Advantages and disadvantages of segmentation in the hospitality industry
In hospitality, industry segmentation can be implemented in a number of ways. The main advantage of using segmentation in the market is to increase efficiency in the market and hence the sales. The hotel industry is demographically segmented in that there are different kinds of hotels operating in different areas. There are hotels operating on beaches and others operating in cities. This segmentation further ranks hotels in a range of quality of their services. This assigns stars to a hotel with a maximum of five stars. This is advantageous to the hotels since it provides customers with a range to choose from according to the quality that they want. It is also advantageous as it assists in making more inventions in the industry to provide new products according to the class of the hotel.
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Behaviorist segmentation in the hospitality industry takes the approaches to take into customer’s behavior. This is important since it helps the industry in making new packages according to the customer’s demand. The behaviorist segmentation creates a market for the high and middle-class hotel industry. This has helped hotels in the hospitality industry to operate targeting certain customers with certain behaviors. This has helped in creating specialization in the industry with some specializing in certain cuisines. This reduced competition in the industry reducing operation cost while keeping the profit high.
Benefit segmentation classifies customers according to what they want to derive from the product. Again this goes to the quality of what of the service in the industry. There are those who patrons the industry for fun, others for conferences while others go for food. This is advantageous since it creates a more diverse service industry where customers get what they want under one roof. However, this increases the cost of operation in that many hotels in the industry tries to provide all under one roof, and hence other hotels are forced to follow suit to match the competition. There is an extra advertisement cost since hotels have to advertise all their services to the customers.
Segmentation based on price and quality
In the hospitality industry, this differentiates the kinds of patrons who will visit a particular hotel. Based on the target market, hotels provide a variety of products that are segmented on the basis of price and quality. It will not be a wonder to visit a three-star hotel and get an omelet and a low price and get the same omelets at a double price in a five-star hotel.
This segmentation has been crucial for the survival of the hotel industry as a pillar of the hospitality industry. The factors that have enabled this segmentation to continue are many and vary from place to place. The first factor is the customer target. Fast food in a busy street will not be targeting the same customers as a five-star hotel but the same customers can visit either establishment. This has helped to create identity depending on the quality of services that are offered in an establishment.
Another crucial factor that has enabled the success of the industry has been the range of services that are provided in an establishment. A five-star hotel will offer various quality services than a three-star hotel which justifies the segmentation based on price and quality. Similarly as was said before, the same omelets in a three-star hotel will not be served the same in a five-star hotel. Another key pillar that has supported this segmentation is the location of the establishment. Those located in tourist sites and major cities will offer their service at a higher price and quality.
The positioning strategy used in is the industry is the same as above based on price and quality. Customers believe they are expected to pay more in five-star hotels and at the same time get quality services than in a three-star hotel. Customers expect to pay more on quality and extra service they get than in a competing establishment.