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Short haul business travel in the European Union: a segmentation profile

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Business travellers tend to be charged a premium for the air services they consume due to the nature of demand, and therefore represent a potentially high source of revenue to airlines. Airlines are keen to secure and maintain executive travel business. The research investigates the short haul business air travel market in Europe, using a conceptual benefit segmentation model that addresses the industrial nature of the market. Three distinct market segments are identified; the schedule driven segment, the corporate cog segment, and the informed budgeter segment. A profile of these market groupings is given and implications for marketing strategy discussed.
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Journal of Air Transport h4anagement Vol 2, No 3/4, 197-205. 1995 pp.
Copyright 0 1996 Elsevier Science Ltd
Printed in Great Britain. All rights reserved
0969-6997/96 %lS.CNl + 0.00
SO969-6997(%)00006-3
Short haul business travel in the
European Union: a segmentation
profile
Keith J Mason and Richard Gray
Centre for International Shipping and Transport, University of Plymouth, Drake Circus,
Plymouth PL4 8AA, UK
Business travellers tend to be charged a premium for the air services they consume due
to the nature of demand, and therefore represent a potentially high source of revenue
to airlines. Airlines are keen to secure and maintain executive travel business. The
research investigates the short haul business air travel market in Europe, using a concep-
tual benefit segmentation model that addresses the industrial nature of the market.
Three distinct market segments are identified; the schedule driven segment, the corpo-
rate cog segment, and the informed budgeter segment. A profile of these market group-
ings is given and implications for marketing strategy discussed. Copyright 0 1996
Elsevier Science Ltd
Keywords: business travel, European Union, airline marketing, segmentation
Background
Business travellers are particularly attractive to
schedule airlines as they tend to travel more
frequently than leisure passengers, and they tend to
be prepared to pay higher prices than leisure
passengers (Shaw, 1985). In short haul markets, such
as those within the European Union (EU), business
travel may represent a large proportion of a sched-
uled airline’s traffic. Wickers (1994) indicates that
about half of all US domestic travel is business
related, and Doganis (1991) indicates that this
proportion may be as high as two-thirds within
Europe. Business travel, therefore, represents a
vitally important market to short haul EU carriers.
The EU has recently undertaken a major liberal-
ization of the air transport market. Mason and Gray
(1993) indicate that since the third phase of liberal-
ization, which took effect on 1 January 1993, any
community airline can operate any intra-EU route
it chooses, at any price, and can offer as much
capacity as it wishes. (There are some exceptions,
but these are insignificant for the purposes of this
paper.) The legislative changes mean that the EU
market is becoming more competitive than at any
time in its past.
Faced with an increased choice of airlines, prices,
and frequency, the behaviour of the business travel
market is difficult to predict. To survive in this new
competitive environment, an airline will need to
protect and build its market share. The development
of marketing strategy, based on a sound under-
standing of the factors that affect the market, is
therefore necessary.
Studies of the behaviour and attitude of air
travellers have traditionally considered the business
travel market as part of the entire air travel market
(e.g. Ritchie et al., 1980; Good et al., 1985). The
rationale for considering the business market
together with the leisure market is that the differ-
ences in the factors of demand of these two markets
are often considered and exploited together by
airlines (Brunning ef al., 1985). By so doing airlines
can manage the peaks and troughs in demand, and,
thereby, maximize their revenue per flight. The
disadvantage with such an approach is that the
richness and complexity of the factors of demand in
both sectors tend to be overlooked in a bid to find
the main differences between the two markets. In
the above examples (Ritchie et al., 1980; Good et al.,
1985) the traditional view of business travellers as
consumers who place high importance on schedul-
ing factors and low importance on price is re-
affirmed; however, little new information about the
market is gained. While price elasticity may be the
main distinguishing feature between business and
leisure travel, it is unlikely that all business
travellers follow this stereotypical pattern (e.g. self
employed persons who pay their own fare may
consider cost to be highly important). To gain a
more comprehensive understanding of the business
travel market, given its size and importance, the
197
Short haul business travel in the EU: KJ Mason and R Gray
research described in this paper undertakes a
market segmentation study of the business traveller
market in isolation.
Segmenting the business travel market
Separate bodies of literature have developed for
consumer marketing and industrial marketing.
Therefore, to consider the business travel market
using the applicable body of literature, the market
needs to be defined as either being consumer or
industrial in nature.
The Industrial Marketing Committee Review
Board (IMCRB, 1954) defines consumer products
as
“goods [and services] destined for use by the
individual ultimate consumer in such form that they
can be used by him without further commercial
processing”.
Using this definition it would seem that business
related air travel may be defined as a consumer
service, as the individual consumer (the business
traveller) uses the air service as a complete product,
which requires no further commercial processing.
