Four Seasons Segmentation, Targeting, and Positioning

Introduction

This report will discuss the Four Seasons Dubai Beachfront Resort, a luxury hotel that is located in the city mentioned in its name. It is a part of a successful global chain that is renowned for its success in a competitive industry. Four Seasons has achieved this goal by implementing excellent segmentation, targeting, and positioning strategies to attract a customer class that would be interested in its specific offerings. As such, the company is a noteworthy target for a case study on the implementation of the theory behind these concepts. This report will provide a background on the three stages of marketing strategy development and their use by Four Seasons. It will also give an overview of the company’s position in the market, as well as its points of differentiation and parity.

Company Description

Four Seasons is a worldwide luxury hotel chain that focuses on creating medium-sized hotels that provide a high standard of quality and emphasize service. It was started in 1960 in Canada by Isadore Sharp, though its majority ownership has since passed to Bill Gates and Prince Al-Waleed bin Talal. Despite its relatively recent opening when compared to other prominent hotels and chains such as Marriott, the company has achieved considerable success and become a notable competitor in the field. Alongside the excellent service quality, its additional offers have also become an attraction that distinguishes it from other companies. Four Seasons has over 100 locations worldwide, most of which are located in popular tourist destinations. One such hotel is located in Dubai, at the Jumeirah Beach, and will serve as the subject of this report.

The Four Seasons Dubai Beachfront Resort is an excellent example of the traits that define the broader chain. It offers views of both the Dubai cityscape, including the Burj Khalifa, and the Arabian Gulf, creating an excellent environment for travelers. The architecture is a mix of a Western interior design that defines Four Seasons Hotels and Arabian architecture, which can be seen throughout the building. According to Dubai at Jumeirah Beach (n.d.), the hotel features a highly advanced spa that provides relaxation and wellness services. However, the page for Dubai at Jumeirah Beach (n.d.) also describes services that aim to help the traveler familiarize themselves with Dubai and the UAE as a whole. Through the expertise of its local employees and partners, the Four Seasons Dubai Beachfront Resort aims to deliver a comprehensive and integrated experience to its customers, creating value for them.

Theoretical Concepts

A marketing strategy generally consists of three distinct stages: segmentation, targeting, and positioning. Kurtz et al. (2019) state that the first concept involves the definition and division of the market into groups that have shared characteristics, needs, and desires. Through segmentation, the company can evaluate the importance of appealing to specific groups with its products as opposed to others. Kurtz et al. (2019) provide examples of four different differentiation approaches: geographical, demographic, psychographic, and product-related. The first approach considers the location and population density of specific populations, and the second considers characteristics such as age, gender, income, education level, and others. The third discusses personalities and aspects such as lifestyle, habits, values, self-image, opinions, and behaviors, and the fourth involves attitudes towards products, considering whether customers value luxury, comfort, economy, brand loyalty, or other qualities.

As can be inferred from the definitions of these methods, different evaluation methods have to be used to process specific characteristics. Grün et al. (2018) describe these modes of research as the two extremes of commonsense and data-driven segmentation, though they note that most segmentation studies will fall into a category between the two. Information such as geographic distributions and demographic data can be gathered using publicly available data and specialized research agencies and processed using computers. On the other hand, it is generally not possible to obtain information about the customer base’s beliefs and personalities, and the marketers will have to make assumptions. Surveys can be used to gather some information and provide a baseline evaluation, but there exists the possibility of error, and they cannot be trusted. Ultimately, the strategy designers will have to combine data and personal judgment to determine market segmentation.

Once segmentation concludes, the marketers proceed to consider the segments that it intends to target and how it may succeed in this task. This process is known as targeting, and it is essential to the success of the strategy. Camilleri (2017) highlights the primary targets as identifying untapped needs to attract customers who are inadequately served as well as identifying the most profitable segments. Both of these findings can help the company determine ways in which it can maximize its profits. The decision is then made to choose particular segments that the company will target with its products and offerings. The two areas mentioned above will not necessarily be chosen, as it can be challenging to address their needs or to capitalize on the segment appropriately. As such, the marketing team should consider all possible targets and compare their advantages and disadvantages.

Companies generally use targeting strategies that can be differentiated into three distinct categories. Hollensen and Opresnik (2019) describe them as undifferentiated, differentiated, and concentrated marketing, but they also define a subset of the third category that they call micro marketing. In undifferentiated marketing, the business appeals to the entire market with a single offer, an approach that is valid when the product serves a universal need. In differentiated marketing, various market segments receive different offers that vary in price, quality, and other aspects. Concentrated marketing focuses on a subsection of the market and tries to match its needs as much as possible, which is particularly valuable when the business has limited resources. Lastly, micro marketing is a more restricted variation of this approach, in which the company markets toward extremely small market segments, such as its loyal customers.

The third and final step of marketing strategy design is the choice of the company’s positioning relative to its competitors. Durand (2018) defines positioning as the customer perception of the company’s essential attributes when compared with other industry members and notes that the view is not objective. Customers will typically not have the data necessary to obtain a complete overview of the different businesses’ offerings and compare them meaningfully. As such, the company needs to create a perception that its products are superior to those of the competition or provide improved value compared to them. Durand (2018) highlights the possibility of using a variety of dimensions to achieve this goal, such as environmental friendliness, security, and others, in addition to the standard aspects of price and quality. A company’s positioning strategy succeeds if it can establish the elements in which it excels as critical to its targeted markets.

