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Consumer Behavior: Segmentation and Targeting Professor Dr. Gordon Leichter May 14, 2012 Abstract The assignment reviews industry practices which involve segmentation, targeting and positioning. I will attempt to explain these three consumer behaviors below. The airline industry will use the above mentioned practices in order to enhance and or improve marketing strategies.
In order for this to take place and marketing analyst must develop techniques to observe consumer behavior by analyzing segmenting, targeting and positioning for airline industry Identify Key External Factors That Affect the Passenger Airline Industry To explain how the key external factors affect the passenger airline and how the impact occurs. The airline industry was heavily impacted by the global recession.
Many major Airline companies faced heavy revenue losses and a hand full of airlines merged in the post-recession era to handle the situation of decreasing demand in air travel. In order to be successful, they have to carry out their business from a certain value-based perspective “less for much less” and concentrate their attention on the following Key Success Factors of their industry which would be the overall low costs: overall low costs are essential to be able to offer cheap fares.
They are achieved by several cost-cutting business practices such as: * Point-to-point services (no waiting for baggage or passenger transfers, less complexity) * Cheaper product design (no free food or drinks, no newspapers) * Standardized fleet (lower aircraft capital outlay, lower training costs, cheaper parts & equipment supply, lower maintenance costs) * Use of secondary airports (lower charges) * Direct Sales via Internet as main distribution channel Explain Segmentation, Targeting, and Positioning According to an article from the University of Southern California on egmentation, targeting and positioning, there is some good information explain all three. Segmentation involves finding out what kinds of consumers with different needs exist. Segmentation, targeting, and positioning working together comprise a three stage process. The first stage is to determine which kinds of customers exist. The second stage is to select which ones we are best off trying to serve and, finally, the third stage is to implement our segmentation by optimizing our products/services for that segment and communicating that we have made the choice to distinguish ourselves that way.
Demographic variables essentially refer to personal statistics such as income, gender, education, location (rural vs. urban, East vs. West), ethnicity, and family size. Some consumers want to be seen as similar to others, while a different segment wants to stand apart from the crowd. Another basis for segmentation is behavior. Some consumers are “brand loyal”, they tend to stick with their preferred brands even when a competing one is on sale. Some consumers are “heavy” users while others are “light” users. In the next step, we decide to target one or more segments.
Segmentation involves finding out what kinds of consumers with different needs exist. First, how well are existing segments served by other manufacturers? Secondly, how large is the segment, and how can we expect it to grow? Thirdly, do we have strengths as a company that will help us appeal particularly to one group of consumers? Positioning involves implementing our targeting the product that occupies in consumer’s minds relative to competing products which are typically defined by consumers on the basis of important attributes.
Positioning normally involves implanting the brand’s unique benefits and differentiation in the customer’s mind and it maps that plot perceptions of brands are commonly used. (Anonymous, n. d. ) Identify the Major Airline Market Segments In the article, “Identifying Market Segments and Selecting Target Markets,” segment marketing, companies identify consumer with similar needs and wants. For example, an airline is looking forward to providing no frills connectivity between metro cities on us east coast compare. This segment is within airline industry but needs of customer is different.
Target audience is low budget travelers, however, customers within the segment look for different attributes, for example, lunch or beverages as part of travel. Here companies can offer this by charging the customer. A niche market is worth exploring where customers are willing to pay a premium for product, entry barriers are high and market has growth potential. In local marketing, customers are local neighborhood, trading stores, for example, many banks prefer local marketing for better understanding of client and provide them right type of service.
In individual marketing, companies look forward to satisfying needs and wants of individual customer. Internet is facilitating the process of individual marketing, where in customer log on to the site and creates products from available options. This process is not feasible for high technology products like automobiles. What Are the Target Markets for First Class vs. Business Class vs. Economy Class The target market for the different airline class is that first class is for high budget travelers comprising passengers and the target market consists mainly of German and  international business.
The business class traveler primary fly in first/business class and this target is mainly geared for corporate travelers by offering a very high touch approach to service end to end. The economy class targets small corporate customers, tourists and budget travelers (such as students) whereas the business class aims at medium and big corporate customers. These target markets are identical when viewing people and their societal differences when it comes to background and exposure. (Anonymous, n. d. ) Contrast Jet Blue vs.
Southwest Airlines | In an article by Chris Woodyard in USA Today, he outlined several contracts between JetBlue at Southwest Airlines. Below are a few of the documented differences between the two. I will focus on the listed issues that I seem to face when traveling. Ticket counter and gate: Southwest has installed enough self-serve check-in machines at Los Angeles International to hold down the wait time in the ticket counter line. The ticket counter is usually well staffed, so lines move quickly.
