chapter thirteen differentiation, segmentation and target marketing

Chapter Thirteen

Differentiation, Segmentation and Target Marketing

© 2008 Pearson Education, Upper Saddle River, NJ 07458.

All Rights Reserved.2

Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw

Differentiation Distinguishing your product or

service from the competition in ways that are both identifiable and meaningful for the customer

The customer should perceive a greater value




Differentiation Differentiation is effective when:

It cannot be easily copied It appeals to a particular need or

want It creates an image or impression

that goes beyond the specific difference itself




Exhibit 13-2; Ritz-Carlton tangibilizing the intangible




Differentiation Differentiation as a marketing

tool Helps create awareness and trial by

the customer Sometimes product differentiation is

the only thing a firm can do It is much easier to do in the

foodservice environment, even within hotels




Differentiation Differentiation -- of anything

Can be product, message or brand specific

Difficult to achieve in hospitality because of the variety of services offered

Separates product classes and products within the same class

Provides an opportunity to strengthen competitive strategy

Is the basis for positioning strategy




Market Segmentation Market segmentation:

Is a complimentary strategy to differentiation

Is dividing a market into meaningful groups who have similar wants and needs (market segments)

Starts with the customer




Market Segmentation Which comes first: differentiation or

segmentation? Both happen in combination at different

times Both are part of the marketing concept First know how people differ Then segment them accordingly Develop products that meet their specific

wants and needs Creating these two strategies are major

reason to study consumer behavior




Market Segmentation The process:

Step one: Needs and wants of the marketplace

Step two: Projecting wants and needs into potential markets

Step three: Matching the market and capabilities

Step four: Segmenting the market Step five: Selecting target markets from

identified segments




Segmenting Variables Various ways in which a market can be

divided, or segmented, into meaningful groups of buyers

Geographic Demographic Psychographic Usage Benefit Price




Geographic Segmentation Most widely used in restaurant and

hotel industry These segments then become easier

to reach Direct mail Media Data and information on demographics

Metropolitan statistical areas (MSAs) Defining large metropolitan areas in

terms of supposed economic boundaries Designated market area (DMA)




Demographic Segmentation Widely used because easy to

measure and classify Does not necessarily distinguish

wants and needs Demographic lines are now

blurred Useful demographics

Age Family life cycle stage




Psychographic Segmentation Based on activities, interests, and

opinions (AIO), self-concepts and lifestyle behaviors

Lifestyle patterns combines demographics with the way people live, think and behave in their everyday lives and correlate them into homogeneous categories

A rich area for marketing effectiveness for the hospitality industry

PRIZM and VALS




Exhibit 13-6; VALS framework




Usage Segmentation Umbrella term that covers a wide range of

categories Purpose Frequency Monetary value Recency RFM Timing Nature of the purchase Where they go Purchase occasion Heavy, medium or light




Benefit Segmentation May be the most basic and most predictable of

all segments Benefits are very related to need satisfaction Benefits

Comfort Prestige Low price Recognition Attention Romance Quiet Safety




Price Segmentation A form of benefit segmentation,

only more visible and more tangible

Price segments within a product class

Price segments between product classes




Segmentation Strategies There will be many segments, some

with overlap, and different strategies for each segment

The test of a segment is their different behavior

Segments change over time Market segmentation has become

increasingly critical with competition Segmentation will remain a key

competitive strategy within the product class




Target Marketing Selecting specific market segments to

target and designing the product or service to meet their specific wants or needs

More refined segmenting rules apply Strategies:

Undifferentiated targeting market strategy Strong targeting strategy Differentiated multi-target marketing




Mass Customization The concept that modern

technology is bringing us closer to target markets of one

Make one product and personalize the product to their specifications

Largely due to databases that track customer behavior




Discussion Which comes first: differentiation

or segmentation? Why?

chapter thirteen differentiation, segmentation and target marketing

Documents

marketing essentials

pearson education

upper saddle river

product differentiation

target marketing slide

customer slide

marketing tool

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