Market Segmentation Approaches: Do They Benefit Destination Marketers?

by : Don Fuller, Janet Hanlan and Simon Wilde

(Published by : Centre for Enterprise Development and Research, Occasional Paper No. 4, August 2005)

Introduction

Market segmentation aims to divide markets comprised of individuals into groups whose characteristics are relatively homogeneous within each set or segment and heterogeneous between segments, based on an identified set of variables (Kara and Kaynak, 1997). Marketing academics and practitioners have adopted the concept of market segmentation enthusiastically. The benefits have been seen to include an ability to gain a fuller understanding of a particular market, improved techniques to predict consumer behaviour, and an improved ability to identify and exploit new market opportunities for commercial benefit (Heok, Gendall and Esslemont, 1996). A capacity to divide markets into distinct groups of buyers, or prospective buyers, who respond differently to changes in marketing mix variables is likely to prove particularly beneficial to those attempting to influence consumer demand for a particular product or service. . . . .

Hoek, Gendall and Esslemont (1996) have argued that at an intuitive level, market segmentation appears worthwhile in terms of increasing sales and revenue. For example, vendors of yacht fittings would appear to increase their chances of making sales if they target yacht owners rather than a broad market that has not been segmented. However, market segmentation strategies go beyond such clearly rational judgements aiming to gain a competitive advantage by identifying and serving the needs of customers more effectively than competitors. Complex segmentation exercises use a wide number of consumer variables as the basis for segmenting markets and then adopt sophisticated statistical analysis to group customers together based on these variables. The dilemma facing such segmentation studies is how to actually segment the market from a myriad of possible approaches and how to choose the statistical technique likely to prove most suitable in providing the information required to aid market segmentation. . . . .. . . . . . . . . . . . . (baca selengkapnya)

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