Republic of the Philippines

CAMARINES NORTE STATE COLLEGE

F. Pimentel Avenue, Brgy. 2, Daet, Camarines Norte – 4600,
Philippines

COLLEGE OF BUSINESS AND PUBLIC ADMINISTRATION

THC 7 Marketing for Hospitality and Tourism
1st Semester, AY 2020 - 2021

Name of the Faculty: Viah Nicole R. Mulato

Subject: THC 7 Marketing for Hospitality and Tourism
Schedule for Instruction:
BSHM 2A: Tuesday 11:00-12:30pm
BSHM 2B: Tuesday 8:00-9:30pm
BSHM 3A: Monday 2:00-3:30pm
BSHM 3B: Monday 9:30am-11:00am

CHAPTER 2: THE TOURIST MARKET AND SEGMENTATION

OBJECTIVE:

 Identify the characteristics of good market segments;

 Discuss market coverage strategies and positioning; and
 Enumerate the three steps to target marketing

Market segmentation, targeting, positioning are key terms useful in any marketing process. Identifying
one’s market segments will help in identifying the market’s needs and wants. How their needs should be met and
how to communicate such to benefit them is covered in this topic. Market coverage strategies and identifying one’s
unique selling proposition and competitive advantage will greatly contribute to a successful marketing plan.

Market
When we say “Market” it is a set of actual or potential buyers of a product. These buyers share a particular need or
want that can be satisfied through exchange relationships (Kotler et al. 2010).
However, to marketing professionals, a “Market” is all actual and potential buyers of a product or service.

Tourism and Hospitality product is not for all. Because some of the product is only for VIP, or
Businessmen/woman, etc. Our industry aims to target a specific set of individuals. It is for a particular set of buyers,
or what we call a “niche market”.

We have 3 steps to target marketing:

I. MARKET SEGMENTATION
Market segmentation is comprised of varied profiles and characteristics that can be further
segregated. Imagine the market as an entire pizza that can be divided into several parts. Each slice segment has
different characteristics among others. This segment differs in their wants or desires, socio-economic status, age,
travel behavior, etc.

Market Segmentation is dividing the market into distinct groups who might require separate products and/or
marketing mixes

Market Segment is a subgroup of a total consumer market who share similar characteristics and needs relevant to
the purchase of a product, service, or experience. Each segment is profiled based on their characteristic:

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 Republic of the Philippines
CAMARINES NORTE STATE COLLEGE
F. Pimentel Avenue, Brgy. 2, Daet, Camarines Norte – 4600,
Philippines

COLLEGE OF BUSINESS AND PUBLIC ADMINISTRATION

THC 7 Marketing for Hospitality and Tourism
1st Semester, AY 2020 - 2021
Characteristics of a Market Segment
a) Identifiable – The people who comprise the segment can be located and identified such that targeting them
would be easy. (Ex. Each guest at the hotel has profiles.)

b) Cohesive – The consumers should be part of a whole whose specific qualities are common to all. (Ex.
Heart Evangelista is part of the socialite's group, it’s a group of people who is well known in
fashionable society and is fond of social activities and entertainment.)

c) Measurable - The marketer should be able to estimate the size and potential spending of the members of
the market segment (Spending power of each class in the society (upper class, middle class, and lower
class). Each of them has different qualities especially buying powers)

d) Accessible - The members of the segment should be accessed by marketing efforts and promotional
activities to be conducted. (Ex. Restaurants at Daet use the online platform to distribute their
advertisements.)

e) Substantial – Segments should be large to be substantial. If the segment is small, it should have a high
spending capability to make a significant impact on the business’ bottom line.
(Ex. Amanpulo, Luxury Resort in Palawan. You need to be a member first before you can stay in
this resort. Not all people can afford the membership fee. Even though they have few ‘market’ it’s
still has a significant impact on their sales because most of their customers are people that can
willingly splurge a lot of money in the establishment.)

