britophile): this kind of visitor is the most committed to Britain and the most
experienced traveller within the country. They returned regularly, stayed in upmarket inns and bed
and breakfasts, and might have friends and relatives with whom they stayed for part of the trip.
3.6.2 Case Study 2: First Time Versus Repeat Visitor

Research in Greece by Eugenia Wickens resulted in a typology based on visitors to Chalkidiki. Segment
names were given, suggesting how each differed in their commitment to Greece and how their activities
interacted with their previous experience/non-experience of Greece.
Five segment types were identified:
• The Cultural Heritage Seeker: This tourist normally travels in families and may be a first time visitor
who seeks to access the natural beauties of Greece, its cultural sights engage with its history;
• The Raver is a party animal, attracted by the cheapness of the resort, the alcohol available, as
well as the sun, beach and nightlife. These were sometimes first time visitors, hardly concerned
or conscious of the specific venue, rather than the facilities around their hotel that supplied them
with the activities they wanted;
• The Shirley Valentine is a woman, sometimes a repeat visitor, travelling alone or with a same-sex
friend, and ‘seeking sexual adventure’ with a ‘Greek god’. ‘Shirley Valentines’ dated waiters or
other local men and viewed the destination as a setting for romance;
• The Heliolatrous is a sun worshipper whose main driving motivation is to get the perfect suntan.
For them Greece is ‘home plus sunshine’ and they seldom ventured out of the hotel environs/
beach/village;
• The Lord Byron is the person that makes ‘an annual ritual return to the same destination’ – often to
the same place and hotel. They seek a close association with Greece, have often begun to learn the
language and are more likely to be invited by locals for a meal either in the home or a ‘taverna’.
For them Greece is a passion.
Comments: Both case studies illustrate the value of differentiating between the first time and
the repeat visitor in understanding their behaviour. They also indicate a recurring theme in this
handbook – i.e. the critical way in which different variables, in this case, first and repeat visitor
status, interact with others, such as motivation and travel patterns, so that the most illuminating
kinds of segmentation are the holistic ones that are based on combining different perspectives/
approaches.
3.7 Benefit Segmentation

What is it? Benefit segmentation, first theorised in the marketing of physical goods, derives
from the notion that consumers might have different criteria for judging the same
products – e.g. in toothpaste choice, some people regard sparkling teeth as the most
important reason for purchase, while others regard prevention of dental decay as
the main benefit. Benefit analysis has been applied to tourism as a basis of market
segmentation and may be defined as the process of distinguishing and defining the
principal benefits sought by visitor market segments to a destination.
Why do it? Given the variety of destination product and attributes, benefit analysis can help
planners understand the main bases of destination choice among different visitor
groups. It allows them to explore why different destinations attract people, how
the same destination may serve different benefit seekers and how apparently
homogenous segments, e.g. backpackers or golfers, may in reality consist of sub-
groups seeking different benefits. In short, benefit analysis can reveal the main
benefits of a destination to visitors in general and the more specific benefits sought
by segments.
How to do it? There are several ways of assessing benefits:

• Benefit mapping of destinations involves conducting qualitative research
with tourists, through in-depth interviews or focus groups, asking them to rate
different destinations against each other. From this a number of choice criteria
will emerge as respondents verbalise their ratings of the destinations. Once a list
of destination choice attributes has been assembled, these are translated into
quantitative survey questionnaires that are given to representative samples of
respondents from target groups. They are asked to rank the attributes in order of
importance and to rate what score, e.g. out of a 5 or 10, they would give different
destinations for each attribute.
Respondents are also asked to score their ideal destination for each attribute.
From this research it is possible to identify the most important benefits sought by
particular groups at a destination, rank them in order, compare group perceptions
of different destinations and compare the performance of ‘real’ destinations
with an ‘ideal’ one. Based on this, analysts can construct maps, indicating the
comparative perceptual strengths and weaknesses of destinations in relation to
the attributes sought and identify gaps in current provision.
How to do it? • Using visitor surveys to collect benefit responses is a simplified version of the
above procedure. Benefit ratings are determined by asking respondents to give
a numerical value to a list of destination attributes in terms of importance, e.g.
“here are a list of possible destination descriptions – on a scale of 1 to 5 indicate
how important each is to you”. Respondents are then asked to give a numerical
value indicating the degree to which the destination delivered the benefit “Now
thinking of your visit to destination X how many marks out of 5 would you give it
for attribute A, B, C etc.”
• Qualitative benefit research of current/past visitors.
If the above procedures are impossible due to lack of resources some indication of
benefits sought and the destination’s delivery may be gathered through small group
work, e.g. focus groups.
Two useful dimensions to take into account are primary and hygiene benefits. Primary
benefits are those that explicitly attract visitors to the destination – e.g. sun, sea,
sand, nature, adventure, romance, tranquillity etc. Hygiene benefits are more prosaic
ones, relating to the logistics and functionality of accommodation, food, sanitary
arrangements, noise levels, etc.
Advantages Since marketing is about satisfying customer needs, it makes sense to have a clear
idea of the benefits a destination is expected to deliver and the expectations held
of a destination by different market segments. This aids decisions on destination
positioning and in evaluating performance in relation to the benefits sought.
Disadvantages Benefits may be multiple and contradictory. For instance, it is evident from research
that some people seek a mix of adventure and security, familiar and novel experiences,
active and passive activities etc. There is a danger of simplifying or misreading
benefits that can result in an inadequate understanding of the consumer.
Resource implications The most important resource required is the skill to analyse benefit data in a sensitive
and informed way – i.e. with an understanding of the complexity of motivations,
benefits and needs of the tourist. Ideally benefits should not be researched only
through the surveys described above, but also through observation, satisfaction
surveys, mystery guest reports and qualitative work with small groups.
3.7.1 Case Study: Monitoring Surfers’ Segment Benefits in Australia

One major study, conducted in Australia by Dolnicar et al (Dolnicar 2004), examines the benefits sought
by surfers in Australia. It explored the possibility of identifying distinctive market segments within the
overall surfer community. An online study was conducted with 430 ‘surfer’ respondents who were
asked to rate the importance of main surfing-related attributes. These included:
• quality of accommodation;
• high quality meals;
• reliable dates;
• ease of access;
• personal safety;
• range of activities available;
• meeting other travellers;
• health concerns;
• price comparisons;
• local rate of exchange;
• quality of natural environment;
• lack of crowd;
• local culture;
• high profile surf destination;

• time of local surf season;
• secret locations/New discoveries;
• facilities for families.
In addition, they were also questioned about their past destination behaviour and asked to specify
which, from a list of 30 international surfing locations, they had previously visited.
From the study, researchers were able to identify four main benefit segments and to specify the distinctive
features of each. Below is a summary of the groups.
• Luxury surfers: Their distinguishing features were that they were not interested in price or exchange
rates, but rated good food and security as important benefit features (19% of surfers).
• Radical adventurers: They were characterised as those for whom time of season, ‘secret locations’,
local culture, lack of crowds and quality of natural environment were important (19% of surfers).
• Price-conscious safety seekers: They rated personal health and safety as important as well as high
quality meals and reliable dates (15% of surfers).
• Price-conscious adventurers: They were similar to ‘price conscious safety seekers’ but gave more
importance to facilities for families and quality of accommodation (24% of surfers).
The 23% of surfers not included in these four groups “did not rank anything to be important at all and
could not therefore be defined as a group”.
Comments: This relatively small-scale study would need to be replicated with a larger sample
to represent valid and reliable conclusions about the nature of surfer segments. However,
methodologically it is of interest in linking benefit segments to previous destination behaviour.
In doing so, such research offers NTOs the possibility both of identifying the benefits sought by
distinctive tourist groups and of tracking past behaviour – thereby gaining insight into the quality
of current product provision and into that supplied by competitor destinations.
3.8 Activity Segmentation

What is it? Activity segmentation involves identifying the range of activities engaged in by visitors
to a destination and then using the information to:
• Target certain of the activity groups as discrete segments.
• Monitor visitor satisfaction levels activities to determine the extent to which there
are appropriate products available and their quality, and to consider any product
improvements that may be necessary.
Activity segmentation has much in common with benefit segmentation, since activities
are pursued for the benefits that visitors obtain from them. Activity analysis may also
reveal opportunities for niche marketing.
Why do it? Activities that are popular enough to constitute discrete market segments, are often
the ones for which a destination has unique or special facilities and may thus contribute
greatly to a destination’s core identity or brand. Even where such activities are not
sufficiently strong to be the main, or exclusive, reason for visiting by special interest
segments, they may be a significant part of the overall destination experience for the
general holidaymaker.
Thus inventorying tourist activities may be seen as an essential accounting procedure
for tracking, maintaining or improving a destination’s tourism performance. The more
the NTO, and the tourism industry, know about visitor behaviour the better they are
able to provide and plan for the tourist.
How to do it? Activities are normally tracked through questions in a visitor study that invites tick-box
responses to a list of activities. The activities-interests listed will vary by destination,
but should comprise a representative or comprehensive list of the main activities,
actual and potential, that a destination offers and/or is particularly keen to develop.
The activities may include some or all of the following: walking, visiting a gallery or
museum, taking bus tour, dancing, swimming, riding, visiting theme park, diving,
angling, golfing, eating out, etc.
In addition, qualitative research – focused groups, depth interviews, observation – may
be used to explore specific activities in more depth.
Advantages The advantages of tracking tourists’ activities are:

• It allows the NTO to identify activity-based groups that may be significant enough
to target as individual niche market segments – e.g. the golf market in Spain and
Ireland, the diving market in Aqaba, Egypt and Cuba, the bird watching market in
Jordan and Scotland, etc
• Monitoring the activities in which tourists engage at a destination enables the NTO
to understand the nature of the trip experience, evaluate its main components, and
improve facilities for the key activities that form part of the components.
Disadvantages There are no disadvantages to monitoring activities. One problem, however, is whether
participation in a specific activity is a sound basis for defining a segment. It could simply
be one of several activities that constitute the overall destination experience. The fact
that 80% of tourists say they engaged in walking at a destination does not mean that
they see themselves as a special interest group of ‘walkers’. The requirement is for NTOs
to monitor each activity, optimally through both qualitative and quantitative research,
in order to separate component activities from genuine stand-alone market segments,
e.g. divers and golfers.
Resource implications The cost of monitoring activities will vary according to whether they are tracked by
questions in a visitor study, or explored by special qualitative studies. However, once
activity segments have been identified, there may be considerable costs in developing
products and product improvements tailor made to the special activities and interest
groups. The profile and needs of special activity segments are often very different from
that of other holidaymakers at a destination (see case study below and the walkers’
case study in the ‘niche market’ section of this report).
3.8.1 Case Study: How Ireland Inventories Activities and Interests as Strategic
Priorities
In the mid 1990s, the Irish NTO, Bord Failte, developed a Tourism Development Plan designed to
prepare it for the new Millennium. It included a major section on ‘Special-Interest Activities’. Ireland
has traditionally been a destination visited for the quality of its environment and the range of outdoor
activities that can be pursued, particularly in the rural regions outside Dublin. Base line figures used by
Bord Failte suggested that:
• 1.2 million overseas tourists engaged in some special interest pursuit.

• 350,000 said their choice of Ireland was influenced by the activity.
The Plan began with a situation analysis that attempted to inventory these main activities and interests
and quantify the potential tourist base of each.
a) Situation analysis: inventorying activities supply
Activities were grouped into three main categories:

– outdoor activities: angling, field sports, cruising, etc;
– personal interests;
– leisure interests.
Outdoor activities
Angling and field sports Game angling; coarse angling; shore angling; sea angling and shooting
Cruising River cruising; lake cruising; canal cruising; and pleasure cruising
Cycling Cycle touring; rent-a-bike; cycling package/luggage transport
Golf Golf
Equestrian Pony trekking; trail riding; riding schools; three-day eventing; horse drawn
caravans
Nature study Geology; bird watching; botany; wild life; nature reserves
Sailing Yacht charter; sail training; coastal sailing; lake sailing
Walking Hill walking; long-distance walking; hiking
Water and adventure Activity centres; abseiling; ballooning; boating; canoeing; flying, hang gliding;
sports mountaineering, orienteering; rowing; sub-aqua; surfing; water skiing.
Personal interests
Business Incentive tours; seminars; business meetings
Health and fitness Health farms; spas; thalassotherapy; fitness
Religious travel Pilgrimage; holy shrines, monastic sites
Shopping Fashion; crafts; Irish food and drink; souvenirs; antiques
Study Language learning; Irish studies; youth exchange, study tours, agritours
Leisure interests
Culture Art; music; dance; literature; folklore; Irish language; festivals
Heritage Architecture; archaeology; history; gardens; island life; genealogy; rural life-style
Hobbies Crafts; bridge; vintage cars; steam trains
Spectator sports Show jumping; horseracing; greyhound racing; rugby; soccer; Gaelic games; motor
sports; tennis; hockey
b) Situation analysis: quantifying activities demand
In addition to inventorying the activities, Bord Failte quantified the size of different activity markets
based on historic trends and set five-year performance targets. In some instances they were not
able to put numbers to activities and recommended additional research to explore them. Below
are the activities for which data was available.
Quantitative dimensions and targets by activities
Outdoor activities
Angling and field sports • Growth up 49% on 1989 to 179,000
• Target for Millennium 240,000
Cycling • 100,000 to 167,000 (1989 – 1993)
• Target increase to Millennium 230,000
Golf • 95,000 to 162,000 (1989 – 1993)
Equestrian • 42,000 to 61,000 (1989 – 1993)
Outdoor activities
Sailing • Sailing increase from 31,000 to 35,000 (1989 – 1993)
• Target increase to 75,000 by Millennium
Walking • Walking increase 244,000 to 323,000 (1989 – 1993)
Personal interests
Study • 47,000 to 85,000 (1988 – 1993)
c) Situation analysis: SWOT analysis of activity groups
The exercise also included a SWOT analysis to evaluate the supply of product provision for the
different activities in terms of geography and quality of the main products within each activity
category, i.e. where they were located, how good they were and product development requirements
for the future. Below are examples of SWOT appraisals of two of Ireland’s main activity products
– golf and cycling.
Golf Cycling
Strengths • A great growth market: up from • Fast growing international market:
95,000 to 162,000 in five years up from 100,000 to 167,000 in five
with target increase to 250,000 by years with target growth to 230,000
Millennium; by Millennium;
• Quality product; value for money; • Ireland has essential conditions
accessibility and friendly welcome. – quiet roads, beautiful scenery,
absorbing heritage;
• Cycling already popular in Cork,
Kerry, Connemara and Donegal.
Weaknesses • Geographical imbalance of golf • Geographical weaknesses in the
product distribution – need for more Midlands and East of Ireland;
supply in Cork, Mayo and North West. • Poor information on cycling.
Opportunities • To develop on prestige of famous • To develop information provision
courses; across several fronts including
• To attract new golf event segments signposting of cycle routes, route
– resort golf, championship golf, maps and accommodation guides
casual golf, tuition golf, competition and back-up guide books;
golf and business golf; • To develop product initiatives
• To develop a ‘golf passport’ with including one-way bike rental
voucher booklet allowing golfer to schemes, guided cycling tours with
move around different courses. multi-lingual guides, themed cycle
trails, circular cycling tours, and
special rates for bikes on public
transport.
Threats • The main threat was competition • Adverse weather (rain and wind)
from Scotland, Spain, Portugal, so possible development of cycle
France and new destinations. shelters at exposed centres.
Source: Adapted from data in, Bord Failte (1994): Sustainable Development Plan, 1994 – 1999, Dublin.
On the basis of this appraisal, three activities emerged as highest priorities on the basis of their percentage
growth over the previous five years: Golf (+71%), Cycling (+67%) and Angling (+50%).
Comments: This case exemplifies some of the requirements of activity analysis and planning.
It demonstrates the need for in-depth analysis of the activity market and the industry products
available to serve it. It also indicates the importance of quantifying all activities. The analysis
showed that it was possible to put numbers to some activities but not others. To decide priorities
it is essential to gather trend data in order to nominate ‘winners’ and ‘losers’. Finally, the activities
review suggests the problems of differentiating between activities as discrete segments that can
be realistically targeted, rather than simply seeing them as activities undertaken as part of a more
general trip structure. The three activities given priorities (golf, cycling, and angling) were assumed
to be discrete segments made up of special interest tourist groups who would devote all, or a
substantial part of their trip, to the activity.
3.9 Motivation Segmentation
What is it? Motivation is a key concept in both academic research and tourism industry planning.
Tourism motivation may be defined as, a drive, or drives, that propel people to travel.
Motivation may be generated by internal factors, e.g. by a longstanding desire to see
a place, or extrinsically derived, e.g. by encountering a bargain package to a place in
a travel agent’s window.
Tourism motivation may also be produced by positive factors such as an attraction to
a place or by negative ones, e.g. desire to escape a stressful environment. The positive
aspects of motivation have been described as pull factors, and the negative ones
driving people away from their environment as push factors.
In general, academics and practitioners have taken two quite different approaches
to motivation.
• Academics have sought to identify general tourism motivations that provide
insights into the underlying reasons behind why people engage in tourism.
• Practitioners have been more interested in the specific motivations that attract
tourists to particular destinations/products.
The two orientations are discussed and illustrated in the case study below, which
reports a recent, academic research programme into general tourism motivations,
and suggests how it could be adapted by NTOs to focus on motivations to visit a
destination.
Why do it? Understanding of motivation is a crucial matter for destination planners, since
knowing why tourists visit a destination, or do not do so, is essential in providing for
their needs. Destinations may potentially appeal to many motivational needs that
may be held by different kinds of visitors. Being able to identify, quantify and give
value to the motivational draw that a destination possesses for a range of segments
is a useful tool in marketing planning.
How do it? Identifying motivations may be methodologically difficult for four reasons. People
may not:
• want to reflect on why they engage in tourism;
• be able to reflect on the real reasons;
• wish to divulge the reasons, even if known;
• be able to express the true reasons.
In addition, tourists’ real motivations may be ones that are far from planners’ official
vocabularies. Moreover, different groups may have different motivations, e.g. Ibiza
may be a club land Mecca for the young, but ‘hell on earth’ for older, more affluent
groups.
Many approaches to researching motivation have been tried, some of which have
focused on attempts to identify motivations before the trip, and others to deduce
motivations from responses during or after the trip has been taken.
How to do it? The most productive approach from the destination planner’s point of view is to use
a combination of methods that include:
• data from industry representatives (i.e. asking people from the tourist industry to
identify motivations for visiting a destination on the basis of what they know of
their customers);
• qualitative research, often focused groups, with samples of visitors and potential
visitors to elicit motivations;
• quantitative research that tracks the motivations of tourists through visitor surveys,
which may later be analysed using cluster analysis to identify homogenous
motivational groups.
Advantages An accurate understanding of different motivational groupings allows NTOs to

align the promoted benefits of a destination with the targeted groups identified as
being motivated to visit by those specific benefits. Once the motivations of discrete
groups have been differentiated, NTOs and the industry can develop promotional
programmes, information packages and events for them at a destination.
Disadvantages There are no disadvantages to motivational segmentation, but there may be

operational difficulties in doing so. There may be a difficulty in identifying and
distinguishing motivation from other kinds of segmentation – such as purpose of
trip, benefits, and activities all of which comprise elements related to motivation.
Also, motivation can be subject to changes in fashion/taste.
Resource implications Motivation can be explored through low cost qualitative work, e.g. using a few small
groups, or depth interviews or by more extensive work involving both qualitative
and quantitative procedures, and then augmenting the results with lifestyle analysis
and geo-demographic data.
3.9.1 State-of-the-Art Academic Research on Motivation

Motivation was one of the first major research topics to capture the attention of tourism academics three
decades ago. The basic quest was to identify the main needs that drive tourists away from home to seek
satisfaction in other places. There was an initial assumption that it might be possible to inventory a few
key motives – escape, romance, nostalgia, health, etc. – that would account for all recreational tourism.
Almost immediately however, the picture grew complicated by the recognition that, due to the diversity
of tourism forms and practices, there might be many different motivations behind travel that could not
be reduced to a few basics.
It also became clear that ‘tourists’ could not be conceived as an undifferentiated aggregate but comprise
different groupings with different motivations and goals. At this point, the focus shifted from motivation
as a stand-alone concept, to tourist typologies and the interaction between type of tourists and type of
motivations.
This line of thought resulted in an attempt to specify the interaction between motivation and tourist
type. It was initially based on a theory of motivation, first proposed by Abraham Maslow, which asserted
that humans experience motivations as a hierarchy of needs in which they must first satisfy basic needs
such as hunger and thirst and then progress to higher order needs, e.g. social needs, needs for self
fulfilment, etc. This idea was adapted to tourism by Pearce et al and systematically explored in an
extensive programme whose results were published in 2005 (Pearce and Uk-ill Lee, 2005).The key
element of the adaptation was the ‘tourist career’. The ‘tourist career’ is based on the hypothesis that
tourist motivations may change as people become experienced travellers, so that what might originally
have been motivators, change as new order needs develop over the course of a tourist’s ‘career’.
The research
The research aimed to:
• identify a broad range of travel motives for pleasure travel;

