The purpose of the task is to develop an understanding of market segmentation and explain how it can assist organizations in the allocation of their resources more effectively and efficiently. The marketing segmentation process is a strategy adopted by organizations with an aim of preparing the organizations sales and marketing for the target clients (Steenkamp & Ter Hofstede, 2002). The target clients are the clients who are known to traditionally consume the products or services of the particular organization.
The discussion below focuses on Qantas Airlines and discuses the advantages the organization has gained from the strategy as well as associated benefits. Further the discussion aims at analyzing how the organization has been able to maximize profits as a result of the market segmentation strategy. Lastly the discussion shall in a general perspective focus on the applicability and suitability of the strategy as well as the challenges involved. Definition of consumer needs at Qantas Airlines.
The airline has in an effort of market segmentation, categorized the needs for its customers into 3 distinct levels based on the perceived needs of the particular customers in the respective departments. To this end the airline has come up with the following categories or levels. Business. Qantas Airlines has come up with a strategy of dealing with hotels which meet the standards of their customers. As a policy the airline only boos its passengers to certain hotels only where the company enjoys some interests and discounts as a laid out in a memorandum of understanding.
Secondly the Airline has reorganized its operations in line with the policies and procedures which the top board meets and reviews yearly. An example was the recent improved communication system which was aimed at improving communication with flight crew any were in the world. As a sales strategy it can be said to have resulted into improved profits due to high customer turn out as well as the elimination of slug- in time which would result from poor communication earlier (McKenna, 1988p. 275-80).
Qantas Airlines has also utilized its marketing strategy to mange its inventories which are in different locations al over the world, by the use of IT the farm has been able to overcome challenges related to the task of inventory and has come out successfully to minimize loss and wastage of company assets. Consumer needs. The company has taken into consideration in the process of its product design the fact that there exists a class of consumers for its services who won’t just use a flight for the sake of it. They have to be treated and made to feel special and comfortable.
To this end the company had come up with first class a prestigious class who are basically consumers whose major concern is not the much they are charged for the flight but the comfort that comes with it. This satisfies the company’s clients emotionally and therefore leaves a permanent or at least long last memory on the customers mind that is hard to erode and it makes the company to have what is termed as regular customers who no matter what, they value and like the services of Qantas Airlines. Functional needs.
Functionally the market segment is likely to utilize the services and even propose the same to new customers who would trust the word of mouth from accomplice than the usually costly and expensive advertisements. This is an effective marketing strategy (Steenkamp & Hofstede, 2002p. 101-120). Considering that different people require different purpose s to meet their demands and needs, Qantas Airlines has invested in flat beds for the flights especially long distance ones by investing in new fleet
Since Qantas Airlines has already been in the market for over a decade and therefore can be termed as market leaders in the flight industry, they have concentrated in a process of reducing expenses, the company carried out a retrenchment of its employees aimed at reducing the number of employees deemed not very core to the organizations needs and therefore not key staff. The other key cause of market segmentation for the airliner is the need for a consistent and more cash flow (Day, 1980p. 345). Before it undertook the market segmentation exercise, Qantas was facing liquidity problems and for several years that, registered minimal profits.
The need for a more efficient service delivery caused the company to seriously consider segmenting the market hence the reason for aiming at market segmentation. The airliner has segmented the market further into: The different seasons as determined by different times. Accessibility of the different customers has also influenced how the market is segmented to favor customers who are easily reachable and those who are hard to reach such as those who live in areas where the airliner does not have offices and at the same time can not book for services online.
As a marketing strategy, Qantas Airways has scheduled direct flights to vacation and holidays all over in the world. Market segmentation, for Qantas Airlines has involved dividing the market into the following segments: Key strategies in the marketing campaign includes categorizing such into how similar they are, similar in needs, expectations and are likely to respond similarly to the market segmentations in place (McKenna, 1988p. 57-89).
For instance, when Qantas hiked fares for the prestige class and minimized fares for the business class, it was easy for the market to react; this led to improved sales and more bookings. The company has come up with niche markets, such as Africa, Asia and Far East. This led to Qantas Airways to categorize the market into business and private, segments which then fitted the needs of specific customers such as those who take business trips. Advantages. By providing for the segmentation the company customers, the company has achieved efficiency.
Efficiency has been achieved in the way the company tapped opportunities in the leisure and summer holiday takers. This led to the introduction of special fare rights as well as introduction of chartered flights aimed at taking the customers to their destinations. The markets were to be exploited exhaustively and the only way of doing it was through the segmentation of the market. By deducing customers needs’ the company was also aiming at maximizing its profits. This significantly improved the markets and led to the improvement of flight bookings.
On the other hand the company improved the introduction of cargo flight aimed at tacking the growing demand for air lifting of cargo. To the advantage of the company the segmentation led to the company achieving a marketing edge and becoming one of the most competitive airlines’ both in terms of activity and customer preference. Therefore the company was able to effectively look into the market and attain maximum profits. Another key thing is that, the company was able to maximize on the needs of the company while at the same time satisfying the needs of the customer.
The key advantages of the organizations segmentation process. • All target markets by Qantas are accessible. • All the segments by the organization have been curved out to ensure that they are large enough to offer big enough customer subscription. • The reduction of flights to and from the New York route was aimed at concentrating the flight to other markets with loyal clientele. • The reduction of lights which was also seen as rationalization plan affected the Manila, Rome, Bangkok, Taipei, Johannesburg, India, was an direct result of the market segmentation and it has proved worthy while.
Qantas market Segmentation was largely necessitated by the collapse of Ansett a major competitor in the Australian domestic flight market. In terms of inventory the segmentation has led to the disposal of 2 B747SP aircraft in 2002 which for the company translated to minimization of cost of repairs. The introduction of an all economy-class aircraft targeted the segment of domestic market as well as off season flights which happen when not so many people are traveling.
A segment consisting of flights from Sydney to Melbourne to Sydney to Brisbane and back was introduced since that was deemed ideal for business travel. City Flyer was also introduced to serve the domestic market which is flourishing and its operational costs very low. Market segmentation is a winning strategy as is evident with Qantas, there is a need for other business to borrow from the Qantas example and therefore cash in the strategy which although it involves drastic measures is nevertheless key to organizational marketing and sales strategic plans.