Market Segmentation
Market segmentation is a marketing procedure which involves dividing a huge goal market into subsets of patrons, organizations, or international locations that have, or are perceived to have, usual needs, interests, and priorities, after which designing and imposing systems to goal them.
Hospitality markets can be segmented in the following basis:
| Table of ContentsBase for segmentation | What it means? | Example |
| Geographic Variables | Guests can be divided into different segments on such geographic units such as nations, states, regions, cities etc. Their preferences may vary because of their geographic differences. | Most hotels understand the importance of segmenting the markets based on the origin of the guests (i.e. the place they come from). It is an effective way to identify those places that the hotels should concentrate on advertising and promotion. |
| Demographic Variables | Guests are divided into different segments based on age, gender, income, family, educational level, occupation etc. | McDonald’s understands the importance of segmenting the fast food markets on the basis of age; the company’s Happy Meal and the “Go Active Birthday Party” are specifically targeted at children. |
| Psychographic Variables | Guests are divided into different segments based on their social class, lifestyle, and personality characteristics. | Afternoon tea, brunch etc. in most hotels is targeted at the upper classes (based on social class) |
| Behavioral Variables | Guests are also divided on the basis of their knowledge, attitude, use, or response to a product or service. | Most of the hotels understand the importance of grouping guests according to the product/service they seek. Therefore atmosphere and food quality are often highlighted by luxury restaurants in their promotional messages. |
Market segmentation is a useful approach to understand the structure of the hospitality markets better and it helps hospitality organizations to identify the needs of specific market segments so that suitable products and services can be identified to suit each segment.
The following is a list of initiatives commonly taken by hotels worldwide; which clearly reflect the ways that the hotel industry segments its markets:
- A Ladies Executive Floor is exclusively provided for female executive travelers given that women business travelers are traveling more nowadays (Demographics Segmentation).
- The spa has become popular among the higher class travelers in recent years. Thus many hotels position themselves as true spa hotels (Psychographic Segmentation).
- Many hotels also have Frequent Traveler Rates for regular guests to increase loyalty and frequency of use even further (Behavioral Segmentation).
- Services like translators and audio aids are given for helping international guests (American, Chinese, English) for effective service (Geographic Segmentation).
Target Markets – The groups of people that an organization wants to attract as guests are known as target markets.
Different Target Markets have Different Product/Service Needs
| Target Market | Hospitality Products / Services |
| Families | . Rooms with more space. Reasonable rates or no extra rates for children. Low-cost recreational facilities. Room with kitchen facilities. Kiddie menus. Colorful interior rooms. In house doctors. Baby-sitting facilities. All-inclusive packages |
| Business Executives | . 24 hours room service. Internet connection. Business centre. Airport pickup and drops. Conference rooms. Quality service |
| Female Travelers | . Safety (primary concern). Quiet floors. Bathroom with good lighting for makeup. Hair dryers, iron boards, etc.. Spa and health club |
| Retirees | . Clean and comfortable rooms, lounge areas and public areas. High safety and security measures. Easy access rooms closer to elevators. Elderly care facilities. Large well lit rooms and non-slippery floors. |