• chart the underlying factors defining motivations;
• relate travel motivation to travel experiences;
• test the notion of motivational change over the course of the ‘tourist’s career’.
The methodology involved included:
a) A qualitative phase comprised 12 in-depth interviews with respondents with differing levels of
experience of overseas travel that varied between 0 and 15 overseas trips. The in-depth interviews
were designed to generate responses on motives for travel that could be inventoried and then
incorporated into a more quantitative survey, exploring the relative importance of the motives,
among a much larger sample. Respondents were asked to state their motives for past and future
travel. In addition, at the end of the interviews, respondents were given a two-page list of 38 travel
motives and asked to rate each on a scale of importance.
Researchers observed two main motivational tendencies. The first was that novelty and self-
development were key motivations for all respondents. Secondly, the researchers observed a
tendency for the inexperienced to differ from experienced travellers in motivational choices. The
less experienced travellers put enjoyment and novelty seeking as important motivations, while
the more experienced group came to see visiting cultural and historical sites, learning and self-
education as more important.
b) A quantitative survey of 1,012 respondents using a battery of motivational statements – including

those that had emerged in the first phase. The sample included a mix of experienced and less
experienced travellers and a mix of age groups, occupations and genders, namely:
– 22% from the UK;

– 21% from other Western countries;
– 47% male and 53% female;
– 53% up to age of 36 and 47% over 36;
– 47% experienced in domestic travel (having made at least 26 trips);
– 53% had travelled overseas;
– 23% were in professional/technical employment;
– 56% had tertiary education.
Results
The first major finding of the programme was that 14 general motivations for travel were identified that
comprised, in order of importance, the following:
• Escape/relaxation
• Relationship (strengthen)
• Autonomy
• Nature
• Self-development (host-site involvement)
• Stimulation
• Self-development (personal development)
• Relationship (security)
• Self-actualisation
• Isolation
• Nostalgia
• Romance
• Recognition
From this list four sets of motivations seemed to apply across the board to all the tourists in the sample.
These were:
• Novelty
• Escape/relaxation
• Relationship strengthening
• Self-development
However, a number of the motivations varied in strength according to a number of variables that defined
groups within the respondent sample. The researchers had divided the research respondents into what
they called, two main ‘tourism career’ groups composed of:
• More experienced travellers, who tended to be older, more likely to be in professional occupations,
and more educated.
• Less experienced travellers, who tended to be younger and less educated.
When these two groups were compared, the differences in the importance of the different motivational
items for each emerged, as contrasted in the table below.
Differences between groups in important motivations
Experienced travellers Less experienced travellers
• Experience nature • Stimulation

• Host-site involvement (interaction with culture of • Relationship strengthening
host community) • Nostalgia
• Personal development • Romance
• Self actualisation • Recognition
Implications
How might this academic work be of use to NTOs? The research has been reported because it holds
both substantive and methodological lessons for NTO planners interested in assessing motivational
factors in segmentation.
a) Substantive lessons: It suggests that there are key motivational benefits sought by all tourists – i.e.
novelty, escape/relaxation, relationship strengthening and self-development – and that they should
all feature, to some extent, in destination promotion. It also suggests that other motivations may
vary with previous travel experience and with age, education, occupation, etc.
b) Methodological lessons: This approach provides a useful model that NTOs might consider
when conducting their motivational research. Though this example was designed to explore
tourism motivation in general, it could be adapted to focus on motivations for travel to a specific
destination. This would require choosing samples, for both the qualitative and quantitative phases,
of potential travellers and previous travellers to the destination for which the NTO was responsible,
and exploring the motivations within the context of that specific destination.
Comments: Motivation may be a useful ingredient for NTO segmentation. One of the advantages
is the likelihood that it will reveal motivational differences among different types of traveller.
A charter flight of British visitors to Cuba flying from London to Havana was once found to
have four completely different motivational groups of travellers: a packaged holiday tour group
travelling for a week to two destinations on a Christmas break, a small group of people with skin
conditions seeking treatment in one of Cuba’s state-of-the-art clinics, a trade union party visiting
Cuba as a political tour and a scuba diving club who were visiting Cuba for a week-long diving
break. The research programme described suggests how motivation may be researched and it
may be associated with segmented group variables, including previous tourism experience, age,
education, occupation, etc. Finally, it is important to remember that motivation is inherently linked
to other tourism segmentation variables such as activities, benefits and purpose of trip. Identifying
segments, solely in terms of their motivation, can therefore be problematic.
3.10 Lifestyle Segmentation
What is it? Lifestyle segmentation was first developed in general marketing in the 1970s, but was
only widely adopted in tourism in the last decade. It involves the multi-dimensional
profiling of consumers, i.e. combining behavioural and product consumption data
with psycho-social dimensions such as personal values, attitudes, and opinions. Once
data on all the variables has been gathered through a questionnaire survey, cluster
analysis is used to identify lifestyle groupings consisting of people who share similar
patterns of behaviour, attitudes, values, etc.
The purpose of lifestyle segmentation in tourism is to provide a more holistic
understanding of tourists, and thus to market to them more effectively. The term
psychographics is sometimes given to lifestyle segmentation.
Why do it? Until the late 1970s, market segmentation had mainly been based on socio-
demographic data and product usage information which allowed marketers to identify
such things as the effect of class, gender, income, occupation and age on product
preferences, usage patterns, repeat purchase behaviour and brand switching, etc.
The problem that lifestyle purported to address was the fact that all these traditional
methods resulted in a simplistic picture of the consumer that failed to take account of
differences beyond discrete, single dimensions like age, occupation, and gender.
Lifestyle segmentation promised to provide a more complex picture of the
consumer as a ‘whole person’ through the statistical possibility of clustering many
research survey response variables into groupings that indicated people with similar
responses. The clustered groupings were then given a lifestyle name, designed to
indicate the nature of the common responses they shared. Data derived from lifestyle
cluster analysis enabled marketeers to identify sub-group profiles – including those
whose behaviour varied in relation to the benefits sought, activities desired/pursued
and attitudes to destinations.
How to do it ? In practice, there are four levels for conducting lifestyle segmentation in NTO tourism
planning:
• Level 1 – Inclusive population level: the most inclusive lifestyle methodology
is based on sampling and surveying the whole population of a country through
an omnibus survey that explores many variables – opinions, attitudes, values,
different kinds of buyer behaviour, socio-demographics etc – and then dividing
the population into the resultant lifestyle categories that emerge from cluster
analysis.
The research instrument for tracking these large populations is the use of surveys
using hundreds of questions and multiple choice statements, that explore many
aspects of the respondents’ behaviour, outlook on life, politics, leisure, the family,
careers, etc, as well as their consumption patterns and choice of products.
How to do it? The results are then used to explore relationships between many kinds of variables,
e.g. relationships between attitudes to tourism and other kinds of consumption,
leisure habits, health practices, and even political and social orientations. The
possibilities are limited only by the number and nature of topic areas. This kind
of study is normally ‘bought in’ by NTOs from consultancies that have conducted
the national study, and is used as a ‘single source’ data set for an appraisal of a
geographical target market in depth.
• Level 2 – Tourism behaviour level: confines the lifestyle survey exclusively to
the tourism behaviour and attitudes of a specific population sample group,
whether a large one such as a whole country, or a smaller one such as a family
life cycle grouping – e.g. young singles and couples aged 18–30 or people over
the age of 50. Once the sample has been chosen, the lifestyle study proceeds with
questionnaires that track a range of behaviour and attitudes all of which relate to
tourism. Instead of being an overall lifestyle study as in the previous level, this is
specific to a particular kind of consumption – tourism behaviour.
• Level 3 – Tourism product market level: focuses even more narrowly on a specific
kind of tourism market – e.g. instead of surveying all travellers, the survey might
focus on English short-break travellers or American cultural travellers. This product
level focus might also include data on benefits sought and activities desired by
special interest tourist groups – e.g. bird watchers, surfers, book collectors, etc.
Once the sample has been selected, the methodology is similar to levels 1 and
2, comprising a questionnaire survey tracking the attitudes and behaviour of the
targeted group, and then search for and analysis of clustered segments within the
main body of responses.
• Level 4 – Own product data analysis: is that of the NTO’s own tourists. Provided
regular visitor studies have been conducted and data based, it is possible to ‘mine’
past data for lifestyle clusters. A consultancy may be employed to help with this
process, and it may be able to enrich it by augmenting data base profiles with
additional information – e.g. supplying post code profiles and consumption data
for the addresses of inquirers held by the NTO (see geo-demographics below).
Once the lifestyle groupings have been developed from these procedures, NTOs may
often follow up with qualitative research based on in-depth interviews or focused
groups with small numbers of people known to belong to the emergent lifestyle
groupings.
Advantages Lifestyle segmentation has much to offer tourism planners. Tourism is a central
element in the lifestyles of people in the developed world. The only other
consumption categories that come close to the privileged place tourism has as part
of modern living are cars, homes, media, and for some, but not all of the population,
media and sport. It is therefore relevant to try to identify the ways in which tourism
behaviour connects with values, attitudes, opinions and other kinds of behaviour –
e.g. media exposure, technology use, etc. Lifestyle segmentation also assists NTOs in
understanding the motivational and behavioural basis of destination choice, as well
as aiding promotional planning in terms of media choices, messages and imagery.
Disadvantages Lifestyle segmentation has become something of a marketing cliché. One of the
dangers, as Sleight (1993) has noted, is that it can come to “mean whatever you want it
to mean”, rather than an empirically derived form of classification, based on systematic
survey work. In tourism strategies that are not based on such work, it can simply be
anecdotal descriptions, conceived by tourism planners from their impressions of
their main visitor types. Apart from this danger, even when lifestyle segmentation is
supported by empirical research, the depth and extent of that research may vary. The
two cases studies for New Zealand and Massachusetts below give some insight into
differences in depth of lifestyle analysis.
Disadvantages By giving personalised names to lifestyle segments, e.g. ‘young upwardly mobile
metropolitans’, ‘dual income experientials’, ‘young activity status seekers’, etc., it is
possible to lose sight of the fact that lifestyle segments are a statistical creation and
not ‘real’ people – i.e. though people may give similar responses to some questions,
they may vary significantly in other ways. There is therefore a danger of stereotyping
people based on a relatively small number of features that they share – many of which
have no tourism relevance. This is particularly true of ‘off-the-shelf’ segmentations
that are non-tourism specific.
Resource implications Lifestyle segmentation can be ‘resource-hungry’ for several reasons:

• It requires either the buying of research studies, and/or the conduct of primary
quantitative, and often qualitative, research.
• It may also involve the cost of using agencies and consultancies.
• It ideally requires an in-house research methodology specialist, able to oversee the
cluster analysis procedures and other elements of the research schedules necessary
to implement lifestyle analysis.
The following case studies provide insight into how lifestyle systems have been developed in two countries
and attempt to illustrate the range of tourist descriptors that can be achieved using the approach.
3.10.1 Case Study 1: United Kingdom Traveller to Australia

The United Kingdom is one of Australia’s most important inbound travel markets. The market has grown
steadily in recent years and was predicted to continue to grow by an average of 4.3% each year to 2003.
In calendar year to date (September 2004), the UK became Australia’s third largest source of visitors,
with 442,500 arrivals (holiday 203,330/VFR 157,256).
The Australian Tourism Commission (ATC) sought to grow Australia’s share of the long haul market by
increasing the effectiveness of NTO marketing and the product experiences on offer. To do this, it was
necessary to answer questions such as ‘Who should be targeted in the UK market?’ ‘What do they want
from long haul travel?’, ‘What makes a destination attractive to them?’ and ‘How does a trip to Australia
meet their needs?’
A research programme was devised based on a comprehensive market research study of the UK travel
market conducted by the Destination Australia Marketing Alliance (DAMA) in early 2004. The study,
which was based on a quantitative questionnaire survey, was designed to identify and prioritise the
key target segments for the UK long haul travel market. The quantitative survey disclosed a number of
lifestyle groupings that were further investigated through qualitative interviewing with representatives
of the named segments.
What segments were selected?

ATC identified five distinct lifestyle segments in the UK long haul travel market:
• Self-Challengers
• Comfort Adventurers
• Cocoon Travellers
• Taste and Try
• Pushing Boundaries
The segments were distinguished by their travel experience, on the one hand, and their attitudes to
travel and the style of travel experience they seek, on the other. Almost every long haul traveller in the
UK could be allocated to one of the five segments that together accounted for more than 15 million
people, a third of the population of Great Britain aged 18 to 75 years.
Below are brief extracts from the profiles of three of the lifestyle segments identified in the research
programme, with indications of tourism tastes, media , etc.
Self-challengers Comfort adventurers Cocoon travellers
Segment size • 1.8 million travelers: • 2.7 million long haul • 1.8 million long haul
12% of the UK long travellers: 18% of the travellers: 12% of the
haul market. long haul travel market. long haul travel market.
Main features • Need to challenge • Seek to experience the • Seek holiday experiences
themselves; unique and unusual that affirm their
• Are experienced, without compromising status as travellers;
passionate travellers; their creature comforts. • Like to go somewhere
• Seek to explore and new, but they do
immerse in culture not like anywhere
and lifestyle of the too challenging;
destination; • Have firm ideas of what
• Seek destinations that they want from a
are different from holiday and do not
home and do not mind leave things to chance.
roughing it a bit.
Planning timelines • Start planning: 25 weeks • Start planning: 26 weeks • Start planning: 28 weeks
before departure; before departure; before departure;
• Book flights: 16 weeks • Book flights: 19 weeks • Book flights: 22 weeks
before departure; before departure; before departure;
• Book accommodation: • Book accommodation: • Book accommodation:
13 weeks before 17 weeks before 24 weeks before
departure. departure. departure.
Media habits • Reading the • Newspapers; • Sunday Times and

and sources of Sunday Times; • Specialist travel the Sunday Mirror;
information • They always read the magazine; • TV and entertainment
travel and arts sections • Family who live there; magazines and
of the newspaper; Marie Claire;
• More likely to read
• More likely to listen to the local newspapers • Films, documentaries,
the BBC, especially BBC and the Daily Telegraph; and house and garden
Radio 2, BBC Radio 4 programs on TV;
• Pay particular attention
and Classic FM, which • The most frequent
to the travel, business
they are the biggest cinema goers, with
and arts sections of
listeners of compared some going weekly.
the newspaper.
to the other segments.
Planning sources • The biggest internet • Newspapers and • High street travel agents
users of all the magazines, airline and Internet travel sites;
segments, many using magazines, internet • Newspapers are used for
it daily for various travel sites, airline destination inspiration
personal purposes; websites and and internet travel sites
• TV documentaries travel agents; for accommodation
and Travel books are • A key trait of this research.
the main sources. segment is they are open
to marketing influences
and are very likely to
respond to publicity,
promotions and branded
destination messages.
Self-challengers Comfort adventurers Cocoon travellers
Profiles • Are more affluent and • Are slightly older • Are more affluent;
highly educated; (average age: 47); • Have higher than
• Have a higher income; • More likely to be retired; average incomes;
• More likely to be single; • More likely to be • Are more likely
• Have the greatest range empty nesters; to be married;
of interests, including • More likely to • Are less likely to
eating out, reading, be married; have children living
and music concerts. • More highly educated. with them.
Travel profiles • May travel by • Travel with their • Travel with their
themselves; spouse or partner; spouse or partner;
• Travel for about • Travel for about • Travel for about two
three weeks and the two weeks; weeks, more likely
highest proportion of • Stay in moderate to between 8 to 10 days;
all segments to travel luxury hotels, and • Stay in moderate
for 8 weeks or more; very unlikely to stay in to luxury hotels
• Stay in budget backpacker and budget or with family;
to moderate hotels or hostels; • Spend almost £100
accommodation, • Spend almost £120 (US$183/€147) a
including hotels, hostels, (US$220/€177) a day per person.
and bed and breakfasts. day per person.
Holiday activities • Walking or hiking; • Enjoying good • Enjoying good

• Nature and wilderness food and wine; food and wine;
activities; • Shopping; • Sightseeing;
• Local food and wine; • Walking or hiking; • Relaxing by the
• Cultural events; • Visiting gardens; beach/pool;
• Visiting gardens. • Photography. • Walking or hiking;
• Shopping;
• Golf.
Approach to long • When travelling abroad, • Want to see • Are most interested in
haul travel immersion in the local destinations before relaxing when they
culture, lifestyle, and they are discovered by travel;
environment is key for masses of tourists; • Do not want to leave
‘Self-Challengers’; • Make sure they see anything to chance and
• They definitely the iconic sights and good tourism
perceive themselves as get ‘under the skin’ of infrastructure is
travellers, not tourists; their destination; important to them.
• And are focused on • Safety is important to
experiencing them, and they like to
destinations before travel in comfort and
they become part enjoy some luxuries.
of a tourist trail.
After DAMA had identified the five segments, it used a commercial ranking model to determine the
potential value of each segment. The five segments were rated according to:
• predisposition to long haul travel;
• size and make-up of the travel party;
• length of stay;
• type of accommodation used;
• holiday activities;
• propensity to disperse;
• daily spend;
• size of the segment;
• openness to marketing influence and ease of reaching the segment.
On the basis of the commercial ranking analysis, DAMA chose ‘Comfort Adventurers’ and ‘Self-
Challengers’ as the ones with the greatest potential to generate income for Australian tourism and to
deliver a good return on marketing investment.
3.10.2 Case Study 2: Massachusetts (MOTT) Lifestyle Segmentation Study

The next case study is from the 2002 Massachusetts Marketing Plan. It was based on a lifestyle programme
that used a combination of a quantitative national questionnaire to identify six lifestyle groups and then
followed up with focused groups to investigate the two deemed to be most promising.
The following are some highlights from the segmentation study:
• Segmentation was used as a customer-focused research method that identified the likes and
dislikes of different groups of people, and was used to enhance the effectiveness of advertising
media choices.
• As part of MOTT’s segmentation study, six distinct groups were identified who were similar in
travel preferences and demographic features.
• Based on several criteria, including segment size, average visitor spending and length of trip,
MOTT further explored the travel preferences of two segments by conducting focus groups. The
following table contrasts the differences and similarities between the two.
Segment Attributes Segment D Segment F
Average age • All the group fell into the age category • Average age was 47 to 50
35 to 54, with the average age being • 73.6% were 35 to 54
45 to 47
• 26.4% were more than 55
Income • US$106,000 to US$111,000 • US$108,000 to US$110,000
Total segment size • 10.2% to 18.3% of the US population • 20.9% to 23.8% of the US population
Children • 43% to 59% • 44% to 54%
Key activities • Lying on beach • Visiting gourmet restaurant

