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Market segmentation: Australia

Paper Type: Free Essay Subject: Tourism
Wordcount: 2882 words Published: 8th May 2017

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Market Segmentation recognizes that people differ in their tastes, needs, attitudes, lifestyles, family size, and composition, etc… “It is a deliberate policy of maximising demand by directing marketing efforts at significant sub-groups of customers of consumers” (Chisnall, 1985: 264).

‘Segmentation involves viewing a heterogeneous market as a number of smaller, more homogeneous markets’ (Smith, 1956). ‘These smaller markets can be distinguished by different consumer needs, characteristics, or behaviour. For segmentation to be managerially useful, each segment needs to be accessible, measurable, and substantial’ (Kotler, 1980).

‘The report focuses on the particular case of “Tourism Australia”, which promotes Australia as a tourism destination internationally and domestically and delivers research and forecasts for the sector.’ (Tourism Australia, 2009)

Why segment a destination?

  • It identifies the destinations’ potential customers
  • It enables the organization and other travel agencies and tour operators to focus their marketing on the customers who will be most likely to buy the services that are on offer.
  • Enhanced profits for business
  • Helps improve customer service.
  • Kick-starts competition in specific parts of the market


Tourism Australia is a statutory authority of the Australian Government, which promotes Australia as a tourism destination internationally and domestically and delivers research and forecasts for the sector.

Established on 1 July 2004, Tourism Australia brings together the collective skills and knowledge of four separate organisations: the Australian Tourist Commission, See Australia, the Bureau of Tourism Research and Tourism Forecasting Council. In a strategic planning process Market Segmentation is a stepping step which recognizes that people’s need, desire, and expect different characteristics from products or services that they experience or purchase.

Under the Tourism Australia Act (2004), Tourism Australia has a statutory obligation to help foster a sustainable tourism industry in Australia. Sustainable tourism is in the buzz now, and is one of the many key segments, that Tourism Australia focuses on.

The Tourism White Paper is an AustralianGovernment tourism initiative,designed to achieve industry growth and provide greater synergy across all areas. It provides framework for structural change to more effectively support Australia’s tourism industry.

‘Tourism Australia’ and their Market Segmentation:

Tourism Australia concentrates on Demographic and Psychographic segment wherein mainly it attracts youth travellers and other interests and leisure travellers.

1. Demographic

Understanding demographics is vital to service/product development and segmentation, especially with regard to understanding trends in the market place. Demography includes the study of age, sex, education, family status, life cycle etc., which acts as an excellent tool for a Destination Management Company or a Travel Board to attract more tourists and travellers to their country. In the case of Tourism Australia and this report I have chosen to concentrate on ‘Lifecycle’ laying emphasis on ‘Youth Market’.

1.1 Lifecycle:

1.1.1. The Youth Market:

They have lower than average incomes, high energy approach to travel; they are more likely to undertake “backpacker tourism, adventure sports, and other activities on offer that generate high adrenaline.

Focusing on ‘Tourism Australia’ as a potential attractor to the ‘Youth Market’ there are a few most appealing segments that the marketing team concentrates on.

1.1.1a. Nature is the most appealing experience to youth travellers with high appeal in all markets. Australia’s wild flora, fauna, its scenic beauty acts as a perfect getaway and holiday destination for youth of this generation. Australia has a lot on offer like sea, sand, sun, surf, bungee jumping, parasailing, etc., which attract youth’s and also see to it that they are connected to nature and still maintain the ecology.

1.1.1b. Coastal Lifestyle experience is also very appealing to youth traveller. It portrays a very classic Australia outdoor lifestyle and provides a whole lot of fun and thrill at the same time. Travellers get to meet new people, mix and learn the lifestyle of the locals and enjoy the fun environment the destination has to offer.

1.1.1c. Aboriginal Australia is of moderate appeal to youth traveller. The Aboriginal Australia is very historical and cultural, but not many are interested in undertaking this segment of tourism that the country has to offer. It calls for less interaction and very minimal socialising, whereas youth prefer the opposite. ( Aboriginal Tourism Australia ).

1.1.1d. Outback Australia and Food & Wine are less appealing to youth travellers and are not currently perceived as being unique to Australia. While the outdoor, relaxed nature of this experience has appeal, in general it is seen as an expected element of a holiday. There is an opportunity for Australia to promote accessible and affordable quality food & wine experiences to the youth market. There are opportunities to reposition these experiences for the youth market to make them more relevant to this segment (Marketing Resource, Tourism Australia, 2009).

