Segmenting Jamaica's Small Hotel Market for Better Targeting/Segmentation du Marche des Petits Hotels de la Jamaique pour un Meilleur Ciblage/Segmentando el Mercado de Pequenos Hotels de Jamaica para una Mejor Focalizacion.
Marketing campaigns have been found to have a relatively low impact on the performance of small island hotels (Kilic and Okumus 2005) despite some tourists having a preference for small hotels because of personalized service along with the informal and intuitive nature of these hotels (Zupan and Milfelner 2014). More broadly, small business owners do not make effective use of marketing and tend to place less priority in this area than other areas of the business despite the obvious contribution of marketing to the profitability of firms (Yolala et al. 2009). This certainly is the case with small hotel operators who have little or no budget to launch marketing campaigns but instead rely on repeat business from local communities (Keller 2002). Further, small hotels in Jamaica have been experiencing a downturn in their markets with trends indicating that hotels with a smaller number of rooms have lower occupancy rates than those with larger numbers. For example, hotels with fewer than 50 rooms have experienced occupancy rates of 28.7 percent, 51-100 rooms had 35.5 percent, 100-200 rooms had 61.9 percent and greater than 200 rooms recorded 73.1 percent occupancy (JTB Annual Travel Statistics 2016). Notably, this downturn is partly due to competition from larger hotels that have more resources to employ marketing strategies such as product differentiation, growth in new markets and general brand awareness (Moriarty et al. 2009).
In spite of the paltry marketing efforts among small Jamaican hotels, Smith (2014) found that training seminars in marketing were highly demanded among SMEs in the country. It was, however, determined that these small-type firms were strapped for funding to carry out traditional marketing programmes and were merely demanding inexpensive training for sales staff to help with promotions.
Market segmentation is a key element of market planning, particularly in an environment of scarce resources where a market must first be stratified to allow for effective targeting of attractive segments. Without segmentation, marketers would be left with a mass marketing approach, and consequently, the needs of many customers within the diverse market would not be met. Market segmentation is therefore necessary for an effective usage of marketing funds as each segment should be targeted based on the known characteristics of that segment.
The segmentation process can be facilitated by a number of variables where the majority of these variables are incorporated into one of four bases of segmentation: demographic, psycho-graphic, geographic and behavioural (Armstrong et al. 2014). Armstrong et al. (2014) indicate that measurability, accessibility, sustainability along with actionability are four necessary requirements of an effective segment. In the context of small hotels, Link (1993) suggests that market planning should address practical segmentation issues and must include questions such as: Who are [the people who are] using your hotel? Who [are the people who] might be using your hotel? Where can you look [i.e. in what segment can you look] to expand your hotel business? These questions, it is felt, can be answered through a scientific analysis of the knowledge that already resides with the owners/managers and workers of these small hotels.
Notwithstanding the obvious importance of market segmentation to effective marketing, very little academic work has been done on segmentation in the tourism and hospitality sector and the literature lags behind practice in this very significant area. Wen and Peng (2002) have argued that the marketing management literature in general continues to focus on popular bases of segmentation such as demographics and psychographics but lags behind on practical and effective means of segmenting markets. Further, without an effective market segmentation strategy, it is difficult to produce the services required to compete and sustain profitability within the complex hospitality business (Inbakaran and Jackson 2005).
Clustering the tourism product through strategic alliances and the grouping of offerings have been considered key strategies for sustaining Caribbean tourism since the early 1980s (Seraphin et. al 2018). It has been observed that "much of the small firms' literature in general, and the tourism and hospitality literature in particular, [has taken] the view that small firms were miniature versions of larger firms" and consequently have hardly begun to address the marketing requirements of smaller-type hotels (Friel 1999, 97). Moreover, with the difficulties that small hotels are experiencing, owners and managers of these hotels must be able to identify market segments in order to align their offerings with profitable segments.
The gaps in the literature on the need to address practical questions on market segmentation (Link 1993), the need for practical and effective ways to segment markets (Wen and Peng 2002) and the need for effective market segments in the hospitality business (Inbakaran and Johnson 2005) have provided a basis for addressing segmentation in small Jamaican hotels. This article will therefore address the following research question in fulfilment of these gaps: What are the key market segments that small Jamaican hotels should target for more effective usage of marketing funds?
