Market Segmentation Market Segmentation is pursuing a marketing strategy whereby the total potential market is divided into homogeneous subsets of customers, each of which responds differently to the marketing mix of the organization.

Criteria for Effective Market Segmentation Substantiality – large enough to warrant attention Measurability – potential demand and purchasing power Accessibility – can reach segments with a variety of communications Actionability

Segmentation Variables Geographic – country, region, state, MSA Demographic – age, income, family size Psychographic – lifestyle, hobbies, interests Behavioral – frequent user, trip behaviors Benefits Sought – price, location, convenience

Market Segmentation Decision Process Identify segmentation bases Develop profiles for each segment Forecast potential demand Select specific target market segments

Market Segmentation Strategies Mass-market strategy – one product-services mix for all potential customers Differentiated strategy – more than one market segment with a separate marketing program for each Concentrated strategy – one (or a few) market segments with limited changes in the marketing program

The Positioning Process Positioning-The process of determining how to differentiate a firm’s product offerings from those of its competitors in the minds of consumers Four Steps in the Positioning Process  Determine the ideal mix for consumers  Measure consumer perceptions of available services  Look for gaps in coverage and select a desired position  Develop a strategy for obtaining the desired position

Step1-Determine the ideal mix for consumers Table 4.2 Important Attributes for Hospitality and Travel Firms Type of Firm List of Attributes Restaurant Price, value, quality of food, type of food, service quality, menu variety, employee friendliness, location, atmosphere, speed of service, cleanliness, parking Hotel Price, value, room quality, restaurant quality, location, number and types of restaurants, other facilities (e.g., pool and fitness center), cleanliness, atmosphere, employee friendliness, speed of check-in and check-out, amenities (e.g., valet parking and room service), service quality Airline Price, value, service quality, employee friendliness, on- time performance, baggage handling, direct routes, cities served, scheduled flights, frequent flyer programs Rental Car Company Price. value, service quality, convenience, location, types of cars, condition of cars, speed of service, pick-up and drop-off policies

Step2- Measure consumer perceptions of available services Perceptual mapping -A technique used to construct a graphic representation of how consumers in a market perceive a competing set of products relative to each other Table 4.3 Competitive Benefit Matrix Potential benefitsOur OperationCompetitor ACompetitor B Value for price Quality of food Quality of service Atmosphere Location Menu variety

Step3-Look for gaps in coverage and select a desired position Positioning statement - Results from consumer research and perceptual mapping enable firms to develop a positioning statement. The positioning statement should differentiate the organization’s product–service mix from that of the competition Unique selling proposition (USP) - Promoting a unique element of the product–service mix

Step4-Develop a strategy for obtaining the desired position Guidelines for Developing Positioning Strategies  What position do you own?  What position do you want?  Who must you outgun?  Do you have enough money?  Can you stick it out?  Do you match your position?

Market Segmentation

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