The Airline Industry Operates in a Fiercely Competitive Environment. Discuss How the Industry Utilises the Theories of Consumer Segmentation and Buying Behaviour to Respond to Consumer Demand. Use Relevant Examples to

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The Airline industry is renowned for its money making potential. This essay will be discussing how these individual airlines, and the industry as a whole, will conduct their own integral consumer segmentation procedures, what theories do they derive from and how they utilize each one to their advantage. There are numerous Airlines that operate here in the UK, the largest of which is British Airways. Due to the Airline industry being one of the most profitable market places in the world, the rivalry is extremely competitive. The fierce competitive environment forces these Airlines to constantly react to their rivals marketing strategies and the public’s consumer needs, all in the hope of making themselves appeal over that of the competition. The Customer Segmentation (SearchCRM.com, 2003) defines typical consumer segmentation as ‘Customer segmentation is the practice of dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing, such as age, gender, interests, spending habits, and so on.’ ‘The marketer has to determine which segments offer the best opportunity for achieving company objectives.’ Kotler et al. (1996, p.93). The Airline industry will conduct this type of research for concluding their potential demographic audience, and consequently be able to design a product or service around the most ideal target market. This is in the hope it will distribute marketing resources efficiently, making full potential of the money and time invested. When it comes to segmentation in the consumer market there are three different types: an undifferentiated; a differentiated; and a concentrated strategy. These are initial marketing segmentation strategies that will be concluded in a very early stage before any real research into the more specific segment type can be successfully found. ‘An undifferentiated mass market strategy means addressing the entire market with the same marketing approach.’ Bradley (1995, p.126). This will not be the airlines industry’s strategy as the services they offer need to be targeted at a more specific group of consumers. ‘A differentiated strategy means operating in two or more segments using separate marketing strategies in each segment.’ Bradley (1995, p.126). This seems to be the most appropriate as Airline organizations like BA will have a range of services available. So this means that they will have to target different segments from economy fares to that of business class fares. ‘By following a concentrated (or niche) strategy, the company selects a single segment in the market which represents the best opportunity for the company to serve customers well, and build a defensible competitive position against new entrants.’ Bradley (1995, p.126). It is difficult to say that an Airline, like BA, will be able to use this strategy. Niche markets will tend to be exceptionally specific and consequently on a smaller scale. It will be particularly difficult for BA to target one individual group so exclusively and reap the benefits of being so personal to this group of consumers. This is because BA needs to target numerous segments across several different types of fares, whilst at the same time maintaining a generic reputation as the countries ‘flag carrier’ for each one. In conclusion for the above initial marketing strategies, the most beneficial, most realistic and the type that would make best use of marketing investment, would be the differentiated marketing strategy. This is because, as stated previously, will make it possible for Airline companies to invest their time and money between more than one type of marketing segment, allowing them to be more specific for each service. This now makes it possible for each service to attract the correct segment of the market. Although each specific service needs it own segment, it would be very constructive to try and incorporate more than one variable...
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