N ER D O M MARKET 2 EDUCATION

N ER D O M MARKET #2 EDUCATION Market Segmentation: A Tool in Tourism Marketing and Evaluation MARKET #4 ENTERTAINMENT H ER IT AG MARKET You #1 E FACILITIES PROGRAMMING MARKET #3 Ed Mahoney, Michigan State University, PRTR

The origins of the term market segmentation can be traced back to Wendel Smith's trail-blazing article in the 1950 s which introduced the concept as `based upon developments on the demand side of the market and represents a rational and more precise adjustment of product and marketing effort to consumer and user requirements' [Smith, 1956]. Market segmentation was identified as a prerequisite for any organisation endeavouring to create products to fit customers' needs.

Market Segmentation: 1. Is the central concept and basis for “modern marketing” including: Relationship Marketing Customer Bonding Data Base Marketing Strategic Service Improvement 2. It should be the basis for many form of tourism evaluations and studies: Spending and Economic Impacts Market Value Analyis Positioning Analyses Marketing Effectiveness Customer Satisfaction Inquiry Conversion

Tourism Spending Information Resident vs. Non-Resident Day vs. Overnight trips Party Size Equipment Type -- boating, camping “ 0” spenders & Heavy Half Spenders Spending by persons/parties attracted by different marketing messages/media Different target markets

3. A central component in marketing strategies: Visioning TOURISM Strategic Objectives Facility& Attraction Objectives Marketing Situation Economic Political Social Demographic Technology Market Overview Current markets Market segments Market trends Competition and Potential Partnerships Economic Objectives Tourism Inventory and Performance Current Tourism System Community Plans & Objectives Supply Perceptions Cooperation Publics Opportunities, Threats, Strengths, Weaknesses, and Issues Product/Service -- Segments -- Relationships Target Segments Cooperative Regional Tourism Development & Promotion Positioning Strategy Target Market Objectives Marketing Mix Objectives and Strategies Facilities - Events - Services - Prices - Packages - Accessibility -Communication - Education - Community Monitoring Evaluation - Reporting Cooperative Themes and Objectives

4. The emphasis is shifting to “CUSTOMER PORTFOLIOS” and “RETENTION. ” Having identified potentially attractive market segments, the further task is that of evaluating and choosing between segments (what Kotler [1997] terms `market targeting') `The objective is to link revenues with the appropriate customer or market segment, and to match costs with their related revenues, in some systematic and rational manner’ [Barnes and Cumby, 1995).

5. Market segmentation is still not integrated or utilized fully in tourism marketing and development Focus on activities and products Aggregate analysis Limited evaluation and assessment Lack of segmented data

Market Segmentation & Elasticities P 2 P 1 Q 1 Market P 2 P 1 Q 2 Q 1 Segment A Q 1 Segment B Q 2

PROMOTION Market Segmentation & Elasticities PROMOTION Visits Segment A PROMOTION Visits Segment C Segment B

Segmentation and Service Enhancement Attribute/ Service Satisfaction/Purchases Segment A Attribute/ Service Satisfaction/Purchases Segment B

ENTERTAINMENT/CULTURE ES G KA C PA QUIET P 2 P 1 EIR H EXCITING WN O NT O PRICE P 1 OUTDOOR RECREATION QUANTITY

ENTERTAINMENT/CULTURE ES G KA C PA QUIET PROMOTION EXCITING EIR H NT O WN O VISITS PROMOTION OUTDOOR RECREATION PURCHASES

CAPABLE? EXISTING POTENTIAL INTERESTED? MARKET(? ) STRATEGIC OBJECTIVES SEGMENTATION CRITERIA & PROFILING DATA GATHERING EVALUATION AND TARGETING TARGET MARKET OBJECTIVES SEGMENTATION AND PROFILING POSITIONING

EXISTING POTENTIAL MARKET(? ) STRATEGIC OBJECTIVES SEGMENTATION CRITERIA & PROFILING DATA GATHERING EVALUATION AND TARGETING TARGET MARKET OBJECTIVES SEGMENTATION AND PROFILING POSITIONING

SEGMENTATION CRITERIA There is no generally accepted and validated way to segment markets Geographic Segmentation. Demographic (Socio-economic) Segmentation. Psychographic Market Segmentation -- social class and lifestyle variables. Behavioural Market Segmentation -- purchase occasion and method, benefits sought, degree of usage and loyalty, buyer readiness stage, and marketing focus sensitivity