There is no one way of segmenting the market. Different variables for market segmentation can be used to find out
which one is the most effective.

Variables for Market Segmentation

a) Geographic
Geographic segmentation divides the market into different geographic units such as nations, states,
regions, countries, cities, neighborhoods, barangays, towns, etc. Some tourism companies decide
to strengthen their relationship in certain geographic regions, concentrating their resources in
entering the specific geographic location.

Ex. The Department of Tourism in the Philippines conducted workshops on how the travel trade
sector can tap the emerging source markets for Philippine Tourism. Conclusions are countries
such as Korea, the USA, and Japan remains the strong markets because of the close relation of the
Philippines with those countries while Russia, India, and Australia show as being potential new
markets.

b) Demographic
Demographic segmentation refers to segmenting the market based on age, life cycle, gender,
income, occupation, education, religion, and race.
It is a good idea to segment the market based on demographic variables because consumers would
have similar likes and possible consumption patterns and behavior.

Ex. The major developed countries lie Europe, America, Japan, and Australia are experiencing an
aging population while India, China are comparatively young markets. Those 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
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 Republic of the Philippines
CAMARINES NORTE STATE COLLEGE
F. Pimentel Avenue, Brgy. 2, Daet, Camarines Norte – 4600,
Philippines

COLLEGE OF BUSINESS AND PUBLIC ADMINISTRATION

THC 7 Marketing for Hospitality and Tourism
1st Semester, AY 2020 - 2021

c) Psychographic
Psychographic segmentation divides consumers based on different psychographic profiles such as
social class, lifestyle, and personality characteristics. Different social classes will have different
preferences for what they buy. In the Philippines, we categorize socio-economic classes through
ABCDE categories. with class A being the most affluent. Lifestyle also influences what and how
consumers buy products and services. Restaurants and bars tap different markets based on lifestyle.
Personality is also seen as an indicator of the type of product people buy. Products take on an image or
a personality just like people.
Ex. Green Bar restaurant’s target market is people who are vegetarian or vegan.
Cologne advertisements are mostly about personality (outgoing, timid, adventurous, etc.

d) Behavioral
Behavioral segmentation refers to dividing groups based on their knowledge, attitude, and use of
products, response to the product or services. Behavioral segmentation is a good starting point for
creating a communication campaign to target specific segments that would seem viable for the
company.
Special Occasion Segment involved purchases made base on a special occasion such as
Valentine's day or Birthdays. Buyers may also be group according to the benefits they seek such
as quality, ambiance, menu variety, and price. User Status refers to the markets based on the usage
of the product such as first time users, regular users, non-users, potential users, etc. Usage rate
refers to the frequency of use categorized as light, medium and heavy users. Loyalty status
segmentation refers to the degree by which customers are loyal to the brand. Some buyers just go
for the cheapest or most convenient while others stick to a brand unconditionally. Buyer readiness
pertains to the different stages buyers become ready to purchase a product. These stages range
from being unaware, slightly aware, want to buy, and intend to buy.

e) Technographic
With the use of the World Wide Web, there is an increasing divide between the users and non-
users of technology in searching for travel information. The more technologically savvy one is, the
more information he gets from the internet. Hence, travel websites and lifestyle, lifestyle travel
portals will allow customers to customize their travel needs.

II. MARKET TARGETING

Market segmentation shows the various market segment opportunities available for a company. A careful
assessment of these specific market segments will help the firm identify with the ones it should target.
Market Targeting is evaluating each segment’s attractiveness and selecting one or more of these market
segments in which to operate one’s business.
a) Segment Size – refers to the current sales volume, growth rate, and high-profit margin.
b) Attractiveness – refers to the potential impact of the segment to the company. One that is not saturated
and has few aggressive competitors would be structurally attractive.
c) Company objectives and availability of resources – refer to the main reasons for its decision making
and the available resources the company will use to make its objectives a reality.

