Understanding China's long-haul outbound travel market: An overlapped segmentation approach Xiang (Robert) Li a, ⁎, Fang Meng a , Muzaffer Uysal b , Brian Mihalik c a School of Hotel, Restaurant & Tourism Management, University of South Carolina, United States b Department of Hospitality and Tourism Management, Pamplin College of Business, Virginia Polytechnic Institute and State University, United States c College of Hospitality, Retail, and Sport Management, University of South Carolina, United States abstract article info Article history: Received 1 November 2010 Received in revised form 1 June 2011 Accepted 1 August 2011 Available online xxxx Keywords: Chinese outbound travel Overlapped segmentation Push–pull model Canonical correlation analysis This study replicates and augments a segmentation approach with overlapped schemes by examining the Chinese outbound travel market. A total of 1600 past and potential long-haul Chinese outbound tourists in three Chinese cities were surveyed and segmented into three groups with overlapped segment members: Entertainment/Adventure Seekers, Life-seeing Experience/Culture Explorers, and Relaxation/Knowledge Seekers. The canonical correlation analysis along with the assignment scheme assigns respondents to canon- ical variates forming product bundles and implied market segments. The findings provide important insight on destination marketing toward Chinese outbound tourists. Further, evidence suggests new and emerging markets are better served using an overlapped segmentation approach. © 2011 Elsevier Inc. All rights reserved. 1. Introduction The explicit and implicit assumptions of consumer behavior and market diversity support market segmentation as a foundational con- cept of marketing research and practices (Neal, 2000; Sheth & Sisodia, 1999). Facing substantial demand and supply heterogeneity in today's competitive environment, marketers generally respond with market segmentation and product differentiation strategies respec- tively (Neal, 2000; Smith, 1956). Arguably, at the heart of such strat- egies is a tradeoff between economies of scale and level of customization. Because product development (and differentiation) is generally beyond their control, tourism managers find market seg- mentation critical to destinations' marketing strategies. As such, mar- ket segmentation studies are prevalent in the tourism literature (Dolnicar, 2002; O'Leary, Lehto, Cheng, & Oh, 2004). Market segmenting divides potential customers into homoge- neous groups. A well-defined market segment responds to a business' market-mix variables in a similar manner (Green & Tull, 1978). De- spite varying in statistical tools employed, mainstream segmentation practices commonly assign each case (i.e., customer) into one group (i.e., segment) (Arabie, Carroll, DeSarbo, & Wind, 1981). Alternatively, some researchers suggest the notion of overlapping segments (Arabie et al., 1981; Baloglu, Weaver, & McCleary, 1998; Chaturvedi, Carroll, Green, & Rotondo, 1997; Oh, Uysal, & Weaver, 1995), which argues that a customer may simultaneously belong to multiple groups, and segment membership does not have to be monogamous. The over- lapped segment approach seems to provide a more realistic picture of today's market. One market calling for further analysis is China's rapidly growing outbound travel market. The United Nation World Tourism Organiza- tion (UNWTO) projects China to be one of the world's top source mar- kets (WTO, 1999). In 2009, 47.66 million outbound trips were made by Chinese tourists, a 4% increase over the previous year. While 4% seems modest compared to the country's historic records, this in- crease defies a worldwide decline amidst the global economic slow- down. Further, Chinese outbound travelers spent a total of USD $42 billion in 2009, representing an impressive 16% increase over the previous year (China Tourism Academy, 2010). While the coun- try's phenomenal development has drawn worldwide attention, Chinese outbound tourism remains mysterious to most Western marketers. Cultural and language barriers aside, the market's sheer size and the substantial intra-group differences (e.g., regional, gener- ational, or socio-economic status differences) among Chinese tourists could somehow overwhelm destinations and businesses newly entering this market. A segmentation analysis on the Chinese outbound market provides a useful starting point for Western tour- ism marketers interested in China. Thus, this paper's purpose is to segment the Chinese outbound market using an overlapped segmen- tation analysis, and provide useful strategy insights on foreign destination marketing in China. Journal of Business Research xxx (2011) xxx–xxx ⁎ Corresponding author. Tel.: + 1 803 777 2764. E-mail addresses: robertli@mailbox.sc.edu (X.(R.) Li), fmeng@hrsm.sc.edu (F. Meng), samil@vt.edu (M. Uysal), bmihalik@hrsm.sc.edu (B. Mihalik). JBR-07367; No of Pages 8 0148-2963/$ – see front matter © 2011 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2011.09.019 Contents lists available at SciVerse ScienceDirect Journal of Business Research Please cite this article as: Li X(R), et al, Understanding China's long-haul outbound travel market: An overlapped segmentation approach, J Bus Res (2011), doi:10.1016/j.jbusres.2011.09.019