Market Segmentation in Hospitality Research

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Market segmentation in hospitality research: no longer a sequential process

John T. Bowen William F. Harrah College of Hotel Administration, University of Nevada, Las Vegas, USA Explores development in market segmentation relating to hospitality and tourism research published between 1990 and 1998. The literature is divided into three sections: segmenting a market; market targeting and marketing positioning. Identifies new areas for research, deeper examination of segments, identification of difference between markets, and more segments.

“One of the most important strategic concepts contributed by the marketing discipline to business firms and other types of organizations is that of market segmentation” (Myers, 1996). Segmentation involves a three-step process (Kotler et al., 1999). The first step in this process is market segmentation, dividing a market into distinct groups of buyers who might require separate products and/or marketing mixes. The company identifies different ways to segment the market and develops profiles of the resulting market segments. One of the most frequently used methods for segmenting a market has been demographic segmentation. Demographic segmentation consists of dividing the market into groups based on demographic variables such as age, gender, family life cycle, income, occupation, education, religion, race, and nationality One reason for the popularity of . this method is that consumer needs, wants, and usage rates often vary closely with demographic variables. Another is that demographic variables are easier to measure than most other types of variables. Other variables can be used to segment markets. For example, geographic, psychographic and behaviouristic variables are other common segmentation variables. Geodemographic segmentation, such as the segments created by PRIZM, creates profiles of different zip codes. Geodemographic segmentation is based on the premiss that birds of a feather flock together. For example the world’s largest users of scheduled airlines belong to suburbs called the Urban Gold Coast. The suburbs are composed of upscale high-rise neighbourhoods in only a handful of big cities. Urban Gold Coast tops many demographic lists: most densely populated, most employed, most white-collar workers, most renters, most childless, and most New York based. Almost two-thirds live in residences worth more than $200,000; decorating their home according to Metropolitan Home; buying their clothes at Brooks Brothers; and frequenting the same hand starch Chinese laundries. In Urban Gold Coast, residents have the lowest incidence of auto ownership in the nation; these cliff-dwellers get around

by taxi and rental car. Urban Gold Coast residents usually eat out for dinner and lunch. They comprise 5 per cent of US households. Sample neighbourhoods include Manhattan, New York – Upper East and Upper West Sides, area codes 10021 and 10024, West End, Washington, DC 20037, Fort Dearborn, Illinois 60611, Rincon East (San Francisco), California 94111 (Weiss, 1988). The geodemographic system has evolved into household models. Rather than assume that all members of a zip code share the same characteristics, these new systems look for individual households that share the same characteristics. Jock Bickert, formerly of National Demographics and Lifestyles, Inc. (NDL) and now with Looking Glass, Inc., has developed a household segmentation called Cohorts. Cohorts profiles 11 married groups, eight single female groups and eight single male groups. He has given the groups names such as Jason, Kenny, Elmer, Stuart, Minnie, Victoria, Hazel, Elwood and Willamae, Alec and Elyse, and Abe and Millie. The following are sample descriptions of the segments: • Alec and Elyse. Affluent, empty-nesters, dual-income, older couples who use their discretionary income to enjoy all aspects of the good life, median age 53, income >$100,000. • Elwood and Willamae. Retired couples with modest incomes who dote on...
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