Transcript Market Segmentation

4. Market Segmentation
World Tourism Organization
Manila, 20 – 22 March 2006
R. Cleverdon
MARKET SEGMENTATION AND
TARGET MARKET SELECTION
SESSION COVERAGE
•Determinants of tourism demand
•Analysis & forecasting: why necessary? which methods?
•Market segmentation criteria and variables
•Value of different market segments in achieving optimal benefits for
the destination
•Examples: growth segments & source markets
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
TOURISM’S DETERMINANTS & INFLUENCES
•Foundations for tourism
* economic: GDP growth, employment
* technological: transport, www
* political: integration of Europe, ending of apartheid,
liberalisation of travel into/out of China
* demographic: ageing of industrialised country population,
marriage/family trends, migratory flows
•Globalisation
* vertical, horizontal & diagonal integration; economies of
scale & scope; electronic databases & marketing
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MARKET SEGMENTATION AND
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TOURISM’S DETERMINANTS & INFLUENCES
•Localisation
* conflict between identity & modernity
* increased focus on ethnicity, religion, social structure
* questioning of the form & scale of tourism development in
developing countries
* opportunities for tourism related to cultural & natural
resources of destinations
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MARKET SEGMENTATION AND
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TOURISM’S DETERMINANTS & INFLUENCES
•Socio–environmental awareness: sustainable/responsible tourism
•Living & working environments: “time poor but money rich” –
human touch of tourism
•Service-to-experience economy
•Marketing
•Safety of travel
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
ROLE OF RESEARCH & INFORMATION
•What is tourism demand? – for:
- tourism office marketing executive
- parks manager
- transport operator
- hotel operator
- community through which tourists pass
- community in which tourist activity takes place
COMMON LINK IS THAT THEY CANNOT ACHIEVE THEIR GOALS
FROM TOURISM WITHOUT MARKET UNDERSTANDING
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
ROLE OF RESEARCH & INFORMATION
Marketing research & information system structured to:
* provide understanding of tourist demand
* quantify & forecast accurately
* identify trends & changes enabling us to anticipate
* monitor performance – both of competitors & ourselves
Primary reason for needing a good marketing information
system is long lead time for tourism infrastructure & facilities,
and difficulty of short term adjustment of supply i.e. rigidity of
supply
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
FORECASTING – SHORT & LONG TERM
Why are reliable forecasts needed in tourism?
* tourism product is perishable
* people are inseparable form the production-consumption
process
* customer satisfaction depends on complementary
services
* leisure tourism demand is sensitive to natural & manmade
disasters
* tourism supply requires large, long lead-time investment
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
USE OF TOURISM FORECASTS
1. To set marketing goals
2. To explore potential markets
3. To assess the impact on demand of future events
4. To determine operational requirements
5. To assess project feasibility
6. To predict the economic, socio-cultural & environmental
consequences of visitors
7. To assess the potential impact of regulatory policies
8. To project public revenues for tourism
9. To ensure adequate infrastructure & plant capacity
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
FINDING & APPLYING THE RIGHT METHOD
QUANTITATIVE VS. QUALITATIVE
Quantitative: extrapolative (time series), causal models
- problem of reliance on past relationships in a sector
subject to much continuous change
- complexity from large number of variables affecting
tourism demand and the way in which these interplay
- extrapolation methods: objective data, short time
horizon, few anticipated changes in environment
- regression analysis models: long forecast horizon, large
changes expected in environment, good information on the
relationship between the variables. NB if many data exist on
causal variables, structural causal models apply
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
FINDING & APPLYING THE RIGHT METHOD
Qualitative: jury of executive opinion, subjective probability
assessment, Delphi method, consumer intentions survey
Benefits & Difficulties:
- inexpensive
- no need for high level of statistical skills
- often only method available
- possible flawed selection of “experts”
- danger of confusing “forecasts” with “desires”
- predisposition to be anchored in the present
- no control over the assertion of the experts’ own views
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MARKET SEGMENTATION AND
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CONTINUING NEED INFORMATION SYSTEMS
Managers have different information needs at different times. These
can be met by an ongoing, continuous flow of information on certain
key subjects and through tailor-made research studies to investigate
a specific issue
Marketing information system based on three sources:
- internal records & resources
- intelligence gathering activities
- marketing research
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
INTERNAL RECORDS & RESOURCES
Determine management information needs through asking:
What types of decision do you make regularly?
