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Brand Segmentation in the Hotel and Cruise Industries: Fact or Fiction?
By Michael Lynn, Ph.D.
Monday, 21st May 2007
 
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.

Your Comments Please
If this CHR Report made a positive impact on your management approach or business operations, we welcome your commentary. We would like to post your comments on our website.

Download The Report To view the whole report, please click on the link below

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

Michael Lynn is an Associate Professor of Consumer Behavior and Marketing in the School of Hotel Administration at Cornell University. Mike, who obtained his PhD in Social Psychology from the Ohio State University in 1987, is the author of over 50 articles that have appeared in such journals as American Psychologist, Journal of Applied Social Psychology, Journal of Consumer Research, Journal of Economic Behavior and Organization, Journal of Personality and Social Psychology, Journal of Socio-Economics, and Personality and Individual Differences. He is a past editor of the Cornell Hotel and Restaurant Administration Quarterly and currently sits on the editorial boards of the Journal of Advertising and the Journal of the Academy of Marketing Science.

The Center for Hospitality Research
E-mail: hosp_research@cornell.edu
Phone: 607-255-9780
Fax: 607-254-2922
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