CRT LEARNING MODULE

Course Code THM07

Course Title Tourism and Hospitality Marketing
Units 3
Module Title The Tourist Market and
Segmentation

Date Developed: Document No. 001-2020

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 College for Research & Technology of Cabanatuan

HOW TO USE THIS DIGITIZED LEARNING MODULE

Welcome to the module in The Tourist Market and Segmentation . This
module contains training materials and activities for you to complete this module. This
module also covers an explicit overview of tourism and hospitality industry and the
relationship of tourism and hospitality.

You are required to go through a series of learning activities in order to complete

each learning outcome of the module. Each of the learning outcomes is provided with
Modules. Follow these activities on your own and answer the self-check at the end of
each learning outcome. You may remove a blank answer sheet at the end of each
module (or get the answer sheets from the online facilitator) to write the answers for
each self-check. If you have questions, don’t hesitate to ask your facilitator for
assistance.

This module was prepared to help you gain fundamentals and basic knowledge
about Tourism and Hospitality Marketing. This will be the source of Information for you
to acquire knowledge and skill in this particular trade independently and at your own
pace, with minimum supervision of help from your instructor.

 Talk to your online facilitator and agree on how you will both organize the
Training of this unit. Read each through the module carefully. It is divided into
sections, which cover all the skills and knowledge you need to successfully
complete this module.
 Work through all the information and complete the activities in each section.
Read Modules and complete self-check. Suggested references are included to
supplement the materials provided in this module.
 Most probably your facilitator will be your supervisor or manager. Your online
facilitator will support and correct you.
 Your online facilitator will tell you about the important things you need consider
when you are completing activities and it is important that you listen and take
notes.
 You will be given plenty of opportunity to ask questions and practice on the job.
Make sure you practice new skills during regular work shifts. This way you will
improve both your speed and memory and also your confidence.
 Talk to more experienced workmates and ask for their guidance.
 Kindly the self-check questions at the LMS (EDMODO) to test your own progress.
 When you are ready, ask your online facilitator to watch you online via Zoom or
Google Meet to perform the activities outlined in this module.
 Ask your online facilitator work through the activities: ask for written feedback
on your progress. Your online facilitator keeps feedback/pre-assessment reports

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 for this reason. When you have successfully completed each element, ask the
facilitator to mark on the reports that you are ready for assessment.
 When you have completed this module, and feel confident that you have
sufficient practice, your online facilitator will arrange an appointment with
registered assessor’s to assess you. The results of your assessment will be
recorded in your competency Achievement Record.

Date Developed: Document No. 001-2020

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 MODULE CONTENT

MODULE TITLE: The Tourist Market and Segmentation

MODULE DESCRIPTOR: This module covers the market segmentation,

targeting and positioning are key terms in useful in any marketing process.

NUMBER OF HOURS: 3 hours (1 week)

LEARNING OUTCOMES:
At the end of the module, you MUST be able to:

1. Define what a market is.

2. State the three steps to target marketing.

3. Identify the characteristics of a good market segment.

4. Distinguish the new and emerging markets in the Philippines

Contents:

1. Definition of a market
2. Market Segmentation
3. Market Targeting
4. Market Positioning
5. New and Emerging Markets

Conditions:

The students must be provided with the following:

1. Hard copy or soft copy of the course syllabus
2. MS Word
3. Pen
4. Paper

Assessment Method:

1. Submission of Research paper.

2. Written examination.
3. Quizzes using Google forms.

Date Developed: Document No. 001-2020

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 MODULE 2
The Tourist Market and Segmentation
Learning Objective: After reading this MODULE, you should be able to:

1. Define what a market is.

2. State the three steps to target marketing.
3. Identify the characteristics of a good market segment.
4. Distinguish the new and emerging markets in the Philippines.

INTRODUCTION
Market segmentation, targeting, and 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 chapter. Market coverage strategies and
identifying one's unique selling proposition and competitive advantage will greatly
contribute to a successful marketing plan.

DEFINITION OF A MARKET
A market is a set of actual and potential buyers of a product. These buyers
share a particular need or want that can be satisfied through exchange relationships
(Kotler et al. 2010). The meaning of the term market has evolved over the years. To
marketing professionals, a market is all actual and potential buyers of a product or
service (Kotler et al. 2010).

The tourism product is not for all. The tourism industry aim to target a specific
set of individuals. It is for a particular set of buyers, a niche market. There are three
steps to target marketing: (1) market segmentation, (2) market targeting, and (3)
market positioning.

