This Research Paper on Consumer behaviour trends and their impacts on airline product distribution will help in writing Marketing Dissertation Topic
KEY COMPETITIVE
THEMES FOR THE FUTURE
Technology
evolution over several decades has resulted in a distribution landscape that is
increasingly fragmented and replete with new opportunity. Airlines can no
longer rely on a static approach to inventory distribution or traditional
revenue as a conduit to economic vitality – rather they must adopt a dynamic approach
that leverages technology appropriately and supports a return to true
one-to-one marketing (Peppers and Rogers, 1994) between airlines and their
customers.
To do this
effectively, airlines will need to devise a plan that is often evolutionary but
also sometimes revolutionary in nature. Focusing on five key themes, airlines
will positively transform the effectiveness of their distribution and revenue
optimisation strategy to compete given the new reality of the info-consumer.
Mix it up!
In today’s
multi-channel distribution environment, the majority of airlines offer content
to their customers through a variety of channels. Given the nature of the
info-consumer’s desire for immediate access to information through a variety of
communication vehicles, there is compelling evidence that the multi-channel trend
will continue to gain importance. Tomorrow’s distribution reality will be a greater
emphasis on multi-channel mix. This will be more pronounced years from now when
travel shoppers and buyers will receive tailored, dynamic and experiential
content – increasing spontaneity in travel buying. Airlines will have to master
use of emerging technologies and evaluate multiple ways to communicate with
customers while also considering the true costs and benefits of each channel.
Moreover, they
will do this whereas customers continue to gain in their ability to seek out travel
information from a variety of sources. With numerous factors to evaluate, it is
obvious that no one-distribution mix will meet the needs of all airlines.
Guided by the anticipated results of each airline’s target customer strategy,
the right channel mix will be influential in reaching the airline’s most profitable
consumers without ignoring larger, less-profitable segments that keep the
airline’s brand relevant in the marketplace and keep airplanes full. The
concept of ‘trip type’ helps an airline segment booking types both by their number
of occurrences and their contribution to an airline’s bottom line. When
travelling, the info-consumer will not be defined by one label or type of
travel. Instead, the info-consumer will travel at different times for different
reasons – for the week, a business trip; for the weekend, a quick getaway. This
channel jumping trend can already be seen today as highlighted by historical
air travel purchase data outlined in Figure 1, based on a 2007 global distribution
study by Sabre Holdings. These bookings come from different sources depending
on the trip type. For example, in the scenario in Figure 1, about 70 per cent
of bookings for cost-conscious leisure trips are made through a direct channel
whereas about 90 per cent of managed corporate bookings are made using an
indirect channel. The length of each bar is relevant to the size of the segment
that purchases the type of trip.
Get intimate!
The ability for
an airline to truly understand its customers – who they are, what they want and
how to best reach them in a dynamic, interactive sense – will become
increasingly important. Info-consumers have access to endless amounts of
information in printed publications and through the media, but especially via
the internet. This enhanced knowledge plays a crucial role in the decisions they
make when planning a trip. Consumers might at times be overwhelmed with too
much information, ironically leading them to recruit the help of a travel
agent. This will likely be experiential in nature, using advanced technology to
address tailored information with destination expertise. This provides another
opportunity for airlines to get to know
their customers and offer options for those requiring a little more help making
decisions than those who view themselves as independent consumers.
In either case,
info-consumers need to be viewed as unique individuals with specific needs,
which help determine the decisions they make about the trips they purchase.
Most importantly, the info-consumer wants to know that airlines understand
their desires. This individuality drives the need to identify new and creative
ways to reach travellers without compromising products, services or price.
Leveraging
customer data
For an airline
to simply know who its info consumers are
– based on what is collected today through loyalty programmes – will be largely
insufficient down line. Expanding the information collected and thus the
intimacy of the relationship will result in creating innovative travel choices
that will satisfy the customer’s desire for more tailored travel options. To do
this successfully will require more indepth knowledge of
what travellers want as they travel upstream and downstream in the price
spectrum. In addition, a good understanding of the unique attributes of the
travel experience desired will be required. As discussed earlier, the trap here is recognising that the
same info-consumers may appear in various segment types and be inconsistent in
the types of trips they select or in how they pay attention to brand. These
consumers want to create personally branded options from start to finish for
every trip, and they want to do it quickly.
One possible
solution to this dilemma is through enhanced, automated search capabilities or
data mining. Data mining may become the equivalent of today’s comprehensive
contact lists enhanced with advanced customer relationship management tools
that could facilitate more innovative marketing practices.
The increase in
savvy info-consumers who want to travel ‘their way’ coupled with the emergence
of new markets will compel travel suppliers to collect comprehensive customer data
from all points of sale as well as employ analytical tools to interpret that
information. Getting the right product to the right customer at the right time
for the right price will not only be a preferred goal of marketers but a
necessity for success. Mechanisms critical to understanding not only the
customer value but the customer network value enables airlines of all sizes to
market appropriately to the info-consumer. With this information, airlines will
more effectively sell and cross sell to their targeted audience, offer
consistent service, drive loyalty and leverage customer feedback in the
development of new and desired products.
Disclaimer-This research paper written by Gordon Locke and taken from Journal of Revenue and Pricing Management Vol. 8, 2/3, 267–278 is property of Palgrave Macmillan and should be used for academic reference purpose only.
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