| Scope and method of study. The focus of the current study was to evaluate whether the Customer Equity based segmentation approach has an effect on customer equity in the hotel industry. In order to achieve the highest possible Customer Equity, the study suggested the following Customer Equity Management (CEM) process: (a) analyze marketing effort, (b) evaluate marketing strategies, and (c) recommend action plans. The specific objectives of the research were (a) to determine the core Customer Equity drivers in the hotel industry; (b) to examine the impact of the CE-based segmentation on Customer Equity in the hotel industry; and (c) to utilize the CEM process to maximize Customer Equity in the hotel industry. After a thorough literature review, a focus group study was conducted with professionals in the hotel industry in order to identify the primary CE drivers. The results of the qualitative study confirmed the five key drivers of Customer Equity (i.e., convenience, quality, price, brand image, and relationship driver) in the hotel industry. A quantitative analysis was performed, (a) to determine the key CE segments; (b) to demonstrate the five CE drivers' impact on marketing effort using Conjoint Analysis; (c) to maximize the Return-on-Investment (ROI) on marketing effort responsiveness through RiskRTM simulation; and (d) to develop the marketing action plans for each of the CE segments.;Findings and conclusions. This study found that the CE-based segments consisted of Relationship-Seeking Customer Segment (RSCS), Convenience-Seeking Customer Segment (CSCS ), Quality-Seeking Customer Segment (QSCS), Brand Image-Seeking Customer Segment (BSCS), and Price-Seeking Customer Segment (PSCS) in the hotel industry. The drivers that are most effective in terms of marketing effort are different for each of the CE-based segments. The driver that identified the CE-based segment was not always the significant driver in terms of the probability of brand switching, the increase in room-nights they are willing to stay, and the increase in room rate they are willing to pay. Therefore, it behooves the hotel managers to target marketing efforts for each segment separately by clearly identifying what works for them rather than assuming the same efforts would work for all. This study implies that segmenting the hotel customers by CE drivers makes better sense than traditional segmenting methods since it allows better targeting of marketing effort. |