By contrast a definition given by Haas (1989) of
industrial products indicates that business related
air travel could also be considered as an industrial
service. He states that an industrial market
involves
“organizational users who buy goods and services
necessary to the operation of their businesses and
organizations” (p. 3).
As demand for business travel is derived from a
need for business people to travel in the pursuit of
their business, business travel also falls within the
scope of the definition of industrial products.
It would seem therefore that the definitions given
fail to classify business related travel adequately,
indeed business air travel market has elements that
would be expected in both consumer and industrial
markets. Consumers seek benefits from the product
that relate to both personal and organizational
objectives. For example, a traveller may want to
arrive at the destination in good time, be able to
work on the flight if necessary, and have short
check-in times so that working time can be
maximized at the destination (organizational objec-
tives). However, the traveller may also want to
arrive home after the trip in good time to spend
time with his/her family, earn frequent flier scheme
points, enjoy a high quality in-flight service, and
have a certain amount of leg room (personal objec-
tives).
While the airline user’s set of purchase motives
are complex they may not be the only set of motives
that affect the purchase of air travel. Cost is likely
to be a low consideration to the traveller when the
cost for the ticket is not borne by himself/herself.
This cost is invariably incurred by the organization.
A study by American Express (199314) shows that
many organizations are beginning to apply closer
control over the spending of executives on business
trips. It would seem, therefore, that the organization
which employs a business traveller may have some
influence over the purchase.
The needs or wants of the traveller may not be
the same as the needs or wants of the company. In
some cases there may be some conflict between the
objectives. It would seem important, therefore, to
assess the extent to which organizational involve-
ment in the purchase of business travel has an influ-
ence on buying behaviour.
To treat the market just as a consumer market,
may lead to errors of omission as the analysis would
exclude organizational influence. Alternatively, a
purely industrial analysis may understate the impor-
tance of the personal element of the traveller’s
motives. It is possible that air business travel can be
perceived as a hybrid market, featuring elements of
both consumer and industrial markets.
To segment the business travel market a segmen-
tation base was used that considered the many
factors that influence buying behaviour and also
addressed the influence that the employing organi-
zation has over the purchase. The market was
segmented based on the benefits sought from the
product, using a stakeholder model of the organiza-
tional decision processes. This approach draws on
the advantages of the two most appropriate segmen-
tation bases available (benefit segmentation, and
buyer centre segmentation).
The conceptual model
The diagram in Figure I represents a conceptual
model of the buying behaviour of companies in the
business air travel market, that can be used to
segment the market. Three stakeholder groups are
identified (the organization entity, the travel
organizer, and the traveller). The model shows that
each stakeholder group seeks its own benefits
(examples of key variables are given) which may be
divergent from those selected by the other groups.
For example, an organization wishing to minimize
the cost of air travel may be in conflict with a travel
organizer who wishes to book a flight quickly (as
he/she will need to spend time searching for the
cheapest flight), and the user who may not receive
the quality of in-flight meal service that he/she
sought from the airline choice. Therefore, it is
hypothesized that the relationship between the
stakeholders will affect the combined bundle of
benefits sought from the air service. It can be seen,
therefore, that the actual benefits that are sought
from the air service purchase will be based on the
competition between the stakeholders, which may
be outright “victory” for one stakeholder, or result
in a compromise solution.
Short haul business travel in the EU: KJ Mason and R Gray
ltfhidp .. w
El
Exwlpl=d I---- -1
Key vatiab1cs I_____~
Figure 1 Conceptual model
Methodology
To operate the model a survey of one group of
stakeholders was undertaken to identify the
purchase criteria, so that benefit segments could be
identified, and also to collect information on the
other significant actors that have a stakeholding in
the purchase so that further behavioural analysis of
industrial purchasing of air travel could be under-
taken. The traveller stakeholder group was selected
to be surveyed because:
l While it has been established that the business
travel market has a hybrid nature, the consumer
element of the market is significant, and thus it
would seem important to interview the individual
traveller to ensure that the consumer element of
the market is sufficiently considered.
l Business travellers were the easiest group to
survey as they could be identified and inter-
viewed at an airport, or in-flight.
A quantitative study was undertaken at Stansted
Airport, in the UK. A self-completion question-
naire was designed to be completed by short haul
international and domestic business travellers and
827 responses were collected during a 2 week
period. A sample size of 1,111 was required to gain
a desired precision of f 0.5 trip in the calculation
of average number of trips per annum. While this
target was not met the sample represented approx-
imately 10% of travellers during that period, which
was deemed adequate.
Attitude statements regarding 23 product
attributes, and various demographic and
behavioural data were collected (see the Appendix).
