...Consumer Behavior Consumer Behavior: Contrast Jet Blue vs. Southwest Airlines Trident University MKT501 CS1 Identify key external factors that affect the passenger airline industry and explain how that impact occurs There are several external factors that affect the passenger airline industry. Some of the factors that affect the industry are economic crisis, instability in aviation fuel price, and environmental factors. I will elaborate more in detail in the following paragraphs on these factors. The first area I want to talk about is our countries current Economic Crisis, and in my opinion drives all the other factors that affect airline industry’s the most. The current economic situation is not good and therefore will have an effect on what a customer will or will not do. Air travel is very expensive as it is, in my opinion, so a sluggish economy will add more pressure on an individual or family thinking of flying anywhere. The second area that affects the airline industry is the cost of aviation fuel. If fuel prices are high, the airline will have to charge more for tickets. As I mentioned earlier, higher ticket prices is not what the public wants in our current economy. The airline industry is a business and in order to make money and continue to provide the service, the company has a breakeven price, approximately 66% of their operating cost (Airline Economics Break Even Load Factors Paragraph). If the company doesn’t break-...
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...University International Williams Anaab Module 1 Case Assignment (Airline Market) MKT 501: Strategic Marketing Dr. Cathy Cameron 24 November 2013 Introduction In recent years, affected by natural disasters, emergencies, oil price volatility, the international financial crisis and other factors, especially the oil price, that is the most major factor of the airline cost, and still increasing, made the airline industry’s production decline sharply. The main source of profit for the airline industry are passenger and cargo revenue primarily, in addition, the fuel surcharges and exchange gains constitute the major part of its profits. According to these factors, airline companies will make an expectation development whether they can benefit or loss, and they will expect how much they will benefit or loss. However, the question that over the past 10 years, airline has lost $50bn, but it is less than the expected losses shows that the expect losses larger than actual losses Key External Factors The key external factors that affect the passenger airline industry are the economic growth, level of employment, disposable income, fuel prices, political stability, and trade regulations. If there is slower economic growth the business activity decreases and business traveling decreases. Similarly, lower disposable incomes means people cut down on traveling and this affects the passenger airline industry. When there is political instability, people cut down...
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...Full-Service In this essay I will create a nine-component marketing plan on flying full-service business class with Delta opposed to flying with a discounted low-fare carrier like Southwest. As the economy struggles and air travel becomes more competitive it is not easy to establish the best niche market strategy for an airline. Teplensky defined (as cited in Parrish, Cassill, & Oxenham, 2006) niche market strategy as, "an emphasis on a particular need, geographic, demographic, or product segment" (p. 695). Therefore, it would be ideal for Delta to seek a more specific niche in air travel and differentiate by precisely satisfying customers’ needs; rather than attempting to generalize broad niches that only partly satisfy customers’ needs as a whole. Company Overview/ Description of Location Delta Air Lines Inc. has their corporate headquarters in Atlanta Georgia. However, Delta Air Lines Inc. has a vast worldwide airline system. Delta serves over 160 million customers annually, and offers 356 destinations in 65 countries. Additionally, Delta has over 80 years of passenger service, more than 80,000 employees, and 700 aircraft that spread across six continents. Packed with an array of good services, Delta offers more than 13,000 daily flights, SkyMiles rewards (frequent flier plan), the world's largest airline loyalty partnership, over 50 Sky-Clubs, and an award-winning BusinessElite program (Delta Air Lines Inc., 2011). Description of Product or Service Focusing primarily on...
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...MARKETING TERM PAPER FOR [pic] AIRLINES: A MODEL OF EXCELLENCE IN THE CIVIL AVIATION INDUSTRY Table of Contents 1.0 INTRODUCTION 3 1.1 Company Background 3 1.2 Research Topic 5 2.0 ENVIRONMENTAL ANALYSIS 6 2.1 Political, Economic, Social and Technological Analysis 6 2.2 Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis 7 2.3 Summary 9 3.0 SEGMENTATION, TARGET AND POSITIONING (STP) 10 4.0 PRODUCT, PRICE, PLACE AND PROMOTION (4Ps) 11 5.0 CONCLUSION 12 6.0 REFERENCES 13 6.1 ANNEX I 14 INTRODUCTION The Airline Industry has experienced global economic and ecological turmoil in the past two decades. This turmoil has brought to the fore the challenges being faced by the Aviation Industry in the world which have, in most cases, led to decreased profitability, lower growth rates, safety concerns and employee lay-offs among others. However, in-spite of the above mentioned challenges in the industry, Southwest Airlines has emerged as one of the most creative, most price competitive, safe, innovative and flexible company in the industry. The company has overcome unsurmountable challenges to become what is perceived today as a successful model of excellence in the industry with an extraordinary safety record in the last 40 years. In its forty-three years of service, the Dallas-based Airline continues to differentiate itself from other carriers with exemplary customer service delivered...
