BE200 Marketing Management
Tutor Marked Assessment
Read carefully the following instructions and both cases study, and then answer each question in an essay format. To support your analysis use relevant material from BE200 covered so far and other resources such as AOU e-library articles.
BE200 Marketing Management INSTRUCTIONS:
For textbook: Principles of Marketing (Arab World Editions) with My Marketing Lab – refer to chapters 1, 2, 3 and 5
BE200 Marketing Management United Airlines
BE200 Marketing Management Using segmentation to grow a business
United Airlines was formed in 1927 from four airlines – Boeing Airplane Company, National Air Transport, Varney and Pacific Air Transport. From its roots as a USA domestic carrier, United Airlines expanded into international routes to become the world’s second largest air carrier. With hubs in Chicago, Denver, Los Angeles, San Francisco, Washington D.C. and key international gateways in Tokyo, London, Frankfurt, Miami and Toronto, United flies to 117 destinations in 26 countries. These schedules are obviously subject to change. United employs more than 80,000 people worldwide and carries more than 210,000 passengers every day. Its customers have access to more than 729 destinations around the world through Star Alliance, the leading global airline network. BE200 Marketing Management
By offering a range of customer-focused products and services, United has become an industry innovator. In a service-based industry, customers and the services they require are at the center of any marketing strategy. Besides offering convenient scheduling throughout its domestic and international routes, United seeks to attract high-yield customers and to earn their preference and loyalty. It does this by providing a comprehensive network and an attractive frequent-flyer programmer with enhanced product/service offerings. BE200 Marketing Management
Within markets, not all customers are the same – they have different tastes and want different things. As a result, particular markets can usually be further divided into discrete segments. Each group consists of people with similar needs and requirements. The organization then develops strategies that are closely aimed at satisfying each customer group. This process is known as market segmentation. BE200 Marketing Management
Through segmentation, United Airlines can identify market opportunities and meet its marketing objectives. Segmentation gives an airline a better understanding of its customers, the services they require, where and when they want those services and how they would prefer to pay for them. BE200 Marketing Management
United Airlines segments its market so that it can:
Identify consumer needs and the proportion of customers who have those needs
Develop products and prices to meet these needs
Target communications at customers within each segment
Allocate funds to support and develop each market opportunity.
Market segmentation therefore enables United Airlines to maximize the efficiency of its marketing efforts by moving the company to use a different strategy for each market segment.
BE200 Marketing Management Segmentation involves dividing a whole market so that products and services can then be developed for each part of the market. Some companies divide a market geographically, while others divide markets according to demographic details such as age, gender or occupation. The criteria used to divide the market is known as the segmentation base.
United Airlines uses a form of psychographic segmentation to divide the market for its services. This involves identifying the social class, lifestyles, opinions, interests, behavior and attitudes of customers. Modern communication systems play a major part in this information-gathering exercise. With the help of questionnaires, United Airlines classifies its customers by their motivations. For example, some customers choose United Airlines because of price, while others choose the airline because of schedules, frequent flyer programmers or other forms of service.
For United Airlines, successful segmentation enables targeting to take place. Targeting provides the focus for the activities of the business.
It enables promotions and services to be aimed only at those who are most likely to respond positively to them. Passengers are communicated with through email, which is becoming a focus for closely targeted marketing. BE200 Marketing Management
The United Airlines business model can be compared to the classic 80:20 rule in Pareto’s Analysis. Based on experience of the airline industry, the model assumes that, for airlines offering a high level of service, 80of profit comes from 20of customers. The profit-generating customers are the ones who are prepared to pay a premium price for a premium service. They are the ones that the airline most needs to attract. BE200 Marketing Management
United Airlines recognizes that airlines need to be able to respond rapidly to changing customer requirements in what is a complex service industry. The company understands the role of technology in enabling it to amass the data it requires about customer requirements. In a heavily regulated and increasingly competitive market place with good prospects for long-term growth, United Airlines successfully uses market segmentation to target distinct customer groups from whom growth opportunities can be developed.