Tourism Market

Segmentation &
Targeting
- Aritro Dasgupta

Segmentation &
Targeting
No destination can be sought after universally

by all potential tourists

Depending on profile, lifestyle & aspirations,
tourists have different tastes & preferences
Segmentation gives marketer valuable
insights into different tourist groups
Communication strategies can be formulated
accordingly
Diversity of products thus becomes crucial
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Identifying a set of possible competitive advantages of the

brand
Selecting the right competitive advantage
Communicating the chosen competitive advantage to the
target group

Evaluating the market segments for their attractiveness

Deciding the market coverage strategy

Identifying various bases for segmenting markets

Developing profiles of market segments

Positioning

Targeting

Segmentatio
n

STP

Segmentation
Sub-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
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Pre-requisites for Effective

Segmentation
Measurable
Accessible
Differentiable
Substantial
Homogeneous
Size

Segment Identification
Different sets of criteria used including

personal characteristics of consumer, benefits

sought & behavioural measures
Within each category many options available
Multiple segmentation approach may also be
followed
No fixed recipe, identification of criteria part
of creative realm
Carries structural & value chain implications
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Segmentation Techniques
Factor analysis
Cluster analysis
Discriminant analysis
Multiple regression
Chi-square analysis
Tree analysis

Levels of Market
Segmentation
Mass marketing
Segment marketing
Niche marketing

Mass Marketing
Serve broad range of tourists
Price differentiation pursued
Mass promotion of one package for all
Low profit margins

Segment Marketing
Large identifiable group within market with

similar wants, purchasing power, geographical

location , buying attitudes or buying habits
Buyers within group fairly homogeneous
Naked solution: product & service elements
valued by all segment members
Options: valued by certain segment
members

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Advantages of Segment Marketing

Company 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

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Niche Marketing
Niche 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
survive
Often a case of guerrillas v/s gorillas
This strategy requires decentralization
Customers willing to pay premium price
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Advantages of Niche
Marketing
Customers distinct set of needs met
Unlikely to attract many rivals
Nichers gain economies through specialization
Size, profit & growth potential

13

Patterns of Market Segmentation

Homogeneous preferences
Diffused preferences
Clustered preferences

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Homogeneous & Diffused

Preferences
Homogeneous: market where customers

have roughly similar preferences with limited

natural segmentation
Diffused
Consumer preferences scattered
First brand to enter market is likely to position

itself in centre to appeal to most people

Brand in centre minimizes customer
dissatisfaction

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Clustered Preferences
Position in centre to appeal to all groups
Position in the largest market segment-

concentrated marketing
Develop several products positioned in a
different segment

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Bases for Segmenting Tourists

Geographic
Demographic
Psychographic
Behavioural

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Geographic
Region
Climate
Culture
Economic environment
Political conditions

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Demographic
Age & lifecycle
Family structure
Gender
Income
Education
Occupation
Religion

19

Psychographic
Social class
LifestylePersonality

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Behavioural
Occasions
Benefits sought quality, convenience, value

for money
User status- non-user, ex-user, first time,
regular, potential
Usage rate- light user, medium, heavy
Loyalty status- strong, weak, non-loyal
Mode / place of purchase
Readiness & attitude
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Segmentation Based on Customer

Expectations
Group 1: highest expectations about

complementary activities
Group 2: do not expect much in term of
complementary activities or quietness of
location
Group 3: low expectations on complementary
activities but high on area quietness

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Segmentation Based on Customer

Image
Favourable image
Neutral image
Negative image

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Targeting
Once segmentation done, targeting plans

need to be evaluated per segment

It involves selecting how many & which ones
to target
3 major aspects within targeting:
Evaluation
Selection
Coverage

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Evaluation of Segments
Overall attractiveness
Organization / destination objectives &

resource competencies

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Overall Attractiveness
Size
Growth rate
Accessibility
Profitability
Scale economics
Risk