The main purpose here is to address the longstanding gaps in the literature that are summarized above. It is felt that the small hotels in Jamaica offer a good place to fill these gaps as their marketing programmes are characterized by low budget (Keller 2002) and low impact (Kilic and Okumus 2005) and therefore help is needed to better market these hotels. Moreover, small Jamaican hotels must be appropriately positioned in attractive market segments (Tourism Master Plan 2002) and the targeting of these segments could aid in a more efficient usage of the marketing dollar.
In the section that follows, we present a brief review of literature on the fundamentals of market segmentation, the prior research on market segmentation in hospitality and tourism, the bases of market segmentation, a brief note on selecting market segments, and an integrative approach to market segmentation. We then undertake an overview of the method for carrying out the study and present the results and discussion. The study's limitations, opportunities for further research and insights for marketers are presented next. We conclude the paper by underscoring its contribution to the literature and identify the key segments that small hotels could target either singly or by combining segments in the local and overseas markets.
THE FUNDAMENTALS OF MARKET SEGMENTATION
The term 'market segmentation' was first applied in the marketing literature by Wendell Smith in 1956 (Foedermayr and Diamantopoulos 2008), as a response to the lack of homogeneity or sameness in the market from both the demand side (with respect to diversity of customer needs and preferences) and the supply side (with respect to diversity in product offering). Hence, the need to segment markets evolved from both customer and firm. In this context, the customers' demand for products within segments gave rise to the firms' supply of products to those segments. Market segmentation is therefore driven by heterogeneity in the marketplace (Smith 1956, 3) and represents "a force in the market that will not be denied" (6). Notably, this "is based upon developments on the demand side of the market and represents a rational and more precise adjustment of product and marketing effort to customer or user requirements" (5).
Market segmentation can be defined as the process of subdividing a market into groups of buyers in which customers with similarities in needs and preferences are placed within the same group and those with differences are placed into other groups with customers who share their similarities. Thus, in segmented markets, there are similarities within groups and differences across groups.
The concept of market segmentation was developed from the economic theory which suggests that a firm which sells a homogenous product in a market of heterogeneous demand could optimize profits by utilizing consumers' marginal response to price to define mutually exclusive segments (Claycamp and Massy 1968). This suggests that each segment will attract a different price. Other marketing variables (besides price) could also be included in defining these segments (388). In essence therefore, a market segment is usually constituted by a combined set of variables derived from the consumers' demand for benefits from the key elements of the marketing mix of product, price, promotion, place, people, process and physical evidence.
MARKET SEGMENTATION IN HOSPITALITY AND TOURISM
A thorough review of prior research has revealed very little work on market segmentation within the hospitality and tourism literature. Some of the more recent studies in this stream of work have addressed segmentation on tourist travel characteristics, cruise ship passengers, and restaurants, and only one study, Inbakaran and Jackson (2005), was found on resorts or small type hotels. Table 1 below provides a summary on studies selected from the very few done on market segmentation in hospitality and tourism.
The studies reviewed have hardly begun to address market segmentation of small hotels, notwithstanding Inbakaran and Jackson (2005) on resort visitors. Moreover, since segmentation within the larger hospitality and tourism business may or may not be applicable to small hotels (Friel 1999), the gap still remains in the literature on the segmentation of small hotels for better marketing.
Bases of Market Segmentation
The process of dividing existing and prospective customers into groups to better serve their needs forms the basis of market segmentation (MacDonald and Dunbar 2004). Such a division provides a basis by which a firm's marketing mix (product, price, promotion, place and people) can be developed to meet the varying needs of the market segments. Segmentation studies have identified geographic, demographic, psychographic and behavioural elements as four critical bases of market segmentation (Armstrong et al. 2014). These bases are integral to any analysis of market segmentation as they provide a framework for aggregating and disaggregating variables within a segmented market.
