Iloilo City Community College

Bachelor of Science Tourism Management

Course Module

THC 8- TOURISM AND HOSPITALITY MARKETING

TOPIC 2: THE TOURIST MARKET AND SEGMENTATION

Time Frame: 4.5 hrs

I. Learning Outcomes
Dear student, at the end of the chapter, you will be able to:
 Explain the definition of a market, the market segmentation, targeting and positioning including the market
coverage strategies that is in line with its objectives and resources
 Classify a good market segments and new emerging markets in the country

II. Learning Materials

Smartphone, and internet

References
 Badilla, Maricel G. (2015).Tourism Marketing. Rex Bookstore
//www.youtube.com/watch?v=Cl4GhjSALsI
III. Learning Activities

What is Market?

-is a set of actual and potential buyers of a product. ( Kotler et al 2010 )

-is all actual and potential buyers of a product or service.
-tourism product is not for all
-tourism industry aims to target a specific set of individuals.

3 steps to target marketing:

1. Market segmentation
2. Market targeting
3. Market positioning

MARKET SEGMENTATION
-is dividing the market into distinct groups who might require separate products and/or marketing mixes.
Market segment- is a subgroup of the total consumer market who share similar characteristics and needs relevant to
the purchase of product , service, or experience.

Characteristics of a Market segment

1. Identifiable. The people who compromise 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 efforts 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. If the segment is small, it should have 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.

1| Course Learning Guide in THC- 8 Tourism and Hospitality Marketing

Prepared by: Gina Q. Baylon
 Variables to Segment Consumer Markets

Geographic Demographic
Nations Age
States Life cycle
Regions Gender
Countries Income
Cities Occupation
Neighborhoods Education
Barangays Religion
Towns Race

Psychographic Behavioral
Social class Special occasions
Lifestyle Benefits sought
Personality Usage rate
User status
Loyalty status
Buyer readiness

Technographic
Variables to Segmentation

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

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

Psychographic
Psychographic segmentation divides consumers based on different psychographic profiles such as social
class, lifestyle, and personality characteristics. Different social classes will have different tastes and preferences on
what they buy. In the Philippines, we categorize socio-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. Restaurant and bars tap
different markets based on lifestyle. Personality is seen as an indicator of the type of products people buy. Products
take on image or a personality (outgoing, 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.

Behavioral
Behavioral segmentation refers to dividing groups based on their knowledge, attitude, use of or response to
a product or service. Kotler identify behavioral variables to include special occasion segmentation, benefits sought,
user status, user rate, loyalty status, and buyer readiness.
Special occasion segmentation purchases made based on occasions such as Mother’s 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, regular users, non-users, potential users, etc. Usage rate 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. Buyer readiness pertains to the different stages buyers become ready to purchase a product. These stages
from being unaware, slightly aware, want to buy, and intend to buy.

Technographic

2| Course Learning Guide in THC 8-Tourism and Hospitality Marketing

Prepared by: Gina Q. Baylon
 Copper (2006) suggest 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. Travel websites and lifestyle travel portals will allow
customers to customize their travel needs

MARKET SEGMENTATION
-is evaluating each segment’s attractiveness and selecting one or more of these market segments in which to
operate one’s business.

3 factors in evaluating segments

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 of the company.
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.

Market Coverage Strategies

1. Undifferentiated marketing – company ignores market segmentation and goes after the entire market with only one
market offer
- has in common and is designed to reach a huge number of buyers.
-can be used effectively for consumer products mainly because a lot of buyers would need the same
product.
- effective for consumer products by not be effective for tourism products.
2. 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. Example, Holiday Inn Galleria Suites and 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.
3. Concentrated marketing – is practiced by companies with limited resources. It is risky.
-pursues getting a big share of a small market rather than a small share of a large market.
-it is advisable to operate in at least two profitable segments.

