2.2 Identifying and profiling target markets
5 min read•july 30, 2024
Identifying and profiling target markets is crucial for hospitality and tourism businesses. By understanding customer segments, companies can tailor their offerings and marketing strategies to attract the right audience. This process involves analyzing market size, consumer needs, and growth potential.
Market research plays a key role in defining target markets. Using primary and secondary research methods, businesses can gather insights on customer preferences and behaviors. Online tools and customer segmentation techniques help create detailed buyer personas, enabling personalized marketing approaches and product development.
Ideal Target Market Characteristics
Market Size and Profitability
Top images from around the web for Market Size and Profitability
Reading: Defining the Marketing Mix – Introduction to Marketing I (MKTG 1010) View original
Is this image relevant?
The Purpose of Market Segmentation and Targeting | Principles of Marketing View original
Is this image relevant?
Chapter 16 Hospitality & Tourism – Fundamentals of Business View original
Is this image relevant?
Reading: Defining the Marketing Mix – Introduction to Marketing I (MKTG 1010) View original
Is this image relevant?
The Purpose of Market Segmentation and Targeting | Principles of Marketing View original
Is this image relevant?
1 of 3
Top images from around the web for Market Size and Profitability
Reading: Defining the Marketing Mix – Introduction to Marketing I (MKTG 1010) View original
Is this image relevant?
The Purpose of Market Segmentation and Targeting | Principles of Marketing View original
Is this image relevant?
Chapter 16 Hospitality & Tourism – Fundamentals of Business View original
Is this image relevant?
Reading: Defining the Marketing Mix – Introduction to Marketing I (MKTG 1010) View original
Is this image relevant?
The Purpose of Market Segmentation and Targeting | Principles of Marketing View original
Is this image relevant?
1 of 3
- An ideal target market should be sizable enough to generate sufficient revenue and profit for the business
- The market size can be estimated through analyzing industry data, government statistics, and conducting market research
- An attractive target market should have sufficient disposable income to afford the products or services offered by the business
- Economic factors such as income levels, employment rates, and consumer spending patterns should be considered
Consumer Needs and Alignment
- The target market should have a demonstrated need or desire for the specific hospitality or travel offerings provided by the business
- This can be assessed by analyzing consumer trends, conducting , and monitoring competitors (Airbnb, Expedia)
- The target market should align with the business's brand identity, values, and unique value proposition
- This ensures that the business can effectively connect with and serve the needs of its target customers (, luxury travelers)
Accessibility and Growth Potential
- The ideal target market should be accessible through cost-effective marketing channels
- The business should be able to reach and communicate with the target audience through appropriate media outlets and distribution channels (social media, travel agencies)
- A viable target market should exhibit long-term growth potential
- Demographic trends, such as population growth, age distribution, and changing consumer preferences, should be analyzed to ensure the market's sustainability (aging population, increased international travel)
Market Research for Target Markets
Primary and Secondary Research Methods
- Primary research methods, such as surveys, , and interviews, can be used to gather direct insights from potential customers
- These methods allow for targeted questions and in-depth exploration of consumer preferences, behaviors, and opinions
- Secondary research involves analyzing existing data sources, such as industry reports, government statistics, and competitor analysis
- This data can provide valuable information on market size, growth trends, and consumer demographics (, )
Online Research and Customer Segmentation
- Online research tools, such as Google Trends, social media analytics, and website traffic data, can be used to identify popular search terms, trending topics, and online behavior patterns related to the hospitality or travel industry
- Customer segmentation involves dividing the market into distinct groups based on shared characteristics, such as age, income, lifestyle, or travel preferences
- This allows for targeted marketing strategies and personalized offerings (, )
- Creating customer profiles or buyer personas helps to humanize the target market and provides a clear understanding of their needs, motivations, and decision-making processes
- These profiles should include demographic, psychographic, and behavioral attributes (Lisa, 35, marketing manager, enjoys cultural experiences)
Target Market Segment Viability
Market Size and Competition
- Market size and growth potential should be evaluated to ensure that the selected target markets have sufficient demand and long-term sustainability
- This can be done by analyzing market data, industry reports, and consumer trends (, )
- The level of competition within each target market segment should be assessed to determine the business's ability to differentiate itself and capture market share
- Analyzing competitor offerings, pricing strategies, and market positioning can provide valuable insights (Marriott, Hilton)
Profitability and Business Alignment
- The profitability of each target market segment should be evaluated by considering factors such as pricing power, cost structure, and customer lifetime value
