Chapter Twelve

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Shoemaker, Lewis, and Yesawich: Marketing Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4Leadership in Hospitality and Tourism, 4 thth edition edition

Chapter TwelveChapter Twelve

Differentiation, Differentiation, Segmentation, and Target Segmentation, and Target

MarketingMarketing



DifferentiationDifferentiation

Separating your product in the mind Separating your product in the mind of the consumer so that they will of the consumer so that they will choose you over the competitionchoose you over the competition

Basis of differentiation:Basis of differentiation:– Difficult to duplicateDifficult to duplicate– Focuses on specific need or wantFocuses on specific need or want– Creates a perception that the change is Creates a perception that the change is

greater than the specific differencegreater than the specific difference





Differentiation (cont.)Differentiation (cont.)

Differentiation of intangiblesDifferentiation of intangibles– ““Tangibilize the intangible”Tangibilize the intangible”

Differentiation as a marketing toolDifferentiation as a marketing tool– Can be real or perceived and create Can be real or perceived and create

awareness for the firmawareness for the firm Differentiation–of anythingDifferentiation–of anything

– The customer’s perceived difference in a The customer’s perceived difference in a productproduct





Market SegmentationMarket Segmentation

Complementary strategy to Complementary strategy to differentiationdifferentiation

Divides market by customers’ Divides market by customers’ different needs and wantsdifferent needs and wants

Which comes first?Which comes first?



Market Segmentation (cont.)Market Segmentation (cont.) The process of market segmentation:The process of market segmentation:

– Step 1: Needs and wants of the Step 1: Needs and wants of the marketplacemarketplace

– Step 2: Projecting needs and wants into Step 2: Projecting needs and wants into potential marketspotential markets

– Step 3: Matching the market and Step 3: Matching the market and capabilitiescapabilities

– Step 4: Segmenting the marketStep 4: Segmenting the market– Step 5: Selecting target markets from Step 5: Selecting target markets from

identified segmentsidentified segments



Tailoring the Product to the Wants Tailoring the Product to the Wants and Needs of the Target Marketand Needs of the Target Market

Advantages:Advantages:– Better able to identify and evaluate Better able to identify and evaluate

opportunitiesopportunities– Better mesh our product with consumer Better mesh our product with consumer

needsneeds– Better able to allocate resourcesBetter able to allocate resources– Use intelligence to change strategyUse intelligence to change strategy– Able to differentiateAble to differentiate– Determine strategies to enlarge core Determine strategies to enlarge core

marketmarket



Segmentation VariablesSegmentation Variables

Geographic segmentationGeographic segmentation– Most widely used in hospitalityMost widely used in hospitality– MSA and DMAMSA and DMA

Demographic segmentationDemographic segmentation– Easily measured and classifiedEasily measured and classified

Psychographic segmentationPsychographic segmentation– Based on self-concepts, lifestyle Based on self-concepts, lifestyle

behaviors, and personality traits behaviors, and personality traits









Segmentation Variables (cont.)Segmentation Variables (cont.) Usage segmentation:Usage segmentation:

– PurposePurpose– FrequencyFrequency– Monetary valueMonetary value– RecencyRecency– REMREM– TimingTiming– Nature of purchaseNature of purchase– Where they goWhere they go– Purchase occasionPurchase occasion– Heavy, medium, and light usersHeavy, medium, and light users



Segmentation Variables (cont.)Segmentation Variables (cont.)

Benefit segmentationBenefit segmentation Price segmentationPrice segmentation

– Between product classBetween product class– Within product classWithin product class

International segmentationInternational segmentation Fine-tuning segmentsFine-tuning segments

– Become more specific and concentratedBecome more specific and concentrated



Luxury - top 15% average room ratesUpscale - next 15% average room rates

Mid-Price - middle 30% average room ratesEconomy - next 20% average room ratesBudget - lowest 20% average room rates

In rural or non-metro STR markets, the luxury and upscale segments collapse into the upscale and form four price segment categories:

Upscale - top 30% average room ratesMid-Price - next 30% average room ratesEconomy - next 20% average room ratesBudget - lowest 20% average room rates

Price Segments in the U.S. Price Segments in the U.S. Lodging IndustryLodging Industry



Globalization of Globalization of MarketsMarkets

Theodore Levitt’s Theodore Levitt’s argument in the argument in the “era of “era of multinational multinational marketing”marketing”

Segmentation Segmentation StrategiesStrategies

Behavior of Behavior of segments is the segments is the test of validitytest of validity

Avoid too much Avoid too much segmentationsegmentation

Seek the ideal Seek the ideal segment mixsegment mix





Target MarketingTarget Marketing

Drawn from segmentsDrawn from segments Are more refined toward more Are more refined toward more

specific portions of the marketspecific portions of the market Three strategies:Three strategies:

– UndifferentiatedUndifferentiated– ConcentratedConcentrated– Differentiated multi-targetDifferentiated multi-target



Mass CustomizationMass Customization

Customers as a “segment of one”Customers as a “segment of one”

Put forth by technology and databasesPut forth by technology and databases



Documents

Chapter Twelve