Market Segmentation

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Market Segmentation in Tourism
Every tourist is different. Every tourist feels attracted by different tourist destinations, likes to engage in different activities while on vacation, makes use of different entertainment facilities and complains about different aspects of their vacation. While all tourists are different, some are more similar to each other than others: many people enjoy culture tourism, many tourists like to ski during their winter holiday and many tourists require entertainment facilities for children at the destination. Acknowledging that every tourist is different and that tourism industry cannot possibly cater for each individual separately forms the basis of market segmentation. Smith (1956) introduces the concept of market segmentation as a strategy. He states that "Market segmentation […] consists of viewing a heterogeneous market (one characterized by divergent demand) as a number of smaller homogeneous markets". When segmenting a market, groups of individuals are developed which are similar with respect to some personal characteristic. The particular personal characteristic with respect to which similarity is explored is the segmentation criterion or segmentation base. Segmentation criteria / bases can be socio-demographics (for instance, old versus young tourists), behavioral variables (skiers versus sightseers) or psychographic variables (tourists motivated by rest and relation versus those motivated by action and challenges). Market segmentation can be applied by any unit operating in tourism industry: hotels, travel agencies, tourist attractions, restaurants, and local charities. A tourism destination is the entity for which market segmentation is conducted. The benefit of market segmentation lies in a tourist destination being able to specialize on the needs of a particular group and become the best in catering for this group. In doing so the destination gains a competitive advantage because (1) competition can be reduced from the...
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