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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Market Segmentation, Targeting, and Positioning
Foreword:
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“The mythological, homogeneous America
is gone. We are a mosaic of minorities.”
-Joel Weiner-
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
OBJECTIVES
After reading this chapter, you should be able to:
• Identify the major steps on designing a customerdriven marketing strategy: market segmentation,
targeting, and positioning.
• List and distinguish among the requirements for
effective segmentation: measurability, accessibility,
substantiality, and actionability.
• Explain how companies identify attractive market
segments and choose a market-targeting strategy.
• Illustrate the concept of positioning for competitive
advantage by offering specific examples.
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Marketing for Hospitality and Tourism, Fifth Edition
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© 2010 Pearson Higher Education, Inc.
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Market Segmentation, Targeting and Positioning
Dunkin’ Donuts & Starbucks
• Dunkin’ Donuts recently paid dozens of customers
$100 a week to buy coffee at Starbucks instead.
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– at the same time, the no-frills coffee chain paid Starbucks’
customers to make the opposite switch
• Dunkin’ says it found them so polarized that
company researchers dubbed them “tribes”.
– each of whom loathed the very things that made the other
tribe loyal to their coffee shop
• Dunkin’ fans saw Starbucks as pretentious & trendy.
– Starbucks loyalists saw Dunkin’ as plain & unoriginal
– a Dunkin’ regular told researchers “If I want to sit on a
couch, I stay at home.”
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Market Segmentation, Targeting and Positioning
Dunkin’ Donuts
• William Risenberg opened the first Dunkin’ Donuts
in Quincy, Massachusetts, in 1950, where residents
flocked each morning for coffee & fresh doughnuts.
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– Rosenberg started franchising the Dunkin’ Donuts name,
and the chain grew rapidly in the Midwest & Southeast
• By the early 1990s, Dunkin’ was losing breakfast
sales to morning sandwiches at McDonald’s and
Burger King.
– Starbucks and other high-end cafés began sprouting up,
bringing more competition
– sales slid as the company clung to its strategy of selling
sugary doughnuts by the dozen
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Market Segmentation, Targeting and Positioning
Dunkin’ Donuts
• In the mid-1990s, Dunkin’ shifted its focus from
doughnuts to coffee hoping that promoting a more
frequently consumed item would drive store traffic.
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– the push worked, as coffee now makes up 64% of sales
and doughnuts a mere 17%
– sales have surged more than 40% in the past four years
• Based on this success, Dunkin’ now has plans to
expand into a national coffee powerhouse, on a par
with Starbucks, the nation’s largest chain.
– the chain has more than 5,800 US restaurants & plans to
open another 10,000 stores nationwide by 2020
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Market Segmentation, Targeting and Positioning
Dunkin’ Donuts & Starbucks
• Dunkin’ is not Starbucks and doesn’t want to be.
– Dunkin’ & Starbucks target very different customers, who
want very different things from their favorite coffee shops
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• To succeed, Dunkin’ must have its own clear
vision…
– of just which customers it wants to serve:
(what segments & targeting)
– and how:
(what positioning or value proposition)
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Market Segmentation, Targeting and Positioning
Dunkin’ Donuts & Starbucks
• Starbucks is strongly positioned as a sort of highbrow “third place”—outside the home and office—
featuring couches, eclectic music, wireless Internet
access, and art-splashed walls.
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– Dunkin’ has a decidedly more low-brow, “everyman” kind
of positioning
• Dunkin’ plans to move upscale—but not too far—to
rebrand itself as a quick but appealing alternative to
specialty coffee shops and fast-food chains.
– a prototype store in Euclid, Ohio features rounded granitestyle coffee bars where workers make espresso drinks face
to face with customers
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Market Segmentation, Targeting and Positioning
Dunkin’ Donuts & Starbucks
• Dunkin’ built itself on serving simple fare to
working-class customers, and inching upscale
without alienating that base will prove tricky.
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– there will be no couches in the new stores
– vice president of consumer insights Regina Lewis, says
of Dunkin’ customers, “…they see through the hype.”
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Market Segmentation, Targeting and Positioning
Dunkin’ Donuts & Starbucks
• Dunkin’s research showed that while loyal Dunkin’
customers want nicer stores, they were bewildered
and turned off by the atmosphere at Starbucks.