Market Coverage Strategies

In the selection of specific market segments, a company decides on a market coverage strategy that is in
line with its objectives and resources.

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 Republic of the Philippines
CAMARINES NORTE STATE COLLEGE
F. Pimentel Avenue, Brgy. 2, Daet, Camarines Norte – 4600,
Philippines

COLLEGE OF BUSINESS AND PUBLIC ADMINISTRATION

THC 7 Marketing for Hospitality and Tourism
1st Semester, AY 2020 - 2021
 Undifferentiated Marketing, a company ignores market segmentation and goes after the entire market
with only one market offer.
This looks into what the market has in common and is designed to reach a huge number of buyers. This
market coverage strategy can be used effectively for consumer products such as shampoo and soap. This
strategy may not be effective for tourism products.

PRODUCT MARKET

 Differentiated Marketing, approaches the market by targeting several market segments using separate
offers per segment. Companies may offer several products for different market segments to capture a
bigger chunk of the market.
PRODUCT MARKET

 Concentrated Marketing, is a practice by companies with limited resources. It pursues getting a big share
of a small market rather than a small share of a large market. Companies can allow their resources in
making their presence felt in a specific market with greater impact. However, this strategy is risky because
it is like putting all your money in one basket. It is advisable to operate in at least two profitable segments.

MARKET

PRODUCT

The following factors are considered when choosing a market coverage strategy
a) Company’s Resources - This refers to how much money and resources the company has which can
be allocated to marketing. If the company has limited resources, it is logical to use concentrated
marketing.
b) Degree of Product Homogeneity – If products are standardized and identical, it is advisable to go for
an undifferentiated or concentrated marketing
c) Market Homogeneity – If there is a diverse market, differentiated marketing is advisable. If the
market has a lot of similarities, undifferentiated marketing may be used.
d) Competitor’s Strategy – It is important to assess the strategic competitors are using so that the
correct strategy can be implemented to counter their marketing efforts.

III. MARKET POSITIONING

It is developing competitive positioning for the product and appropriate marketing mix.
The positioning has everything to do with the way by which marketers would want to position their product in the
consciousness of its prospective customers. Its goal is to identify the product’s unique characteristics in a way that
will differentiate it in the marketplace. These three positioning concepts will help reinforce the idea of market
position:

a) Unique Selling Proposition (USP) – It is a term used to identify what makes the product or service
different from others. This USP may occur due to the product’s physical attribute, added services,
personnel, location, or image. For example, Himalayan salt. We all know that it is just salt but it is a salt

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 Republic of the Philippines
CAMARINES NORTE STATE COLLEGE
F. Pimentel Avenue, Brgy. 2, Daet, Camarines Norte – 4600,
Philippines

COLLEGE OF BUSINESS AND PUBLIC ADMINISTRATION

THC 7 Marketing for Hospitality and Tourism
1st Semester, AY 2020 - 2021
mined near the Himalayan Mountain it also looks cool because of its unique color shade of pink that is
usually used as a garnish on food or drinks.

b) Competitive Advantage – is the product’s advantage over competitors, which is gained by offering greater
value either by offering lower prices or providing more benefits to justify higher prices. For example, the
Louis Vuitton bag has the same purpose of any bag but because of the quality and also because of the
process it is made it justified its expensive price.

c) Top of mind – is the highest level of recall that a brand receives. It means that the brand occupies the top
spot in a consumer’s mind. The ultimate top of mind level brand can reach is when it becomes synonymous
to the generic. For example, Colgate is a brand of toothpaste but the way Filipino uses the word is as if it is
the only brand of “toothpaste”.

Market positioning is a way of making sure that the product has a high recall in the consumer’s mind
relative to its competitors.

Philippines Source Markets in Asia

These tables highlight various source markets of the Philippines per region, these characteristics, market
potential, and the challenges of a said market segment.