• Doing things • Lying on beach
• Whale watching • Visiting American history sites
• Natural wonders • Doing things
• Hiking • Getting off beaten path
• Getting off beaten path • Visiting historic sites
Main place • Peaceful and natural • Authentic

motivators • Different experiences • Entertainment
• Family • More developed activities
• Small towns preferred • Cities are preferred
The Massachusetts marketing planners commented that D and F shared some key motivations for
selecting the destination for a getaway, including history and relaxation. However, the two groups
defined relaxation in different ways. Segment D referred to relaxation as ‘getting away’ while segment
F referred to relaxation as ‘doing something active and fun’.
The State tourism agency said that the identification of two key segments allowed it to effectively focus
its marketing and advertising efforts and strengthen Massachusetts’s advertising campaign in 2002.
Comments: The Australian Tourism Commission is well advanced along the lifestyle approach to
segmentation. Combining quantitative research with qualitative research, they have been able to
identify, quantify and profile lifestyle groups from the source countries (here the UK), using extensive
single source research data bought in from large national studies, and enriched by consultants,
and then augmented with qualitative research conducted with small sample representatives of the
targeted groups.
The results have heavily influenced the NTO’s market planning in terms of media choice,
advertising and publicity themes, and information provision programmes, including web page
design and content.
The Massachusetts results, which may not be directly comparable because they present only edited
results, reflect a similar approach to Australia’s except that the data derived is much less dense and
suggestive. However, like the Australians, Massachusetts’s destination marketers are convinced
that lifestyle approaches are most helpful in marketing planning.
In most cases, NTOs, as in these two cases, are using levels 1 and 2 of the 4 levels described above.
This means that they are buying in, or commissioning, national surveys, and then augmenting and
enriching the data, often with qualitative studies. This will always be the most expensive option.
For NTOs with limited research budgets, a cheaper approach is a level 4 one, where the NTO
simply data bases results of its visitor surveys, and then seeks to identify lifestyle groupings within
the results – e.g. by identifying what groups most engage in what activities, what travel patterns,
what accommodation choices, etc.
Depite the volume of interviewing and qualitative work necessary to implement lifestyle approaches
they are in principle not difficult to do, provided the appropriate research technicians are available
– which means at least one member of staff or consultancy who has mastered cluster analysis.
Although many NTOs and other destination agencies have been happy to report on the lifestyle
methodologies they are using, and to name their own particular categories, there has so far been
little detailed and systematic evaluation which has definitely related the profiles of actual visitors
to the targeted lifestyles. This remains a major area for work since, without it, lifestyle planning is
simply plausible potential, not a fully checked-out methodology.
Lifestyle techniques are further explored in the case studies on ‘geo-demographics’, ‘benefits sought’
and ‘activities’ which often involve the same clustering techniques that are here described as lifestyle
analysis.
3.11 Niche Market Segmentation
What is it? A niche market is traditionally a small market, composed of tourists with idiosyncratic
or special tastes, that a destination is uniquely or particularly qualified to attract and
serve.
The basis of the destination’s qualification to attract these special interest groups
may be natural features, e.g. coral reefs for divers in Australia, Egypt and Jordan,
sub-cultural features, e.g. Amish communities in the USA which attract people
interested in Amish culture and Amish artefacts, the provision of services, sought by
people with special needs and not found elsewhere, e.g. Cuba’s skin disease clinical
treatments or Switzerland’s image as a centre for convalescent homes for people
with chest diseases.
A niche market may thus be the result of intrinsic natural factors and/or a product of
deliberate strategic choice/policy.
Why do it? In reality, there is little qualitative difference between a prime market segment and
a niche market. They differ only in the volume of people likely to constitute it and,
to some extent, the reduced scale of provision necessary for the host destination to
accommodate and service it. It is always possible for a niche market to grow beyond
the limits of being a small, specialist group.
How to do it? NTOs are unlikely to be able to justify allocating significant funds to consumer
promotion of niche markets in source countries. It is more likely niche groups will
be influenced and/or organized in their own countries, by specialist tour operators,
societies, clubs, interest groups and hobbyists. To exploit new niche markets, a
destination may require repositioning. An example of the latter is the traditional
English seaside resort, Newquay, which went into steep decline in the 1960s and
1970s, but then earned a new lease of life through its re-branding as a destination
for young surfers.
A niche market activity may be an exclusive purpose for travel, e.g. a golfing holiday,
or exist as a component in a general trip, e.g. a family holiday which may include
one day of a specialist activity such as horse riding or windsurfing. Clearly there are
differences in servicing the exclusive and part holiday niche markets.
Advantages It may allow exploitation of very small but lucrative markets. In the recent past, there
have been significant product innovations in niche tourist products for very small
numbers of very rich, international groups – e.g. gated real estate products, specially
developed on reclaimed island sites, for elite sporting superstars, or all-year, luxury
apartment homes on cruise ships for jet setting travellers, who can board and jump
ship at will at different places around the world.
Many kinds of the minority activities, interests and hobbies that constitute niche
markets are served by specialist media, particularly printed media that reach core
enthusiasts with little of the wastage that may accompany the use of more general
consumer media. In developing niche markets, NTOs need to make sure that their
offices or agents abroad can supply data on potential niche market opportunities in
generating countries in terms of volume and value, and also on the media servicing
them.
It is generally recognized that as mass markets become saturated, and competition
becomes fiercer in many countries, the creative identification and development of
high yield niche markets will become a more essential feature of tourism portfolio
planning.
Disadvantages In many cases, niche visitors may travel independently without any kind of organised
grouping – as is the case with visitors to book towns in Europe.
Resource implications However, NTOs and regional, public sector tourism organizations may partner and
facilitate niche travel at the destination by supplying or funding information – e.g.
through accommodation and hospitality guides, retail guides, and maps.
Once a niche market has developed, it is important for NTO’s to monitor its progress
and the profile of people that constitute it.
3.11.1 Case Study 1: ‘Book towns’ – Niche Markets in Europe, America and
Asia
Over the last 30 years, a completely new niche market product has evolved in rural areas of Europe, the
development of book towns. These are small rural towns – typically with population of around 1,500
to 3,000 – into which second hand booksellers have moved. Once there is a critical mass of them, it is
possible to brand the destination as a book town, and thus to attract book collectors.
In some cases, book towns have been developed by private entrepreneurs (Hay on Wye, Wales), but
increasingly they have been supported by public sector agencies, including development agencies and
tourist boards (Scotland, France and Germany) because of their role in rural regeneration.
Book towns may be seen as a form of special retail tourism, created by the geographical concentration of
many dealers all selling the same commodity in the same place, which has been successfully developed
in Europe and America in other product categories – e.g. fashion-based factory outlets, antique centres,
etc.
Not all of these ventures have had equal success, but in the better cases, book town development has
offered a way of branding little known country towns, and creating economic activity in areas that
would otherwise have suffered the same kind of decline that has afflicted many rural regions across
Europe and elsewhere. (For a fuller account of Book Town developments, see Seaton 1996 and 1999.)
3.11.2 Case Study 2: the ‘Walking’ Market in Ireland

Walking has traditionally been a popular activity for visitors to Ireland and a distinctive niche market
in the destination’s product portfolio. In 2003, there were indications that there was a decline in the
number of visitors engaged in walking, so the NTO conducted analysis to profile them, provide insight
into the activities, habits and experiences, and identify weaknesses.
The study was achieved through two in-house activities: a cross tabulation analysis of those reporting
walking as an activity in main visitor study surveys and a special additional study of walkers, including
published studies, to get some more in-depth data on opinions and visitors’ satisfaction.
Profile
The following were the key characteristics of the walker in Ireland. The figures were compared with those
of all holidaymakers so that the differences between walker behaviour and the rest may be assessed.
Key characteristics Walkers All overseas holiday makers
Class /Occupational Status ABC1 = 88% ABC1 = 78%
Age 68% = 44 or under 58% = 44 or under
Party composition 42% travel as a couple, 23% travel

alone and 17% as a family
Seasonality 81% in May to September 54% in May to September
Travel behaviour and attitudes
Mode of transport • 78% entered Ireland by air transport and only 27% by sea
Distance walked • Most walkers walk a short distance within 3 kilometres of home
Satisfaction • Satisfaction with price/value fell from 77% in 1993 to 60% in 1999
Main walking terrain • Rural: pathways, roads, hills and cross country, and way marked ways;
• Americans and Europeans preferred marked trails, hills and cross country;
British preferred paths and roads
Sources of information • 50% used internet as sources of information and then word of mouth and
personal recommendation
Disadvantages • Weather as the main disadvantage
Length of stay • That of walkers was longer than ordinary holiday-makers (16.1 vs. 11.5).
Mainland Europeans stayed longest with 12.5 nights, British 9.3 nights, North
American 10 nights and all overseas 7.8 nights in 2003
Independent vs. package • 72% were independent travellers (non package travellers)
travel
Accommodation • 33% stayed in guest house/bread and breakfast (vs. 15% for all tourists);
• 12% walkers stayed in hostel vs. 3% for all tourists
Source: Siubhan Nic Grianna, 2005
Comments: The research programme illustrates the importance of monitoring the performance of
niche markets because the principle of ‘holding on to what one has’ is a key one. Existing markets
are often easier to support than trying to find replacement ones after they are gone.
In addition, the research programme suggests the depth of information that may be necessary to
understand and maintain a market that, on the face of it, seems simple. Further, the case research
shows how multi-dimensional data must be used to establish the differences in behaviour that
distinguish niche market visitors from the general visitor – in this case, the differences emerged in
class, age, party composition, length of stay, accommodation, and seasonality.
3.12 Geo-demographic Segmentation

What is it? Geo-demographic segmentation is a variant of lifestyle segmentation that explores
the profile, behaviour and attitudes of target populations, except that it makes one
variable central to the analysis – where they live. It is based on the common sense
notion that people who live in a residential location may share common characteristics
in their socio-demographic features and also in their consumption patterns.
Geo-demographics links the location of national populations (based on their
postcode) to their socio-demographic characteristics, attitudes and consumption
patterns. Thus, market segments may be identified that consist of people who live in
similar neighbourhoods. Geo-demographic data and advice are offered by companies
in many developed countries and have become an important way of identifying,
targeting and reaching tourist markets, and it has expanded considerably among
NTOs in the last ten years.
Why do it? By providing a method of gathering in-depth data on national source markets by
analysis of the neighbourhood in which tourists, actual or potential, live, geo-
demographics has the potential to improve considerably upon indiscriminate
targeting of whole countries. It helps tourism organizations to target their
promotional activities, media, advertising message, branding and direct mail more
precisely. It is normally used alongside other marketing/research practices in making
segmentation decisions.
How to do it ? Geo-demographic data can be gathered in two ways:

• One method is by obtaining, from a geo-demographics agency, detailed
consumer maps of the country an NTO wants to segment. The maps provide
profiles of consumers living in all residential areas. The NTO then identifies
segments appropriate to its marketing strategy. The geo-demographic agency
thus enhances the understanding of an NTO’s markets by providing profiles of
populations. For example, an NTO with a major interest in targeting segments
in the UK and in the USA might approach companies offering geo-demographic
intelligence on those countries by region, city, and postcode. The NTO would
then receive a population map of the whole country with profiles of the people
living in all the major neighbourhood categories from which to target appropriate
segments for their destination.
How to do it ? • The other method, which is available even to small NTOs with no budget for
external consultants, is to build their own data base of names and post code
addresses of its visitors, and then conduct its own analysis of which regions,
areas, states, neighbourhoods its visitors come from in every main source market.
It can then produce maps for each country, tracing the ‘hot spots’ and ‘cold spots’
where its visitor base is greatest and least.
The data may be gathered in several ways:
• By response mechanisms, attached to promotional activities and events – e.g. by
internet surfers who fill in forms for obtaining tourist information, or by visitors to
consumer fairs who leave their name and addresses for follow-up information;
• By information sharing activities with tour operators, by which they make available
client address lists, in return for joint promotional assistance or other NTO support
services;
• From official government data gathered on people entering the country by border
surveys and immigration control databases;
• A consultancy may also be employed to help with the analysis who may have
additional data on the segments represented on the population maps.
Advantages Geo-demographic systems and data bases now exist in most of the countries that
have the greatest travel propensity, those which occur most regularly on the strategic
target list of NTO markets include: the USA, Canada, UK, Germany, Netherlands,
Sweden, Finland, etc. Geo-demographic systems can thus be used to make more
refined analyses of tourism propensity among the varied groups within each country.
Once the results have been studied, segments may be prioritised geographically, and
precise marketing campaigns developed to influence them.
Disadvantages In principle, geo-demographic systems have no disadvantages, since they are

capable of incorporating all the variables found in other methods of segmentation.
Nonetheless, potential problems include:
• Though the systems offer considerable insight into consumer populations, there
is a growing resistance to the concomitant marketing activities that organizations
use to target them – e.g. in many European countries, householders resist the ‘junk
mail’ and unsolicited telephone calls that result from geographic targeting;
• The systems are imperfect since not all neighbourhoods have the homogeneity
assumed by the systems, and even where they do, the character and status of a
neighbourhood may change;
• NTOs in countries that do not have geo-demographic systems may find it difficult
to grasp the potential of the systems in affording insight into national source
markets abroad.
To date, geo-demographics has been used mainly by tourism organizations in
developed countries seeking to understand their domestic markets.
Resource implications Geo-demographic segmentation demands significant financial investment, since

it requires the purchase of geographical profiling data and the regular use of
consultants/agencies to assist in augmenting or enhancing the consumer databases
that NTOs build.
3.12.1 Case Study 1: National Geo-demographic Typologies

This first case study illustrates the principles of geo-demographics for tourism organizations. It shows
an analysis of the UK population as developed by a geo-demographic system company Cameo –
http://cameo.bvdep.com. Cameo has identified 50 different neighbourhood residential types that may
be grouped into nine main target markets.
The table shows the number of each household type in the UK and the percentage of the total that each
represents. This kind of data, and the more detailed population sub-groups subsumed within the main
groupings, can be bought from several geo-demographic companies in Europe and the USA. By looking
at the category types, an NTO, in consultation with its overseas offices, could begin to identify what
kinds of household were most likely to be in the market for specific products.
Population group Indices for segmentation analysis Cameo group analysis
Cameo United Kingdom groups National frequency (%)
1. Young and affluent singles 1,136,532 4.6
2. Wealthy retired neighbourhoods 3,537,010 14.4
3. Affluent home owners 4,148.192 16.9
4. Smaller private family homes 3,851,018 15.7
5. Poorer home owners 4,141,862 16.9
6. Less affluent older neighbourhoods 1,558,616 6.3
7. Council tenants on family estates 2,649,338 10.8
8. Poorer council tenants – many single parents 2,333,906 9.5
9. Poorer singles 1,202,554 4.9
Totals 24,559,028 100.0
However, a better way of using the data would be to compare the profile of the UK population with the
profile of UK tourists arriving in a country, and then quantify the strength of each group by indexing its
relative occurrence in the tourism population versus its occurrence in the total population of the source
country, in this case the UK. The table below presents some actual data that makes this comparison.
Cameo United Kingdom groups Visitors to (%) National (%) Index 100 =
region X frequency average
(000)
1. Young and affluent singles 88 3.4 1,136,532 4.6 74
2. Wealthy retired neighbourhoods 434 16.6 3,537,010 14.4 115
3. Affluent home owners 647 24.8 4,148.192 16.9 147
4. Smaller private family homes 431 16.5 3,851,018 15.7 105
5. Poorer home owners 465 17.8 4,141,862 16.9 105
6. Less affluent neighbourhoods 216 8.3 1,558,616 6.3 132
7. Council tenants 144 5.5 2,649,338 10.8 51
8. Poorer council tenants 134 5.1 2,333,906 9.5 54
9. Poorer singles 49 1.9 1,202,554 4.9 39
Totals 2,608 100.0 24,559,028 100.0
From this analysis, it immediately becomes apparent that groups 3 (Wealthy retired neighbourhoods)
and 6 (Less affluent neighbourhoods) display special propensity to travel to the destination while groups
7, 8 and 9 show low propensity.
3.12.2 Case Study 2: Geo-demographic Analysis of Tourism South East/UK

The case study that follows illustrates how a tourist board may use consultants to assist in more precise
targeting of tourists, seeking particular tourism products from destinations within a region. Tourism
South East is the domestic destination agency responsible for marketing the South East of England,
which is the richest region in Britain. Locum, a consultancy group was engaged to apply lifestyle and
geo-demographic analyses to profile visitors to the south east, particularly looking out for differences
in the segments for individual towns and areas within the general region, and attempting to define the
characteristics of the differing groups.
The consultancy used two models for their analysis, Cameo and ArkLeisure. The programme was as
follows: Over the summer of 2005, Tourism South East (TSE) carried out an extensive programme of
visitor surveys in 22 destinations around the region that was designed to provide greater insight into
visitor behaviour in the South East. The aim of the study was to find a meaningful way of increasing the
effectiveness of marketing by identifying clusters of related tourism product that appeal to defined types
of visitors.
Working with TSE’s Research and Arkenford Ltd., Locum Consulting analysed the data from 5,000 visitor
surveys across a range of variables including age, accommodation used and place of origin. Locum’s
system of analysis was to compare all 22 destinations in a ‘league table’ format. This had the effect of
showing very clearly the similarities and differences across the different destinations.
Two different market segmentation models were applied to the survey results. The first was Cameo,
which classifies every postcode in the country according to socio-economic status. The second was the
ArkLeisure, a lifestyle segmentation system developed on behalf of VisitBritain, which divides holiday
takers into eight groups based on each individual’s values and service priorities.
The eight consumer groups comprised:
• Style hounds
• Cosmopolitans
• Discoverers
• High street
• Followers
• Habituals
• Functionals
• Traditionals
These eight groups were also placed on a matrix scale that comprised two sets of contrasted variables
relating to shopping behavior: ‘Innovators’ vs. ‘Sustainers’ and ‘Mass Market’ vs. ‘Independent Market’.
The diagrams below indicate how these typologies were applied and interacted.
ArkLeisure segmentation model
Innovators
Style Hounds
“Young Free Single” impulsive
Fashion counts Cosmopolitans
Brands counts Strong, active, confident
Mass Market Looking for fun with friends Style & brand important, but as an expression of their self made in identily
Most not seriously sporty High spenders especially on innovation and technology
Looking for new challenges, new experiences
High Street Globetrotters
Main stream early adopters
Followers of high street fashion Discoverers
Care what others think Independent in mind and action
Happy to buy packaged options Little influenced by style or brand but interested in new options
Buy on function and value to them
Followers Looking for new and educational experiences
Strongly influenced by what others will think
Don´t want to be seen as old fashioned
Less active Traditionals
Slow to adopt Self reliant internally referenced
Avold risk Slow to adopt new options
Strong orientation towards traditional values Independent
Habituals Value individual attention & service
Market
Largely inactive, low spending group
Very traditional, strongly resistant to change
Risk adverse
Functionals
Self reliant
Value relaxation, peace and quiet
Price driven
Value function over style
Traditional values, but interested in new experiences, not risk advers
Sustainers
Innovators
Style Hounds
Mass Market Cosmopolitans
Arundel
High Street Rochester, Thames

Brighton Discoverers
Portsmouth
Windsor, Tunbridge
Hastings, Chichester Canterbury
Followers Winchester, Eastbourne
Lewes, Sussex Coast,

Oxford
Traditionals
New Forest Independent
Isle of Wight
Market
Broadstairs
Habituals Functionals
Sustainers
Source: Arkenford Ltd., 2007
Destination analysis
The surveys generated a very distinctive picture of the visitor profiles of different destinations. On
the basis of the segmentation analysis, Locum was able to categorize the destinations into different
groupings, according to the type of visitor experience they offer. For example, the core audience for all
of the ‘heritage’ destinations – Oxford, Windsor, Winchester, Chichester, and Canterbury – came from
the ‘Traditionals’ and ‘Functionals’ categories in the ArkLeisure Model. The people in these segments
are independent minded and like the ‘explorability’ of heritage cities.
Arundel was another illuminating example where the product seemed to match the market. Almost
50% of the town’s visitors were classified in the affluent and high spending ‘Cosmopolitan segment’.
Arundel provides an atmosphere and shopping experience that clearly appeals to ‘Cosmopolitans’ – the
retail and food and beverage offer is almost entirely independent and positioned at the higher end of
the quality spectrum.
In nearby Portsmouth, by contrast, ‘Cosmopolitans’ made up only 8% of the visitors surveyed, while
almost half were classified as ‘brand loving High streets’ and a further 15% in the associated ‘Followers’
segment. Two-thirds of these visitors reported visiting a large retail outlet in Portsmouth. This could only
be Gunwharf Quays, an attractive and successful waterfront destination combining designer outlets,
restaurants and bars, and other leisure facilities. The occupiers are almost entirely mid-upper range
brands – exactly the type of offer that appeals to ‘High streets’ and ‘Followers’. Some destinations
proved to be more eclectic than others, appealing equally strongly to different segments. For example,
Windsor and Canterbury are also attracting ‘Cosmopolitans’ alongside visitors with more traditional
tastes, reflecting the value of their strong independent retail and food offers.
Locum’s analysis emphasized that certain types of experience, across the entire spectrum of tourism
products, appeal to certain types of customer. The most effective marketing campaign was thus a closely
tailored one. Success depended upon identifying the right type of customer, finding the most effective
means of reaching them, then packaging a desirable ‘bundle’ of destinations, accommodation and
things to do that will stimulate their interest. It was obvious, for example, that ‘Cosmopolitans’ like
the type of experience that is typified by Arundel – a quality, independent-oriented retail offer, quality
independent restaurants and gastro-pubs, and smart country house and boutique hotels. TSE intends
to follow-up the segmentation exercise by developing three focused marketing campaigns to target
cosmopolitans/discoverers, functionals/traditionals and high streets/followers.
Developing an increasingly refined understanding of the synergies between products and how
the relevant experiences can be best presented to potential customers is possibly the main area of
opportunity in destination marketing. The visitor economy has tended to lag behind other sectors in
the field of marketing. By adopting the more discriminating and sophisticated approach embodied in
the ArkLeisure Model, TSE believes that the industry has the tools to move thinking forward about the
relationship between product and market.
Attractions analysis
In addition to the visitor assessment, Locum Consulting also undertook a ‘product mapping’ exercise,
plotting all attractions in the region onto a map and looking for particular concentrations. A number of
ideas emerged from the product mapping that might form the basis of campaign activity and product
development. These included: England’s Garden Route (from Kent, through Sussex to Surrey), Cathedral
Crescent (trail linking Cathedral Cities from Bath to Canterbury) and England’s Culture Coast (Kent and
East Sussex).
Comments: Though this programme was conducted by a regional destination agency in the UK it
may be seen as a feasible model that any NTO could adapt to study its visitors from source countries
that have geo-demographic and/or lifestyle systems. The basic requirements would be for the NTO
to have databases on visitors by different nationalities, including essentially, their home postcodes
and details of which places they visited at the destination. It would then be possible to group
them into different kinds of visitors according to their travel choices and patterns. Some NTOs,
e.g. Australia and New Zealand, are already engaging in this kind of intensive study of tourists,
recognising that as the same markets become targeted by more and more destination agencies, it
is not enough to simply base market segmentation on country alone. More refined and in-depth
analysis is necessary. Geo-demographics and lifestyle are the cutting edge, progressive areas of
segmentation methodology for NTOs and for this reason these two case studies are particularly
useful as models of the processes involved in using them.
3.13 Price Segmentation