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...CHAPTER 8 Market Segmentation, Targeting, and Positioning CHAPTER OVERVIEW Chapter 8 shows different approaches that companies can take to a market in order to best serve customer and company needs. It begins with a brief overview of three marketing approaches that companies can take: mass marketing, product-variety marketing, and target marketing. A fuller discussion details the three steps of target marketing, beginning with market segmentation: dividing a market into groups that is measurable, accessible, substantial, and actionable. This can be done in different ways by using geographic, demographic, psychographic, behavioral, or other variables. Next, the process of market targeting and the different approaches a company can take are discussed. These include undifferentiated, differentiated, and concentrated marketing. The chapter concludes by covering market positioning strategy and how companies can position their products for the best competitive advantage. CHAPTER OBJECTIVES Students should be able to: 1. Explain market segmentation, and identify several possible bases for segmenting consumer markets, business markets, and international markets. 2. List and distinguish among the requirements for effective segmentation: measurability, accessibility, substantiality, and actionability. 3. Outline the process of evaluating market segments, and suggests some methods for selecting market segments. 4. Illustrate the concept of...
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...CHAPTER 8 Market Segmentation, Targeting, and Positioning CHAPTER OVERVIEW Chapter 8 shows different approaches that companies can take to a market in order to best serve customer and company needs. It begins with a brief overview of three marketing approaches that companies can take: mass marketing, product-variety marketing, and target marketing. A fuller discussion details the three steps of target marketing, beginning with market segmentation: dividing a market into groups that is measurable, accessible, substantial, and actionable. This can be done in different ways by using geographic, demographic, psychographic, behavioral, or other variables. Next, the process of market targeting and the different approaches a company can take are discussed. These include undifferentiated, differentiated, and concentrated marketing. The chapter concludes by covering market positioning strategy and how companies can position their products for the best competitive advantage. CHAPTER OBJECTIVES Students should be able to: 1. Explain market segmentation, and identify several possible bases for segmenting consumer markets, business markets, and international markets. 2. List and distinguish among the requirements for effective segmentation: measurability, accessibility, substantiality, and actionability. 3. Outline the process of evaluating market segments, and suggests some methods for selecting market segments. 4. Illustrate the concept of positioning...
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...The Effect of Consumer Behavior on Southwest Airline’s Market Strategies Southwest Airlines provides flight transportation to leisure travel and business travel clients. While they specifically cater to each of these areas of segmentation, Southwest Airlines organizationally competes on a low cost strategy. The company’s approach to the market is to provide a low cost option to both consumer segments, while providing top-notch service and convenience. Southwest’s strategy targets business class travelers, making corporate partnership agreements a large part of their marketing and finance strategy. In catering to the business class bargain hunter, Southwest has established a value concept of customer loyalty and convenient services. Southwest has been able to capitalize this market segment to become the largest domestic airline while also able to maintain the highest customer satisfaction level in the industry. The company is able to maintain partnerships and brand themselves as an affordable business travel option by providing discount partnerships with affiliate businesses. This allows the airline to maintain market share by providing financial motivations for its business partners to incentivize them to continue to patronize Southwest Airlines. They actively promote their schedule of frequent non-stop flights to major city hubs as well as surrounding cities, proving to be a practical option for business class travelers. Southwest’s business traveler value concept extends...
