Reference no: EM132211273
As stated in the case study, United Airlines has used psychographic segmentation to divide its market.
With regards to the above statement evaluate the use of psychographic segmentation and assess the implementation of United Airlines psychographic segmentation strategy such as lifestyle,activities interest and opinions ,social class and personality.
How successful was the psychographic segmentation strategy.
Read the case study below and answer the above question.
The base for segmentation United Airlines uses a form of psychographic segmentation to divide up the market for its services. This involves identifying the social class, lifestyles, opinions, interests, behaviour 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 programmes 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. 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, 80% of profit comes from 20% of 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 . There are clear differences between domestic segments and global segments. For example, international segments might differ by hours rather than minutes in the US, and the cost of domestic travel is also significantly lower. Having identified different segments, United Airlines had to decide on which ones to concentrate. One key factor was the potential of each sector to generate not only revenue but also profit. In some segments, such as global executives, the customer profile was clear-cut regarding who they were and what they required so compiling a package of services for them was comparatively straightforward. However, some segments were less responsive to key benefits and it proved harder to identify precisely what they were most looking for. With global executives as the target market, the airline also developed packages for schedule optimizers, mile accumulators, travel seekers, corporate troopers and quality vacationers.