Country Characteristics Potential of the Market Challenges of Tapping the

Market
Hong Kong Very Sensitive High Volume of flights to They still haven’t
Very Skeptical and from the country forgotten the hostage-
Willing to pay as long taking incident
they are given a good They more into sport
reason to spend activities
React fast
Indonesia The largest economy in English is widely spoken Relatively low volume of
ASEAN direct flights between the
No travel tax upon exit countries.
Backpacking s gaining
popularity among the Prefer 2-4 nights trips
young with average spending
A lot of affordable
Likes to experience the commodities and
local culture accommodation

Japan Prefer close destinations Increase of flights Language Barrier

(the Philippines is just 4
hours away) Emerging MICE
destination

Philippine is known for

being an English as a
Second Language)
provider in Asia with a lot
of teaching facilities both
online and in-school.

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 Republic of the Philippines
CAMARINES NORTE STATE COLLEGE
F. Pimentel Avenue, Brgy. 2, Daet, Camarines Norte – 4600,
Philippines

COLLEGE OF BUSINESS AND PUBLIC ADMINISTRATION

THC 7 Marketing for Hospitality and Tourism
1st Semester, AY 2020 - 2021
South Korea More knowledgeable and The continued growth of External economic factors
experienced travelers the Korean arrivals described as a challenge
on the Korean economy,
Increase in Mice market The abundance of
carriers that fly between
Give more importance to countries
activities done at a
destination than where The continuous popularity
the destination is of Low Cos Carriers

Relaxation and healing Online media has the

trips are their trend. greatest influence.

Quality over quantity

Singapore They look for good food, An abundance of natural Limited infrastructure
shopping mall, and resources that provide catering to the cruise
weather seasonality great opportunities for a market.
sightseeing adventure,
Increasing demand for an and diving
exotic destination
Growing MICE industry
Cruises are a popular
choice for holidays An abundance of natural
exotic destination in
Mindanao
Thailand Aging Society The Internet is a major Language barrier
tool for gathering
Tend to own or consume information Philippines offers more
what opinion leaders say expensive package rates
and use Facebook and Twitter are compared to other
indispensable Southeast Asian (SEA)
Family is highly treasured communication tools for destination.
the younger generation
Price-dependent
The short-haul
destination is most
popular and travel is
concentrated more on
visa-free destination
Australia The majority of AU There are a lot of direct Transport infrastructure
travelers are from the flights offered between the needs improvement
working class countries
Love to shop and sightsee Traditional Filipino Few travel Agency in
Hospitality is a come-on Australia; less
information on
The diverse culture and destination and packages
people

France Demand for personalized The Philippines is a The Philippines ranks 85th
trips is increasing generally elderly-loving in the top 100

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 Republic of the Philippines
CAMARINES NORTE STATE COLLEGE
F. Pimentel Avenue, Brgy. 2, Daet, Camarines Norte – 4600,
Philippines

COLLEGE OF BUSINESS AND PUBLIC ADMINISTRATION

THC 7 Marketing for Hospitality and Tourism
1st Semester, AY 2020 - 2021
Give importance to country and a country of destinations of French
exclusive, authentic, and choice for retirement tourists.
rare packages
Numerous blogs and Instances of political
Price and quality are top social media pages of instability
criteria different destination
around the country
USA 44% of US travelers The steady increase over Community-based tourism
prefer beach destinations. the past 10 years should be developed to
cater to adventure
Mostly independent going The average length of stay tourists, as more US
on holiday is 14.5 nights travelers are interested in
experiencing local
Social media has a heavy cultures through
influence on travel. assimilation.

Emerging markets can also be segmented using demographic and psychographic variables. Some of the
Philippines ' emerging markets include the family market, the senior market, the youth market, MICE a
business market.

Types of Markets
1. The Family Markets
Families represent a large and growing market for the tourism industry. Family tourism is driven by the
increasing importance placed on promoting family togetherness, keeping family bonds alive, and creating
family memories. Predictions for the future of family travel are shaped by changes in demography and social
structures. With global mobility, families are increasingly geographically dispersed and new family markets
are emerging.

