notes

1. What is a Market Segment?
A market segment is a group of clients who share certain traits, such as price sensitivity, preferred method of
booking, travel destination, length of stay, and booking lead time.
Market segmentation is the process of dividing a market of potential customers into groups, or segments
based on different characteristics. The segments created are composed of consumers who will respond
similarly to marketing strategies and who share traits such as similar interest, needs and locations.
According to Philip Kotler, “ Market segmentation is the subdividing of a market into homogeneous subsets of
customers, where any subset may conceivable be selected as a market target to be reached with a distinct
marketing mix.”

2. Why is Market Segmentation Important?
One of the primary techniques used by revenue managers to increase hotel
revenue is variable pricing. For the same good or service, hotels charge varying
fees to their clients. By employing lower prices, hotels can draw in clients who
might not otherwise purchase by selling rooms at the highest prices that guests
are prepared to pay. For instance, a customer paid $100 for a regular
accommodation three months in advance. The identical type of room cost $150
on the day of arrival.

3. Why is Market Segmentation Important?
The first stage in developing a successful pricing discrimination strategy is
segmentation. The elasticity of demand must be determined by hotels. Prices
will be greater for guests with price-inelastic demand than for guests with elastic
demand. For example, a leisure traveler who books in advance is more price-
elastic and needs a special discounted rate. Price-inelastic and willing to pay
more is a business traveler who makes a last-minute reservation.

4. Why is Market Segmentation Important?
The personalization and customization of hotel product offers is another advantage of
segmentation. Hotel competition shouldn't be limited to pricing. Competitive hotels
compete on price. By identifying the needs and interests of various consumer groups,
segmentation enables the creation of targeted offerings. For instance, a breakfast
package for visitors from abroad or a pet package for owners of dogs that includes a
dog bed, snacks, and in-room check-in. Every visitor should, ideally, receive a unique
pricing and a unique value addition.

5. Why is Market Segmentation Important?
Customer segmentation is a foundational component of hotel marketing tactics.
Without first identifying the segments, good hotel marketing is impossible.
Marketers for hotels can use segmentation to develop customized promotions,
draw in new clients, and boost demand in already-existing areas. For instance,
a tailored offer for families with children or a special summer discount for visitors
from Europe.

7. Requirement for Effective Segmentation
1.Measurable
Your market's size and purchasing power profiles should be measurable, which
means there should be statistics available. The profiles and data of a consumer give
marketing strategists the knowledge they need to execute their campaigns.
Advertising for markets with scant or no data, or for audiences that cannot be
measured, would be challenging. Always determine whether there is a market for the
kind of product or service your company wishes to offer before estimating the number
of potential clients and consumers in that market.

8. 2. Accessible
Accessibility means that customers and consumers are easily reached at an
affordable cost. This helps in figuring out how to make commercials more profitable
and how certain advertisements might reach various target markets.
Whether it is more practical to publish online advertisements, in print, or outside the
home is a good issue to ask. For instance, gather information on the websites that
a certain target market frequently visits so that you can increase your advertising
there instead.

9. 3. Substantial
A brand should have a sizable target market that it wants to enter. By compiling
information on a consumer's age, gender, employment, socioeconomic level, and
purchasing power, you should be able to describe their profiles precisely.
By attempting to reach an unreasonable number of individuals, you are merely
wasting resources. You also don't want to advertise the brand to a market that is
so small that it prevents the company from becoming profitable.

10. 4. Differentiable
Make sure that different target markets react differently to various marketing
methods before segmenting the market. This might not be a big deal if a
company just caters to one market group.
However, if college students are your target market, it is crucial to develop a
marketing plan that both first-year and senior students respond to favorably. By
using this technique, you can be confident that the plans you develop will be
more effective and economical.

11. 5. Actionable
Finally, your market segments must be actionable, which means they must be
useful in real life. A market segment should have results that are straightforward
to quantify and be able to respond to a certain marketing strategy or program.As
a business owner, it’s important to identify what kind of marketing strategies work
for a certain segment. Once those plans have been determined, consider if the
company has the capacity to implement them.

14. Market Targeting
Market is segmented using certain bases, like income, place,
education, age, and life cycle, and so on. Out of them, a few
segments are selected to serve them. Thus, evaluating and
selecting some market segments can be said as market targeting.
The quoted definitions are not available.