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1.1.2. The Family Market:

‘In accordance with segments created by Tourism Australia, the family market constitutes of the above average education and income, most affluent of the other lifecycles. They tend to be shorter-haul travellers because of their busy lifestyles work and also are mostly accompanied with children Most of the travellers falling under this category of the market focus on soothing vacation holidays, so that they are rejuvenated after a hectic schedule of work and life and are ready to get going till the next vacations’ (Marketing Resource, Tourism Australia, 2009).

1.1.3. The Mature Market:

‘Mature-aged travellers are defined aseither domestic or international visitors aged 55 years and over. They are well educated and affluent and more likely to seek out exploratory vacation activities. Most travellers in this segment of lifecycle segmentation are more likely to visit destinations and other attractions for either exploratory or research work’ (Marketing Resource, Tourism Australia, 2009).

1.1.4 The Senior Market:

The senior market consists of travellers are likely of all the above segments to seek out exploratory vacation experiences, much less likely to view vacations as opportunities for relaxation. Above average participation in natural sightseeing, they will be less active in outdoor activities. They rely more on printed material and television for travel opportunities and information. One of the most prominent holidays that travellers in this market look out to is “Cruise holiday”. Although the might be the smallest segment, special attention should be paid to the seniors market, as its members look for exploratory experiences and prefer value-added components such as guided services (Marketing Resource, Tourism Australia, 2009).

Limitations of Family/ Lifecycle approach:

This approach gives little or no explanation for differences in consumption patterns as compared to psychographic or lifestyles, demographics says nothing regarding motivations and the value structures which guide the travellers or visitors’ behaviour. (Moutinho, 2002)

2. Psychographic

This type of segmentation divides the market into groups according tocustomers’ lifestyles.It considers a number of potentialinfluences on buying behaviour, including the attitudes, expectations and activities of consumers.The main types of psychographic segmentation are: lifestyle (different lifestyle patterns), Activities, Interests and Opinions (AIO).

Purpose of visit classification enables Tourism Australia to identify the nature of its visitor base and to plan activities accordingly. It also enables the identification of geographical/seasonal variations in tourism by purpose.

In accordance with the case of analysing the segment markets of Tourism Australia, after the reading, I found that they segment their potential tourist market mainly on the basis of ‘Interests’. The following are the various sub-segments and niche markets classified:

2.1 Interests (Trip Segmentation or Activity Segmentation)

2.1.1. Backpacker Tourism:

‘International backpacker visitation has continued to increase by approximately 3% per year since 2000 to reach 566,000 visitors. There were 500,000 domestic backpackers in 2007′. (Backpacker Snapshot, 2009)

‘Spending more time in Australia, these travellers tend to explore considerably more of the country. Many backpackers participate in working holidays enabling them to stay longer in the country ‘(Tourism Australia Corporate, 2009).

2.1.2. Education Tourism:

An education tourism visitor can be associated as an international traveller whose main reason for coming to Australia is education and length of stay is less than twelve months.

This is a very attractive segment that was put forward by Tourism Australia in collaboration with tourism boards of other territories in the country, since Australia is one amongst the leading education grounds for many international students.

2.1.3 Taste and Try:

Travellers coming into Australia as “learners” are inexperienced travellers attracted to “trendy” well known destinations in and around Australia, like Melbourne, Sydney, Perth and Brisbane. ‘They highly depend on recommendations from experienced travellers, usually visit destinations with numerous attractions; they look out for sun, sea, sand and nightlife. The top travellers of destination motivation for the Taste & Try segment include: friends who have visited Australia and its tourist attractions and also to visit family who live at the destination’ (Australian Tourism Commission Report).

In 2006 the International and National Visitor Surveys undertook a survey specifically for Food and Wine Visitors. This survey probed awareness of Australia as a gourmet culinary destination.

“Food and wine visitors aredefined as any holiday or leisure traveller who stated that one of their reasons for taking the trip was to experience Australia’s food or wine”(Tourism Research Australia International and National Visitor Surveys, 2007).

2.1.4: Roots- Exploring the heritage

Travellers under this segment travel to places that they feel a connection to, through heritage. Travelling may include with or to visit friends and family. Most travellers under this segment show keen interest in to learn the local languages and are very concerned about various threats that the particular destination or country as a whole faces.

2.1.5: Adventure Tourism:

The sub- segment of Adventure Tourism has helped Tourism Australia to grasp a whole lot of travellers to come to the country and indulge in the various adventure sports and activities, which bring significant gains to regional and national economies.