- This helps to ensure that the business can generate sufficient revenue and maintain healthy profit margins (, )
- The alignment between the target market segments and the business's core competencies and resources should be considered
- This ensures that the business can effectively serve the needs of its target customers and deliver a compelling value proposition (, )
- The regulatory and legal environment surrounding each target market segment should be assessed to identify any potential barriers or compliance requirements that may impact the business's operations or profitability (, )
Buyer Personas for Target Markets
Demographic and Psychographic Characteristics
- Demographic information, such as age, gender, income level, education, and occupation, should be included in the buyer persona to provide a clear understanding of the target customer's background and socioeconomic status
- Psychographic characteristics, such as personality traits, values, interests, and lifestyle preferences, should be incorporated to gain insights into the target customer's motivations, attitudes, and decision-making processes (adventurous, environmentally conscious)
Behavioral Attributes and Pain Points
- Behavioral attributes, such as purchasing habits, brand loyalty, and media consumption patterns, should be outlined to understand how the target customer interacts with products, services, and marketing channels (, )
- Pain points and challenges faced by the target customer should be identified to determine how the business's offerings can address their specific needs and provide solutions to their problems (limited vacation time, language barriers)
- Goals and aspirations of the target customer should be considered to align the business's value proposition with the customer's desired outcomes and experiences (relaxation, cultural immersion)
Persona Development and Refinement
- Creating a fictional name, photo, and narrative for each buyer persona can help to bring the target customer to life and make them more relatable and memorable for the business's team members (John, 28, software engineer, seeks authentic local experiences)
- Continuously updating and refining the buyer personas based on new market research, customer feedback, and changing trends ensures that the business stays attuned to the evolving needs and preferences of its target markets (, )
Key Terms to Review (33)
Adventure seekers: Adventure seekers are individuals who actively pursue experiences that offer excitement, thrill, and new challenges, often in unfamiliar or wild environments. These travelers are typically motivated by a desire for exploration and personal growth, often choosing destinations and activities that allow them to push their limits and experience the world in unique ways.
Behavioral Targeting: Behavioral targeting is a marketing strategy that uses data about a consumer's online behavior to deliver personalized advertisements and content. This approach focuses on understanding the interests and preferences of individuals based on their previous interactions, such as browsing history, search queries, and social media activity. By leveraging this information, marketers can create tailored experiences that are more relevant to each user, improving engagement and conversion rates.
Budget hotels: Budget hotels are affordable lodging options that provide basic accommodations and essential services for travelers, typically at lower price points than mid-range or luxury hotels. These establishments cater to a wide range of guests, including budget-conscious tourists, business travelers, and families, making them an essential part of the hospitality landscape. By offering no-frills services and competitive pricing, budget hotels play a vital role in meeting the diverse needs of various target markets within the travel industry.
Budget travelers: Budget travelers are individuals or groups who prioritize affordability in their travel experiences, often seeking the best deals on accommodations, transportation, and activities. They are characterized by their resourcefulness, willingness to sacrifice certain comforts, and desire to stretch their travel funds as far as possible, allowing them to explore more destinations and experiences on a limited budget.
Business travelers: Business travelers are individuals who journey away from their usual place of work to conduct work-related activities, which can include attending meetings, conferences, or training sessions. They often seek convenience and efficiency in their travel arrangements, making them a crucial market segment in the hospitality and travel industry. Understanding their specific needs and preferences is essential for creating targeted marketing strategies that cater to this group.
Census Data: Census data refers to the collection of demographic information from a population at a specific point in time, typically conducted at regular intervals, such as every ten years. This data provides detailed insights into the characteristics of a population, including age, gender, income, education level, and ethnicity. Analyzing census data is crucial for businesses and organizations to identify and profile target markets effectively, allowing them to tailor their strategies based on the demographics and behaviors of potential customers.
Customer journey: The customer journey refers to the complete experience a customer has with a brand, from initial awareness through the stages of consideration, purchase, and post-purchase interactions. Understanding this journey helps businesses tailor their strategies to meet customer needs at each touchpoint, enhancing satisfaction and loyalty.
