a) Marketing environment
Marketing environment is the integration of internal and external aspects and powers which influence the firm's capability to create a connection and serve its clients. Some of these elements are controllable while others are not and require business operations to change. Marketing environment consists of the internal environment, microenvironment, and macro-environment (West, Ford and Ibrahim 2015, p.67).
b) How changes in the demography, culture, and economy affect United Airlines decision
Demographic setting includes a varying age bracket, increasing diversity, ever-changing household profiles, topographical populace shift, locations, gender, and occupation. Categorizing generation in the U.S. offers to understand the shifting patterns in the airline sector. The demand for air travel has risen substantially over the years. The generations are classified into; baby boom generation, generation X, generation Y, and Generation Z. Changing demographic factors enable United Airlines to forecast demand. The demographic factors match the client's expectation in regard to the value-added service offering. United Airlines should understand that the future of air travel will be determined by the progress in the millenarian generation (Henry 2018, p.32).
Passenger's inclination and origin location data can be highly important for marketing decisions. The millenarian group is the future of the travel sector. Nowadays, the travel sector is propelled by baby boomers' travel demands. In the next decade, the millenarian generation will enter their peak earning, spending and traveling years. United Airlines can use the demographic data to make informed decisions about their customers.
Society's culture influences the culture of an organization in an environment. Nowadays, airlines' customers have transformed. United airlines have had to make numerous modifications to fulfill the demands of these customers. Most passengers prefer airlines that offer more services for a reduced price. There have been less business class passengers, and this has been a key loss for airlines. Computerization has also resulted in fewer passengers flying to business endpoints because they can just hold a session call or Skype consultation.
Over the years, the millenarian generation's appearance into the passenger class has led to numerous social variations, more significantly in terms of service, where consumers have become much more demanding. To fulfill the rising demands of this group, United Airlines has to alleviate costs. Cultural changes have also changed the passenger profile in that the passengers are more economically minded.
The economic environment comprises elements that influence purchasing influence and trends. The economic setting is characterized by more buyer concern for utility in ever-changing buyer spending trends. Airline clients are pursuing greater value-just the right premium service at a fair cost. The spread of income is also changing. The wealthy have grown wealthier, the middle class has reduced, and the deprived have remained at the same levels resulting in a two-tiered market. United Airlines is compelled to tailor its marketing bargains to two diverse markets-the wealthy and the less prosperous.
The recent recession was a huge blow to United Airlines. Additionally, United Airlines have had to deal with ever-rising fuel costs. These costs have made the company's profitability to decline. United Airlines has to remain in a market where there is stiff competition from emerging cheap airlines and few people who seek to travel because of fiscal motives. United Airlines have had to struggle with more labor demands from their workers.
a) Market segmentation, market segment, targeting, and positioning
Market segmentation is a method of apportioning the market of prospective clients into diverse groups and segments on the grounds of particular characteristics. The participant of these groups share comparable features and often has one or more aspects common among them.
Market segments are divisions comprising of clients who will react equally to marketing approaches and share characteristics like similar desires, positions or interests. Market segments can also be in terms of demographics by age, gender, family size, income; psychographic by personality, social class and behavioral by benefits, uses or response.
Targeting is the second phase of the segment. After the market has been classified into its segments, the marketer will choose a segment or sequence of segments and 'target' them. Targeting involves an assortment of prospective clients to whom an enterprise wishes to sell merchandises or services. Targeting strategy entails segmenting the market, selecting which sections of the market are suitable and ascertaining the products that will be provided in each section (West, Ford and Ibrahim 2015, p.108).
Positioning is a promotion strategy that focuses on making a brand holds a unique position, comparative to contending brands, in the mind of the passenger. Positioning is applied either by emphasizing the distinct characteristics of their brand or create an appropriate image through marketing. Once a product is positioned, it is very had to reposition it without damaging its reliability.
b) How United Airlines use segmentation to grow
Through segmentation, United Airlines can recognize industry prospects and fulfill its marketing goals. Segmentation provides the company with a clear comprehension of its clients, the amenities they need, the place and time they desire those amenities and the payment form of their services. United Airlines segments its market for various reasons such as; to identify customer demands and the proportion of clients who have those requirements; develop products and costs to fulfill the customer's demands; target communications at clients within each segment and allot money to support and develop each market prospect (Statista.com 2016, p.1).
