STP Chapter 8

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 Chapter objectives
• Explain market segmentation and identify
several possible bases for segmenting markets

• List and distinguish among the requirements

for effective segmentation

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 Chapter objectives
• Illustrate the concept of positioning for
competitive advantage

• Discuss choosing and implementing a

positioning strategy

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 5 Applications of AI Technology in the
Hospitality Industry

• Chatbots & virtual assistants

• Frictionless booking processes
• Making reviews actionable
• Prediction analysis & dynamic pricing
• Automation and efficiency through AI power
•

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 Segmentation is first step
1. Market segmentation
• Dividing a market into distinct groups of buyers with
different needs, characteristics or behaviour who
might require separate products or marketing mixes
2. Market targeting
• Evaluating each market segment’s attractiveness and
selecting one or more of the market segments to enter
3. Market positioning
• Setting the competitive positioning for the product
and creating a detailed marketing mix

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 Benefits of Segmentation

• Gain focus
• Create Value for a target market
• Positioning
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 Steps in Market Segmentation,
Targeting, and Positioning
Market Segmentation
1. Identify bases for
segmenting the market
2. Develop segment profiles

Market Targeting
3. Develop measure of
segment attractiveness
4. Select target segments

Market Positioning
5. Develop positioning for
target segments
6. Develop a marketing
mix for each segment

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Step 1. Market Segmentation
Levels of Market Segmentation

Mass Marketing
Same product to all consumers
(no segmentation, i. e. a commodity)

Segment Marketing
Different products to one or more segments
(some segmentation, i.e. Marriott)

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Step 1. Market Segmentation

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Step 1. Market Segmentation
Geographic Segmentation
International
Accor

National

Regional/City

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 Step 1. Market Segmentation
Demographic Segmentation
 Dividing the market into groups based on variables such as:
 Age.
 Gender.
 Family size or life cycle.
 Income
 Occupation
 Education
 Religion - Race
 Nationality

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Step 1. Market Segmentation
Psychographic Segmentation
Divides Buyers Into Different Groups Based on:

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 Step 1. Market Segmentation
Behavioral Segmentation
 Dividing the market into groups based on variables such
as:
 Occasions. E.g. take the Hotel market …. Does buyer behavior differ
according to occasion ?
 Benefits. E.g. What benefits does this specific hotel provide
 User status. E.g non users, ex users etc.
 Usage rate. E.g. light to heavy users
 Loyalty status. E.g. hardcore, split, shifting and switchers
loyals
 Readiness stage. E.g. are there some people ‘just thinking’
versus those who are nearly ready to buy ?
 Attitude toward product. E.g. Apple products attitude for its
limitations
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Step 1. Market Segmentation
Behavioral & Psychographic Segmentation

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Step 1. Market Segmentation
Segments must respond differently to different marketing mix elements
& programs.
Requirements for effective segmentation:

• Size, purchasing power, profiles

Measurable of segments can be measured.
(Lack of data)

• Segments can be effectively

Accessible reached and served.

• Segments are large or profitable

Substantial enough to serve.

• Effective programs can be

designed to attract and serve
Actionable the segments.

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 Discussion questions in groups

1. The Adventure Travel Company is an online travel

agency that organizes worldwide adventure vacations. It
has split its customers into three segments, because it's
too costly to create different packages for more groups
than this.
2. How would you segment the market? Segment by A, B
& C customers. The reason why you have chosen to
segment based on the chosen segmentation.

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 Discussion questions in groups

1. Segment A is made up of young married couples, who

are primarily interested in affordable, eco-friendly
vacations in exotic locations.
2. Segment B consists of middle-class families, who want
safe, family-friendly vacation packages that makes it
easy and fun to travel with children.
3. Segment C comprises upscale retirees, who are looking
for stylish and luxurious vacations in well-known
locations such as Paris, Rome etc.

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 Discussion questions in
groups/Presentation

1. Some restaurateurs want to develop a

restaurant with something for everyone.
Why is this idea a dangerous policy?

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 Discussion questions in
groups/Presentation

Restaurants cannot be all things to all people. This leaves

the brand undifferentiated or diluted. Because of this
customers are confused as to the brand's values and core
services. Furthermore, it can prevent customer loyalty as
the restaurant does not prioritize certain market segments
and develop relationships with them.

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 Evaluating Market Segments
• Marketing segmentation reveals the market segment
opportunities for the firm.

• The firm now has to evaluate the various segments and

decide the number of segments to cover and the ones to
serve.

