An analysis of a consumer database calls into question the idea, common among academic observers, that market segmentation can work as a grand strategy for either cruise lines or for hotel brands.

In pursuing a market segmentation strategy, a brand would focus its efforts on a discrete group of consumers to the exclusion of other groups. In so doing, that brand would attempt to forestall that set of customers from doing business with competitors.

Using data drawn from a sample of over 40,000 respondents in the United States, this study finds no such exclusivity for large market segments. One reason for this is that hotel and cruise markets are not sufficiently segmented for such a strategy to succeed.

Moreover, even if hotel and cruise market segments were sufficiently distinct, the competitors in these two industries are far too adept to allow one brand to achieve dominance in a particular segment. Then again, certain hotel brands and cruise lines do appeal to specific customer groups more than do their competitors.

For example, one cruise line attracted more business from women than did its cohorts. Likewise, women patronized two high-end hotel brands to a greater extent than they did competing high-end hotels. These findings suggest that market segmentation can be effective on a tactical level.

That is, rather than think of market segmentation as a strategic measure, cruise lines and hotel companies can work to gain modest advantage with specific demographic groups, and thus compete in a set of slightly differentiated markets.

To view the documents, please click on the link below:

www.hotelschool.cornell.edu/chr/pdf/showpdf/509/chr/research/lynnsegmentationtopost.pdf

Dr. Michael Lynn is a professor of consumer behavior and marketing at the Cornell University School of Hotel Administration. He received his Ph.D. in Social Psychology from the Ohio State University in 1987, and has taught in the marketing departments of business and hospitality schools since 1988. Dr. Lynn paid his way through school by waiting tables and bartending. This experience sparked his interest in service gratuities (tipping), a topic on which he has over 35 published academic papers. His other research focuses on consumer status and uniqueness seeking. Dr. Lynn is the past editor of the Cornell Hospitality Quarterly, and is currently on the editorial board of the Journal of Academy Marketing Science, which gave him an outstanding reviewer award in 2006.