Geographic segmentation is based on disaggregating markets on variables such as geographic region, population density and climate. This process involves segmenting customers into distinct geographic locations either by focusing on small or large hotel segments. Thaczynski and Rundle-Thiele (2011) found that country of origin and place of residence were the most important geographic attributes for segmenting a given tourist destination. Place of residence can also be segmented in rural and urban. In assessing the geographic segment of rural tourists, Pesonen (2012) found that this segment could be divided into four marketable sub-segments of social travellers, wellbeing travellers, home region travellers and family travellers. Geographic segmentation is often seen as broad in scope and may be complemented with other bases like demographic, usage, psychographic and benefit because such a segment on its own does not identify the diverse needs of the hotel market.
Markets segmented on the basis of age, gender, size, income, occupation, education, nationality, religion and family life cycle stage define demographic segmentation (Armstrong et al. 2014). In segmenting a tourist destination on demographics, Tkaczynski and Rundle-Thiele (2011) found that age, gender, travel party composition and income were most salient. Georgsdottir and Oskarsson (2017) have however found that nationality was the strongest factor that distinguishes the behaviour and characteristics of the cruise ship passenger from different parts of the world. It was observed that nationality, as a single demographic factor, could reasonably account for differences in behaviour on issues such as what passengers wanted to buy, what they wanted to spend and even what they wanted to see. In addition, Kalabikhina and Shishalov (2016) found other demographic variables that are important for segmenting markets of internal tourist. These include low-income retired persons, groups of students, working qualified experts and family travellers.
Age and family life cycle stage are two recurrent demographic variables used in the segmenting of the hotel industry (Medlik and Ingram 2000). In the context of age, the hotel industry often targets the 'mature' market consisting of affluent senior citizens. Similarly, family life cycle which consists of stages such as singles, married couples, married with children, and married with grown children are popular segmentation delimiters utilized by hotels in practice (Medlik and Ingram 2000).
Psychographic segmentation divides markets using lifestyle variables such as interests, activities, opinions, values and attitudes (Gonzalez and Bello 2002) and is quite applicable across hotels and other tourism interests. Weinstein (2004) identified eight consumer lifestyle segments that are applicable across all business types. These are: innovators, thinkers, achievers, experiencers, survivors, believers, strivers and makers. Innovators are sophisticated and curious. Thinkers are reflective and informed. Achievers are goal oriented, brand conscious and conventional. Experiencers are trend setting, impulsive and variety seeking. Survivors are constrained and cautious. Believers are loyal and moralistic. Strivers are contemporary and style conscious. Makers are reasonable, practical and self-sufficient (Morritt 2007; Weinstein 2004).
Psychographic segments identified within the tourism and hospitality industry include 'natural beauty and information seekers' and 'independents' (Birdir 2015). In destination marketing, trip purpose, motivations, and activities sought are considered to be relevant psychographic indicators for segmenting tourism destinations (Tkaczynski and Rundle-Thiele 2011).
The limitations of psychographic segmentations are identified by both Morrison (1996) and Weinstein (2004). Morrison argued that psychographic segmentation is not an approach that is useful on its own but must be part of a multi-segmentation approach, which also utilizes demographic and geographic segmentations to identify target segments. Weinstein critiqued the expensive nature of psychographic segmentation and suggested that it may not be appropriate for businesses with limited budget, for example, small hotels. He further argued that this type of segmentation is complex as it requires extensive primary research and generates large volumes of data, which could prove difficult to analyze.
Behavioural segmentation is based on customers' behaviours towards a product, such as price, benefits sought, brand loyalty, user status and readiness to buy (Armstrong et al. 2014). Medlik and Ingram (2000) offered a useful example of the dynamic nature of behavioural segmentation in that a businessman may stay at a quality hotel while on business and make charges to an expense account. However, when travelling for pleasure with his family on his own expenses, he may resort to a lower grade hotel. On brand loyalty, which is considered among the most important behavioural variable, Morrison (1996) offered several classifications that are applicable to the hotel market. These are: hard core loyalists who always stay at the same hotel, split loyals who would stay at two or three hotels, shifting loyals who tend to transfer loyalty between different brands, and switchers who have no loyalty to any brand and often make decisions based on best price or value. Tkaczynski and Rundle-Thiele (2011) identified expenditure type, number of nights, and purchasing behaviour among the behavioural variables for segmenting the tourist market. In addition, willingness to pay for hotel room amenities such as added kitchen and larger bedroom was also identified as a key variable of the behavioural segment (Johnston 2014). Similarly, Noone and McGuire (2016) found that willing-to-pay constitutes an important variable of the behavioural segment within the general tourism and hospitality business.
