MARKET SEGMENTATION TARGETING POSITIONING Ch. 8 KOTLER, BOWEN, AND MAKENS. MARKETING FOR HOSPITALITY AND TOURISM. 6E. PEARSON HIGHER EDUCATION. 2014
MARKET SEGMENTATION Dividing a market into distinct groups who have, or are perceived to have, common needs, interests, and priorities that might require separate products and / or marketing mixes There is no single way to do this
MARKET SEGMENTATION Enormous variety of variables Really, every single consumer is a separate market (complete segmentation) This is impossible, and inefficient, so we look for wide groups / classes / categories / segments of buyers who share a relatively dependable need or buying response Can t serve all customers equally
MARKET SEGMENTATION: GE0GRAPHIC World Region or Country Country Region City or Metro Size Density Climate All are important in understanding preferences, and making marketing decisions
Different preferences in different regions In the south, people tend to like spicier foods Bring people to you, or you to them
MARKET SEGMENTATION: DEMOGRAPHIC Age Gender Family size Family life cycle Religion Race Generation Nationality Income Occupation Education
MARKET SEGMENTATION: DEMOGRAPHIC Most popular bases for segmenting 1. strong correlation between demographic variables and consumer needs, wants, and usage rates 2. easy to measure
MARKET SEGMENTATION: BEHAVIORAL Buyers grouped by their knowledge, attitude, use, or response to a product Occasion Benefits User status Usage rate Loyalty status Readiness stage Attitude towards product
MARKET SEGMENTATION: BEHAVIORAL Occasion segmentation Holidays Honeymoons Weddings Birthdays Concerts Festivals
MARKET SEGMENTATION: BEHAVIORAL Group guests by the product Benefits they seek Hotels accommodating pets Restaurant appeal categories How important is food quality, menu variety, price, atmosphere, and convenience Family-style restaurants guests value convenience and menu variety Atmosphere restaurant guests value food quality and atmosphere Gourmet restaurant guests value food quality
MARKET SEGMENTATION: BEHAVIORAL User status Non-user Ex-user Potential user First-time user Regular user
MARKET SEGMENTATION: BEHAVIORAL Usage rate Light Medium Heavy: 80/20 rule Promote your loyalty program
MARKET SEGMENTATION: BEHAVIORAL Loyalty status Would you market your product the same way to a loyal guest vs a non-loyal one? None Medium Strong Absolute Price sensitive insensitive
MARKET SEGMENTATION: PSYCHOGRAPHIC Divides customers based on Social class Lifestyle Personality
REQUIREMENTS FOR EFFECTIVE SEGMENTATION Is every variable important? Can group people by hair color, but is that helpful? Measurability: can you determine segment size and purchasing power Accessibility: can you reach the segment 20% of a restaurant s guests near a university were frequent users, but they had no common characteristics Students, faculty, staff, part-time, full-time, 1 st -4 th year how can you assess and serve this frequent-user segment
REQUIREMENTS FOR EFFECTIVE SEGMENTATION Substantiality: is the segment large enough or profitable enough to serve as a market for your business You have a great concept for an Ethiopian food restaurant, but you put it in a small town with low population and density, not a good fit for a niche Actionability: degree to which effective programs can be designed for attracting and serving segments Is it going to cost to much to create a marketing program
MARKET TARGETING You have researched and distinguished many different market segments, but which ones provide the best opportunity
MARKET TARGETING: EVALUATION CRITERIA Size, growth rate, and expected profitability Structural attractiveness Lots of competitors? Buyer power? Supplier power? Substitute goods? Company objectives and resources Mission, vision, image Don t want to overextend yourself, or go after a market and fail KFC and healthy food
TARGET MARKET SELECTION STRATEGIES Undifferentiated Marketing Ignore segment differences and go after the whole market with one offering Marketing plan to reach the greatest number of buyers, and focuses on the common need everyone shares Need a place to stay that is not my home Pro: Advertising is cheaper, research is cheaper Cons: Difficult to create a product that satisfies everyone
TARGET MARKET SELECTION STRATEGIES Differentiated Marketing Target several segments and design separate products for each Reason why the major hotel chains have so many brands Typically yields more sales than undifferentiated (three brands in one city vs 1) Signature: Marriott Luxury: Bulgari, Ritz-Carlton, JW Marriott Lifestyle collection: Edition, Autograph Collection, Moxy, AC Hotels, Renaissance Select service: Courtyard, Springhill Suites, Fairfield Inn Extended Stay: Residence Inn, TownePlace Suites, Marriott Executive Apartments Destination entertainment: Gaylord Hotels
