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Unlock This CourseImagine you run a hotel. Would you advertise the same way to a family from Birmingham as you would to a business traveller flying in from Tokyo? Of course not! That's exactly why travel businesses use market segmentation splitting customers into groups so they can target them more effectively.
Market segmentation is one of the most important tools in travel and tourism marketing. Instead of trying to sell to everyone in the same way, businesses identify specific groups of customers who share similar characteristics, needs, or behaviours and then tailor their products and promotions to suit those groups.
Key Definitions:
According to VisitBritain, the UK welcomed over 38 million inbound visitors in 2019, spending around £28.4 billion. Meanwhile, UK residents made over 100 million domestic overnight trips. These are very different groups with very different needs and businesses must understand both to succeed!
Geographic segmentation is all about where your customers come from. It's one of the simplest and most widely used ways to segment a market in travel and tourism. A seaside resort in Cornwall, for example, will attract very different visitors depending on whether they live nearby, in another part of the UK, or have flown in from overseas.
There are four main geographic segments you need to know for your iGCSE:
This refers to customers from the immediate local area the town, city or neighbourhood surrounding a tourism attraction or business. Local visitors might include day-trippers, people using local leisure facilities, or residents visiting nearby attractions.
Example: A visitor attraction like Alton Towers in Staffordshire will attract many visitors from nearby towns like Stoke-on-Trent and Derby these are local market customers.
This covers customers from a wider geographic area within the same country such as a region, county or group of counties. Regional visitors often travel further than local visitors but still don't cross national borders.
Example: The Lake District National Park attracts many visitors from the North West of England and Yorkshire a regional market. Marketing campaigns may specifically target cities like Manchester and Leeds.
Domestic tourists are people who travel within their own country. They don't cross international borders. This is a huge market for most countries and is often more stable than international tourism because it's less affected by exchange rates, visa issues, or long-haul travel costs.
Example: A family from London taking a holiday in the Scottish Highlands is domestic tourism. VisitScotland actively markets to people living in England, Wales and Northern Ireland.
Inbound tourists are visitors from other countries coming into a destination. This segment is vital for national economies as it brings in foreign currency. Inbound tourists often have very different needs, languages, cultural expectations and spending habits.
Example: An American tourist visiting London, or a group of Japanese tourists on a tour of Scotland both are examples of inbound tourism to the UK.
Different geographic segments behave differently. They spend different amounts, travel at different times, want different experiences and respond to different types of marketing. Understanding these differences helps businesses make smarter decisions about their products, pricing, promotion and distribution.
Inbound tourists from long-haul destinations like the USA, China or Australia tend to stay longer and spend more per trip than domestic visitors. However, domestic and local visitors may visit more frequently throughout the year, providing a more consistent income stream.
Often day visitors. Lower spend per visit but may come frequently. Important for cafés, local attractions and leisure centres. Less likely to book accommodation.
May stay overnight or for short breaks. Moderate spend. Very important during school holidays. Easier to reach through UK-based marketing campaigns.
Often stay longer and spend more overall. May need multilingual support. Attracted by iconic national landmarks. Bring valuable foreign currency into the economy.
✅ Domestic overnight trips in the UK generate around £19 billion per year.
✅ Inbound tourism contributes around £28 billion annually to the UK economy.
✅ The top inbound markets for the UK are the USA, France, Germany, Ireland and Australia.
✅ London receives the vast majority of inbound tourists over 60% of all overseas visitors go to the capital.
The UK has two separate national tourism organisations that perfectly illustrate the difference between targeting inbound and domestic markets:
VisitBritain is the national tourism agency responsible for marketing the UK to the rest of the world. Its entire focus is on the inbound geographic segment. It runs campaigns in countries like the USA, China, Germany and Australia, promoting iconic British experiences such as Buckingham Palace, the Scottish Highlands, Stonehenge and the English countryside.
VisitBritain tailors its marketing to specific countries for example, Chinese visitors are particularly interested in royal heritage and countryside experiences, while American visitors often want to explore historical sites and literary connections (like Harry Potter locations!). This shows geographic segmentation working at an international level.
VisitEngland focuses on encouraging English residents to explore their own country the domestic geographic segment. Campaigns like "Escape the Everyday" encourage people to take short breaks in English destinations. VisitEngland also works with regional tourism boards (like Visit Cornwall or Marketing Manchester) to target regional segments within England.
Before its collapse in 2019, Thomas Cook was one of the world's largest travel companies. It used geographic segmentation extensively. In the UK, it targeted domestic customers through high street shops and online platforms. For inbound tourism, it worked with overseas partners to bring tourists into UK destinations. It also segmented by region running specific promotions for customers in the North of England, where package holiday demand was particularly strong. This shows how a single company can target multiple geographic segments simultaneously.
Knowing your geographic segments is only the start. The real skill is using that knowledge to make better business decisions. Here's how travel businesses actually apply geographic segmentation:
Businesses choose different advertising channels depending on the geographic segment they're targeting. Local segments might be reached through local newspapers, radio or leaflets. Domestic segments might be targeted through national TV adverts or UK-based social media campaigns. Inbound segments require international marketing overseas travel fairs, foreign-language websites and partnerships with overseas travel agents.
Products and services are often adapted to suit different geographic segments. A hotel near a major UK airport might offer multilingual menus, prayer facilities and currency exchange to cater for inbound international visitors. The same hotel might offer a "staycation" package with spa treatments and afternoon tea to attract domestic visitors looking for a luxury UK break.
Geographic segments visit at different times. Local and domestic visitors are heavily influenced by UK school holidays particularly summer, Easter and half-term. Inbound visitors from the USA or Australia may visit at different times of year, helping to spread visitor numbers more evenly. This is hugely important for managing capacity and staffing.
The UK has many regional tourism organisations that specifically target both local/domestic and inbound visitors to their area. Examples include Visit Cornwall, Marketing Manchester, Visit Wales and Tourism Northern Ireland. These organisations understand their specific regional market and can target both domestic visitors from other UK regions and inbound international visitors.
Geographic segmentation also influences pricing. Inbound tourists from countries with strong currencies (like the USA or UAE) may be willing to pay premium prices. Domestic visitors on a budget may respond better to early-bird deals or family discount packages. Local visitors might be offered loyalty cards or resident discounts to encourage repeat visits.
In your iGCSE Travel and Tourism exam, questions on geographic segmentation often ask you to identify the segment, explain why it's important, or evaluate how a business should target it. Here are some key points to remember:
A common mistake is confusing domestic and inbound tourism. Here's a simple way to remember it:
🏠 Domestic = People travelling inside their own country. ("Staying at home.")
✈️ Inbound = People coming into a country from abroad. ("Coming in from outside.")
Think of it like a house domestic is staying inside, inbound is someone coming through the front door from outside!
Geographic segmentation is a powerful tool that helps travel and tourism businesses understand where their customers come from and tailor their products and marketing accordingly. The four key segments locality, region, domestic and inbound each have distinct characteristics, spending patterns and needs. Successful businesses like VisitBritain, VisitEngland and major hotel chains use geographic segmentation every day to make smarter marketing decisions, develop better products and ultimately attract more visitors.