Abstract

In today’s competitive hospitality industry, market segmentation as a critical strategic option is very important if players in the hospitality industry are to achieve customer satisfaction and sales growth.  This study is based on the effect of market segmentation on the performance of Hotels. In the case study of MAWA AND BLUE PEARL Hotels, the investigation, focuses on how market segmentation has affected the sales performance. The aims and objectives of the study were to examine the effect of demographic, behavioral and geographic variables as determinants of effective market segmentation on the sales of Hotels in Bamenda. Three specific research questions were used for the research. The researcher used descriptive research design. Questionnaire was used for the collection of data from sixty sampled management staffs. Simple random sampling methods was used, and the main statistical method used for this study was regression. The study revealed that demographic, behavioral and geographic segmentation criteria has a positive significant relationship with the performance of hotels. The researcher made some recommendations based of the finding (market segmentation has a positive relationship with sales). The Researchers recommend that market segmentation as a marketing strategy should be taken seriously by hotels since it promotes quality service delivery and can serve as a competitive edge among hotels.

CHAPTER ONE

INTRODUCTION

1.1 Background to the study

The main function of the hospitality industry is to offer travelers homes away from homes and provide friendly reception and warm greetings (Walker, 2007). It is a broad category of fields within the service industry that includes lodging, food and drink service, event planning, theme parks, transportation, cruise line, traveling, airline and additional field within the tourism industry. It is made up of businesses that provide lodging, food and other services to travelers, the main components are hotels, motels, inns, resorts and restaurants and swimming pools (Alhassan and Sakara, 2014). According to Ghosh, (2006) the industry is both national and international in nature and in terms of accommodation it ranges from luxury to budget hotels, from city center business properties to tourism resorts and from motels to health spas, in the wider sense, time- share, caravanning and camping should be considered a part of the industry. Classified as service sector, the hospitality industry does not manufacture tangible goods, but rather provides services. Specifically speaking of hotels, whether it is the front desk agent that welcomes the guests, the bellman that takes them to the room, the restaurant server that wait on them at dinner or the spa therapist that gives the message, the success of a specific hotel relies on the ability of these employees to meet and exceed service expectation by customers. But how to meet and exceed the customer need remains a challenge.

Marketing in the hospitality industry should be viewed as a strategic function that is charged with helping to lead a more customer-centric business model. Offering excellent customer service entails creating constant communication with all customers, most especially, high valued customers. Hotels in CAMEROON gain competitive advantage for being able to price effectively; this demands sophisticated analysis of customer data, market segmentation and the use of information technology and bundling products in an attractive manner.

According to Alhassan and Sakara, (2014), any organization, whether public or private, profit or non-profit, has to understand the make-up of its market(s) in order to provide products and services which meet clients’ needs and wants. As results of this, the concept of market segmentation was introduced in the hotel sector to provide greater understanding of the customer so as to meet their needs. This strategy tends to have a trinity aim: for hotels to increase sales volume; to achieve high market share; and to properly meet the needs and wants of organizations’ target markets (Alhassan and Sakara, 2014). Market segmentation is a fundamentally important concept within the hospitality services industry. The customer segmentation process determines “the modus operandi” of all the functions that serve the customer. A key element for increasing market share and profitability in a fragmented market like the Cameroonian hospitality industry is through the strategy of market segmentation since stiffer competition in the industry has resulted in the need for hotels to identify various options for survival.

The primary objective of segmentation must be how to win and retain customers. Players in the hospitality industry must concentrate on attracting new customers into their organization and most importantly efforts must be geared towards keeping such customers; market segmentation therefore offers an opportunity to do so

1.2 Statement of the Problem

The dynamics of the business environment for the hospitality industry as well as the dynamics of the customer needs are not debatable. It is therefore very important for hotels to respond to the changing needs of the customer and the business environment. Competition in the Cameroonian hospitality industry as a result of a high rate proliferation of the hotels in Cameroon means customers now have a choice. Dissatisfied customers are therefore more likely to defect and move to competitors.

Generally, a great number of problems confront the application of market segmentation and positioning. To describe the market segmentation verbally is not a big deal but to put the description into practice is not easy. Some of the problems however are particular in Hotels which tends to have a lot of bearing on the sales performance. Some of the problems are listed below

1. The inability of Hotels to classify their customers group according to the uniqueness in purchases (such as according to the level of income and sex, occupation).
2. The segmentation is based on subjects rather than base on customers/consumers and their needs (such benefit and usage occasion).
3. The inability to segment their market based on the location of their customers.
4. The inability to carry out marketing survey and research on customers characteristics to be used for segmentation analysis

Using wrong segmentation strategies may have devastating effect on the achievement of stated objectives. Achieving customer satisfaction will be very difficult if hotels service providers fail to provide tailor-made products and services to high valued customers while simultaneously having a good package for the average customer. In the various categories or market segments of hotels, the needs of customers are very diverse. Hotels therefore must adopt effective market segmentation strategies to overcome this. The study therefore takes a critical look at how the hotels in Bamenda seeks to achieve excellence organizational performance by using effective market segmentation strategy.

1.3 Research questions

1.3.1: Main research question

What is the effect of market segmentation on the sales performance of hotels in Bamenda?

1.3.2 Specific research questions

1. What is effect of demographic segmentation on hotels performance in Bamenda?
2. What is the effect of behavioral segmentation on the performance of hotels in Bamenda?
3. What is the effect of geographic segmentation on hotels performance in Bamenda?

1.4 Research objectives

1.4.1 Main objective

To examine the effect of market segmentation on the performance of hotels in Bamenda

1.4.2 Specific research objectives

1. To examine the effect of demographic segmentation on Hotels performance in Bamenda.
2. To determine how behavioral segmentation affects the performance of these hotels in Bamenda.
3. To examine the effect of geographic segmentation on hotels performance in Bamenda

1.5 Hypothesis of the study

Null (H0): Market segmentation has no significant effect on the performance of hotels in Bamenda.

Alternative (H1): Market segmentation significantly affects the performance of hotels in Bamenda