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– crowds of laptop users made it difficult to find a seat
– they didn’t like Starbucks’ “tall,” “grande,” & “venti”
lingo for small, medium, & large coffees
– they couldn’t understand why anyone would pay as much
as $4 for a cup of coffee
• The Starbucks’ customers that Dunkin’ paid to switch
were equally uneasy in Dunkin’ shops.
– says an ad executive, “the Starbucks people couldn’t bear
that they weren’t special anymore”
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Market Segmentation, Targeting and Positioning
Dunkin’ Donuts & Starbucks
• Such opposing opinions aren’t surprising, given the
differences in the two stores’ customers.
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– Dunkin’s customers include blue- & white-collar workers
across all age, race, and income demographics
– Starbucks targets a higher income, professional group
• Dunkin’ researchers concluded an ideal set the two
tribes apart.
– Dunkin’ members want to be part of a crowd
– members of the Starbucks tribe want to stand out as
individuals
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Market Segmentation, Targeting and Positioning
Dunkin’ Donuts & Starbucks
• Dunkin’ executives made dozens of store-redesign
decisions, big and small, from how much of its
signature pink & orange color scheme to retain to
where to place fresh baked goods.
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– executives committed to dropping the word “donut” from
its signs to convey the menu is now broader
• Dunkin’ knows that it’ll take some time to refresh its
image, but whatever else happens, it plans to stay
true to the needs & preferences of the Dunkin’ tribe.
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Markets
Introduction
• Companies today recognize that they cannot appeal
to all customers in the marketplace, or at least not all
customers the same way.
II
– customers are too numerous, too widely scattered, too
varied in their needs & buying processes
• Companies themselves vary widely in their abilities
to serve different segments of the market.
– a company must identify the parts of the market that it can
serve best and most profitably
– it must design customer-driven marketing strategies that
build the right relationships with the right customers
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Markets
Identification
• Most companies have moved away from mass
marketing, toward target marketing.
II
– identifying market segments, selecting one or more of
them, and developing tailored products & programs
Figure 8-1 Steps in Segmentation, targeting and positioning.
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Markets
Target Marketing
• There are three major steps in target marketing.
• The first is market segmentation, dividing a market
into distinct groups who might require separate
products and/or marketing mixes.
• The second step is market targeting, evaluating each
segment’s attractiveness and selecting one or more of
the market segments.
• The third step is market positioning, developing
competitive positioning for the product and an
appropriate marketing mix.
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Market Segmentation
Introduction
• Markets consist of buyers who differ in their wants,
resources, locations, buying attitudes & buying
practices.
II
– because buyers have unique needs & wants, each is
potentially a separate market
• As most companies are unable to offer complete
segmentation due costs, companies look for broad
classes of buyers who differ in their product needs
or buying responses.
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Market Segmentation
Variables
• The restaurant industry offers many examples of
segmentation by a variety of variables.
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– because each customer group in a market may want a
different product, a restaurant cannot serve all customers
with equal effectiveness
• To gain an edge over its competition, a restaurant
must examine market segments by identifying one or
more subsets of customers within the total market
and concentrate its efforts on meeting their needs.
– the restaurant must distinguish the easily accessible
consumer groups from the unresponsive ones
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Market Segmentation
Introduction
• Table 8–1 outlines major variables that might be used
in segmenting consumer markets. Here we look at
the geographic, demographic, psychographic, and
behavioristic variables used in segmenting consumer
markets.
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Market Segmentation
geographic, demographic, psychographic & behavioral
• There is no single way to segment a market. A
marketer has to try different segmentation variables.
• Table 8–1 on page 200 outlines major variables that
might be used in segmenting consumer markets.
II
– geographic, demographic, psychographic & behavioral
Table 8-1a Major Segmentation Variables for Consumer Markets - Geographic.
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Market Segmentation
Geographic Segmentation
• Geographic segmentation is dividing the market into
different geographic units, such as nations, states,
regions, counties, cities, or neighborhoods.
II
– paying attention to geographic differences in customer
preferences
• Hospitality companies such as Starwood Hotels and
Resorts make use of geographic information in their
databases to develop highly targeted promotions,
special packages & regional foods for guests.
– absence of effective database use forces companies to use
mass marketing tactics, often of no interest to a majority
of recipients
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Market Segmentation
Geographic Segmentation
• Knowledge of geographic customer preferences is
particularly important in North America and Europe
where immigration has created pockets of customers
with very different product/service preferences.
II
– growth of Muslim markets has created a need for prayer
rug areas within some hotels
• A customer origin study can be collected by simply
asking customers for their zip code or databases.
