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Concepts of market segmentation
Concepts of market segmentation
Concepts of market segmentation
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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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Johnson, G., Scholes, K., Johnson, G. and Whittington, R. 2011. Exploring strategy. Harlow: Financial Times Prentice Hall.
Kapferer, J. 2012. The new strategic brand management. London: Kogan Page.
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Thompson, Arthur, John Gamble, John Gamble, A. III, and Alonzo Strickland. Strategy. McGraw-Hill/Irwin, 2005. 299. Print.
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.
Terrell, E. (n.d.). Market Segmentation. (Business Reference Services, Library of Congress). Retrieved April 6, 2014, from http://www.loc.gov/rr/business/marketing/
“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 ...
Yet amidst the storm, some regional airlines such as Jet Blue Airlines have managed to focus on specific markets and maintained or increased their profits. It is no doubt that Porter’s 5 forces of competition are at play in this industry. These forces are the Threat of Substitutes, Threat of New Entrants, Competitive Rivalry, Bargaining Power of Buyers and Bargaining Power of Suppliers. Threat of Substitutes The airline industry has been plagued by rising costs resulting in poor profits.
Kaplan, R. S., & Norton, D. P. (2000). Having trouble with your strategy?: Then map it. Harvard Business School Publishing Corporation.
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).
Gerry Johnson & Kevan Scholes (2002) Exploring Corporate Strategy Sixth Edition. London: Prentice Hall. 2. Henry Mintzberg, James Brian Quinn, & Sumantra Ghoshal (1995)
10- Assumptions and risks In my opinion all of this strategies are brilliant, the only risk I see is in hubbing, customers sometimes don’t want spend additional time changing planes, there is the risk of missing connecting planes, luggage may get lost, etc. In the rest of the strategies I don’t see any risks what so ever.
Segmentation is the process of identifying different macro-groups of customers (i.e. segments) based on their common characteristics. The process of choosing a target segment, on which to focus marketing activities on, is a process named targeting.
Segmentation is a procedure of splitting up the market into different groups of consumers who the same common needs and wants. There are different types of segmentation like geographical segmentation, behavioral segmentation, demographic segmentation, lifestyle segmentation. Lexus divided their vehicles into two categories they four wheel drives and two wheel drives.
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.
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.
There are other ways in which airlines customers are segmented. The airline services are divid...
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.