Market segmentation by expenditure: an underutilized methodology in tourism research

Purpose – The purpose of this study is to identify best practices in the implementation of market segmentation via expenditure in tourism research so that the practical potential of this technique can be realized. Market segmentation on the basis of expenditure has tremendous practical potential for tourism destinations, yet the volume of research remains slim. This article examines 20 studies of market segmentation based on expenditure in tourism research in order to identify issues and challenges which currently impede the growth of this area and its translation to policy. Design/methodology/approach – The studies reviewed are analyzed on four dimensions, namely, the tourism market context, the specification of the expenditure variable, data source and sample size and the methodological approach. Findings – To identify commonalities across big spending tourists, tourism markets should be categorized and the expenditure variable clearly specified. Studies using a relatively simple bivariate statistical analysis have more practical usefulness than those using a slightly more complex multivariate approach. Research limitations/implications – While the articles studied have been selected to include seminal and widely cited early studies and to provide a broad overview, no other selection criteria were established. The study is not exhaustive, and further research could be more broadly inclusive. Practical implications – Expenditure segmentation if utilized by tourism planners can help maximize revenue from smaller tourism numbers. The results of this article show the most useful research path for practical application. Originality/value – There is no prior study reviewing the literature using expenditure segmentation in the tourism context. Providing such an overview will facilitate further use of this research tool.