Chapter 6 Tourist Market

Chapter 6 Tourist Market

Learning objectives ◆Outline the major tourist market trends that have occurred since World War Ⅱ ◆ Understand the process whereby tourists make a decision to visit a particular destination ◆ Appreciate the need for, and the evaluative criteria involved in , the practice of market segmentation ◆ Describe the major categories of market segmentation

Understand the strengths and limitations of ‘country of origin’ as a form of geographic segmentation • Appreciate the growing importance of the ‘pink dollar’ within the tourism sector ◆ Identify the strengths and limitations of the family life cycle as a segmentation criterion

◆ Differentiate between allocentric ,midcentric and psychocentric forms of psychographic segmentation ◆ Understand the various dimensions of motivation as a form of psychographic segmentation ◆ Appreciate the types and importance of behavioural segmentation

6.1 introduction 6.2 Tourist market trends • The tourist market is defined as the overall group of consumers that engages in some form of tourism-related travel. Since World War II there have been several major trends in the evolution of this market and these are discussed below.

Essentially, the overall tendency has been towards a gradually increasing level of market segmentation, or the division of the tourist market into discrete of distinctive market segments that are presumed to be more or less homogeneous in terms of their characteristics and behavior

6.2.1 the democratisation of travel The first trend may be described as the democratization of travel. During the classic era of ‘mass tourism’, the tourism industry tended to perceive tourists as an undifferentiated mass market that demanded and consumed a very similar array of goods and services.

6.2.2 the emergence of simple market segmentation and multilevel segmentation • the second major trend is simple market segmentation or the division of the tourist market into a minimal number of more or less homogenous subgroups based on certain common characteristics and /or behavioral patterns. • Multilevel segmentation: a refinement of market segmentation that further differentiates basic level segments

Figure 6.1 Tourist market trends since world war II the tourist 1950s Mass market 1960s 1970s Simple marlet segmentation 1980s Multilevel segmentation 1990s Niche markets Markets of one 2000s older adults young couples wealthy older adults Asian older adults postal clde 0000 John Doe

6.2.3 niche markets and “markets of one” • Niche markets: highly specialized market segments • Markets of one: an extreme form of market segmentation, in which individual consumers are recognized as distinct market segments

6.3 the decision-making process In general, the buying process involves six distinct stages: need recognition, information search, evaluation of alternatives, purchase decision, actual purchase and post-purchase behavior, including consumption (figure6.2).

Need recognition ↓ information search ↓ evaluation of alternatives ↓ purchase decision ↓ purchase ↓ post-purchase behavior ←consumption ↖evaluation • Figure 6.2 • The buying process

6.3.1 the destination selection process The actual process is not a simple linear progression, but usually involves several feedback loops that can result in a return to earlier stages. Figure 6.3 is an example of a destination buying process that accommodates such complexity. In this particular model, push and pull factors provide the consumer with the incentive or predisposition to travel, thereby shaping his or her need recognition.

Figure 6.3 • The destination decision process push and pull factors need recognition Primary destination image Tentative travel decision consider alternatives Information search Refinement of image renewed information search confirmation Rejection Travel to destination Recollection, evaluation Further refinement of image

6.3.2 multiple decision makers • The decision to visit a particular destination is complicated by the fact that more than one person is often involved in the decision-making process.

6.4 tourist market segmentation The purpose of market segmentation is to divide the total tourist market into smaller, relatively homogeneous subgroups that can be catered to or managed as distinctive market segments. There are several factors that should be considered when evaluating the utility of market segmentation, including:

measurability • size • homogeneity • compatibility • action ability • durability • relevance

1. Measurability • Can the target characteristics be measured in a meaningful way? Psychological criteria, for example, are difficult to quantify as compared with age or education level.

2. Size • Given the technological capabilities of a particular company, is the market segment large enough to warrant attention? Very small groups, such as female war veterans over 85 years of age, may be insufficiently large to warrant attention by smaller companies or destinations that lack the capacity to engage in niche marketing.