What is it? In many consumer goods categories it is believed that there are price conscious buyers
who constitute a market segment, and the volume of special offers in all product
categories would certainly suggest that this is the case. The situation is less clear in
tourism markets. Tourism consumption is both price and income sensitive. However,
price is a dangerous dimension to emphasise for NTOs in positioning a destination.
Generally, people do not buy purely on price. It is normally one element in the
consideration set of tourists looking for a particular kind of trip, rather than a main basis
of choice. It is a parameter of the trip decision that may affect the choice of transport,
accommodation and spend at the destination but is not usually the key criterion.
The times when NTOs may wish to emphasise price in their destination marketing are
therefore likely to be infrequent.
Why do it? For an NTO to segment a market on the basis of price is normally a short term measure,
linked to competitive conditions, or crisis management where, for example, cutting the
price may be an incentive to win back a visitor base that has been disrupted by some
external occurrence. There is rarely a reason for an NTO to make either high price or low
price a strategic basis of segmentation.
How to do it? Price segmentation, if used, simply involves identifying the target markets thought
to require stimulation, assessing the available media that might reach them, and
constructing the promotional message.
The best way to manage tactical, low price or short term bargains is through trade
partnerships, where reductions in travel costs, accommodation offered by the trade are
promoted within an NTO framework that reassures the consumer that the destination
is ‘great’ – e.g. a theme such as “Look at these prices. There has never been a better time
to visit the beautiful destination X…”
Advantages Low price or price reductions nearly always have short-term impact, in generating
visitors in competitive markets for which there are many substitutable products
– e.g. sun, sea and sand destinations. They can also be effective as tactical forms of
crisis management for propping up the market, after a destination has suffered a
catastrophic decline following unpredicted, external events such as terrorism, health
scares or environmental disasters. They should be withdrawn as soon as market factors
stabilize, people’s memory of them fades or the NTO can develop alternative plans.
Disadvantages Price, either high or low price, can be a dangerous segmentation strategy. Most NTOs
seek the widest possible tourist franchise for their destination, different parts of which
will appeal to a variety of tourists – the ‘something for everybody’ syndrome. The
most common problem for some NTOs, particularly those in the developed world, is
reassuring tourists that their destination is affordable, but this is best done by indirect
means, rather than positioning it as ‘cheap’.
Where NTOs attempt to emphasise low price, the consequences may be the weakening
of the destination image. However, when they emphasise high price to appeal to an
elite market, the destination is likely to suffer later, once the fashion-conscious move
somewhere else, as they always do, when attempts to attract lower-income tourists
may be difficult because the destination is seen as a ‘fat cat’ destination.
Resource implications There are no major resource implications for the NTO which, given a marketing and
promotional budget, may just as easily position a destination on price to some market
segments, as on any other basis. However, in the long-term it is a non-sustainable
option and one that should only be used tactically in special market circumstances.
3.13.1 Assessing the Relative Cost of Destinations

The comparative price of a destination relative to others is an important factor in destination marketing
that should be an issue to monitor rather than, necessarily, one to address in marketing and promotional
activity. Price perceptions are affected by many factors outside the control of the NTO, including
exchange rates, income levels and economic conditions in source countries, and general price levels
and economic conditions in destination countries. Larger NTOs with the resources to monitor the price
of competitive destinations have commonly used two techniques.
• The first, which aims to reveal objective data on destination prices, is ‘Mystery Guest’ observation.
This involves the use or hiring of people to act as typical tourists in competing destinations to
keep an account of the price of a number of typical expenditures incurred over a defined period
of stay. The items inventoried might include such purchases as cost of travel to destination, airport
charges, taxi fares, cup of tea or coffee, price of attraction admissions, cost of single night in bed
and breakfasts, or hotels with similar grading, petrol costs, cost of breakfast, lunch and dinner.
The list can be varied according to conditions at the compared destinations and the nature of the
tourism – for example, at skiing resorts or other activity destinations, the itemised and aggregate
costs of taking part in the activity (e.g. equipment hire, transport, guiding and instruction costs etc.)
would be compared. The British Tourist Authority used this methodology to compare prices at a
range of international capital cities, at a time when there was some evidence that London prices
might become a barrier to visiting.
• The second approach is a perceptual one. Since the relative cost of a destination costs is primarily
a matter of perception, it is desirable to monitor how tourists rate destinations against each other.
Group discussions and in-depth interviews are qualitative ways of getting this information, and
results can often be further investigated, using quantitative inventories that systematically allow
relevant target samples of tourists to provide scaled ratings of different destinations for expense.
Comments: Cost and price perceptions are major parameters of tourist choice and need to be
monitored by NTOs. In certain circumstances, it may be desirable, in conjunction with industrial
partners, to promote price reductions and ‘bargains’. And for some tourism sectors, e.g. budget
hotels, low cost transport, price positioning may be a strategic option in identifying market
segments. But in normal circumstances, price segmentation should not be deployed as a strategic
option for marketing destinations by NTOs.
3.14 Media Audience Segmentation
What is it? In some consumer goods markets, particular media vehicles can reach a large
proportion of consumers in certain specialist interest/hobby groups – e.g. stamp
collecting, angling, bird watching, etc. Indeed, they may be used by some organizations
as their main dimension in market segmentation.
Similarly, there are now both press and broadcast media vehicles in many countries
offering specialist coverage of travel and tourism that may seem to offer the same
possibility to tourism companies, i.e. making the audience of a specialist, tourism
medium the main segmentation parameter.
Why do it? The attraction of using a single media vehicle, on the assumption that it reaches an
audience whose profile and audience size substantially matches potential demand
for a destination, is that it simplifies the task of segmentation. However, in practice it
is unlikely to work.
How to do it? Segmenting a tourism market by media audience involves deciding which
publications, broadcast programmes, or other advertising media have an audience
whose profiles approximate to those of the market for the destination, and buying
space or time in them.
Advantages Using the audience of a tourism media vehicle as a market segment, e.g. a specialist
tourism magazine or television programme, does, in theory, simplify the segmentation
task. On the surface, it offers a means of destination advertising without wastage
because every reader or viewer is assumed to be interested in travel and tourism.
Disadvantages In practice, neither of these advantages exist for NTOs. The key disadvantage of using
the audience of a specialist tourism vehicle as a market segment is that none of the
media vehicles reach the total travel market, or even most of any tourism sub-market
(see case illustration below). Usually, only a minority of total and potential tourists
read or watch specialist tourism media, even though those who do may have a high
travel propensity and their profile may be close to that of an NTO’s target segments.
For most NTOs, a more productive strategy is to identify a target segment’s media
habits and promote to them through an appropriate mix of media – which may
include general media such as national magazines and newspapers – many of which
publish regular, weekly travel supplements.
Resource implications Using media audience as a basis for segmentation requires no special resources. It
relies on the almost religious, belief that the readership/viewing figures of a single
media vehicle broadly approximates to the groups targeted for NTO activity. For those
who do not have such faith, a specialist tourism medium will be just one vehicle that
requires consideration, and the relative costs and benefits will need to be considered
alongside other promotional outlets.
3.14.1 Case Study: Sunday Times Travel Magazine

Travel and tourism decisions are significantly influenced by media exposure of destinations, not just
through commercially sponsored advertising by NTOs, but through the way destinations may be
represented in editorial, documentary and feature coverage, and also in a whole range of fictional
outputs (feature films, radio, novels) which may create images in the minds of potential tourists.
Over the last decade, coverage of tourism in the press has grown considerably in the developed world as
newspapers have developed special editorial sections and supplements for travel and tourism advertising.
In addition, there are a number of glossy specialist magazines, exclusively devoted to tourism that offer
high impact, colour advertising space for products aimed at elite travellers.
In the UK, the biggest selling, national, weekly quality newspaper is the Sunday Times, which reaches
a higher volume of upper-income readers than any other weekly. Because of its success, in 2003 the
newspaper launched a new, monthly, specialist tourism publication, designed to capitalize on the image
of the main newspaper, called the Sunday Times Travel Magazine. The magazine cost £3.25. Its target
market was the upper socio-economic travel market in the UK.
As a marketing aid, the new publication produced and distributed a PowerPoint guide for tourism
advertisers on its main features. The data comprised information on its audience profile and the way in
which the magazine was read. Below are some of their key dimensions that were featured.
Circulation and readership (official audited figures)

• Circulation: 61,135 (ABC)
• Readership: 213,973
Audience profile
The key audience dimensions included the following:
• average age of readers is 44;

• 63% of readers are female;
• average household income £75.7,000 (US$124,000 / €109,000);
• average cost of a main holiday is £2,600 (US$4,250 / €3,757), with 2.8 main holidays per year;
• 15% spent over £5,000 (US$8,173 / €7,225) per main holiday;

• average cost of last short break was £600 (US$981 / €867);
• number 1 European destination: France/Monaco;
• number 1 worldwide destination: USA (not Florida or West Coast);
• beach/resort holidays are the number one type of holiday (44%);
• city breaks were the second most popular (21%).
Readership behaviour
Since the magazine is a monthly, it was important for the STTM to demonstrate that, despite poor
frequency of appearance, it compensated through its ‘shelf life’ in the home, and the qualitative intensity
with which it was read. As a result, the following features were emphasised:
• 50% keep issues for 6 months or more;

• only 13% keep it for less than a month;
• 70% read/browse every article;
• 28% only read articles of direct interest;
• 20% read through the advertisements for products that are in the market;
• 11% read/browse all advertisements.
How should an advertiser assess this magazine as media vehicle?
Appraisal
The obvious weakness of the magazine is the relatively small circulation and readership for a NTO
wanting to create awareness of a country. The three top social groups in the UK, those whose social
grading is ABC1 comprise about 40% of the population, so a total readership of 0.2 million, two thirds
of whom are women is small, though less of a disadvantage if it is mainly the ABs, who represent about
15% of the population. However, it is unlikely that an NTO would want to make its sole, or prime, target
market segment so limited. The magazine is probably more relevant to providers of high luxury travel
products including hotels, air travel, travelling accessories and gifts, rather than most NTOs.
Comments: A magazine, such as the Sunday Times, can seem an attractive option for NTOs
looking to reach rich and influential groups in the UK and there are other magazines in Europe
and America whose readership and production values seem to hit the same market. It is easy to
imagine that the readership of such magazines may offer a ready-made target segment that could
be reached more cheaply and with less wastage than adverts placed in more general interest
publications such as mainstream weekly or daily newspapers and magazines. This impression is
often fostered by the publication and supported by carefully chosen readership data. For smaller
NTOs with only limited resources for conducting a thorough appraisal of available media in all
their main source markets, and only a general idea of their target markets, such magazines may
seem an attractive option that offer a shortcut to effective market targeting. NTO representatives
abroad are sometimes vulnerable to the space selling persuasiveness of advert managers from
magazines and newspapers whose job is to routinely use figures to show their media vehicles in
the best possible light.
Targeting the audience of a single, or even a few publications, is unlikely to be an effective method
of segmenting a market, or reaching a designated market. The only practical way of segmenting
a market is first to identify target groups, using some of the methodologies indicated in this study,
and only when this has been done, to objectively appraise, preferably with a good advertising
agency, the extent to which different media vehicles (television programmes, newspapers,
magazines, radio slots etc) reach the target groups with adequate coverage, frequency and impact
at an acceptable cost. When this is done, what it will normally reveal is what has been found in
countless consumer goods markets – that no single publication or programme exactly, or even
closely, matches the profile and number of target prospects, and that there is nothing for it but to
use a combination of media to achieve coverage and effectiveness.
3.15 Internet Segmentation

What is it? Given the rapid and extensive expansion of internet usage for travel and tourism
purposes, it is important to assess the medium as a segmentation component. Internet
usage is an increasingly important element in many tourism decisions, but one that
varies greatly among people of different nationalities, age groups and travel tastes.
Why do it? The main reason for using the internet as an ingredient of segmentation, is the
relatively inexpensive global information and promotional opportunities that it
creates for NTOs – although usage remains uneven with some nationalities (USA,
Germany, UK, Scandinavia) making greater use of the internet than others.
How to do it? Using the Internet to identify and promote to target segments can be helped by:
• research to establish differential Internet usage (see Jordan case below), tourism
information needs and travel habits (see New Zealand case below);
• effective web design offering the user a response mechanism that enables the NTO
to data-capture;
• evaluation of website responses – especially in terms of converted customers
among the target segments.
Advantages The internet may be a partial way of reaching and influencing pre-defined segments,
who manifest a higher than average use of the internet (see the New Zealand case
below). Another important function may be as a way of discovering new segments
among the varied and fragmented audiences who surf the net. By analysing responses,
particularly surveys emailed to those who have requested information, NTOs may be
able to identify profiles of significant segments for their destination not previously
targeted.
Disadvantages There are no disadvantages to establishing NTO websites as tools for target marketing.
Indeed, there is probably a competitive disadvantage for any NTO not doing so, and
this disadvantage will surely increase in the future.
Resource implications The resource implications of effective Internet targeting may be extensive in terms of
time and funding. The most effective website marketing is likely to involve considerable
research of the target markets before websites are designed and implemented
(see New Zealand case below). It is also likely to require considerable investment
to maintain. Finally, effective website use requires evaluation to determine to what
extent target groups have been reached and persuaded. Nonetheless, compared
to other media channels, the Internet is a highly cost-effective channel. Return on
investment evaluation results in recent years (from VisitBritain and others) are very
encouraging.
3.15.1 Case Study 1: How New Zealand Targets the Interactive Traveller
New Zealand has invested time and money into assessing its potential markets in depth over the past
five years. This has included not just analysing its own internal data, but also employing consultants to
appraise international data that might have relevance to New Zealand arrivals. One of the main results
of this research programme has been the identification of what the NTO sees as its prime markets,
international travellers from a number of countries whom the NTO groups together as the interactive
traveller segment.
The interactive traveller market segment

The group was identified from a range of quantitative and qualitative research studies, conducted by both
their own staff and consultants. The key characteristics of interactive travellers are that they are regular
international travellers who use technology to make their lives easier, including a higher-than-average
use of the Internet in holiday decisions. They are high consumers of goods and services, interested in
novelty and demonstrate respect for the natural, social and cultural environment. They tend to fall into
two age groups: 25 to 34 and 50 to 64, both groups being child free, the first because they have not had
children, the second because they are empty nesters whose children have left home. Specific features
of this group are:
• a high interest in news and readership of newspapers and magazines;

• a tendency to research destinations. For their research they use the Internet, guidebooks, word of
mouth and travel agents;
• they support the performing arts in terms of cinema, theatre, galleries and museums;
• they are high users of technology, including the internet, digital cameras, mobile phones and
‘other forms of lifestyle information technology’;
• they are health conscious, exercising regularly and eating healthy food;
• they entertain at home;
• they have liberal attitudes;
• they take risks in seeking mental and physical challenges;
• they have high disposable income;
• they enjoy fine cuisine and wine;
• they are opinion leaders among their peer groups who influence others.
Quantifying the market the segment

The NTO has been able to form broad quantitative estimates of the number and proportion of people
with these lifestyle characteristics in ten countries regarded as specially high in potential for New
Zealand, based on previous visitor patterns. From the analysis they have concluded that the most
promising interactive traveller segments may be those in Australia, USA, UK and Republic of Korea.
In addition, through qualitative interviews, the NTO has been able to amass a great deal of knowledge
about the segment’s tourism decision processes from pre-booking behaviour to trip structures and
patterns, including data on:
• why they choose New Zealand;

• how they plan the trip;
• how they gather information;
• how they book;
• what activities they enjoy in the destination;
• what they want from accommodation.
Among the findings of this programme is the fact that interactive travellers require more information about
activities before departure than they do about accommodation and transport, but that more decisions
are made about the latter before departure. The NTO is able to use this information to create website
pages that address the known requirements, travel habits and information needs of their markets.
3.15.2 Case Study 2: Internet Usage as an Indicator of International Market

Potential to Jordan
This case study, from a small Middle Eastern destination agency, shows a less resource-hungry and
time-consuming way of using a range of indicators to assess national market segments in which Internet
usage features prominently.
The Aqaba Special Economic Development Zone (ASEZA) is a development organization charged with
improving tourism levels to southern Jordan.
It approached the task of market segmentation planning in 2005 by an analysis of trends in a number of
national source markets to Aqaba from western, eastern and northern Europe. The analysis was based
on a number of key indicators for each country, of which Internet usage was one. Internet usage was of
particular interest, not just because of the insight it offered into potential tourist information sources,
but because ASEZA’s planners saw website promotion as an important option, given limited funds for
widespread mainstream advertising and publicity.
Internet usage was only one indicator that was included in part one of a three-section study of the key
national indicators that were evaluated. The full contents of each section were as follows:
• Part 1 – National economic indicators: country’s population, average per capita gross domestic
income, and annual percentage growth of gross domestic income.
• Part 2 – Tourism trends: Visitor arrivals to Jordan and bed nights in Aqaba.
• Part 3 – Jordan and Aqaba’s industrial readiness to realistically market to European individual
countries effectively: whether or not the Jordan Tourism Board was already active in specific
countries, whether there was existing charter access to the countries, and whether tour operator
interest had been identified.
From these indicators, ASEZA selected market priorities by country. The following represents a sample
table of indicative results.
National economic and other data Tourism trends Industrial readiness

to Jordan (2003)
board in market
Tourist arrivals
growth of GDP
Charter access
Jordan tourist
Internet users
Tour operator
Bed-nights in
Average (%)
Average per
Population
capita GDP
identified
to Aqaba
(million)
(million)
interest
Aqaba
(2004)
(US$)
Austria 8 2 26,000 2.1 2,932 1,206 Yes Yes Yes
Hungary 10 0.7 5,000 4.5 21,297 165,524 Yes Yes Yes
UK 60 15 24,000 2.0 34,765 11,473 Yes Yes Yes
Germany 82 24 26,000 1.6 20,387 10,002 Yes Yes Yes
Comments: Both these cases suggest the importance of Internet use as one indicative parameter
of segmentation, but in neither case is it the main or sole basis of segment choice. It is a facilitator
not a category.
New Zealand’s approach is innovative, since it makes above-average usage of the internet, one
of the key dimensions in its identification of its target market, and it follows through in planning
terms by making its website information match the interests, activities, booking patterns, and
information needs that have emerged from in depth research. However, internet usage is only
one dimension, and there is no suggestion that New Zealand’s main market segment is simply
characterised by its internet usage, still less that the internet audience is synonymous with its total
market.
In the case of Aqaba, the same holds true, but to a greater degree. Internet usage is simply one of
several indicators in national market appraisal. The key difference from the New Zealand case is
that Aqaba’s analysis is based mainly on publicly available, secondary data, and comprises none
of the targeting refinements made possible by New Zealand’s expensive programme of research
gathering and analysis that led to the identification of, and planning for, its ‘interactive traveller’
segment.
3.16 Business-to-Business Segmentation

What is it? Business to business segmentation (by an NTO) is the attempt to identify, target and
work with a range of tourism industry stakeholders that make destination products and
services available to visitors. This diverse group comprises intermediaries that package
and distribute products (travel agents, tour operators etc.) and suppliers (carriers,
attractions and accommodation etc). It may also include other groups with opinion
forming or research skills such as the media, academia and industry organizations.
Business-to-business segmentation is particularly important in situations where the
end-user (visitor) is not necessarily the decision-maker – e.g. organizations looking
to arrange international conferences, companies arranging training and/or incentive
programmes. In such situations, ‘decision-makers’ need to be identified/targeted if
business from these sources is to be obtained.
Why do it? Some stakeholder groups may be fee-paying subscribers to an NTO (or contribute to
NTO campaigns) and all expect publicly funded NTOs to take account of their views and
needs. NTOs engage in business-to-business relationships because there is a common
interest. Together, they are better able to maximise partnership synergy in undertaking
joint activities to attract visitors.
How do it? An inventory (database) should include the names, profiles and business potential
of the destination’s main stakeholders and intermediaries – especially details of the
biggest tour operators offering holidays to the destination. For smaller, developing
countries with a low tourism base, the number of stakeholders may be less, so it is often
possible to develop personalised relationships with the main ones. Through sensitive
segmentation of stakeholder groups, it is possible for NTOs to foster effective marketing
partnerships. Many NTOs now have a department dedicated to managing relations with
strategic partners.
Advantages Intermediaries may provide high impact cooperative campaigns as partners. In addition,
since many intermediaries often promote the image of a destination in their activities,
it is important that an NTO and its partners coordinate their efforts to ensure that the
images promoted are consistent.
Disadvantages Trade segmentation activity is difficult to evaluate. NTOs may never know the exact
results in tourism revenue terms of stakeholder relations, because commercial firms
rarely divulge detailed information about their sales and profits. This does not reduce
the importance or value of segmented planning for stakeholder groups at home and
abroad.
Resource implications It is customary for an NTO to have a dedicated section/person whose remit is trade
liaison and networking. This may include a special trade events and exhibitions group. In
addition, agents abroad may be employed to provide links and intelligence. Most NTOs
also have a dedicated section that works with specialist intermediaries in stimulating
business (MICE) tourism.
3.16.1 Case Study 1: How New Zealand Segments the Business-to-Business