15. However, we can define the term as:
• We can define the term as: Market targeting is a process of selecting the target market
from the entire market. Target market consists of group/groups of buyers to whom the
company wants to satisfy or for whom product is manufactured, price is set, promotion
efforts are made, and distribution network is prepared.
• It involves basically two actions – evaluation of segments and selection of the
appropriate market segments. In this relation, market targeting can be defined as:
Market targeting is an act of evaluating and selecting market segments.
• Finally, we define market targeting as: Market targeting consists of dividing the total
market into segments, evaluating these segments, and selecting the appropriate
segments as the target market.

16. Selecting a Market Segments
1. Single Segment Concentration:
It is the simplest situation. The business just chooses one market sector as its
target market and only provides one product. Here, product and sector each
count as one. For instance, a business can decide to target just higher income
groups among the many income-based segments, such as the poor, middle
class, upper class, etc. The company only produces product lines for one specific
market niche.

17. 2. Selective Specialization (Multi Segment Coverage)
The business chooses a few segments in this option. A business chooses multiple
categories and markets various products to each section. In this case, the corporation
choose a wide range of customer categories to service. All of these market sectors are
appealing and compatible with the goals and resources of the company.
The segments' synergy could be minimal or nonexistent. Each market area has the
ability to guarantee earnings. The advantage of this multi-segment coverage method is
that it spreads the firm's risk. If one or two segments don't seem to be profitable, the
company can make money from other segments. For instance, a business can focus on
all the income categories it wants to serve.

18. 3. Product Specialization:
In this scenario, a business produces a certain good that can be distributed across
various markets. In this case, there is only one product but several segments. In order
to satisfy the needs of various market segments, the company offers a variety of
models. The organization can establish a solid reputation in the particular product
category, which is the main advantage. However, there is a chance that a completely
new technology could replace that product. This approach is preferred by many
manufacturers of ready-made clothing.

19. 4. Market Specialization:
This strategy consists of serving many needs of a particular segment. Here, products are
many but the segment is one. The firm can gain a strong reputation by specializing in
serving the specific segment. Company provides all new products that the group can
feasibly use. But, reduced size of market, reduced purchase capacity of the segment, or
the entry of competitors with superior products range may affect the company’s position.

20. 5. Full Market Coverage:
In this strategy, a company attempts to serve all the customer groups with all the
products they need. Here, all the needs of all the segments are served. Only very large
firm with overall capacity can undertake a full market coverage strategy.

21. Choosing a Market Coverage Strategy
Philip Kotler identifies two broad ways for full market coverage strategy as under:
Undifferentiated Marketing:
All consumer groups are sold the same products by the business. It does not take into
account buyer differences. All of the segments continue to use the same products and
marketing strategies. The company relies on mass manufacturing, distribution, and
advertising. As a result, it can significantly cut production, distribution, and marketing
expenses. Similar to how lower costs translate into lower prices, price-sensitive
consumers may be drawn in. Pharmaceutical businesses use this approach.

22. Toothpaste is the best example. You can use any toothpaste. The whole market uses
toothpaste. There are few exceptions where companies produce toothpaste for kids
(which requires heavy marketing to sell) or specialized medicinal toothpaste for dental
problems (which people only buy if a doctor prescribes them)
Like toothpaste, there are several other product categories that require undifferentiated
marketing. Bottled water, Wheat, Rice, basically anything mass produces and mass-
consumed.

23. Differentiated Marketing:
The company in this case operates in various market segments and creates unique
marketing strategies for each of the segments. Different product categories and
marketing techniques target different customer segments. It is predicated on the
idea that every group need various items. The majority of automakers employ this
method. Although this method increases overall revenue, it also drives up business
expenses.
For example: A restaurant is promoting the fact they server special meat platter, or
they have separate special offers for students.

24. 3. Concentrated Marketing
Concentrated marketing is especially effective when a company has resource
constraints. Instead of choosing a small share of a large market, the company
chooses a large share of one or a few submarkets.
Certain advantages of targeted marketing are available. The company develops a
strong market position as it becomes aware of the needs of the segments and builds
a distinctive reputation.
Due to production, distribution, and promotion specialization, concentrated
marketing offers numerous operating economies. A smartly selected market niche
supported by focused marketing guarantees a high rate of return on the company's
investment.

25. Market Positioning
Market positioning is the capacity to shape consumers' perceptions of a brand or product in
comparison to rivals. Establishing a brand's identity or image with the intention of
influencing how consumers view it is the goal of market positioning.
• For example:
• A handbag maker may position itself as a luxury status symbol
• A TV maker may position its TV as the most innovative and cutting-edge
• A fast-food restaurant chain may position itself as the provider of cheap meals

26. Positioning Strategies
When using positioning tactics, there are numerous options to consider. Despite
the fact that a central one is frequently required, using multiple simultaneously
works well. This strategy enables a wider market reach and aids in informing your
clients via various channels. the following seven categories of positioning
strategies:

27. 1. Product characteristics or consumer benefits:
The emphasis in applying this positioning strategy is on quality. It discusses the
style, dependability, and durability of the brand. When toothpaste manufacturers
describe their product as "refreshing" or "cavity fighting," they are using
positioning based on features. A tagline like "stronger than steel" conveys
toughness and dependability in a market where similar products are available but
are distinguished by consistency in their physical attributes.