3. Homogeneity • Is the resulting group sufficiently distinct from other market segments? It may be found, for example, that the 45—49 age group of adult males is no significantly different from the 50—54 age group, thereby eliminating any rationale for designating them as separate segments

4. Compatibility • Are the values, needs and wants of the segment compatible with the destination or company’s own values, corporate strategies, and so on? To use an extreme example, the Muslim holy city of Mecca forbids the presence of non-Muslims, who therefore constitute an incompatible market for that city.

Similarly, a company that caters to fundamentalist Christians may generate conflict if it introduces strategies to attract gay and lesbian consumers.

5. Actionability • Is the company or destination able to serve the needs of the market segment? For example, a wilderness lodge is usually not an appropriate venue for catering to gamblers or those with severe physical disabilities.

6. Durability • Will the segment exist for a long enough period of time to justify the pursuit of specialised marketing or management strategies? To illustrate this criterion, the population of World War II veterans is now experiencing a high rate of attrition, and is likely to decline altogether by 2020.

7. Relevance • Is there some underlying logic for targeting a particular segment? Segmentation on the basis of eye colour meets all the previous criteria, but there is no rational basis for thinking that eye colour influences consumer behavior in any significant way.

6.4.1 Geographical segmentation • Geographic segmentation Market segmentation carried out on the basis of the market’s origin region; can be carried out at various scales, including region (e.g. Asia), country (Germany), subnational unit (California, Queensland), or urban/rural

GIS (geographic information systems): sophisticated computer software programs that facilitate the assembly, manipulation, analysis and display of spatially-referenced information

Case study: Japanese and British inbound tourists in Australia

Subnational origins • It is appropriate to take the process of geographical segmentation beyond the national level under three circumstances. • First larger countries may display important differences in behavior from one internal region to another. • The second factor is the number of people from a particular country that travel to a destination. • Finally, subnational origins may be a matter of interest if the destination or business possesses the technological capacity, through GIS or other means, to target niche markets.

Urban and rural origins • Irrespective of geopolitical regions of origin, useful insights may be gained by subdividing the tourist market on the basis of community size. • The urban /rural dichotomy is particularly important in less developed countries , where large metropolitan areas are likely to accommodate Phase Three or Four societies, while the countryside may reflect Phase Two characteristics.

6.4.2 sociodemographic segmentation • After place of origin, sociodemographic variables probably constitute the most commonly employed segmentation criteria. • Sociodemographic segmentation Market segmentation based on social and demographic variables such as gender, age, family life cycle, education, occupation and income

Gender and gender orientation Gender segmentation: the grouping of individual into male and female categories, or according to sexual orientation Case study: Chasing the pink dollar

Education, occupation and income • Education, occupation and income tend to be highly interrelated in terms of travel behavior, since education generally influences occupation, which in turn determines income level. • Not surprisingly, high levels of income and education, as well as professional occupations, are associated with increased tourism activity and in particular with a higher incidence of more costly long-haul travel.

Age • Older adults In general, the traditional stereotypes of the senior tourist are becoming increasingly defunct due to their demonstration of considerable purchasing power and physical vigor. • Young adults In contrast to the 65+ cohort, young adults, and especially those in their teens and early 20s, are often associated with higher levels of loutish and high risk behavior. • Race, ethnicity and religion • Age and family life cycle

Family life cycle (FLC) Family life cycle (FLC): a sequence of stages through which the traditional nuclear family passes from early adulthood to the death of a spouse; each stage is associated with distinct patterns of tourism-related behavior associated with changing family and financial circumstances

Figure 6.4 • The traditional family life cycle Young singles ↓ Young couples (no children) ↓ Full nest one (pre-school children) ↓ Full nest two (school-age children) ↓ Full nest three (older children) ↓ Empty nest one (still working, no children) ↓ Empty nest two (retired) ↓ Solitary survivor (retired)

(Table 6.2 Tourism participation and expenditure in New Zealand by FLC type) The evidence from New Zealand suggests that FLC is a potentially useful sociodemographic basis for tourist market segmentation.

