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Segmentation Targeting and Positioning Analysis Theory

“Kotler (1994, p. 93) has pointed out that the strategic marketing planning process flows from a mission mission and vision statement to the selection of target markets, and the formulation of specific marketing mix and positioning objective for each product or service the organization will offer. Proceeds to segment the market, select the appropriate market target, and develop the offer's value positioning. The formula - segmentation, targeting, positioning (STP) - is the essence of strategic marketing” Restrepo (2010, p1).

Source: Segmentation, Targeting, and Positioning (2010)http://www.consumerpsychologist.com/images/cb/STP.png

http://www.consumerpsychologist.com/cb_Segmentation.html

Today, India is one of the world’s fastest growing economies. With having a wide geographical area of about 15,200Km and a coast line of 7,500 Km over a billion people .According to Financial times (2004) the GDP growth rate was less than 1% in 1991, however by 2003 the figure grew by 8.5%. Button et al (1999) argues that because of the growth of India’s IT industry, the number of travelers has grown rapidly. Due to which India’s Travel and Tourism generated $38.8 billion in 2004 and it is expected to raise $ 90.4 billion by 2014.

“According to the centre for Asia pacific Aviation (2005), Indian airlines have ordered a total of 490 aircraft over the last few months. Which in turn it is expected a growth of 164% compared to a world average of only 2.7% “Connell & Williams (2006, p.358).

Connell & Williams (2006) states that India’s domestic air travel has grown rapidly due to the growing wealth of India’s population. At the beginning of 2005, there were only four domestic airline services Indian airlines, Air Sahara and Jet airways and Air Deccan which was the low cost carrier.

Company background - Air Deccan:

Air Deccan (2009), India's first low fare and fastest growing airline was formed in 2003 with the vision to empower every Indian to fly by providing the lowest airfares and connectivity to unconnected towns and cities. Deccan is a business unit of Deccan Aviation, India's largest private helicopter charter company, which pioneered helicopter tourism in India. In 1997, a group of old army buddies led by Capt. Gopi decided to pool in their vast experience and knowledge of aviation and geography to launch India's first Private sector helicopter charter company. Deccan Aviation was started in 1997 with one helicopter, it now has a fleet of 10 helicopters and 2 fixed wing aircraft deployed across eight bases at Bangalore, Mumbai, Delhi, Ranchi, Hyderabad, Surat, Katra and Colombo (Sri Lanka). Deccan Aviation provides helicopter charter services for a range of aviation activities like helicopter tourism, aerial coverage of sports events, heli- skiing and rappelling, aerial reconnaissance and photography, and also undertakes logistic support for off shore oil explorations, geophysical mineral survey, power line survey, emergency medical evacuation, V.I.P. movement, film production etc.

The result was Deccan, India's first low cost, no frill airline, which was launched on the strength of a simple dream. A dream inspired by just one statement. "I want every Indian to fly at least once in his/ her lifetime." (Captain Gopinath, CEO, 1995)

The first flight was launched on 23rd August 2003 from Bangalore to Hubli. Since then forward innovation and cost efficiency has been the main reason of our business philosophy and strategy. The business model is robust, scalable and aligned to the dreams of nation building by making air travel a mass commodity.

We pride ourselves on our out of the box strategies which have created several firsts in Indian aviation and also made air travel affordable, available and easily accessible to the common man of India.

Source: Destinations of Air Deccan (2009)

Growth Story:

India government is considering the growth of aviation sector especially of the private sector in aircraft manufacturing, operating and upgrading airports and by providing enhanced ground services. According to ICFDC (2004) The Indian aviation sector has four types of operators – domestic airlines, operating within India and select International destinations, International airlines, chartered air operators and air cargo service providers, whose services include air transportation of cargo and mail.

According to the Director General of civil aviation (2006), when Air Deccan began its operation in August 2003, with a single aircraft from Bangalore to Hubli, Air Deccan has seen a phenomenal growth.

