MARKET SEGMENTATION TARGETING POSITIONING

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MARKET SEGMENTATION

TARGETING

POSITIONING

KOTLER, BOWEN, AND MAKENS. MARKETING FOR HOSPITALITY AND TOURISM. 6E. PEARSON HIGHER EDUCATION. 2014

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MARKET SEGMENTATION

• Dividing a market into distinct groups who have, or are perceived to have, common needs, interests, and priorities that might require separate

products and / or marketing mixes • There is no single way to do this

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MARKET SEGMENTATION

• Enormous variety of variables

• Really, every single consumer is a separate market (complete segmentation)

• This is impossible, and

inefficient, so we look for wide groups / classes / categories / segments of buyers who share a relatively dependable need or buying response

• Can’t serve all customers equally

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MARKET SEGMENTATION: GE0GRAPHIC

• World Region or Country • Country Region

• City or Metro Size • Density

• Climate

• All are important in

understanding preferences, and making marketing

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Different preferences in different regions

In the south, people tend to like spicier foods

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MARKET SEGMENTATION: DEMOGRAPHIC

• Age

• Gender

• Family size

• Family life cycle • Income • Occupation • Education • Religion • Race • Generation • Nationality

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MARKET SEGMENTATION: DEMOGRAPHIC

• Most popular bases for segmenting

• 1. strong correlation between demographic

variables and consumer needs, wants, and usage

rates

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MARKET SEGMENTATION: BEHAVIORAL

Buyers grouped by their knowledge, attitude, use, or response to a product • Occasion • Benefits • User status • Usage rate • Loyalty status • Readiness stage

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MARKET SEGMENTATION: BEHAVIORAL Occasion segmentation • Holidays • Honeymoons • Weddings • Birthdays • Concerts • Festivals

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Group guests by the product Benefits they seek • Hotels accommodating pets

• Restaurant appeal categories

• How important is food quality, menu variety, price, atmosphere, and convenience

• Family-style restaurants guests value convenience and menu variety

• Atmosphere restaurant guests value food quality and atmosphere

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User status

• Non-user

• Ex-user

• Potential user

• First-time user

• Regular user

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Usage rate

• Light

• Medium

• Heavy: 80/20 rule

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Loyalty status

• Would you market your product the same way to a loyal guest vs a non-loyal one?

• None

• Medium • Strong

• Absolute

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MARKET SEGMENTATION: PSYCHOGRAPHIC

Divides customers based on • Social class

• Lifestyle

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REQUIREMENTS FOR EFFECTIVE SEGMENTATION

• Is every variable important?

• Can group people by hair color, but is that helpful?

• Measurability: can you determine segment size and purchasing power • Accessibility: can you reach the segment

• 20% of a restaurant’s guests near a university were frequent users, but they had no common characteristics

• Students, faculty, staff, part-time, full-time, 1st_-4th_{year…how can you assess}

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REQUIREMENTS FOR EFFECTIVE SEGMENTATION

• Substantiality: is the segment large enough or

profitable enough to serve as a market for your

business

• You have a great concept for an Ethiopian food restaurant, but you put it in a small town with low population and

density, not a good fit for a niche

• Actionability: degree to which effective programs can be designed for attracting and serving segments

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MARKET TARGETING • You have researched

and distinguished many different market

segments, but which ones provide the best opportunity

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MARKET TARGETING: EVALUATION CRITERIA

• Size, growth rate, and expected profitability

• Structural attractiveness

• Lots of competitors? Buyer power? Supplier power? Substitute goods?

