In order for hotel businesses to compete and maintain their brands in the volatile market, effective and efficient marketing strategies that aim at meeting and exceeding the exact expectations of all customers is a basic necessity.
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Different customers have different needs, tastes and preferences and this has shaped the way modern hotel businesses package their products and services to meet the customer needs. This paper discusses the concept of market segmentation, targeting and positioning and how the same is applicable in the hotel industry and in particular Intercontinental Hotels Group.
Segmentation, targeting and positioning in hotels
How a hotel packages itself to meet the needs of its customer base determines its financial success and retention of its position in the competitive market.
Market segmentation is an important concept in hotel business whereby the customers are divided into unique small groups each different from the other in terms of how they respond to the product’s marketing, promotion, pricing and other variables depending on their unique needs such as financial abilities, age, tastes, resources, behaviors, location tastes and preferences. This is usually the contrast of mass marketing whereby customers are treated as one homogeneous group with the same needs.
Market targeting concept works in the principle of identifying the different markets segments in terms of their unique needs and pining out the most viable segments and concentrating their resources on them by considering their relevance to the core business of the organization, size and profitability (Rudra 25).
Positioning integrates both Market segmentation and targeting to create a clear picture in the mind of the targeted segments of customers, about the uniqueness of the packaged products and how they best suit their unique needs. Positioning implies the efforts employed towards clearly convincing different segments of the market into perceiving your services as uniquely tailored for them or as simply suggested by Subha “a product’s position is how potential buyers see the product” (Rudra 33).
Segmentation in hotel industry
The hotel industry is arguably one of the most lucrative businesses and also very competitive and volatile. Most multinational hotels use the concept of Market segmentation targeting and positioning to serve the different customer base.
Most market segments in the hotel industry prefer to segment their Market mainly depending geographic segmentation whereby they target different geographic regions depending on the different cultures, sizes such as large cities, population density. Demographic segmentation is mainly focused on income, occupation and social status. Psychographic segmentation in the hotel industry takes on activities such as tourism and business oriented luxuries.
Intercontinental Hotels Group
Intercontinental Hotels Group (IHG) is one the leading hotels in the world. IHG has continually applied the concept of Market segmentation, targeting and positioning to retain its position as the leading hotel chain in the world.
Their Market segmentation is mainly demographic whereby products are packaged focusing on the income of the targeted market with different brands such as InterContinental Hotels & Resorts which is a package of prestige to the most prestigious in the community, Holiday inn express offers limited services targeting middle income earners, Candlewood Suites, which is an extended-stay concept, but one targeting the mid-market business and leisure segment among others (Intercontinental Hotels Group 1).
In this segmentation IHG offers the brand Crowne Plaza which is a full-service offering, upscale accommodations by targeting more selective, less price-conscious business and leisure travelers. They also offer Stay Bridge suites brand catered to the extended-stay market and Holiday inn brand which targets commercial and leisure travelers (Brophy 1).
Geographic segmentation can be observed in the way brands such as Hotel Indigo is located in urban, mid-town and suburban areas near businesses, restaurants, and entertainment venues, Holiday Inn Express hotels are most commonly situated along major highways, interstates, and airport locations The Staybridge Suites and Candlewood Suites brands are located near commercial business parks, colleges, and universities (Brophy 1).
Different hotel companies such as the Hilton hotels, Wyndham hotel, Marriot international hotels, Accor group, and Choice hotels among other leading hotels compete extensively by targeting the same group of customers. The hotels offer exclusive packages for every segment and as such competition for business in each segment becomes extremely high.
Perhaps the most lucrative and the most competitive segment in the hotel industry is the exclusively rich segment which offers exclusive services to the most prestigious and wealthy class in the world.
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IHG competes with other leading hotels such as Hilton hotels in offering the most lucrative and classic services to this segment by using the brand InterContinental Hotels & Resorts designed to deliver customer experience to the elite in a unique and distinctive way. The brand is said to boast of being the hotel brand of choice for some of the most influential personalities in the world (Brophy 1).
IHG may not have made such a success in segmenting and targeting this particular segment without proper positioning. Davies John claims that the art of positioning is arguably the hardest and trickiest especially when dealing with the royal class segment. Getting this segment to perceive your services and products as the best is not as simple task.
IHG probably does brand positioning by mostly investing in the most luxurious parts of the world such as the major cities, setting high standards in terms of luxurious service delivery (Davies 1). IHG is also known of hosting some of the most influential people and this have perhaps done a milestone in positioning the brand. A report by Deloitte was quoted claiming that “InterContinental completed its brand repositioning in Q3 2005, with global press and TV advertising campaigns launched with CNN and in-flight carriers” (Deloitte 1).
The fruits of effective positioning of this brand can be attributed to the success of the InterContinental Hotels & Resorts brand in terms of its presence in the most prestigious parts of major cities and its credential of serving the most influential people in the world.
The hotel industry has used segmentation, targeting and positioning concept to best capture every segment of the competitive market. Hotel industry segments divide the market into unique groups and rolls their services according to the specific needs. The hotel industry does positioning of specific segments by setting standards, investing in the most relevant locations and presenting their services in the most attractive way to the specific segment.
IHG has used this concepts and the success can be seen in their position as one of the leading hotel chains in the world. Those who are planning to invest or improve on their hotel industry may be advised to seriously consider the potential of segmentation, targeting and positioning concept if they are to achieve any meaningful success in the hotel industry.
Rudra, S. Market Segmentation Targeting and Positioning. Market Segmentation, 2010. Web.
Brophy, M. Brand Power: InterContinental Hotels Group. Brand Power Intercontinental, 2009. Web.
Intercontinental Hotels Group (IHG).Our History. Intercontinental, 2011. Web.
Davies J. Hotel Marketing in 2010: Perception Trumps Positioning. Hospitality, 2010. Web.
Deloitte. Bringing a luxury brand to life. Deloite, 2006. Web.