Selecting the Market Segments
There is little or no guidance in the existing literature for identifying and selecting an appropriate set of segments. And with market segmentation being antecedent to effective marketing, small hotels have difficulties in carrying out marketing programmes, not only because of the lack of funding (Keller 2002) but also because of lack of science in segmentation analysis (Inbakaran and Johnson 2005; Wen and Peng 2002).
Kotler and Keller (2006) noted that market segments are dynamic and change with the passage of time. Segmentation analysis must therefore be carried out on a regular basis to capture changing segments. Another challenge associated with market segmentation is the expense to conduct market research, develop customer databases and embark on targeted communications to facilitate the market segmentation process. Yet, greater risks may emerge from selecting an unviable segment.
Integrative Approach to Market Segmentation
Bowen (1998) argued that the best approach for market segmentation is for firms to pursue an integrative one. According to him, such an approach begins by dividing markets into groups, identifying differences and similarities in the market segments, evaluating these segments among the firm's goals and resources, then creating a marketing mix that is appropriate for the segments developed. Hence for Bowen, market segmentation, targeting and positioning (STP) are combined strategies for the integrative approach.
The method employed for segmenting Jamaica's small hotel market is discussed in seven steps. First, a focus group of five owners/managers of small hotels was conducted to identify segmentation variables that are relevant to these hotels. The decision to use focus groups is based on the paucity of scholarly work on market segmentation of small hotels and consequently a comprehensive list of variables that characterizes the market of visitors could not be obtained from the review of literature. The focus group participants were advised of the popular bases of segmentation and prompted to use the bases to provide profiles on the types of people who visited these hotels.
Second, a manuscript was developed from the focus group responses. This was analyzed using a basic thematic approach and only variables on which there was consensus on the guests' profile, by at least three of the five participants, were extracted. This resulted in a list of 36 segmentation variables that characterize the market of visitors of the small hotels.
Third, the list of the 36 segmentation variables, representing each of the four popular bases of segmentation, was used to develop a survey instrument. The items on the instrument were each anchored on 5-point Likert scales, ranging from 'strongly disagree' to 'strongly agree'. Examples of these items are as follows: "at my hotel, educated guests consist of a substantial number of visitors"--demographic; "at my hotel, Jamaicans living overseas consist of a substantial number of visitors"--geographic; "at my hotel, higher social class guests consist of a substantial number of visitors"--psychographic; and "at my hotel, price conscious guests consist of a substantial number of visitors"--behavioural. Notably, each item was pinned with the word 'substantial' making it a criterion of market segmentation. Further, the 'measurability' criterion of segmentation was implicitly captured by the Likert scale with each point on the scale being indicative of a measure of the item while 'accessibility' and 'actionability' (the other two criteria) were assumed to be present. (2) In addition, a filter question on 'number of rooms' was included on the final instrument as a control for ensuring that all hotels in the final sample were small and contained 10 to 100 rooms. Background questions were also added to the instrument for the purpose of describing the sample.
Fourth, a sample frame was developed from the listing of registered hotels with the Jamaica Tourist Board. This list was combined with the listing of hotels from the Jamaica Online Yellow Pages, and the frame was cleaned to eliminate duplications as well as the large and medium-sized hotels that were not relevant to the study. This resulted in a sample frame of 305 small hotels. A stratified random sample of 175 was then drawn from the frame with hotels located in the northern, southern, eastern and western parts of the island.
Fifth, a telephone mode of administration was used for conducting the survey. Individuals surveyed were hotel owners, managers or representatives who were in leadership positions within these entities. The final sample consisted of 102 small Jamaican hotels (58 percent response rate) with approximately 80 percent with 10-50 rooms and the other 20 percent having 51-100 rooms. These hotels were spread across the entire island with 37 percent located in the northern region, 33 percent in the eastern region, 20 percent in the western region and the remaining 10 percent in the southern region. Forty percent of these hotels had been in operatation for 10-20 years, 20 percent: 21-30 years, 20 percent: 31-60 years; with the remaining 20 percent not indicating how long they were being operated. A large number of respondents did not provide information on occupancy rates and so this metric was not computed.