MARKET SEGMENTATION
A market is comprised of varied profiles and characteristics that can be further g
ed. 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 characters from
the others. Three segments differ in their wants or desires, socio-economic status, age,
travel behavior, etc. Marketing segmentation is dividing the market into distinct
groups who might require separate products and/or marketing mixes (Kotler et al.
2010). A market pot in a subgroup of the total consumer market who share similar
characteristics and needs relevant to the purchase of a product, service, or experience
(Hsu 2008). Each segment is profiled based on its characteristics.

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 Characteristics of a Market Segment
Lumsdon (1997) identified six characteristics of a segment, as follows:

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.

4. Accessible. The members of the segment should be accessed by marketing

effort and promotional activities to be conducted. If they are difficult to reach,
efforts to reach out to the specific segment might be futile.

5. Substantial. Segments should be large in order to be substantial of the segment

in mall, it should have a high spending capability to make a significant impact on
the business' 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 find out which one is the most effective. These variables
used in segmenting consumer markets include geographic, demographic,
psychographic, and behavioral.

Variables for Segmentation

Geographic

Geographic segmentation divides the market into different geographic units such
as nations, states, regions, countries, cities, neighborhoods, barangays, towns, etc.
Kotler er al 2010. Some companies make a decision to strengthen foothold on a certain
geographic region, concentrating their resources in ensuring deep penetration of a
specific geographic location

In the 2 Philippine Travel Exchange, the Department of Tourism conducted

workshops on how the travel trade sector can tap the emerging source markets
Countries such as Korea, USA, and Japan remain strong markets while showing the
potential of new markets such as Russia, India, and Australia.

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Demographic

Demographic segmentation refers to segmenting the market based on variables

such as age, life cycle, gender, income, occupation, education, religion, and race (Kotler
et al 2010). 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. Some popular ways tourism marketers segment the market using
demographic variables are through age and life cycle, gender, and income.

The major developed markets of Europe, America, Japan, and Australia are
experiencing an ageing 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.

Psychographic

Psychographic segmentation divides consumers based on different psychographic

profiles such as social class, lifestyle, and personality characteristics. Different social
dames will have different tastes and preferences on what they buy. In the Philippines,
we categorize to do economic classes through the ABCDE categories, with Class A being
the most affluent.

Lifestyle has an influence on what and how consumers buy products and services
Restaurants and bars tap different markets based on lifestyle. Personality is seen as an
indicate of the type of products people buy Products take on an image or a personality (
going private, adventurous, etc.) and people also have personality traits. Studies have
shown that consumers tend to buy products that reflect a personality similar to
themselves.

Newer forms of tourism such as adventure tourism, cultural tourism, and e are
types of tourism which the market has created. These are types of tourism which match
the likes of the younger generations.

Behavioral

Behavioral segmentation refers to dividing groups based on their knowledge,

attitude, use of or response to product or service Kotler et al (2010) identify behavioral
van to include special occasion segmentation, benefits sought, user status, user rate,
loyalty status and buyer readiness.

Special occasion segmentation involves purchases made based on occasions

such as Mothers Day, Valentine's Day, honeymoon, anniversary, or birthday. Buyers
may also be grouped according to benefits they seek such as quality, ambiance,
menu variety, and price. User status refers to markets segmented based on usage of
product such as first time users, regular user, non users potential users, etc. Usage
rate on the other hand, refers to 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 content while
others stick to a brand unconditionally. Buyer readiness pertains to the different

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stages buyers become ready to purchase a product. These stages range from being
unaware, slightly aware, want to buy, and intend to buy.

Behavioral segmentation is a good starting point for creating a communication

campaign to target specific segments that would seem viable for the company

Technographic

Cooper (2006) suggests that there is a fifth variable for market segmentation
which he calls technographic segment. With the prevalence of the Internet and the
World Wide Web there is an increasing divide between the users and non-users of
technology in searching for travel information. The more technological savvy one is, the
more information he gets from the Internet. Hence, travel websites and lifestyle travel
portals will allow customers to customize the travel needs.

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
form identity which as it should target. Market targeting is evaluating each segment
attractiveness and selecting one or more of these market segments in which to operate
one's business (Kotler a al. 2010).

Kotler suggest three factors to consider in evaluating which segments

should be targeted. Those factors are:

1. Segment size- refers to the current sales volume, growth rate, and high profit
margin.

2. 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.

3. 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.

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 Market Coverage Strategies
In the selection of specific market segments, a company decides on market
coverage strategy that is in line with its objectives and resources. Kotler et al. suggest
that it can adopt any of three market coverage strategies: (1) undifferentiated
marketing. (2) differentiated marketing, and (3) concentrated marketing.