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...Air Asia is a low cost airline based in Kuala Lumpur, Malaysia. It operates scheduled domestic and international flights and is Asia’s largest low fare, no frills airlines. Air Asia pioneered low cost travelling in Asia. It is also the first airline in the region to implement fully ticketless travel and unassigned seats. Its main base is the Low Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport (KLIA). Its affiliate airlines Thai Air Asia and Indonesia Air Asia fly from Suvarnabhumi Airport, Thailand and Soekarno-Hatta International Airport, Indonesia, respectively. AirAsia operates with the world's lowest unit cost of US$0.023 per available seat kilometres (ASK) and a passenger break-even load factor of 52%. It has hedged 100% of its fuel requirements for the next three years, achieves an aircraft turnaround time of 25 minutes, has a crew productivity level that is triple that of Malaysia Airlines, and achieves an average aircraft utilisation rate of 13 hours a day. It is currently the main customer of the Airbus A 320 which has been operational since 2013. The first unit of the plane arrived on 8 December 2005. Air Asia’s Values The emphasis of this assignment is to Identify how Air Asia can attain its vision and reach its identified target customers by the use of S.T.P strategy and how the firm has managed its marketing decisions to position themselves for maximum competitive advantage. Air Asia’s S.T.P strategy Segmentation it is to determine...
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...Market Segmentation By Jerry W. Thomas W hen the term “market segmentation” is used, most of us immediately think of psycho- A brand could be sold only in one market, one state, or one region of the United States. Many restaurant chains focus on a limited geographic area to achieve concentration of force. Regional differences in consumer preferences exist, and this often provides a basis for geographic specialization. For example, a company might choose to market its redeye gravy only in the southeastern U.S. Likewise, a picante sauce might concentrate its distribution and advertising in the southwest. A chain saw company might only market its products in areas with forests. Geographic segmentation can take many forms (urban versus rural, north versus south, seacoasts versus interior, warm areas versus cold, high-humidity areas versus dry areas, high-elevation versus low-elevation areas, and so on). These examples also reveal that geographic segmentation is sometimes a surrogate for (or a means to) other types of segmentation. The purpose of segmentation is the concentration of marketing energy and force on the subdivision (or the market segment) to gain a competitive advantage within the segment. graphics, lifestyles, values, behaviors, and multivar- iate cluster analysis routines. Market segmentation is a much broader concept, however, and pervades the practice of business throughout the world. What is market segmentation? At its most basic level, the term “market...
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...before he specialized in strategy) and looks at the size and composition of the market you intend to target. Strategic strength is a supply-side dimension and looks at the strength or core competency of the firm. In particular he identified two competencies that he felt were most important: product differentiation and product cost (efficiency). He originally ranked each of the three dimensions (level of differentiation, relative product cost, and scope of target market) as either low, medium, or high, and juxtaposed them in a three dimensional matrix. That is, the category scheme was displayed as a 3 by 3 by 3 cube. But most of the 27 combinations were not viable. In his 1980 classic Competitive Strategy: Techniques for Analysing Industries and Competitors, Porter simplifies the scheme by reducing it down to the three best strategies. They are cost leadership, differentiation, and market segmentation (or focus). Market segmentation is narrow in scope while both cost leadership and differentiation are relatively broad in market scope. Empirical research on the profit impact of marketing strategy indicated that firms with a high market share were often quite profitable, but so were many firms with low market share. The least profitable firms were those with moderate market share. This was sometimes referred to as the hole in the middle problem. Porter’s explanation of this is that firms with high market share were successful because they pursued a cost leadership strategy and...
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...Southwest Strategically Robert E. Woodward Embry Riddle Aeronautical University Abstract The following document will discuss and analyze how Southwest Airlines has become an industry leader in the air carrier business. How has Southwest Airlines adapted after the attacks on the Twin Towers of New York and the Pentagon on September 11, 2001. Where is the company headed in the future? Recommendations after a SWOT analysis will be made on how Southwest could remain one of the dominant leaders in the airline business. Southwest Airlines Corporate Stategy I. INTRODUCTION A. Executive Summary 1. Summary statement of the problem: Where did Southwest Airlines begin and how do they stay competitive in the air carrier industry since the attacks on America the morning of September 11, 2001. 2. Summary statement of the recommended solution: Southwest can stay competitive by reshaping its rewards program and trying to increase its customer loyalty. B. The Situation Southwest Airlines began business in 1971 offering flights between Houston, Dallas and San Antonio Texas. Now Southwest Airlines operates in more than 35 states. It offers shorter flights than other air carriers; that average less than 1.7 hours. Most of Southwest’s flights are non-stop. Southwest Airlines customer focused attitude helps them to become the leader in US flights, according to the bureau of transportation statistics (docstoc). On September 11, 2001, terrorist attacks shut down...
