Customers are one the fundamental concerns of an airline’s business, as they are the primary source of revenue. Most airlines have adopted customer-focused strategies in which they deliver customer service based on their target segment’s needs and wants. An airline can apply a customer centric strategy though various ways including: through the development of the organisational culture, using the Customer Relationship Management framework, by diving consumers into segments and targeting those segments by adequate positioning. Market segmentation sets the basis for the pricing structure, the promotional efforts and the competitive strategy of an airline. It helps the airline to evaluate its target market and consequently develop strategies to
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By implementing the targeting strategy the airline selects which segments it wants to deliver its service to (Perner, 2010). An airline can choose to develop a target strategy around a single consumer segment (Proctor, 2000). For example, easyJet has developed their target market strategy around corporate business travellers (easyJet, 2009). Focusing on one consumer segment is cost effective in terms of resources but it limits the airline in sense that if that segment experiences a decline then the airline has no other segment to make profit from (Proctor, 2000). Alternatively, an airline can choose a multi segment target strategy in which it targets both leisure and business travellers (Proctor, 2000). This is exemplified by Full Service Carriers (FSC) that incorporate class distinctions including: First class, Business class and Economy class. After selecting the target segment an airline has to position itself in the market in a differentiated way (Perner, 2010). The strategic positioning of an airline revolves around delivering the brand image to the target market considering factors such as product, price and promotion (Perner, 2010). For example, Southwest Airlines’ strategic positioning is that it is a low cost carrier that delivers frequent short haul flights (Massey, 2012). This establishes the direction for the employees of Southwest Airlines as the …show more content…
The generic strategies an airline can implement are: Cost Leadership, Differentiation and Focus (Shaw, 2011). The Cost Leadership strategy has to be combined with the Differentiation strategy because it is very difficult for a firm to survive the competition if it does not offer it’s service in distinct manner from its competitors (Smith, 2011). For example, when Southwest Airlines initially begun operations, their segmentation strategy was based on targeting Texans that wanted to travel between Texas cities in a cost and time efficient manner (Smith, 2011). Based on the target market, Southwest Airlines could meet the needs of the segment by adapting the Cost Leadership strategy in which the airline cuts operational costs to provide a low cost service (Shaw, 2011). Southwest’s point of differentiation is that it delivers its customer service in a friendly and fun manner that satisfies the consumers and builds loyalty to the airline (Smith, 2011). Therefore, the airline’s market segmentation and target market strategies helps to identify what the consumers value thus allow for the airline to develop a competitive strategy effectively and with accordance to the segment
By implementing the targeting strategy the airline selects which segments it wants to deliver its service to (Perner, 2010). An airline can choose to develop a target strategy around a single consumer segment (Proctor, 2000). For example, easyJet has developed their target market strategy around corporate business travellers (easyJet, 2009). Focusing on one consumer segment is cost effective in terms of resources but it limits the airline in sense that if that segment experiences a decline then the airline has no other segment to make profit from (Proctor, 2000). Alternatively, an airline can choose a multi segment target strategy in which it targets both leisure and business travellers (Proctor, 2000). This is exemplified by Full Service Carriers (FSC) that incorporate class distinctions including: First class, Business class and Economy class. After selecting the target segment an airline has to position itself in the market in a differentiated way (Perner, 2010). The strategic positioning of an airline revolves around delivering the brand image to the target market considering factors such as product, price and promotion (Perner, 2010). For example, Southwest Airlines’ strategic positioning is that it is a low cost carrier that delivers frequent short haul flights (Massey, 2012). This establishes the direction for the employees of Southwest Airlines as the …show more content…
The generic strategies an airline can implement are: Cost Leadership, Differentiation and Focus (Shaw, 2011). The Cost Leadership strategy has to be combined with the Differentiation strategy because it is very difficult for a firm to survive the competition if it does not offer it’s service in distinct manner from its competitors (Smith, 2011). For example, when Southwest Airlines initially begun operations, their segmentation strategy was based on targeting Texans that wanted to travel between Texas cities in a cost and time efficient manner (Smith, 2011). Based on the target market, Southwest Airlines could meet the needs of the segment by adapting the Cost Leadership strategy in which the airline cuts operational costs to provide a low cost service (Shaw, 2011). Southwest’s point of differentiation is that it delivers its customer service in a friendly and fun manner that satisfies the consumers and builds loyalty to the airline (Smith, 2011). Therefore, the airline’s market segmentation and target market strategies helps to identify what the consumers value thus allow for the airline to develop a competitive strategy effectively and with accordance to the segment