Sixth, the statistical tools for extracting the segments were examined. The options examined were factor analysis versus cluster analysis. Hair et al. (2010) explained that cluster analysis differs from factor analysis in that cluster analysis is used to group objects or respondents while factor analysis is primarily concerned with the grouping of variables. In essence, cluster analysis will group respondents around selected variables to form clusters while factor analysis is used for data reduction and group variables that are correlated to form dimensions or structures. Further, cluster analysis requires a sample that is large enough to guarantee substantial segments while factor analysis requires a minimum sample of 100 observation (Hair et al. 2010). Constantinides and Stagno (2011) pointed to a sample size threshold of no less than 200 for using cluster analysis and Formann (1984) recommended a preferred minimum of [5*2.sup.k], where k represents the number of variables. Indeed, large numbers of variables will require very large samples for using cluster analysis.
In this study cluster analysis was eliminated for two main reasons:
1. The usable sample of 102 owners/managers was too small to generate ample numbers of practical clusters necessary to satisfy the objective of this study,
2. The number of segmentation variables generated from the focus groups was too many to cluster the 102 respondents around.
Seventh, similarly to Constantindes and Stango (2011) therefore, where there was need to find a number of segments that varied markedly in profile, this study utilized factor analysis--a technique that is often used in market segmentation studies (Hoek et al. 1996). Notably, when factor analysis is used to generate structures, the resulting factors can be defined as market segments (Singh Minnas and Jacobs 1996). This technique was therefore used for analyzing interrelationships among the large number of variables that are highly correlated within segments using SPSS version 22. Further, key assumptions suggested by Hair et al. (2010) for using factor analysis were adhered to:
1. Sample size [greater than or equal to] 100
2. Kaiser-Meyer-Olkin (KMO) Measure of Sampling Adequacy > 0.5
3. Bartlett's Test of Sphericity with significance < .05
Principal component analysis with varimax rotation was then applied for extracting factors from underlying items into related segments.
The results supported the use of factor analysis with sample size of 102 (>100), KMO of .556 (>.50) and Bartlett's Test of Sphericity = 810.873 with significance <.05. Based on the application of the Principal Component Analysis, seven items with factor loadings less than 0.5 were dropped and ten segments were extracted from the 29 remaining items. These segments were found to be significant with eigenvalue > 1 [rule of thumb suggested by Hair et al. (2010) for retaining the segment] and explained 68 percent of the total variance. See Table 2.
Description of Segments
Ten clearly delineated segments with at least two variables per segment were identified from the analysis and were considered to be effective segments. Notably, each segment was deemed to be both sufficient and measurable based on survey questions on 'substantial' and the Likert scales used for measuring attitudes to the 'items'. The other two criteria of effective segments i.e., accessibility and actionability were not determined through this study but were assumed to be present as these constructs are entity specific; falling within the sphere of influence of the individual hotel.
The description of these segments is as follows:
* Segment 1 consists of a combination of demographic and geographic variables and can be characterized as middle-aged couples from North America and the United Kingdom who seek a vacation getaway from the cold climate.
* Segment 2 consists of both demographic and psychographic variables and can be described as visitors, both educated and uneducated, with high moral and value systems.
* Segment 3 is constituted by both psychographic and behavioural variables and can be described as fun loving guests who would visit hotels for events such as weddings, conferences and banquets and on occasions like Mother's Day and Christmas.
* Segment 4 consists of geographic variables and can be described as Jamaican locals from urban and rural communities.
* Segment 5 has a combination of demographic, psychographic and behavioural variables and consists of senior citizens of a high social class who have demonstrated loyalty to the Jamaican brand.
* Segment 6 constitutes a combination of demographic, psychographic and behavioural variables and can be described as young, first-time guests who visit in small groups for church or party related events.
* Segment 7 is combined with demographic and psychographic indicators and consists of low social class groups with low incomes.