– In 2002 Accor formed an active partnership with the
Humane Society of the United States(HSUS). This was
reported in the American Hunter, the National Rifle
Association(NRA), opposed to the policies of HSUS
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Market Segmentation
Geographic Segmentation
• The success of local and regional tourism depends on
creative geographic segmentation.
• Tourists must have strong reason to travel hundreds or
thousands of miles to visitor destinations.
- Not many years ago, the isolated town of Sedan,
Kansas. Bill Kurtis(CBS Morning News anchor), a
Kansas native, had a different vision for the town.
Today, revitalization has begun in Sedan.
- Prairie artists have located there, and unique
restaurants, quilt shops, antiques stores, and other
specialty retailers now occupy Main Street.
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Market Segmentation
Demographic Segmentation
• Demographic segmentation consists of dividing the
marketing into groups based on demographic
variables such as age, life cycle, gender, income,
occupation, education, religion, race, and nationality.
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– the most common bases for segmenting customer groups
• One reason is that consumer preferences & use rates
often vary closely with demographic variables.
– another is that demographic variables are easy to measure
• Even when segments are first defined using other
bases, demographic characteristics must be known to
assess market size, and to reach it efficiently.
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Market Segmentation
Demographic - age & life-cycle stage
• Consumer preferences change with age and some
companies offer different products or strategies to
penetrate various age & life-cycle segments.
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– McDonald’s offers Happy Meals with include toys aimed
at young children
– American Express focuses on a mature market because this
age segment accounts for 70% of tour industry bookings
• The “baby boomer” generation is large in several
industrialized nations: Japan, the UK, Canada, others.
– this market represents tremendous buying potential for
tourism
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Market Segmentation
Demographic - Gender
• Gender segmentation, long used to market clothing,
hair, cosmetics & magazines is now used by the
hospitality industry.
• Hotels now consider women when designing rooms
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– and are including more women executives in their ads
• Gender marketing is not simplistic, since a “typical”
male or female does not exist, and many companies
have erred trying to develop and market a product or
service for such an individual
– gender marketing is most effective when combined with
lifestyle and demographic information
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Market Segmentation
Demographic - Income
• Much used by marketers of products & services, the
lodging industry is particularly effective in using
income segmentation.
II
– upper-income guests & corporations are targets for country
clubs, boxes at sports stadiums, upscale hotels & resorts
• Lower-income segments are relatively easy to target
by budget motels, interstate bus services, and others.
– in designing and marketing by income, it is well to keep
in mind an old proverb, “Whoever sells to kings may dine
with peasants, but whoever sells to peasants, may dine
with kings.”
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Market Segmentation
Demographic - Income
• The middle-income consumer is by far the largest
segment for the hospitality industry.
II
– but can be difficult to attract and retain
• The term “middle income” encompasses a wide
range of incomes and lifestyles, and an abundance
of competitors serve this segment, and product
service offerings are numerous
– changing preferences, economic cycles, reaction to
terrorism & violence by this segment complicate marketing
• Income does not always predict which customers will
buy a given product or service.
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Market Segmentation
Demographic - Income
• Income segmentation is commonly believed to be
one a primary variable affecting pricing strategies.
II
– price is not solely determined by income, but there is a
close correlation
• Fractional ownership, partial property ownership, is
clearly designed for the upscale income market.
– marketing of fractional ownership (also called residence
clubs) is essentially a high-end real estate function
• Some individuals have worried that fractional
ownership will harm the upscale hotel market.
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Market Segmentation
Psychographic - Social Class
• Psychographic segmentation divides buyers based on
social class, lifestyle, and personality characteristics.
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– the same demographic group can have very different
psychographic profiles
• Social class has a strong effect on preferences for
cars, clothes, home furnishings, leisure activities,
reading habits, and retailers.
– afternoon tea at the Ritz-Carlton is aimed at the uppermiddle & upper classes(VIP Lounge)
– a neighborhood pub near a factory targets the working
class
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Market Segmentation
Psychographic - Lifestyle
• Marketers are increasingly segmenting the markets
by consumer lifestyles.
II
– many bars/watering holes are designed for young singles
wanting to meet other singles, and couples wanting to
avoid the singles scene and enjoy each other’s company
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Market Segmentation
Psychographic - Personality
• Marketers use personality variables to segment
markets, endowing their products and personalities.
• Wendy’s had a great personality in the person of
Dave Thomas, the founder.
