This assignment aims to achieve a number of things. It will define customer value and explain why it is so crucial that companies need to create it and incorporate it into their operations.
It will then focus on the airline industry and discuss the evolution of customer value driven services marketing in this industry. Finally, it will address the challenges airlines face in creating and delivering customer value driven marketing strategies. In addition to this it will discuss the methods that airlines use in order to create value for their customers.
It is becoming ever more important for organizations to create customer value in order to gain and retain customers. The airline industry is at one of its most competitive stages in its history. It is becoming increasingly challenging for airlines to create customer value in order to retain their current customers and aim to gain new customers.
Table of Contents
1. Introduction
2. Definition of customer driven service marketing
3. Evolution of customer driven service marketing in the airline market
3.1 Full-service carriers / Network Carriers
3.2 Low-cost carriers (LCC)
4. Challenges in the airline market
4.1 Frequent Flyer Program
4.2 Strategic alliances
4.3 Social Media
4.4 Environmental protection
4.5 Complaint management
5. Conclusion and forecast
Objectives and Topics
This paper aims to define customer value within the context of the highly competitive airline industry and explores how airlines evolve their marketing strategies to retain existing customers while attracting new ones. It examines the distinct approaches of full-service network carriers versus low-cost carriers, addressing modern challenges such as loyalty programs, strategic alliances, digital communication, environmental concerns, and service recovery.
- Theoretical definition and importance of customer value creation.
- Evolutionary differences between network carriers and low-cost business models.
- Analysis of customer retention strategies including loyalty programs and strategic alliances.
- Impact of social media and digital customer service on brand perception.
- Strategic responses to environmental challenges and complaint management.
Excerpt from the book
Defining Customer Value
In every buying decision, a consumer asks the same question: 'is what I am going to receive worth what I have to give up in order to obtain it?' (McLaughlin & Shinn, 2014). The gain the consumer receives for the benefit is weighed against the cost the consumer must pay to acquire the benefit. The value the individual consumer places on a product or service becomes the customer value. The simple formula is: Customer Value= Benefits – Costs (McLaughlin & Shinn, 2014).
This customer value is weighed against the customer values assigned for similar products and services that would provide a similar benefit. Consumers will typically purchase the item or service with the highest customer value among all offerings in the marketplace (Mahajan, 2016).
There are different varieties of costs that need to be considered. In most cases the most significant costs considered by the consumer will be the actual price they pay for the product or service (Busch, Dögl, & Unger, 2008). However, there are other costs that need to be considered. Another important factor is the taken time to purchase a product. ‘For example, a consumer is willing to pay more for a cola drink at a convenience store, as opposed to going to the supermarket. This is because it is much faster for them to access and purchase via that particular type of retailer. Therefore, the amount of time involved in the purchase transaction will be considered by some consumers.’ (marketingstudyguide, n.d.)
‘Every consumer has a unique set of needs and resources, so no two consumers will place the same customer value on the same product or service.’ (McLaughlin & Shinn, 2014) Some consumers are ready to pay a comparatively higher price for a high quality level of service. Others will make the decision that the same benefits are not worth the price (McLaughlin & Shinn, 2014).
Chapter Summaries
1. Introduction: Outlines the significance of customer value in a competitive airline market and sets the scope for analyzing marketing strategies and industry challenges.
2. Definition of customer driven service marketing: Explores the theoretical concept of customer value and the strategic importance of aligning business operations with customer needs to ensure loyalty and profitability.
3. Evolution of customer driven service marketing in the airline market: Traces the historical development of airline products and distinguishes the service-oriented approach of network carriers from the price-focused model of low-cost carriers.
3.1 Full-service carriers / Network Carriers: Analyzes the transition of full-service airlines towards multi-cabin configurations and premium service offerings to foster customer loyalty.
3.2 Low-cost carriers (LCC): Discusses the successful business model of low-cost carriers based on operational efficiency, reduced services, and price-sensitive customer acquisition.
4. Challenges in the airline market: Examines modern hurdles in customer retention, specifically focusing on how different customer segments perceive value and loyalty.
4.1 Frequent Flyer Program: Evaluates the role of loyalty programs in rewarding frequent travel and gathering data to optimize marketing measures.
4.2 Strategic alliances: Details how global partnerships allow network carriers to expand their route networks and provide seamless travel experiences to satisfy international passengers.
4.3 Social Media: Investigates how airlines leverage social media for customer interaction and the discrepancies between platform strategies used by network and low-cost carriers.
4.4 Environmental protection: Addresses the rising pressure from eco-conscious consumers and the industry's response through sustainable initiatives and marketing.
4.5 Complaint management: Highlights the critical need for effective service recovery to maintain long-term relationships despite operational disruptions.
5. Conclusion and forecast: Summarizes the key findings and provides strategic recommendations for both business models to improve customer satisfaction and future competitiveness.
Keywords
Customer Value, Airline Industry, Network Carriers, Low-cost Carriers, Customer Retention, Loyalty Programs, Strategic Alliances, Social Media, Generation Z, Environmental Protection, Flygskam, Complaint Management, Service Marketing, Customer Satisfaction, Competitive Strategy.
Frequently Asked Questions
What is the central focus of this research paper?
The paper focuses on the creation and delivery of customer value within the airline industry, analyzing how different business models adapt their marketing to retain customers.
What are the primary business models discussed?
The study primarily contrasts full-service network carriers, which emphasize service quality and loyalty, with low-cost carriers (LCC), which prioritize pricing and operational efficiency.
What is the core objective of the airline marketing strategies mentioned?
The primary objective is to gain and retain customers by offering superior value that meets specific consumer needs, thereby ensuring long-term profitability.
Which scientific methodology is primarily applied?
The research is based on a literature-based analysis of industry studies and market developments, complemented by a practical experiment regarding social media response times.
What topics are covered in the main section of the paper?
The main sections cover industry evolution, the role of loyalty programs and strategic alliances, social media communication, environmental sustainability efforts, and the effectiveness of complaint management.
Which keywords best characterize this work?
Key terms include Customer Value, Airline Industry, Customer Retention, Strategic Alliances, and Environmental Protection.
How do low-cost carriers differ from network carriers regarding loyalty programs?
Network carriers typically utilize intensive, points-based loyalty programs to retain business travelers, whereas low-cost carriers often avoid such programs due to cost and the fact that their price-sensitive customers prioritize low fares over long-term loyalty benefits.
What impact does 'Flygskam' have on current airline marketing?
The 'air shame' movement has forced airlines to increasingly address environmental concerns in their marketing, with carriers now highlighting CO2-offsetting programs to appeal to environmentally conscious segments like Generation Z.
What does the experiment on social media reveal about current service standards?
The experiment showed that airlines are often slow to respond to customer inquiries on social media compared to consumer expectations, indicating a significant gap in digital customer service that needs to be closed to improve customer satisfaction.
- Arbeit zitieren
- Jeremy Schulze (Autor:in), 2019, Customer-Driven Service Marketing in the Airline Market, München, GRIN Verlag, https://www.grin.com/document/541129
