After conducing external environmental scanning, product analysis, and a SWOT analysis, segmentation is the next step in the marketing process. Since the city cannot change as a product, tourism marketers need to segment and target potential tourists who will enjoy what the city has to offer. The market is the entire group of potential tourists, while the process of grouping them on shared characteristics is segmentation. Targeting is deciding which of the segments would be most likely to be motivated to visit. Segmentation and targeting is necessary because the marketing concept calls for providing consumers with a product that provides the benefits they desire.

Tourism marketers may implement segmentation by using an undifferentiated, concentrated, or differentiated strategy. An undifferentiated strategy is when segmentation is ignored and a single promotional message is communicated to the entire market. A concentrated strategy, when a single segment is targeted, is used when only a single group of tourists can be attracted because the city has a unique core product with specialized appeal. Tourism marketers use a differentiated segmentation strategy when more than one segment is targeted. Usually there is a primary segment that will provide most visitors to the city. However, additional tourists can be motivated to visit by targeting a second, smaller segment.

There can be many approaches to segmentation, depending on the product. However, the main segmentation approaches used in tourism marketing for cities include demographic, psychographic, geographic, and usage segmentation. Demographic segmentation includes external characteristics that can be...