Contents
Question 1 3
Question 2 4
Financial perspective 5
Customer focus 5
Environment and community 5
Internal process 5
Employee satisfaction 5
Question 3 6
Question 4 7
1) Establishing the Mission of the organisation 7
2) Analyze the firms’ environment 8
References: 9
Question 1
Your first decision when running your airline was to choose the sector it operated in — discount, normal or luxury. Therefore, you had to segment the market. How did you do this? As the simulation progressed, did you change your market segmentation? Why? In your judgement, did you segment the market successfully? Why? If not, why not?
We choose to operate in discount sector.
According to Kotler et al 2013 market segmentation is defined as dividing a market into smaller segments of buyers with distinct needs, characteristics or behaviours that might require separate marketing strategies or mixes. As per the industry data which we were operating we used different theories to segment the market one of them is STP process. In this method whole market is sub divided into different segments based on three activities these are segmentation, targeting and positioning. From the market information in case study we identified similar groups of consumer under market segmentation activity. For example market E had consumers travelling between mini hub to medium city that had a new and growing market. While targeting the market we identified which group of consumers to aim for instance market D had major university and service sectors. Lastly in the product and brand positioning we created a concept so as to appeal the target market by running as discount airline. One of the approaches for market segmentation according to Kotler et...
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...mier, EBSCOhost, viewed 27 April 2014.
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“A market segment consists of a group of customers who share a similar set of needs and wants. The marketer’s task is to identify the appropriate number and nature of market segment and decide ...
The demographic environment includes the study of human populations in terms of size, density, location and other statistical information (allbusiness, n.d.). Airlines look to airports that are situated in cities or population with high density. Airlines have the need to serve airports and markets where they can generate sustainable levels of traffic and yield (IATA, 2013). This is particularly true as the airline industry is already highly competitive and coupled with competition that drives lower fares for customers; the need to operate in an airport that revenue potential for airlines is crucial. Population density is one of the factors that affect the choice of airport for airlines. Southwest is a LCC that serves dense, short-haul markets on a point-to-point basis with frequent service (Dresner, Lin , & Wi, 1996). A strategy that LCCs can adopt when expanding is to look out for markets with high density and high GDP and tap on the latent demand of the middle class. Ryanair has been successful in seeking out markets with high density and GDP ( Ryanair, n.d.). Ryanair’s strategy is to attract the latent demand for extra flights distinctive of the middle class, which is especially concentrated in high GDP areas as they are more willing to spend money on leisure trips, while still being price conscious (Malighetti, Paleari , & Redondi, 2009). The decision to serve a market is crucial to airlines as it has fixed costs that c...
Terrell, E. (n.d.). Market Segmentation. (Business Reference Services, Library of Congress). Retrieved April 6, 2014, from http://www.loc.gov/rr/business/marketing/
As discussed in Chapter 3, there are several bases for market segmentation. Because the needs and wants of consumers in various markets differ, there are general indicators that are used to segment markets—geographic demographic, and arguably most importantly, psychographic segmentation. From this, variables like lifestyle, family size and region are used to identify key segments for Virginia Beach. (Spiller, 2012, 88)
Segmentation variables can be classified into four major classes; geographic, demographic, psychographic and behavioural. The use of these categories either individually or in combination assists companies to identify and establish market segments which is relevant to the product or service they are offering. This in turn helps these organisations to evaluate the relevant segments to choose the pertinent target market.
On the surface, the players in the U.S. Airline Industry appear to be in an enviable industry filled with glamorous perks and a solid business model. However, analysis paints a different story. Digging deeper reveals significant issues with little possibility for industry wide solutions, therefore making the industry unattractive.
The airline industry has long attempted to segment the air travel market in order to effectively target its constituents. The classic airline model consists of First Class, Business Class and Economy, and the demographics that make up the classes have both similarities and differences to the other classes. For instance there may be similarities between business class travellers on a particular flight, but they will not all be travelling for the same reason. An almost-universal characteristic of air travel is that customers do not fly for the sake of flying; the destination is the important element and the travel is a by-product, a means-to-an-end that involves the necessity of an aircraft that gets the customer from point A to point B. Because the reasons can differ greatly in the motivations for a customer wanting to fly, it can be difficult to divide the market into discrete segments, that is, there is always going to be overlap in the preferences and characteristics of any given segment. With that in mind, the commonalities that are shared between the clientele that make up the respective classes can easily withstand analysis.
Companies start by segmenting their customers by demographics, geographics, behaviors, and attitudes (Iacobucci, 2013). Once the company decides who their segment group is, they can target
Caroline and Jennifer said that ‘Market segmentation is a crucial marketing strategy. Its aim is to identify and delineate market segments or set of buyers which would then become targets for the company’s marketing plans.’ (Tynan and Drayton, 1987) There are many ways to segment the market, such as age, region, environment, psychology and wages (Hall, Jones and Raffo, 2010).
To begin with, it is crucial to appreciate the meaning of segmentation and targeting because these two terms lay the foundation for this report. Consequently, segmentation is dividing a market, into groups of consumers with homogenous traits in order to provide each group with the desired product. What is the meaning of targeting? It is where an enterprise evaluates every segment with an objective of identifying segments with promising business opportunities. Considering the nature of the product in question, it sufficed to mention that liquor- filled chocolates are to be sold to adults.
Many factors should be addressed when defining a target market. These factors include market segmentation, product life cycle, and the four "P's" that make the marketing mix. Market segmentation is the process of dividing a total market into market groups consisting of people who have relatively similar product wants and needs. There are four major segmentation variables: geographic, demographic, psychographic, and behavioral. Geographic segmentation includes world region, country region, city, density, or climate. Demographic segmentation can consist of age, gender, income, occupation, education, race, religion, or nationality. Social class, lifestyle, and personality fall into the psychographic segment. The behavioral segment divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product (Bethel, 2007). Once the market segment is identified, that market can be targeted.
Air travel has developed into the main form of transportation this century and its demand will double in the next 20 years. In order for airlines to maintain their profitability, they have turn to airline revenue management. Ever since deregulation, airlines have adopted this system to maximize revenue and profitability. What exactly is revenue management? Is a system designed to take advantage of the market, by segregating the market population into different categories of consumer needs, income, and overall behavior of the consumer. Through this process airlines carriers enhance product availability and price to maximize revenue.
Market research provides information to help unravel marketing obstacles that businesses face in today’s business climate, an essential part of the business planning process. As shown in the example certain strategies such as segmentation or differentiation are almost unattainable without relevant market research.
To buttress the implication of the model, Porter explained why the airline industry is the least profitable amongst industries owing to the high threat of the competitive forces. The airline industry players compete heavily on price. Most custom...
Segmentation is a marketing strategy that involves separating a wide target market into small groups of customers who share the common need of using or purchasing the product that needs to be marketed. Market segmentation strategies are utilized to identify these groups of consumers and strategies are designed and implemented to make the product or service appeal to them. Support and also the product will be strategically placed in order to successfully achieve the ultimate marketing goal. Businesses and organizations may come up with different type of strategies involving different products and catchy phrases depending on the product or the target segment.