© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Chapter Twelve Differentiation, Segmentation, and Target Marketing

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Differentiation  Separating your product in the mind of the consumer so that they will choose you over the competition  Basis of differentiation: –Difficult to duplicate –Focuses on specific need or want –Creates a perception that the change is greater than the specific difference

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Differentiation (cont.)  Differentiation of intangibles –“Tangibilize the intangible”  Differentiation as a marketing tool –Can be real or perceived and create awareness for the firm  Differentiation–of anything –The customer’s perceived difference in a product

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Market Segmentation  Complementary strategy to differentiation  Divides market by customers’ different needs and wants  Which comes first?

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Market Segmentation (cont.)  The process of market segmentation: –Step 1: Needs and wants of the marketplace –Step 2: Projecting needs and wants into potential markets –Step 3: Matching the market and capabilities –Step 4: Segmenting the market –Step 5: Selecting target markets from identified segments

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Tailoring the Product to the Wants and Needs of the Target Market  Advantages: –Better able to identify and evaluate opportunities –Better mesh our product with consumer needs –Better able to allocate resources –Use intelligence to change strategy –Able to differentiate –Determine strategies to enlarge core market

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Segmentation Variables  Geographic segmentation –Most widely used in hospitality –MSA and DMA  Demographic segmentation –Easily measured and classified  Psychographic segmentation –Based on self-concepts, lifestyle behaviors, and personality traits

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Segmentation Variables (cont.)  Usage segmentation: –Purpose –Frequency –Monetary value –Recency –REM –Timing –Nature of purchase –Where they go –Purchase occasion –Heavy, medium, and light users

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Segmentation Variables (cont.)  Benefit segmentation  Price segmentation –Between product class –Within product class  International segmentation  Fine-tuning segments –Become more specific and concentrated

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Luxury - top 15% average room rates Upscale - next 15% average room rates Mid-Price - middle 30% average room rates Economy - next 20% average room rates Budget - 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 rates Mid-Price - next 30% average room rates Economy - next 20% average room rates Budget - lowest 20% average room rates Price Segments in the U.S. Lodging Industry

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Globalization of Markets  Theodore Levitt’s argument in the “era of multinational marketing” Segmentation Strategies  Behavior of segments is the test of validity  Avoid too much segmentation  Seek the ideal segment mix

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Target Marketing  Drawn from segments  Are more refined toward more specific portions of the market  Three strategies: –Undifferentiated –Concentrated –Differentiated multi-target

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Mass Customization  Customers as a “segment of one”  Put forth by technology and databases

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition