Segmentation in Consumer and Market Research: Applications, Current Issues and Trends

David W. Stewart, University of Southern California, Los Angeles
Michael A. Kamins, University of Southern California, Los Angeles
[ to cite ]:
David W. Stewart and Michael A. Kamins (1991) ,"Segmentation in Consumer and Market Research: Applications, Current Issues and Trends", in NA - Advances in Consumer Research Volume 18, eds. Rebecca H. Holman and Michael R. Solomon, Provo, UT : Association for Consumer Research, Pages: 176-178.

Advances in Consumer Research Volume 18, 1991      Pages 176-178

SEGMENTATION IN CONSUMER AND MARKET RESEARCH: APPLICATIONS, CURRENT ISSUES AND TRENDS

David W. Stewart, University of Southern California, Los Angeles

Michael A. Kamins, University of Southern California, Los Angeles

 

AN APPLICATION OF SEGMENTATION RESEARCH IN THE TRAVEL AND LEISURE INDUSTRY: THE CASE OF HILTON HOTELS (A SYNOPSIS)

Renee' Zakoor, Hilton Hotels Corporation

(Condensed by Dr. Michael A. Kamins)

The focus of this presentation examined how Hilton Hotels Corporation uses segmentation research in the development of successful marketing programs. Consistent with her objective, Ms. Zakoor discussed two specific examples relating to the business traveler and the weekend leisure traveler at Hilton.

In the development of marketing strategy, it was noted that Hilton closely monitors industry trends. Specifically, according to recent information (1988) from the U.S. travel data center, it was noted that while overall travel has increased recently, the average number of nights spent away from home has decreased. The inference made was that while people travel more often, their trips are of shorter duration. When this information was examined in more depth through sub-classification, some interesting trends appeared. Specifically, the data was found to show that business travel volume has remained relatively flat over the past few years whereas leisure travel volume has increased. Moreover, both business and leisure trips have been shortened. Therefore, it can be concluded that vacation travel has increased in frequency and declined in duration, whereas business trips, while relatively stable in frequency, have shortened in duration.

While three quarters of all travel in the United States in 1988 was for leisure purposes, at Hilton, the majority of travel was for business (approximately 60%). This fact, coupled with the information above, had specific implications for Hilton's marketing efforts for both the business and the leisure traveler.

Taking the business traveler first, it was noted that internal tracking studies at Hilton revealed that the business traveler who stays at Hilton can be classified into four (4) distinct categories or segments which differ demographically as follows:

- no surprises

- (25% of frequent business travelers). These individuals typically look for a hotel which anticipates problems. They prefer chain hotels to avoid the unfamiliar.

- "shoppers"

- (24% of frequent business travelers). These individuals represent a growing segment of individuals who are typically looking for the best accommodations at any price.

- "best of everything"

- (31% of frequent business travelers). These individuals are prestige-oriented and wish to be recognized and valued as frequent guests. They wish to receive personal and attentive service. They are the wealthiest segment (average income is $72,000).

- "games players"

- (20% of frequent business travelers). These individuals are very loyal to hotels and airlines that offer frequency programs. They are the youngest segment (average age is 41).

It was noted that the "best of everything" and "games players" segments account for almost two thirds of business travelers' hotel stays and, hence, these segments are of particular interest to Hilton. Specifically, to address the needs of the "best of everything" segment, Hilton reportedly introduced Towers Floors to cater to the needs of this traveler. They continually refine this product as the needs of this segment change. Regarding the "games players," Hilton introduced the Hilton Honors Frequent Guest Program which is currently reported to be the second largest program in the industry in terms of membership.

Regarding the leisure traveler, the trend noted earlier was for shorter trips. This has contributed to | the weekend get-away becoming a growing market in I the travel industry. Hilton strategy was to take | advantage of this phenomenon by expanding its : weekend discount strategy to a consumer "end I benefit" marketing strategy that focuses on the i needs of tired couples and families to "bounce back" from the stress of hectic schedules and work week. Therefore, the concept of the bounce-back weekend E was created.

It was reported that the bounce-back strategy was developed with the reliance on some key emerging consumer lifestyle trends such as--more i people working, busier schedules, less time for relaxation and fun. The underlying premise guiding the strategy was that Americans have allowed their f leisure time to be regulated to the narrow time frame known as "the weekend" and, as such, do not seem \ to be getting as much relaxation/refreshment from the time as they should. Research conducted for Hilton using a telephone omnibus survey through R.H. Bruskin Associates and involving 1,024 interviews supported this premise. That is, it was found that most people start their weekends tired and by the end of the weekend, very few feel any more energetic than when the weekend began. Specifically, on average during weekends, people spend about eight hours less than they would like on relaxing activities and about six-and-a-half more hours than they want to doing chores.