Air Deccan now has an Aprx 266 flight which runs on a daily basis.

As of March 2006, Air Deccans market share is at 19%, making it the third-largest airline in the country.

Currently, the carrier employee’s apprx 2,600 employees.

As of Nov 30 2005, Air Deccan had flown apprx 2.7 million passengers.( Air Deccan,2009)

Vision and Mission:

According to Air Deccan (2009), Captain Gopinath’s vision has helped the lives of India’s masses where they realized through Air Deccan, which is a pioneering low-cost business model. The airline has played a significant role in making the common man’s dream to fly which has come true. However, “the airline plans to fly a large number of destinations in India by connecting millions of people” (Captain Gopinath, CEO, 2004).

Basic Idea behind the modeling approach:

STRENGTHS

• Leader in LCC market

• Highest load efficiency

• Flies to destinations in the hinterland

WEAKNESS

• Focuses on South Indian market

• Image plagued by frequent breakdowns and near misses

• Very limited advertising 

• Reached at the threshold of cost efficiency

OPPORTUNITIES

• Extensive network to capitalize Air Cargo business

• Plenty of scope for expansion of operations

• Strengthen its position in Chartered flight segment

• could start ’Contractual Employment’

THREAT

• High attrition rate

• the threat of new entrants into Low Price Segment especially Indigo, Go Air, Spice jet and Jetlite.

• High risk perception.

As mentioned in Air Deccan (2009) Air Deccan has plenty of scope for expansion of operations; also it has been in operation since last 5 years, so kingfisher with the merger could get the opportunity to fly internationally and Air Deccan with facing constant threats from the ever emerging low cost carriers, higher attrition rate and requirement for capital had no other better option than to accept the offer of getting merged with Kingfisher.

Marketing Strategies:

Segmentation:

High aircraft utilization was the first of Air Deccan’s strategies as it would directly result in high revenue generation. The success of the Air Deccan is by its well planned operational routes. The Air Deccan operates from six bases, which are located in the metropolitan cities of Mumbai, Delhi, Chennai, Kolkata, Bangalore and Hyderabad. Further these bases are connected to other regional locations through regional routes. The main strategy of Air Deccan is to pursue unexplored routes which would result –high yield and high load factor (Sampler, 2006).

Positioning:

The main success behind Air Deccan is because of its unique pricing model. In the pricing model seats which were booked well in advance had lower fares, whereas the seats booked closer to the travel date had higher fare. However, this helped the airline to maximize its revenues from ticket sales as well as maintain high seat occupancy.

By commenting on additional revenues, Captain Gopinath (CEO, 2005) states that “With an average passenger spending INR 75 for a quick meal or beverage, Air Deccan could have easily generated additional revenue worth INR 202.5 million from 2.7 passengers that had flown on the airline till November 2005”.

Targeting:

Air Deccan (2009) has achieved tremendous growth due to their marketing and promotion strategies. The airline utilized its marketing and promotional programs effectively to highlight the competitive advantage with the result of its low fares.

The target segment which is for the customers who are cost-conscious, Air Deccan choose cartoonist R K Laxman’s famous mascot ‘The common man’ as its brand ambassador. The airline advertisement is generally through media like print, radio, and bill boards. The airline has entered into various sales which have provided Deccan with additional advertising slots on television, newspapers and radio.

Word Count: 1,335.

Referencing:

Anonymous. (2010). Segmentation, Targeting, and positioning .Available: http://www.consumerpsychologist.com/cb_Segmentation.html. Last accessed 11/12/2010.

Annonymous. (2009). Deccan simply fly. Available: http://www.deccanair.com/aboutus.html. Last accessed 12/12/2010.

Annonymous. (2010). Centre for Asia Pacific Aviation. Available: http://www.centreforaviation.com/. Last accessed 12/12/2010.

Button, K.J., Lall, S., Stough, R., Trice, M., 1999. High-technology employment and hub airports. Journal of Air Transport Management 5, 53–59

Financial Times, 2004. From India’s forgotten fields, a call for economic reform to lift the poor.

