CHAPTER 4: MARKET

SEGMENTATION AND
POSITIONING
DTM50153 – TOURISM AND HOSPITALITY
MARKETING
CONTENT OUTLINE
Demonstrate mastery of knowledge and understanding of Market
Segmentation and Positioning
4.1.1 Explain the meaning of market segmentation,
positioning, target market and niche market
4.1.2 Explain the factors that determine the selection of a
market segment
4.1.3 Identify the relationship between market
segmentation and marketing objectives
4.1.4 Identify target market and niche market
4.1.5 Identify market segmentation for tourism and
hospitality products and services
4.1.6 Predict and rationalize potential future products or
services in tourism and hospitality industry.
 4.1.1 Explain the meaning of market segmentation,
positioning, target market and niche market

Market Market positioning Niche Market

Target market
segmentation

Dividing market Developmen

into distinct A set of t of service
group of buyers buyer and a Complex set
with different sharing marketing of needs;
needs, common mix to they will pay
character or needs or occupy a a premium
behavior who characteristi specific to the firm
might require cs that the place in the best
separate company mind of satisfying
products or decide to customers their needs.
marketing serve within target
mixes market
4.1.2 Explain the factors that determine the
selection of a market segment

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SEGMENTING CONSUMER MARKET

SEGMENTING BUSINESS/ ORGANIZATIONAL

MARKETS
 4.1.2 Explain the factors that determine the
selection of a market segment
1. SEGMENTING CONSUMER MARKET

a) Geographic Segmentation
- Dividing the market into groups of customers who
are share the same geographic location
- e.g.: country, state, district, zone, city and etc.
- The company pay attention to geographical
differences in needs and wants
 Geographic Segmentation

Dividing the market

into different • Country
geographic units • State
• District
• Zone
• City
• Housing estate
1. SEGMENTING CONSUMER MARKET

b) Demographic Segmentation
• Dividing market based on population statistics
• Primarily generated from census information-
include age, gender, occupation, race, religion,
education, social class, family size and also life cycle
of a family.
• Companies that offer services such as hotel and
airlines usually offer products based on income.
 Demographic Segmentation

Dividing the market • Age

into groups based on • Gender
demographic • Income
variables • Occupation
1. SEGMENTING CONSUMER MARKET

c) Psychographic Segmentation
• Segregated into several group based on social
class, lifestyle or personal characteristics.
• Lifestyle is the way a consumer lives his life and
how he spends his money daily.
• Personality in other hand explain characters of
the consumer such as shy, aggressive, active,
independent, conservative, confident and many
more.
Source: Kotler et al, 2003
1. SEGMENTING CONSUMER MARKET

d) Behavior Segmentation
• Dividing a market into group based on consumer
knowledge, attitude, use or response to a product:

• a. occasion
b. benefit sought
c. user status
d. usage rate
e. loyalty status
f. buyer readiness stage
 Behavior Segmentation

Buyers are divided into Types

groups based on their • Occasions
knowledge, attitude, • Benefits sought
and use or response to
• User Status
a product
• Usage rate
The best starting point
for building market • Loyalty status
segments • Buyer readiness
stage
1. SEGMENTING CONSUMER MARKET

e) Purpose of trip Segmentation

• Usually use by lodging, restaurant, travel agency,
cruise, airline and destination marketing
• Factors that greater influence on the customer’s
behavior
• Split into:
- business travel market
- personal travel market
2. Segmenting business/ Organizational Market

a. Based on geographical areas

- country, states, districts, zone
b. Based on business type
- food outlets, construction, shipping
companies and etc.
c. Based on company size
- small, medium and large
- factor: number of sales and the number of
company staff
 4.1.3 Relationship between market segmentation and
marketing objectives

• Assessing the
• Can be identifiable • Margin that meets extent to which
such as purpose of organizational segments contribute
visit, income, financial objectives positively or
location of such as cost, budget, negatively to the
residence, profit environment
motivation missions of business

Discrete Measureable
Viable
Sustainable
Appropriate

Available marketing • Essential that

data such as new segments to be
data that can be serviced on the
obtained at same premises that
contribute to the
acceptable cost image or position in
the market
4.1.4 Explain target market and niche market
TARGET MARKET
i) Evaluating Market Segment
a) Segment size and growth

b) Segment structural attractiveness

c) Company objectives and resources

ii) Selecting Market Segment

a) Undifferentiated marketing

b) Differentiated marketing

c) Concentrated marketing
 4.1.4 Explain target market and niche market
a) Target Market

i. Evaluating Market Segments

• Segment size and growth
- current sales, growth rates and expected
profit
• Segment structural attractiveness
- have desirable size and growth and still not
offer attractive profit
- e.g. competitors, substitute product, power
of buyer
• Company objectives and resources
- consider the objectives and resources
 4.1.4 Explain target market and niche market

a) Target Market

i. Selecting Market Segments

• Undifferentiated Marketing

• Differentiated Marketing

• Concentrated Marketing
Undifferentiated Marketing

• Using an undifferentiated marketing (or mass marketing)

strategy, a firm might decide to ignore market segment
differences and target the whole market with one offer.
• Such a strategy focuses on what is common in the needs of
consumers rather than on what is different.

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Differentiated Marketing

• A coverage strategy in which a firm decides to

target several market segments and designs
separate offers for each. E.g. Nike offers athletic
shoes for different sports such as running,
aerobics, cycling, baseball, basketball, tennis…
• These companies hope for (1) higher sales; (2) a
strong place within each market segment; (3)
more loyal customers because the firm’s
offerings match each segment’s desires better.
Concentrated Marketing

• When using a concentrated marketing (or niche marketing)

strategy, instead of going after a small share of a large
market, a firm goes after a large share of one or a few
smaller segments or niches.
• Today, the low cost of setting up shop on the Internet makes
it even more profitable to serve seemingly miniscule niches.
 4.1.4 Explain target market and niche market

b) Niche Market

• The customer in the niche have distinct and somewhat

complex set of needs; the will pay a premium, to the firm
best satisfying their needs; the niche marketer would
need to specialize its operations to be successful; and the
niche leader is not easily attacked by other competitors.
b) Niche Market

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c
)Creating niches

Expanding niches

Protecting niches
4.1.5 Market Segmentation for Tourism and Hospitality
products and services

a) Prestige • Level of prestige, particularly long-distance travelers.

b) Escape • Desire escape momentarily from the day-to-day.
c) Sexual • Travel has long been viewed as means to meet attractive
Opportunity people.
d) Education • Travel in and of itself has historically been viewed as
broadening.
e) Social • Meet and interact with people previously unknown as
interaction powerful motivator.
f) Family • Family reunions have become an important market segment
bonding for many in travel industry.
g) Relaxation • Destination resort and cruise ship best exemplify need
fulfillment for relaxation.
h) Self • Travel offers the opportunity to ‘find oneself’.
discovery