Expenditure-based segmentation: Taiwanese tourists to Guam

Abstract

Progressive destination marketers try to expand their market share by seeking travelers who will spend money, and not just time, on their tourism products. Marketing researchers have found that heavy users of consumer products account for a large percentage of sales. Tourism researchers report mixed results when using travel expenditures as a segmentation variable. Earlier studies were unable to distinguish heavy users from light users in terms of demographic and socioeconomic characteristics but more recent studies reported very different results. Based on these results, it seems that segmenting visitors based on travel expenditures may be a useful alternative to the more common approach of segmenting on the basis of travel activities. These studies were conducted in the United States and the consumers under study were Americans. There are relatively few reports in the tourism literature about Asian tourists’ spending behavior. In view of the extravagant spending behavior and unique spending patterns of Taiwanese tourists, this paper applied and assessed the potential usefulness of an expenditure-based segmentation technique in marketing Guam to the Taiwanese travelers. Results from this study show that heavy spenders were distinguishable from the other segments in terms of age, party size, length of stay, trip purpose, travel mode, and their spending pattern.