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Fallen Star

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Submitted By linhrinchan
Words 848
Pages 4
Name: Pham Thuy Linh - FB4A

Market segmentation case study
“SILVERJET – A fallen star”

Market segmentation is one of significant tools in business which divides consumers into groups based on common needs; it not only brings a number of benefits to both the consumer and the organization but also causes the failure of organization. SilverJet is a typical example; it was found by Lawrence Hunt in 2006 and bankrupted in 2008. Even though it gained some achievements, it was ended because of some serious mistakes.

Before explaining about the reasons of failure of SilverJet, we should know about the segmentation bases used by airline and SilverJet, and the importance of carbon offset fee added to the ticket price. There are four types of market segmentation: geographic, demographic, and psychographic and behavior. Nowadays, the airlines do not segment anymore on geographic, but on demographic, psychographic and behavior criteria. (1) The airlines divide first their customers with variables such as age, income, social class and life style. Those are variables that consumer wants, preferences and usage rates are often associated with. Demographic variables are popular for segmenting market because they are common and easily identified consumer characteristics. Further segmentation could be done through various behavior criteria such as purpose of travel, price and time, service orientation. Thus, the better an airline does the segmentation the better it will know and serve its customer needs. They also can manage their competitive by entering the market where only a limited number of competitors are active or where their most powerful rivals are not competing. Aviation industry has a clear basic market segmentation system which three segmentation parts named economic, business and first class. Economic class takes up the

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