Market segmentation is the process of dividing a market into smaller groups to make it easier for marketers to understand and sell products or services differently to each group.
Market segmentation in tourism refers to dividing tourists into categories or segments based on their interests, needs, purpose and touristic objective.
By matching a tourism product to the needs of a tourist, a tourism business can create an experience that will be both memorable for the tourist and profitable for the business.
Why Market Segmentation in Tourism?
Market Segmentation in Tourism is necessary because different tourists have different needs and so what might be good for one tourist might not necessarily be the best option for another.
For instance, an affluent couple may be looking for a luxurious, all-inclusive resort while a young backpacker may prefer a more budget-friendly option that offers more opportunities to explore the local culture.
Such segmentation based on price allows touristic businesses to maximize their profits by offering expensive options to those who can afford them.
Similarly, a family of five would prefer to stay in a large resort with multiple restaurants and activities while two retired individuals may prefer to explore the outdoors.
Classifying customers based on the benefits they can have is the surest way of ensuring customer satisfaction.
Market Segmentation in Tourism is also necessary because different destinations have different things to offer.
For example, a beach town may be great for swimming and sunbathing while a city may be great for shopping and nightlife.
Market Segmentation is also helpful in putting together people with similar needs. This is how tour groups are formed.
Market Segmentation focuses on understanding the differences between people so that tourist agencies, airlines, hotels and others in the tourism industry can target their products at specific demographics, focusing on customer needs rather than just creating a “one-size fits all” offering.
Different Sectors of the Tourism Industry
Tourism largely comprises of the following sectors:
- Travel – plane, boat, ship, car, train
- Lodging – Hostels, Campsites, Inns, Apartments, Hotels, Resorts
- Dining – Fast Food, Street Food, Catering, Restaurants, Luxury dining
- Attractions – Sightseeing, hiking, biking, fishing, scuba diving, skiing, bungee jumping, relaxing on the beach, gastronomic experiences, mountain biking, etc.
Based on these sectors we can segment the tourist industry using different variables.
Variables for Segmenting the Tourism Market
The tourism market can be segmented based on the following variables:
- Geography: segmenting the market by country, region, or city
- Demographics: segmenting the market by age, gender, income, education level, etc.
- Purpose of visit: leisure travel, business travel, adventure travel, gastronomic travel, cultural travel, etc.
- Type of traveller: independent travellers Vs package tourists
- Time of year: peak season Vs off-season
- Attractions: popular tourist destinations Vs lesser known attractions
- Services: luxury hotels Vs budget accommodation/hostels, restaurants, transportation
- Languages spoken: English speaking tourists versus non-English speaking tourists
The market can be further segmented based on the type of tourism.
Different types of tourism are:
- Leisure Tourism
- Adventure Tourism
- Recreation Tourism
- Ecotourism
- Business Tourism
- Health Tourism
- Religious Tourism
- Cultural Tourism
- Sport Tourism
- Educational Tourism
- Environmental Tourism
- Event Tourism
Demographic Segmentation in Tourism
Demographic segmentation is a common market analysis strategy that divides the market up by factors such as age, gender and income.
Marketers create customer profiles for each segment so that they can identify their target audiences in various ways including demographics or psychographics.
This information helps marketers decide what types of products are most appropriate for different segments, how much to charge for the product, and where and how to advertise.
Marketers create marketing campaigns that effectively reach their target audiences by using different media channels based on each segment’s demographics.
For example, tourism marketers might identify that retired people in their community are more likely to travel than younger people, so they may create campaigns specifically targeting retirees.
Alternatively, they may find that single women have more discretionary income available to spend on travel than do married couples and so they may create campaigns that appeal to single women.
By using demographic segmentation in tourism, marketers can better understand their target audiences and create marketing strategies that are more likely to be successful.
Geographic Segmentation in Tourism
Geographic Segmentation in Tourism is a way of segmenting a market based on tourist destinations.
This means that the market can be divided into different regions, such as Asia, Europe, North America, South America and Africa. Each region will have its own unique attractions that draw tourists in.
For instance, those wanting to visit Europe will likely be interested in art, history and cultural experiences, while those wanting to visit Asia would probably be attracted to beautiful natural scenery and ancient ruins.
Similarly, those interested in seeing wild animals in their natural habitat would be more likely to visit Africa, while those looking for a beach holiday would be open to going to South America or the Caribbean.
Geographic Segmentation is important for tourism-related businesses because it allows them to target a specific group of people who are interested in visiting certain places.
These businesses can now create marketing strategies and products that are specifically tailored to these tourists.
Purpose-based Segmentation in Tourism
Another way of segmenting the market is by a tourist’s purpose of visit. This can be split into categories such as leisure, business, adventure, conventions, sport, cultural, nature, etc.
Each type of tourist will have different needs and wants, which must be taken into account when designing a purpose-based tourism product.
For example, a business tourist might be looking for a hotel that is close to downtown or close to a conference center, while a leisure tourist might want something with more facilities such as a pool, sauna and a gym.
Summary
Market Segmentation in Tourism helps tourist agencies, airlines, hotels and other tourism-related businesses market to different types of tourists, classified based on segmentation variables like demographics, geography (the tourist destination), the purpose of visit, type of traveler and the type of tourism.
Each type of tourist will have different needs and wants, which must be taken into account when designing a tourism product.
By segmenting the market, businesses can better target their products and services to the right customers, making them appealing to as many people as possible.
Segmentation helps map a tourist product to a tourist’s needs which helps satisfy the tourist and maximize profits for the business offering the product.