Customer Lifetime Value (CLV): Customer Lifetime Value (CLV) is a metric that estimates the total revenue a business can expect from a single customer throughout their entire relationship with the brand. Understanding CLV is crucial because it helps businesses identify and prioritize their target markets, measure the effectiveness of social media marketing efforts, apply research insights for strategic decisions, and analyze real-world marketing cases to enhance customer retention and profitability.
Customer personas: Customer personas are detailed, semi-fictional representations of a business's ideal customers, created through research and data analysis. They help businesses understand their target audience better by highlighting demographics, behaviors, motivations, and preferences. By utilizing customer personas, companies can tailor their marketing strategies and engagement tactics to effectively connect with potential customers throughout their journey.
Decision-making process: The decision-making process is a series of steps that individuals or groups follow to identify and choose among alternatives to reach a desired outcome. This process typically involves recognizing a problem, gathering information, evaluating options, making a choice, and then implementing the decision. Understanding this process is crucial for effectively identifying and profiling target markets, as it helps marketers comprehend how potential customers make purchasing decisions.
Eco-friendly accommodations: Eco-friendly accommodations are lodging options designed to minimize their environmental impact while providing a sustainable experience for guests. These types of places often incorporate green practices such as energy conservation, waste reduction, and the use of sustainable materials. By catering to environmentally conscious travelers, eco-friendly accommodations contribute to responsible tourism and can attract specific market segments that prioritize sustainability in their travel choices.
Eco-tourism: Eco-tourism is a responsible travel approach that focuses on experiencing natural environments while promoting conservation, minimizing environmental impact, and benefiting local communities. This concept connects travelers with nature and emphasizes sustainable practices in tourism, which enhances the travel experience while ensuring that destinations can thrive for future generations.
Emerging destinations: Emerging destinations are travel locations that are gaining popularity among tourists but have not yet reached the status of well-established tourist spots. These places often offer unique cultural experiences, natural beauty, and affordable options, attracting a growing number of travelers seeking new adventures. As these destinations develop their tourism infrastructure and marketing strategies, they can significantly impact the travel industry and attract various target markets.
Focus Groups: Focus groups are a qualitative research method used to gather feedback and insights from a small, diverse group of participants regarding their opinions, perceptions, and attitudes toward a product, service, or marketing concept. This approach allows researchers to explore deeper emotional responses and motivations behind consumer behavior, making it valuable for understanding market dynamics and refining strategies.
Global tourism forecasts: Global tourism forecasts are projections made by analysts and organizations that estimate future trends in international travel and tourism, including factors such as growth rates, visitor numbers, and market dynamics. These forecasts play a critical role in helping businesses and governments understand potential shifts in travel patterns, consumer behavior, and economic impacts on the tourism industry.
Hotel occupancy rates: Hotel occupancy rates measure the percentage of available hotel rooms that are occupied over a specific period. This key performance indicator is crucial for understanding a hotel's operational efficiency and financial performance, as higher occupancy rates typically lead to increased revenue and profitability.
Lifestyle segmentation: Lifestyle segmentation is a marketing strategy that divides consumers into groups based on their lifestyles, values, interests, and behaviors. This approach helps businesses tailor their marketing efforts to target specific segments more effectively, aligning products and services with the unique preferences and motivations of different consumer groups. By understanding lifestyle characteristics, brands can create targeted campaigns that resonate with consumers on a deeper level.
Luxury Resorts: Luxury resorts are high-end accommodations that provide exceptional comfort, exclusive amenities, and premium services to guests. These resorts often feature stunning locations, opulent facilities, and personalized experiences designed to cater to affluent travelers seeking relaxation and indulgence.
Market segmentation tools: Market segmentation tools are methods and techniques used to divide a broad target market into smaller, more defined groups of consumers with similar needs, preferences, or characteristics. These tools help businesses identify and understand their target markets, allowing them to tailor their marketing strategies to specific segments for better engagement and effectiveness. By leveraging these tools, businesses can more accurately match their products or services with the right audience, enhancing customer satisfaction and driving sales.
Mass marketing: Mass marketing is a strategy that aims to reach the largest possible audience by promoting a product or service without targeting specific segments of the market. This approach relies on broad messaging and media channels to create awareness among consumers, focusing on appealing to common needs and preferences rather than tailoring messages for niche groups. By casting a wide net, businesses hope to generate high sales volume across diverse customer bases.