"Kingfisher-Deccan Merger". 12 Dec. 2010 http://www.antiessays.com/free-essays/47835.html

Kotler, P. (1994), Marketing Management: Analysis, planning, implementation, and

Control, 8th edition, Prentice Hall, Inc., Englewood Cliff, New Jersey.

O'Connell.F.J, & Williams.G.. (2006). Transformation of India’s Domestic Airlines: A case study of Indian Airlines, Jet Airways, Air Sahara and Air Deccan. Journal of Air Transport Management. 12 (1), 358–374.

Restrepo.A.J.. (2010). SEGMENTATION – TARGETING – POSITIONING.Available: http://pdfcast.org/pdf/segmentation-targeting-positioning. Last accessed 11/12/2010.

Sampler.L.J. (2006). Air Deccan. Available: http://web.mit.edu/cisr/working%20papers/cisrwp365.pdf. Last accessed 11/12/2010.

Marketing ethics and social responsibility – an opportunity for competitive advantage or a constraint on marketing decisions? Discuss citing appropriate examples.

Introduction:

Carrigan & Attalla (2001, p.560) states that “Marketing ethics and social responsibility are inherently controversial, and years of research continue to present conflicts and challenges for marketers on the value of a socially responsible approach to marketing activities”.

According to Laczniak & Murphy (1993) since few years there are certain controversy revolving around marketing ethics and social responsibility, researchers and scholars are continuing to work on it. Smith & Quelch (1996) states that most of the company would like to think that being a good company will attract customers with their products, while it has seen that by the unethical behavior customer would reject their offer/products.

The basic idea behind focusing marketing is by its products and services with the environment, where customers play a very important part by representing (Vaaland et al, 2007).As mentioned by Vaaland et al (2007, p.929):

“Marketing is the process of planning and executing conception, pricing, promotion and distribution of goods, ideas and services to create exchanges that satisfy individual and organizational goals”.

According to Singhapakdi et al (1995), Social responsibility is been given so much importance because, E.g., some public companies undergo social responsibility which might limit profits and disagreement of the social responsibility. However, he also argues that, the international researchers have not identified in detail to which marketers across the countries assume that ethics and social responsibility are important for their organization for their growth. And also argues that, first managers should be aware of the ethics and social responsibility to have the organization grow before their behavior become more ethical and reflects greater social responsibility.

Social responsibility in marketing:

As Laczniak & Murphy (1993, p.5) states that, both ethics and social responsibility have to make a positive impact towards the success of an organization, due to which customers make ethical judgments that are likely to influence their purchases. As he has told that:

“Customers over time will normally recognize the organizations that attempt to be responsive to various ethical and social factors in the marketplace”.

The ethics era:

Hunt and Vitell ( 2006, p.3) pointed out that “ An individual perceives a situation as having ethical content, the next step is the perception of various possible alternatives or actions that might be taken to resolve the ethical problem”.

http://www.emeraldinsight.com/content_images/fig/2160040303002.png

As Hoddow (2001) states that even though, the researchers are working on this field “ ETHICS” since 30-40 years it’s still not possible to have achieved the answer of what exactly is the social responsibility of marketing. According to BBC (2001) there have been lot arguments which have been made by governments and organizations with regarding to the ethical issues. E.g., Companies like Oxfam and Medecin sans Frontieres on allowing cheaper access for consumers of drugs like AZT.

Globally, there are many organizations and institutes which are established to do research and promote ethical business behaviour like for E.g., European Business Ethics network, Hong Kong Ethics Development Centre. There has been given a lot of importance to the field of marketing as it has grown rapidly and developing a strong ethical profile, academically and professionally, marketers are finding it difficult to ignore the gap of ethics of what the society is expecting and what marketing professionals are delivering (Carrigan & Attalla, 2001).

