THE TOURIST

MARKET AND
SEGMENTATION
Chapter 2
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.

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 tourism product is NOT for all. The tourism industry aims 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 segregated.
Each segment has different
■ Market Segment is a subgroup of the
characteristics from the others.
These segments differ 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 (Kotler et al. 2010).
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.
CHARACTERISTICS OF A
MARKET SEGMENT
■ Identifiable. The people who comprise the segment can be located and identified such that
targeting them would be easy.
■ Cohesive. The consumers should be part of a whole whose specific qualities are common
to all.
■ Measurable. The marketer should be able to estimate the size and potential spending of
the members of the market segment.
■ Accessible. The members of the segment should be accessed by marketing efforts and
promotional activities to be conducted.
■ Substantial. Segments should be large in order 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.
■ Actionable. The company has enough resources and commitment to enable effective
penetration of the identified segment to ensure effective positioning
VARIABLES FOR SEGMENTATION
GEOGRAPHIC
■ Divides the market into different geographic units such as nations, states,
regions, countries, cities, neighborhoods, barangays, towns, etc. (Kotler et al.
2010)

DEMOGRAPHIC
■ refers to segmenting the market based on variables such as age, life cycle,
gender, income, occupation, education, religion, and race (Kotler et al. 2010).

PSYCHOGRAPHIC
■ Divides consumers based on different psychographic profiles such as social
class, lifestyle, and personality characteristics.
VARIABLES FOR SEGMENTATION
BEHAVIORAL
■ Refers to dividing groups based on their knowledge, attitude, and use of or
response to a product or service. Kotler et al. (2017) identify behavioral
variables to include special occasion segmentation, benefits sought, user status,
user rate, loyalty status, and buyer readiness.

TECHNOGRAPHIC
■ Fifth variable for market segmentation which called 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.

MARKET
TARGETING
Market Targeting is
evaluating each segment’s
attractiveness and selecting
one or more of these market
in which to operate one’s
business. (Kotler et. al.
2017).
Factors to consider in evaluating which
segments should be targeted:
■ Segment Size – refers to the current sales
volume, growth rate, and high profit margin.
■ 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.
■ Company Objectives and Availability of
Resources – refers to the main reasons for
its decision making and the available
resources the company will use to make its
objectives a reality.
 Kotler et al. Suggest that it can adopt any of
three market coverage strategies:

MARKET ■ Undifferentiated Marketing. A company

ignores market segmentation and goes after

COVERAGE the entire market with only one market offer.

This looks into what the market has in
common and is designed to reach a huge
STRATEGIES number of buyers.
■ Differentiated Marketing. Approaches the
In the selection of specific target market by targeting several segments using
market segments, a company separate offers per segment. Companies
decides on a market coverage may offer several products for different
market segments to capture a bigger chunk
strategy that is in line with its of the market.
objectives and resources.
■ Concentrated Marketing. 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.
Kotler et al. Suggest the following factors to be considered
when choosing a market coverage strategies:
■ Company’s Resources. This refers to how much money and resources
the company has which can be allocated to marketing.
■ Degree of Product Homogeneity. If products are standardized and
identical, it is more advisable to go for undifferentiated or concentrated
marketing.

■ 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.

■ 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.
 Three positioning concepts that will help
MARKET reinforce the idea of market position:

POSITIONIN ■ Unique Selling Proposition (USP). A

term used to identify what makes the
G
Is developing competitive
positioning for the product and
product or service different from others.

