Tourism Market Segmentation & Targeting

Tourism Market Segmentation & Targeting- Aritro Dasgupta1Segmentation & TargetingNo destination can be sought after universally by all potential touristsDepending on profile, lifestyle & aspirations, tourists have different tastes & preferences Segmentation gives marketer valuable insights into different tourist groupsCommunication strategies can be formulated accordinglyDiversity of products thus becomes crucial 2STP3SegmentationSub-division of heterogeneous market in to homogeneous subsets of customers May be targeted with a distinct marketing mix Prefer varied genres of tour packages May be identified examining demographic, psychographic & behavioural differences among buyers Firm has to then decide which segment ahs greatest potential for their product & thus must be targeted 4Pre-requisites for Effective SegmentationMeasurable AccessibleDifferentiableSubstantialHomogeneousSize5Segment IdentificationDifferent sets of criteria used including personal characteristics of consumer, benefits sought & behavioural measures Within each category many options availableMultiple segmentation approach may also be followedNo fixed recipe, identification of criteria part of creative realm Carries structural & value chain implications 6Segmentation TechniquesFactor analysisCluster analysisDiscriminant analysisMultiple regressionChi-square analysisTree analysis7Levels of Market SegmentationMass marketingSegment marketingNiche marketing 8Mass MarketingServe broad range of touristsPrice differentiation pursuedMass promotion of one package for all Low profit margins 9Segment MarketingLarge identifiable group within market with similar wants, purchasing power, geographical location , buying attitudes or buying habitsBuyers within group fairly homogeneousNaked solution: product & service elements valued by all segment membersOptions: valued by certain segment members10Advantages of Segment MarketingCompany can create more fine tuned product or service offering & price appropriately for target audience Choice of distribution & communication channels becomes easier Lesser number of competitors faced per segment 11Niche MarketingNiche is narrowly defined group Marketers identify niches by dividing segment into sub-segments which are fairly small & homogeneous in nature Attract fewer players & even fewer can surviveOften a case of guerrillas v/s gorillas This strategy requires decentralization Customers willing to pay premium price 12Advantages of Niche MarketingCustomers distinct set of needs metUnlikely to attract many rivalsNichers gain economies through specializationSize, profit & growth potential 13Patterns of Market SegmentationHomogeneous preferencesDiffused preferencesClustered preferences 14Homogeneous & Diffused PreferencesHomogeneous: market where customers have roughly similar preferences with limited natural segmentation DiffusedConsumer preferences scattered First brand to enter market is likely to position itself in centre to appeal to most peopleBrand in centre minimizes customer dissatisfaction 15Clustered PreferencesPosition in centre to appeal to all groupsPosition in the largest market segment- concentrated marketingDevelop several products positioned in a different segment16Bases for Segmenting Tourists17GeographicDemographicPsychographicBehavioural GeographicRegionClimateCultureEconomic environmentPolitical conditions18Demographic19Age & lifecycleFamily structureGenderIncomeEducation OccupationReligionPsychographic20Social classLifestyle-Personality

Behavioural21Occasions Benefits sought quality, convenience, value for moneyUser status- non-user, ex-user, first time, regular, potential Usage rate- light user, medium, heavy Loyalty status- strong, weak, non-loyal Mode / place of purchaseReadiness & attitudeSegmentation Based on Customer ExpectationsGroup 1: highest expectations about complementary activitiesGroup 2: do not expect much in term of complementary activities or quietness of locationGroup 3: low expectations on complementary activities but high on area quietness22Segmentation Based on Customer ImageFavourable imageNeutral imageNegative image23Targeting24Once segmentation done, targeting plans need to be evaluated per segmentIt involves selecting how many & which ones to target 3 major aspects within targeting: EvaluationSelectionCoverage Evaluation of Segments25Overall attractivenessOrganization / destination objectives & resource competenciesOverall Attractiveness26SizeGrowth rateAccessibilityProfitabilityScale economicsRisk Organization / Destination Objectives & Resource Competencies27Organizations short & longterm objectives to be kept in mind Check compatibility with resources available at disposal & their capabilitiesSelection of Segments28After segmentation rate them on pre-determined scaleSegments may be ranked based on scores obtained Alternative Coverage Strategies29Undifferentiated marketingDifferentiated/ targeted marketingConcentrated marketingCoverage of Segments30Coverage StrategyUndifferentiatedTargetedConcentratedSegmentationZeroSubstantialSelectiveType of MarketingMass marketingSegmented marketingNiche / single marketingExampleHotels in Mahipalpur / PaharganjRadisson Blue, GingerTaj SafarisUndifferentiated Marketing31Basic essential services providedOne size fits all policyLimited differentiationLower levels of customer loyalty

Differentiated / Targeted Marketing32Differentiated marketing strategies for separate segmentsSubstantial segmentationTypically for comfort travelGreater costs but higher profitability per unit spentGreater level of customer loyalty Price less important service quality more so Concentrated Marketing33Concentrated towards one small niche segmentSelective segmentationTypically for luxury or comfort segmentsHigh customer loyaltyService quality only important variable

Variables for Choosing Coverage Strategy34Variable Coverage StrategyUndifferentiatedTargetedConcentratedCompany resourcesModerateLargeLimitedService variabilityLessMoreLessLifecycle stageIntroductionGrowthIntroduction / MaturityMarket variabilityLessHighHighSelecting & Entering Market SegmentsSingle segment concentrationSelective specializationProduct specializationMarket specializationFull market coverage 35Single Segment ConcentrationS1S2S3P1P2P336Selective Specialization37S1S2S3P1P2P3Product SpecializationS1S2S3P1P2P338Market SpecializationS1S2S3P1P2P339Full Market CoverageS1S2S3P1P2P340Positioning41Act of designing companys offering & image to occupy distinctive place in the mind of target segment Identification of the destinations Unique Selling Proposition (USP)Comparisons with competitors productsSelecting differences that have greatest competitive advantage Communicating such advantages to the target audience DifferentiationProcess of distinguishing a product or service from others to make it more attractive to a particular target market Source of competitive advantageReduces directness of competition between otherwise similar players42Sources of DifferentiationDifferences in quality, resulting in differences in priceDifferences in functional featuresSales promotion activities of sellers especially advertisingDifferences in availabilityIgnorance of buyers regarding the essential characteristics & qualities of goods / services they are purchasing43Stages in DifferentiationDefining customer value Building customer value hierarchyDeciding on customer value package44Building Customer Value HierarchyBasicExpectedDesiredUnanticipated 45Approaches to Tourism DifferentiationConsumer- oriented approachCompetitor - oriented approachTrade- oriented approach46Perceptual Map47Good ConnectivityPoor ConnectivityPleasant WeatherExtreme WeatherPerceptual Map48Good ConnectivityPoor ConnectivityPleasant WeatherExtreme WeatherPositioning ProcessDefining market in which product / brand will compete (relevant buyers)Identifying attributes that define product spaceCollecting information from sample of customers about perceptions about each product Determining products share of mindDetermining products current location on product space49Positioning ProcessDetermining target markets preferred combination of attributes (ideal vector)Examining fit between:Positioning of productPositioning of ideal vectorPositioning50Competitors Strategic AlternativesStrengthen own current position in consumers mindGrab an occupied positionExclusive club strategy 51Which Positioning to PromoteBest qualityBest serviceBest valueLowest priceSafestFastestMost customizedMost convenientMost advanced technology 52Positioning ErrorsUnder positioningOver positioningConfused positioningDoubtful positioning53Thank You54