This thesis discusses segmentation, targeting and positioning for organizations competition in marketing management, and applies relative theories to British Airways (B.A). Brand and web 2.0 technology are also discussed to illuminate marketing assets and competition in modern business world.
According to American Marketing Association, Marketing (management) is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, services to create exchanges that satisfy individual and organizational goals. While in the definition of The Chartered Institute of Marketing，Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably. There are several core concepts of marketing management which includes target markets & segmentation; needs, wants and demands; product or offering; value and satisfaction; exchange and transactions; relationships and networks; marketing channels; supply chain; competition and marketing environment. Within these concepts segmentation, targeting and positioning are three vital ones.
Segmentation, Targeting and Positioning in today’s Marketing Management
Taken down to its most fundamental level, customers choose to do business with a firm because (a) it offers better value, (b) it has a stronger brand, or (c) switching away from it is too costly. No one can satisfy everyone in a market.
Therefore, marketers start with market segmentation.
A market segment is a sub-set of a market made up of people or organizations with one or more characteristics that cause them to demand similar product and/or services based on qualities of those products such as price or function. A true market segment meets all of the following criteria: it is distinct from other segments, it is similar within the segment, and it can be reached by a market intervention. The term is also used when consumers with identical product and/or service needs are divided up into groups so they can be charged different amounts. The people in a given segment are supposed to be similar in terms of criteria by which they are segmented and different from other segments in terms of these criteria. These can broadly be viewed as ‘positive’ and ‘negative’ applications of the same idea, splitting up the market into smaller groups-the target market of different companies.
Once a market segment has been identified via segmentation, and targeted (in which the viability of servicing the market intended), the segment is then subject to positioning. Positioning involves ascertaining how a product or a company is perceived in the minds of consumers.
This part of the segmentation process consists of drawing up a perceptual map, which highlights rival goods within one’s industry according to perceived quality and price. After the perceptual map has been devised, a firm would consider the marketing communications mix best suited to the product in question.
For each chosen target market, the firm develops a market offering. The offering is positioned in the minds of the target buyers as delivering some central benefit(s).
For example, B.A. develops its flights for the target market of buyers for whom travel comfort and safety is a major concern. B.A., therefore, positions its flights as the most comfortable and safest a customer can take.
Traditionally, a “market” was a physical place where buyers and sellers gathered to exchange goods. Now marketers view the sellers as the industry and the buyers as the market. The sellers send goods and services and communications to the market; in return they receive money and Information.
In today’s world, market is changing at an accelerating rate: today is not like yesterday, and tomorrow will be different from today. Continuing today’s strategy is risky; so is turning to a new strategy. Therefore, tomorrow’s successful companies will have to heed three certainties: globalization, technological advances, and deregulation. Firms has to face all these changes and adjust their strategy to comply with development trend, otherwise they will not survive in the developing world.
Take airline market for example , an airline which is to apply the principles of marketing successfully needs a thorough knowledge of current and potential markets for its services. This knowledge should encompass an understanding of the businesses in which they participate, and of the market research techniques they must apply in order to gain the knowledge they need about the market place. They must be able to identify “Customers” and distinguish them from “Consumers”. They must segment their markets and identify the requirements of customers in each of the segments. Finally, and most importantly, they must examine their markets in a dynamic rather than a static sense and anticipate future changes in customer needs.
People choose airlines for different reasons, Transportation, communication, leisure, logistics, and etc. As the world develops so fast, the ratio of different customers are changing fast, thus airline companies need to study the recent trends and make their marketing strategy. In recent years, the growth of corporate dealing has been one of the major trends in business air travel marketing. In particular, recessionary conditions from 2001 until 2003 saw severe pressure being placed on travel budgets in many markets, and corporate dealing being recognized as a valuable way of reducing costs.
Today, the question of correctly identifying and targeting “Customers” in the business air travel market is a vital one for airlines, and one that is causing increasing controversy. The problem is that it is very difficult to be certain exactly who is making the relevant decision. The normal expedient adopted by many airlines including B.A. of simply asking the person who flies the question as to who was responsible for their choice-of-airline decision is unlikely to yield much enlightenment, striking as is does at the heart of questions about corporate status and privilege.
