Market Segmentation For Hospitality Industry

Numerous organizations nowadays understand that they can’t interest all clients in the marketplace, or in any case not all customers in the same way. Customers are too numerous too widely scattered, and too varied in their needs and buying process (Kotler and Bowen, 2010). In addition, Kotler and Bowen (2010) added that most organizations themselves vary widely in their abilities to serve different market segments. Every individual association must perceive the pieces of the market that they can serve the best and most gainfully by planning customer-driven marketing strategies that fabricate the right relationships with the right clients. According to Kotler et al (2003), target marketing contains three different steps. Primarily is market segmentation which divides the market into different groups and identifies different ways to develop profiles of the resulting market segments. The secondary is market targeting, by evaluating each segment’s attractiveness and selecting one or more of the market segments. Finally, market positioning, which is developing products competitive positioning and an appropriate marketing mix.

The world is comprised of a wide range of consumers, each with their own needs and behaviors. Segmentation tries to supplement consumers with items that fulfill their individual needs and behavior patterns. Think about a market as a chain of associated and exceptional segments, each with its own profile. Companies can discover new segments by researching the hierarchy of attributes that consumers will consider when choosing a brand (Kotler).

Market segmentation is a technique that divides consumers with comparative needs and basic purchasing practices into segments. These portions become the reason for targeted marketing, which is a more proficient and effective method of marketing. This is basically a client-focused methodology that matches items and contributions to customer interests. These changes are intended to more readily coordinate the particular attributes and behaviors of segments, or groups, of consumers. A market segmentation approach is led by adhering to certain standard steps that are intended to comprehend the correlation patterns among enormous purchaser groups. Segmentation begins by identifying a constellation of metrics that will be utilized as the reason for deciding how to group customers.

To associate personality with brands, psychographic segmentation was developed by marketing researchers. Psychographics is defined as ‘the study of personality, values, attitudes, desires, and lifestyles.’ In order to interact efficiently with them, companies need to know their customer preferences and for the customer to recognize the goods or services of the company. Psychographic segmentation works on the prospective customer’s psychology and lets the merchant determine how the consumer who to handle the consumer who belongs to some particular segment.

Chaney (1996) asserted that lifestyle allows individuals to identify their attitudes and values, as well as to demonstrate their wealth and social identities. Not only is a lifestyle a mixture of different objects and processes, but it also offers a sense of common identity. Market segmentation, as stated by Boote (1981), is used as a method to classify individuals within the

market who are more likely to be impacted by marketing activities associated with a specific product or service. Boote (1981) further noted that there are two purposes for the use of market segmentation: (1) to have the product, service, or brand more sophisticated to be sold rather

than simply concentrating on the entire market, and (2) to maximize marketing efficiency that focuses the effort directly on target segments, taking into account the characteristics of those segments in particular.

Wells (1974) indicated that in the study of marketing activities for segmentation, lifestyle analysis is recognized as one important field. Any two products may share demographic profiles that are very similar, but the products may have very different psychographic profiles. While demographics are typically used as a basis for target group classification, if specific lifestyle information is offered, more useful information can be generated.

Lifestyles are detailed patterns of one’s actions, and those actions derive from his/her inner values (Mitchell,1983). Horley, Carroll, & Little (1988) claimed that lifestyle could be recognized as unique features or one’s way of life. Wells (1974) pointed out that lifestyles are generally considered to be the mainstay of psychological study, and knowledge on lifestyles can also clarify a great deal about buying behaviours. Plummer (1974) said lifestyle research offers a powerful approach to understanding, interact, and targeting customers.

Marketing lifestyle is important because today’s media is fragmented, brand loyalty might not be as easy as it was in the past, products are no longer just products, and product categories are saturated (Schreiber & Lenson, 1996). The incorporation of lifestyles in marketing enables personal values and social issues to be used for the careful segmentation of target buyers and users. By developing company identity and product differentiation, offers an efficient alternative to conventional marketing methods. Anderson and Golden (1984 ) argued that lifestyle is related to the economic level at which people live, how they spend their money, and how they allocate their time. In particular, research on lifestyle segmentation analyses how individuals spend their time, what desires they have, what they value, and defines some specific demographic features.

The Hotel Marketing Theory can mean anything from personal sales, advertisements, making hotel rooms available online etc. These operations are carried out in the pre-arranged market (Prasad & Dev, 2000). The basic requirement of each guest is the need for adequate accommodation with outstanding facilities. However, given the various types of hotels available for the different market segments, it is important to identify hotels in order to meet the needs of the guests. This theory is focused around what to concentrate on and why, as hotel chain companies have finite properties, it might not be possible to have the best product for all.

A limited-property corporation must choose only the best chance of impact. It takes care of the components of what visitors expect in a hotel, what that demand demands in terms of design, size, decoration, facilities, amenities, staff and room rate.