an appropriate marketing mix. ■ Competitive Advantage. The product’s

(Kotler et al. 2010) advantage over competitors, which is
gained by offering greater value either by
GOAL of Positioning: to identify
offering lower prices or providing more
the product’s unique characteristics benefits to satisfy higher prices.
in a way that will differentiate it in
■ Top of Mind. The highest level of recall
the marketplace. that a brand receives. It means that the brand
occupies the top spot in a consumers mind.
 Generational Travel Markets
NEW AND
EMERGING
MARKET
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. New customers
have begun to travel, while
regular travelers have traveled
more often.
■ Generational segmentation is one of the
easiest ways to segment the travel market.
■ Regardless of age, the generational segments
generally travel to spend time with family
and friends, to get away from everyday
life, to relax, and to rejuvenate.
■ However, their travel behavior differs
significantly;
Baby Boomers (1946- Travel “to see”
1964)
Generation X (1965-1980) Usually travels with their
families
Millennials (1981-1996) Travel “to do”
(also called Generation Y)
Generation Z (1997-2012) are the most environmental
(also called Zennials) concerned travelers
 Some of the Philippines’ emerging markets
includes:
■ The Family Market. There are three types of
vacation decision makers within the family market.
TYPES OF
MARKET Joint 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 participate in
Emerging markets can also a lot of leisure activities.
be segmented using Husband makes the decision – characterized by
demographic and spouses with greater age differences. Husband-dominant
families spend the largest amount of money on their
psychographic variables. vacations.
Wife makes the decision – is characterized by short
planning duration and uses the fewest information sources
for planning. This type of families spend the least amount
of money and shortest duration compared to joint
decision-making and husband-dominant families.
 ■ The Senior Market. Also known as the
silver market or third-age tourism. They
have the time, money and desire to
travel. They look at retirement as an

NEW AND opportunity for personal development

and improvement.
EMERGING ■ The Youth Market. Research has
MARKET shown that long-distance youth
travelers are primarily experience-
seekers, collecting unique experiences
that will serve to build their self-identity
narratives.
 ■ MICE (Meetings, Incentives, Conference,
Events) and Business Tourism. Known as
the events industry, this type of travel is
connected but not limited to business travel.
This sector have differences but also have
overlaps that make it convenient to put
NEW AND them together as one growing segment of
the tourism industry.
EMERGING
MARKET Conference Tourism – refers to all activities
associated with planning, travel to and
participation in conferences and meetings,
both domestic and international.

Incentive Travel – comes in the form of a

reward for employees or business partners.
 ■ The Solo Travel Market. is one of the
fastest-growing markets as shifts as social
structure and lifestyles, such as self-
partnering, childless couples, and later
marriages. Solo travelers prefers freedom
and flexibility but in more structured and
NEW AND organized style (Laesser et. al. 2016).
EMERGING ■ The LGBTQ+ Market. Refers to the
MARKET development and marketing of tourism
products and services to lesbian, gay,
bisexual, and transgender people. Travel
service providers such as airlines and
hotel chains sought to assure the LGBT
people that they welcome and respected.
 ■ The Bleisure Market (Business and
Leisure). It is the blending of business and
leisure tourism as travelers extend their
business visit with a leisure trip. This trend
has two components: (1) spouses and
children tag along on trips for a few days
NEW AND of family fun and (2) lone leisure and

EMERGING sports activities often by younger travelers.

(Tala et. al. 2011).
MARKET
■ Wellness Tourism. Defined as travel with a
pursuit of maintaining one’s personal well-
being--- balance with a physical, mental,
emotional, and spiritual domain of human
life. Activities like fitness, healthy eating,
relaxation, and healing treatments.
 • A market is a set of actual and potential buyers of a product.

• There are three steps to target marketing: market segmentation,

market targeting and market positioning.

• A market segment has to be identifiable, cohesive, measurable,

accessible, substantial, and actionable.

• Markets can be segmented using different variables that are

geographic, demographic, psychographic, and behavioral in nature.

• The factors to consider in evaluating which segments are to be targeted

SUMMARY are segment size and growth, segment structured attractiveness, and
company objectives and resources.

CONCLUSIO • There are three market coverage strategies: undifferentiated,

differentiated, and concentrated marketing.

N • Top of the mind is the highest level of recall a brand can achieve in the
customer’s mind.

• Unique selling proposition differentiates the product or service from

others.

• Competitive advantage means the greater value the product or service

from others.
• New and emerging markets include the family market, the senior
market, the youth market, MICE market, solo travel market, LGBTQ+
market, bleisure market, and wellness tourism.
THANK YOU FOR
LISTENING
REPORTERS:

Leizter L. Flores Angelica A. Manliguez