Because of this difficulty, B.A. and most other airlines today follow the policy of giving incentive to everyone, whether or not the person in question is actually able to influence the amount of business obtained. Thus, nearly all airlines offer individual travelers incentives through a frequent flayer programmer. They may also give the firms that these people work for substantial corporate discounts. Finally, the travel agents that these firms use are still sometimes rewarded by the offer of override commissions, though the extent of this practice has declined in recent years.
Deregulation is another important question in airline marketing management. Deregulation of many domestic markets has left the constraint that foreign-owned airlines are prevented from competing in almost all domestic markets. In international aviation, countries tried regulatory reform to reduce these influence. However, the question of the future regulatory scene which will face airlines is still an uncertain one. It is clear, though, that the trend will be towards an increasingly liberally-regulated or deregulated market place. This will in turned require a response in terms of the business and marketing strategies that carriers pursue.
In the intensely competitive modern world, B.A. keeps its clear marketing strategies with the slogan “To fly, to serve.” They are clear that in airline industry, hardware differences are generally slight, thus, if they want to differentiate a clear market positioning, the keep points is service, or software parts. This strategy also illuminates an idea, that positioning is not what you do to a product it is what you do to the mind of a prospect.
Brand, an identifiable asset
A brand is an offering from a known source. A brand name such as B.A. carries many associations in the minds of people: huge flight courses, best services, high price and maybe “The World’s Favorite Airline”. These associations make up the brand image. Since a brand is a name with the power to influence the market, its power increases as more people know it, are convinced by it, and trust it. Brand management is about gaining power, by making the brand concept more known, more bought, more shared. All companies strive to build a strong, favorable brand image, with which they can attract loyal customers.
Achieving a high degree of loyalty is an important goal in the branding process.
Loyal consumers are valuable consumers because it is much more expensive to recruit new customers than nursing and keeping existing ones. Brands are important vehicles when building consumer loyalty as they provide recognizable fix points in the shopping experience.
In another side, brand also benefits customers, the brand removes the risk. The certainty, the guarantee and the removal of the risk are included in the price. If the brand is strong it benefits from a high degree of loyalty and thus from stability of future sales. A lot of customers of B.A. are regular and loyal and represent much of the sales. The reputation of the brand is a source of demand and lasting attractiveness, the image of superior quality and added value justifies a premium price. A dominant brand is an entry barrier to competitors because it acts as a reference in its category.
Brand is not an isolated idea, it is closed connected with market segmentation and positioning, the idea of brand positioning is based on the assumption that consumers have limited mind space for commercial messages and that the most successful brands hence are the ones able to position themselves in the minds of consumers by adapting the most congruent and consistent commercial message. This message must be clear and attractive, thus they need to be short and concise. The brand message of B.A. is transferred to customers not only through their services but also through the short slogans which updated regularly, like “To fly, to serve,” and “Upgrade to British Airways”.
However, even brand is very important for a company’s business, a brand‘s influence cannot be changed dramatically fast, not matter how much a company paid for brand strategy. It is time to structure and organize the many terms related to brands and their strength, and to the measurement of brand equity.
According to standard accounting practices, an asset can only be entered in the accounts if it can be identified and clear future economic benefits can be attributed to it. Inter-country debate currently rages on the criteria for such identifiability. Thus a number of methods have been proposed to define the value posted in the balance sheet when a brand is part of the assets of an acquired company, these methods include valuation by historical costs，valuation by replacement costs，valuation by market price，valuation by royalties，valuation by future earnings , valuation by present earnings, etc. Each of the methods has its highlighted point, but none of them are complete and impartial. However, no matter how much the deviation between the real value and estimated value of a brand, it is sure that the brand is valuable, and it is an identifiable asset.In the B.A. case study, although the brand B.A. only started from 2002, but it inherited its predecessor’s brand value, both British overseas airways corporation and British Europeans Airways are famous brands, and British Airways is a merge and development of the two above.