In a differentiated marketing, a company ignores market segmentation and

goes after the entire market with only one market offer (Kotler et al. 2010). 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
mainly because a lot of buyers would need the same product. Using economies of scale,
consumer goods such as shampoo and soap could ignore differentiation and go for the
market with a single product offer. This strategy may not be effective for tourism
products.

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. Holiday Inn Galleria
Suites and Crowne Plaza share a common management group but Crowne Plaza is
more upscale than Holiday Inn Galleria Suites; thus, giving clients an option of where to
stay depending on what their budget could afford.

Concentrated marketing is practiced 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 are able to allot its resources in making its presence felt in a
specific market with greater impact. If the segment is well chosen, it may yield high
returns for a company. However, this strategy is risky because it is like putting all your
eggs in one basket. It is advisable to operate in at least run profitable segments.

Kotler et al. (2010) suggest that the following factors be considered when
choosing a market coverage strategy as follows:

1. 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

2. Degree of Product Homogeneity. If products are standardized and identical,

is more advisable to go for undifferentiated or concentrated marketing

3. 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

4. Competitor's Strategy. It is important to assess the strategy competitors are

using so that the correct strategy can be implemented to counter their marketing
efforts If competition is doing undifferentiated marketing, it would be
advantageous to do differentiated or concentrated marketing If competitors are
doing segmentation concentrated marketing is a must.

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 MARKET POSITIONING

Market positioning is developing competitive positioning for the product and

an appropriate marketing mix (Kotler et al 2010)

Positioning has everything to do with the deliberate way by which marketers

would want to position their product in the consciousness of its prospective customers
Its goal is to identify the products unique characteristics in a way that will differentiate
it in the marketplace. These three positioning concepts will help reinforce the idea of
market position: (1) unique selling proposition, (2) competitive advantage, and (3) top
of mind.

Unique selling proposition (USP) 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 attbutes, added services, personnel, location, or image (Kotler et al. 2010)

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 (Kotler 2010).

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 a
brand can reach is when it becomes synonymous to the generic. For example, Xerox is
actually a brand of a photocopying machine but the way Filipinos use the word is as if it
were the act of photocopying. We would use the term “pa-xerox" when we actually
mean "pa-photocopy." Market positioning is a deliberate way of making sure that the
product has a high recall in the consumer's minds relative to its competitors.

Some positioning strategies include the following:

1. Specific product attributes such as price and special features can be used to
position a product.

2. The product can also be positioned based on its benefits and the needs the
product fills

3. Positioning the product based on certain classes or segments users (eg, women
or children as primary users) can also be done.

4. A company can decide to position itself against an existing competitor and

present its edge over said competitor.

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 NEW AND EMERGING MARKETS

The study of new and emerging markets in tourism is vital in the growth of
destinations In order to obtain sustainable competitive advantage; the process of new
market identification should be taken seriously Tourism markets have evolved in recent
years. New customers have begun to travel, while regular travelers have traveled more
often.

Cooper et al. (2006), in their article on new and emerging markets, identified of
tourism markets as fueled by these factors on the demand side:

1. Economic growth in major source markets.

2. Increase in disposable leisure time and a longer life expectancy with a sound
health to travel.

3. Changes in living conditions especially city dwellers becoming more inclined to

engage in tourism.

4. Rising educational levels and increased access to information, stimulating

curiosity

5. 5. Increasing international integration of life.

Further, Cooper et al. sec tourism's supply side growing through:

1. The development of and investment in infrastructure
2. Continuous tourism product development
3. The elimination of legal limitations on and practical obstacles to travel

In the long term forecast of the World Tourism Organization (WTO). "Tourism
2020 Vision, there is still a huge potential for tourism growth. Mature markets have not
yet reached saturation while emerging markets continue to develop. For marketers, this
signals the growth potential of an ever increasing market. Unlike other industries where
the market is already saturated and one has to compete in eating up someone else's
market share, tourism markets are growing The challenge, however, is to capture the
fancy of the emerging markets

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 Types of Markets
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 (Meetings, Incentives, Conference, and Events)
and business market, among others.

The Family Market

There are three types of vacation decision makers within the family market: (1)
joint decision-making families. (2) Husband making the decision, and (3) wife making
the decision.

In a study conducted by Nichols and Snepenger (1988) on family decision

making and tourism behaviors and attitudes, they made the following conclusions:

Just decision-making families plan trips with the longest period of time and
make use of the widest range of information sources. This type of families participates
in a lot of leisure activities. Thus, promotional materials should be made available early,
dispersed in a variety of media sources, and designed for spouses of the same age.

