THE TOURIST

MARKET AND
SEGMENTATION
CHAPTER 2
 OBJECTIVES: INTRODUCTION
Market segmentation, targeting, and positioning are
At the end of the chapter, the students key terms useful in any marketing process.
should be able to:
Identifying one’s market segment will help in
1. Define what a market is; identifying the market’s needs and wants.
How their needs should be met and how to
2. State the three steps to target communicate such to benefit them are covered in
marketing; this chapter. Market coverage strategies and
identifying one’s unique selling position and
3. Identify the characteristics of a good
competitive advantage will greatly contribute to
market segment; successful marketing plan.

4. Discuss the market coverage strategies

DEFINITION OF A MARKET
and positioning; and
A market is a set of actual and potential buyers of a
product. These buyers share a particular need or
5. Distinguish the new and emerging want that can be satisfied through exchanges
markets in the Philippines relationships (Kotler et al. 2016)
The meaning of the term market has evolved over the
years. To marketing professionals, a market is all
actual and potential buyers of product or service
( Kotler et Al. 2017
 MARKET SEGMENTATION
A market is comprised of varied profiles and characteristics than can
be further segregated. Imagine the market as an entire pizza that can be
divided into several pieces or an orange fruit with several segments. Each
slice or segment has different characteristics from the others. These
segments differ in their wants or desires, socioeconomic status, age,
travel behavior, etc.
Market segmentation is dividing the market into distinct groups that might
require separate products and/or marketing mixes (Kotler et al. 2017) A
market segment is subgroup of the total consumer market that shares
similar characteristics and needs relevant to the purchase of a product,
service, or experience (Hsu 2008). Each segment is profiled based on its
characteristics.
 CHARACTERISTICS OF A MARKET
SEGMENT
1. IDENTIFIABLE
The people who comprise the segment can be located and
identified such that targeting them would be easy.

2. COHESIVE
The consumers should be part of a whole whose specific
qualities are common to all.

3. MEASURABLE
The marketer should be able to estimate the size and potential
spending of the members of the market segment.
 CHARACTERISTICS OF A MARKET
SEGMENT
4. ACCESSIBLE
The members of the segment should be accessible by the marketing
efforts and promotional activities to be conducted. If they are difficult to
reach, efforts to reach out to the specific segment might be futile.
5.SUBTANTIAL
Segments should be large in order to be substantial. If the segment is
small, it should have a high spending capability to make a significant
impact on the business’s bottom line.
6.ACTIONABLE
The company has enough resources and commitment to enable
effective penetration of the identified segment to ensure effective
positioning
 There is no one way of segmenting the market. Different variables for market
segmentation can be used to be find out which one is the most effective. These
variables used in segmenting consumer markets include geographic,
demographic, psychographic, and behavioral.

Table 2.1 Variables to Segment Consumer Markets

Geographic Demographic Psychographic Behavioral

• Nations • Age • Social class • Special occasions
• States • Life cycle • Lifestyle • Benefit
• Regions • Genders • Personality • Sought usage
• Countries • Income • Rate User status
• Cities • Occupation • Loyalty Status
• Neighborhoods • Education • Buyer readiness
• Barangays • Religion
• Towns • Race
 VARIABLES FOR SEGMENTATION

1. Geographic
Geographic segmentation is the oldest
and simplest basis of segmentation (Cook
et al. 2018).

It divides the market into different

geographic units such as nations, states,
regions, countries, cities, neighborhoods,
barangays, town, etc. (Kotler et al. 2017)

Some companies decide to

strengthen a foothold on a certain
geographic region, concentrating
their resources on ensuring deep
penetration of a specific geographic
location.
 VARIABLES FOR SEGMENTATION
2. Demographic
Although geographic segmentation is the
simplest and oldest approach to grouping
tourists, demographic segmentation is the
basis most used for market segmentation.
( Cook et al. 2018).

Demographic segmentation refers to

segmenting the market based on variables
such as, life cycle, gender, income,
occupation, education, religion, and race
(Kotler et al. 2016)

it is a good idea to segment the marked

based on demographic variables because
consumers would have similar likes and
possible consumption patterns and behavior.
 VARIABLES FOR SEGMENTATION
2. Demographic
the major developed markets of
Europe, America, Japan, And
Australia are aging in population,
while India and China are
comparatively young markets
(cooper 2006).

these regions would want to avail of

significantly different products. The
former would possibly like more
leisure and shopping while the latter
would prefer more adventurous
destinations with nightlife.
 VARIABLES FOR SEGMENTATION
3. Psychographic
Psychographic segmentation was
developed by marketing researchers
trying to link personality to a product. It
divides consumers based on different
psychographic profiles such as social
class, lifestyle, and personality
characteristics.

Sometimes, psychographic
segmentation is called lifestyle
segmentation (Cook et al. 2018).
Lifestyles has an influence on what and
how consumers buy products and
services. Restaurants and bars tap
different markets based on lifestyle
 VARIABLES FOR SEGMENTATION
3. Psychographic Costumer situation What can we offer:
Personality is seen as an indicator of
the type of products people buy.
Products take on an image or personality
( Outgoing, private, adventurous, etc.) in
the same way people have personality
traits. Studies have shown that
consumers tend to buy products that
reflect a personality similar to others.