Supply Chain in the US Market
Tourism New Zealand has invested considerable time and effort into tracking the contours of the
business market that supports its consumer market. It has developed profile maps of the supply chain in
its main generating source markets, and estimated the volume of contributions from each. The diagram
below shows results of the analysis of the US market to New Zealand, and the estimated contribution
of different intermediaries to total arrivals to New Zealand. It presents the main segmented components
of the supply chain and, in the bottom box, some of the typical characteristics of New Zealand’s main
target tourists.
USA Consumers
Total long haul outbound estimated: 22.0 million / NZ arrivals YE 12/04: 218,300
Airline Direct
Retail 10% of NZ arrivals
Incentive E-Commerce
20% of NZ arrivals Approx. 30,000 agencies including Virtuoso Air New Zealand
10% of NZ arrivals Qantas
Carlson Incentive Flight Centre Independent agencies
United Airlines
Maritz Approx. 10,000 of which are now home-based (Frequent flyer points)
Web ‘Self Serve’
Pricelin e.com
Corporate Hotwire.com
5% of NZ arrivals
AMEX Corporate Web ‘with retail’
Carlson Wagonlit Consolidators Cruise Specialist Group Series
Expedia.com 7% of NZ arrivals
LDS Church
12% of NZ arrivals Wholesalers 10% of NZ arrivals
Travelocity
Air by Pleasant Princess 29% of NZ arrivals Globus Cosmos
Rosenbluth Cheaptickets.co
Trans am Royal Swain Australia Tauck Tours
C&H Caribbean Discover Wholesale Grand Circle
Air Tickets Holland Pleasant Holidays Ambassador Prog.
America Newmans South Pacific
New Zealand Inbounds

Include: Contract Pacific, General Travel, Pan Pacific, Southern World Vacations, Tourmasters, Travel Arragements
New Zealand Product
Holiday Travel Styles

Average length of stay: 10 days
Target groups: Interactive Travellers FIT – 25 to 34 and more than 55 years of age, younger FITs, Strong existing coach and cruise market.
Transport Styles: Self drive, group tour, large cruise market.
Inclusions. Hotels, domestic air, cultural activities, farm and garden visits.
Popular regions: NA. Visitors generally prefer to get off the beaten track as FITs. Coach and cruise cover traditional regions.
This kind of analysis will always be directionally useful, rather than something that represents an exact
state of affairs. It is also likely to be more or less easy to do in some countries than others, due to
difficulties in obtaining the data. Its main value is in allowing NTO’s to give detailed consideration to
the specific links in the supply chain that takes the product to the consumer.
3.16.2 Case Study 2: How BTA Targeted Tourism Partnerships for its ‘UKOK’
VFR Campaign
The campaign to attract VFR tourists to the UK by BTA, as described in the VFR section (see section 6.4),
was supported by many participants from the tourism industry in Britain who helped to contribute to
the scale and reach of the campaign. Below is a short account of some of the stakeholders recruited, as
partners, to support and implement the campaign.
Tourism partners
All of the national tourist boards – the English Tourism Council, VisitScotland, Wales Tourist Board and
Northern Ireland Tourist Board – contributed funding to the campaign on a per capita basis. This was
to ensure that the packs and postcards distributed reflected images from the home ‘country’ of the
sender.
In addition to the tourist board support, backing was also received from heavyweight private sector,
commercial partners:
• British Airways: provided the first set of 40 return flights for the prize draws, ensured that it provided
discounted fares to the UK for the friends and relatives of its 50,000 British staff in February 2002,
promoted the campaign to its customers via www.ba.com and was involved in media interviews
at the London launch.
• BritRail: worked closely with BTA to devise the ‘Companion Pass’ specifically for the VFR campaign,
allowing the UK hosts of any overseas purchaser of a BritRail Pass to receive the equivalent pass for
free. This was BritRail’s first ‘two-for-one’ deal and with passes costing up to US$600 it provided
a powerful incentive for UK residents to persuade their overseas friends/relatives to visit the UK.
Vouchers to receive the ‘Companion Pass’ were included in all 200,000 of the original VFR packs
and when these had all been distributed, it was offered via an online form on www.visitbritain.
com/ukok.
• Six Continents Hotels: offered the prizes of 30 double rooms (for one week each) at any of its
Intercontinental, Crowne Plaza or Holiday Inn brands.
• Ramada Jarvis: provided the 30 double rooms for the Phase II prize draws, provided a UKOK/
MVC special rate for hotel guests to support the campaign and sited bespoke postcard dispensers
throughout its hotels.
• Virgin Atlantic: provided 20 return flights to the UK for the Phase II prize draws.
• American Airlines: provided 20 return flights to the UK for the Phase II prize draws.
All commercial partners received branding on postcards/VFR packs and, wherever possible, online and
offline promotions. All partners also had hyperlinks to their sites from the www.visitbritain.com/ukok
splash-page.
Non-tourism partnerships
In order to leverage the campaign, support was sought not only from traditional travel partners but
also non-tourism partners. High impact presentations were made to leading retailers such as Boots,
Sainsbury’s, WH Smith, Centrica/AA, Consignia, Shell, Lloyds TSB and Marks & Spencer.
Special postcard dispensers were created for each of the restaurants under the theme of ‘UKOK’ and
the bespoke BF slogan of ‘Get Together’. Ancillary posters and voucher booklets were distributed to
diners as they bought their meals. In addition to the regular prize draws to win free flights and hotel
accommodation for overseas friends/relatives, there was the additional prize of having a ‘family reunion’
portrait taken by Lord Litchfield at his photographic studios. Some 100,000 BF/UKOK postcard sets
were distributed at the restaurants in April/May 2002.
Comments: This BTA case study demonstrates the value of business-to-business segmentation
as a means of creating powerful public-private partnerships, that provide levered funding and
resources for strategically important marketing campaigns developed by NTOs.
It is useful for NTOs to review the potential participation of stakeholder segments at the outset of
planning any major marketing activity.
In addition, it is also important for NTOs to put in place mechanisms for two-way communication
with stakeholders on an ongoing basis, as part of the need to establish relationships of cooperation
and coordination in destination planning.
3.17 No Segmentation
What is it? Marketing theorists have suggested that there are instances where it may be
desirable for an organisation not to segment a market but allow it to find its own
recruits.
For NTO planners to adopt such a strategy would mean that they either believe that
their destination appeals to everyone, or alternatively, that they have no idea whom
it might attract. In practice, neither of these two hypothetical situations is likely to
be the case, since in all but a very few instances, NTOs will have previous tourism
data that indicates who its main tourists have been, and are thus most likely to be
in the future.
Why do it? The only reason for adopting this approach, if ever, is as a short-term measure
pending better understanding of the market for a new product – e.g. where potential
buyers are difficult to predict in precise terms. For NTOs there may be instances
where special events or attractions are launched that make it seem necessary to
suspend judgement about their clients – e.g. Olympic Games.
How It is not clear exactly how an organisation should implement a ‘no segmentation’
policy. One possibility it that the NTO should undertake no marketing at all. Another
is that they attempt to promote to everyone, by seeking publicity through public
relations activities in as wide a range of media as possible.
Advantages The approach relieves planners of the responsibility for making decisions that
always involve difficult rejection of some markets and the embracing of others.
Theoretically, it may result in the discovery of new market groups that would, or
could not, have been predicted if segments had been decided before marketing
activity.
Disadvantages The main disadvantage is that targeting all people in a market may be a waste of
resources since, in reality, all destinations appeal more to some than others. The
most effective segmentation policy, therefore, is to focus resources and action on
the best prospect customers.
Resource implications The approach may demand either minimal resources if no segmentation means
refrain from marketing activity, leaving the markets to ‘find their own level’.
Conversely, if the NTO seriously attempts to make its destination known and
accessible to all markets, it will require extraordinary levels of investment.
Chapter 4
Practical Guide
to Segmentation
For some NTOs, segmentation is firmly embedded in their marketing philosophy and some are already
using very sophisticated segmentation techniques. Many other NTOs are just beginning to consider
segmentation as a marketing approach and require guidance on how to initiate segmented marketing.
For this reason, some NTOs may find this practical guide section simplistic while, for others, it may be a
significant revelation. However, it is expected that all NTOs will find something of value in this section
that they can adopt or adapt for their own requirements.
4.1 Introduction
While some NTOs may elect not to undertake any form of segmentation, preferring instead to undertake
generic or other non-segment specific marketing, evidence suggests that segmentation significantly
reduces deadweight, i.e. marketing messages that reach those who have little or no interest in your
product or service for the foreseeable future, and that marketing activities, focused on segments of best
potential customers, can generate the best returns on investment. Without exception, all NTOs surveyed
– whose marketing is described as ‘segmentation-based’ – claimed to have achieved significant benefits
as a direct result of following the segmentation route.
There is no single preferred methodology for undertaking segmentation. A variety of methodological

options exist and several are documented in this handbook (see chapter 6). An NTO’s ability and
desire to undertake segmentation will depend upon many factors – e.g. availability of statistical and
demographic data, budget, marketing philosophy, research capabilities, etc. While such factors may act
as a constraint on the methodology selected by an individual NTO, there are no significant barriers to
prevent NTOs from undertaking some form of segmentation – no matter how basic. It stands to reason
therefore, that the actual methodology selected will be one that best meets the needs of an individual
NTO.
Market segmentation may be seen as a sequential process that involves a number of distinct stages.
Whichever methodological route is chosen for segmentation, there are six basic stages that NTOs are
advised to follow.
• Analysis: investigating potential market segments

• Diagnosis: identifying, quantifying and profiling segments
• Selection: choosing and prioritising target segments
• Implementation: undertaking activities aimed at reaching target segments
• Evaluation: evaluating the outcome of these activities
• Review: reviewing segment profiles and priorities in light of outcomes
This section suggests a practical framework for action (strategy), within which segmentation can be set
in context, involving a logical sequence of processes and guiding principles. Nonetheless, NTOs may
wish to add, subtract or adapt the basic framework to meet their own particular needs.
As stated, segmentation should not be seen in isolation. Rather, it should be seen in the context of
an NTO’s overall strategy for achieving its corporate and/or national tourism objectives. NTOs will
not all be starting their segmentation from the same point. Therefore, NTOs will enter the process of
segmentation at a place that suits their own needs.

The suggested Strategic Framework (SF) intends to be a useful aide memoire to describe the process
that NTOs can go through in developing a segmented business marketing plan (see diagram below).
The various stages are explained in detail within this chapter. While the SF provides a useful prompt on
how to develop a segmented business/marketing plan, the individual stages do not need to be followed
slavishly. Rather, it is for NTOs to decide which elements they need to use and at which points they
need to re-enter the cycle. For this reason, NTOs are recommended to create their own versions of the
SF that suit their particular needs.
Strategic Framework
Mission Statement
Objectives/Targets
Tourism Trends
Market Environment
Competitive Environment
Product Audit
Brand Audit
Segment Research and Intelligence
Segment Market
Segment Segment Segment Segment
Select ‘target’ Segments
Develop a strategy (Marketing Mix) for each target segment

Target Segment 1 Target Segment 2 Target Segment 3 Target Segment 4
Product Product Product Product
Price Price Price Price
Place Place Place Place
Promotion Promotion Promotion Promotion
Resource Resource Resource Resource
Build the Business Plan
Implement the Business Plan
Measure and Evaluate Performance
Re-enter at points as required

Practical Guide to Segmentation 79
4.2 Defining Tourism Objectives

All too often, the objectives of an NTO are vague or implied rather than clearly expressed. For example,
a number of NTOs simply have “to increase tourism” as their primary objective. This is not meaningful
unless the objective is expressed in specific value or volume (visits or spend) terms and have specific
time-bound targets relating to these objectives.
Many NTOs express their tourism objectives in terms of increased ‘visits’ and yet, when questioned,
claim that economic benefit is the main reason for NTO marketing. If so, the tourism objective would
better be expressed in ‘value’ terms as, in theory, a ‘visits’ target could be met while, at the same time,
the spend from these visitors might actually have declined.
The first stage in segmentation is therefore to define exactly what benefits are expected from tourists. For
example, are they wanted solely for their national economic benefit or so that they visit specific regions
of the country? Are there specific products (e.g. carriers, accommodation, attractions) that are under-
utilised or under threat of closure and therefore require more users? Are there specific times of the year
when tourism-related staff become unemployed because tourists cannot be attracted ‘off-season’? Are
there environmentally sensitive areas where equally ‘sensitive’ visitors are wanted? Such issues need to
be considered carefully in order to shape NTO tourism objectives/targets so that they will, if met, help
to overcome the underlying problems or barriers that they are seeking to address.
NTOs also need to consider, when spending taxpayers’ money as most do, the thorny issue of market
failure. If the private sector is already doing a good job and the market is operating well, it is not
generally thought to be the role of Government to support or ‘subsidise’ it. Rather, resources should
be focussed on areas where the private sector is not operating so efficiently and where there is market
failure/ inefficiency – e.g. this might include persuading more tourists to visit ‘off-season’ or spreading
the benefits of tourism more widely throughout the country. For example, there may be little point in an
NTO spending large tactical marketing resources on targeting main season ‘sea, sun and sand’ segments
if this is already well-catered for by the private sector and the real need is to persuade tourists to come
‘off-season’ and thereby help to safeguard year-round tourism employment. At the very least, NTOs in
this position might consider freeing up resources spent on targeting segments that are all ready well
served by the industry itself, and using them on developing other segments with potential.
The following SMART acronym is commonly used a reminder of good practice when developing
objectives and targets:
Specific – objectives should specify exactly what you want to achieve.
Measurable – you should be able to measure if you met your objectives.
Achievable – are the objectives you set achievable?
Realistic – can you realistically achieve them with the resources you have?
Time bound – in what time-scale do you want to achieve the objectives?
Only when an NTO is clear about what it wants tourists to contribute to its destination’s economic
and/or social objectives, can it realistically start to identify and attract those ‘segments’ that will make
the best contribution to meeting those objectives. The targets should also be reviewed periodically, to
gauge whether they are on course to be met, or whether they need modifying in the light of changing
circumstances.
4.3 Tourism Trends

The analysis of international tourism trends is a critical prerequisite to effective segmentation. Not only
should an NTO’s current major source markets be continually monitored, so should those markets that
could offer significant potential business for the future. The two main types of analyses are quantitative
(mainly statistical) and qualitative analyses. Most NTOs have a Market Intelligence or Research
Department that undertakes such analyses. Those that have been particularly effective are based within
an NTO’s Marketing Department – i.e. where line management and departmental objectives forge a
direct link between gathering market intelligence and undertaking marketing/promotional activities.
4.3.1 Quantitative Analyses

International tourism statistics vary tremendously, in terms of their reliability, depending upon their
source. Some countries have extremely robust ‘inbound’ and ‘outbound’ tourist figures based on large
sample border surveys while others do with ad hoc and/or statistically inferior surveys. Some countries
make details of their tourism statistics publicly available while others treat them as confidential.
However, obtaining good source data is not particularly difficult – especially for those countries that are
the major world source markets such as Germany, United Kingdom, United States of America, Japan,
etc. UNWTO and a host of other organizations spend a great deal of time and effort in attempting to
harmonise the vast array of tourist statistics and make them meaningful to the analyst, and these are
readily available as a time series to those NTOs wishing to examine international trends.
The benefits in analysing international statistical tourism trends are many but include:
• understanding where a destination sits within the international context;

• examining markets in terms of their real and potential growth;
• assessing how the competition is doing;
• tracking the changing fortunes of source markets and destinations and analysing why these changes
have come about;
• helping to establish realistic tourism goals for a destination;
• forecasting tourist demand so that supply side can plan ahead;
• providing the building blocks for identifying segments with growth potential for a destination.
UNWTO produces a substantial range of easily accessible tourism trend statistics that can be used as the
starting point for such analyses. For example, the table below indicates which world tourism regions are
likely to grow fastest in terms of inbound tourism over the next few years.
Forecast tourism growth in outbound trips by region of origin, 2010
Region Int. Tourist Int. Tourist Annual Market Market Share

Arrivals, Arrivals, average share, 2010 share, 1995 +/–
2010 1995 growth 1995 (%) (%)
(million) (million) to 2020 (%)
Africa 36 13.9 6.2 3.6 2.5 Gain
Americas 173 107.8 3.1 17.2 19.1 Loss
East Asia/Pacific 193 84.3 6.5 19.2 14.9 Gain
Europe 520 312.6 3.4 51.7 55.3 Loss
Middle East 21 8.6 5.8 2.1 1.5 Gain
South Asia 10 4.3 5.6 1.0 0.8 Gain
Not specified 54 33.9 3.6 5.4 6.0 Loss
Total World 1,006* 565.4 4.1 100.0* 100.0 n/a
Source data: Tourism 2020 Vision, 2002, UNWTO, Madrid

* does not aggregate to total due to rounding
Similar forecasts are also available by country.

Forecast of top inbound and outbound markets by 2020
Market share (%)
Market share (%)

1995 to 2020 (%)
1995 to 2020 (%)

Arrivals (million)
Arrivals (million)
Annual growth
Annual growth
Int. Tourist
Int. Tourist
Rank Inbound Rank Outbound
1 China 130 8.3 7.8 1 Germany 153 9.8 2.9
2 France 106 6.8 2.3 2 Japan 142 9.1 7.5
3 USA 102 6.6 3.5 3 USA 123 7.9 2.7
4 Spain 74 4.7 2.6 4 China 100 6.4 12.8
5 Hong Kong (China) 57 3.6 7.1 5 United Kingdom 95 6.1 3.3
6 United Kingdom 54 3.4 3.4 6 France 55 3.5 3.9
7 Italy 53 3.4 2.1 7 Netherlands 46 2.9 3.0
8 Mexico 49 3.1 3.6 8 Italy 35 2.3 3.1
9 Russian Federation 48 3.1 6.8 9 Canada 31 2.0 2.0
10 Czech Republic 44 2.8 4.0 10 Russian Federation 31 2.0 4.0

Source: Tourism 2020 Vision, 2002, UNWTO, Madrid
In terms of working towards segmentation, NTOs need to look below the macro level figures and
consider the underlying trends within a market. For example, UK inbound international statistics at the
macro level indicate a reasonably steady state in recent years. It is only with analysis below the macro
level that it is possible to discern a major shift away from leisure and educational visits to business and
VFR, and that the UK inbound visitor market is becoming increasingly dominated by ‘older’ visitors
while ‘younger’ visitor numbers have declined significantly. Such market insights have a strong bearing
on NTO segmented marketing planning and resource allocation.
4.3.2 Qualitative Analyses

As with statistical trends, there are plenty of organizations that are analyzing international tourism
trends and making these freely available, e.g. European “Megatrends” which are produced by ETC (see:
www.etc-corporate.org).
Below are just a few examples of the sort of general qualitative trends that can be identified from ‘desk-
research’ sources.
Information and booking

• Tourism purchases, especially of travel and accommodation, are taking place nearer to the time
of departure.
• As new technology is made more readily available, there will be a steady increase in reservations
made direct with suppliers.
• Better and more accessible information and booking systems will allow reservations to be made
later and allow for more flexible travel schedules.
• Customer expectations about the efficiency of these systems, especially for independent travellers,
will rise and those companies offering fast efficient and customer friendly services will gain
business at the expense of the inefficient.
Value for money

• Easier access to information about tourism destinations, products, services and prices means that
the international tourism traveller is fast becoming more critical and self-confident about choosing
a destination.
• Travellers are increasingly assessing the relationship between price and quality, i.e. the value for
money offered by competitors.
Independence
• Independently arranged trips are growing at the expense of organised or packaged group trips.
Intermediaries, especially retail and wholesale agents, will need to provide significant added value
to win or retain customers.
• Packaged travel will become smaller in terms of participants per group and operators will need to
develop more flexible itineraries to meet the differing needs of customers within the group.
Short-breaks
• The number of holidays per holiday-taker is increasing, although the average length of stay is
becoming shorter. Expenditure on holidays (per day) is growing faster than expenditure on many
other products and services.
• However, because of the shorter length of holidays, expenditure per trip is decreasing. Short-
break city visits, especially for shopping, sporting and cultural reasons, will expand. Products and
product presentation will need to be developed/refreshed to capture repeat business.
Longer holidays (10 to 21 days)