Ethical Consumer Behaviour:

According to Hunt and Vitell (1992) it has been seen that a lot of attention is given to marketing ethics in the current years, irrespective of that it is been unsuccessful to see the buyer side of the exchange process. However, it is a fact that the customers are more informed, more educated and are aware of their consumer rights and product requirements in most of the western society.

However, a study conducted by Boulstridge and Carrigan (2000) examined customers response to ethical or unethical behaviour, where they found out that the most customers did not have more information weather a company did or did not behaved ethically. E.g., Nestle and Exxon. Even though many people believed that social responsibility is not important while considering in their purchasing behaviour, even with knowledge about unethical activity, some customers still bought goods from the company. The main reason why consumers bought these products is because of price, value, and quality and brand familiarity rather than societal ones.

“Ulrich and Sarasin (1995) say that, one thing is clear, don’t do any research. Don’t ask the public any questions on this subject. The answers are never reliable. In instances where the head says one thing and the heart another. Studies are useless if not misleading “(Carrigan and Attala, 2001, p.566).

Performance framework:

Friedman (1962, p.133) argues that “few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible”.

The framework by Carroll (1995) gives us the idea and the present condition of what corporate social responsibility theory and their role within the corporate social performance framework.

http://labspace.open.ac.uk/file.php/4778/!via/oucontent/course/132/pyramid.gif

Figure 2: Source: Carroll (1995, p.49). The pyramid of corporate social responsibility.

According to Windsor (2001), Carroll’s four dimensional pyramid of responsibility structures the “crude notion” of various corporate social responsibilities into a construction of pyramid. And the pyramid consists of economic responsibilities which are the foundation and philanthropy is the apex. The construction of the pyramid is such that the other responsibilities will not be achieved in the absence of economic performance. Economic and legal responsibilities are socially required, ethical responsibilities are socially accepted and philanthropy is socially desired.

Socially Responsible firms:

When asked to identify the socially responsible firms, many would point out on Marks and Spencer, because as Jobber (2010, p.182) mentioned that M&S aims to go “carbon neutral, send no waste to landfill, extend sustainable sourcing, help improve the lives of people in its supply chain and help customers and employees live a healthier lifestyle”.

According to Carrigan & Attalla (2001) companies like JCB, Nissan and Co-operative bank followed ethical behaviour to an extent and when one trying to think of being a good citizen one respondent said:

“There really aren’t that many .I am sure they are all unethical to some degree.” (Anonymous, 2008).

Companies like Microsoft, is well known as philanthropy. Bill gates, fights for many of the world’s diseases with his foundation with Melinda Gates. The foundation has given $ 20.1 billion since its first set up (Jobber, 2010).There are few well known companies which they have been registered as a poor social responsibility for many reasons, E.g, L’Oreal for their animal testing, NatWest due to their financial investment with animal research centres and Shell and BP for their poor environmental pollution and poor employee relations (Carrigan & Attalla (2001).

As mentioned by Carrigan & Attalla (2001, p.569) the attitudes of many consumers would include “when you buy petrol, you do not think of those companies that are or not ethical, it does not even cross your mind. I would only fill up elsewhere if it caused no inconvenience to me”.

However, the behaviour of the ethics needs to be changed or it has to be convincing to the people in order to make them buy or have believe in the products. As we have discussed above about few companies and have seen the reaction of customers buying behaviour as the just buy the products because of their convince and or are for the brand name. All these show us that the customers are passive ethical shoppers other than the active consumer shoppers (Carrigan & Attalla (2001).

Conclusion:

It has been seen from the study whether the customers care about the marketing ethics and social responsibility which would influence them on their buying behaviour. It has also seen that researchers have studied the consumers buying behaviour and they have to say that the many of them give very less attention to ethical considerations when it comes to their buying or decision making behaviour. Carrigan & Attalla (2001) states that the link between the social responsibility and marketing ethics and consumer purchase remains unproven but also one should not conclude with the development of ethical marketing policy and social responsibility.

Word Count: 1,376.

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