* Segment 8 is constituted of both geographic and psychographic variables and can be described as Caribbean nationals who are laidback and nature loving.
* Segment 9 consists of both psychographic and behavioural variables and can be described as family oriented, price conscious visitors who are seeking a deal.
* Segment 10 combines demographic and geographic variables and consists of the middle income Jamaican diaspora.
This study was prompted by prior research such as Wen and Peng (2002) who spoke to the insufficiency of the marketing management literature in its treatment of effective market segmentation. In the specific context of small hotels, lack of practical and workable segmentation strategies was alluded to by Link (1993) who suggested that small hotel managers must be armed with answers to basic questions such as who are, or who might be using their hotels and what segments can be targeted for expanding businesses. Further, the very important role that small hotels continue to play in the tourism and hospitality sector along with the marketing challenges that have stymied performance of these hotels (Kilic and Okumus 2005; Storey 1994) must also be underscored as a practical rationale for pursuing this study. These gaps that were presented by both scholarship and practice were therefore addressed through the following research question:
"What are the key market segments that small Jamaican hotels should target for more effective usage of marketing funds?" In this undertaking, 29 segmentation variables were identified from the segmentation analysis. These variables were used to profile the visitors of small Jamaican hotels and analyzed to determine possible segments that these hotels could target. The findings revealed that there are ten feasible segments that could be considered by these hotels. These are:
i. Middle-aged UK and North American residents
ii. Guests with high moral and value systems
iii. Fun loving guests who will attend events and also visit hotels on special occasions
iv. Jamaicans living in Jamaica
v. Higher social class seniors who are loyal to the Jamaican brand
vi. Small groups with common interest of young first-time visitors
vii. Lower social class/low income guests
viii. Caribbean nationals who are laidback and nature loving
ix. Price-conscious families
x. Middle-income Jamaican diaspora
These segments could be combined in any number of ways for delivering the offering of the small hotel. Suggested combinations and possible justifications are noted below:
First, middle-aged UK and North American residents are already established as one of the most attractive segments for Jamaican hotels, as consistently, over 80 percent of visitors to Jamaica are from these regions. Besides, geographic segmentation, particularly on the basis of nationality, is one of the most widely used segmentation strategies among hotels (Georgsdottir and Oskarsson 2017) and is largely driven by the well-known and friendly relationships between countries. This segment would naturally combine with the price conscious family segment as with the expected large numbers from the combined segments, economies of scale should lead to discounted prices. In addition, many hotels have continued to offer packages simultaneously to couples and families as this is seen as a natural mix, tested and proven, and so, combining these two segments will not be too risky, despite the hedonistic association with couples that runs counter to the family offering.
Second, Caribbean laidback and other nature loving guests are viewed as a homogenous segment based on Jamaica's Master Plan for Sustainable Tourism Development (The Commonwealth Secretariat 2002), which made the recommendation for nature tourism to be twinned with the traditional sun, sea and sand for more effective segmentation. Support for this type of segment is also offered by Yelkur and Neveda DaCosta (2001) who argued that small hotels should focus on leisure guests and not always market to business travellers. D'Astous and Mathieu (2008) have argued that nature loving customers are often willing to pay more for products and services. This segment could successfully be combined with the fun loving, events and special occasion segment, as intuitively, it would seem that there is a natural nexus between fun loving and the laidback guests. Further, events, for example, weddings and occasions, such as public holidays, could effectively be combined through value propositional elements of leisure, laidback and fun loving for which Jamaica is well known.
