United Airlines, segmentation, customers, market, travel, compete, air, business, schedules, carriers, growth, industry, routes.
Today we live in a global community as global citizens where we have become increasingly conscious about sharing the planet with people from other cultures and backgrounds.
Not only can we use information technologies to e-mail, phone or fax friends, family and colleagues in other parts of the world, we can also use reliable and regular travel links to visit them, covering vast distances in a matter of hours.
Whereas in the past travelling by air was, for many people, an experience more often than not associated with an annual family holiday, today air travel has become a way of life both for business and leisure.
This case study focuses upon how United Airlines uses customers' motivations for different types of services to segment the market and improve its competitiveness.
In a service-based industry, customers and the services they require are at the centre of any marketingstrategy.
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 has to compete with a range of other carriers across all routes and must decide how it is going to compete.
For example, more frequent services, more destinations, more comfortable seating, superior food, lower prices etc.
Managers at United Airlines constantly monitor competitor activity in order to maintain its market position, whether through prices, schedules or route networks.
Although airline travel experienced consistent growth since 1991, its business environment is susceptible to shock events.
National governments, which may limit access to certain routes i.e. between Denver and Heathrow, where the Bermuda 2 agreement between the USA and the UK limits the number of carriers.
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.
As a result of carefully reading this case study, students should be
- provide a brief understanding of the notion of global citizenship
- learn about the importance of customer service in targeting customers within a service-based industry
- understand the principles and practices of market segmentation as well as the operation of a segmentation base
- relate process and practices of segmentation to a large service-based business
- understand the service life-cycle.