Factors in choosing a market coverage strategy

1. Company’s resources
2. Degree of product homogeneity
3. Market homogeneity
4. Competitor’s strategy

MARKET POSITIONING
-is developing competitive positioning for the product and an appropriate marketing mix.
3 positioning concepts:
1. Unique selling proposition- is a term used to identify what makes the product or service different from others. It
may occur due to the product’s physical attributes, added services, personnel, location, or image.
2. Competitive advantage – is the products advantage over competitors, which is gained by offering greater value
either by offering lower prices or providing more benefits to justify higher prices.
3. 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. 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 the photocopying. We would use the term, “pa-xerox” when we actually mean “pa-
photocopy.”

TYPES OF MARKET
-family market
-the senior market
-the youth market
- the Meetings, Incentives, Conferences (Conventions), and Exhibitions (MICE)

The Family Market

Joint decision-making families –participates in a lot of leisure activities.
- Promotional materials should be made available early, dispersed in a variety of media sources, and designed for
spouses of the same age.

3| Course Learning Guide in THC 8-Tourism and Hospitality Marketing

Prepared by: Gina Q. Baylon
Husband makes the decision- is characterized by spouses with greater age difference. Promotional activities are
directed to the male spouse, it should emphasize outdoor recreation. Husband-dominant families spend the largest
amount of money on their vacations.
Wife makes the decision - is characterized by short planning durations, and uses fewest information for planning. It
spends the least amount of money and shortest duration. The family life cycle refers to the progressive stages
through which individuals and families proceed overtime.

The Senior Market

-also known as the silver market or third –age tourism
-Spend Kid’s Inheritance (SKI)- a campaign which encourages the elderly to go on vacations.
-they have the time, money, and desire to travel.
-they look at retirement as an opportunity for personal development and improvement.
-the senior market is healthier, wealthier and more active.

The Youth Market

-long distance travelers are primarily experience-seekers, collecting unique experiences that will serve to build their
self-identity narratives.

The MICE and Business Tourism

-the Meetings, Incentives, Conferences (Conventions), and Exhibitions (MICE) known as the event industry. This
type of travel is connected but not limited to business travel.

Conference tourism-refers to all activities associated with planning, travel to and participation in conferences and
meetings, both domestic and international.

Incentive travel- most lucrative of the MICE market. It 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.

Participation Activity: Among the three attractions located at Iloilo City, choose only one attraction and identify
potential market segments based on the variables for segmentation.
1. Villa Beach
2. Water world
3. Iloilo Esplanade

IV. Evaluation. Use a sheet of yellow pad. The answers should be in handwritten.

Task 1: Mini Case

Why Koreans Tour and Stay in the Philippines

The Korean market is the Philippines top market, representing more than 25% of foreign visitors. Have you
even wondered why they choose the Philippines?

In an interview made by the Philippine Star with Philippine Ambassador to Korea Luis T. Cruz, he cited
reasons why Koreans remain as the top source of foreign tourists in the country. Koreans love our holiday and leisure
attractions which complement their main reason for travel, that is, to learn English. Koreans males come to the
Philippines over the weekend to play golf, women come for shopping, spa and entertainment activities. In a Gallup
Poll targeting the Korean market, interestingly, Koreans enjoy our seafood as well.

Philippines and Korea have very strong bilateral relations, The Philippines supported Korea during the
World War II and in their post-war restoration. Hence, government relations between the two countries have been
strong since the 1950s.

Question: (10 points)

What activities should the Philippines develop in order to keep on attracting this market segments?
Criteria:
Content-5
Punctuality- 5

4| Course Learning Guide in THC 8-Tourism and Hospitality Marketing

Prepared by: Gina Q. Baylon
Task 2: Concept Application (10 points)

When you eat in a restaurant/food chain establishment, observe the kinds of people who patronize the products in
the menu. What products do children and their parents eat? What segment of the market does this food chain
establishment cater to?

Criteria:
Focus & Details – 3
Organization - 2
Punctuality- 5

5| Course Learning Guide in THC 8-Tourism and Hospitality Marketing

Prepared by: Gina Q. Baylon