Back to Basics – Market Segmentation and Targeting

We all say we’re customer-centric, but we often forget what it means when the commercial pressure is on. Staying true to your marketing credentials is the best way to succeed when there’s pressure for results, with a dose of good old segmentation and targeting.


We’ve all fallen into the trap – we rush out of the trading meeting with a sense of purpose and urgency because we have bed nights/cabins/seats to shift or visitors to increase and start implementing a whole raft of activity without giving a single thought to what sorts of customers we’re going to ‘shift’ this product to.


To me, this is a sales mentality (give me the product and I’ll sell it to whoever) rather than a marketing one (who’s going to want to buy this product) and a surefire way to fritter your marketing budget away.


Market segmentation and targeting is right at the heart of marketing theory and practice so it’s worth going back to basics on this one. Let’s start with some definitions:


A market segment is a group of people or organizations sharing one or more characteristics that cause them to have similar product and/or service needs.”  (Source: Wikipedia)


“Targeting is the selection of the appropriate market segment(s) to direct your efforts towards and tailoring your mix as appropriate.” (Source: Me)


In addition to the shared characteristics, a market segment has to be actionable (you can reach these people) and profitable (otherwise why are you bothering).  Theory also states that the segment has to be substantial, but profitable would override substantial in my book as my work at the luxury end of the market has convinced me that they are plenty of profitable segments of one.


Segment characteristics i.e. those shared factors that bind a segment together and differentiate them from other segments, can be divided into 3 main groups:


  • Behavioural – product usage, benefit sought etc


  • Geo-demographics – where you live, occupation, socio-economic group, lifestage, ethnicity etc.


  • Psychographics – personality, values, attitudes, lifestyle etc.


My experience has taught me that the best segmentation models include a flavour of all 3 groups.


From a behavioural perspective, benefit sort and timing is important – our whole brand’s ‘raison d’etre’ should be focused around a benefit or benefits sort – a need or desire our offering is designed to serve.  Some marketers advocate stopping there when it comes to segmentation – I disagree.  Timing is also key – whatever anyone says about the demise of the 2 week break, the rise of the spontaneous short break etc, the timing of our breaks (and therefore the timing of their booking) is still largely predictable. And again, if we’re prepared to delve a little beyond the behavioural, a whole pandora’s box of opportunities can open up.


  • From a geodemographic perspective lifestage and geography are key – lifestage determines if they’re just thinking about themselves, trying to balance the needs of a partner or trying to keep the kids happy as well (and woe betide the marketer who lumps “married with kids” into one homogenous segment). For tourism attractions, geography determines catchment, and unless you’re located in one of the UK’s tourism hotspots, most visitors are going to sourced from the locality as defined by an acceptable journey time.


  • But it’s psychographics that interests me most, particularly how personality, values, personality and lifestyle are reflected in the desired level of cultural immersion – do your customers want to watch, get involved or get immersed. I’m convinced psychographics should play a key part in any travel or tourism segmentation model.


OK – I think that’s enough for starters. This is a complex subject so more articles on it soon.