United Airlines: Marketing Case Study

Question 1

Defining Marketing environment

The marketing environment is a combination of both internal and external factors, which can play a role in creating and sustaining good relations with customers. The market environment depicts market trends, competition, and the firm’s ability to respond accordingly.

The US airline industry is competitive. Many airlines have emerged with a broad range of services for customers. Companies have made several customer segments and shaped the services accordingly. (Para7). Customers in this market intend to experience high-quality services. Several airlines depict premium pricing strategy to become the status symbol. Competitors such as American Airlines, America express, and southwest airline have sustained the brand image in the competitive landscape. However, United Airline, due to differentiated services, has converted many customers. Loyal customers are willing to pay premium prices, which increases revenues and profitability. Airlines intend to gain and sustain the competitive advantage by reaching motile destinations (Miller, 2018). Customer loyalty and satisfaction are two prominent factors, which revolve around the competitive position of firms.

Changes in the demographic, cultural, and economic environments affect united airlines decision

Changes in the demographic, cultural, and economic environments affect the United Airlines decision.  For Instance, The United Airline integrated with the psychographic segmentation (Para 8). Based on different industry trends, customers depict different interests, attitudes, behaviors, and intentions. United airline perceived these customer traits to design its services. United Airline has recognized a particular social class to offer services. For Instance, by using questionnaires, the management derived several customer trends or needs.  Thus, due to customer-oriented strategies and effective execution of thighs particular market segments, the firm sustained success. Frequent flyer programmers, prices, and schedule of the airline made the customer’s mind. The US economic condition is stable, as people have a high-income level. High-income levels fostered people to acquire these services. The cultural integration is remarkable, and it changed the minds of the customer. United Airline made business or market decisions through aligning with the customer, market, cultural, economic and segmentation. However, with time, United Airline is quite capable of changing these decisions to be relevant and lucrative in the competitive market.  For Instance, based on the needs of customers in different regions, it can find new destinations with differentiated services (Helleloid et al., 2015).

Question 2

Defining Market Segmentation, Market Segment, Targeting and positioning

Market segmentation is a process of dividing customers into different groups in the market due to different characteristics or behaviors. A market segment is a particular group of customers, which is shaped by the company. Targeting is a process of producing, promoting and selling products or services to a particular customer group. Positioning is a process of the position better in customer’s mind.

United Airline improved flight operations, customer services, and brand image in the airline market, and it enhanced its competitive positioning. Effective flight operations and service standards have helped people to have a positive perception of the company. Differentiation regarding prices, flight operations, and services enabled customer preferences. Market segmentation is a process of dividing the market or customers into different groups to design separate services or products. United Airline demonstrated independent services for each group. Pricing, service standards, and flight operations are different for each customer group.

On the other hand, the market segment is a particular customer group that revolves around several customer traits. For Instance, a demographic section depicts age, income level, race, and gender (Para 6). Geographical division portrays several regions to conduct business activities. The behavioral part indicates a particular customer’s behavior. The psychographic segment shows the social status and attitude of customers, which compels them to acquire the airline services. Targeting is a process of meeting the needs of a particular customer group (Wedel & Kamakura, 2012). For Instance, United Airline targeted psychographic segments to meet needs and increase both revenues and profitability. 80% of the profit comes from 20% of customers, and apparently, it seems a psychographic segment.

United Airline’s Growth through Segmentation

United airline used the segmentation strategy to grow in the competitive market. For Instance, the firm came up with a premium pricing strategy for a psychographic customer segment. People with low bargaining power are willing to pay high process. It generates revenues for the company to expand the business into new regions and get an edge over other competitors in the market. Different customers or segments of customers need effective communication to derive their motivations (Locke, 2009). United Airline used email and other communication tools to communicate with customers and develop services. Segmentation is a key growth strategy for this company, and it is still working to sustain business growth in the long run (Wedel & Kamakura, 2012).

Question 3

Defining SWOT Analysis

SWOT analysis is a strategic tool for management to examine the current situation of the business. It is a situational analysis that indicates the current position in both internal and external business environment. It is a useful tool for the firm to derive the current company positioning and make different strategies for both, short and long run.

Defining SWOT Components

The main components of SWOT analysis are strengths, weakness, opportunities, and threats. The company can obtain internal strengths and weaknesses to improve internal operations. Conversely, opportunities and threats exist in the external business environment. Interestingly, the company can utilize its strengths and eliminate weakness to integrate successfully with the external business environment. External business factors can help improve the internal process as well. SWOT can also be used as TOWS by the company to match items and make effective business decisions.

Applying SWOT Analysis

• Strengths

United Airlines has expanded into different international routes. The business expansion is the biggest strength of this company, as it helped it to become the second largest airline in the world. Aligning with 117 destinations in 26 countries is a remarkable achievement (Para 1).  A broad customer range enables rapid revenue growth and Profitability.  The strategic Star alliance has also become a significant strength of the firm, as customers can access more than7209 destinations. Also, it focused on customer-oriented products and services.  Customer satisfaction and loyalty are quite visible.

• Weakness

United Airline depends on psychographic customer segments. For Instance, the firm generates revenues and profit from this customer segment. 80% revenue from 20% customer is the biggest weakness (Para 11). Promoting services for loyal customers is the right approach. However, in an intense rivalry, the firm does not try to grab or target new customers. It is a weakness, and it needs to be fixed immediately.

• Opportunities

In the complex service industry, the firm must increase its capacity to respond to customer requirements. Due to financial capability, it can enhance the service developed and came up with the moiré differentiated flight operation. Business expansion is also an excellent opportunity for this company, especially in Asian regions. It seems a better strategy to reach maximum destinations (Miller, 2018). The firm needs to focus on other customer segments as well. Depending on a single customer segment may limit financial growth and expansion in the future. Customer behavior and demographic is to be navigated expertly to justify a broad range of services. The most important thing is to make the business different from other airlines in the United States. It contains the capability to become the number one airline in the world.

• Threats

Premium price increased revenue growth and profitability. However, other competitors offer low-cost flight operations. It is a massive threat because it can convert customers. These competitors are reducing the switching cost for customers and its cachet the company hard. Despite containing maximum destinations and growth, increasing fuel price is always a significant threat (Sumers, 2018).

References

Helleloid, D., Nam, S.-H., Schultz, P. & Vitton, J., 2015. The U.S. Airline industry in 2015: instructors’ notes. Journal of the International Academy for Case Studies, 21(6), pp.145-48.

Locke, G., 2009. Consumer behaviour trends and their impacts on airline product distribution. Journal of Revenue and Pricing Management, 8(2-3), pp.267-78.

Miller, S., 2018. A route network to beat the airline startup challenges: Moxy begins to take shape. [Online] Available at: https://paxex.aero/2018/07/moxy-a220-route-network/ [Accessed 22 November 2018].

Sumers, B., 2018. U.S. Airlines Hope to Charge Passengers More as Fuel Prices Climb. [Online] Available at: https://skift.com/2018/07/31/u-s-airlines-hope-to-charge-passengers-more-as-fuel-prices-climb/ [Accessed 22 November 2018].

Wedel, M. & Kamakura, W.A., 2012. Market Segmentation: Conceptual and Methodological Foundations. Springer Science & Business Media.