Market Segmentation Strategy: Hilton Hotel
Introduction
The hotel industry is often operated in a delicate and profitable environment that is composed of many players who tend to allocate significant amounts of capital for purposes of budgeting and branding. Market segmentation entails the division of the market into distinct groups and segments based on influential characteristics from a particular market (Reidhead, 2020). This segmentation makes it easy to target suitable and attractive segments based on the products and services. Market segmentation in Hilton is composed of a unique segmentation strategy that encompasses cultural and economic dynamics that guarantee satisfaction and attachment (Applegate, Piccoli, & Dev, 2008). Segmentation, positioning and targeting in the hotel industry often entail ways and mechanisms in which the companies choose to sell their services to the market while positioning its services such as to appeal to the aspirations and needs of the market in the most effective manner.
Hilton Hotel Market Segmentation
Hilton Hotel has more than 530 resorts and hotels globally most of which have diversified and established their base in more than 78 countries. It often engages in strategies that enable it to positions itself such as to meet the needs of both its current and potential customers. As a result of peak and off-peak times, the organization often maximizes its strategies through product and price adjustment, as well as packaging and presentation to ensure constant cash flow. Its focus is to target particular consumer groups in relation to the geographic location at the national and international levels (Chon & Cunill, 2006). For instance, the hotel has established business in popular travel locations in London where most of its hotels are found in famous places such as Aldwych, Tower Bridge, Canary Wharf, and Bankside. However, although Hilton Hotel has established a niche for itself in the high-end community, its success is often limited by competition from some of its competitors including Peninsula, Aman, Intercontinental, Ritz Carlton, Marriott, and Hyatt, among others. However, it has managed to acquire the loyalty of its customers owing to its high status in the society, sense of luxury, and sense of achievement that one gets with Hilton Hotels.
Demographic Segmentation
This segmentation encompasses aspects of age, race, occupation, class, and level of education, among others. Through this segmentation, Hilton determines the preferences, needs, and the position of its customers. There are various variables that are often employed in the demographic market segmentation including income, gender, life-cycle, lifestyle, and social class. Hilton’s target segment includes the senior and middle-aged professionals with a high income who belong in the upper social class (Reidhead, 2020). For instance, Hilton resorts often target individuals who prefer luxury lifestyles that are often charged premium prices for the products and services that are perceived to be of the relevant quality.
Psychographic Segmentation
This is a segmentation according to the people’s lifestyle demands and personal activities. This segmentation is essential in that it provides the service providers with an opportunity to package the services to the target market accurately. This segmentation often examines the manner in which people feel, think, and behave using their lifestyle, values, and personality, as the segmenting variables. As such, the Hilton hotels in the UK and those in Africa serve different market segments each in a unique manner to meet specific market demands (Chang, Ku, & Chen, 2019). The focus of the psychographic segmentation adopted by Hilton hotels focuses on ambitious individuals who would like to express their achievement and status by enjoying the luxury of five-star hotels provided at premium prices.
Behavioral Segmentation
Hilton hotels are exclusive and high-quality service providers both in the local and international scene. Most customers have a unique attitude and behavioral perception of the brand. The hotel has established a unique segmentation of its customers depending on the knowledge and brand perception in a manner that has created a niche in the high-end market (Luck & Lancaster, 2003). This behavioral segmentation is the reason why most international dignitaries and governments often choose to launch their brands and hold meetings at the Hilton premises. Additionally, this knowledge and attitude have caused its customers to have unwavering loyalty particularly in the new countries that the institution intends to venture.
PESTEL Analysis
Political Factors
The growth evidenced in Hilton hotels in the UK can be attributed to the stable political environment as well as the legal framework that supports economic investments and development. Despite the situation created by the COVID-19 pandemic and Brexit, the political environment is conducive for expansion and growth due to the hotels’ reputation.
Economic Factors
The UK is often considered one of the strongest and reliable economies in the world. Increased business outsourcing from different economies has played a significant role in speeding economic growth. Economic diversification in the country provides the country with a cushion against a likely economic recession (Reidhead, 2020). Additionally, the environment is stable owing to the fact that it managed to recover from the recession and that the government has heightened investments in the hotel industry since it is a crucial source of economic diversification.
Social-Cultural Factors
The social-cultural perspective of a particular environment often impacts the manner in which an organization executes its operations. The growth evidenced by Hilton Hotels in the UK environment has been facilitated by its ability to analyze the demographics, class and power structure, attitude, education level, leisure interests, and environmental consciousness, all of which have created a competitive advantage in the industry.
Technology Factors
The UK is one of the countries with a high record in technological advancement in most segments of is economy (Reidhead, 2020). As such, the incorporation of this technology has provided support structures that have enabled the hotel to become recognized for efficiency in service provision, communication, and an array of economic processes that are central to the hotel’s success.
Environmental Factors
In the recent past, sustainability initiatives and green practices have facilitated the utilization of environmentally friendly operational mechanisms and products. The UK government is now focused on the development of sustainability programs that focus on the importance of recycling in order to protect exhaustible resources. This has created a distinct competitive advantage since most of the consumers in the UK are environmentally conscious. As such, they are likely to prefer hospitality services from the organization that shows efforts to promote environmental sustainability.
Legal Factors
The success evidenced in Hilton hotels in the UK has been facilitated by its ability to consider essential legal considerations including employment law, data protection law, discrimination law, intellectual property law, patents, copyright, and consumer protection law.
An analysis of the external environment shows that the success evidenced in the hotel has been facilitated by its ability to analyze its strategy in a manner that has created a competitive edge in the industry. Its ability to take into consideration the legal, technological, social, political, and environmental factors has created a competitive edge over its competitors (Atkinson & Brown, 2001). However, there is a need for the organization to increase its customer base and enhance its competitiveness by embracing innovation, altering its demographic focus, and through increased diversification.
Conclusion
Segmentation, positioning, and targeting in the hotel industry often entails ways and mechanisms in which the companies choose to sell their services to the market while positioning its services such as to appeal to the aspirations and needs of the market in the most effective manner. The success evidenced in Hilton Hotels in the UK has been facilitated by its ability to maximize its strengths and opportunities while handling its weaknesses and threats inherent in the market. Additionally, the ability to segment its market into geographical, demographic, and behavioral aspects has an advantage over other hotels in the industry.
References
Applegate, L. M., Piccoli, G., & Dev, C. S. (2008). Hilton hotels: Brand differentiation through customer relationship management. Harvard Business School Pub.
Atkinson, H., & Brown, J. B. (2001). Rethinking performance measures: assessing progress in UK hotels. International Journal of Contemporary Hospitality Management. https://doi.org/10.1108/09596110110388918
Chang, Y. C., Ku, C. H., & Chen, C. H. (2019). Social media analytics: Extracting and visualizing Hilton hotel ratings and reviews from TripAdvisor. International Journal of Information Management, 48, 263-279.
Chon, K. S., & Cunill, O. M. (2006). The growth strategies of hotel chains: Best business practices by leading companies. Routledge.
Luck, D., & Lancaster, G. (2003). E‐CRM: customer relationship marketing in the hotel industry. Managerial Auditing Journal. https://doi.org/10.1108/02686900310469961
Reidhead, C. (2020). Impact of Organizational Culture on Employee Satisfaction: A Case of Hilton Hotel, United Kingdom. Journal of Economics and Business, 3(1). https://ssrn.com/abstract=3563546