According to Hilton research, the solution to the dilemma of a non-relaxing weekend with too many chores is to get away. To address this need, Hilton designed the bounce-back weekend, a get-away break which allows the guest to relax and recharge from a stressful week. Hilton also prepared a "guide to bouncing back" which provides helpful hints on how to manage the week so that one can get away and get the most relaxation from the weekend.

A multi-million dollar advertising campaign was developed to support the program. The advertising is targeted toward younger audiences since they lead the trend toward get-away weekends, and they're an audience which Hilton wants to attract. It was reported that the results from the bounce-back campaign have been very positive since February of this year. Bounce-back generated more than twice the number of bookings relative to Hilton's previous weekend product.

The paper concludes by noting that ''finding a need and filling it is the core of the marketing process. Research is the catalytic force that enables Hilton to identify these needs and once identified, to build a product that successfully fills these needs."

 

CASE STUDIES ON THE USAGE OF SEGMENTATION IN MARKET RESEARCH.

(A SYNOPSIS)

Bill Heiland, Custom Research Inc.

(Condensed by Dr. Michael A. Kamins)

Three different case studies on the use of segmentation in market research were discussed. These studies illustrated the use of different techniques in segmentation research as well as different types of data.

Mr. Heiland made the point that everyone segments in virtually every quantitative study since the banners in a cross tabulation are really a priori segment definitions. Specifically, the concept is that the researcher has chosen the segments to examine, and the tabs (hopefully) indicate whether or not there are any differences between or among the columns of interest.

According to Mr. Heiland, the difference with statistical/mathematical clustering, is that first you find segments that are different, and then (hopefully) identify the segments by other variables or attributes. The presentation was limited to this case using as illustration three different techniques or applications in segmentation differing in purpose, data collected, and statistical technique.

(1) "Classic" Attitude Segmentation:

The Objective of this study was to determine groups of people who have common attitudes about eye glasses. The first stage of the study involved the collection of attitudinal statements about eye glasses from focus groups, marketing and marketing research personnel. The statements were first edited into a reduced set of 70. Then, through the use of a multi-stage Q sort procedure, each statement for each individual was categorized along an eleven point agree/disagree scale ranging from "most agree" (S) through "neutral" (0) to "most disagree" (-5). This procedure was designed to result in a rescaled data set in the shape of an inverted triangle (pseudo normal) distribution such that for a particular individual, the bulk of statements are rated within a narrow range of neutrality.

The analytical task then undertaken was a Q-factor analysis with the output (factor-scores) indicating the degree to which subjects agreed (+) or disagreed (-) with these statements. Results revealed three specific segments regarding attitudes towards eyeglasses: those consumers identified as "medically oriented," "style conscious," and "I can't be bothered." To further round out the analyses undertaken, the segments were cross-tabulated with other demographic/usage data to help in their identification. As noted by Mr. Heiland, one side benefit of this procedure is- that the statements are often good starters for an ad agency's creatives.

(2) Regression Trees:

The task of this technique was described as the classification of respondents on a particular (dependent) variable (e.g., purchase intention, overall satisfaction, or sales volume) into segments determined by other (independent) variables (e.g., product characteristics such as appearance) such that the distance between the segments is maximized while each group's variance is minimized. It was noted that the advantages of this technique involve its stability, easy use of categorical data, use of surrogate variables when data for splitting variables is missing, and a lot of competitive variables (those which compete to be the splitting variable) for each split that the tree generates. It should be noted, however, that the procedure requires a sample of approximately 300 respondents to be stable.

A case study was presented to illustrate the use of this technique. It involved a dinner entree which had two forms, with no significant difference in overall purchase intent between them. Using the regression tree technique, the sample of 294 individuals was first split on the overall hedonic characteristics of the product with a sub-split regarding the appeal of product appearance. When these factors were considered it was evident that appearance of one product form was detracting from the buying intent.

(3) Importance Ratings, A Post Analysis Use of Segmentation

It was noted that when subjects are asked to evaluate the importance of product/service performance attributes prior to evaluating a competitive set of brands on performance, there is no easy way to remove the potential presence of a high,/low rater effect. According to Mr. Heiland, since performance is affected by the products while importance ratings are not, a two-stage procedure was proposed and illustrated to uncover such an effect.

First, a cluster analysis was undertaken and reported on attribute importance ratings for a given product. The first break was into two segments which were high versus low raters. A Standardized Thurstone scale was then run to determine if the rank order of attribute importance ratings varied between the segments. In the example presented, they did not and the conclusion presented was that "while there are high and low raters, they don't differ in the order of importance of the attributes."

Mr. Heiland also noted that this segmentation procedure can be used as one of the effects in a general linear model (the other being the brands) to look for interactions.

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