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Segmentation, Targeting and
Positioning
Objective: Discussing the importance of segmentation,
targeting and positioning in the communication process.
Importance of Targeting
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In order to create effective marketing
communications, managers need to identify their
companies’ target market(s) and then direct their
communications to these people.
Messages need to be designed and positioned in
a way to connect to and attact specific target
markets.
Markets
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Originally, a market is defined as a physical place where
buyers and sellers gather to exchange goods and
services.
In marketing, a market is the set of all actual and
potential buyers of a product or service.
Since people’s buying behaviors and characteristics
differ, it is not possible to satisfy all consumers in the
market for many tourism and hospitality services.
Therefore, they need to determine target markets for
their operations. This task involves three steps.
Steps in Target Marketing
1. Market segmentation; dividing a market into distinct
groups of buyers with different needs, characteristics or
behaviors who might require separate products or
marketing mixes.
2. Market targeting; evaluating each market segment’s
attractiveness and selecting one or more of the market
segments to enter.
3. Market positioning; setting the competitive positioning
(difference) for the product and creating a detailed
marketing mix.
Market Segmentation
Involves the following steps;
1. Identifying bases for segmenting the market
2. Developing profiles of resulting segments
Market Targeting
Involves the following steps;
3. Developing measures of segment attractiveness
4. Selecting the target segments
Market Positioning
Involves the following steps;
5. Developing positioning for each segment
6. Developing marketing mix for each target
segment
Bases of Market Segmentation
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There are various ways to segment a market. A
marketer has to try different segmentation variables,
alone and in combination to understand the
structure of the market in the best way. The
following are the major ones used to segment
tourism and hospitality markets;
demographic segmentation
 behavioral segmentation
 psychographic segmentation
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Demographic Segmentation
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Companies divide the market into groups based
on;
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age and life stage: needs and wants change with age,
that is why, tourism and hospitality organizations
may use different marketing approaches for different
age and life stage. E.g. Families with young children
have different requirements from a holiday
compared to singles. Accordingly, the package
holiday market is mostly segmented by age.
gender: men and women have different tastes and
values. Accordingly marketing messages should
be designed based on the targeted gender to be
effective.
 sexual orientation: becoming a key segmentation
variable for tourism and hospitality organizations
and destinations. Some destinations are known
for attracting these groups e.g. Mykonos.
 ethnicity and cultural background: race and ethnicity
are also important variables as cultural norms and
customs influence food choices, attitudes towards
travel, holidays and destinations. E.g. Visiting
family and relatives during Bayram.
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socio economic variables: include occupation, income,
education and social class. Although social classes
differ by country, they are quite useful and easy to
measure. In the same social class, people have similar
consumption patterns, tastes, lifestyles and values.
Since people in different social classes differ in what
they read, which TV programs to watch and what
activities they take, social class is a very important base
in seg is mainly used for automobiles, boats, clothing,
cosmetics, financial servicesmentation in designing
arketing communications. People also differ by
income. Accordingly tourism and hospitality
operations offer different products, e.g. Holiday Inn
offers upscale properties “Crowne Plaza”, economy
properties “Hampton Inn”, luxury “Embassy Suites”
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geographic region: can be used in terms of pure
geographic region, or in combination with
demographic (geodemographic) variables by tourism
and hospitality firms, e.g. higher income consumers
live in the European side of Istanbul.
Behavioral Segmentation
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Companies may divide buyers into groups based on
their knowledge, attitudes, uses or responses to a
product.
 benefit sought from the experience: benefit
segmentation considers the reasons why people
buy tourism and hospitality services. While
leisure travelers may look for otal relaxation, or
authentic experiences, business travelers would be
interested in the speed of service, access to
wireless internet etc.
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As service benefits, one of the following product
categories can be used;
Product benefit (core product): at the heart of the
holiday experience, a set of values may be offered as
the main benefit e.g. ultimate luxury, paradise, total
pampering, economy, etc.
 Product attributes (actual product): tangible features
of the service, servicescape or the physical evidence,
design, branding and packaging may be offered as the
main benefits.
 Marketing support services (augmented product):
including after-sales services, guarantees, customer
loyalty schemes, etc.These can contribute to the
benefits sought.
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attitudes, perceptions, values, beliefs: as they are strongly
linked to behavior, they are helpful to understand
how customers groups view tourism and hospitality
services. E.g. Backpackers.
 decision-making processes: brand loyalty, risk perception,
adption of new innovations, choice criteria, selection
variables are examples that influence decision
making.
 usage patterns/frequency of use: purchase occasions and
type of use are important segmentation variables for
tourism and hospitality e.g. leisure, business,
convention, special occasion, overnight, short break,
etc.