• International demand is increasing for most types of longer-stay holidays – especially culture
(education, history), activity-based pursuits (sporting, health), rest and relaxation (cruising, sun,
beach, rural).
• Travel is increasingly becoming a combination of holiday and events. Imaginative packages need
to be developed that include timely information about events/attractions and offer the option of
purchasing tickets in advance. There is an increasing need for mobility at the holiday address as
customers seek to explore outside of their holiday base.
While much of what is freely available tends to be generic, the skilled analyst will go further and attempt
to highlight which segments in a market show the greatest propensity to exhibit such trends and those
that do not conform so closely. Of course, many NTOs augment trend information by undertaking their
own primary research or purchasing ‘off-the-shelf’ analyses of international markets.
With this sort of trend information, NTOs can examine their own tourism products and services to
assess how they compare with what customers are seeking, what their own industry is providing and
how the competition is responding to these trends. This puts the NTO in a strong position, as this sort of
information is valuable when it comes to the later stages of identifying and selecting target segments.
4.4 Market Environment

When considering the international flow of tourism and its potential for a destination, it is important to
analyse a range of relevant macro-level factors than might impact upon the ability to persuade people
to visit a particular destination. Every market is influenced by the wider social, economic and political
environment in which it operates. Foreign exchange rates, interest rates, inflation levels, GDP, political
stability, legal constraints, unemployment rates, visa restrictions and a host of other factors all with an
impact upon levels of outbound tourism from a source market.
Such factors are also dynamic, i.e. they are in a constant state of flux. As these factors change and
interact, they can result in the creation of new and significant market forces that, in turn, can give
rise to new tourism opportunities and threats. It is therefore important that NTOs monitor and analyse
key macro-level factors in source markets to ensure that their destination is not put at a competitive
disadvantage, and that they take remedial action – e.g. defensive marketing – or reallocate resources to
other more buoyant markets where necessary.
In undertaking macro-level analyses, it is important to assess the impact that such factors have on
particular key segments – those that are likely to be most important for a destination – and not just the
general impact on society. This helps to identify the most resilient customers, i.e. those that may still visit
a destination even during difficult times.
The extent to which an NTO is able to sense forthcoming change in source markets, depends on the
quality of its monitoring and analysis capability. One technique widely used by NTOs is known by the
acronym PEST – which stands for Political, Economic, and Social and Technological. PEST analysis
seeks to identify changes in the wider environment and assess their likely impact on business from
source markets/segments. There is no definitive set of factors that are important for all NTOs at all times,
so the identification of key factors can be a problem. Below, is a suggested mechanism that NTOs might
consider. The basic question NTOs need to ask is:
What factors in the wider environment will drive change in outbound tourism from this market?
To answer this question, it is advisable to spread the net very widely initially but then be selective in
sifting results. It is useful to consider potential factors under the four broad PEST acronym headings.
Some examples of what might be included are outlined below.
Political
• Employment policies
• Foreign trade policies
• Government stability
• Immigration/visa requirements
• Impending elections
• Industry regulation and support
• International relations
• State ownership/free enterprise policies
• Trading restrictions
Economic
• Balance of trade
• Business cycles
• Currency stability
• Exchange rates
• GDP trends
• Inflation
• Interest rates
• Levels of income
• Taxation regime
• Unemployment/labour supply
Social
• Attitudes to work and leisure

• Demographic trends
• Holiday entitlement
• Income distribution
• Levels of education
• Lifestyle changes
• Media habits
• Peer group/cohort travel
• Religion
• Transport usage/preference
• Travel booking
Technological
• Computers per population

• Infrastructure developments
• Internet penetration rates
• Technological development
Many factors could be considered under more than one heading – as long as they are identified, the
heading is largely irrelevant.
NTOs do not usually need to undertake primary research or employ consultants to uncover information
about PEST factors. There are many respected commentators who already analyse these trends and
make them freely available via the Internet. Desk research will quickly provide access to information
about specific markets and general trends. For example, in just five minutes spent on the Internet, it was
possible to find several generic tourism PEST analyses suitable for this purpose.
A brief extract analysis is:
Political
• Increased ‘departure’ and other tourism-related taxes together with the absence of a European visa,
for travellers from other continents, may constrain travel – especially from important emerging
markets.
• Generally, government support for tourism is declining with the rise of the market driven economy
and privatisation of industry.
• Increasing free trade agreements and a move towards free market economies make first world
governments disinclined to intervene to help specific sectors.
• Diminishing state support for overseas promotions, greater regulation and changes in distribution,
sales and reservation systems will put increasing pressure on small businesses. This may adversely
affect the overall quality and perception of the information and other services that they provide.
Economic
• Tourism is becoming more volatile and subject to rapid and substantial consumer reaction to
economic pressures during times of recession.
• These economic disruptions, to international travel from key source markets, will often be relatively
short-lived (6 to 18 months) and be localised rather than global – thus requiring flexible marketing
responses from NTOs.
• On the positive side, the majority of the population in developed countries is interested in, and
can afford, international travel. The long-term potential for growth remains vast.
• Excess capacity in key product sectors and more generally throughout some ‘outdated’ destinations,
leads to falling profit margins, a lack of re-investment in new tourism products/services and a shift
into non-tourism related usage.
• Oil prices and its impact on tourism supply and demand.
Social
• Tourism by older people has witnessed expansion in recent years.

• Youth travel must be catered for by suitable services from transport and other suppliers – e.g.
budget but good quality accommodation and reductions in subsidies/grants from educational
authorities.
• Competition for international education/training customers will remain intense.
• While lower long-term global inflation offers trade benefits, it also reduces revenue from savings,
thereby limiting disposable income and spending by retired and older people – a market which
has been growing rapidly and helped to address seasonality problems in recent times.
• Income distribution is becoming more polarised – wealthier people with less leisure time and
more relatively poor people – many with insufficient income for international travel.
Technological
• The technical means of accessing information and making bookings is changing rapidly. Travellers
will no longer be tied to PCs but will be able to access information through mobile phones,
television and other devices. Internet penetration will be massive and global.
• The internet will no longer be just a means of conveying information but will open up new and
creative marketing opportunities – especially as broad band links will facilitate the greater use of
high quality pictures, video footage, music and other media designed to be inspirational.
Having identified the macro-level factors that might affect a source market, they need to be screened for
importance by asking three key questions:
• How important are these factors for outbound tourism?

• How much and how rapidly are these factors changing?
• How might they affect tourism to the destination?
It is useful to focus attention – monitoring and analysis – on the seven or eight factors that are considered
likely to have the greatest impact on tourism from this market. Different factors can be monitored for
each source market. Once the key factors are identified, it is useful to ask:
• What are the most likely scenarios that can be envisaged for the future of outbound tourism
from this market?
• What will successful destinations have to do well to compete in these conditions?
• Where does the NTO’s destination stand?
• What are the implications?
Once a range of source markets has been examined in this way, it is possible to compare and contrast
them and begin making decisions on where resources are likely to generate the best returns. Some
NTOs adopt basic brainstorming techniques, using in-house staff and/or external expertise, to develop
and explore the above scenarios. Others have developed sophisticated models in an attempt to forecast
the impact that changes, in key factors, are likely to have on the volume and value of tourism to their
destination from source markets. Indeed, some NTOs use such models as the basis for allocating their
international marketing resources and/or setting tourism targets for these source markets.
The option selected will likely depend upon the availability of resources/expertise and the importance
attached to particular markets. The crucial aspect to remember is that the key factors identified will be
dynamic, and therefore need to be reviewed on a regular basis – especially when major change is taking
place in a source market.
4.5 Competitive Environment

With only a small percentage of the world’s current population actually ‘in the market’ for an
international trip in any one year, competition for this business from the 200 or so NTOs throughout
the world is naturally intense. With finite resources, many NTOs are attempting to ‘outsmart’ their
competitors rather than ‘outspend’ them. For example, in recent years there has been a huge investment
by NTOs in destination ‘branding’, in an attempt to create stronger international tourism identities, and
to differentiate the visitor experience on offer from that of competitors offering similar products/services.
An examination of competitor activity can produce insightful observations.
4.5.1 Competitive Intensity

Competitive intensity, i.e. the strength of competition from other products, services and destinations,
should be considered by NTOs as part of their strategy for targeting a specific market or segment. It is
useful to identify and analyse key factors that affect competitive intensity. Once done, NTOs can then
consider how to defend their destination against competitive forces and/or influence them.
Knowledge and analysis of the underlying sources of competitive pressure – e.g. existing/new competitors,
substitute products/services, the bargaining power of buyers/suppliers – can bring several benefits.
For example, it can:
• highlight the critical tourism strengths and weaknesses of a destination;

• establish where it stands in relation to competitors;
• identify where a destination enjoys competitive advantages and unique selling propositions
(USPs);
• clarify where change is needed to improve the product offering, promotional messages and
ultimately return on investment;
• recognise examples of best practice among competitors that might be emulated.
4.5.2 Competitive Benchmarking

Many NTOs judge their own performance, entirely or in part, in terms of how they compare over time
with their competitors. Even if benchmarking is not used to assess performance, it can generate key
insights, which help NTOs to understand the changing strengths/weaknesses of their destinations, and
the constantly changing opportunities/threats that exist in a dynamic market place. Benchmarking can
include both quantitative and qualitative benchmarks.
The main benefits of benchmarking are to:
• compare a destination’s performance over time – e.g. before and after a major campaign or series
of product developments;
• compare its performance against others/competitors;
• help justify the use of public resources to Government;
• assess whether the Tourism Strategy is working.
The first stage is to identify genuine competitors rather than those believed to be the best or most
popular destinations. For example, a European sea, sun and sand destination has little to be gained in
comparing itself against Norway, the UK or Germany. More likely it will be compared with Greece,
Spain and Italy. The key to effective benchmarking is to identify those countries that compete for the
same groups of customers, i.e. segments and/or those that offer similar products.
One example of good practice is to establish a grid in which a destination is compared with a selection
of main competitors in terms of key performance indicators. The table below is an example of how this
might look.
Example of performance indicator benchmarks
Performance Indicators (2005) Country

Yours A B C D E F G H
Rank in international tourist arrivals 6 33 5 1 9 15 22 4 3
Rank in international tourism receipts 5 11 7 3 6 10 28 4 2
International tourist arrivals (million) 25.2 4.9 31.2 75.5 19.0 12.5 6.7 41.2 48.2
Growth in international tourist arrivals,
7.2 32.7 56.0 25.8 28.4 23.8 39.6 32.5 38.1
2000 to 2005 (%)
International tourism receipts 19.5 8.4 16.2 29.9 17.8 9.2 3.6 27.4 31.0
(US$ billion)
Growth in international tourism 4.8 6.3 86.2 8.7 -1.7 124.4 32.7 -4.5 22.0
receipts 2000 to 2005 (%)
Average spend per visit (US$) 776 1,714 276 396 938 738 537 666 643
World share in arrivals (%) 3.6 0.7 4.5 10.8 2.7 1.8 1.0 5.9 6.9
World share in receipts (%) 4.1 1.8 3.4 6.3 3.7 1.9 0.8 5.8 6.5
Forecast annual average growth 3.2 6.2 7.8 2.1 0.9 2.0 3.1 2.0 2.2
to 2010 (%)
Once an appropriate grid has been created, it is important that an NTO analyses the results regularly
over a period of time in an attempt to extract as much management information as possible. Discussion
and debate should take place, internally and with stakeholders, as to why the destination performed
in the way it did. For example, if a destination is performing well against the competition, why is this
and how can this performance be sustained/improved? Conversely, if it is performing poorly against the
competition, why is this and what can be done to improve performance? In undertaking the discussion/
debate, it should be possible to highlight particular competitive strengths and weaknesses, and to isolate
those factors that the NTO can influence and the exogenous factors that the NTO cannot influence but
has to understand and work around.
Competition for tourist business is not necessarily always from the same set of countries. Once an NTO
has decided upon its target segments, it becomes possible to identify specific products and destinations
that are in direct competition for those customers. For example, BTA which wanted to examine the
key competitors for its segments for both short and longer holidays produced the following table in
the 1990s. With this sort of information, an NTO can begin to examine its competitive strengths and
weaknesses and address these through its marketing and or product development activities.
Segment competitor table
European Markets Segment Short break competitor Main holiday competitor

Nordic Youth Amsterdam, Paris, Barcelona USA, Spain, Greece, France, Italy,
Australia
Dinks Copenhagen, Helsinki, Paris, France, Spain, USA, Greece, Italy

Oslo
Families Scandinavia, France, Italy Mediterranean
Empty nesters Paris, Rome Europe, USA
Belgium Youth Cultural school trips: Sporting school trips:

Italy, France, Netherlands Switzerland (ski), Greece and Turkey
Dinks Belgium, France, Netherlands
Families France, Spain
Empty nesters Paris, Vienna, Prague France, Germany, Ireland
Italy Youth USA, Ireland, Malta
Dinks Paris, Madrid, Prague France, Miami, Cuba, Far East
Families Paris, Madrid, Prague, Austria, France, Miami, Cuba, Far East,
Greece Germany, Netherlands
Empty nesters Italy, France, Spain
France Youth Barcelona, Amsterdam, Rome, Germany, Ireland, Scandinavia,

Venice Switzerland, Austria
Dinks Brussels, Amsterdam, Italy
Empty nesters France, Spain, Italy Greece, Portugal, USA, Scandinavia
Spain Youth Ireland, USA
Dinks Paris, Lisbon, Rome
Portugal Youth Paris, Rome, Barcelona,

Madrid
Dinks Portugal, Spain, France Germany, Italy, USA
Netherlands Youth Paris, Prague, Dublin, Madrid France, Germany, Austria
Families France seaside, Germany, Austria
Empty nesters France, Germany, Austria, Ireland
Seniors France, Belgium

European Markets Segment Short break competitor Main holiday competitor
Ireland Youth Paris, Brussels Ireland
Dinks Paris, Brussels Ireland
Families Ireland, France, USA, Spain, Greece,

Italy, Switzerland
Empty nesters Ireland, France, Spain
Austria Dinks All European cities Italy, Germany, France, North America
Young urban Paris, Rome

professionals
Switzerland Dinks All European cities France, Spain, Italy, Germany,

North America
Young urban Paris, Rome

professionals
Germany Dinks France, North America, Greece, Italy,

Spain, South America, Australia
Young urban Paris, Rome, Greece, Spain, USA,

professionals Australia, Scandinavia
Families Car tour in France, USA, Spain, Italy,

Ireland
Source: VisitBritain
Qualitative benchmarking can be more costly as it frequently involves primary customer research. It
is good practice, when undertaking customer research, to optimise the information you extract from
your surveys/studies. One way in doing this is to seek information about your competitors from survey
respondents. For example, include questions about the strength of your brand, quality of products,
prices, accessibility, etc as compared to other destinations. You will then be in a position to establish
a series of qualitative benchmarks. Time series or ‘tracking’ surveys allow NTOs to monitor customer
attitude changes over time to the areas identified for benchmarking; and allows NTOs to monitor
progress against their competitors.
4.6 Product Audit

With so much competition for international tourism, it is critical that NTOs realistically assess what
tourism products they have (supply), how these compare with competitors and current usage (demand).
It may seem obvious, but NTOs do need to be very familiar with the full range of tourism products that
are on offer within their countries – otherwise how can they market destinations effectively?
However, often tourism-related products are developed without the knowledge or involvement of NTOs
and without regard to the markets/customers that NTOs are active in promoting. This is especially true
where tourism products are designed by suppliers primarily for a ‘domestic’ rather than ‘international’
audience.
In terms of demand for tourism products, there are many ‘off-the-shelf’ survey reports that provide
information on market-specific products/services that tourists consume. There are also, once again,
freely available sources of information highlighting generic trends. A quick trawl of the Internet can get
some useful trend information. For example:
Transport
• Air transport is forecast to increase significantly. Budget airlines will help bring costs down
– especially on competitive routes. However, there is a danger that budget prices may not be
sustainable. This may depress demand for the increasingly budget-conscious customer.
• The growing cost and congestion of road travel may restrict growth in car (private and hire)
journeys.
• Cruising as a leisure activity is set to expand to new destinations and increase in popularity –
especially amongst more wealthy older couples and groups.
• Public transport usage will grow provided there is substantial infrastructure investment – including
the development of sea and air ports/routes by governments and that the linkages (interconnection,
speed and frequency) between various forms of transport are improved for the customer. A failure
to invest will substantially affect the outlook.
Accommodation
• Deluxe rated hotels may be approaching saturation, but demand for three star and budget
facilities continues to rise. Hotel accommodation will be increasingly packaged with transport
and attractions/events/themes – especially for short breaks.
• Special purpose centres, such as holiday villages and sports/health centres will become more
attractive.
• Good quality budget accommodation will thrive – bed and breakfast, university facilities and
roadside/city travel lodges will grow in popularity.
• Room sales and other services will be tailored to changing demand, e.g. treatment of single
occupancy and multi-occupancy, and provision of meal and other services with a variety of
options, with more hotel created packages for direct sell purposes.
Attractions and events
• It is in this area that the needs of the customer will vary most. Differences in life-stage, personal
interests, demographics, disposable income, response to brands and a range of other factors mean
that anticipating these particular tourism needs of future international travellers is difficult. In
destinations with variable climates, the provision of all-weather facilities will become increasingly
important.
• Only through effective customer research, segmentation analysis and customer relationship
management can destinations and product suppliers hope to match supply and demand.
Consequently, suppliers and destinations that undertake regular customer research and respond
positively to customer’s feedback will have a competitive advantage.
Catering
• Catering has expanded through chains and themed restaurants but demand for small independent
restaurants and inns of character will continue to expand.
• The search for quality and novelty in food will be a continuing trend.
Customer service
• Expectations about customer care, at all links in the purchasing chain, are rising.
• Meeting the demand for personal attention, speed and efficiency in dealing with customers is
important to successful bookings and repeat business.
Environment
• Environmental aspects, e.g. crowding, cleanliness, safety, and ambiance, have a major influence
on destination choice.
• Host populations, in tourism-congested destinations, are becoming more critical with regard to
tourism – which will, in turn, negatively affect the levels of service and welcome provided.
Once a picture of current international tourism consumption patterns has been developed, it is possible
to assess the relative strengths and weaknesses of a destination’s own products and services – e.g. in
terms availability, price, quality, value for money, access, etc.
Strengths and weaknesses of Britain identified in research studies
Strenghts Weaknesses
• Amusement parks • Bad attitude of the host residents to tourists

• Ancestry (especially in the capital city)
• Culture • Bad weather (cold and wet)
• Ease of accessing information when planning a visit • Boring, not dynamic, ordinary, no surprises,
and while there static image
• Football • Crowded, dirty
• Friendly people • Expensive, exchange rates
• Good nightlife, clubs • Lack of budget hotels
• Heritage • Lack of clean beaches
• History • Language barriers (lack of second language skills)
• Mixture of old and new • Old fashioned, not trendy
• Museums, monuments • Not family friendly
• Pubs • Not sporty
• Quality of deluxe hotels • Poor and expensive accommodation
• Safety • Poor, inconvenient and expensive transport
• Scenery, landscape, nature • Poor food and lack of variety
• Shopping • Poor hospitality, service, welcome
• Theatre • Quality of budget hotels
• Variety of entertainment, things to see and do • Signs of poverty (begging, litter, graffiti, crime)
• Terrorism
• Traffic (noise, pollution and congestion)
Source: VisitBritain
4.7 Brand Audit

Competition for international tourism is more intense than at any time in the past. A destination’s brand
image and strength can often be the deciding factor for the customer in choosing between competing
destinations. The importance of branding, both at market and segment level, should therefore not be
underestimated. For example, some commentators claim that destination branding has become more
important because of the following trends:
• quality and authenticity have become core elements in holiday decision-making and destination
perception;
• adventure, imagination, luxury, pleasure and exclusivity are becoming more significant in holiday
perceptions;
• the leisure market has become more fashion oriented and fashionable brands and destinations are
pivotal in determining the status of a holiday.
Effective destination brands are those that have real value, i.e. are highly regarded and sought by target
customers, honestly reflect the core values of the destination and adequately differentiate them from the
competition. Consequently, NTOs throughout the world are spending considerable sums of money on
branding consultants in an attempt to give their destination a competitive edge in this area. Branding a
destination can be a lengthy, sophisticated and expensive process and probably commands a practical
guide book in its own right. For the purposes of this book therefore, it can only be touched at the
surface.
Put simply, a brand is the total response of a customer to the symbol or name that states who a product/
service is and what it has to offer; and that differentiates it from its competitors. The customer’s attitude
to the brand may be based on ‘emotional’ and/or ‘rational’ feelings. A brand is not a logo or marque.
These latter are simply outward visual expressions of the brand.
The branding of destinations can be particularly complex because they usually comprise many and
varied product/service suppliers – e.g. transport, attractions, shops, restaurants, accommodation, etc.
These suppliers may well attract or target different customer segments. The challenge for the NTO, as
the destination’s tourism brand manager, is to bring together the disparate elements of the destination
into a meaningful brand and communicate the brand consistently to customers.
A brand audit – assessing the image and strength of a brand – is critical to positioning a destination in
a way that will appeal to target markets/segments. Because a destination’s brand ‘value’ rests with the
customer – i.e. ‘customers’ collectively determine whether a brand is relatively good, bad, strong, weak,
etc – it stands to reason that a brand audit involves asking customers for their views. Hence primary
research (interviews, focus groups, surveys, etc) may be necessary.
There are some key answers NTOs need from the research:
• Are people aware of the destination?