MARKET(? ) EXISTING CAMPERS POTENTIAL DECIDE ON SEGMENTATION CRITERIA SEGMENTATION AND PROFILING EVALUATION AND TARGETING TARGET MARKET OBJECTIVES CAMPGROUND ATTRIBUTES PRIMITIVE CAMPERS DEVELOPED CAMPERS TARGET THE DEVELOPED CAMPERS ATTRACT RV CAMPERS DEVELOP PROGRAMS ENHANCE SITE HOOKUPS IMPROVE ACCESS POSTION ON: POSITIONING • MODERN FEATURES • FULL SERVICES • MUCH TO DO! • CONVENTIENT

Data Base Marketing POTENTIAL 1. Database marketing is a MARKETING ISSUE EXISTING 1. SECONDARY NOT a technology issue. POTENTIAL MARKET(? ) STUDIES 2. PURCHASED decisions/uses and information required 2. Clearly identify PROFILES-LISTS STRATEGIC OBJECTIVES 3. SURVEYS 3. Draw a picture or process diagram of how the marketing database needs to work. SEGMENTATION CRITERIA & PROFILING DATA GATHERING EXISITING 4. Build the database manually. EVALUATIONyou automate it. first, before 1. REGISTRATIONS Then build a prototype-not a pilot. AND TARGETING 2. INQUIRY CONVERSIONS SEGMENTATION AND PROFILING 5. Collect only data that will absolutely be used in the 3. SURVEYS next 12 months. TARGET MARKET OBJECTIVES 4. INTEGRATED 6. DATA a simple but proven software package. Use BASES POSITIONING

POTENTIAL 1. SECONDARY STUDIES 2. PURCHASED PROFILES-LISTS EXISTING POTENTIAL MARKET(? ) STRATEGIC OBJECTIVES 3. SURVEYS SEGMENTATION CRITERIA & PROFILING DATA GATHERING EXISITING 1. REGISTRATIONS 2. INQUIRY CONVERSIONS 3. SURVEYS 4. INTEGRATED DATA BASES EVALUATION AND TARGETING TARGET MARKET OBJECTIVES SEGMENTATION AND PROFILING POSITIONING

EXISTING POTENTIAL Evaluation 1. Different elasticities 2. Servicability 3. Competitiveness Current Position 4. Value in present & over time MARKET(? ) STRATEGIC OBJECTIVES SEGMENTATION CRITERIA & PROFILING DATA GATHERING EVALUATION AND TARGETING SEGMENTATION AND PROFILING 5. ROI 6. Fit and Compatability TARGET MARKET OBJECTIVES POSITIONING

EXISTING POTENTIAL Objectives 1. Increase length of stay. 2. Loyalty/relationship building. 3. Increase purchases 4. Enhanced perceptions. MARKET(? ) STRATEGIC OBJECTIVES SEGMENTATION CRITERIA & PROFILING DATA GATHERING EVALUATION AND TARGETING SEGMENTATION AND PROFILING 5. Satisfaction 6. Word-of-mouth TARGET MARKET OBJECTIVES POSITIONING

N ER D O M MARKET #2 EDUCATION MARKET SEGMENTS FOR “CULTURAL TOURISM” MARKET #4 ENTERTAINMENT H ER IT AG MARKET You #1 E FACILITIES PROGRAMMING MARKET #3

PRODUCTS FOR “CULTURAL TOURISM” MARKET SEGMENTS N ER D O M NC RA #2 MARKET S NG UM KI SE OR MU W EDUCATION ES H MARKET #4 PROGRAMMING ENTERTAINMENT H ER IT AG MARKET #1 E FACILITIES TS EN ES TM RIV RY AC E D #3 TO RS IN MARKET IS U E TL H O R T G T CA VIN ED LI UID G

G S TAREDET IN RIE ARKET B MEF I D QU RE N IN A S O ET ED RK CT INQUIRIES A M LLE ET CO RG ON TA TI W A O RM TARGET H O F MARKET C MARKET D IN TARGET MARKET A

M ET IN H Q O UI D RY O F TRAVEL MICHIGAN OF ER IES B M IR NU QU IN DIRECT MAIL OF G IN IRY TIM QU IN T E RK MA S ET IRIE G AR NQU T I SUMMER PLANNER REGIONAL COOPERATIVE ADS IN RE FO Q RM UE A ST TIO ED N

Art Fair Tourists Do Not Buy Art Light Buyers Day Trippers Overnight Heavy Buyers Overnight Day Trippers

Art Fair Tourists Do Not Buy Art Light Buyers Overnight Heavy Buyers Overnight

Art Fair Tourists Do Not Buy Art Profiles 1. Years of attendance 2. Family life cycle 3. Other activities Heavy 4. Light art fairs Other 5. Preferred lodging Buyers 6. Organizations 7. Art buying info 8. Planning 9. Spending Overnight Strategies 1. Positioning 2. Coop ad/promos = Overnight 3. Packaging 4. Retention effort 5. Relationships Overnight