How Airline Industry utilises the Theories of Consumer Segmentation and Buying Behaviour to respond to Consumer Demands?

A case study of EasyJet and British Airways Airlines.

Introduction For the past years, airline industry has developed faster, from an opulent way of travelling on the beginning of the previous century, to a routine system of travel in present (Chen et. al, 2008). As a consequence of the upscale relaxation aim of the travel process, the airline industries used to focus more attention on the excellent services reaching higher standards. However, as soon as this industry started to face competition threats, the quality of services became less important, concentrating more on the price impact and market share, in order to enhance their facilities and to increase the number of customers (Zeithaml and Bitner, 1996). Airline industry has encouraged a significant improvement of the efficiency of marketing performances, as these are determining the main reference of the competitive sustainability in this industry, built on the relationship between the consumer and the retailer (Appiah-Adu et. al, 2000). This industry is linked to travel and tourism marketing, resulting high interests in consumer contentment (Oyewole, 2001), sometimes even defined as a brutally competitive industry (Prokesh, 1995, p.101). This fact determined most of the airline companies to embrace different marketing strategies to develop unique selling points, obtaining more competitive advantages. While Howard and Sheth (1969) theory demonstrates that the importance of the status of customer contentment determines a powerful system that ensures a more suitable comprehending of the purchase for the company-provider, on the other hand, Cordozo (1973) stated that the enjoyment induced by the product/service to a customer can persuade to a recur buying process, becoming loyal to the product/service and to the brand, which can lead to a high economic impact on the company revenue (Anderson et. al, 1994). Since April 1997, when the regulations and restrictions were removed from the airline industry policy in Europe, there were created various benefits for airline consumers, as higher standards for the services provided and lower prices (Piga and Filippi, 2002). Although, one of the most significant side of this impact was the appearance in the market of low-cost airlines companies, using unique approaches to the industry, offering favourable prices comparative to usual airlines (Pender and Baum, 2000).

EasyJet Airline Company Limited, known as EasyJet, was established in 1995 as a reaction to the higher need for low-cost travelling (Sull, 1999). Even from their second year of being on the market, they have been entitled as the ideal European for low-cost airline companies (ibid), restructuring the whole airline industry. British Airways is known as the biggest airline company in UK in terms of the number of international flights and destinations (Right Now, 2010), and also for its contribution to protect the external environment by reducing the CO2 emission and improving the service quality for their customers with amazing offers (British Airways, 2012b). In this paper, the author will identify and examine different types of consumer buying behaviour, the factors influencing buyer behaviour decision and how airline industry is utilising those applications of theory to respond to consumer demands in order to sustain and improve customer relationship management.

Main Body The Importance of Buying Behaviour as a Competitive Advantage According to Proussaloglou and Koppelman (1999), in the decision process of selecting an airline company service with the purpose of travelling from a destination to another, is assumed that the customer is reasonable enough to take a decision which is based on research done in order to accomplish his/her needs, analyzing all the possibilities and choose the one which suits better his/her expectations and time. Furthermore, Ben Avika and Lerman (1985) sustain in their studies that the chance is higher that a consumer will choose to use the services from the company that fulfils his/her requirements and the opportunities are much better than what other companies are offering, underlining the importance of the mutual relation between customer and airline company, both parts being satisfied at the end of the buying process. An airline company must respond to their consumer demands utilising different methods to analyze their behaviour and needs, meeting their expectancies, to maximize their profit and improve their brand image (Jobber, 2007). Some of the aspects which must be taken into consideration as market presence, quality of service, frequent flyer membership, fare levels and travel restrictions, and schedule convenience (Proussaloglou and Koppelman, 1999, cited in Piga and Filippi, 2002, p. 238), must be provided every time to every passenger to build and maintain the customer relationship. According to Porters (1985) theory, these important elements listed above are known in his paper as benefit drivers, which are contributing to define the company status, as the opportunities through which a business is emancipating its higher standards to its consumers and also through its unique services that are separating it from the competition.

Consumer Segmentation in Airline Industry The author is using as example, EasyJet Airline as a low-cost company, to apply Jobbers (2007) consumer segmentation model to identify how this company can segment its customers based on the behavioural, psychographic and profile criteria. Easyjet it became a high usage company due to its number of flying hours and number of passengers per day, by comparing to British Airways (Burns, 2012), which can explain that one of the purchase reasons for its consumers is brand loyalty and also that is perceived as an advantageous deal (Sull, 1999). As from the psychographic criteria, EasyJet is taking into consideration different types of personalities and lifestyles, like business people or travellers, suggesting different offers like flexible fare including speedy boarding, unlimited data changes, hold luggage included and no extra payment fee (EasyJet, 2012), in order to fulfil their needs and schedule constrains. Demographic segmentation is becoming useful for airline companies when they are creating special offers for families, children, couples or students in order to meet their expectations (Swarbrooke and Horner, 2008). From geographic point of view, an airline company can make use of this information to know exactly to which zones, countries, cities to market and promote their business and where to invest and expand more, in order to cover the number of consumer demands and planning for future developments. Companies as EasyJet and British Airways are offering on their official websites suggestions for future and potential hotel booking, car rental, special holiday packages (EaseJet, 2012; British Airways, 2012a) to respond to consumer demands, being unique and quick in order to step up from the tight competition. Analyzing BA website, is it evidently that this company is focusing more on the brand power and status as benefits sought of the consumers, which most of them are corporate and executive people determining most of their target market segmentation. BA company is offering a special Executive Club area for all loyal customers, presenting different membership cards which can be received accordingly with their booked flights for shopping discounts, access to first-class lounges or different bonuses (British Airways, 2012c). However, it is unquestionable that competitive opportunities for the airline companies is based on the applicability of other terminologies presented by Porter (1985), known as cost advantage, and how these airlines are capable to remain competitive adopting lower prices as a suitable determination of cost drivers. Thus, in the low-cost airlines companies situation, according to Reynolds-Feighan (2001), it is improper to suppose that low cost airlines will transform the intraEuropean flights from a service, as it is, into a consistent product in a market where its qualities are not important anymore, besides the price. Still, looking back a couple of decades, Button and Swann (1989) were emphasising the idea that airline industry was not classically been compared with an industry that build price competition, but as a matter of fact, was known as possessing a