• Do people understand what the destination has to offer?
• Are they positive about the destination?
• Can they differentiate the destination from competitors?
• Does the brand have integrity, i.e. does it deliver what it promises?
• Is the brand strong in those markets/segments that the NTO wishes to attract?
Once an NTO has a sound understanding of how its destination brand is viewed in the market place,
it is able to consider whether ‘re-branding’ is necessary. If it is, most NTOs commission experts to help
develop their branding strategies – paying particular attention to the views/needs of the target segments
that emerge from the segmentation process.
4.8 Segment Research and Intelligence

Clearly, much research and intelligence will already have taken place in the earlier stages of the
Strategic Framework process, and as a result NTOs are likely to have identified clusters of segments that
look interesting. For example, NTOs should by now be able to disaggregate (from their tourism trends
analyses) visitors in terms of type (business/VFR/leisure/education/other), source market, travel cohort,
length of stay, average expenditure per visit, age, repeat/first time visitors, accommodation used, etc.
Any desk, primary and ‘off-the-shelf’ research used should also have shed light on current and potential
segments of interest to the NTO.
It is worth shaping these clusters into broad segments at this stage – e.g. ‘Japanese business travellers’,
‘adventurous Australians’, ‘Korean language students’, ‘American couples’, etc. They can be refined, or
added to, as the process continues. At the same time, it is useful to collate what is known about these
broad segments and what further information is needed. One way of doing this is to create a list of what
needs to be known about segments. For example:
• Are they adventurous or safety seekers?

• Are they price sensitive?
• How do they travel – air, coach, train, etc?
• What is the size of the segment?
• How much do they spend per day/trip?
• How many holidays do they take each year?
• Is the segment growing or decreasing?
• What accommodation do they prefer?
• What booking mechanisms do they use?
• What do they know about the destination?
• What do they read – e.g. newspapers/magazines?
• What is their disposable income?
• What is their life-stage – single/family/retired?
• What leisure interests do they have – e.g. golf/football/theatre, etc?
• When do they normally travel?
• Who do they travel with?
Some of this information may be readily available from existing sources – e.g. data mining NTO
enquirers, visitor surveys, etc – while some may have to be estimated using secondary sources – e.g.
based on the views of your trade or on-territory staff/representatives. Primary research can be expensive
and, for many NTOs, would normally be used later in the SF process when deciding upon segments to
target.
One example of good practice is the ICIC (Identify, Collect, Interpret and Communicate) approach
– see diagram below. In essence, this is a reminder that primary research can be expensive and that
NTOs should identify exactly what they need to know before embarking on a study/survey. Once the
information has been collected, all too often it is neglected or ignored – i.e. it is not interpreted in a
way that makes it useful to the marketeers or not communicated effectively. Finally, it reminds us that
gathering knowledge is a constant requirement in an ever-changing international market – it is therefore
a cyclical/on-going process.
Identify knowledge gaps
Communicate the information

Collect missing data – using
to users in a way they will
existing knowledge and available
understand ICIC data. Primary research only when
necessary and cost effective
Interpret the data i.e. transform

data into information
4.9 Segmenting Markets

Put simply, a segment is a group of people in a market who share a broad range of characteristics. These
could be a mix of demographic, social, geographic, economic, cultural or attitudinal characteristics.
Knowing these common characteristics helps in the analysis of whether people in a segment are likely
to be interested in the product on offer and helps in designing a marketing strategy to reach them cost
effectively. ‘Segmentation’ is giving each segment a name, and then describing in detail what makes
each segment different from all the others.
In tourism segmentation, there has been a discernable movement away from comparatively simple
typologies of consumers based on a few socio-demographic variables, to more elaborate and creative
ways of profiling and prioritising customers. Advances in segmentation have been particularly associated
with developments in Information Technology (IT). The gathering, analysis and storage of massive
volumes of data, on computerised databases is now commonplace, and this facility is a major asset to
market segmentation and customer relationship management.
The methodology an NTO uses to segment a market(s) is dependent upon:
• what it wants to know about customers in a population;

• what it intends to do with the information;
• the availability of the information;
• the resources and skills required to obtain the information;
• the expertise required to understand and utilise the information.
Many ways have been described throughout this book on how NTOs can go about segmenting markets.
Chapter 3 outlines many examples of how NTOs can identify segments. It is at this point in the process
that an NTO needs to make a decision on which techniques it wishes to use. For the purposes of
this practical guide section, good practice example used by a number of NTOs has been taken as a
pragmatic and cost-effective mechanism for identifying segments. NTOs wishing to use other techniques
can rejoin the process at section 4.10.
Once markets have been researched and analysed, a number of broad segments should have been
identified together with a profile of some key characteristics. This information needs to be marshalled
in such a way that it is possible to describe, shape and define the characteristics as far as possible. One
way of doing this is to create a segment ‘grid’ (developing a spreadsheet or database is recommended)
on which to develop the profile of the segments uncovered/discovered. The characteristics chosen will
depend upon how an NTO wishes to segment markets and the factors that are important in defining
them.
Below is an example:
Characteristics Seg. A Seg. B Seg. C Seg. D Seg. E Seg. F etc.
Socio demographic
Age 16 – 18 > 60 18 – 25 45 – 70 > 60 > 60
Disposable income Low Medium Medium High US$ US$

100,000 70,000
per year per year
Children (dependants) No No Yes Possibly 0 0
Children (ages) – – <5 Teens – –
Environmental sympathies Yes ? No No Yes No
Growth trend (up/down) Down Down Stable Stable Up Up
Holiday entitlement (days) 15 30 20 25 ? ?

Characteristics Seg. A Seg. B Seg. C Seg. D Seg. E Seg. F etc.
Socio demographic
Leisure interests Clubs Golf/ ? ? Theatre ?

museums
Location – urban/rural/ Cities Suburbs Cities ? ? Urban

postcode area
Media habits MTV Sundays Dailies ? Broad ?

sheets
Number of people in the 1 million 3 million 100,000 ? ? 2 million

segment
Travel habits
Access to the destination Very Poor Good Poor Good ?

good
Accommodation Budget 3 star 5 star ? 5 star B&B
Adventurous/risk takers Yes No No No No No
Awareness of the Low High Medium ? ? High

destination
Booking mechanisms used Internet Agents ? Agents Internet ?
Competing destinations ? ? ? ? Asia Africa
Decision lead time (weeks) 1–4 6 6 – 10 4 3–5 ?
Destination loyalty No Medium High No ? No
Ease of reach High Low Medium Low ? ?
First time/repeaters F F R F F ?
Mode of travel Coach Air Sea Air Air Air

(air/coach/train)
Price sensitivity Yes Yes Yes No No No
Season of travel Summer All year Summer ? Spring ?
Spend per trip (US$) 150 330 230 ? 550 430
Travel cohort Friends Couples Family Groups Couples Couples
As one goes through this process, a number of knowledge gaps will become evident. Depending upon
the budget available, primary research, estimations and best judgements are all tools that can be used
to help fill these gaps. As the grid develops, a degree of sub-segmentation – a division of one broad
segment into smaller discrete ones – often takes place as knowledge increases. This is good as it means
that segments, and their characteristics/values, are being refined until they make sense.
At the end of this process, some segments will be discarded as being overtly unattractive or too difficult
to define/target – e.g. because of poor access routes, visa restrictions etc. Nonetheless, a number of
segments, perhaps as many as 40 to 60, will have been identified as possible candidates for targeted
marketing. Clearly, with only limited marketing resources, there is a need to focus on those segments
that are most likely to provide the best returns for a destination. The next stage, therefore, is to select
which segments offer the best prospects.
4.10 Selecting Target Segments

Having identified as many as 40 to 60 international segments that are prima facie candidates for targeted
marketing, NTOs need to decide which of these are likely to contribute most to achieving their tourism
objectives. A number of processes for selecting target segments, used by NTOs, have been identified in
chapter 2 (section 2.3.4). It is for each NTO to decide on the best process for its own needs. However,
for the purposes of this practical guide section, a best practice example, used in the past by Tourism
Ireland and VisitBritain, called the ‘segment matrix’, has been taken. The starting point for this selection
process is with an NTO’s objectives and targets.
The use of a ‘segment matrix’ (scoring mechanism) is a very useful technique for deciding where to
direct limited resources. The matrix requires the NTO to answer the following questions about each of
its potential segments:
• How attractive is it?

• How difficult is it to address?
• How much resource do we need?
Before deciding which segments to target, it is best to develop clear statements of:
• what makes tourists attractive to a destination?

• what makes them difficult to address?
Below are some shorthand examples of attractiveness and difficulty factors that have been identified by
tourist organizations implementing this methodology.
Attractiveness factors Difficulty factors
Segment size High cost of reach

Spend per day Difficulty of identification
Length of stay Lack of knowledge about segment
Spend per visit Difficulty in accessing segment
Disposable income Geographical spread of segment
Disposable time Lack of awareness/image of destination
Growth potential Competition from other destinations
Propensity to travel Poor access to destination
Regional spread Lack of partner support
Seasonal spread (or off peak potential) Lack of partner funding
Repeat visitors Lack of short term impact potential
Word spreaders Economic instability
Ease of travel Political instability
Product fit Short lead-in booking pattern
Green/sustainability Lack of promotional/media opportunities
Welcomed by locals Cultural and/or language barriers
Accommodation usage Poor prospect of influencing segment
Some organizations choose to weight some of these characteristics because certain attributes are much
more important than others in meeting their tourism objectives – e.g. an NTO may decide that tourist
‘spending’ is twice as important as getting business in the ‘off-peak’ periods. Or an environmentally
sensitive destination may feel that attracting ‘environmentally conscious’ tourists is more important
than what they spend. As a starting point, it is recommended that NTOs identify the five or six most
important attractiveness/difficulty factors for their destination. The next stage is to compare potential
target segments against each other in terms of how they score against the attractiveness/difficulty criteria
selected.
There are two possible approaches to the next ‘scoring’ stage:
• Discussion and Debate Approach: each segment is discussed and debated in turn by appropriate
NTO staff and/or their stakeholders – usually overseen by an impartial facilitator. The merits of
each, as candidates for targeted NTO action, are compared with the others. A consensus on how
each segment scores against the others, across the range of attractiveness and difficulty factors, is
reached and those segments receiving the highest scores become the prime candidates for targeted
action.
• Rational Approach: each of the attractiveness and difficulty factors is tightly defined so that
impartial quantitative and/or qualitative data can be used to measure how each segment scores.
This mechanistic or modelling approach relies heavily on agreed definitions and very robust
supporting data.
In reality, the rational approach will only be valid up to a point as an NTO’s knowledge of segments,
no matter how good, is unlikely to be so precise as to allow foolproof mathematical modelling. A good
approach may therefore be a combination of the two – where as much impartial data is input into the
process to provide rigour – and a foundation for the Discussion and Debate Approach to take place
– where the knowledge, expertise and best judgments of practitioners in the market place are aired.
It is important that an NTO documents the discussion and debate as this forms an important element
of the overall rationale for marketing activity, and is often required when explaining your strategy to
Government and other stakeholders.
Whichever route is chosen, some form of scoring/prioritisation mechanism is advised to summarise the
outcome of the approach. This makes the process transparent and helps demonstrates the rigour of the
process. Below a pro forma fictional example of how such a scoring mechanism might look is provided.
In this instance, an MS Excel spreadsheet has been used to capture the scores and translate them into a
graphic-style summary of the results.
Once the average attractiveness and difficulty scores for each segment are set, it is possible to plot them
on a matrix – an MS Excel spreadsheet will do this at the press of a button. It will look something like
Step 1 in the diagram below. This provides a graphic illustration or map of the outcome of the discussion
and debate
Step 1 Score the segment against each item in both lists as follows:
1 2 3 4 5 6
Mature Boomer DINKs/ Seniors White Country
travellers couples/ SINKs/ collar/ comforts/
No kids/ 35 to 55 Baby Empty
45 to 54 boomers nesters
Canada USA USA USA Australia Australia
Attractiveness factors Weighting
Long term growth 1 3 1 1 3 2 2
potential
Product fit 1 3 2 1 3 2 2
Value 3 2 3 3 3 3 2
Pionnering 1 2 2 2 1 2 2
Regional spread 1 3 2 0 3 3 3
Seasonal spread 2 1 2 2 1 2 2
Total 19 20 17 21 22 19
Average 3.2 3.3 2.8 3.5 3.7 3.2
Ease/difficulty factors Weighting
Access to England 1 3 2 1 3 1 1
Appropra teness of 1 1 3 2 3 2 1
England message
Influenceablility 2 1 1 1 1 2 1
Cost to influence 1 2 2 1 3 2 3
Appropriateness of 1 2 3 0 3 2 1
England campagn
Major partner support 2 1 3 1 3 1 1
Total 12 18 8 20 13 10
Average 2.0 3.0 1.3 3.3 2.2 1.7
Grand total 31 38 25 41 35 29
Attractiveness scale: 0 = very unattractive, 1 = fairly unattractive, 2 = fairly attractive, 3 = very attractive
Difficulty scale: 0 = very difficult, 1 = fairly difficult, 2 = fairly easy, 3 = very easy
Step 2
Attractiveness
High
Medium
Low
Difficult Medium Easy

Difficulty
Step 3
Attractiveness
High
Medium
Low
Difficulty
Step 4
Attractiveness
High
Medium
Low

Difficulty
Step 5
Attractiveness
High
Medium
Low Proactive marketing activities

Difficulty
This map will give the NTO insights into how to spend limited resources in the most effective way.
The segments in the top right-hand corner are those that the NTO has judged to be the most attractive
and easiest to access. Those in the bottom left-hand corner are relatively unattractive and difficult to
influence. In deciding priorities and resource allocation, the NTO now has a strong steer as to which
segments it should target and those it should put on hold or ignore.
4.11 Marketing Strategy

Having identified a portfolio of ‘best prospect’ segments for targeted marketing activity, it is advisable
to develop a short marketing strategy for each. A simple approach is to consider the strategy under the
4Ps (product, place, price and promotion) of marketing and resource allocation.
4.11.1 Product
In tourism terms, a product is a complex experience, created and delivered by a diverse, but interrelated,
range of suppliers, usually in a fragmented industry often characterised by a preponderance of small
and medium size businesses. The interrelationship between the various suppliers is commonly referred
to as the ‘value chain’.
For example, the product experience of a week-end break in a city hotel might include:
• the information received in advance of the visit;

• how easy it is to book;
• how easy it is to find – signposting;
• car parking facilities or access by public transport;
• how well the staff greets on arrival;
• how well a client is treated while he is there;
• what he eats and how he is served;
• nearby events/attractions;
• how safe/secure he feels;
• the local environment;
• how it matches up to promotional literature;
• the quality of the buildings, fixtures and fittings;
• the overall perception about value for money;
• etc.
The elements that make up the total product experience in this example are outside the control of
any single supplier. Each of the suppliers in a value chain should add value to visitor experience. A
disappointing episode for the customer, at any stage in the value chain during the visit, can have an
adverse impact on the whole product experience. While an NTO rarely owns or manages the tourism
product, it has a general responsibility to oversee and monitor the products and services on offer, and
to advise the supply side on changing customer needs and expectations. In other words, to ensure that
the tourism value chain operates efficiently. Having identified target segments, there is thus an onus
on NTOs to ensure that suppliers deliver the tourism products and services that satisfy the needs of
customers within each segment.
How do I know what my target customer wants?
NTOs will already have a lot of information on which to draw from the segmentation process itself.
Look at all of the following:
• In analysing and identifying segments, NTOs will have uncovered information that will help – e.g.
spending patterns, transport usage, accommodation usage, holiday entitlement, travel cohort,
leisure interests, etc. All these elements provide clues as to what customers need and what they
like to do while visiting.
• Desk research the segment from organizations that know about them – carriers, banks, advertising
agencies, media readership, marketing database companies, etc.
• A ‘day in the life of’ analysis may be helpful. Put yourself in the position of a segment customer.
Imagine that you are experiencing a product.
– What will you want to see?
– How will you travel?
– Who will you go with?
– Who will you book with?
– What accommodation will you require?
– How will you get to your hotel?
– What will you eat?
– What if it rains?
– etc.
• When using the above techniques, identify the constraints within which NTOs and suppliers must
operate. For example, are segment customers restricted in the period they can travel? What limits
are there on the amount they will spend? How much holiday entitlement do they have?
It is not necessary to use all of these techniques in all situations. Those that are the most useful in
the particular circumstances should be considered. Brainstorm the information available and begin to
record the results in a structured way. The attached aide memoire may help in recording the information.
If an NTO is still unsure about the product needs of segments, it may consider investing in focus groups
or other primary research. It is better to do this at this stage than develop promotional campaigns that
feature inappropriate products and messages. When all the information has been gathered, it can begin
to shape it and mould the results into the sorts of products/services that are appropriate to particular
segments. One way of marshalling the information is to use a product grid.
Accommodation Product/Service examples
• Where will they want to stay? • B&B/Budget hotel

• How much will they pay? • 3+ Crown hotel
• How many rooms will they want? • Country house hotel
• TV/satellite in rooms • Caravan/camping
• Separate or adjoining rooms • Canal/houseboat
• En-suite facilities Full or Half Board • University accommodation
• Sports/leisure facilities • Host families
• Tea making facilities in rooms
• Standard – crown/key
Transport Product/Service examples
• How will they travel to the destination • Hire car

• Visas required • Rail passes
• Business/First class/Economy/Charter
• Ports of entry
• How will they travel around
• How much will they pay
• Do they know about rail/road services
• Will their driving licences be valid
Attractions/Events/Activities Product/Service examples
• What will they want to see • Arts

• How much will they spend • Theatre
• What are their leisure interests • Heritage
• What events will interest them • Culture
• What activities will they undertake • Theme Parks
• Mountains
• Countryside
• Festivals
• Sporting events
• Activity holidays
• Cycling
• Surfing
• Rugby
• Football
• Changing of the Guard
• Nightlife
Facilities Product/Service examples
• What specific facilities will they need • Bureau de change

• What will they pay • Cash machines
• Tickets (theatre/rail) purchasing
• Baby minding/crèche facilities
Services Product/Service examples
• What specific services will be required • Language/interpretation

• Are they business/leisure travellers • Business (fax/telex)
• What restaurants/eating facilities • Flexible eating times
• For self-catering, sort of food required • Local restaurants
• What will they pay • Nearby supermarkets
Once a picture of the ideal product(s) has been developed, identify suppliers who closely match this
ideal and begin to design promotional messages that will deliver information about the product into
the hands of the customer. The process of establishing a product-fit for target customers, also provides
insights into areas of the value chain that may need improvement – e.g. instances may be identified
where staff training needs improving, or there may be product gaps/poor quality, low value for money,
poor interpretation, etc. Such information is useful in terms of tourism policy development and product
improvement, i.e. NTOs are able to advise Governments and supplier stakeholders on areas where
change needs to take place in order to meet national tourism objectives.
4.11.2 Place
In marketing, ‘place’ means the channels through which your customer:
• gets information about the product

• buys the product: distribution channels/purchasing and booking mechanisms
• enjoys the product: customer satisfaction monitoring
In its broadest sense, ‘place’ is the total environment in which the supplier, intermediaries and customers
operate. The huge increase in international travel and tourism has led to people buying relatively
expensive products at some distance from the point of consumption. This means that travel agents, tour
operators, NTOs themselves and a host of other intermediaries operate between the customer and the
supplier. The important point to note is that it is the NTO’s role to manage these channels in relation to
its own needs and those of its customer segments.
The key question is:
How easy can I make it for the customer to discover and buy my destination’s products and
services?
An audit of the market, in which it is intended to promote products, should cover such issues as
established travel trade, postal service effectiveness, Internet penetration rates, availability of appropriate
media, legal/cultural constraints, and language and cultural barriers, etc.
In selecting the appropriate communication channels for target segments, NTOs are often faced with a
dilemma – to get at the consumer directly or, more usually, via intermediary agents?
• Direct: Where the NTO has direct control over the content and delivery of promotional
messages and/or the response mechanism. For example:
– Advertising
– Direct Mail
– Internet
– Attendance at consumer exhibitions and shows
• Indirect: Where the NTO relies on intermediaries to deliver messages on its behalf. For
example:
– Wholesalers
– Tour operators
– Consolidators
– Media specialists
The choice of whether to use direct and indirect promotional channels depends partly upon the
availability of resources, knowledge of segments and marketing expertise. While many NTOs would like
to do more direct consumer promotions, they often cite a lack of resource as being a major constraint
and opt instead for indirect promotions by paying intermediaries to undertake the work – e.g. tour
operators, PR companies, overseas representatives, etc. If using third parties (indirect channels), NTOs
need to consider carefully how they will measure effectiveness in spending their resources.
Whichever channel is selected, the guiding principle remains – is this the best way for the target segments
to discover and buy a NTO destination’s products and services, given the resources available?
4.11.3 Price
Price is the prerogative of the tourism supplier taking into account both the needs of the business and
those of the customer. NTOs generally have little influence on the price charged by suppliers for tourism
goods and services. Market forces generally determine the levels at which tourism product prices are
pitched. Nonetheless, NTOs need to ensure that appropriate products are available for the segments
they are targeting and that prices are realistic. Price, and value for money, is normally a key factor that
NTOs take into account, earlier in the segmentation process, when selecting target segments.
4.11.4 Promotion
Once a feel for the distribution channels has been developed, firm up on the promotional messages
and vehicles to use. Promotion is about getting the right message to the right segment at the right time,
cost effectively.
A point to bear in mind, when designing the promotion message, is the level of knowledge that segments
have about the destination:
• If the target segment is immature, i.e. the people in the segment know little about the destination
and/or do not understand what it has to offer, then the message should be simple and powerful.
This stage is about brand building and raising awareness of the destination – often through fairly
wide-band media such as national or regional press.
• As the segment matures, and develops a clearer picture of the destination, the NTO can begin
introducing specific products and services that it believes are attractive to the segment. Promotions
can become more targeted through the use of segment specific media – e.g. special interest
magazines.
• Once a segment understands the destination and its products, the NTO can customise packages
and promote ‘buy it now’ messages using direct marketing techniques. At this stage messages will
probably be product-specific and include details of prices, dates and booking mechanisms.
“Designing the promotional message is not about being creative. It requires disciplined thinking.
Creativity comes after you have determined the promotion message!”
David Collins – Ashridge Consulting Ltd (1993)
4.11.5 Resources
Segmentation should be adapted to the time, resources and skills available to the NTO. A number of
questions need to be asked when undertaking segmentation, for example:
• Who is going to do it?