II
– unfortunately Dave passed away, and the company was
left without a memorable personality
• This is a major reason why companies like
McDonald’s, Burger King, and Jack in the Box use
fictional characters who never age and can adopt a
personality.
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Market Segmentation
Behavioral – Special Occasion Segmentation
• For behavioral segmentation, buyers are divided into
groups based on knowledge, attitude, and use or
response to a product.
II
– many marketers believe behavioral variables are the best
starting point for building market segments
• Occasion segmentation helps firms build product use,
as buyers can be grouped according to occasions
when they make a purchase or use a product.
– Mother’s Day is promoted as a time to take your mother or
wife out to eat; St. Patrick’s Day as a night of celebration
– Monday holidays, such as Labor Day and Memorial Day,
have been promoted as times to enjoy a mini vacation
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Market Segmentation
Behavioral - Benefits Sought
• Buyers can also be grouped according to the product
benefits they seek.
• Knowing the benefits sought by customers is useful
in two ways.
II
– managers can develop products with features that provide
the benefits their customers are seeking
– managers communicate more effectively with their
customers if they know what benefits they seek
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Market Segmentation
Behavioral - Benefits Sought
• After studying patrons and nonpatrons of three types
of restaurants, one researcher concluded there are
five major appeal categories for restaurant customers.
II
– patrons of family service restaurants sought convenience
and menu
– variety patrons of atmosphere restaurants ranked food
quality and atmosphere as the top attributes
– patrons of gourmet restaurants valued quality
• A benefit is a positive outcome received from a
product feature.
– product features with positive outcomes for guests create
value, those with no positive outcomes have no value
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Market Segmentation
Behavioral - User Status
• Many markets can be segmented into nonusers,
former users, potential users, first-time users, and
regular users of a product.
• High-market-share companies such as major airlines
are particularly interested in keeping regular users
and attracting potential users.
II
– potential users and regular users often require different
marketing appeals
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Market Segmentation
Behavioral - Usage Rates
• Markets can be segmented into light-, medium-, and
heavy-user groups.
II
– heavy users are often a small percentage of the market
but account for a high percentage of total buying
• One of the most controversial programs employed by
the hospitality & travel industries to ensure heavy
patronage by key customers is the frequent flyer or
frequent guest program.
– many experts question long-run value of these programs
– they question the “competitive advantage” they create
because most airlines have similar programs
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Market Segmentation
Behavioral - Usage Rates
• Though many hotel chains offer a frequent guest
program, they realize that most look alike, thus
reducing their effectiveness.
• Guests may indeed collect points to enjoy a free stay,
but point accumulation may not build loyalty.
II
– a study on this topic concluded, “…loyalty is an emotional
bond that cannot be bought by points or free stays.”
• Marketers need to find ways to enhance emotional
ties between the consumer and the hotel brands
– an outcome of loyalty is increased usage of the product
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Market Segmentation
Behavioral - Loyalty Status
• A market can be segmented by consumer loyalty.
• A study of hotel brand extensions showed that brand
extensions are helpful in increasing customer loyalty
and in promoting repeat buying.
II
– customers who like a main-line, name-brand hotel are
likely to patronize other hotels owned by that company
• In the hospitality and travel industries, marketers
attempt to build brand loyalty through relationship
marketing.
– marketing strategies for resorts suggest the first, most basic
strategy is “to keep and expand the current market base”
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Market Segmentation
Behavioral - Buyer Readiness Stage
• At any given time, people are in different stages of
readiness to buy a product, and the relative number
in each stage makes a big difference in designing a
marketing program.
II
– some are unaware of the product; some aware
– some are informed; some want the product
– some intend to buy
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Market Segmentation
Requirements for Effective Segmentation
• Not all segmentation methods are equally effective,
so to be useful, market segments must have the
following characteristics:
– Measurability - the degree to which the segment’s size
and purchasing power can be measured.
– Accessibility - the degree to which segments can be
assessed and served.
– Substantiality - The degree to which segments are large or
profitable enough to serve as markets.
– Actionability - : The degree to which effective programs
can be designed for attracting and serving segments.
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Market Targeting
Evaluating Market Segments - Segment Size & Growth
• When evaluating different market segments, a firm
must look at segment size & growth, segment
structured attractiveness, company objectives &
resources.
• A company must first collect and analyze data on
current segment sales for segments with the right
size and growth characteristics,
II
– “right size and growth” is a relative matter
• The largest, fastest growing segments are not always
the most attractive ones for every company.
