Introduction to Market Segmentation and Targeting
Market segmentation and targeting are essential strategies that tourism destinations use to attract the right visitors. Rather than trying to appeal to everyone (which is expensive and inefficient), destinations identify specific groups of travellers who are most likely to visit and enjoy what they offer.
Key Definitions:
- Market Segmentation: The process of dividing a broad consumer market into sub-groups of consumers who have common needs, interests and priorities.
- Target Marketing: The process of selecting specific segments to focus marketing efforts on.
- Market Positioning: How a destination presents itself to appeal to its target segments.
Why Segmentation Matters
Imagine if Blackpool tried to market itself as a luxury destination for wealthy travellers seeking exclusivity, or if Monaco tried to position itself as a budget family destination. Neither would be successful! Understanding your destination's strengths and matching them to the right market segments is crucial for success.
Types of Market Segmentation
Destinations can segment their markets in several different ways. The main approaches include:
👥 Demographic Segmentation
This involves dividing the market based on measurable population characteristics:
- Age: Youth travellers, families, retirees
- Income: Budget, mid-range, luxury travellers
- Family status: Singles, couples, families with children
- Gender: Some destinations target gender-specific activities
Example: Ibiza targets young adults (18-30) for its nightlife, while also marketing family-friendly resorts to parents with children.
🌎 Geographic Segmentation
This involves targeting visitors from specific locations:
- Country of origin: International vs domestic tourists
- Region: Targeting specific countries or regions
- Urban/rural: City dwellers vs rural residents
- Climate: Visitors from cold regions seeking sun
Example: The Algarve in Portugal specifically targets UK and German tourists seeking winter sun escapes from northern Europe.
💡 Psychographic Segmentation
This focuses on visitors' lifestyles, values, attitudes and interests:
- Lifestyle: Adventure seekers, culture enthusiasts, relaxation-focused
- Values: Eco-conscious, luxury-oriented, budget-minded
- Personality: Risk-takers vs security-seekers
- Interests: History, food, sports, nature
Example: Costa Rica targets eco-conscious travellers interested in sustainable tourism and nature experiences.
📅 Behavioural Segmentation
This divides markets based on consumer behaviour patterns:
- Occasion: Holiday types (summer, winter, weekend breaks)
- Benefits sought: Relaxation, adventure, cultural immersion
- User status: First-time vs repeat visitors
- Usage rate: Frequent vs occasional travellers
Example: Edinburgh targets different segments for its summer festivals compared to its winter Christmas markets and Hogmanay celebrations.
Effective Target Marketing for Destinations
Once a destination has identified its market segments, it needs to decide which ones to target. This involves evaluating each segment based on:
📈 Size & Growth
Is the segment large enough to be profitable? Is it growing or shrinking?
Example: The over-65s market is growing rapidly as populations age in developed countries.
💰 Spending Power
How much does this segment typically spend? Are they budget-conscious or luxury spenders?
Example: Chinese tourists have become a key target due to their high spending power.
🎯 Accessibility
Can you reach this segment effectively through marketing? Are they easy to identify?
Example: Social media makes it easier to target specific interest groups like hikers or foodies.
Targeting Strategies for Destinations
Destinations typically use one of three targeting strategies:
- Undifferentiated marketing: Targeting the entire market with one offering (rarely used in tourism)
- Differentiated marketing: Targeting several market segments with different offerings for each
- Concentrated marketing: Focusing intensely on one or a few segments
Case Study: Barcelona's Targeting Strategy
Barcelona uses a differentiated marketing strategy, targeting:
- Cultural tourists interested in Gaudí's architecture and museums
- Urban beach lovers who want city life and seaside relaxation
- Food enthusiasts drawn to Catalan cuisine and food markets
- Business travellers attending conferences and trade shows
Each segment receives tailored marketing messages highlighting the aspects of Barcelona most relevant to them.
Positioning the Destination
After selecting target segments, destinations need to position themselves effectively. This means creating a clear, distinctive image in consumers' minds that highlights the destination's unique selling points (USPs).
Effective positioning involves:
- Identifying what makes your destination special
- Understanding what your target segments value
- Creating a compelling message that connects these elements
- Ensuring all marketing materials reflect this positioning
✅ Successful Positioning Examples
- New Zealand: "100% Pure New Zealand" positions the country as an unspoiled natural paradise
- Las Vegas: "What happens in Vegas, stays in Vegas" positions it as an adult playground
- Scotland: "A Spirit of its Own" highlights unique culture and experiences
❌ Positioning Pitfalls
- Generic positioning: "Something for everyone" fails to differentiate
- Unrealistic claims: Promising experiences the destination can't deliver
- Copying competitors: Failing to highlight unique attributes
Evaluating Segmentation and Targeting Success
How do destinations know if their segmentation and targeting strategies are working? They can measure:
- Visitor numbers: Are target segments visiting in increasing numbers?
- Visitor spending: Are visitors spending as expected?
- Visitor satisfaction: Are target segments enjoying their experience?
- Return on investment: Is the cost of targeting specific segments justified by the returns?
- Seasonality impact: Has targeting reduced seasonal fluctuations?
Case Study: Iceland's Market Segmentation Success
After the 2008 financial crisis and 2010 volcanic eruption, Iceland needed to boost tourism. They identified and targeted:
- Adventure seekers: Highlighting glaciers, volcanoes and unique landscapes
- Northern Lights hunters: Promoting winter tourism to balance seasonality
- Wellness tourists: Marketing geothermal spas like the Blue Lagoon
Results: Tourism grew from 500,000 visitors in 2010 to over 2 million by 2019, with winter tourism growing significantly. This demonstrates successful segmentation, targeting and positioning.
Exam Preparation Tips
For your iGCSE exam, remember to:
- Know the different types of segmentation and be able to give examples
- Understand how destinations evaluate which segments to target
- Be able to analyse real-world examples of segmentation and targeting
- Consider how destinations might need to change their targeting strategies in response to events (like COVID-19)
- Be prepared to suggest appropriate target markets for different types of destinations
Key Takeaways
Remember these points for your exam:
- Market segmentation allows destinations to use resources efficiently
- Different types of segmentation can be combined for more precise targeting
- Effective targeting requires understanding both the destination's strengths and the segment's needs
- Positioning must be distinctive, relevant and authentic
- Successful destination marketing requires ongoing evaluation and adjustment of segmentation strategies