28. 2. Pricing:
The relationship between price and quality as well as the consumer's impression of
a product's value are the main topics of this positioning approach. A buyer may
believe that a jacket with a greater price signifies a higher level of quality when
comparing jacket costs. A cheaper product, on the other hand, will emphasize
affordability. Because they are more expensive, designer jeans boast quality,
whereas everyone can afford department store jeans.

29. 3. Use or application:
Positioning based on use is effective when a brand reaches a bigger market or
alters the purpose of the brand or product. For instance, a company that promotes
its hot tea during the cooler months switches to promoting an iced version during
the summer to change how its brand is used and expand its market reach. The
brand can be repositioned for craft or ornamental projects using tape or adhesives
frequently used for home repairs. By extending the reach, more people can be
reached.

30. 4. Product process:
This occurs when a brand is connected to a particular person or user group. Examples of
endorsements are those made by renowned people or influential people in the industry.
Basketball players who wear particular sneaker brands should cause people to link the
brand with athleticism. All those who wear that brand are expected to be equally athletic
if they choose to purchase it. A shampoo that was before only advertised for babies
might change its application to be used by persons with sensitive hair or scalps as well.
A brand that is already positioned to grow by sharing the market can do so by
repositioning itself based on the application.

31. 5. Product class:
This entails simultaneously putting two related products in the same product class,
which expands the client base. By promoting dried milk as a protein drink and a
breakfast alternative, the attractiveness is increased to meet two separate client
needs.

32. 6. Cultural symbols:
In order to position your brand based on a cultural symbol, you must first pick a symbol
that has significant value for your target market but has not been used by your
competitors. Then, you must use that symbol to link your brand to that one. Airlines have
done this by using cultural icons that are associated with being treated royally.

33. 7. Competitors (relation to):
Another sort of positioning is differentiating a brand by using competitors as a point of
comparison. Setting your brand apart from the competition is a clear challenge to its
quality and a claim that it has a competitive advantage. For instance, one fast food shop
that serves chicken has a cow mascot to encourage customers to order chicken while
acknowledging that the majority of other fast food chains promote beef burgers.
Inferentially acknowledging commonalities while emphasizing differences, positioning in
regard to or against competitors highlights your brand over the competition.

34. Choosing and Implementing a Positioning
Strategy.
Step 1. Find your current position
Step 2. Analyze your competitors
Step 3. Develop your unique position
Step 4. Create a positioning statement
Step 5. Create your tagline
Step 6. Test your marketing positioning

35. Positioning Measurement
Perceptual Mapping:
In planning their differentiation and positioning strategies, marketers often
prepare perceptual positioning maps that show consumer perception of their
brand versus those of competing products on important dimensions. The figure
is a perceptual map of hotels plotted on the attributes of price and perceived
services.

37. On this map we see there is a correlation between service and price; as price goes up
so does service.
Some hotels appear to offer better value than others. For example Italia offer a little
higher level of service than the palace but is less expensive. Two-by- two perceptual
maps provide an easy-to-read picture, but one often has to study multiple maps plotting
different attributes to obtain a good feel of the marketplace. Perceptual maps can also be
developed using consumers’ perceptions of a number of products attributes. Increased
competition or an ineffective positioning strategy can make repositioning necessary.
Perpetual maps provide data supporting the need for repositioning.s

38. Product Differentiation
Businesses employ the technique of product differentiation to set one product or service
apart from comparable ones that are already on the market.
This strategy tries to assist companies in creating competitive advantages and
compelling USPs that distinguish their goods from those of rivals. Organizations having a
portfolio of many products can utilize differentiation to set them apart from one another
and avoid product cannibalization.

39. The purpose of product differentiation is to gain a competitive advantage or to elevate your
product above competitors' offerings. In other words, you want to rise above the competition
rather than just stand out from it.
In any sector, but particularly if you're in a competitive market with plenty of competitors, it's
critical to differentiate your product. The objective is to demonstrate to prospective clients what
you can provide that other companies cannot—and why it is useful to them.
1. Physical attribute differentiation.
Unfortunately, many hotels, restaurants, and airlines lack physical differentiation. Motels in
particular follow a standard architectural look that provides no differentiation. When this
happens, price becomes the primary differentiating factor.