– at times smaller segments are potentially more profitable
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Market Targeting
Segment Structural Attractiveness
• A segment might have desirable size & growth and
still not offer attractive profits, so a company must
examine several major structural factors that affect
long-run segment attractiveness.
II
– a segment is less attractive if it contains many strong &
aggressive competitors, and existence of many actual or
potential substitute products may limit prices and profits
• Relative power of buyers affects attractiveness.
– if buyers possess strong bargaining power relative to
sellers, they will force prices down, demand more quality
services & set competitors against one another
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Market Targeting
Company Objectives and Resources
• Some attractive segments can be dismissed because
they do not mesh with long-run objectives.
II
– although tempting, they might divert a company from its
main goal
– they might be a poor choice from an environmental,
political, or social responsibility viewpoint
• If the company lacks the strengths needed to compete
successfully in a segment and cannot readily obtain
them, it should not enter the segment.
– a company should enter segments only where it can gain
sustainable advantages over competitors
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Market Targeting
Selecting Market Segments
• After evaluating different segments, the company
must decide which and how many segments to serve.
• A target market consists of a set of buyers who share
common needs or characteristics that the company
decides to serve.
• A firm can adopt one of three market-coverage
strategies:
– undifferentiated marketing and Bifurcated Marketing
– differentiated marketing
– concentrated marketing.
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Market Targeting
Selecting Market Segments
II
Figure 8-2 Three alternative market-coverage strategies.
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Market Targeting
Undifferentiated Marketing
• In an undifferentiated marketing strategy, a company
ignores market segmentation differences and goes
after the entire market with one market offer.
II
– it focuses common needs of consumers
• It designs a marketing plan that will reach the
greatest number of buyers.
– mass distribution & advertising serve as the basic tools
to create a superior image in consumers’ minds
• An undifferentiated advertising program holds down
advertising costs.
– also marketing research & product development costs
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Market Targeting
Undifferentiated Marketing
• Contemporary marketers have strong doubts about
the strategy in today’s competitive environment.
II
– it is difficult to develop a product & brand to satisfy all
or even most consumers
• When several competitors aim at the largest segments,
the inevitable result is heavy competition.
– small companies generally find it impossible to compete
are forced to adopt market-niche strategies
• Larger segments may become less profitable because
of heavy marketing costs, including the possibility of
price cutting and price wars
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Market Targeting
Bifurcated Marketing
• In many undeveloped nations such as parts of Asia,
Africa, and Latin America and in developing nations
such as China, the available guest mix is bifurcated.
II
– high-end hotels exist for international visitors and as a
location for social occasions for high-income locals
– low-end hotels exist for locals and adventurous tourists.
• A bifurcated market (a market that contains two
major market segments) sometimes frustrates foreign
hotel owners wishing to enter the market.
– absence or scarcity of middle-income guests means midmarket chains may find little or no success
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Market Targeting
Differentiated Marketing
• Using differentiated marketing strategy, a company
targets several market segments and designs separate
offers for each.
• Accor Hotels, a French company, operates under
twelve trade names and manages several brands &
types of hotels
• Sofitel, Novotel, Ibis, Fomula One, Motel6, Hotelia.
II
– this segmentation has allowed Accor to become one of the
world’s foremost hotel groups
• Differentiated marketing typically produces more
total sales than undifferentiated marketing.
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Market Targeting
Concentrated Marketing
• A third strategy, concentrated marketing, is appealing
to companies with limited resources.
II
– instead of going for a small share of a large market, the
firm pursues a large share of one or a few small markets
• Hospitality companies achieve a strong market
position in the segments that they serve, thanks to
their greater knowledge of those segments’ needs.
– if the segment is well chosen, the company can earn a high
rate of return on investment
• Concentrated marketing involves higher than normal
risks, as a particular market segment can turn sour.
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Market Targeting
Choosing a Market-Coverage Strategy
• Companies need to consider several factors in
choosing a market-coverage strategy.
II
– the company’s resources - when resources are limited,
concentrated marketing makes the most sense
– degree of product homogeneity - undifferentiated
marketing is more suited for homogeneous products
– products that vary in design, such as restaurants & hotels,
are more suited to differentiation or concentration
• When introducing a new product, it may be practical
to launch only one version, so undifferentiated or
concentrated marketing makes the most sense.
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Market Positioning
Positioning Strategies
• Once market segments are chosen, a company must
decide what positions to occupy in those segments.