JetBlue ticket counter only took three minutes to check my bag. Boarding: Southwest’s open-seating policy encourages passengers to get aboard faster to claim an aisle or window. JetBlue has bigger planes, 156-seat Airbus A-320s, but they are often boarded from both ends. Passengers get aboard faster. Cleanliness: Both airlines have leather seats. The Southwest jet had the older brown interior, which is being replaced by new blue interiors on the entire fleet. There were ink scribbles on the headrest in front of my seat.
The JetBlue interior was spotless. The average age of a JetBlue plane is 20 months. Southwest’s average fleet age is about 8 years. Cabin crew: Southwest’s flight attendants are usually fun. They also know when to turn off the jokes, such as on early-morning flights. On the day I flew, humor was in short supply. When a passenger asked for second pillow, the flight attendant replied, “You only get one. That’s it. ” They came by for two beverage runs and a snack-box run. On JetBlue, pillows were plentiful.
The pilot stood at the front of the cabin greeting arriving passengers. The flight attendants came by once to offer beverages and again to deliver snacks. They showed up twice more to hand out bottled water. On-time performance and baggage: JetBlue ranked first among 19 U. S. airlines in on-time performance for the 12-month period ended in April, according to the U. S. Department of Transportation. Southwest was third. JetBlue also had the best record of any airline for not losing bags in April. Southwest was fourth.
People travel because they are pushed by physiological, psychological, intangible and internal factors; and people travel also because they are pulled by the unique things a destination feature, such as image, recreation facilities, education, appreciating scenery, safety, gambling and foods. Compare and explain the impact of key external factors on each, e. g. , economic conditions and the growing consumer interest in leisure travel. There are various factors, which affect segmentation in the business market. Demographic is one such factor, which consists of type of industry, size of company and geographical location of the company.
Operational segmentation is on the technology class, customer consumption and customer requirements. Purchasing methodology includes segmentation based on purchase policy, purchase department structure, relation with companies and market positioning of companies. The order Requirements lets segmentation be based on nature of requirement and size of order. Personality trait segmentation looks at loyalty and risk profile. Describe each company’s target market and positioning. Give some examples of how these strategies are implemented for each company.
Each company target customers are “fare-conscious travelers who might otherwise have used alternate forms of transportation or would not have traveled at all. The current base consists primarily of leisure travelers, the most price sensitive class of travelers. However, JetBlue is increasingly courting a higher class of passengers who have the resources to pay more for a business or first-class ticket, but appreciate a lower fare without sacrificing high-class customer service, especially when corporations are looking to reduce business travel due to tough economic conditions.
Both companies are in a unique position to target business travelers during tough economic times. As a discount provider who also focuses on customer service, they can appeal to cost-sensitive business people that need to cut travel costs but don’t want to sacrifice comfort, convenience, and modernity. Conclusion This concludes my paper on segmentation, targeting, and positioning of the airline industry and the comparative analysis of Jet Blue and Southwest Airlines. References Anonymous, (n. d. ), University of Southern California.
Segmentation, Targeting, and Positioning. Copyright ©1999-2010 by Lars Perner. Retrieved May 17, 2012 from: http://www. consumerpsychologist. com/cb_Segmentation. html Anonymous, (n. d. ), Identifying Market Segments and Selecting Target Copyright © 2008 – 2012 Markets. Retrieved May 17, 2012 from http://www. managementstudyguide. com/identifying-market-segments. htm Anonymous, (n. d. ), Marketing Profs. Retrieved May 17, 2012 from: http://www. marketingprofs. com/ea/qst_question. asp? qstID=37390 Anonymous, (n. d. ), Integrated Company Analysis.
Retrieved May 24, 2012 from: http://business. library. wisc. edu/resources/kavajecz/10_Fall/JetBlue_Report. pdf Anonymous, (n. d. ), Segmentation, Targeting, and Positioning, Building the Right Relationships with the Right Customers. Copyright © 2012 Slideshare Inc. Retrieved May 17, 2012 from: http://www. slideshare. net/mehmetcihangir/segmentation-targeting-and-positioning-presentation Woodyard, Chris, Pitting Southwest vs. JetBlue USA TODAY. Retrieved May 17, 2012 from: http://www. usatoday. com/travel/news/2004-07-05-biztravel-comparison_x. htm

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