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...Not Everyone Wants a Relationship By Rick Spitler and Sherief Meleis Some banking customers — just like consumers who shop at Wal-Mart or fly on Southwest Airlines — are happy to trade style or comfort to get their business expedited on attractive terms. Related Charts • Discount Banks Pursue the 'Other Half' of the Market • Winning Formula • Transforming the Generalist Retail Bank For one view of what the future of the banking industry may look like, consider the airline industry, where Southwest Airlines Co. has ascended to dominance in just 30 years. While "full-service" carriers like American Airlines Inc., Delta Air Lines Inc. and United Air Lines Inc. focused on building elaborate jet fleets and "hub" systems at major regional airports, Southwest adopted a discount fares strategy based on older inner-city airports and a zeal for efficiency. To control costs, for example, Southwest re-used plastic boarding passes and handed out peanuts instead of hot meals — and passed along the savings to its customers. Today, Southwest's market capitalization is roughly seven times that of the nearest U.S. legacy air carrier. Overall, discount carriers have claimed 25% of the U.S. commercial passenger market, according to the National Institute for Aviation Research, based at Wichita State University. That share is expected to soar to 40% over the next few years. This is a harbinger of things to come in retail financial services. Operating with superior efficiency and offering...
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...Southwest Airlines Research Report Tommy Best - Jessica Johnson - Adam McCormick Laura Monday - Evvan Tolly - Jessica Wirth Mary Wrenn ADV 340 - Dr. Childers - Fall 2009 Table of Contents Industry Overview Introduction....................................................................................................................................................................................................................... 1 History............................................................................................................................................................................................................................... 2 Size of Industry.................................................................................................................................................................................................................. 2-3 Stage in Product Life Cycle.................................................................................................................................................................................................. 3-4 Seasonality......................................................................................................................................................................................................................... 4 Growth Potential/Forecasts..........................................................................................................
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...Ltd (Comair) operated as South Africa's first private airline since 14 July 1946. On 27 October 1996 a British Airways franchise agreement came into effect and Comair became known as British Airways Comair (BA). Comair remained a South African controlled company and in 1998 was listed on the Johannesburg Securities Exchange (JSE). In 1999 the airline realised that there was a growing need for affordable air travel as the market had become seriously price sensitive. The economy had weakened at the time and travelling expenses had been cut.6 This realisation led to the launch of kulula.com in July 2001 as a separately branded Comair initiative: a South African low-cost, no-frills airline modelled on the successful European low-cost airline, easyJet. Kulula.com offered return flights between Johannesburg and Cape Town for as little as R800, three times a day, and received 2 000 bookings on its first day of operation. The product offering was simple: easy online booking directly with the airline and affordable fares. At the same time, frills were kept to a minimum: tickets could not be changed once they had been purchased7; there was no pre-assigned seating8, frequent flyer programme or business-class; and food and drink were sold on board rather than distributed for free.9 By stripping costs out of kulula.com's operations and business systems, the airline was able to offer up to a 40% discount on a conventional airline ticket. Research had found strong evidence to suggest...
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...Segmentation, Targeting, and Positioning Segmentation, targeting, and positioning together comprise a three stage process. We first (1) determine which kinds of customers exist, then (2) select which ones we are best off trying to serve and, finally, (3) implement our segmentation by optimizing our products/services for that segment andcommunicating that we have made the choice to distinguish ourselves that way. Segmentation involves finding out what kinds of consumers with different needs exist. In the auto market, for example, some consumers demand speed and performance, while others are much more concerned about roominess and safety. In general, it holds true that “You can’t be all things to all people,” and experience has demonstrated that firms that specialize in meeting the needs of one group of consumers over another tend to be more profitable. Generically, there are three approaches to marketing. In the undifferentiatedstrategy, all consumers are treated as the same, with firms not making any specific efforts to satisfy particular groups. This may work when the product is a standard one where one competitor really can’t offer much that another one can’t. Usually, this is the case only for commodities. In the concentratedstrategy, one firm chooses to focus on one of several segments that exist while leaving other segments to competitors. For example, Southwest Airlines focuses on price sensitive consumers who will forego meals and assigned seating for low prices...
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