• A product’s position is the way the product is defined
by consumers on important attributes.
II
– the place the product occupies in consumers’ minds
relative to competing products
• Consumers are overloaded with information about
products and services. They cannot reevaluate
products every time they make a buying decision.
– to simplify buying decisions, consumers “position”
products & companies in their minds
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Market Positioning
Positioning Strategies
• Marketers do not want to leave their products’
positions to chance, so they plan positions to give
their products the greatest advantage in selected
target markets, then design the marketing mixes.
II
– Wendy’s promotes never-frozen meat, hot off the grill
– Burger King is known for its flame-broiled food
– Rally’s uses low prices to position itself
• A hotel brand’s position can be viewed from two
perspectives—that of management & of the guests.
– management must have a clear concept of the hotel’s
intended position – determined by its customers.
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Market Positioning
Positioning Strategies
• Marketers can follow several positioning strategies,
such as specific product attributes.
• Product attribute positioning can be dangerous.
II
– consumer preferences change and competitors blunt the
effort of specific product attributes
• Products can be positioned against another product
class.
– cruise ships have positioned themselves against other
vacation alternatives such as destination resorts
– B&Bs, as “home-like” alternatives to other lodging
– conference centers have consistently positioned themselves
against hotels with conference facilities
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Market Positioning
Positioning Strategies
• When two or more firms pursue the same position,
each must seek further differentiation.
II
– such as “a business hotel for a lower cost” or “a business
hotel with a great location”
• Each firm must build a unique bundle of advantages
appealing to a substantial group within the segment.
– this subpositioning is often called niche marketing
• Most cruise lines offer a multiday cruise experience
with stops at several ports.
– a few niche cruise lines have found it profitable to offer a
one-day cruise with no ports of call
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Market Positioning
Choosing and Implementing a Positioning Strategy
• The positioning task consists of three steps:
II
– identifying a set of possible competitive advantages on
which to build a position
– selecting the right competitive advantages
– effectively communicating and delivering the chosen
position to a carefully selected target market
• A company can gain competitive advantage by
offering consumers lower prices for similar products
or providing more benefits that justify higher prices.
– a company must compare its prices and products to those
of competitors & always look for possible improvements
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Market Positioning
Choosing and Implementing a Positioning Strategy
• In some cases, unbundling of products has also
worked as a positioning tactic.
• Until the early 70s, many resorts sold only a bundled
product known as the American Plan (AP).
II
– which included resort services such as food & beverage
• Resort managers observed changes in guest behavior,
and began to differentiate their properties.
– offering a modified American plan (MAP), in which lunch
was not included
– or a European plan, which did not include meals
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Market Positioning
Product Differentiation - Physical
• A hospitality company or a visitor destination must
differentiate its products/services from competitors.
II
– by physical attributes, service, personnel, location, image
• Classic hotels such as the Waldorf-Astoria, Palmer
House in Chicago, & Prestonfield House in
Edinburgh differentiate themselves on past grandeur.
– many hotels, restaurants, & airlines lack physical
differentiation & price becomes the primary factor
• Differentiation that excites the consumer and offers
something new can lead to excellent public relations
opportunities, customer loyalty, and greater profits.
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Market Positioning
Product Differentiation - Service
• By providing services that benefit its target market, a
hospitality company can achieve differentiation for a
period of time.
II
– Red Lobster allows its customers to call to put their names
on a wait list, reducing the time they wait at the restaurant
• Unwanted differentiation occurs when a company
consistently provides a horrible level of guest service.
– such a reputation often requires a change in management
or ownership to correct
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Market Positioning
Product Differentiation - Service
• The basics of good customer service are comparable
to the Golden Rule: “Do unto others as you would
have them do unto you.”
II
– it is strange that so many members of service industries
ignore good customer service
• Results of customer service studies usually reveal
common sense yet valuable insight.
– because so many companies overlook the importance of
good service, those who truly emphasize service will
achieve positive differentiation
• Companies gain a strong competitive advantage by
hiring & retaining better people than competitors.
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Market Positioning
Product Differentiation - Personnel
• Personnel differentiation requires selecting customercontact people carefully & training them well.
II
– these personnel must be competent and must possess the
required skills and knowledge
– they need to be courteous, friendly, and respectful
– they must serve customers with consistency & accuracy
– they must make an effort to understand their customers,
and communicate clearly with them
– they must respond quickly to customer requests &
problems
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Market Positioning
Location Differentiation
• Location can provide a strong competitive advantage.