What types of information are needed for these decisions?
What types of useful information do you get regularly?
What are the gaps? What is superfluous to your needs?
What information would you like daily? Weekly? Monthly?
What topics would you like to be kept informed about?
What databases would be useful to you?
What information analysis programmes would you like?
What improvements are needed to the present system?
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MARKET SEGMENTATION AND
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MARKETING INTELLIGENCE
Two types:
- generated by the organisation’s own people through
conversation & observation
- developed through external sources
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MARKETING RESEARCH
Four stage process:
- define the problem & research objectives
- develop the research plan
- implement the research plan
- interpret & report the findings
Three types of objective:
- exploratory: define problem, suggest hypotheses
- descriptive: market size, composition, characteristics
- causal: test hypotheses on cause-and-effect relationships
Three strategic concepts absent in tactical marketing:
1. Strategic business units & business portfolio analysis
2. Product: market growth models
3. Corporate & product positioning
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MARKET SEGMENTATION AND
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MARKETING RESEARCH
Secondary research then primary research
Primary research:
- observational
- survey
- experimental
Four methods:
- mail
- phone
- in-person
- email
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
SAMPLING & QUESTIONNAIRES
Sampling plan
- who to be surveyed?
- how many to be surveyed?
- how should the sample be chosen? Probability (random,
stratified). Non-probability (willingness/convenience, quota)
- when should the survey be conducted?
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MARKET SEGMENTATION AND
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SAMPLING & QUESTIONNAIRES
Questionnaire objectives
- to suit the nature of the target population
- to suit the research methods being used
- to suit the research objectives
- to collect the right kind of data
- to aid data analysis
- to minimise error & bias
- to encourage accurate & full responses
OPEN-ENDED OR CLOSED (yes/no, multiple choice)?
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MARKET SEGMENTATION AND
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SAMPLING & QUESTIONNAIRES
Attitudinal & motivational research response rating scales
Likert summated ratings (opposite statements on five- or
seven-point scale)
Semantic differential scales (bipolar five- or seven-point
rating scale)
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MARKET SEGMENTATION AND
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SUCCESSFUL RESEARCH INDICATORS
1.Set clear objectives
2. Select an appropriate method of research
3. Limit the scope of the survey to the collection of valid data
4. Undertake research over a sufficient time scale
5. Thorough but clear & concise briefing to research team
6. Provide sufficient resources to carry out research efficaciously
7. Speedy analysis mechanism
8. Ability to interpret the results with insight
9. User friendly presentation of results
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MARKET SEGMENTATION AND
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RESEARCH PITFALLS
1. Invalid assumptions
2. Lack of qualitative data
3. Failure to look at different segments within a sample
4. Improper use of sophisticated analysis methods
5. Failure to ensure the research sample is representative of the
population
6 Over-reliance on statistics
7. Failure to eliminate bias in interpretation
8. Unquestioning acceptance of research results
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
MARKET SEGMENTATION
Process whereby:
1. producers organise their knowledge of customer groups &
select those whose needs & wants they are best able to supply
with their products.