Positioning requires a robust internal direction at the company, which can then be expressed to the customers. Padgett and Loos (2019) recommend the usage of a positioning statement, which defines the company or brand, the target customers, the key benefit (also known as the unique selling proposition), and the competitive reference. The first part of the statement discusses the nature and values of the company, which determine its ability to deliver products with specific qualities. The target customers have been decided upon during the targeting step, and their needs and interests should already be known to the company. The key benefit should be derived from the intersection of the company’s capabilities and the customers’ needs, being the highly-needed aspect that it can deliver. Lastly, the competitive reference is the businesses to which the company will compare itself to show its superiority.

Segmentation Variable Description

As a luxury hotel chain, Four Seasons targets customers with high incomes that are able and willing to pay for its services. However, as a hotel, it mostly relies on external traffic, and geographic differentiation does not apply because customers could come from locations throughout the world. Fujioka (2017) indicates that Four Seasons uses a product-based differentiation approach, focusing on style, comfort, service, and pampering. Luxury hotel customers expect accommodations that are well-designed and attractive, though there is considerable diversity in their tastes. Some prefer ostentatious designs with a prevalence of gold, such as that of the Ritz Hotel in London, while others appreciate the more understated approach of Four Seasons. In terms of comfort, customers expect to receive the best possible standard at a luxury hotel, with few to no inconveniences, regardless of how minor they are.

Service and pampering are particularly crucial for this report because of the focus that Four Seasons places on them worldwide. Generally, customers expect excellent service from a luxury hotel as part of its offer. However, Kopelman (2019) claims that this practice has led customer satisfaction with its services to be consistently higher than that for Ritz-Carlton, a rival chain, across sixteen different hotels. As a result, it caters to customers who expect an experience with as few difficulties as possible. Pampering is another part of this paradigm, as customers have different attitudes toward how they want to be treated by the staff. According to Kopelman (2019), Four Seasons employees treat customers warmly and are helpful, but try not to intrude into their lives during their stay. Rather than having their needs watched and proactively addressed, as may be the case in some other luxury hotels, Four Seasons values customer desire to retain their autonomy and privacy while still being ready to aid them.

Porter’s Five Forces Model

Four Seasons, including its Dubai branch, generally targets the upper section of the middle class, particularly business travelers. An analysis of the segment’s attractiveness is warranted to determine how well the chain capitalizes on it.

  • Competition in the industry: high. Many different hotels try to capture the target audience at numerous price points. Four Seasons has to differentiate itself from both cheaper and more expensive offerings to secure customers.
  • Potential of new entrants into the industry: low. The barriers to entry are high, as the construction of a new hotel requires considerable resources. Moreover, it can be challenging to develop a degree of service quality that is comparable to other hotels that target the same segment.
  • Power of suppliers: medium. Hotels that target upper-middle-class and business travelers have to maintain a high quality of service, which restricts their supplier pool. With that said, if necessary, the hotels should be able to replace suppliers without significant difficulties.
  • Power of customers: high. Due to the variety of offerings available, customers can negotiate prices and choose offerings freely. As such, companies have to be diligent to retain their customer base.
  • Threat of substitute products: high. Other options, such as apartments and houses for rent, are also available options. Four Seasons has started to incorporate catered residences into its offering range, but they are not related to the Dubai Beachfront Resort.

POPs and PODs

The points of parity for Four Seasons Dubai Beachfront Resort are the comfort and style, in which it struggles to outperform its competition meaningfully. All luxury hotel chains try to maximize these aspects through a variety of methods. Whenever a new practice that improves them emerges, all members of the industry tend to replicate it. Style, in particular, is highly subjective, and it is challenging or impossible to obtain a clear advantage. With that said, as mentioned above, the service quality is a point of differentiation for Four Seasons, in which it consistently outperforms the competition. As such, the company capitalizes on it and makes it a significant part of its reputation.

Perceptual Map

Perceptual Map

Conclusion and Recommendation

Overall, Four Seasons appears to be using an excellent strategy that capitalizes on a market segment that is challenging to satisfy. The competition is intense, but the hotel has been able to differentiate itself and provide a meaningfully different offering that meets customer needs. However, a single point of differentiation may not be enough to secure sustainability in the long term. As such, this report recommends the hotel seek additional ways to distinguish itself from competitors to retain its advantage. One method through which it may achieve this goal is the expansion of its recreational services, such as that of its Dubai and UAE tours. The acquisition of dedicated residences could also be helpful due to the typical lack of catering in the sector, which would serve as a counterpoint to the company’s excellent service. Overall, it is likely possible to apply the company’s strengths to address additional customer needs in ways the competition cannot match.

References

Camilleri, M. A. (2017). Travel marketing, tourism economics and the airline product: An introduction to theory and practice. Springer.

Dubai at Jumeirah Beach. (n.d.). Four Seasons. Web.

Durand, A. (2018). Marketing and globalization. Taylor & Francis.

Fujioka, R. (2017). Global luxury: Organizational change and emerging markets since the 1970s. Springer.

Grün, B., Dolnicar, S., & Leisch, F. (2018). Market segmentation analysis: Understanding it, doing it, and making it useful. Springer.

Hollensen, S., & Opresnik, M. O. (2019). Marketing: A relationship perspective (2nd ed.). World Scientific Publishing Company.

Kopelman, R. E. (2019). Improving organizational performance: The cube one framework. Taylor & Francis.

Kurtz, D. L., Boone, L. E., & Berston, S. (2019). Contemporary business (18th ed.). Wiley.

Padgett, D., & Loos, A. (2019). Applied marketing. Wiley.

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NerdyRoo. (2022, March 1). Four Seasons Segmentation, Targeting, and Positioning. Retrieved from https://nerdyroo.com/four-seasons-segmentation-targeting-and-positioning/

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