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Psychographic Segmentation
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Companies may also divide the market into different
groups based on;
 personality and identity: very useful for tourism and
hospitality services as these services are consumed
as an expression of self-identity and personality.
Participation in certain leisure activites are an
expression of personality.
 lifestyle: this segmentation based on activities,
interests and opinions is also common for tourism
and hospitality. Mezzaluna targets to a business
lifestyle, whereas the rest of the restaurants in
Ankuva to a student lifestyle.
Target Marketing
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After segmenting the whole market, the firm has to
evaluate these segments and decide how many and
which ones to target. The company should enter
segments only where it can offer superior value and
gain advantages over competitors.
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In evaluating different market segments, a firm
can look at whether the segment is;
Attainable
 Measurable
 Large enough
 Defendable
 Sustainable
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Selecting Market Segments
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The company must decide which and how many
segments to serve, in other words, the company
must decide which market-coverage strategy to
adopt.
There are three market-coverage strategies:
undifferentiated marketing (exclusive segmentation)
 differentiated marketing (selective segmentation)
 concentrated marketing (single segmentation)
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Undifferentiated Marketing
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A market-coverage strategy in which a firm decides
to ignore market segment differences and go after
the whole market with one offer.
Here, the offer focus on what is common in the
needs of consumers rather than on what is
different.
The company designs a product and a marketing
program that appeal to largest number of buyers.
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It relies on mass advertising and a superior
image in people’s minds.
Provides cost effectiveness because of its low
production, inventory, transportation,
advertising, marketing research costs.
Have difficulties in (1) developing a product or
brand that satisfies all consumers; (2) keeping a
strong place in the market and making profit,
when several firms follow this strategy heavy
competition develops; (3) satisfying smaller
segments.
Differentiated Marketing
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A coverage strategy in which a firm decides to
target several market segments and designs separate
offers for each. E.g. ETS tour offers a range of
different products for different groups including
cruise vacations, city breaks, culture tours, domestic
and foreign tour packages, etc.
These companies hope for (1) higher sales; (2) a
strong place within each market segment; (3) more
loyal customers because the firm’s offerings match
each segment’s desires better.
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Creates better total sales, but increases the costs
- developing separate marketing plans for the
separate segments requires extra marketing
research, sales analysis, promotional planning,
channel management.
Because of the high costs involved in this
approach, the company must compare increased
sales with increased costs when deciding to use
differentiated marketing strategy.
Concentrated Marketing
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A market-coverage strategy in which a firm goes
after a large share of one or a few submarkets.
E.g. Saga Holidays concentrate on the over 50’s
age group, Solo’s Holidays targets the single
traveler market.
Suitable for smaller companies to achieve a
strong market place in the segments (or niches)
that it serves because of its greater knowledge
of the segment’s needs.
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Involves higher-than-normal risks because the
target may not respond or larger competitors
may decide to enter the same market but offers
operating economies because of specialization
in production, distribution, and promotion.
Market Positioning
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Once a company has decided which segments to
enter, it must decide what “positions” it wants
to occupy in those segments.
A product’s position is the place the product has
in consumer’s minds relative to competing
products. In other words, a product’s position is
the set of perceptions, impressions, and feelings
that consumers
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hold for the product compared with
competing products. E.g. Southwest airlines is
positioned on economy, Ritz and Four
Seasons on luxury.
Consumers simplify the buying process by
categorizing products in their minds.
Marketers do not leave their products’
positions to chance. They must plan positions
that will give their products the greatest
advantage in selected target markets.
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Marketing communications are based upon
positioning statements expressed in the slogans
of the firms.
While product positioning are mostly based on
technical features, quality, packages, design, etc.,
tourism and hospitality services are largely
positioned on physical qualities or attributes of
the destination based on the following
resources;
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Culture and society, heritage, wildlife, climate,
landscape and physical attributes.
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In reality, marketers position their products/services
based on any aspect of the marketing mix.
The following positioning strategies are particularly
used for tourism and hospitality services;
 image/brand
 price/value dimension
 referrals/testimonials/endorsements
 physical evidence/destination resources/product
attributes
 loyalty schemes/service guarantees/membership
services
 access/place/distribution
 people and service quality/service delivery
Resources
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McCabe, S. (2009). Marketing Communications
in Tourism and Hospitality: Concepts, Strategies
and Cases. Butterworth-Heinemann: Oxford.
Kotler, P.; Bowen, J. and Makens, J. (2010).
Marketing for Hospitality and Tourism (5th. ed.).
Prentice Hall: New Jersey.
Kotler, P. and Armstrong, G. (2010) Principles
of Marketing (13th ed.). Prentice Hall: New
Jersey.