Key External Factors that Affect the Passenger Airline Industry and Their Impacts (Term Paper Sample)

Marketing
Name
Institution
Key external factors that affect the passenger airline industry and their impacts
There are numerous external factors that influence the passenger airline sector. These aspects can either have bear positive or negative consequences on the business Theses factors comprise of economic conditions, political factors, legal factors, technological changes and social factors. Economic occasions that take place outside the airline industry can have an effect on airline profits. Increasing fuel costs because of political or economic occasions decrease airline profit. Weather conditions for instance snowstorms; also have a negative impact on air travel. Happenings such as airliner crashes can distress people's readiness to travel by air (Rothman & Jasper, 2011).
All these may result to a short-term profit loss owing to dwindling demand. An improved in popularity of overseas travel would results to an increase air travel demand. Though, this demand has been negatively affected by increase in terrorism in different country of the world. Economic changes are directly linked to social changes. The economy undergoes a sequence of instabilities related to rise and falls in economic events. At the time of economic rise almost all business enterprises benefit while at the period of economic slow demand declines. Other economic adjustments that influence business are shift on wage rates, rate of inflation and interest rate. Laws are frequently being amended in various sectors of the economy; consumer protection law, health & safety, labor laws and environmental law.
Segmentation, targeting, and positioning
Segmentation
Market segmentation is the partitioning of a market into various types of customers with related needs. It can also be defined as the splitting up of a mass market into distinct and identifiable segments with each having common features and needs and demonstrates related response to marketing activities. The reason for market segmentation is to control scarce resources; or to make sure that marketing mix components (price, products, distribution and promotion) are created to satisfy specific needs of diverse customer groups. Possible methods of segmenting the target market are carried out on the basis of socioeconomics, personality (life style), geographic location, demographics, purchase behavior, benefits sought, purchase occasion, and thoughts towards product and utilization behavior (Rothman & Jasper, 2011). Airlines ought to reassess their products and provide services based on the anticipations of consumers.
Targeting
Target Marketing is the process, by which the seller classifies market segments, chooses one or more and creates marketing mixes and designs products in line with each segment. This segmentation assists the marketers to come up with particular strategies and methods to promote a product among its target market.
Positioning
Positioning is the marketing strategy by which marketers attempt to build an image in the minds of their market for its brand the company. A brand’s position is the manner which the product is distinct by the customers on important characteristics; it is the position the brand occupies in customers’ minds in relation to competing brands. Wen & Yeh, (2010), state that positioning entails establishing the product’s unique advantages and differentiation in consumers’ minds.
Major airline market segments
Traditional airlines such as United, American and Delta segment the market into two most important segments, these rare; Business Travelers and Leisure Travelers, where business travelers are considered to be profitable while leisure is considered unprofitable. These two major categories of segmentation can again be subcategorized by average distance of trip, loyalty to a certain airline and frequency of trips. Business travelers are lucrative for airlines since they tend to purchase their tickets late when prices have gone higher and their timetables are not adequately flexible to change trips. In an economic point of view, their prices are relatively inelastic. Leisure travelers are not almost as profitable since they are more convinced to change modes of travel in relation to prices. Segmentation among leisure travelers is very elastic.
Target markets for First Class vs. Business vs. Economy Class
According to (Rothman & Jasper, 2011), business class airlines are intended to offer some of the services of first class flight at a price a little higher compared to economy-class tickets. Economy-class flight is normally the least expensive flights, targeting customers who are balancing the charges for their trip themselves instead of canceling it on an expenditure report. The charges for a business class ticket are normally much inexpensive than a first class. In some situations, it can be more expensive compared to an economy class flight. First class flight normally target Business Travelers who can pay more in regard to their tight schedules without complaining of high prices. The is in contrary to who business class which consist of middle class and economy class which mainly target least payers called leisure travelers. Economy class seats generally provide the smallest space on an airplane. Business class travelers enjoy expensive drinks, comprising alcoholic drinks, on majority of their flights. First class mainly target the upper class in the society who is ready to pay more catering for high-quality champagne and best seats in the flight. Various companies who are known to offer first class services include Qatar Air and Fly Emirates.
Comparison between Jet Blue and Southwest Airlines in terms economic conditions and consumer interest in leisure travel
Competition among the companies in the airline sector is high since low-cost airlines have joined the market making current competitors to manage costs. Strongly competitiv...