26

Organization / Destination
Objectives & Resource
Competencies
Organizations short & longterm objectives to

be kept in mind
Check compatibility with resources available
at disposal & their capabilities

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Selection of Segments
After segmentation rate them on pre-

determined scale
Segments may be ranked based on scores
obtained

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Alternative Coverage
Strategies
Undifferentiated marketing
Differentiated/ targeted marketing
Concentrated marketing

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Coverage of Segments
Coverage
Strategy

Undifferentiated Targeted

Concentrated

Segmentation

Zero

Substanti
al

Selective

Type of
Marketing

Mass marketing

Segmente Niche / single

d
marketing
marketing

Example

Hotels in
Mahipalpur /
Paharganj

Radisson
Blue,
Ginger

Taj Safaris

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Undifferentiated Marketing
Basic essential services provided
One size fits all policy
Limited differentiation
Lower levels of customer loyalty

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Differentiated / Targeted Marketing

Differentiated marketing strategies for

separate segments
Substantial segmentation
Typically for comfort travel
Greater costs but higher profitability per unit
spent
Greater level of customer loyalty
Price less important service quality more so

32

Concentrated Marketing
Concentrated towards one small niche

segment
Selective segmentation
Typically for luxury or comfort segments
High customer loyalty
Service quality only important variable

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Variables for Choosing Coverage

Variable
Coverage Strategy
Strategy Undifferentiat Targete Concentrated
ed

Company
resources

Moderate

Large

Limited

Service
variability

Less

More

Less

Lifecycle stage

Introduction

Growth

Introduction /
Maturity

High

High

Market variability Less

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Selecting & Entering Market

Segments
Single segment concentration
Selective specialization
Product specialization
Market specialization
Full market coverage

35

Single Segment
Concentration
S1

S2

S3

P1
P2
P3

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Selective Specialization
S1

S2

S3

P1
P2
P3

37

Product Specialization
S1

S2

S3

P1
P2
P3

38

Market Specialization
S1

S2

S3

P1
P2
P3

39

Full Market Coverage

S1

S2

S3

P1
P2
P3

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Positioning
Act 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 products
Selecting differences that have greatest
competitive advantage
Communicating such advantages to the
target audience
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Differentiation
Process of distinguishing a product or service

from others to make it more attractive to a

particular target market
Source of competitive advantage
Reduces directness of competition between
otherwise similar players

42

Sources of Differentiation
Differences in quality, resulting in differences

in price
Differences in functional features
Sales promotion activities of sellers especially
advertising
Differences in availability
Ignorance of buyers regarding the essential
characteristics & qualities of goods / services
they are purchasing
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Stages in Differentiation
Defining customer value
Building customer value hierarchy
Deciding on customer value package

44

Building Customer Value Hierarchy

Basic
Expected
Desired
Unanticipated

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Approaches to Tourism
Differentiation
Consumer- oriented approach
Competitor - oriented approach
Trade- oriented approach

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Perceptual Map
Good Connectivity

Goa

Shimla

Pleasant Weather

Extreme Weather
Pondicherr
y

Arunachal
Pradesh

Poor
Connectivity
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Perceptual Map
Good Connectivity

France

Canada

Pleasant Weather

Extreme Weather
coastal
Namibi
a

Tahiti

Poor
Connectivity
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Positioning Process
Defining market in which product / brand will

compete (relevant buyers)

Identifying attributes that define product
space
Collecting information from sample of
customers about perceptions about each
product
Determining products share of mind
Determining products current location on
product space
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Positioning Process
Determining target markets preferred

combination of attributes (ideal vector)

Examining fit between:
Positioning of product
Positioning of ideal vector

Positioning

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Competitors Strategic Alternatives

Strengthen own current position in

consumers mind
Grab an occupied position
Exclusive club strategy

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Which Positioning to
Promote
Best quality
Best service
Best value
Lowest price
Safest
Fastest
Most customized
Most convenient
Most advanced technology
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Positioning Errors
Under positioning
Over positioning
Confused positioning
Doubtful positioning

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Thank You

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