Market Segmentation – Use-Related Segmentation
According to Schiffman and Kanuk (2007), market segmentation is the process of dividing a potential marketing into distinct subsets of consumers with a common need or characteristic and selecting one or more segments as a target market to be reached with a distinct marketing mix. When a mass customization approach cannot satisfy buyers’ individual needs, market segmentation is essential for determining which sizes will best fit groups of customers who share similar needs, thereby increasing customer satisfaction and the profits.
There are several bases in segmenting different markets. Most researches are only based on the basic demographic or geographic market segmentation approaches which do not reveal or imply distinctive buying-behavior patterns (Lewis, 1984). Use-related segmentation is more effective and it will be the main focus in this report. First of all, use-related segmentation is defined as a popular and effective form of segmentation that categorized consumers in terms of product, service, or brand-usage characteristics, such as usage rate, awareness status, and degree of brand loyalty.
The rate of usage segment can be differentiated as heavy users, medium users and light users. The marketers will usually target on the small group of heavy users. For example, the business travelers will heavily use the business center and the business facilities such as the meeting rooms and video conferencing in the hotel. Therefore, the business hotels will target on those business travelers. Conversely, the resort hotels will target on the leisure travelers who will heavily use the recreation facilities such as spa and outdoor activities (Inbakaran and Jackson, 2005).
Besides, the awareness status is also important in segmentation. Many people have to go to other countries for holiday or business purpose. Most of them are pet owners and they would like to bring their pets travel together. To create awareness and interest of pet-travelers, some airlines, hotels and restaurants are heavily promoting some packages with pets to the pet lovers. For example, the Kimpton Hotel & Restaurant Group, LLC (2009) has the special pet packages that include amenities and services like pet food, dog walking services and chew toys.
They also have the pet relations team which has the pet friendly attitude to take care the pets’ life in the journey. With the increasing number of people traveling with pets, more and more companies are catering to the demands for pet-friendly travel products and accommodations (Miller and Washington, 2008). Moreover, the last significant thing in the use-related segmentation is the brand loyalty. Brand loyalty means repeat purchases ensuing a favorable attitude toward one brand (Backman, 1991).
Customers return to the brand frequently as they are satisfied with the quality and value of that particular brand, they will make more frequent purchases than comparable nonloyal customers, and to be more unlikely to switch to a competitor solely because of price (Kayaman and Arasli, 2007). Also, switching cost is another loyalty determinant which affects the customers’ decision making. It can be defined as the costs involved in changing from one service provider to another (Porter, 1980).
Nowadays, many programs serve as a currency exchange to accumulate airline frequent-flyer miles, hotel points and other kinds of rewards to build the brand loyalty. For instance, ITT Sheraton’s Club International has the frequent-guest program which allows the customers to change their points to ClubMiles redeemable for stays at Sheraton properties, car rentals with Avis, or frequent-flyer miles with its eight airline partners (Bond, 1995). Customers can join the club to accumulate their points through staying at the hotel or traveling by the airline.
If the customers change to other brands, they may lose their points and cannot enjoy the premium services provided by the club. This is the switching cost of changing brands. The membership club is only the financial effect of the switching cost in the brand loyalty segment. Customers can also be affected by the switching cost emotionally and socially. For example, Emirates hotel provide guests with a room that features its own built-in kitchen, complete with a fridge and stove, giving a comfortable feeling to the guest (Sheridan, 2007).
Guests may feel like at home as they can make their own dinner at the hotel. So, the guests will not easily switch to another hotel emotionally. And if all the guest’s friends are staying at the particular hotel, the guest might select to stay at that hotel as well. In the recent century, internet can be accessed everywhere. People can enjoy high-speed internet at home, at school and at office. Travelers may also want to access the internet every place they go. As most people are addicted to the internet, many hotels are targeting on the internet users.
Many hotels invest a lot of money on providing high-speed internet access to satisfy the customers (Adams, 2002). High speed internet access in hotel rooms is a must for any business traveler and now many leisure travelers too. Customers can easily access to the internet in the hotel rooms to have video conferencing with business partners or chatting with friends. They are mostly concern with the speed, reliability and security of the internet access (Budie, 2010).
For example, the Marriott international brand provides low-priced high-speed internet access to increase the awareness of customers (Jesitus, 2000). It targets those travelers by use-related segmentation. Apart from the heavy users, up-to-date and modern technology such as High definition televisions and MP3 docking station which provided by the hotel can create awareness of the young travelers. The strong awareness of technology is the characteristic of young travelers. And these technologies can raise the brand loyalty (Gooch, 1997).
Guests can access to the hotel’s website to make reservation. The luxury hotel brands are using the top modern facilities. The convenience and high-end services can increase the brand loyalty from the customers. To conclude, the use-related segmentation is useful to target the right customers by using usage rate, awareness status and brand loyalty. Different segmentations have different characteristics. The hotels should identify their services into diverse categories and target on the correct customers.