40. 2. Service differentiation.
Mature consumers place special value on friendly staff, guest name recognition by staff, assistance in
making a product decision, opportunities to socialize, and no pressure to leave. These simple services
can reap large rewards for members of the hospitality industry. Because so many companies overlook
the importance of good service, those who truly emphasize service will achieve positive differentiation.
3. Personnel differentiation.
Personnel differentiation requires that a company select its customer contact people carefully and train
them well. These personnel must be competent and must possess the required skills and knowledge.
They need to be courteous, friendly, and respectful. They must serve customers with consistency and
accuracy, and they must make an effort to understand their customers, communicate clearly with them,
and respond quickly to customer requests and problems.

41. 4. Location differentiation.
Hospitality and travel firms should look for benefits created by their location, keeping in
mind that this advantage is subject to chance. Factors such as a new highway bypass or
criminal activity in a neighborhood can quickly turn an advantage into a problem.
5. Image differentiation.
A company or visitor destination image should convey a singular or distinctive message
that communicates the product’s major benefits and positioning.

42. Choosing the right competitive advantage
Fortunate companies can discover several potential differentiations that provide
competitive advantages. This advantage can be make through two ways:
1. How many differences to promote?
2. Which differences to promote?

43. 1. How many differences?
Many marketers think that companies should aggressively promote only one
benefit to the target market (best quality, best service, lowest price, best value, best
location...). Other marketers think that companies should position themselves on
more than one differentiating factors. Companies need to avoid three major
positioning errors: under positioning, over positioning, and confused positioning

44. 2. Which differences?
Differences are worth establishing if they are important, distinctive, superior, communicable,
preemptive, affordable, and/or profitable.
• Important. The difference delivers a highly valued benefit to target buyers. In the case of a
visitor destination, personal safety has become a top benefit.
• Distinctive. Competitors do not offer the difference, or the company can offer it in a more
distinctive way.
• Superior. The difference is superior to other ways that customers might obtain the same
benefit.
• Communicable. The difference is communicable and visible to buyers.
• Preemptive. Competitors cannot easily copy the difference.
• Affordable. Buyers can afford to pay for the difference.
• Profitable. The company can introduce the difference profitability.

45. The ideal differentiators are the ones that meet all 7 of the above criteria fairly well. If
you are entering a target segment that has very little competition, this is entirely
possible. However if there are already a few well established products in the segment,
then you will need to position yourself via multiple differentiators, and your differentiators
may have a more difficult time being truly distinctive, preemptive, and important.

46. Communicating and Delivering the Chosen
Position.
Once a company has made its decision, it must act decisively to deliver and
communicate that decision to its target market. Their new positioning approach
must be supported by their marketing mix initiatives.
They have to take a concrete action to develop the position instead of just
talking. They first have to deliver the position to the consumer. To properly
designing the marketing mix, it first involves working out the tactical details of
the positioning strategy.

47. It's simpler for businesses to develop effective positioning strategies than to put them
into practice. The new role must be developed and established over an extended period
of time. However, businesses must exercise caution since positions that have taken
years to develop can vanish overnight.
It is important for businesses to take precautions to keep the position by delivering
constant performance and communication. They must pay close attention to consumer
wants and rival strategies, but they must also take care to avoid making sudden
changes that could mislead customers. The positioning of a product should change
gradually as it adjusts to the dynamic marketing environment.

48. Olive Garden opened a restaurant in Tuscany, Olive Garden Riserva di Fizzano,
and developed the Culinary Institute of Tuscany. It added Tuscan dishes to its
menu, sent its chefs to the Culinary Institute of Tuscany, and developed a Tuscan
farmhouse design for its restaurants. It also included recipes and cooking tips on
its Web site. The restaurant and Culinary Institute in Italy help communicate Olive
Garden’s position as an authentic Italian restaurant. Its advertisements enforced
this by featuring Italian families dining at Olive Garden.

49. The choices a company makes about its placement influence who its rivals will be. A
corporation should evaluate its competitive advantages and disadvantages before
choosing a positioning strategy in order to choose a position that puts it ahead of its
rivals.
Providing exceptional customer experiences strengthens and supports positioning.
Throughout the day, hospitality companies offer a wide range of services. The majority of
these become ordinary and blend in with rivals. Instead of merely making them better,
the secret to differentiating and creating memorable client experiences is to add an
enjoyable/memorable experience on top.