Market Segmentation, Targeting and Positioning

In today’s corporate environment, too many variables exist in consumer needs, preferences, and
purchasing power to attract all customers with a specific marketing mix. Though it is not necessary that
firms must actually change products to meet the needs of different target markets, they must attempt to
identify the factors that affect purchase decisions and then group consumers according to the presence
or absence of these factors. Finally, firms adjust their marketing strategies to meet the needs of each
group.

The division of the total market into smaller, relatively homogenous groups is called market
segmentation. Both profit oriented and not for profit organizations practice market segmentation.
Segmentation doesn’t automatically guarantee success in the marketing arena; instead, it is a tool that
marketers can use to better assess their formulated strategies. Its effectiveness depends on four basic
requirements.

First, the market segment must present measurable purchasing power and size. Second,
marketers must find a way to effectively promote and serve the market segment. Third, marketers must
identify the segments that are large enough to give them good profit potential. Last, the firm must aim
for segments that match its marketing capabilities (Kurtz & Boone, 2011).

For the case of United Airlines, the company adopted a Psychographic segmentation in analyzing
and segmenting their target markets. Psychographic segmentation divides a population into groups with
similar psychological characteristics, values, and lifestyles. Lifestyle refers to a person’s mode of living and
describes how an individual operates on a daily basis. Consumer’s lifestyles are composites of their
individual psychological profiles, including their needs, motives, perceptions and attitudes.

With the help of questionnaires United Airlines was able to classify its customers by their
motivations. To illustrate, some customers choose United Airlines because of price, while others choose
the airline because of schedules, frequent flyer programs or other forms of service.

By using psychographic segmentation, the company were able focus there promotion and services
to those who are likely to likely to respond positively to them. Passengers are communicated with through
email and other online platform which are becoming a focus for closely-targeted marketing.

In a global segment set up, United Airlines were able to distinguish nine probable market segment
profiles which is shown in the table below.
 Market Segments Description
Global executives face frequent business travel and enjoy it because
of the high level of service
Schedule optimizers use an airline and a class of travel that has been
chosen for them by their company
Corporate troopers go out of their way to take flights that will build up
their air miles entitlement
Mile accumulators go out of their way to take flights that will build up
their air miles entitlement
Reluctant travelers do not enjoy travel and look for services that will
make the experience bearable
Tour takers want everything arranged for them
Quality vacationers treat the travel as part of the holiday experience
and so fly with carriers that provide superior
services
Travel seekers Love to travel and seek out new experiences. They
want travel to be comfortable
Frugal flyers seek out the lowest cost carriers, but still expect
their flight experience to be a good one

Identifying the following segments has enabled United Airlines to have an overview of their
current customers and respective lifestyles. Form here the executives may then assess on which segment
to focus on. . One key factor in determining the right segment was the potential of each sector to generate
not only revenue but also profit.

United Airlines operates in a very competitive domestic airlines industry with local their local hubs
located in Chicago, Cleveland, Denver, Houston, Los Angeles, New York, San Francisco, and Washington
DC. With this information, the company determined that the most probable target market segment was
the Global executives since most of their local hubs are located among business districts. Furthermore,
customer profile was clear regarding who they were and what they required so compiling a package of
services for them was comparatively straightforward as compared to the other segments which were less
responsive to key benefits and proved harder to identify precisely their preferred services.