Customer segmentation revisited: The case of the airline industry
Although the application of segmentation is a topic of central importance in marketing literature and practice, managers tend to rely on intuition and on traditional segmentation techniques based on socio-demographic variables. In the airline industry, it is regarded as common sense to separate between business and economy passengers. However, the simplicity of this segmentation logic no longer matches the ever more complex and heterogeneous choices made by customers. Airline companies relying solely on flight class as the segmentation criterion may not be able to customize their product offerings and marketing policies to an appropriate degree in order to respond to the shifting importance and growing complexity of customer choice drivers, e.g. flexibility and price as a result of liberalization in the airline industry. Thus, there is a need to re-evaluate the traditional market segmentation criterion. By analyzing the stated preference data of more than 5800 airline passengers, we show that segmenting into business and leisure (a) does not sufficiently capture the preference heterogeneity among customers and (b) leads to a misunderstanding of consumer preferences. We apply latent class modeling to our data and propose an alternative segmentation approach: we profile the identified segments along behavioral and socio-demographic variables. We combine our findings with observable consumer characteristics to derive pronounced fencing mechanisms for isolating and addressing customer segments receptive for tailored product packages.
Volume (Year): 42 (2008)
Issue (Month): 1 (January)
|Contact details of provider:|| Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/547/description#description|
|Order Information:|| Postal: http://www.elsevier.com/wps/find/supportfaq.cws_home/regional|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Vredin Johansson, Maria & Heldt, Tobias & Johansson, Per, 2006. "The effects of attitudes and personality traits on mode choice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(6), pages 507-525, July.
- Train,Kenneth E., 2009.
"Discrete Choice Methods with Simulation,"
Cambridge University Press, number 9780521747387, june. pag.
- Louviere, Jordan J, 2001. " What If Consumer Experiments Impact Variances as Well as Means? Response Variability as a Behavioral Phenomenon," Journal of Consumer Research, Oxford University Press, vol. 28(3), pages 506-11, December.
- Mason, Keith J., 2005. "Observations of fundamental changes in the demand for aviation services," Journal of Air Transport Management, Elsevier, vol. 11(1), pages 19-25.
- Swan, William M., 2002. "Airline demand distributions: passenger revenue management and spill," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 38(3-4), pages 253-263, May.
- Inglada, Vicente & Rey, Belen & Rodriguez-Alvarez, Ana & Coto-Millan, Pablo, 2006. "Liberalisation and efficiency in international air transport," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(2), pages 95-105, February.
- Louviere,Jordan J. & Hensher,David A. & Swait,Joffre D., 2000. "Stated Choice Methods," Cambridge Books, Cambridge University Press, number 9780521788304, june. pag.
- Alamdari, Fariba & Mason, Keith, 2006. "The future of airline distribution," Journal of Air Transport Management, Elsevier, vol. 12(3), pages 122-134.
- LindstÃ¤dt, Hagen & Fauser, Bernd, 2004. "Separation or integration? Can network carriers create distinct business streams on one integrated production platform?," Journal of Air Transport Management, Elsevier, vol. 10(1), pages 23-31.
- Vermunt, Jeroen K. & Magidson, Jay, 2003. "Latent class models for classification," Computational Statistics & Data Analysis, Elsevier, vol. 41(3-4), pages 531-537, January.
- Jiang, Meilan & Morikawa, Takayuki, 2004. "Theoretical analysis on the variation of value of travel time savings," Transportation Research Part A: Policy and Practice, Elsevier, vol. 38(8), pages 551-571, October.
- Jaehwan Kim & Greg M. Allenby & Peter E. Rossi, 2002. "Modeling Consumer Demand for Variety," Marketing Science, INFORMS, vol. 21(3), pages 229-250, December.
- Rinus Haaijer & Michel Wedel & Marco Vriens & Tom Wansbeek, 1998. "Utility Covariances and Context Effects in Conjoint MNP Models," Marketing Science, INFORMS, vol. 17(3), pages 236-252.
- Peter M. Guadagni & John D. C. Little, 1983. "A Logit Model of Brand Choice Calibrated on Scanner Data," Marketing Science, INFORMS, vol. 2(3), pages 203-238.
- Anable, Jillian & Gatersleben, Birgitta, 2005. "All work and no play? The role of instrumental and affective factors in work and leisure journeys by different travel modes," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(2-3), pages 163-181.
When requesting a correction, please mention this item's handle: RePEc:eee:transa:v:42:y:2008:i:1:p:227-242. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.