FLC TYPE EXPENDITURE(NZS) EXPECTED CASES DIFFERENCE RATIO OBSERVED CASES PER PERSON TOTAL • 312 55 +5.7 913 913 • 392 95 +4.1 851 1702 • 51 375 -7.4 490 1496 • 192 519 -2.7 468 1831 • 165 227 -1.4 648 2200 • 587 203 +2.9 832 1666 • 262 264 1.0 674 1350 • 106 329 -3.1 764 764 Table 6.2 Tourism participation and expenditure in New Zealand by FLC type

6.4.3 psychographic segmentation Psychographic segmentation The differentiation of the tourist market on the basis of psychological and motivational characteristics such as personality, motivations and needs

Plog’s psychographic typology The personality typology of Stanley Plog is widely cited within tourism studies. According to Plog, a “normal” population, represented as a bell curve can be divided into several categories based on personality dimensions, intermediate categories are provided to recognize the continual rather than discrete nature of these dimensions.

Allocentrics: according to Plog’s typology, ‘other-centred’ tourists who enjoy exposing themselves to other cultures and new experiences, and are willing to take risks in this process • Psychocentrics: ‘self-centred’ tourists who prefer familiar and risk averse experiences

Midcentrics: ‘average’ tourists whose personality type is a compromise between allocentric and psychocentric traits • In sum, Plog’s model is best utilized as a useful indicator of personality dimensions, but not as a definitive predictor of personality distribution or tourist behaviour.

plog’s psychographic typology midcentrics Near-psychocentrics Near-allocentrics Psychocentrics allocentrics • Figure 6.5 Plog’s psychographic typology

Related typologies • Cohen’s model consists of four tourist types that vary on the basis of personality and level of risk aversion that is accepted. • Smith’s model is similar to Cohen’s , but provides seven rather than four categories. In addition, an inverted triangle is provided to depict the assertion that attitudes of the local community towards visitors is likely to become less positive as one moves from the ‘explorer’ to the ‘charter’ tourist.

Motivation • An issue that is relevant to motivation is whether tourists are interested in specific activities, and therefore choose their destination accordingly , or whether activities are then pursued. The second scenario is less common than the first.

Travel motivation is different from travel purpose in that it indicates the intrinsic reasons why the individual is embarking on a particular trip. • In all of these cases, the superficial motivation may itself have some even more fundamental psychological basis.

Motivation MOTIVATON % MOTIVATION % Relaxation/recupertion Relaxation Gather new energy Freedom of action Enjoyment/indulgence To do noting Get a tan Enducation/exploration Gain new experiences See new places and cultures Touring Broaden one’s mind Renew memories Meet something unusual Nature Experience nature Escape pollution Sun ;escape bad weather Adventure/sport Escape everyday life Have fun Experience a lot of variety To exercise Be active in sports 76.5 57.2 47.1 39.2 12.6 77.0 48.3 46.4 43.9 14.2 • Table 6.3 • Travel motives among German tourists Social contacts Time for each other Sociability Meet new people Contact with locals Be together with childen Meet friends and relatives 50.5 37.0 34.7 31.1 28.1 14.5 57.2 49.7 41.7 39.2 28.9

6.4.4 behavioral segmentation • Behavioural segmentation The identification of tourist markets on the basis of activities and actions undertaken during the actual tourism experience

Travel occasion Travel occasion is closely related to purpose. occasion-based segmentation differentiates consumers according to the specific occasion that prompts them to visit a particular tourism product. • Destination coverage Destination coverage considers the number of destinations that are visited during a particular trip. The most basic segmentation distinguishes between single-destination and multi-destination and multi-destination itineraries.

Single-destination patterns • Figure 6.8 • Model of single-and multiple-destination itineraries Home Overnight destination Daytrip destination S1 single destination S2 base camp • Multiple-destination patterns M1 stopover pattern M2 full loop M3 destination area loop cc M4 open jaw loop M5 multiple-destination areas loop

Chapter 6 Tourist Market