Originally published April 11, 2017
Updated May 1, 2021
A Little History of Market Segmentation
Market segmentation certainly isn’t the latest and greatest tool on the market. In fact, it began taking shape in the 50’s when brands like Proctor and Gamble and General Foods began pouring a lot of money into brand management—or marketing as we know it today. In 1956, Wendell Smith introduced the concept of market segmentation in Product Differentiation and Market Segmentation as Alternative Marketing Strategies (not a thrilling read, so we’ll save you some time).
“Market segmentation [. . .] consists of viewing a heterogeneous market (one characterized by divergent demand) as a number of smaller homogeneous markets.”
While a bore, Smith’s foundation is rock solid. A divided market based on personal characteristics, motivators, and similarities helps advertisers cater to the specific needs of specific groups. Now your message is focused and so is your product development (rather than trying to be all things to all people).
Just to be Clear, We’re Not Talking About Personas
Market segmentation isn’t persona research. Sure, they’re very similar tools that group current and potential customers into manageable buckets, but you can’t create a detailed buyer’s persona without first diving into market research. Specifically, personas are used to encourage a design for real people with real needs. Where segmentation aims to pinpoint and measure the size of different groups at a high-level, personas break down the user’s context, needs, motivations, and pain points on a more intimate basis.
Often, we pull in focus groups to test our theories on user motivation and needs. From on-paper prototypes and discussion groups to high-fidelity wireframes and user-experience videos—we pick from our bag of user-testing methods to ensure content and calls-to-action are placed in the best places possible. Learn more about user testing here.
Marketing Segmentation in the Travel and Tourism Industry
Considering the travel market is far too large and diverse to reach effectively in one fell swoop, tourism marketers use segmentation to better understand customer needs and allocate marketing dollars effectively. Effective segmentation is based on extensive quantitative research focusing on large numbers of people and grouping them together based on shared characteristics such as demographics, behavioral patterns, or cognition ratings. Once identified, these groups are referred to as particular segments and can be targeted by particular product offerings, services, and tailored marketing messages.
Some popular segment names for the travel and tourism industry are escapists, learners, planners, and dreamers.
Seize the (Micro) Moment
Marketing segmentation requires you to think critically about your target audience and how they move through the customer journey. Often, tourism and travel market segments are created by one, or a combination, of the following:
- Age / life stage (e.g., millennial, retiree)
- Socioeconomic status
- Type of travel (e.g., business, leisure, extended stay)
With online research easier and more portable than ever, we like to think about marketing segments a little differently. Travel brands and destination marketers should consider the moments your potential customers may jump online from their phone or computer—as the biggest marketing opportunity.
While the who still matters when you’re trying to reach an audience—the when is more vital than ever.
For example, think about how you planned your last vacation. If you were like most, you bounced back and forth between dreaming about and loosely planning your next getaway—zooming in on a destination and quickly bouncing around in search of inspiration only to zoom out and consider all the options yet again. This quick spurt of research to answer an immediate need (usually turning to a search engine) has been coined “a micro-moment” by Google. Such micro-moments represent a huge opportunity for destination marketing organizations and are the key to attracting and earning a savvy traveler’s consideration.
Next Steps. . .
What if your brand or location could be in front of your potential customers during the exact moments they are dreaming about getting away, planning their visit, and eventually booking their vacation? What content should you create at what moments?
Funny you should ask; we actually created a guide that outlines what micro-moments are and how to capitalize on them.
Knowing how to leverage market segmentation and the power of micro-moments is the key to upping your travel industry marketing game. It’s how you keep your messaging laser focused and your audience satisfied. Wendell Smith would be proud.