As a business owner or marketing manager, one of the most vital things you should ask yourself is “Who are my customers?”
Knowing who you are talking to can define what you say and do as a business, and how you say it and do it. In this blog post, we're going to put ourselves in the shoes of a marketing manager working for an airline.
Customers fly for a variety of reasons. We can use these reasons as a potential basis for segmentation, i.e. dividing our customers and potential customers into groups.
Most airlines operate a segmented service: first class, business class and economy class for example. This segmentation is based essentially on price: the more customers are prepared to pay, the more comfortable they can be. However, this does not really tell us enough about our customers and the opportunities for differentiation – i.e. how we can make ourselves different from our competitors.
Segmentation allows us to identify specific groups of customers for whom we can recommend specific positioning for our business, and so achieve some differentiation. Let's assume that our airline operates largely in a consumer market, although its business customers could be B2B. Segmentation variables available are:
1. Profile variables – these are variables in the way that individuals live their lives. The main attraction for us is that they are tangible.
- Demographic variables include measurable data on age, gender and family life cycle (e.g. families with young children, retired couples).
- Socio-economic variables include data on individuals' occupations, education and income.
- Geographic variables include data on consumers' location and geo-demographics (the demographics and socio-economic data on a particular area).
2. Behavioural variables – these are variables in the way that consumers behave when buying or using your product or service.
- Benefits sought are the reasons why an individual purchases your product or service.
- Usage is how the consumer uses your product or service.
- Purchase occasion is the type of occasion on which a purchase is made.
3. Psychographic variables – these are the variables in the attitudes, interests, personality and lifestyle characteristics that might reflect in buying behaviours and choices.
In the case of air travel, benefits sought would provide an insightful segmentation. For example:
Fly to correct destination
Good customer service
Reasonable level of comfort
Priority and late boarding
First class lounge
Fully flat seats
Frequent flyer programmes
* Many of the augmented services are available as standard on certain airlines, but not on budget airlines.
The important features of the augmented benefits are that:
- They provide the opportunity to differentiate your airline from others.
- If they value these benefits, customers will be prepared to pay a premium price for them.
- BUT over time, these services become expected and may lose their power to differentiate and command a premium price.
As a result of this, the airline must continue to come up with new service offers in order to distinguish themselves from the competition – for example spa treatments in the first class lounge, business centres with free wi-fi and refreshments.
Your organisation or small business may not have the huge budgets of airlines, but tips can still be taken from this example. What are your customer segments? How can you offer something different from your competitors, that your customer segment(s) will value?