– hotels facing Central Park in New York City have a
competitive advantage over hotels a block away
II
• Hospitality & travel firms should look for benefits
created by their location, keeping in mind that this
advantage is subject to chance.
– factors such as a new highway bypass or criminal activity
in a neighborhood can turn an advantage into a problem
• Hospitality companies are well advised to seriously
consider what geographic factors may have created
their success before expanding too widely.
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Market Positioning
Image Differentiation
• Even when competing offers look the same, buyers
may perceive a difference based on company or
brand image.
• A company or visitor destination image should
convey a singular or distinctive message that
communicates the product’s benefits & positioning.
• Developing a strong and distinctive image calls for
creativity and hard work.
II
– a positive image must be earned and must be supported by
everything the company says & does
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Market Positioning
Selecting the Right Competitive Advantages
• A company is fortunate enough to discover several
potential competitive advantages must choose the
ones on which it will build its positioning strategy.
• Many marketers think companies should promote
only one benefit to the target market, picking an
attribute & touting itself as #1 on that attribute.
II
– buyers tend to remember number one better, especially
in an overcommunicated society
• Major number-one positions to promote are best
quality, best service, lowest price, best value, and
best location.
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Market Positioning
Selecting the Right Competitive Advantages
• A company that hammers away at a position that is
important to its target market & consistently delivers
on it probably will become best known/remembered.
• Other marketers think that companies should position
themselves on more than one differentiating factor.
II
– a hotel may claim it offers the best value & location
• Because today’s mass market is fragmenting into
many small market segments, companies are trying
to broaden strategies to appeal to more segments.
• As companies increase the number of claims for their
brands, they risk disbelief & loss of clear positioning.
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Market Positioning
How Many Differences?
• In general, a company needs to avoid three major
positioning errors.
II
– underpositioning, or failing to position the company at all
– overpositioning, or giving buyers too narrow a picture of
the company
– confused positioning, leaving buyers with a confused
image of a company
• Good positioning helps build brand loyalty, but for a
hotel, it may not be enough to simply satisfy guests.
– satisfied customers do not repurchase unless they are also
attitudinally brand loyal
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Market Positioning
Which Differences?
• Not all differences are meaningful or worthwhile,
and not every difference makes a good differentiator.
II
– each difference has the potential to create company costs
as well as customer benefits
• Some competitive advantages may quickly be ruled
out because they are too slight, too costly to develop,
or too inconsistent with the company’s profile.
– the company needs a framework for selecting the one that
makes the most sense to develop
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Market Positioning
Which Differences?
• A difference is worth establishing to the extent that it
satisfies the following criteria:
– Important - delivers highly valued benefit to target buyers
– Distinctive - competitors do not offer the difference, or
the company can offer it in a more distinctive way
– Superior - the difference is superior to other ways that
customers might obtain the same benefit
– Communicable - and visible to buyers
– Preemptive - competitors can’t easily copy the difference
– Affordable - buyers can afford to pay for the difference
– Profitable - the company can introduce the difference
profitability
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Market Positioning
Communicating and Delivering the Chosen Position
• Having chosen positioning characteristics and a
positioning statement, companies must communicate
their positions to targeted customers.
II
– all of a company’s marketing mix efforts must support its
positioning strategy
• Building and maintaining a consistent positioning
strategy isn’t easy, as many counterforces are at work.
– advertising agencies hired by the company may not like a
selected position & may overtly or covertly work against it
– new management may not understand the strategy
– budgets may be cut for critical support programs
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Market Positioning
Communicating and Delivering the Chosen Position
• Development of an effective position requires a
consistent, long-run program with continuous
support by management, employees & vendors.
• Companies normally develop a memorable statement
to communicate their desired positions.
II
– unfortunately, a new management team or ad agency may
discard a good statement
• When selecting a positioning strategy, a company
should review competitive strengths & weaknesses
and select a position that places it in a superior
position against its competitors.
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II
See this feature on page 221 of your textbook.
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Market Positioning
Positioning Measurement - Perceptual Mapping
• Perceptual mapping, a research tool, is sometimes
used to measure a brand’s position.
• Two-by-two perceptual maps provide an easy-toread picture, but one must often study multiple
maps plotting different attributes to obtain a
good feel of the marketplace.
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Market Positioning
Positioning Measurement - Perceptual Mapping
• On this map is a correlation between service & price.