Web 2.0 Technology Application
Web 2.0 is commonly associated with web applications that facilitate interactive systemic biases, interoperability, user-centered design, and developing the World Wide Web. A Web 2.0 site allows users to interact and collaborate with each other in a social media dialogue as consumers of user-generated content in a virtual community, in contrast to websites where users are limited to the active viewing of content that they created and controlled. Examples of Web 2.0 include social networking sites, blogs, wikis, video sharing sites, hosted services, and web applications. Web 2.0 websites allow users to do more than just retrieve information. By increasing what was already possible in “Web 1.0”, they provide the user with more user-interface, software and storage facilities, all through their browser. This has been called “Network as platform” computing. Users can provide the data that is on a Web 2.0 site and exercise some control over that data. These sites may have an “Architecture of participation” that encourages users to add value to the application as they use it.
For marketers, Web 2.0 offers an opportunity to engage consumers. A growing number of marketers are using Web 2.0 tools to collaborate with consumers on product development, service enhancement and promotion. Companies can use Web 2.0 tools to improve collaboration with both its business partners and consumers. Among other things, company employees have created wikis — Web sites that allow users to add delete and edit content — to list answers to frequently asked questions about each product, and consumers have added significant contributions. Another marketing Web 2.0 lure is to make sure consumers can use the online community to network among themselves on topics of their own choosing.
Web 2.0 offers financial institutions abundant opportunities to engage with customers. Networks such as Twitter, Yelp and Face book are now becoming common elements of multichannel and customer loyalty strategies, and traditional industry like banks are beginning to use these sites proactively to spread their messages. In a recent article for Bank Technology News, Shane Kite describes how Citigroup’s Global Transaction Services unit monitors social media outlets to address customer issues and improve products. Furthermore, the FI uses twitter to release “breaking news” and upcoming events, and YouTube to disseminate videos that feature executives speaking about market news.
In this background, B.A. has also set up a special innovation unit to explore ways the airline can use web 2.0, shareware and open source technologies. The unit has a core of around 10 people from the IT and commercial departments, which will run small-scale trials of new technology. One of the first things to come out of the innovation unit is the introduction of Google gadgets on the ba.com website. The gadgets include information such as arrivals and departures, special offers and timetables and people can add them to their personalized iGoogle homepage. The unit’s remit also includes open source and a new portal will go live on the BA staff intranet in January based on free open source software called Liferay. Another initiative that has already come out of the innovation unit is a trial at Dusseldorf Airport in Germany replacing the BA self-service check-in kiosks with PCs and printers.
Web 2.0, or possibly the future Web 3.0, is the trend of current IT technology, B.A. and other traditional companies shall adopt this trend and try to make use of this, and slightly by slightly, we may find one day the IT technology will change traditional industry dramatically. For example, if a famous entertainment super star takes one flight and feels uncomfortable, thanks to Web 2.0 technology, he or she may release the feeling easily on twitter or face book, and perhaps thousands of potential customers may be influenced by this comments. This case would never happen in the past ,but very possible in today’s world, thus to adopt Web 2.0 is not simply develop an advanced website (Although this is also necessary), but the whole management structure may need to change. No matter for B.A. or other companies, this is only a beginning, and there is still a long long way to go.
Marketing Management is a business discipline which is focused on the practical application of marketing techniques and the management of a firm’s marketing resources and activities. Rapidly development has compelled firms to adjust their marketing strategy. Key features as segmentation, targeting, and positioning influence companies marketing management strategy dramatically, and company must clarify their market segmentation so as to differentiate targeting customers.
Brand is an identifiable asset for a company, it helps the company to attract loyal customers and make benefits. Brand is connected with marketing segmentation, targeting and positioning, the idea of brand positioning is based on the assumption that consumers have limited mind space for commercial messages and that the most successful brands hence are the ones able to position themselves in the minds of consumers by adapting the most congruent and consistent commercial message.
As information technology develops very fast, Companies need to adopt the concept of Web 2.0. Although companies has already made some change, the influence of IT technology is still underestimated, and perhaps it will change all the industry structures some day.
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