long history of laws where competition is formed mostly by non-price elements. Nevertheless, the abolishment of the regulations in airline industry, conducted to the improvement of marketing environment where the financial value turn to be an important factor and a competitive advantage (Palmer and Boissy, 2009). Moreover, analyzing the Howard-Sheth Theory of Buyer Behaviour (1969), besides the behavioural determinants which can be the personality, culture or the importance of the purchase for the consumer, the social class criteria is mostly determined by the financial status of the consumer and in some situations, some of the inhibitors in the buying behaviour process can be the price of the product and the financial status of the individual (Swarbrooke and Horner, 2008). These two inhibitors are based on the price or known as the economic factors, which are influencing the consumer through the buying process in a positive or negative way. Nowadays, mostly all airline industries are using the price as a main competitive advantage, in order to meet the expectations of a larger segment of consumers and become the top airline company on the market. Many EasyJet consumers are describing the company services as being convenient, creating a balance between price, comfort and accessibility (Burns, 2012), while BA consumers are seeing the company services more reliable, in terms of price, social status, risk reduction and environment friendly (British Airways, 2012b). In both situations the determinant is the price, which is playing an important role in buyer behaviour decision process, where the value for money is different based on the customer perceptions and beliefs regarding the product and service.

Consumer Relationship Management in Airline Industry Airline companies must focus on the consumer relationship management, to invest and analyze customer opinions and feedbacks to create customer satisfaction and generate maximum profit (Shaw and Reed, 1999). This part of management is offering them an overall business strategy, a holistic view of customers and organization (Shanmugasundaram, 2008) and by utilising consumer segmentation and buying behaviour theories through a strategic approach, they are responding to consumer needs focusing on key customers and segments and creating long and close relationships with them (Payne, 2007). By evaluating the strategies that airline industry implements, in terms of marketing as segmenting their market and analyzing the buying behaviour, is a method to connect with the consumers and have a better competitive advantage in the market through fulfilling their needs, and benefiting from those functions at the same time (Kamukama et. al, 2011). Airline companies need to view customer as business assets by managing relationships with them selectively and further development will improve customer profitability, since this focus shall build upon the companys market value (Payne, 2007). Furthermore, the proactive use of the data regarding customers and

competitors shall increase customer satisfaction and reduce attrition by answering to any queries of the product that consumers might have, before the consumers ask the questions about the product, this can be managed much better through a consumer segmentation process where each segment is managed accordingly in order to meet their needs. In this case, airline companies must develop a program to get the consumers feedback and to answer to their questions regarding their inputs in the buyer behavior process, as services, products, facts and images, as fast as possible to avoid any possible inhibitors to cut in and cancel the actual buying process or even worst, to affect the brand image (Swarbrooke and Horner, 2008). Also, creating a balance in the value trade off between the customer and the retailer, in terms of the value delivered by the consumer and the value received by the airline company, and bringing along changes for the various segments, mentioning again the importance of price factor in buying behaviour (Jobber, 2007). As EasyJet is offering holiday packages, special price deductions for their loyal consumers (EasyJet 2012) trying to fulfill each customer segment needs based on economic factors as price and value for money. Another way is to position IT to maximize the value of information through technological innovations such as maintaining a database to collect information on customers and developing applications that enable valuable interaction with customers (Payne, 2007). An useful tool in this case besides company websites and communication through emails with the customers, will be a high useful method as an App for any smart phone to maximize and improve relations with the customer, influencing buying behaviour outputs and appeals to larger market segment, as EasyJet and British Airways did, most of all airline companies are developing one now.

Conclusion Developing one-to-one marketing is appealing to the communication that takes place between an airline company and a certain group of customers with similar needs, in order to develop continuing relationships with them (Payne 2007). Another aspect to conclude is that airline industry is still a strong market where the uniqueness in terms of price offers, services and style can create the differentiation and competitive advantages (Porter, 1985), to determine airline companies to analyze their market segmentation and all the aspect of the buying behaviors, responding to their consumer demands, as EasyJet and BA are succeeding today. As further recommendation from this paper author, airline industry must build a better customer interaction by collecting data information, developing applications enable to interact with all their target market segments and improve the company profitability by viewing customers as business assets through all the buying process.

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