TARGET MARKET SELECTION STRATEGIES Concentrated marketing Pursue large share of a small market (or a few), instead of a small share of a large market Good for companies with limited resources Less risk to go after a few markets than just one; basic concept of diversification
MARKET POSITIONING You have broken down your market into segments, chosen the most appropriate target markets, now how do you want to position your product in the minds of these target market consumers? Product positioning: The way a product is defined by consumers on important attributes, essentially meaning the place the product holds in consumers minds relative to competitors Do not leave this to chance; plan for it McD: quick, low price, service with a smile BK: flame-broiled cooking method Wendy s: only fresh meat, never frozen Checkers: double drive through, unique French fries
MARKET POSITIONING STRATEGIES Specific product attribute positioning Attribute MUST create a benefit for the guest Subway as a healthy alternative to fried fast foods Tag lines (Eat fresh), commercials support this (Jared), website gives nutrition info Stamford hotel: height Product class positioning Cruise lines typically position themselves against other forms of vacation instead of against competitors How do we choose a positioning strategy?
Identifying Competitive Advantages Selecting Competitive Advantages Effectively Communicate Chosen Position Better price or better bundle of benefits What are some potential competitive advantages a hotel can have?
MARKET POSITIONING: IDENTIFYING COMPETITIVE ADVANTAGES hysical attribute differentiation Design Motel/hotel cookie-cutter image
MARKET POSITIONING: IDENTIFYING COMPETITIVE ADVANTAGES Service Differentiation Good reputation develops over time Four Seasons Istanbul Sultanahmet AND Bosphorous in top 5 Travelandleisure.com Overall Service Rating 2013 Personnel Differentiation Singapore airlines, Southwest airlinesmarket positioning: identifying competitive advantages
MARKET POSITIONING: IDENTIFYING COMPETITIVE ADVANTAGES Location differentiation seaside view, nearby to public transport, airport One block can make a difference Central park view in NY or not On Bourbon St or Frenchman St. in New Orleans Motel right on the highway or not
MARKET POSITIONING: IDENTIFYING COMPETITIVE ADVANTAGES Image differentiation I don t want to visit China or India, but I would visit Thailand Diyarbakir Celebrity Cruise: Casual luxury Sheraton hotel: You don t stay here, you belong Ritz-Carlton: We are ladies and gentlemen serving ladies and gentlemen Royal Caribbean: modern, technological, innovation
Identifying Competitive Advantages Selecting Competitive Advantages Effectively Communicate Chosen Position
MARKET POSITIONING: SELECTING COMPETITIVE ADVANTAGES How many to choose 1. Choose one attribute and stick to it We have the lowest prices 2. Choose multiple We have the best value AND service As a result of increasing competition and market fragmentation, companies tend to choose multiple advantages This increases risk as well
MARKET POSITIONING: SELECTING COMPETITIVE ADVANTAGES Potential Mistakes Underpositioning: failing to position the company at all Customer hears the name and can t think of anything, or just knows what product category the company is in Overpositioning: giving consumers too narrow a picture of the company Confused positioning: the company s positioning is unclear Every restaurant in Adana
MARKET POSITIONING: SELECTING COMPETITIVE ADVANTAGES Which differences to choose Important: buyers value the difference Distinctive: not offered by competitors Superior: the difference is a better way to obtain the benefit than other options Communicable: visible to buyers and easy to understand Preemptive: competitors can t duplicate it Affordable: buyers can afford it Profitable
Identifying Competitive Advantages Selecting Competitive Advantages Effectively Communicate Chosen Position
MARKET POSITIONING: EFFECTIVELY COMMUNICATE THE CHOSEN POSITION Can be difficult Entire marketing mix and marketing strategy must support positioning strategy Work with advertisers who understand and deliver your message in the right way Changes in management can change strategic decisions Positioning takes time to develop
MARKET POSITIONING MEASUREMENT: PERCEPTUAL MAPS