Newer forms of tourism such as

adventure tourism, cultural ecotourism,
and ecotourism are types of tourism
that the market has created based on
the market’s personalities. These types
of tourism that match the likes of the
younger generations who have
adventurous and upbeat personalities.
 VARIABLES FOR SEGMENTATION
4. Behavioral
Behavioral segmentation refers to
dividing groups based on their
knowledge, attitude, and use of or
response to a product or service (Kotler
et al 2017). Identify behavioral variables
to include special occasion
segmentation, benefits sought, user
status, user rate, loyal status, and buyer
readiness.

Four Types of Behavioral Segmentation

 VARIABLES FOR SEGMENTATION
1. Purchasing Behavior
Purchasing Behavior
Look at a customer's purchase behavior
and transaction history.

This provides insight into how and why

they decide to convert as well as which
stages of the buyer's journey go
smoothly whereas where a prospect may
come to a bit of a roadblock along the
way.

It also gives you an idea of which

behaviors are likely to accurately predict
a conversion.
 VARIABLES FOR SEGMENTATION
2. Benefits Sought
Identify what your customers are
looking to get out of your product or
service — of all of your features,

which do they need most to

resolve the challenge(s) that they're
experiencing? What specific benefits
do they get out of your product and
which of those benefits are most
important to them?

Determine which of those benefits

are influencing their decision to use
your product/service most.
 VARIABLES FOR SEGMENTATION
3. Buyer Journey Stage
Understanding which stage of the customer journey leads to
the most conversions or which stage prospects get hung up on
most frequently is beneficial information when predicting
behavior and segmenting customers based on those behaviors.

However, it's important to note that using customer journey

stages in behavioral segmentation can be difficult because there
are so many stages — and within those stages are multiple touch
points that contribute to behavior or decision to remain in a stage
or move forward to a new stage, of the buyer's journey.

That's why it's recommended to use a platform like your CRM

or an AI/machine learning tool — they record and track all
interactions throughout the buyer's journey to ensure you're
getting a complete view of your customer's buyer's journey
behavioral data.
 VARIABLES FOR SEGMENTATION
4. Usage
Usage-based segmentation enables you to
segment your customers based on how they
actually use the product or service, how frequently
they use it, how long they use it in a single session,
or which features they use most.

For example, if you sell software, you might

choose to segment your customers further into
more specific usage categories — for instance,
heavy users versus average users versus light
users.

Then, heavy-user messaging could highlight

advanced features and upselling campaigns, while
low-usage messaging could encourage more usage
by discussing the key program features or how to
use them.
 VARIABLES FOR SEGMENTATION
5. Technographic
Technographic segmentation refers to
segmenting your customers based on a
technology or a group of technologies.

It is useful because the products a

company uses indicates something about
their strategy, worldview, and business
needs. For example, a company using
Hubspot is much likelier to invest in
inbound marketing, because of the way
Hubspot has positioned itself in the
market.
Conversely, a company using Salesforce
might be more traditional and invest mainly
in outbound sales.
 MARKET TARGETING

In marketing, market segmentation is the process of dividing a broad consumer or business market,
normally consisting of existing and potential customers, into sub-groups of consumers (known as segments)
based on shared characteristics.

In dividing or segmenting markets, researchers typically look for common characteristics such as shared
needs, common interests, similar lifestyles, or even similar demographic profiles.

The overall aim of segmentation is to identify high yield segments – that is, those segments that are likely to
be the most profitable or that have growth potential – so that these can be selected for special attention (i.e.
become target markets). Many different ways to segment a market have been identified. Business-to-business
(B2B) sellers might segment the market into different types of businesses or countries, while
business-to-consumer (B2C) sellers might segment the market into demographic segments, such as lifestyle,
behavior, or socioeconomic status.
 MARKET TARGETING

Market segmentation assumes that different market segments require different marketing programs – that is,
different offers, prices, promotions, distribution, or some combination of marketing variables. Market
segmentation is not only designed to identify the most profitable segments,

but also to develop profiles of key segments in order to better understand their needs and purchase motivations.
Insights from segmentation analysis are subsequently used to support marketing strategy development and
planning.

Many marketers use the S-T-P approach; Segmentation → Targeting → Positioning to provide the framework
for marketing planning objectives. That is, a market is segmented, one or more segments are selected for
targeting, and products or services are positioned in a way that resonates with the selected target market or
markets.into demographic segments, such as lifestyle, behavior, or socioeconomic status.
 MARKET COVERAGE STRATEGIES

Market coverage strategy is the process of examining the marketplace and finding out
how much of the total market your advertising campaign should cover for a specific
product/service.

While assessing the marketplace, businesses and companies also keep in mind the
economic factors like the buying power of customers and cultural trends.

Most importantly, they also check the relationship of their product with the
marketplace. The purpose of the assessment is to place an effective and efficient market
coverage strategy.

Market coverage provides the basis to formulate the market strategy and plan and build
everything on it. Now it’s up to the business or company whether it wants to cover and
spread its operation all over the market, or it just wants to focus on the specific market
area.
TIME FOR QUIZ!