Market segmentation enables the company to increase the competence of its marketing strategies by ensuring the firm uses a different approach for each market section. United Airlines utilizes a form of psychographic segmentation to separate the market for its amenities. This entails evaluating the social class, views, lifestyles, interests, attitudes, and behavior of customers. Modern technology helps the company in market segmentation. Technology provides the company with adequate data to facilitate the classification of customers by their motivations. In some instances, customers choose United Airlines due to favorable prices while others seek its services because of schedules (Statista.com 2018, p.10.
United Airlines also applies a value-based segmentation approach to manage its clients as resources. Being the world's biggest air travel supplier, United Airline is accountable to about one-third of all global and local travelers around the world. To deliver high client service and effectively target current and potential customer, United Airlines utilizes the forecast analytics technology to identify patterns among its clients. Instead of just categorizing clients by income, the company creates segments based on the client data. To generate more revenue, United Airlines aims to attract premium customers that desire to apply for premium service and to identify different segments accurately.
a) SWOT Analysis
This is a system used to assess a corporation's competitive status by classifying its strengths, weaknesses, opportunities, and threats.
b) Components of SWOT Analysis
This component describes the core competencies of an enterprise. Strengths act as strategic elements that may make a particular venture more likely to prosper and aspects where the enterprise may have merits over another related enterprise.
Weaknesses are aspects that make a particular organization less likely to thrive and sectors where a firm is principally lacking.
Opportunities are aspects that have the capability of increasing proceeds, efficiency or benefit an enterprise in some other way.
Threats have the potential to damage a business.
c) United Airlines SWOT Analysis
United Airlines has a strong operative system (has over 5000 trips a day to 360 terminuses across six continents.
The company has more than 85,000 employees across the world and moderately high employee productivity.
United Airlines is a strong brand name and is widely recognized across the world.
There are efficient strategic alliances and has the industry-leading loyalty program.
United Airlines offers great client experience with onboard entertainment and good brand through far-reaching marketing.
United Airlines has favorable investor metrics. United Airlines is the only airline among the three biggest US global network airlines that have reported an increase in its share price YTD through late-Jul-2018. The firm's P/E is greater than both Americans's and Delta's, and its market capitalization is greater than American's (Henry 2018, p. 88).
United Airlines has an improving operational performance. United Airlines has earned a four-star position for its on-time performance from Jun-2017 to May-2018. The company's annual OTP for that timespan was 80.7 percent. Delta was the only other major US airline to achieve a four-star ranking, and Hawaiian was the only United States to post a five-star performance (Statista.com 2016, p.1). United Airlines has reported that its completion element progressed from 98.3 percent in 2016 (second quarter) to 98.7 percent in 2018 (second quarter).
- United Airlines is experiencing a failing monetary performance because of constant losses.
- The company has a high reliance on third-party service providers for client service, fueling processes, and maintenance.
- Powerful unions are a concern
- Direct connection in 9/11/ terrorist attack was an unfortunate occurrence.
- There is a growing opportunity in the US airline industry
- The United States economy is back on track for growth
- The whole world is experiencing a growth in tourism and travel industry.
United Airlines has the opportunity to implement its domestic strategy. The key driver of the company's higher capacity growth in relation to its rivals is an impulse from its hubs to strengthen linkage to more trivial and intermediate markets.
- There is an intense rivalry from low-cost airline providing reduced prices
- The global rise in fuel costs is also a challenge to the company
- There is a threat of recession across the world.
Geopolitical upheaval and trade wars; United Airlines has assured it has the elasticity to deal with a recession or trade wars through the retirement of older aircraft and returning aircraft off lease. Airlines have not tried to provide clarity about a potential increasing trade watt but are offering assurances that they have the strategies to endure any fallout from trade policy (Wahba 2017, p. 10). Generally, during the past three to four years there has been overcapacity in the US-China market, and if trade impacts demand between the two nations, United States airlines will experience trans-Pacific headwinds.
Henry, A. 2018. Understanding strategic management. Oxford: Oxford University Press.
Statista.com. 2016. United Airlines - Statistics & Facts. Retrieved from: https://www.statista.com/topics/4043/united-airlines/ on date 5/11/2018
Wahba, G., 2017. Measuring the effect of Viral Negative Sentiment on Market Value: Case Study on United Airlines Crisis 2017.
West, D.C., Ford, J. and Ibrahim, E., 2015. Strategic marketing: creating...
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