Mgt 501 Case 1

Topics: Airline, Southwest Airlines, Marketing Pages: 6 (1731 words) Published: May 20, 2013

Module 1 Case Study
MKT 501: Consumer Behavior: Segmentation and Targeting
Professor Dr. Gordon Leichter
May 14, 2012

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 segmentation, 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...
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