Third, lower social class, low income, price conscious families, small groups with common interest of young first time visitors, along with Jamaicans living in Jamaica could be combined based on low price similarities across these segments. Strauss and Frost (1999) have argued that hotels often adjust their prices according to customer, location and product. This process they refer to as segmented pricing or differentiated pricing. Segmented pricing offers are also made to customers by age group. For instance, a small hotel may extend discounts to senior citizens, young children and youngsters who vacation in groups. Small hotels may also differentiate their price offerings based on location and based on the online profile provided by guests who purchase services online (Strauss and Frost 1999). Further, younger guests and families have less disposable income to spend on vacations (Williams et al. 2007); yet, the youth travel continues to increase (WTO 2004). This amalgamated segment should employ a cost leadership strategy for delivering on lower prices and would therefore be suited for small hotels with number of rooms close to 100, which are large enough to accommodate both similarities and diversities in the hotel offering. On the matter of seasonality within this grouping, small hotels should seek to peak on their offering during summer when children are on holiday from school, thus, accommodating families. In addition, an often untapped area in the small hotel sector is the Jamaican domestic market. Many Jamaicans tend to vacation overseas, in the USA, Canada and the United Kingdom rather than spending their vacations in hotels in Jamaica. Hence, this group is very difficult to target and special marketing communication should be channelled to increase the awareness that a local vacation can be as interesting as any other. Moreover, locals should be targeted for filling rooms during summer when the tourists would often not visit Jamaica but instead stay at home during the warmer season.
Fourth, the segment of higher social class seniors who are loyal to the Jamaican brand is of considerable import to small Jamaican hotels. Higher social class seniors are associated with higher income; and, the economic benefits of retaining this class of guest are enormous since visitor loyalty would typically increase revenues and market share. Purchasing history would be an appropriate indicator for determining loyalty (Reichheld 1993). Further, Gilbert et al. (1999) noted that retaining an existing customer is between five to ten times cheaper than acquiring a new one thus indicating the attractiveness of this group. This segment could easily be combined with the segment of high moral and value system, as expectedly, high social class and loyal seniors are usually adept on values.
Fifth, middle income Jamaican diaspora is also an important segment for small hotels to target. This is not only because of size, with more Jamaicans living overseas than those living at home, but more so, because of the umbilical knot that ties the diaspora to the home country. After all, "there's no place like home."
The act of segmenting a market is founded in modern economic theory and suggests that market segmentation is largely a demand side phenomenon and delineated segments emerge because of marginal price differences between segments or between other combinations of elements within the marketing mix. Thus, the study on market segmentation of small hotels is initiated on solid theoretical footing.
Market segmentation is an antecedent step to target marketing as segmentation allows the firm to more easily identify possible consumer groups to access, thus allowing for more effective marketing. However, despite the importance of segmentation in both theory and practice, the marketing management literature does not sufficiently address practical ways of segmenting markets in the context of small hotels nor does it adequately discuss combined segments in this area amidst various bases of segmentation and associated variables. This article has addressed these gaps and contributed to the literature ten clearly delineated segments of the small hotel industry along with strategies for combining these segments. These small hospitality firms remain a significant component of the tourism market within small island states. Further research is therefore required for generalizing these findings within the wider Caribbean.
This article has no doubt yielded a very useful outcome; yet, there are at least two limitations that must be considered in the interpretation of the findings. First, not all respondents surveyed may have provided an accurate profile of the consumer segments, and so there may be some inaccuracies (such as under- or over reporting) in these responses. Second, larger samples should be utilized in future undertakings (a minimum of 200 to accommodate cluster analysis) for clustering the small hotel guests themselves around segmentation variables identified by this study as the responses from the guests as opposed to the owners/managers could improve the profile of the segments. Conducting further market segmentation studies through triangulation of data (including qualitative approaches) could also help with better profiling of these segments.
These findings have also presented useful insights to marketers for implementing market segmentation strategies. The task therefore is for the small hotels to align the segments identified in this study with their resources and capabilities and select the segment(s) most suited to their operations while simultaneously tailoring their marketing mix to synchronize with the segments.
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(1) A small Jamaican hotel is defined as an establishment which provides accommodation, meals and other services with 10-100 rooms (Williams and Hare 2012).
(2) See Armstrong et al. (2014) on criteria of segmentation.
