Chapter 6

Market Segmentation for Travel and

Tourism Markets
 Objectives

The wide range of segments that typically exist

for most products of travel and tourism products

The process of market segmentation and the

key criteria to be applied to any grouping of
customers

The principal ways used in travel and tourism to

divide up markets for marketing purposes
 Why Segmentation?

It is impossible to deal with all customer on mass

consumption/one size fits all basis;
So
Businesses organize their knowledge of current and
potential customer groups

Select for particular attention those whose needs and

wants they are best able to supply with their products in
the most cost effective way both now and in the future

Most businesses however deal with more than one

sector
 Segmentations for producers in travel
and tourism
For example in the case of Hotels
Corporate /business clients
Visitors on group package tours
Independent vacationers
Visitors taking weekend/midweek package
breaks
Conference delegates
 Tension between marketing and
operating manager

Operation Manager Marketing manager:

standpoint:
The need to create
A single, purpose- and deliver purpose-
designed product. adapted products for
Such as airline seat each defined user
(budget airline) group, such as
penthouse suites in a
luxury hotel
 So

The task of marketing management is in

close liaison with operations management
to:

Create and develop compatible products that

meet the need of a compatible target
segment.
 Segmentation definition

The process of dividing markets such as

all visitors, or markets sectors such as
holiday travel or business travel, into
subgroup or segments for marketing
management purposes
 Actionable markets segment

Discrete
Measurable
Viable
Appropriate
Sustainable
 Discrete

The selected subgroups must be separately

identified by criteria such as:

Purpose of visit
Income
Location of residence
Motivation
 Measurable

The criteria distinguishing the subgroups

must be measurable by available
marketing research data, or via such new
data as can be obtained at acceptable
cost
 Viable

The long-run projected revenue generated

by a targeted segment exceeds the full
cost of designing a marketing mix to
achieve it by a margin that meets the
organizations financial objectives
 Appropriate

Reflects the inseparability of service

product delivery and means it is essential
that segments to be serviced on the same
premises are mutually compatible and
contribute to the image or position in the
market of the adopted business
 Sustainable

Assessing the extent to which segments

contribute positively or negatively to the
environmental mission and objectives of a
business.
 Summary

Market segments are identified target

groups within a total market that are
chosen because they are relevant to an
organizations strategic:
Mission
Statement
Interest
Skills
Particular capabilities
 Note:

To be actionable in modern marketing,

segments must meet all five criteria

These are as relevant to service

organisations as they are to products
Main methods of segmentation for travel
and tourism
Purpose of travel

Buyer needs, motivations and benefits sought

Buyer behaviour/characteristics of product usage

Demographic, economic and geographic profiles

Psychology profile

Price
 Purpose of travel

Example: for a tour operator customer

purpose differs according to:

Main summer holidays

Additional holidays and short breaks
Winter sun
Winter sport
Cruises
 Buyer needs, benefits sought

Inkbaran and Jackosn(2005) segmented the

tourist into various clusters:
Resort incidental, recreation-focused
(romantics)
Resort-centred, facilities focused (immerses)
Resort-centred, family-focused (tasters)
Resort-incidental, safety focus (veterans)
 Segmentation by behaviour

Frequency of usage of product (brand loyalty)

Visitor expenditure per capita

The timing and sequence of buyer decision prior to making a

booking

Decisions made in the booking process

Product usage decisions during consumption, including impact on

sustainability

Buyer behaviour and decisions after using any travel and tourism
product, reflecting the experience achieved
Table 4.1
 Segmentation by demographic,
economic, geographic and life cycle

Analysis of customer needs and benefits sought,

will result in clear understanding of the type of
product the chosen customer wants

For the purpose of efficient promotion and

distribution of products, especially to new
customers, the demographic profile is also
needed (e.g. age, gender, life-cycle)
 Segmentation by psychographic

Is to denote measurement of an individuals

mental attitudes and psychological make-up

Clearly distinguished from demographic

The link between attitudes, perceptions and

actual buyer behaviour, combine to determine
the lifestyle

Reflects an understanding of individual needs,

benefits sought and motivations
 Sharpley and Sundarams study

Found some workable clusters with respect

to religious and spiritual tourism:

Spiritual seekers

Tourist trail followers

Yoga/meditation practitioners
 Geographic segmentation

Postal area (zip):

Wealthy suburbs
Affluent working couples with mortgages; new
homes
Council housing areas, high; unemployment,
lone parents
Software system (GIS)
 Segmentation by price

Generally in leisure travel and tourism

demand appears to be highly price
sensitive:

It is not a segmentation variable in the

same way as others:
other things include maintaining the
competitive quality of product delivery needed
to satisfy the demands of modern customers