Chapter 2 Market Segmentation and the Hospitality Industry
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1 Chapter 2 Market Segmentation and the Hospitality Industry Marketing in the Hospitality Industry
2 Outline Know the reason why we need to segment markets Describe the value of each segmentation for marketing in the hospitality industry (geographic, demographic, psychographic, benefit and need, etc.) How each can be applied to the hospitality industry
3 What is Marketing Segmentation? Marketing Segmentation a process of dividing the market into different groups of consumers who have common needs and wants.
4 What is Target Marketing? Target marketing is the process of evaluating each segment s attractiveness and selecting one or more of the market segments. Positioning is the process of developing competitive positioning for the product and an appropriate market mix. Segments Target Position
5 Why need Segmentation? Market segmentation not only helps us understand what people want in a product or service, it also gives a good idea of the price they are willing to pay and where they want to be served. Segmentation offers an opportunity to make more effective use of promotional media by identifying those that can reach the target markets effectively.
6 Types of Segmentation Geographic Segmentation Demographic Segmentation Benefit & Need Segmentation Psychographic Segmentation Price Segmentation Combining Segmentation
7 Group work Discuss with you team members about the segmentation you are going to give a presentation For example, demographic segmentation - Write down keywords on the whitepaper - Describe what demographic segmentation is -How valuable it s going be. Time: 20 minutes
8 What Is Geographic Segmentation? The division of a market generally by: Region Zone State District Metropolitan statistical area Postal code zones (zip codes) 8
9 The Value of Establishing Geographic Market Segments It enables marketers to focus the following: Sales Advertising Public relations Promotional activities in the most appropriate areas of the country. 9
10 Regions, Zones, and Districts Regions: Established geographic subdivisions of a country. Natural borders often define Example: the western region, the area of the United States west of the Rocky Mts. Zones: Geographic areas smaller than a region (determined by individual companies) Example: the Illinois-Wisconsin zone Districts: Geographic areas with a concentration of customers; subdivisions of a zone Example: Chicago, La Crosse could be districts in an Illinois-Wisconsin zone
11 Feeder Cities and City Pairs Feeder Cities Principal cities within a region that tend to feed travel to each other. Example: Las Vegas, Phoenix, and San Francisco, feed Los Angeles. City Pairs Cities between which a heavy travel pattern exists. Examples: Boston and NYC, Shanghai and Pairs
12 Destination Cities and Destination Markets Destination Cities: have unique attractions unto themselves that create demand for travel Examples: Orlando, Las Vegas, Acapulco, West Palm Beach, Lake Tahoe, Atlantic City Destination Markets: create demand for travel not only with unique attractions they offer, but also with their many centers of business and commerce Examples: New York City, Los Angeles 12
13 Demographic Segmentation Demographic segmentation: the categorization of consumers by like characteristics, such as the following: Sex Age Income Home ownership Marital status Occupation Education 13
14 Benefit and Need Segmentation Benefit and need segmentation: the categorization of consumers on the basis of the benefits they seek and the needs they expect to satisfy (and in some cases, the factors they hope to avoid) 14
15 Benefit and need segmentation Customer segments are categories of customers who use hotels for identical reasons and have consumption habits that are mainly similar (user status: first time user, frequency user, potential user, occasion when, how, and why consumer use an operation)
16 Psychographic Segmentation Psychographic segmentation: the subdivision of a market based on like needs and psychological motivations of consumer groups Tends to focus trends into key areas such as AIO (Activities, interests and opinions) QSC( Quality, service and cleanliness) VALS (Values and Lifestyles) 16
17 Price Segmentation Price segmentation identifies groups of consumers within a market whose purchase of products or services is within the limits of certain dollar amounts. 17
18 Combining Segmentation Techniques & Value Each of the segmentation approaches has its advantages and limitations. Price sensitivity is always important Good quality at a fair price Every demographic, psychographic and economic indicator points to a VALUE as a key need that marketing must fulfill in the future.
19 Group Homework submit by before Sunday May 16, 5 PM Background: one five star hotel in downtown will open a new Italian restaurant soon. Using the different market segmentation: geographic, demographic benefit and need, psychographic and combining segmentation to design a market research form to seeking potential consumer for the restaurant. (Minimum 15 questions)
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