Transcript PPT Chapter 13

Chapter Thirteen
Differentiation, Segmentation and
Target Marketing
Differentiation
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Distinguishing your product or service
from the competition in ways that are
both identifiable and meaningful for
the customer
The customer should perceive a
greater value
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Differentiation
Differentiation is effective when:
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It cannot be easily copied
It appeals to a particular need or want
It creates an image or impression that
goes beyond the specific difference itself
Marketing Essentials in Hospitality and Tourism:
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Exhibit 13-2; Ritz-Carlton tangibilizing the intangible
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Differentiation
Differentiation as a marketing tool
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Helps create awareness and trial by the
customer
Sometimes product differentiation is the
only thing a firm can do
It is much easier to do in the
foodservice environment, even within
hotels
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Differentiation
Differentiation -- of anything
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Can be product, message or brand specific
Difficult to achieve in hospitality because of the
variety of services offered
Separates product classes and products within
the same class
Provides an opportunity to strengthen
competitive strategy
Is the basis for positioning strategy
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Market Segmentation
Market segmentation:
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Is a complimentary strategy to
differentiation
Is dividing a market into meaningful
groups who have similar wants and needs
(market segments)
Starts with the customer
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Market Segmentation
Which comes first: differentiation or
segmentation?
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Both happen in combination at different times
Both are part of the marketing concept
First know how people differ
Then segment them accordingly
Develop products that meet their specific wants
and needs
Creating these two strategies are major reason
to study consumer behavior
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Market Segmentation
The process:
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Step one: Needs and wants of the marketplace
Step two: Projecting wants and needs into
potential markets
Step three: Matching the market and
capabilities
Step four: Segmenting the market
Step five: Selecting target markets from
identified segments
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
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Segmenting Variables
Various ways in which a market can be
divided, or segmented, into meaningful
groups of buyers
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Geographic
Demographic
Psychographic
Usage
Benefit
Price
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Geographic Segmentation
Most widely used in restaurant and hotel
industry
These segments then become easier to
reach
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Metropolitan statistical areas (MSAs)
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Direct mail
Media
Data and information on demographics
Defining large metropolitan areas in terms of
supposed economic boundaries
Designated market area (DMA)
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Demographic Segmentation
Widely used because easy to
measure and classify
Does not necessarily distinguish
wants and needs
Demographic lines are now blurred
Useful demographics
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Age
Family life cycle stage
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Psychographic Segmentation
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Based on activities, interests, and opinions
(AIO), self-concepts and lifestyle behaviors
Lifestyle patterns combines demographics
with the way people live, think and behave
in their everyday lives and correlate them
into homogeneous categories
A rich area for marketing effectiveness for
the hospitality industry
PRIZM and VALS
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Exhibit 13-6; VALS
framework
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Usage Segmentation
Umbrella term that covers a wide range of categories
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Purpose
Frequency
Monetary value
Recency
RFM
Timing
Nature of the purchase
Where they go
Purchase occasion
Heavy, medium or light
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Benefit Segmentation
May be the most basic and most predictable of all
segments
Benefits are very related to need satisfaction
Benefits
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Comfort
Prestige
Low price
Recognition
Attention
Romance
Quiet
Safety
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Price Segmentation
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A form of benefit segmentation, only
more visible and more tangible
Price segments within a product class
Price segments between product
classes
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Segmentation Strategies
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There will be many segments, some with
overlap, and different strategies for each
segment
The test of a segment is their different
behavior
Segments change over time
Market segmentation has become
increasingly critical with competition
Segmentation will remain a key competitive
strategy within the product class
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Target Marketing
Selecting specific market segments to
target and designing the product or
service to meet their specific wants or
needs
More refined segmenting rules apply
Strategies:
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Undifferentiated targeting market strategy
Strong targeting strategy
Differentiated multi-target marketing
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Mass Customization
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The concept that modern technology
is bringing us closer to target markets
of one
Make one product and personalize the
product to their specifications
Largely due to databases that track
customer behavior
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Discussion
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Which comes first: differentiation or
segmentation? Why?
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Foundations and Practices by Shoemaker & Shaw
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.