• What expertise and competence is needed?
• Are consultants needed?
• If so, are they affordable?
• Is primary research needed?
• If so, is there money for consumer surveys/research studies?
• What budget is there for segmented marketing activities?
The allocation of resources does not necessarily follow a rule of thumb that many NTOs use, i.e. that
the most important segments require the most marketing funding. Indeed, there is no rule of thumb at
all when considering resource allocation1.
As demonstrated elsewhere in this handbook, it may be that some important segments only require a
watching brief, i.e. the market already operates effectively for these segments and NTOs need only, for
example, service enquiries rather than persuade people from this segment to travel to the destination.
On the other hand, some immature segments, with good longer-term prospects, may require heavy
investment by an NTO in order that it can compete with other destinations seeking to attract people
from these segments.
It is therefore critical that NTOs examine carefully the amount of resource they are prepared to invest in
their portfolio of segments and monitor the effectiveness of their investment on a regular basis. The best
way to do this is through setting campaign targets/performance indicators and evaluating the outcomes/
outputs.
4.12 Evaluation and Review

Having selected target segments and undertaken appropriate marketing activities, NTOs will need to
consider the question:
How do we know if we are being successful?
4.12.1 Evaluation
It is critical that NTOs set in place appropriate measurement/performance indicator mechanisms before
undertaking its marketing activities, rather than attempting to set in place measurement systems once
the activities have commenced. Many NTOs conduct no evaluation but simply use macro level inbound
visitor figures as an indicator of reach, penetration and influence, thereby implicitly using these figures
to judge the success or failure of their work. This is not really sufficient to be an accurate indicator of
performance. Evaluation is more a matter of appraising the performance of segments – e.g. in terms
of their visitor numbers/value, comparative trends with competitors, penetration rates, additionality
created, etc. Measuring NTO added value, i.e. the benefits that accrue to a destination as a direct result
of the activities of an NTO, is perhaps the most important of these.
NTOs have both proactive and reactive customers – i.e. the former are those where the NTO has
stimulated the interest in the destination through its marketing activities and the latter is where the
NTO is reacting to an enquiry generated through some other stimuli. It is important, where possible, to
differentiate between the two because the key to measuring the added value that an NTO generates for a
destination, lies mainly with the former – although NTOs can persuade the latter (committed customers)
to spend longer in a destination than originally planned and thereby create some additionality.
Rather than go into detail here, it is recommended that interested NTOs refer to the ETC/UNWTO’s
publication on Evaluating NTO Marketing Activities2, which sets out in detail the various ways in which
NTOs can measure and substantiate the effectiveness of their marketing activities. Once the NTO has
effective measures in place, it can then consider whether it has the right target segments and/or whether
it is using appropriate marketing activities for those segments. Below is a structure chart outlining the
various stages recommended for evaluating NTO marketing activities.
1 For more information: World Tourism Organization (2006), Structures and Budgets of National Tourism Organizations, 2004-
2006, UNWTO, Madrid.
2 World Tourism Organization (2003), Evaluating NTO Marketing Activities, UNWTO, Madrid.
Model of different levels for the evaluation of NTO activities
1. Evaluation through analysis of tourism a. Monitor tourists arrivals and expenditure

performance indicators in relation to b. Monitor occupancy levels
promotional investments
c. Record promotional investments
2. Trend analysis (longitudinal and latitudinal) a. Aggregate trends

benchmarking analysis b. Segmental trends
c. Target market development trends
3. Return on investment calculations

by indexing performance outputs against
promotional investments (simple causality
assumption)
4. Communication and attitudinal research: a. Conversion Studies

(ROI with specified causality assumption) – Print response (with coded coupon)
– TV/radio response (with free phone response
mechanism)
b. Pre and post tracking studies
– Message recall
– Destination awareness and comprehension
– Attitudes and intentions to destination
5. Return on investment calculations a. Converted customers

by indexing outputs of either: or
b. Changes in pre- and post- communication effects
against promotional investments
(specified causality assumption)
6. Advertising evaluation a. Message(s) evaluation

i. Pre-testing: strategic and executional
ii. Post testing
b. Media evaluation. For example:
– Coverage data
– Frequency data
– Cost per thousand data
7. The evaluation of specific promotional Advertising

activities: PR and media relations
Customer information
Festival and hallmark events
Consumer fairs and events
Trade support and events
Website evaluation
4.12.2 Review
It should be borne in mind that even if an NTO conducted an evaluation of all of its target segment
activities, this might not conclusively validate the bases upon which the original choices were made. In
theory, other forms of segmentation might have been more successful or illuminating. Clearly, evaluating
marketing results and reviewing segments periodically, to ensure that they remain the best for the
destination, is important. Equally important is an evaluation of the segmentation process itself and of
the methodologies used to develop segments.
Before the development of lifestyle and geo-demographics, for example, most NTOs were happy to use
relatively simple variables. The development of newer techniques has added a powerful new dimension
to targeted marketing. With the advent of massive data storage and retrieval systems, one of the problems
that NTOs face is analysing the mass of customer data that it is able to access and making it usable for
the marketeers.
In the late 1990s, an NTO gathered excellent data on its inbound VFR market, but did not know
how to collate and analyse it usefully. The NTO approached academic experts and gave them
complete access to the raw data.
Proper analysis by the experts revealed substantive differences between people visiting ‘friends’
and those visiting ‘relatives’. The NTO had previously assumed both groups to be largely identical
and, as a consequence, the VFR segment as a whole had been written off as not capable of being
influenced. The expert analysis revealed that those visiting friends could be influenced in certain
circumstances.
The NTO subsequently mounted a very successful VFR campaign as a direct result of the analysis.
The problem was a simple matter of finding the right skills and resources. Some lateral thinking on
the part of the NTO helped resolve the situation.
The moral of this example is that NTOs are advised to be sensitive to the emergence of new analytical
procedures for mining customer data and to be imaginative in finding solutions to overcome skills and
expertise gaps.
Chapter 5
Conclusions and Recommendations
This handbook aims to offer a practical guide to the theory and practice of market segmentation. It
considers why and how segmentation can be done, and the resources/techniques needed.
A few insights should be considered in order to help NTOs get the best results from segmentation.
1. Visitor Study – Where possible, NTOs should have access to comprehensive and robust visitor
study data. The visitor study is the bedrock of segmentation planning and, provided it includes a
wide enough range of questions, the results can be used to operationalize most of the ways used to
classify visitors. It is also essential in analysing tourist characteristics and behaviour – e.g. average
visitor spend by market/segment. Visitor study data should be collated in a way that allows for
disaggregation and cross tabulation analyses – e.g. by business, leisure, education, VFR, etc. And,
where possible, by socio-demographic groupings and related behaviour – e.g. short versus longer
stay, type of accommodation used, regions visited, etc.
2. Segmentation – Segmentation is the most important factor for many NTOs in making sure that
their resources are used to best effect. For these NTOs, everything they do (media selection,
destination positioning, branding, editorial, visuals, etc.) revolve around the segments that have
been identified as the most important. To be successful, it is important that segmentation translates
into marketing practice and is not just seen as an academic exercise.
3. Mix and Match – The segmentation methodologies reviewed in this handbook represent those
most widely identified and used. While they have been presented here as discrete entities, for
ease of examination, in reality many would be used in combination with others – depending upon
resources, skills and access to data. There is no ‘ideal’ form of segmentation that should be used
by NTOs. Rather, it makes sense for NTOs to be aware of the range of segmentation possibilities
that are available and to use those that are fit for purpose.
4. Exercising Judgement – No matter how good segmentation data is, there will always be issues
relating to data interpretation. Similarly, there will be diverse views on how best to reach segments,
how much to spend on them, etc. Marketeers, researchers, advertising agencies and others involved
in the decision making process, will all have their own views. In this handbook, a number of
techniques have been outlined that will help to structure this dialogue and debate and capture
value judgements in a way that makes the process rational and transparent.
5. Segment Portfolio – Successful segmentation means identifying and targeting a range of segments
that will provide the greatest contribution to achieving a destination’s tourism objectives. For
this reason, many NTOs have a portfolio of segments that collectively contribute – e.g. a mix of
segments with immediate short term gains and those with longer term potential, segments with a
propensity to travel to areas in need for tourism and those that want ‘honey-pots’ or segments that
come in main season and those that come off peak.
It is unlikely that any NTO could know exactly what the optimal market mix is because the data
necessary to compare all alternatives will never exist, and even if it did, it is likely to change from
time to time. Sustaining a segmented approach to marketing, especially if there are conflicting
NTO stakeholder demands, is not always easy. Monitoring and managing a destination’s portfolio
of segments, in a way that meets its tourism objectives, is therefore a critical function for NTOs,
and doing this in a way that meets the needs of the tourism industry as a whole, rather than vested
interests, is equally paramount.

The number of segments targeted by an NTO will depend upon many factors – e.g. segment
definitions, resources, etc. The key to managing a good segmentation portfolio is to ensure that
only those segments that can be realistically targeted and influenced should be selected. In other
words, a group that has been identified, analysed, targeted, exposed to special marketing activities
and ideally estimated in relation to return on investment. As a rule of thumb, less than ten segments
is the norm for those NTOs that responded to the survey conducted in the framework of this
handbook.
6. Resources – The costs involved in segmentation can be a constraint on segmentation as a whole or

on the number of segments selected for targeted activity. These include the resources available for
research, analysis, planning and, of course, promotion. The costs of segmentation to NTOs should
therefore be weighed against the potential wastage (deadweight) of not segmenting markets.
Ultimately, the choice of how best to use limited resources rests with individual NTOs.
One useful way of allocating the budget is by the amount available for proactive marketing,
i.e. targeted segmentation-based promotions and activities, and the resource available for other
generic or reactive promotional/customer service activities. There is a need for both and the right
balance needs to be achieved.
Appendix
Questionnaire to NTOs
European Travel Commission (ETC)/World Tourism Organization (UNWTO)

Market Segmentation Survey
Thank you for agreeing to participate in this important survey.
Please contact Ian Woodward (woodwardandassociates@yahoo.co.uk) or Tony Seaton (vseaton@tiscali.

co.uk) if you have any questions concerning this questionnaire. We should be grateful if you would
email your completed form to Ian Woodward, by the March 6th at the latest, in order that we can take
your response into account.
NB. Please note that for the purposes of this survey, ‘segmentation’ means – “identifying groups of people who broadly share a range
of characteristics (segments) and having in place a marketing strategy which is targeted at specific segments”. Also, please note
that we are only interested in ‘international’ segments not ‘domestic’ segments.
1. Would you describe your current marketing strategy as ‘segmentation’ based? (Please underline
one of the options below.)
Yes
No
Don’t Know
If no or don’t know, please go to question 15.
2. If yes, please describe the ways in which your NTO identifies and selects its target segments?
....................................................................................................................................................
....................................................................................................................................................
....................................................................................................................................................
....................................................................................................................................................
....................................................................................................................................................
....................................................................................................................................................
Please feel free to attach any documentation that you feel might be useful.
3. Which information sources and techniques are being used for the segmentation?
Sources: Techniques:
................................................................. ................................................................................
................................................................. ................................................................................
................................................................. ................................................................................
................................................................. ................................................................................
................................................................. ................................................................................
................................................................. ................................................................................

4. What are the 5 most important characteristics (in priority order) you have used in defining your
target segments?
For example: Access to your product, booking (e.g. travel trade or independent travellers), demographics (e.g. age/sex/religion),
education, first-time or repeat visitors, income, lifestyle (e.g. attitudes, values/opinions), life-stage, media use, motivations (e.g.
cultural, activity, products), nationality/ geographical location, occupation, purpose of travel (e.g. business, leisure, VFR), travel
and trip patterns (e.g. length of stay, seasonality), destination brand awareness and so on.
(1) ...............................................................................................................................................
(2) ...............................................................................................................................................
(3) ...............................................................................................................................................
(4) ...............................................................................................................................................
(5) ...............................................................................................................................................
5. Please list your top five target segments (in priority order) and briefly describe their key
characteristics and why they have been selected.
(1) ...............................................................................................................................................
(2) ...............................................................................................................................................
(3) ...............................................................................................................................................
(4) ...............................................................................................................................................
(5) ...............................................................................................................................................
6. How many segments (in total) have you prioritised for targeted marketing activities? (Please
underline one of the options below.)
None
1 to 3
4 to 6
7 to 10
11 to 15
16 to 20
More than 21
If none, please go to question 15.
7. How do you identify the specific marketing messages and activities required to reach and
influence/attract your chosen segments?
For example: Advice from advertising agencies, competitor analyses, customer feedback (e.g. brochure coupons/ complaints),
commissioned/in-house customer research (e.g. questionnaire/telephone surveys/focus groups), demographic analyses,
statistical analyses (e.g. visitor/hotel occupancy surveys), supplier feedback (e.g. carriers/hoteliers), external reports and so on.
Please describe your approach to selecting the types of promotions you run and the messages you
use to attract your target segments (if possible, please attach examples e.g. a scan of an ad targeting
one of your chosen segments)
....................................................................................................................................................
....................................................................................................................................................
....................................................................................................................................................
....................................................................................................................................................
....................................................................................................................................................
Appendix – Questionnaire to NTOs 113
8. Do you compile profiles of your target segments? e.g. in databases, handbooks, documents,
marketing guides with details about their characteristics, travel habits, purchase patterns etc.
(Please underline one of the options below.)
Yes
No
Don’t Know
If no or don’t know please go to question 10.
9. If yes, are these available to your stakeholders e.g. private and public sector partners? (Please
underline one of the options below.)
Yes
No
Don’t Know
10. Do you target your priority segments in marketing activities coordinated with other private and
public sector partners?
Yes
No
Don’t Know
If no, please explain why………………………………………………………………………………...
11. Do you know the current volume and value of your target segments? (Please underline one of the
options below.)
Yes
No
Don’t Know
12. Are you able to identify the market potential of your target segments? (Please underline one of
the options below.)
Yes
No
Don’t Know
13. Do you set targets (volume and/or value) for your chosen segments? (Please underline one of the
options below.)
Yes
No
Don’t Know
14. What have been the major benefits of market segmentation?

For example: change in/more focus in campaigns, improved results, better understanding of the market, raise in private co-
funding and so on.
....................................................................................................................................................
....................................................................................................................................................
15. Do you feel that your organisation is currently doing sufficient in terms of ‘segmented’ marketing
to ensure that your resources are focused on customers with the greatest potential for visiting
your destination? (Please underline one of the options below.)
Yes
No
Don’t Know
16. What limitations (if any) are there on you doing more on segmentation? (Please underline one or
more of the options below.)
None
No available statistics
No available resources
No available skills
No interest in segmentation
Other – please specify……………………………………………………………………………………
17. Do you feel your organisation would benefit from knowing more about segmentation techniques?
(Please underline one of the options below.)
Yes
No
Don’t Know
Thank you for taking the time to complete this questionnaire. please feel free to send us any comments
(or supporting documentation) that will help us to understand your NTO’s views/approach to
segmentation.
Name ...................................................................................................................................................
Organisation (NTO) ..............................................................................................................................
Position ................................................................................................................................................
Email address .......................................................................................................................................
Now please send your completed questionnaire to ian woodward:

email address: woodwardandassociates@yahoo.co.uk
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HANDBOOK ON TOURISM MARKET SEGMENTATION

Maximising Marketing Effectiveness – A Report of the Market Intelligence Group of the

A Report produced for the Market Intelligence Group

Brussels, July 2007

Handbook on Tourism Market Segmentation – Maximising Marketing Effectiveness

World Tourism Organization European Travel Commission

Permission to photocopy this material in Spain must be obtained through:

Foreword ............................................................................................................................ vii

Executive Summary .......................................................................................................... xiii

Purpose of this Handbook ................................................................................................ xv

1 Segmentation Explained ................................................................................................... 1

2 Current NTO Segmentation Practices ............................................................................. 11

3 Segmentation Methodologies in Action .......................................................................... 25

© 2007 European Travel Commission – ISBN 978-92-990034-6-6

3.3 Purpose of Trip Segmentation ..................................................................................... 28

4 Practical Guide to Segmentation ..................................................................................... 77

4.3.2 Qualitative Analyses ........................................................................................ 81

5 Conclusions and Recommendations .............................................................................. 109

Appendix – Questionnaire to NTOs ................................................................................. 111

Bibliography ....................................................................................................................... 115

Leslie Vella (Chairman of the ETC Market Intelligence Group)

© 2007 European Travel Commission – ISBN 978-92-990034-6-6

© 2007 European Travel Commission – ISBN 978-92-990034-6-6

© 2007 European Travel Commission – ISBN 978-92-990034-6-6

• The key to effective target marketing is to:

• Many NTOs already undertake some form of segmentation.

© 2007 European Travel Commission – ISBN 978-92-990034-6-6

• Segmentation should be fully integrated into the strategic planning framework.

• explain theories of market segmentation;

© 2007 European Travel Commission – ISBN 978-92-990034-6-6

1.2 Tourism Propensity

© 2007 European Travel Commission – ISBN 978-92-990034-6-6

Number of tourists in a segment as a percentage of all tourists = segment tourism propensity

25,000 tourists (segment)

Higher Tourism Propensity Lower Tourism Propensity

Higher income groups Lower income groups

1.3 Market Segmentation

“A market segment refers to subgroups of consumers who respond to a given marketing-strategy

1.4 Segmentation Benefits

Tourism Australia – Market segmentation benefits

Objective 3 – to communicate more effectively with our customers: Developing consumer

1.5 Segmentation Prerequisites

1.6 Segmentation Approaches

1 Evaluating NTO Marketing Activities, UNWTO, 2003

Below is a summary of some key variables used in these approaches.

Category Types of variable

1. Demographic Age, gender, education, lifecylce stage, income

3. Psychological/lifestyle Beneﬁts, attitudes, values, personality characteristics

Segmentation approach Active variables Passive variables

A priori Buying behaviour Person variables

A posteriori Person variables Buying behaviour

1.7 Segmentation Typologies

Some of the more common examples are:

1.8 Targeting Segments

Current NTO Segmentation Practices

Argentina Finland Kenya Seychelles

2.2 Quantitative Analysis

© 2007 European Travel Commission – ISBN 978-92-990034-6-6

Summary of responses to quantitative questions

Do you compile proﬁles of your target segments?

Do you target your priority segments in marketing activities coordinated

Do you feel that your organization is currently doing suﬃcient in terms

2.2.1 Quantitative Insights