Market Segmentation for Bed &Breakfasts

by Dominique Lavigueur and Robert Chiasson

Your B&B does not have the attributes to satisfy the needs of all travelers… and it never will. That’s where market segmentation comes in, i.e. choosing among the many subgroups of travelers those whose expectations you can fulfil. Innkeepers already practice a form of market segmentation in that, by virtue of their inherent characteristics, they cater to certain types of travelers (or market segments) to the exclusion of others. A key strength of mid-town B&Bs is their proximity to places of business and, as such, they are better suited to meet the requirements of business travelers than, say, outdoor sports enthusiasts.

Many successful innkeepers go one step further by actually targeting specific members of the traveling public, learning all they can about their needs and wants, and adapting their B&B accordingly. The result is a higher return on their marketing dollar, greater customer satisfaction and increased profitability. Markets can be segmented using a wide variety of criteria, but the more typical are demographic, psychographic and behavioral.

Demographic

Demographic segmentation is based on age, gender, marital status, family size, family lifecycle, generation (baby boomers, generation X, echo boomers, etc.), geographic location, income, occupation, education, ethnicity, nationality, religion, social class. Using the lifecycle variable, travelers are usually divided into single adults, married adults without children, family with one or more children, empty-nesters.

Income and occupation are frequently used to identify potentially lucrative markets. For example, middle-class vacationers give more value to high-profile destinations such as Palm Beach, lower-income groups prefer sites like Disney World whereas individuals in the high income bracket seek destinations associated with their status, such as the prestigious Relais & Château chain of inns.

Psychographic

In psychographic segmentation, travelers are grouped according to their activities, interests, opinions, beliefs, personality, attitudes and values. For example, conservatives are inclined to travel to safe and predictable destinations such as Florida. High achievers are confident, individualistic and seek recognition and status; they insist on quality and value for money. Adventurers want to experience all that life has to offer, which includes testing their physical limits or traveling to places that are off the beaten path. Other psychographic profiles can include fun seekers, aspiring sophisticates, family oriented traditionalists, relaxers, etc.

Behavioral

Behavioral segmentation is based on actual customer behavior towards products or services, i.e. benefits sought, usage rate, brand loyalty, user status (potential, first-time, regular, ex-users, etc), readiness to buy. It should be noted that travelers weigh the different attributes of a B&B not for their own sake but for the particular benefits they deliver. These benefits can include a chance to relax, escape from work-related pressures, personal enrichment, meeting new people, amusement, pampering, good shopping nearby, nostalgia, etc.

Travelers who are loyal to a popular destination may stay at different lodging establishments as their familiarity with the region grows (usage rate). Young first-time visitors will spend all their waking time seeing and doing as much as possible in the area; lodging is of secondary importance. On their second visit a few years later, they will pursue primarily their favorite activities and stay longer in the region. On a third visit, they will be active mainly during the daytime and focus more time and money on quality accommodation and fine dining. On subsequent visits, they will pay top dollar for a lodging establishment that provides peace and quiet, and remain loyal to that establishment.

Identifying and targeting the best market segments for your B&B implies gathering information which can be done by analyzing your internal records, conducting interviews with current clients, observing the marketing efforts of your key competitors, attending industry trade shows, researching association and trade publications as well as government databases, etc.

The ideal subgroup should have unique and identifiable needs that you can satisfy. It should be large enough to provide a solid customer base. Competitors within the segment should be few in number and strength, and it should be easy to reach using your marketing resources.

To learn more about the motivations and decision-making processes of various market segments, read an informative article published by the Kansas State Historical Society at www.kshs.org/involved/technical/pdfs/tn_audience1.pdf. For a list of organizations that conduct tourism research and publish demographic and psychographic data, visit the University of New Mexico web page at www.unm.edu/~tourism/dryinfo2.pdf.

Dominique Lavigueur and Robert Chiasson are award-winning hosts of the 5-star B&B Moka & Pyjama located in the Charlevoix region of Quebec. They also teach, write and speak about the many facets of operating a B&B and, in their capacity as consultants, provide a wide range of B&B-related services to government officials, reporters and individuals. They can be reached toll free at 866-863-6060, by e-mail at info@moka-pyjama.com, or through their web site at www.moka-pyjama.com.