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 Evaluating Market Segments
 Segment size and growth
 Analyse current sales, growth sales and expected profitability for
various segments.
 Segment structural attractiveness
 Consider effects of: competitors, Availability of substitute products
and, the power of buyers & suppliers.
 Company objectives and resources
 Company skills & resources needed to succeed in that segment(s)
 Looking for competitive advantages
 (example – Starbucks in Italy & Australia next slide) example 2
next slide

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Domino's, Pizza Hut (In Iraq as
well), 7-Eleven, Starbucks

All Failed in Australia

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Step 2. Market Targeting
Market Coverage Strategies
A. Undifferentiated Marketing. E.g. One or two star hotels liland hotel

Company
Marketing Market
Mix

B. Differentiated Marketing. E.g. Grand millennium

Company Segment 1
Marketing Mix 1
Company Segment 2
Marketing Mix 2
Company
Segment 3
Marketing Mix 3
C. Concentrated Marketing. E.g. 45 park lane hotel London next slide

Company Segment 1
Marketing Segment 2
Mix
Segment 3 24
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 Choosing a market-coverage
strategy
 Company resources; When the company’s resources are limited,
concentrated marketing makes the most sense
 Degree of product homogeneity; When they are perfect
substitutes and buyers perceive no actual or real differences between the
products offered by different firms. Price is the single most important
dimension along which firms producing homogenous products compete.
undifferentiated or concentrated marketing makes the most sense (fruits,
salt etc)

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 Choosing a market-coverage
strategy

 Market homogeneity; If buyers have the same tastes, buy a

product in the same amounts, and react the same way to marketing
efforts, undifferentiated marketing is appropriate. E.g. bottle waters.
Is it now a days the case?
 Competitors’ strategies; When competitors use segmentation,
and you apply undifferentiated marketing, this can be suicidal.

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 Step 3: Positioning for Competitive
Advantage
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

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 Positioning Strategies
Positioning by specific product attributes:
by benefits. e.g. Subway has been successful in positioning its
sandwiches as a healthy alternative to fried foods and hamburgers.
for user category. E.g.  Microsoft positions its Surface Pro tablet as
ideal for students
for usage occasion. E.g Jeep's focus on off-road driving is an
excellent example.
against another competitors. E.g. Everything is easier on a Mac
against another product class. E. g  safe, reliable, affordable ?
Which car?
Problem-Solution. E.g. Head & Shoulders dandruff

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 Steps to Choosing and Implementing
a Positioning Strategy
• 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.

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Product Differentiation

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Positioning map

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

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 Exercise or perpetual mapping any
industry
• Choose any restaurant in groups and draw a
service/product perceptual map and like (Pronto, Roma
Restaurant, Damasquino Sulaymaniyah, Rotana
Slemani, Dawah, 360 Revolving, Ady’s Beef House)
• how it differentiated itself from its competitors to position
itself in the market.
•  Any criteria can be used for the map for example price,
quality, status, features, safety and reliability.

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 Case Study AIRBNB
•Read the case study and answer within
groups.

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 Tourism Kurdistan

 A middle East Tourism Exhibition was held METEX in Erbil

 Some 200 tourism companies attended.
 Build new partnerships and customer database in a large travel market.
 Reach high-level executives and influential decision makers.
 Connect with buyers face to face and provide your services.
 Reach one large market in a short time.
 Contracts were signed with Kuwait, Jordan, Egypt, Tunis, Lebanon, Ukraine,
UAE, Iran, Turkey and Belarus.

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KEY TERMS
Behavioral segmentation. Dividing a market into groups
based on consumers’ knowledge, attitude, use, or response to a
product.
Competitive advantage. An advantage over competitors
gained by offering consumers greater value either through
lower prices or by providing more benefits that justify higher
prices.
Competitors’ strategies. When competitors use segmentation,
undifferentiated marketing can be suicidal. Conversely, when
competitors use undifferentiated marketing, a firm can gain an
advantage by using differentiated or concentrated marketing.

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 KEY TERMS
Confused positioning. Leaving buyers with a confused mage of a company.
Degree of product homogeneity. Undifferentiated marketing is more suited
for homogeneous products. Products that can vary in design, such as restaurants
and hotels, are more suited to differentiation or concentration.
Demographic segmentation. Dividing the market into groups based on
demographic variables such as age, gender, family size, family life cycle, income,
occupation, education, religion, race, and nationality.
Gender segmentation. Dividing a market on the basis of gender.

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 Geographic segmentation. Dividing a market into different
geographic units such as nations, states, regions, counties, cities, or
neighborhoods.
 Income segmentation. Dividing a market into different income
groups.
 Market homogeneity. If buyers have the same tastes, buy a product in
the same amounts, and react the same way to marketing efforts,
undifferentiated marketing is appropriate.
 Market positioning. Formulating competitive positioning fora product
and a detailed marketing mix.
 Market segmentation. Dividing a market into direct groups of buyers
who might require separate products or marketing mixes.

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 Market targeting. Evaluating each market segment’s attractiveness
 and selecting one or more segments to enter.
 Over positioning. Giving buyers a too-narrow picture of the company.
 Psychographic segmentation. Dividing a market into different groups
based on social class, lifestyle, or personality characteristics.
 Specific product attributes. Price and product features can be used to
position a product.
 Under positioning. Failing ever to position the company at all.

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