Market SegmentationDESINGED BY

Sunil KumarResearch Scholar/ Food Production FacultyInstitute of Hotel and Tourism Management,MAHARSHI DAYANAND UNIVERSITY, ROHTAKHaryana- 124001 INDIA Ph. No. 09996000499email:  skihm86@yahoo.com , balhara86@gmail.com  linkedin:- in.linkedin.com/in/ihmsunilkumarfacebook: www.facebook.com/ihmsunilkumar webpage: chefsunilkumar.tripod.com 

A market segment is a sub-set of a market made up of people or organizations with one or more characteristics that cause them to demand similar product and/or services based on qualities of those products such as price or function.

Examples:• Gender• Price• Interests

It starts with NEED!

Wants, desires, aspirational, social esteem, security, functional, peer, trendy, ‘must-have’, financial, time saving, educational, personal growth, etc.

Four Primary Bases to segment

• Geographic Segmentation• Demographic Segmentation• Behavioral Segmentation• Psychographic Segmentation

A true market segment meets all of the following criteria:

• it is distinct from other segments (different segments have different needs),

• it is homogeneous within the segment (exhibits common needs);

• it responds similarly to a market stimulus, and • It can be reached by a market intervention.

Individual Consumers look at..

• Physical Size• Creation of or response to a

fad• Geographic location• Time related factors• Demographics/culture/

religion• Gender• Age• Social status• Education

• Avocation• Special Interests• Accessibility• Access• Need for specific

information• Need for customization• Need for quality• Degree of a

product/service ingredient

Purchase decision influencers

• Preference for channel of distribution

• Number of decision makers

• Financial strength of the prospect

• Quantity/volume requirements

• Ability to use the offering• Affiliation with other

organizations

• Commitment required• Brand awareness/users• Attitude toward a

personality or enterprise• Attitude toward price

versus value• Experience with other

products/services• Prospect bias• After sale support

expectations

Benefits of Segmentation

• Effective use of resources• Gain a focus• Create Value for a target market• Positioning

Steps in Market Segmentation, Targeting, and Positioning

Market Segmentation1. Identify bases for segmenting the market2. Develop segment profiles

Market Targeting3. Develop measure of segment attractiveness4. Select target segments

Market Positioning5. Develop positioning for target segments6. Develop a marketing mix for each segment

Levels of Market Segmentation

Through Market Segmentation, Companies Divide Large, Heterogeneous Markets into Smaller Segments that Can be Reached

More Efficiently And Effectively With Products and Services That Match Their Unique Needs.

Mass MarketingSame product to all consumers

(no segmentation, i. e. a commodity)

Segment MarketingDifferent products to one or more segments

(some segmentation, i.e. Marriott)

• Size, purchasing power, profiles of segments can be measured.

• Segments can be effectively reached and served.

• Segments are large or profitable enough to serve.

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

ActionableActionable

• Effective programs can be designed to attract and serve

the segments.

Requirements for effective segmentation

Choosing a market-coverage strategy

• Company resources • Degree of product homogeneity• Market homogeneity• Competitors’ strategies

• Product’s Position - the way the product is defined by consumers on important attributes - the place the product occupies in consumers’ minds relative to competing products.

Marketers must:–Plan positions to give their products the

greatest advantage in selected target markets

Positioning for Competitive Advantage

Positioning Strategies

• Positioning by specific product attributes• Positioning by benefits• Positioning for user category• Positioning for usage occasion• Positioning against another competitors• Positioning against another product class

• Step 1. Identifying Possible Competitive Advantages: Competitive Differentiation.

• Step 2. Selecting the Right Competitive Advantage: Unique Selling Proposition (USP).

• Step 3. Communicating and Delivering the Chosen Position.

Steps to Choosing and Implementing a Positioning Strategy

Product Differentiation

• Physical attributes• Service differentiation• Personnel differentiation• Location• Image differentiation

Positioning map of service level versus price. Source: Lovelock, Services Marketing, Prentice Hall

Perceptual Map

Exercise• Make four teams. One traveling for business, another

travelling to attend the wedding of a friend, the third travelling for a vacation and the fourth to start a new factory.

• Group A is expected to stay for only a night.• Group B for 3 nights. First day sangeet, then marriage and

third day reception.• Group C is expected to stay for 5 nights. The vacation is at a

beach or in the hills, the group can decide!• Group D is expected to stay for a month. The group will start

the factory and then come back.• Each group is now invited to make a list of services / products

that the group might need from the hotel it stays in.

Hotels based on Market Segmentation

• Commercial hotels• Leisure Hotels• Airport hotels• All-suite hotels• Extended stay • Residential• B&B /Motels• Casino Hotels• Convention Hotels / Centers

IHG SegmentsMarket segment The Group’s brands Description Customer segment

Luxury — Hotels with the highest level of amenities, often boutiques or small chains with top-class facilities and services and very high room rates.

A mix of business and leisure, dependent on location, often with a high proportion of international guests.

Upper Upscale InterContinental Well-appointed hotels with full, high-quality, amenities including spacious rooms and bathrooms. High room rates. Usually located in prime city-centre locations in major cities or in resorts.

Predominantly business often with a high proportion of international guests.

IHG SegmentsMarket segment The Group’s brands Description Customer segment

Upscale Crowne PlazaStaybridge SuitesHotel Indigo

High-quality, mostly full-service hotels with moderate to high room rates. Less luxurious than upper upscale and sometimes lacking some of the facilities such as a concierge.

Predominantly business in urban locations but also appealing to the leisure guest; less international than upper upscale but can still have a significant international guest base.

Midscale (full service) Holiday InnHoliday Inn SelectHoliday Inn SunSpree

Full service but with fewer amenities than upscale. Comparatively lower room rates than upscale

Predominantly domestic guests, both business and leisure.

IHG SegmentsMarket segment The Group’s brands Description Customer segment

Midscale (limited service)

Express by Holiday Inn(in EMEA and Asia Pacific)Holiday Inn Express (in the Americas)Candlewood Suites

Reduced food and beverage, bar and meeting facilities but similar quality room product to full service midscale. Broadly comparable room rates with midscale (full service).

Predominantly domestic guests, both business and leisure.

Economy/ Budget __ Cheapest most basic hotels with limited facilities

Predominantly domestic guests.

Market Segments used in Hotels

• Corporate – A/B/C

• Leisure• Conferences / Events• Travel Agent• Airlines/Cruise/Crew• Long Stayers• Complimentary

Basics of Marketing

• Ps– Product– Price– Place– Promotion

• Extended Ps– People– Process– Physical Evidence

Questions