Market segmentation and targeting

Market Segmentation in Travel and Tourism

Market segmentation is the process of dividing a broad market into distinct subsets of customers with common needs, wants, or characteristics.
It allows a business to target its products or services more accurately, hence towards those who are most likely to benefit from or be interested in them.

Geographic segmentation involves segmenting the market based on location such as countries, regions, cities, or neighbourhoods.
Demographic segmentation is based on variables like age, gender, income, education, occupation, marital status, family size, and ethnic background.
Psychographic segmentation considers aspects like lifestyle, values, attitudes, and personality traits.
Behavioural segmentation is based on customer behaviour, including knowledge of, use of, or response to a product or service.

Market targeting (also called target marketing) is the act of selecting a segment or segments of the market that your organisation decides to serve or sell to.
The selected segments should be large enough to justify the resources needed to target them yet small enough to be engaged effectively.

Undifferentiated targeting (or mass marketing) is when a company decides to serve the entire market with one offer.
Differentiated targeting (or segmented marketing) involves targeting several market segments and designing separate offers for each of them.
Concentrated targeting (or niche marketing) is when a company decides to target one or a few lucrative market segments.
Micro-marketing is the practice of tailoring products and marketing programs to suit the needs and wants of specific individuals and local customer segments.

In order to evaluate and select the most beneficial market segments to target, businesses may consider factors such as the segment size and growth, its structural attractiveness, and how well the company’s objectives and resources match the segment’s needs and wants.
The cost-effectiveness of reaching the segment, potential for increased profit, and the intensity of competition within the segment are also important considerations.

By understanding market segmentation and targeting, businesses in travel and tourism can better identify customer needs and more effectively allocate resources.
This knowledge also aids in designing and implementing marketing strategies that are more likely to attract and retain the desired customers.
Overall, segmentation and targeting contribute to a business’s competitive advantage by helping to deliver superior customer value.