Segmentation Analysis

Segmentation analysis

What is segmentation?

In the 19th centuries and to till the middle of the 20th centuries, companies wanted to reach the most consumers possible and there was and to do it they just have to mass-product it because there was so few companies that would be able to do it and so, fewer competition, that it was the perfect model to sell. Nowadays, the world and the vision on the product have changed, everyone want to be unique and to have product that fit their unique style of life. That is why segmentation is used, to be able to reach the peoples who want and need our products or services.

The segmentation will let us know the people who will be the main source of revenue for our hotel. For this we will base on the assumption that the Pareto principle is also valid for our hotel, meaning that 20% of our customers will provide us 80% of our revenue.

To find our segment, we will divide our segmentation into 4 categories which are Geographic, Demographic, Psychographic and Behavioral.

The geographic segmentation allows us to know in which different area of the world, countries, district etc. our customer come from. With internet, we could consider that anyone within the world with a connection could make a reservation to our hotel and come to spend a night. However there is a misconception that we are not a classical product or service; we are delivering specific service that cannot be exported and therefore, the customers have to come in our hotel to enjoy it. That is why we will consider that a circle with 100km of diameters with Lausanne as it center seems to be the most reasonable choice to beginning with. But that would just be a mistake since we are deciding to target another kind of people. Of course, after the popularity of our hotel increase, we might consider to have expanded our segmentation. We decide to choose the people coming from the Middle East and more specifically from Saudi. Those are the eighth most numerous to come in our country and more especially, to Lausanne.

Then the demographic segmentation will allow us to narrow our targeted segment through the finding of the age of our customers, there income etc. Those data help us to have a better understanding of our segment because a lot of "needs, wants, and usages rated often vary closely with demographic variables" (p205). A segment with an income between 100'000 to 250'000.- per year will be the best for use to have the rates we project to put. This income can be reached by professionals, people working in the bank industry, high positioning worker. Therefore their age might be as low as 25 years old and go up to the retiring age which is, in Switzerland, around 65 years old. As noted in the geographic part, the people that are going to be in our hotel will be living around Lausanne so they mostly are Swiss (some French and German might come too).

To continue our segmentation, we are using now the psychographic segmentation which means that we might divide our customer into different segment based on social class, lifestyle and personality characteristics etc. As said before, since we need our customers to be able to pay for the hotel, we can make a distinction too by the social class. Our price put us way