market segmentation - case study - overseas holidays
The UK leisure travel industry is a large, highly fragmented and competitive market. In total, UK consumers take almost 110 million holiday trips each year. Of these, some 36 million trips are overseas (“Overseas Holidays”) – a market worth £16 billion.
Segmenting the market
The Overseas Holiday market can be segmented in several ways:
The key distinction being between holidays involving an element of air travel (“Air-inclusive Tours” or “AIT”) and holidays involving other means of transport (Non-AIT”). The most significant type of Non-AIT transportation is “Self-Drive”, particularly to France, Italy and Ireland.
The most popular overseas destinations for UK holiday makers are Spain, France, North America, and Greece. By definition, many of these destinations require air travel as part of the holiday experience, with self-drive only being a practical option for certain Western and Northern European destinations. However, a wide range of holiday experience is possible in any of the above countries.
Holiday accommodation varies enormously. It can be hotel-based (with a range of catering options), in apartments, villas, holiday home properties, mobile homes, tents, boats and other categories.
Flexibility and Customer Management
Customers may prefer holidays with a high degree of independence and flexibility, with little if any involvement during the holiday from the tour operator. At the other end of the spectrum, many holidays are based around an escorted, fixed itinerary where the tour operator controls and manages most of the holiday experience.
A number of holidays are designed around offering a particular type of activity such as scuba diving, walking or skiing. Such holidays can also offer expert tuition as part of the package or alternatively be designed for well-experienced participants.
Most holidays tend to be taken for either 7 or 14 nights. However, according to the International Passenger Survey , the fastest growing segment by holiday duration is for holidays taken for between one and three nights i.e. weekend and short break holidays.
Price and Quality
As in any consumer market, operators position holiday products in a range of prices from unbranded, discounted holidays priced at less than £99 to luxury, all-inclusive and highly bespoke itinerary holidays in excess of £10,000 per passenger.
The majority of Overseas Holidays taken by UK consumers involve taking either a scheduled or charter flight to their chosen destination and so fall into the AIT category. Within the broad AIT classification, there will be a plethora of different destinations, accommodation types as well as varying degrees of customer management. All of this translates into a continuum of holidays covering a broad range of price points.
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