It was found that personal characteristics, hospitality activities, and information sources can be used to predict the hospitality activities that people engage in. The concept of lifestyle emphasizes what people value and how they behave. Although individuals’ attitudes toward objects are essential, human behaviors are usually the final observable outcomes that marketers and consumer scientists can examine. A study found information on what hospitality activities people actually engage in, and information on how they value their lives. Those behaviors and values help researchers to picture how a person engages in certain activities in certain ways.

Using the lifestyle segmentation method, individuals’ behaviors, attitudes, and values are all taken into considerations in order to create distinct segments. A study found that current hospitality consumers in the United States can be categorized into three different hospitality segments: Family, Active, and Inactive groups.

The family group has a stable hospitality lifestyle with a family-oriented concentration. Members of the family group are predominantly married males, college graduates, and have three children but no child under age 18. The family group is conservative in its decisions on hospitality activity. In other words, the members in this group are more ‘picky’ then other groups when engaging in hospitality activities.

The active group participates heavily and regularly in hospitality activities. The participants in this group are younger, highly educated, take multiple trips, spend more money on food, and consume more alcoholic drinks than the other two groups. Above everything, this group values fun and enjoy life. The essential source of hospitality information for them is word of mouth from friends and family.

The inactive group does not participate in most hospitality activities. Married women dominate this community and the most important value to them is security. People in the inactive group do not take many trips, spend less money while eating out, and often do not consume alcoholic beverages.

Most predictors of hospitality activities are not related with personal characteristics (e.g., demographic), but rather to other items of hospitality activities. The most significant factor affecting other hospitality activities is the consumption of alcoholic beverages. Additionally, this factor was one of the main features in distinguishing between different hospitality lifestyle segments.

In order to have a higher degree of customer loyalty and retention, the key advice for individuals employed in the hospitality industry relates to targeting the right market segments. The following discussions offer alternatives to concentrate on various segments of hospitality lifestyle for hospitality companies.

Mid-priced hotels and economy hotels are the two major respondents in the hotel segments. Due to economic and other issues, these two segments will continue to be popular in the near future. When choosing or changing hotels, the most significant criterion for individuals was cleanliness. Although price and location were other factors, cleanliness should surely be put above all else. During weekdays, the family group mostly remains at mid-priced hotels. In order to attract the family group and get them to stay longer, hotels will therefore offer discounted weekday packages. The active group often stay at a lower priced economy hotel to save money to spend on other hospitality activities. Hotels should concentrate their marketing efforts on this lucrative group in order to attract and maintain this profitable market. The inactive group does not participate in many hospitality activities. The best way for hotels to meet and maintain this category is to offer quality services to attain higher levels of customer satisfaction. As this group could be rising due to economic and travel-related issues, hotels need to be prepared to meet the security needs of these groups.

The economic crisis and war events have directly impacted travel operations. The primary concern of travel-related organizations needs to be safety concerns and discount prices.

In contrast to the other two groups, the active group moves the most. In order to attract and maintain this lucrative group, the travel industry will therefore be able to target active group through special promotions through their frequent travel programs.

The active group are heavily involved in food and beverage activities. They are the largest consumption group for alcoholic drinks. Restaurant and bars may want to suggest cross-promotions with hotels, as this group travels frequently, in order to attract more potential customers. In order to draw more clients from the family group, family dining restaurants may promote weekday lunch specials. Usually, delivery or take out services will be more appealing to the inactive group.

In order to meet this group, members of the family group tend to have more considerations when engaging in the hospitality-related activities, “family” is the key concern for the industry to solve. Developing family package tours, family meal specials, and family group discounts in hotels may be one of the tactics for the industry to consider in order to attract this group. The active group is involved in most hospitality events and can theoretically be used as a source of information for other organizations. People also seek advice from friends or relatives

who travel or eat more often than they do. The hospitality industry will also be able to gain access to the family and inactive groups by satisfying the active community.

The members of the family group tend to have more considerations when participating in hospitality-related activities, in order to reach this group, ‘family’ is the main issue for the industry to address. Developing family package trips, family meal specials, and family group discounts in hotels, may be one of the strategies for industry to consider in order to attract this group. The active group highly participate in most hospitality activities, and potentially may be used as an information source for other groups. People will often seek the advice of friends or family who travel or eat out more often then they do. By satisfying the active group, the hospitality industry may also be able to gain access to the family and inactive groups. Another consideration for this inactive group is that the industry should promote itself through public relations and educational programs in order to encourage and motivate this group to take part in hospitality activities.

It should be noted that, due to economic, tourism and war-related issues, consumers may be shifting from one hospitality lifestyle to another. Some Americans may have modified their lifestyles of hospitality and become part of an inactive community because of their fears of travel-related terrorism. Since the study found that the active community had the least number

of participants, it should be the main goal for any hospitality-related company. It is important that the industry maintains the active group while at the same time seeking to increase the family and inactive groups. Relationship marketing and public relations are critical for the industry to be properly handled in order to establish a healthy and long-term relationship with its customers in any hospitality lifestyle group.