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Tourism Market Segmentation & Targeting

Get to know about tourism market segmentation & targeting. SKYLINE Business School is a career-oriented business school in India that can boost your career by joining the relevant training sessions in which you are interested. Their highly experienced trainer will give complete knowledge about every parameter of the tourism sector. As we all know that the tourism industry is a fascinating one giving employees the advantages of meeting hundreds of people across the world.

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Tourism Market Segmentation & Targeting

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  1. Tourism Market Segmentation & Targeting - Aritro Dasgupta

  2. 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

  3. STP

  4. 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

  5. Pre-requisites for Effective Segmentation • Measurable • Accessible • Differentiable • Substantial • Homogeneous • Size

  6. 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

  7. Segmentation Techniques • Factor analysis • Cluster analysis • Discriminant analysis • Multiple regression • Chi-square analysis • Tree analysis

  8. Levels of Market Segmentation • Mass marketing • Segment marketing • Niche marketing

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

  10. 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

  11. 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

  12. 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

  13. Advantages of Niche Marketing • Customers’ distinct set of needs met • Unlikely to attract many rivals • Nichers gain economies through specialization • Size, profit & growth potential

  14. Patterns of Market Segmentation • Homogeneous preferences • Diffused preferences • Clustered preferences

  15. 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

  16. 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

  17. Bases for Segmenting Tourists Geographic Demographic Psychographic Behavioural

  18. Geographic • Region • Climate • Culture • Economic environment • Political conditions

  19. Demographic Age & lifecycle Family structure Gender Income Education Occupation Religion

  20. Psychographic Social class Lifestyle- Personality

  21. 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

  22. 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

  23. Segmentation Based on Customer Image • Favourable image • Neutral image • Negative image

  24. 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

  25. Evaluation of Segments Overall attractiveness Organization / destination objectives & resource competencies

  26. Overall Attractiveness Size Growth rate Accessibility Profitability Scale economics Risk

  27. Organization / Destination Objectives & Resource Competencies Organization’s short & long–term objectives to be kept in mind Check compatibility with resources available at disposal & their capabilities

  28. Selection of Segments After segmentation rate them on pre-determined scale Segments may be ranked based on scores obtained

  29. Alternative Coverage Strategies Undifferentiated marketing Differentiated/ targeted marketing Concentrated marketing

  30. Coverage of Segments

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

  32. 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

  33. Concentrated Marketing Concentrated towards one small niche segment Selective segmentation Typically for luxury or comfort segments High customer loyalty Service quality only important variable

  34. Variables for Choosing Coverage Strategy

  35. Selecting & Entering Market Segments • Single segment concentration • Selective specialization • Product specialization • Market specialization • Full market coverage

  36. Single Segment Concentration

  37. Selective Specialization

  38. Product Specialization

  39. Market Specialization

  40. Full Market Coverage

  41. Positioning Act of designing company’s offering & image to occupy distinctive place in the mind of target segment Identification of the destination’s Unique Selling Proposition (USP) Comparisons with competitor’s products Selecting differences that have greatest competitive advantage Communicating such advantages to the target audience

  42. 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

  43. 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

  44. Stages in Differentiation • Defining customer value • Building customer value hierarchy • Deciding on customer value package

  45. Building Customer Value Hierarchy • Basic • Expected • Desired • Unanticipated

  46. Approaches to Tourism Differentiation • Consumer- oriented approach • Competitor - oriented approach • Trade- oriented approach

  47. Perceptual Map Good Connectivity Pleasant Weather Extreme Weather Poor Connectivity

  48. Perceptual Map Good Connectivity Pleasant Weather Extreme Weather Poor Connectivity

  49. 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 product’s share of mind • Determining product’s current location on product space

  50. Positioning Process • Determining target market’s preferred combination of attributes (ideal vector) • Examining fit between: • Positioning of product • Positioning of ideal vector • Positioning

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