2. total market is divided into subgroups, or segments, for
marketing management purposes
Purpose:
To facilitate more cost-effective marketing through the design,
promotion & delivery of purpose-designed products, aimed at
satisfying the identified needs of the target groups
Means of implementing marketing strategy
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
MARKET SEGMENTATION
Market segmentation starts with understanding people’s
motivations
“Hierarchy of needs” (Maslow). Basic needs to sophisticated
desires. “I need to eat” >> “I need a holiday”
Needs-driven >> outer-directed >> inner-directed
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MARKET SEGMENTATION AND
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MARKET SEGMENT METHODS
Purpose of travel
Buyer needs, motivations & benefits sought
Buyer/user characteristics
Demographic, economic & geographic characteristics
Psychographic characteristics
Geo-demographic characteristics
Price
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
LIFESTYLE SEGMENTATION
The measurement of consumer attitudes and values – lifestyle –
is possible through computer programmes that identify and
measure the extent and strength of correlations between these
factors and consumers’ travel and tourism purchasing
behaviour.
This measurement can be further refined by probing attitudes
towards, and perceptions of, individual destinations (and their
attractions) and companies (and their products).
This type of research supports the technique of product
positioning.
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
LIFESTYLE SEGMENTATION
Psychocentric (inward looking) at one extreme
Allocentric (outward looking) at the other
The shape of the psychographic breakdown of any population is
bell-shaped, with most individuals exhibiting a combination of
psycho and allo characteristics - that is, mid-centric.
Destinations can be placed along the continuum between the
extremes. Their placement varies according to source market
being researched and changes over time.
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
PSYCHOCENTRIC
 Prefer the familiar in travel destinations
 Like commonplace activities at places visited
 Prefer sun and fun spots, with a focus on relaxation
 Low activity level
 Prefer destinations they can drive to (“being in control”)
 Prefer developed tourist areas,- hotels, restaurants, shops
 Prefer familiar atmosphere - international fast-food, familiar
entertainment – with minimal interest in local culture
 Like full tour packaging, with advanced activity scheduling
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
ALLOCENTRIC
 Prefer non-touristy areas
 Enjoy the sense of discovery and delight in new experiences
 Prefer novel & different destinations
 High activity level
 Prefer flying to destinations
 Adequate-to-good hotels and food, but not modern or chain
hotels, and few tourist-type attractions
 Enjoy meeting local people & having access to their culture
 Basic tour arrangement with considerable flexibility
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
GEOTOURISM
The National Geographic Society broadly classifies tourism into
three destination styles:
• touring
• rest and recreation, and
• entertainment.
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
GEOTOURISM
GEOTOURISM: “tourism that sustains or enhances the
geographical character of a place - its environment, culture,
aesthetics, heritage, and the well-being of its residents”.
Geotourism is therefore wider than the (as yet) better known
concept of “ecotourism” as it includes both people and their
environment.
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
RANGE OF RESOURCES FOR GEOTOURISM
• flora and fauna;
• heritage;
• scenic places;
• traditional architecture;
• local crafts;
• arts;
• cuisine; and
• dance.
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
DOMESTIC TOURISM
In countries with developed economies, tourism grew based on
domestic demand but there are mutual benefits from having a
combined national and international market – 70% of London’s
theatre income is derived from British audiences with foreign
visitors contributing the remainder, thereby enabling price levels
to be lower than if totally dependent on local demand.
UNEP workshop on Marketing Sustainable Tourism
Products: over-ambitious new tourism projects with limited
resources to attract “hard-to-reach” international tourists should
be deferred in favour of “promoting to the domestic market, and
the extension of current products”.
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MARKET SEGMENTATION AND
TARGET MARKET SELECTION
ONE-TO-ONE MARKETING
The principles of one-to-one marketing are:
• Meeting customer needs individually;
·
• Knowing your customers and their value to you – the “life
time value “ (LTV) concept – that is, the stream of expected
future profits, net of costs, on a customer’s transactions,
discounted at some appropriate rate back to its net present
value. Forecast probabilities, and added benefit of referrals
of other customers;
·
• Investing in customers with high value LTVs: and
·
• Defining the right strategy aimed at improving the capabilities
needed to turn the business into more of a one-to-one
enterprise.
R. Cleverdon
THE COMPETITIVE CONTEXT
Thank you!
R. Cleverdon