United Airlines' Essay On Market Segmentation, Targeting, And Positioning.

Implications of Demographic, Cultural and Economic Environments on Decisions of United Airlines

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.

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.

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.

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.

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.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.

The marketing environment is the actual combination of internal along with external factors along with forces which will be affecting the ability of the company in establishing the proper relationship along with serve with the customers. The marketing environment of the different businesses consists of both external along internal environment. The internal environment is specific towards the customers along with this is inclusive of the different owners along with materials and machines (Andaleeb 2016). On the other hand, the external environment is inclusive of the larger societal forces which can affect the society.

b. Implications of Demographic, Cultural and Economic Environments on Decisions of United Airlines 

The different changes in the demographic, cultural along with economic environment plays a major and substantial role on the marketing decisions of the United Airlines.

The economic factors are inclusive of the different changes in the preferences of the customers in the market and the shift in the spending patterns of the customers as well. In the present scenario, this has been seen that there are different budget airlines in the market which are offering quality services at an affordable rate. This is one of the major reasons which is affecting the overall effectiveness of the United Airlines in a negative manner (Andaleeb 2016).

Demographic environment helps in showing change in the age structure, shift in the geographic population along with increase in the diversity in an effective manner. The age variable is one of the major factors as trends are changing which is necessary to be considered as the young generation prefer budget airlines as they do not have such income and this is required to be considered by United Airlines (Kalafsky and Sonnichsen 2015).

Cultural factors are inclusive of advertising and changing preferences of the customers in the market. This respective factor is required to be considered by United Airlines as the other competitors such as Air Asia and Indigo are using social media networking in order to attract customers and this can negatively affect the overall popularity of the company (Andaleeb 2016).

a. Definition of Market Segmentation, Targeting and Positioning 

Market Segmentation is the process of dividing the entire market of the different customers who are potential in nature which are based on the various characteristics. The segmentation helps in dividing the complete market into small segments who have similar kinds of tastes and preferences. The market segmentation is done on basis of income, age group along with gender which is essential in nature to be considered (Andaleeb 2016).

Definition of Market Segmentation, Targeting and Positioning

Market Targeting is the process of selecting the group of customers from the entire market and this consists of the buyers to whom the organization needs to satisfy the different requirements of the customers to satisfy the needs of the customers ion an effective manner.  

Market Positioning refers to the perception of the consumers of the product which is in relation to the different competing brands and products. This is the process which helps in establishing a proper brand image of the product which will be consumed by the customers in the market.

b. Usage of Segmentation by United Airlines

United Airlines utilizes the psychographic kind of segmentation in order to divide the service market. This generally involves the lifestyle of the individuals who are premium in nature and they prefer the exclusive kind of services from UA as well (Zia and Kumar 2016). UA tries to use the predictive analytics technology wherein the company tries to attract the premium group of customers and this uses the psychographic segmentation characteristics. Firstly, the company has tried to categorize customers in different motivational type of groups:

• Global Executives
• Schedule Optimizers
• Reluctant Travellers
• Travel Seekers
• Frugal Flyers

From the above, this can be analysed that UA is mainly focusing on the customer experience and this has implemented the valued-based psychographic segmentation which helps in increasing the view of the different customers and this will increase the number of customers.

a. Definition of SWOT Analysis 

SWOT analysis is the strategic planning method which is being used to help the organization in identifying the different strengths, weaknesses, opportunities along with threats which is related to the business competition along with planning for the project. This is the framework which is being utilized in evaluating the competitive position of the company in an effective manner (Venter, Wright and Dibb 2015). This is the respective model which analyses the potentiality of the organization in performing certain aspects and this is being utilized by the different organizations in carving for the sustainable niche in the entire market effectively.

b. Components of SWOT Analysis 

Strengths- This is the advantage which can be gained by the organization and the aspects which are required to be considered in the section is inclusive of performance of the company along with analysis of the different strong points which is best in comparison to the other competitors in the market. The strengths are inclusive of strong brand name, good reputation along with cost advantages which can be different strengths.

Usage of Segmentation by United Airlines

Weaknesses- This is entirely the opposite of strengths and the weaknesses is inclusive of the different kinds of hindrance of the development of the organization. The worse areas are required to be analysed in comparison to the other competitors. The weaknesses are inclusive of weak brand name along with poor reputation which can affect the overall profitability of the company (Bruwer and Li 2017).

Threats- This is inclusive of the different kinds of aspects or the markets which can cause damage to the firm or possibly damage the goodwill of the firm in a negative manner. Furthermore, the vicious competition from the peer enterprises will be determined as this will provide a brief overview on threats in an effective manner. The different threats are inclusive of the different changes in the trend, new legislations along with different substitute products.

Opportunity- The opportunities is inclusive of the different potential customers along with the different kinds of promising aspects which can be gained by the company in a proper manner. This is inclusive of arrival of new technology, unfulfillment of the different demands of the customers along with training courses which will be beneficial for the overall success of the firm (Feili et al. 2017).

c. SWOT Analysis of United Airlines 

References

Andaleeb, S.S., 2016. Market Segmentation, Targeting, and Positioning. In Strategic Marketing Management in Asia: Case Studies and Lessons across Industries (pp. 179-207). Emerald Group Publishing Limited.

Bruwer, J. and Li, E., 2017. Domain-specific market segmentation using a latent class mixture modelling approach and wine-related lifestyle (WRL) algorithm. European Journal of Marketing, 51(9/10), pp.1552-1576.

Feili, H., Qomi, M., Sheibani, S. and Azmoun, G., 2017, November. SWOT Analysis for Sustainable Tourism Development Strategies using Fuzzy Logic. In 3rd International Conference of Science & Engineering In the Technology Era.

Flouris, T.G. and Oswald, S.L., 2016. Designing and executing strategy in aviation management. Routledge.

Gengler, C.E. and Mulvey, M.S., 2017. Planning pre-launch positioning: Segmentation via willingness-to-pay and means-end brand differentiators. Journal of Brand Management, 24(3), pp.230-249.

Kalafsky, R.V. and Sonnichsen, T., 2015. Employing SWOT analysis in coursework on the geographies of regional economic development and trade. Journal of Geography, 114(5), pp.177-187.

Schlegelmilch, B.B., 2016. Segmenting Targeting and Positioning in Global Markets. In Global Marketing Strategy(pp. 63-82). Springer, Cham.

United Airlines. (2018). [online] Available at: https://www.united.com/ [Accessed 22 Nov. 2018].

Venter, P., Wright, A. and Dibb, S., 2015. Performing market segmentation: a performative perspective. Journal of Marketing Management, 31(1-2), pp.62-83.

Zia, M. and Kumar, N., 2016. A Three Dimensional Vertical Differentiation Model: Implications for Segmentation, Targeting and Positioning.