II
– plotted on attributes of price &
perceived service
– as price goes up, so does service
Figure 8-3 Positioning map of service level versus price. From Christopher Lovelock, Services
Marketing, 1996, p. 178 Prentice Hall, Upper Saddle River, NJ. Used with permission.
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Market Positioning
Positioning Measurement - Perceptual Mapping
• Perceptual maps can be developed using consumer
perceptions of a number of product attributes.
• Dev, Morgan, & Shoemaker developed a perceptual
map based on ratings of eight attributes, using a
technique known as probabilistic multidimensional
scaling.
II
– to derive the coordinates for the map in figure 8–4
• This technique is useful to identify competitive set
and to open spaces that can represent an opportunity
for repositioning away from the competition.
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Market Positioning
Positioning Measurement - Perceptual Mapping
II
Figure 8-4 Positioning map using multiple attributes to position hotels. From Chekitan S. Dev,
Michael S. Morgan, and Stowe Shoemaker, “A Positioning Analysis of Hotel Brands,” Cornell Hotel
and Restaurant Administration Quarterly 36 (December 1995): 48–55. Courtesy of Cornell Hotel and
Restaurant Administration Quarterly. Copyright Cornell University. Used by permission.
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Market Positioning
Positioning Measurement - Perceptual Mapping
• The circles are drawn around clusters of the hotels
not statistically significant distances from each other.
II
– the hotels in the circles can be viewed by the consumer as
being similar
• In this type of map the positions are essentially
neutral; one spot on the map does not inherently
have to be better or worse than another.
• Increased competition or an ineffective positioning
strategy can make repositioning necessary.
– perceptual maps provide data supporting the need for
repositioning
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KEY TERMS
• Behavioral segmentation. Dividing a market into
groups based on consumers’ knowledge, attitude,
use, or response to a product.
• Bifurcated market. A market that is divided into
two major market segments.
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KEY TERMS
• Competitive advantage. An advantage over
competitors gained by offering consumers greater
value either through lower prices or by providing
more benefits that justify higher prices.
• Competitors’ strategies. When competitors use
segmentation, undifferentiated marketing can be
suicidal. Conversely, when competitors use
undifferentiated marketing, a firm can gain an
advantage by using differentiated or concentrated
marketing.
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KEY TERMS
• Confused positioning. Leaving buyers with a
confused image of a company.
• Degree of product homogeneity. Undifferentiated
marketing is more suited for homogeneous products.
Products that can vary in design, such as restaurants
and hotels, are more suited to differentiation or
concentration.
• Demographic segmentation. Dividing the market
into groups based on demographic variables such as
age, gender, family size, family life cycle, income,
occupation, education, religion, race & nationality.
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KEY TERMS
• Gender segmentation. Dividing a market on the
basis of gender.
• Geographic segmentation. Dividing a market into
different geographic units such as nations, states,
regions, counties, cities, or neighborhoods.
• Income segmentation. Dividing a market into
different income groups.
• Market homogeneity. If buyers have the same
tastes, buy a product in the same amounts, and react
the same way to marketing efforts, undifferentiated
marketing is appropriate.
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KEY TERMS
• Market positioning. Formulating competitive
positioning for a product & detailed marketing mix.
• Market segmentation. Dividing a market into
direct groups of buyers who might require separate
products or marketing mixes.
• Market targeting. Evaluating each market
segment’s attractiveness and selecting one or more
segments to enter.
• Overpositioning. Giving buyers a too narrow
picture of the company.
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KEY TERMS
• Psychographic segmentation. Dividing a market
into different groups based on social class, lifestyle,
or personality characteristics.
• Specific product attributes. Price and product
features can be used to position a product.
• Underpositioning. Failing ever to position the
company at all.
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EXPERIENTIAL EXERCISES
Try the Following !
• Find an advertisement from a hospitality or travel
company that targets a specific segment, such as
children, young adults, seniors, upper-income
customers, etc., and visit a location of that company.
• What does the company do at the location with its
marketing mix to attract the segment that it targeted
in the advertisement?
• This can include sales promotions, signage, product
mix, location of the company, and pricing of
products.
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INTERNET EXERCISES
Try This !
Support for this exercise can be found on the Web
site for Marketing for Hospitality and Tourism,
www.prenhall.com/kotler
• Go to the Web site of a major brand of a
hospitality or travel company.
• Explain how they appeal to different segments
through the Web site.
II
– give specific examples
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END
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