Table 1: Market Segmentation in Hospitality and Tourism Author(s) Year Topic Market Segments Identified Birdir, S.S. 2015 Segmentation 'natural beauty and of Tourist information seekers', Using 'price sensitives' and Demographic 'independents' were and Travel the three Characteristics: identified segments The Case of Istanbul Bowen, J. 1998 Market Bowen (1998) catalogued segmentation a number of in hospitality segmentation studies research: no from 1990 to 1998: longer a sequential process MacKay and Fesenmaier (1998) divided the getaway market into five segments: i. precontemplators (not in the market for a getaway trip), ii. contemplators (would consider a getaway trip), iii. ready for action (decided to take a getaway trip), iv. active (takes a getaway trip), and v. maintainers (always in the market for a getaway trip) Legoherel (1998) presented the short-term vacations segment with opportunities to promote entertainment, restaurants and retail sales Author(s) Year Topic Market Segments Identified Grazin and Olsen (1997) identified three groups of consumers relating to fast food restaurants: non-users, light users, and heavy users Oh and Jeong (1996) took a different approach to segmenting the fast food market and identified four segments: neat service seeker, convenience seeker, classic diner, and indifferent diner Georgsdottir, I. 2017 Segmentation The two attractive and Oskarsson, G. and targeting segments were in the cruise nationality and the industry: an length of stay insight from at the point of practitioners destination serving passengers at the point of destination Gonzalez, A. and 2002 The construct Lifestyle was found Bello, L. "lifestyle" in to be a feasible market market segment segmentation: The behaviour of tourist consumers Inbakaran, R. and 2005 Understanding Four segments Jackson, M. resort visitors were identified: i. through recreation-focused segmentation (romantic), ii. utilities-focused (immersers), iii. safety-focused (veterans), and family-focused (tasters) Kalabikhina, I.E., 2016 Socio-demographic Most identifiable and Shishalov, D. portrait of segments were couples Russian and family travellers Author(s) Year Topic Market Segments Identified Hennessey, S., 2012 Segmenting Three distinct segments Yun, D., & the market were identified; i. Macdonald, R. of first-time cultural-oriented, ii. visitors to active, and iii. casual an island destination Jang, S. C. 2002 Understanding The segments were relationships labeled: shopping and among travel dining, nature and expenditure, local lifestyle, culture activities, and entertainment, and seasons: touring and sightseeing, An approach and passive segments to efficient travel segment mixes using financial portfolio theory The segments and related variables are also illustrated in Figure 1 below. Table 2: Segments Generated from Factor Analysis Segmentation Factor Segment Eigenvalue Variable Loading Middle aged guest .505 1. Middle-Aged UK & 4.749 North American Couples .664 Guest from cold climate .814 North American guest .679 United Kingdom guest .535 Educated guest .767 2. High Value System 2.551 Uneducated guest -.726 Guest with high value .675 system Guest for events .636 3. Fun Loving, Events 2.219 & Special Occasion Fun loving guest .629 Special occasion guest .851 Jamaican living in .674 4. Jamaicans Living in 2.102 Jamaica Jamaica Urban guest .658 Rural guest .747 Senior guest .794 5. High Social Class 1.798 Repeat Seniors Higher social class guest .580 Repeat visitors .506 Younger guest .660 6. Small Groups & 1.555 Young First-Timers Small groups with common .630 interest .599 First time visitors Lower income guest .619 7. Low Social 1.344 Class/Income Lower social class guest .793 Guest from Caribbean -.625 8. Caribbean 1.241 Laidback/Nature Loving Laid back guest .700 Guest who loves nature .751 Family oriented guest .564 9. Price Conscious 1.096 Families Price conscious guest .722 Middle income guest .793 10. Middle Income 1.053 Jamaican Diaspora Jamaicans living overseas .546 Segmentation % of Cumulative Variable Variance Variance Middle aged guest 16.376 16.376 Couples Guest from cold climate North American guest United Kingdom guest Educated guest 8.797 25.173 Uneducated guest Guest with high value system Guest for events 7.650 32.823 Fun loving guest Special occasion guest Jamaican living in 7.248 40.071 Jamaica Urban guest Rural guest Senior guest 6.201 46.272 Higher social class guest Repeat visitors Younger guest 5.363 51.636 Small groups with common interest First time visitors Lower income guest 4.633 56.269 Lower social class guest Guest from Caribbean 4.278 60.547 Laid back guest Guest who loves nature Family oriented guest 3.781 64.327 Price conscious guest Middle income guest 3.632 67.959 Jamaicans living overseas
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|Author:||Smith, Trevor A.; Haughton, Suzette A.|
|Publication:||Social and Economic Studies|
|Date:||Dec 1, 2018|
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