2. The Senior Market

The senior market also is known as the silver market or third-age tourism. There was even a campaign know
as SKI which encourages the elderly to go on vacation to Spend Kid’s Inheritance. There is a high level of
demand for travel within the senior market. They have the time, money, and desire to travel. However, the
senior market also has limitations and constraints to engage in travel. These factors include safety, and
security, health issues, availability, cost, family responsibilities, poor information about suitable options, and
previous experience.

3. The Youth Market

Research has shown that long-distance youth travelers are primarily experience-seekers, collecting unique
experiencing that will serve to build their self-identity. Backpacking is very famous for youth travelers. It is
a form of low-cost, independent travel, often staying in inexpensive lodgings and carrying all necessary
possessions in a backpack.

4. The MICE Market and Business Tourism

The Meeting, Incentives, Conferences, and Exhibitions industry is extensively and rapidly growing.
Collectively known as the events industry, this type of travel is connected but not limited to business travel.
These sectors have differences but also have overlaps that make it convenient to put them together as one
growing segment of the tourism industry.
Conference tourism revolves around service provision to business travelers attending seminars, workshops,
conferences, and conventions.
Incentives tourism comes in the form of a reward for employees or business partners; hence, luxury is a
natural consequence.
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 Republic of the Philippines
CAMARINES NORTE STATE COLLEGE
F. Pimentel Avenue, Brgy. 2, Daet, Camarines Norte – 4600,
Philippines

COLLEGE OF BUSINESS AND PUBLIC ADMINISTRATION

THC 7 Marketing for Hospitality and Tourism
1st Semester, AY 2020 - 2021

Teacher’s Note: It always important in every business to know who their market is. Knowing the market
will help the business to create what products or services they will be offering. In the Tourism and
Hospitality industry, there is a certain way to segment our market and it will always be different for each
destination.

That’s the end of Chapter 2. If you have questions or clarification in the handout don’t hesitate to message
me.

~~~~~~~~~~~~~~~~~~~~~~~~~~~End of Chapter 2~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Activity #1. Analyze the situation. Answer what is being asked. (10points)

The Senior Market

In a study of the travel behavior patterns of Metro Manila senior citizens with retirement benefits conducted by
Christian Magno (2012), results indicated that the specific market travels from one to their times a year. These senior
citizens, since they have retirement benefits and do not rely on their children for sustenance, can make their own travel
decisions. This market segment is an interesting segment to research, especially since they have a lot of time in their
hands to engage in leisure activities; tourism, being one such activity.

Data revealed that this type of market does not choose the most expensive options available as long as differences in
comfort and experience are not that significant. The study further states that this group is considered midcentric, having
the qualities of both allocentric (adventure-seeking) and psychocentric (non-adventurous). The results showed that
seniors are willing to participate in new activities and discover new destinations as long as there are no physical or
financial constraints. The Baby Boomers are willing to engage in some adventure tourism activities. They also prefer to
engage in ecotourism and watch more adventurous counterparts. They also prefer buying packaged tours than preparing
the trip on their own.

a. What are the unique characteristics of the Senior Market that make them a viable market for tourism
and hospitality products?
b. What tourism products can we sell to the Senior Market? Cite 3 products.

References:
 Badilla, M.,(2015), Tourism Marketing, Rex Marketing, Manila.
 World Tourism Organization, (2015), United Nation, accessed July 20, 2020, http://mkt.unwto.org/pu
publication/unwto-tourismhighlights-2015-edition
 Kotler, P., Bowens, J., ., and Makens, J., (2006), Marketing for Hospitality and Tourism, a 3rd edition. New Jersey:
Pearson-Prentice Hall.

Prepared by: Viah Nicole Mulato

Instructor 1

Reviewed and Approved by Gennevie L. Elep, MAT

Department Chairperson

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