Market Segmentation

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Frame of Reference

This chapter will introduce the theories for the research questions that occurred based on the purpose of this study. The theories will facilitate the analysis. Particularly theories about segmentation will be presented where the focus will be on Kotlers four areas: geographic, demographic, psychographic and behavioristic. It will also address previous research about advantages and disadvantages when buying trips through Internet or in a local store. These theories will assist the reader to critically review the analysis and better understand the purpose of this study.

Consumer buying behavior

This section will provide general information about how people behave in their consumption, which is important knowledge when segmenting a market. This information will give an overview and introduction to the subject market segmentation.
A market consists of many people, potential customers and buyers who all differ in their needs, desires, interests, benefits they seek and buying procedures. They could also vary a lot in age, income, education-level and their taste. All these different factors are examples of things that influence consumers’ buying behaviour. Due to all these factors it is a challenge for companies to satisfy all customers requires and needs with only one single service and product (Dibb & Simkin, 1991; Kotler et al., 2008). It is very complicated to understand consumers’ buying behavior but yet so important and central for the marketing management in a firm (Kotler et al., 2008.
“Just as marketing ends with consumption, so marketing management must begin with understanding customers” (Kotler et al., 2008, p. 238).
In earlier times marketers had it easier to understand the consumers, due to marketers’ daily experience of selling to the customers. Today it is different, markets and firms have grown in size and there is a distance between marketers and customers, both: demographically, physically and socially. Therefore companies spend more money today than ever before to study consumers and learn about their consumers’ buying behavior. There are six questions a marketer can use as a guide to find out about consumer behavior; what do consumers buy, where, when, why, how, and who buys? It is found that consumer-purchases are very influenced by cultural, social, personal and psychological characteristics. Marketers cannot control these factors but it is important and necessary to take them into account (Kotler et al., 2008).
Today there are large markets consisting of lots of buyers and they vary between each other. Companies have understood that they cannot reach all buyers in a market and especially not reach all buyers in the same way. It is also true that the companies’ capability to satisfy all segments of the market differ a lot. Therefore it is of importance for companies to search and identify which groups of the market they can best serve and earn most money on (Kotler et al., 2008). It has been crucial for companies to move away from mass marketing and towards target marketing strategy; which means determining market segments, choose one or several of them and finally developing products and marketing programs suitable for each segment (Dibb & Simkin, 1991).

Market Segmentation

This section enables us to understand the basics of market segmentation which will make it easier to understand the concept of demographic, psychographic and behavioristic segmentation. Further it will facilitate the answering of research question 1, 2 and 3.
Smith (1956) came up with the concept market segmentation (Smith, 1956) and it is a tool for developing a market (Assael & Roscoe, 1976). To be more specific, market segmentation is a process of finding a group within a market that is identified based on certain criteria. This group of people has the similar interest in the product or service (Smith, 1956). From then on, in the study of marketing, the market segmentation has been one of the most important parts (Dickson, 1982). Beane & Ennis (1987) argue that some segmentation will not provide any important or useful information but there are still a lot of ways to do market segmentation and some of them might give valuable information (Beane, & Ennis, 1987). According to Wind (1978), when doing a successful advertising, pricing, distribution, product positioning and new product introduction for a company, segmentation has become the preferred technique to all of these (Wind, 1978). There are two major reasons why we do market segmentation; one is to look at new opportunities or areas for a product that may be open to existing product repositioning. The other one is to develop a better advertising announcement and through this get a better comprehension about the customers (Beane & Ennis, 1987).
When trying to find the segment it is important to be creative because there are many different ways to segment a market. It is important to investigate any relationship that can be promising and hopeful (Beane, & Ennis, 1987). When the research about the segment is conducted and the information is consolidated, the next step is the selection; how many segments should be included? After determining the different segments that should be included the target segment/group is decided. While the selection of the target group is being decided there are some factors that should be taken into account such as reachability of the segment, competitive activities, the management’s resources and the possibility to implement a strategy for the segments that have been chosen. When the segments are determined the management must translate the results into a clear marketing strategy. Regardless of how good a market segmentation has been conducted, the main reason of a successful work is that the management can develop appropriate marketing strategy from the received information about the segments (Wind, 1978). Therefore when the management are planning marketing activities they require exact utilization of the market segmentation (Smith, 1956). But it is important to have in mind that the segments will constantly change since the market changes all the time (Beane, & Ennis, 1987). In the final end it is the management that select the target segment for their marketing project (Wind, 1978).

1 Introduction
1.1 Background
1.2 Problem discussion
1.3 Purpose
1.4 Research questions
1.5 Perspective
1.6 Delimitations
1.7 Definitions
1.8 Outline of the thesis
2 Method
2.1 Research approach
2.2 Research strategy
2.3 Quantitative and Qualitative methods
2.4 Data collection
2.5 The study´s validity and reliability
2.6 Generalizability
3 Frame of Reference 
3.1 Consumer buying behavior
3.2 Market Segmentation
3.3 Advantages and disadvantages of buying online and offline
3.4 Summary of frame of reference
4 Empirical Findings
4.1 Statistical results
4.2 General about traveling
4.3 Demographic segmentation
4.4 Psychographic segmentation
4.5 Behavioristic segmentation
4.6 Advantages and disadvantages
5 Analysis 
5.2 Psychographic segmentation
5.3 Behavioristic segmentation
5.4 Advantages and disadvantages of buying online and offline
6 Conclusion
7 Discussion
7.1 Reflections
7.2 Critique of the study
7.3 Suggestions for further research
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Off l ine vs. Online: Who buys where? A c u s t o m e r s e g m e n t a t i o n s t u d y o f t r a v e l a g e n c i e s

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