Families where the husband makes the decision for the vacation destination
ir characterized by spouses with greater age differences. Promotional activities are
directed to the male spouse, hence, it should emphasize outdoor Recreation. Husband
dominant families spend the largest amount of money on their vacations.

Wife dominant families form the smallest segment of the family market. If
the wife makes the decision on vacations, it is characterized by short planning duration
and uses the fewest information sources for planning. This type of families spends the
least amount of money and shortest duration compared to joint decision making and
husband-dominant families With the entry of more women in the workforce and
availability of information on the Internet, these findings made in 1988 may have
changed over time. Further research on this area may be useful in understand the
travel behavior of families

Aside from segmenting the family market using decision makers as a standard,
using the concept of the family life cycle (FLC) is another way. The family life ac refers
to the progressive stages through which individuals and families proceed over time. It
describes the patterns of relative want and prosperity experienced by family members
(Lawson 1991). The FLC describes how one moves from being a member of his nuclear
family into building his own family with the arrival, growth, and dispersal of children.
Travel behavior changes depending on the family's stage in the life cycle mainly due to
time and budgetary contacts in raising a family,

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 The Senior Market
The senior market is also known as the silver market or third-age tourism. There
was even a campaign known as SKI which encourages the elderly to go on vacations to
Spend Kid's Inheritance There is clearly a high level of demand for travel within the
senior market. They have the time, money, and desire to travel. They look at retirement
as an opportunity for personal development and improvement. There are assumptions
that the senior market is healthier, wealthier, and more active than previous
generations of the same age (Moscardo 2006). There is also a danger of categorizing
the senior market into one single market. The so called baby boomers have different
travel interests compared to their older silent generation cohorts (Lehto 2006).

However, the senior market also has limitations and constraints to engage in
travel. These sectors include safety and security, health issues, availability, costs, family
responsibilities, poor information about suitable options (Moscardo 2006), and previous
experience (Lohmann & Danielsson 2001). The senior market in the Philippines can be
characterized into two those with retirement benefits, and those who rely on their
children for sustenance. With the increasing costs of health care and medicines in the
Philippines and the meager social security provisions provided to senior citizens, the
Philippine silver market is a niche market.

It is also important to say that there may be a danger of age based stereotyping
Facilities and services that appeal to the senior market may be developed for
establishments that want to target this age group, but care must be exercised that they
do not send negative signals to this sensitive market.

The Youth Market

Research has shown that long distance youth travelers are primarily experience-
seekers, collecting unique experiences that will serve to build their self-identity
narratives (Richards & Wislon 2006). There is a growth of travel participation among
the youth market that is fueled by several factors, enumerated by Richards et al. (2006)
as follows:

1. Increased participation in higher education.

2. increased travel budgets (parental contribution, savings, and work)

3. Work and travel combinations

4. The rise of low-cost/budget airlines

5. Shorter employment contracts leading to significant gaps in employment

6. The global rise of the internet culture

7. Growth of independent travel guidebooks

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 Backpacking, which used to be a western habit, has been acquired by countries
such as China, India, and Korea. The student market of Koreans is a major market of
the Philippines. Some schools have a considerable percentage of Koreans. Youth study
exchange programs, internships, and voluntary work have also encouraged parents to
send their children abroad.

The MICE Market and Business Tourism

The Meetings, Incentives, Conferences (Conventions), and Exhibitions (MICE)
industry is extensively and rapidly growing (Ladkin 2006). 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. All of these events need a
conglomeration of products and services such as transportation, accommodations, food
and beverage, banquet facilities, entertainment, and shopping.

Conference tourism refers to all activities associated with planning, travel to and
participation in conferences and meetings, both domestic and international (Ladkin
2006). An additional benefit is that more often than not, delegates extend their stay
after the event for leisure purposes (sightseeing and shopping), and are joined in by
their spouses, children and/ or friends.

Incentive travel is the most lucrative of the MICE market. Incentive travel comes
in the form of a reward for employees or business partners, hence, luxury is a natural
consequence. Most of the travel requirements are paid for by the giver of the incentive,
and participants are sometimes given pocket money for their other needs. Thus, you
can expect high per capita expenditure for incentive travel market.

Important elements in venue selection for the MICE market were itemized by
Ladkin (2006) as follows: cost, location and accessibility, time and duration of
conference, technical requirements, size of the conference, and configuration of the
rooms, destination image, and leisure opportunities. For destinations and
establishments targeting the MICE market, they should continue to improve their
services, facilities and the design of their venue, be abreast of information technology
developments, and maintain competitive destinations that offer value for money.

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