• Company objectives and resources

• Mission, vision, image

• Don’t want to overextend yourself, or go after a market and fail

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TARGET MARKET SELECTION STRATEGIES Undifferentiated Marketing

• Ignore segment differences and go after the whole market with one offering

• Marketing plan to reach the greatest number of buyers, and focuses on the common need everyone shares

• Need a place to stay that is not my home

• Pro:

• Advertising is cheaper, research is cheaper

• Cons:

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TARGET MARKET SELECTION STRATEGIES

Differentiated Marketing

• Target several segments and design separate products for each • Reason why the major hotel chains have so many brands

• Typically yields more sales than undifferentiated (three brands in one city vs 1)

• Signature: Marriott

• Luxury: Bulgari, Ritz-Carlton, JW Marriott

• Lifestyle collection: Edition, Autograph Collection, Moxy, AC Hotels, Renaissance • Select service: Courtyard, Springhill Suites, Fairfield Inn

• Extended Stay: Residence Inn, TownePlace Suites, Marriott Executive Apartments

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TARGET MARKET SELECTION STRATEGIES Concentrated marketing

• Pursue large share of a small market (or a few), instead of a small share of a large market

• Good for companies with limited resources

• Less risk to go after a few markets than just one; basic concept of diversification

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MARKET POSITIONING

• You have broken down your market into segments, chosen the most

appropriate target markets, now how do you want to position your product in the minds of these target market consumers?

• Product positioning: The way a product is defined by consumers on

important attributes, essentially meaning the place the product holds in consumers’ minds relative to competitors

• Do not leave this to chance; plan for it

• McD: quick, low price, service with a smile • BK: flame-broiled cooking method

• Wendy’s: only fresh meat, never frozen

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MARKET POSITIONING STRATEGIES

• Specific product attribute positioning

• Attribute MUST create a benefit for the guest

• Subway as a healthy alternative to fried fast foods

• Tag lines (Eat fresh), commercials support this (Jared), website gives nutrition info • Stamford hotel: height

• Product class positioning

• Cruise lines typically position themselves against other forms of vacation instead of against competitors

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• Better price or better bundle of benefits

• What are some potential competitive advantages a hotel can have?

Identifying Competitive Advantages Selecting Competitive Advantages Effectively Communicate Chosen Position

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MARKET POSITIONING: IDENTIFYING COMPETITIVE ADVANTAGES

Physical attribute differentiation • Design

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• Service Differentiation

• Good reputation develops over time

• Four Seasons Istanbul Sultanahmet AND Bosphorous in top 5 Travelandleisure.com Overall Service Rating 2013 • Personnel Differentiation

• Singapore airlines, Southwest airlinesMarket positioning: identifying competitive advantages

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• Location differentiation

• seaside view, nearby to public transport, airport

• One block can make a difference

• Central park view in NY or not

• On Bourbon St or Frenchman St. in New Orleans • Motel right on the highway or not

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• Image differentiation

• I don’t want to visit China or India, but I would visit Thailand • Diyarbakir

• Celebrity Cruise: “Casual luxury”

• Sheraton hotel: “You don’t stay here, you belong”

• Ritz-Carlton: “We are ladies and gentlemen serving ladies and gentlemen”

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MARKET POSITIONING: SELECTING COMPETITIVE ADVANTAGES

How many to choose

• 1. Choose one attribute and stick to it

• We have the lowest prices

• 2. Choose multiple

• We have the best value AND service

• As a result of increasing competition and market

fragmentation, companies tend to choose multiple advantages

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Potential Mistakes

• Underpositioning: failing to position the company at all

• Customer hears the name and can’t think of anything, or just knows what product category the company is in

• Overpositioning: giving consumers too narrow a picture of the company

• Confused positioning: the company’s positioning is unclear

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Which differences to choose

• Important: buyers value the difference • Distinctive: not offered by competitors

• Superior: the difference is a better way to obtain the benefit than other options

• Communicable: visible to buyers and easy to understand • Preemptive: competitors can’t duplicate it

• Affordable: buyers can afford it • Profitable

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MARKET POSITIONING: EFFECTIVELY COMMUNICATE THE CHOSEN POSITION

• Can be difficult

• Entire marketing mix and marketing strategy must support positioning strategy

• Work with advertisers who understand and deliver your message in the right way

• Changes in management can change strategic decisions • Positioning takes time to develop

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MARKET POSITIONING MEASUREMENT: PERCEPTUAL MAPS