Are you “Embracing Life” or “Getting Ahead”? Case Study of Domestic Travel Segmentation

Todd Nicholson

How important is the domestic tourism market?

Contributes $12.4 Billion annually to NZ economy

57% of the contribution from tourism Yet almost all coordinated marketing

focuses on international travelers

Goal of our workUnderstand size and composition of

groups with in the marketProduce segments that are good

predictors of both travel type and frequency

Simple and easy to understand for:

Design online surveyChoose variables for segmentationPrinciple Components AnalysisK-means technique to identify segmentsProfile segmentsValidate segments with industry experts

Segmentation Approach

% o

f tr

avel in

last

year

2000 people were surveyed using an online survey

Selected by region, gender and ageOver 100 questions

including:◦Demographic◦Behavioural◦Interests◦Preferences◦Drivers◦Hindrances

Survey Data Used

Interests and favouritesLife cycle stageGenderPersonal prioritiesEducation levelIncome (amount and source)Consumables and property ownedOwnership and access to technology

Variables Used in Segmentation

Principal Components Analysis

Need to narrow down the 200 or so variables

While losing as little information as possible

Also means the segmentation inputs are not correlated

Principal Components Analysis

Segmentation Approach

Use K-means to identify similar groupsAvoid hierarchical clustering because we

need to keep it simple8 segments were used to balance

simplicity and detail

Many ways to skin a cat

SAS coding (very flexible, slower)Enterprise Guide (slightly less flexible,

faster, good for graphing results)JMP (slightly less flexible, faster run time)Enterprise Miner (fast development,

transforming and imputing is easy, easy to profile segments)

Segmentation Results

Viewing the Segments

Being There

Viewing the Segments

Aiming High

Viewing the Segments

Aiming High

Break Frequency and Aspiration%

asp

irin

g t

o m

ore

dom

est

ic s

hort

bre

aks

Avg. number of domestic short breaks last 12 months

Holiday Frequency and Aspiration%

asp

irin

g t

o m

ore

dom

est

ic longer

holid

ays

Avg. number of domestic longer holidays last 12 months

Profiling the Segments

Segments broken-down by Gender

Profiling the Segments

Aiming High

Profiling the Segments

Aiming High

Profiling the Segments

Aiming High

Profiling the Segments

Aiming High

Ideal holiday – Destination characteristics

(-3=Not important, 3=Very important)

Profiling the Segments

Aiming High

(-3=Not important, 3=Very important)

Ideal holiday – Activities and experiences

Profiling the Segments

Aiming High

Profiling the Segments

Being There

Profiling the SegmentsImmersing

Profiling the SegmentsRewarding

Aiming HighSize: 8% of the adult population

Demographics: Younger, many students, many living at home or in flats, high-income households, over-represented in Auckland

Travel: International (+), domestic short (+), domestic long (+)

Key Interests: Texting, Facebook etc, downloading music, eating out, tramping, boating, going to concerts and performing arts, going to movies, live music, surfing, waterskiing, diving, kayaking, swimming, going to gym, yoga and meditation, cycling and mountain biking, going to dance classes, meeting new people, playing sports and watching live sports

Priorities: Having a good time, finding direction, fitness, travel, sport/hobbies, career, education

Travel Interests: Beaches, big cities, nightlife, shopping, sporting activities, outdoor activities, wellness, food and wine

Key Destination Characteristics: Exciting, entertaining, challenging, different

Travel Barriers: Annual leave, work commitments, transport, travel companions

Marketing Channels: Youth media, special interest media (e.g. Surfing, skiing etc), online channels, interest groups and clubs, cinema

Marketing Opportunities: Adventure and sports product, youth/sporting/adventure events, urban product, wellness

Embracing LifeSize: 11% of the adult population

Demographics: Middle age groups, families with children at home, male bias, high income, under-represented in North Island towns

Travel: International (=), domestic short (+), domestic long (=)

Key Interests: Cycling and mountain biking, hiking and tramping, kayaking, boating for fun and all types of fishing, live sport, home renovation and entertaining at home

Priorities: Raising family, personal relationships, building career/business, building assets, travel, spending time with family and friends, reducing debt

Travel Interests: Outdoor and nature-based experiences, scenery and landscapes, culture and heritage, food and wine (all shared with friends/family)

Key Destination Characteristics: Family-friendly, relaxing, romantic

Travel Barriers: Annual leave, work commitments, care responsibilities, suitability for children

Marketing Channels: Business media, special interest media/online (e.g. golf, outdoor, boating, fishing etc), newspapers, boating/fishing/outdoor events/shows/fairs

Marketing Opportunities: Outdoor/adventure experiences for the whole family, food and wine product, cultural product, heritage experiences

Are you “Embracing Life” or “Getting Ahead”? Case Study of Domestic Travel Segmentation

Todd Nicholson