According to the BTR International Visitor Survey, 2003, it was found that, nearly 2.2 million international travellers undertook adventure activities and spent 77.5 million nights in Australia in the year 2003. These travellers spent an estimated $6.7 billion in 2003 in Australia, accounting for 60 per cent of total expenditure by all international travellers.

2.1.6 Business Tourism:

Business tourists spend more money per night than holiday visitors. Their main mode of transport is air and car hire resulting in high-yield for the car hire industry and the airlines. These visitors provide improved business communication, and help to promote Australian products and services overseas. This in turn generates additional income and employment within Australia.

A research conducted by Tourism Australia, 2004, stated that business tourism is a very important high yield sector of the tourism industry. In 2003, visitors who travelled mainly for business purposes spent $11 billion in Australia, accounting for 17 per cent of all tourism expenditure in that year. Hence the segment proved vital and very fruitful to the organization and the destination (Source: Tourism Research Australia International and National Visitor Surveys, 2007).

2.1.7 Indigenous Tourism:

“Indigenous tourism is defined as participating in an activity that gives Indigenous people the chance to tell their story, in their way, sharing cultural insights, traditional practices and contemporary concerns with non-indigenous Australians and international visitors” (Robertson-Friend, 2003).

In 2003, about 5 per cent (214 000) of all international visitors visited an indigenous community and nine per cent (411 000) of international visitors experienced the Indigenous arts and crafts and cultural displays during their stay (Australia Tourism Research Report Volume 6 Number 1, 2004). The rise in the number of visitors visiting the country and looking for indigenous tourism is because of the appropriate segmentation and the marketing the specific program to the right target markets.

2.1.10 Cruise Tourism:

Larry Dwyer and Peter Forsyth state that Cruise Tourism is one of the major growth areas of world tourism (Dwyer and Forsyth, cited in Peisley, 1992; Hobson, 1993; Cruise Lines International Association, 1995).

“Cruise tourism has been identified as a key growth area within inbound and domestic tourism and Tourism Australia has increased its focus on this market segment. Cruise shipping as a segment, proved beneficial to the board.

A study conducted by Cruise Down Under, 2006 revealed that the total income generated by the cruise shipping industry in Australia was approximately $438.8 million in 2005/06 compared to $228.1 million in 2004/05, including direct expenditure of approximately $256.6 million” (Tourism Australia, 2009- Markets)

Limitations of segmenting the tourist market according to interests are that participation in a specific activity is a sound basis for defining a segment. It could simply be one of the several activities that constitute the overall destination experience. For example; the fact that 80% of tourists say they engaged in surfing at a destination does not mean that they see themselves as a special interest group of ‘surfers’.


Tourism Australia has a number of resources and opportunities available to assist tourism industry operators target leisure, business events and niche markets. Tourism Australia segments its market into all the four bases of segmentations that usually all marketers do.

It uses geographical- focuses on domestic tourists and visitors as well as international tourists and visitors. Tourism Australia runs special marketing programmes that focus entirely on domestic tourism, which can be interpreted as to how TA has segmented its market in and out of the country.

Demographic Segmentation is also used in their STP plan but, doesn’t yield high results as compared to the rest. Demographic segmentation doesn’t keenly concentrate on what a visitor is looking at, but just segments the market on actual figures like age, gender, incomes, family and its lifecycle, etc,.

The best and most efficient segment that Tourism Australia derived and uses it to its fullest is the Psychographic segmentation, with dedicated significance on ‘interests’ of the visitor. Various segments like, ecotourism, backpacker tourism, cruise tourism, spa and wellness tourism, beach tourism, golf tourism, adventure tourism and other such sub segments and types of tourism were created keeping in mind the previous year’s data and facts. On the basis of research and results, these segments were derived at which proved to be beneficial to the Australian Tourism Board in terms of monetary benefits as well as benefits to the visitor, where in they can easily identify their preferred segment.

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Behavioural segmentation is also observed in the marketing and segmenting of the destination by Tourism Australia, with focus on social-status and occasions. Many new segments are created time after time, keeping occasions in mind, like, special tour packages on Boxing Day, Christmas and New Years, and also a special program that is dedicated to the aborigines of the continent Island.

After studying the bases of segmentation that Tourism Australia has put into practice and relating it to the past results, facts, figures and the various research’s that are undertaken to study how beneficial the whole segmentation process has been, it is quite a happy news for the Australian Tourism Board as well as for the Tourism Research Australia Organization.


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