Millennials: Millennials, also known as Generation Y, are individuals born approximately between 1981 and 1996. This generation is characterized by their embrace of technology, values of social consciousness, and a desire for experiences over material possessions. Their unique behaviors and preferences significantly influence market trends, especially in areas like travel and hospitality.
Niche marketing: Niche marketing is a targeted approach to reaching specific segments of the market that share distinct needs, interests, or characteristics. By focusing on a specialized audience, businesses can tailor their products, services, and marketing strategies to better meet the unique demands of that group, often resulting in higher customer loyalty and reduced competition.
Online booking: Online booking refers to the process of reserving travel services such as flights, hotels, and rental cars through internet-based platforms. This method provides convenience for consumers to easily compare options, check availability, and secure their travel arrangements without needing to visit a physical location or speak directly with a representative. It has transformed the way consumers plan their travel by allowing them to make informed choices based on real-time data.
Personalized experiences: Personalized experiences refer to tailored interactions or services that cater to the specific preferences, needs, and interests of individuals. This concept emphasizes understanding and engaging with customers on a deeper level, ultimately enhancing their satisfaction and loyalty. By leveraging data and insights, businesses can create unique offerings that resonate with target markets, making each experience feel special and relevant to the consumer.
Post-pandemic travel preferences: Post-pandemic travel preferences refer to the evolving attitudes and behaviors of travelers that have emerged in response to the COVID-19 pandemic. These preferences are shaped by a heightened focus on health and safety, flexibility in bookings, and a desire for unique and meaningful travel experiences. Understanding these changes is crucial for effectively targeting and profiling market segments in the travel and hospitality industry.
Return on Investment (ROI): Return on Investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment relative to its cost. It helps businesses determine the financial return generated from marketing activities, making it essential for assessing the effectiveness of strategies across various aspects of hospitality and travel marketing.
Social Media Influence: Social media influence refers to the ability of individuals or brands to affect the opinions, behaviors, and decisions of others through platforms like Facebook, Instagram, Twitter, and TikTok. This influence is crucial for identifying and profiling target markets, as it allows businesses to understand how social interactions shape consumer preferences and trends. By analyzing social media influence, marketers can tailor their strategies to engage specific demographics effectively.
STP Model - Segmentation, Targeting, Positioning: The STP Model is a marketing framework that helps businesses identify and cater to specific customer segments by focusing on segmentation, targeting, and positioning. It starts with dividing the market into distinct groups of consumers (segmentation), then selecting which segments to focus on (targeting), and finally creating a unique image or identity for the product in the minds of those targeted consumers (positioning). This model is crucial for understanding how to effectively reach and engage different consumer demographics and helps marketers craft strategies that resonate with their chosen audiences.
Surveys: Surveys are systematic methods used to collect data and insights from a group of respondents, typically through questionnaires or interviews. They help organizations understand consumer behaviors, preferences, and attitudes, allowing for more informed marketing strategies and decision-making.
Tax Regulations: Tax regulations are rules and guidelines established by government authorities that dictate how taxes are to be assessed, collected, and managed. These regulations can significantly impact businesses and individuals by determining tax liabilities and compliance requirements, influencing decision-making processes. Understanding these regulations is essential for identifying target markets and developing effective marketing strategies, as different segments may respond differently based on their tax obligations and financial behavior.
Travel Industry Reports: Travel industry reports are comprehensive documents that provide analysis and insights on various segments of the travel sector, including trends, forecasts, market performance, and consumer behavior. These reports play a crucial role in helping businesses identify opportunities and challenges in the market, making them essential for effective decision-making and strategy development.
Visa requirements: Visa requirements refer to the regulations and conditions that travelers must meet to enter a foreign country, including obtaining a visa before travel. These requirements vary significantly by destination and can include documentation such as a passport, invitation letters, proof of funds, and sometimes health certifications. Understanding visa requirements is crucial for effectively identifying and profiling target markets in the hospitality and travel industry, as they directly influence travel behavior and destination choices.
Wellness travel: Wellness travel is a segment of the tourism industry focused on promoting health and well-being through travel experiences. This type of travel typically includes activities like spa treatments, yoga retreats, meditation, and healthy culinary experiences that aim to rejuvenate the mind, body, and spirit. It often appeals to individuals seeking a break from their daily routine and a way to restore balance in their lives.