An attitude rating scale based on the Q-sort
approach (Green and Tull, 1978) was used. Each
respondent rated the importance of each product
attribute on a 5-point ranked continuum scale. The
validity of results derived from the survey may be
criticized as the sample is drawn at only one airport,
in one time frame. While this limitation on the study
is recognized, validity can only be tested by drawing
different samples in different time frames. This is a
normal scientific approach; however repeated
survey administration was not possible due to
limited project funds and difficulties with gaining
access to potential respondents at other airports.
Principal component analysis of the 23 purchase
benefits was performed to identify any underlying
purchase benefits. Prior to the administration of the
procedure, tests of sampling adequacy and spheric-
ity, and tests of the internal consistency of the
attitude data were undertaken. The data performed
well under all of these tests (for a full exposition of
the statistics see Mason, 1995). A criterion of an
eigenvalue greater than one was applied to select
the number of common factors in data. This proce-
dure identified six principal purchase benefits.
Factor scores for each respondent were calculated
and stored to be used in a cluster analysis to identify
segments within the business travel market.
Results
The respondents were predominantly male (89%),
from a high social classification (83% were AB),
aged between 25 and 54, and made an average of 16
business trips a year.
Six principal factors identified by principal
component analysis accounted for 60.6% of the total
variation in the data set. The factors identified are
shown below, along with the variables that associ-
ated highly with each factor:
1.
2.
3.
4.
5.
6.
Business travel exclusivity and added value:
Return boarding card, availability of a business
lounge, city centre check-in, duty free and
frequent flier scheme.
Comfort and experience: In-flight service, seat
comfort, punctuality, past experience of an airline
and safety record.
Air service user-friendliness: Ease of reservation,
lack of ticket restrictions, seat allocation at reser-
vation, parking assistance and quality of ground
service.
Price: Ticket price and discount.
Scheduling: Timing of outward flight and timing
of return flight.
Local airport: The airport should be easily acces-
sible.
Table 1 shows the segment centres of the robust three
segment solution obtained in the iterative cluster
analysis. The factors in Table 1 are the same as those
described above.
199
Short haul business travel in the EU: KJ Mason and R Gray
Table 1. Mean factor scores for identified segments
Segment Factor 1
1 0.1896
2 0.1238
3 a.2056
Factor 2
0.2447
-0.0420
-0.0685
Factor 3
a.0560
0.1860
-0.1564
Factor 4
0.1852
0.5351
-0.6049
Factor 5
Al.5291
0.7038
-0.4500
Factor 6
1.4515
-0.2326
-0.4221
Analysis of the three segments identified three
types of travellers; schedule driven consumers,
corporate cogs, and informed budgeters. The types
were allocated these names based on a scrutiny of
the significant variables. Table 2 shows the indepen-
dent variables which differ significantly between the
three segments using the chi-squared test of
independence. A 95% confidence level for the tests
was adopted; however, the reader will note that one
of the variables (marked “*“) included falls
marginally outside this level.
A profile of each segment is developed from an
analysis of the differences between the segments
(see the following three sections: Segment 1,
Segment 2 and Segment 3).
Segment 1: Schedule driven consumers
This segment represents 18.5% of the business
travel market. 60.6% of the members fall into the A
social classification. While this figure is not greatly
different than that for the third segment (59.4%) it
is significantly higher than the second segment
(49.6%).
Table 3 provides a quick guide to the findings that
distinguish this segment from the other two, and are
used in developing the profile for this segment.
Similar tables are provided in the two following
sections, in which some data are duplicated. It may
be noted that the data provided in the section “distin-
guishing product element ratings” are proportions of
the segments that rated product elements with high
importance (this is also true for Tables 7 and 8).
Members of this segment are more likely to
purchase full fare tickets than those in other
Table 2. Significance levels of variables explaining segment
membership
Variables that influence segment membership Significance
Corporate position 0.04324
Travel policy decision making 0.0.5349*
Class of travel for directors 0.03729
Class of travel for senior managers 0.00300
Class of travel for other managers 0.00925
The ticket source (distribution) 0.00732
The fare type 0.00014
The payment method 0.01279
Gender 0.01499
Geographic location of home 0.04569
Geographic location of work 0.00106
Product elements 1 to 23 O.OOO@O
200
segments. The cost of these tickets are fairly high
compared with other tickets available, but offer
more scheduling flexibility. This suggests that
members of this segment are not particularly
concerned about the cost of a flight but that flexi-
bility is important to them.
The majority (66.4%) of this segment purchase
their ticket from a business travel agent, and a
significantly higher proportion of this segment than
other segments leaves the responsibility for booking
the ticket to a secretary.
With regard to travel management, 61.3% of this
segment indicated that the travel policy operated by
the organization for whom they work is set by the
directors of the organization. This figure is signifi-
cantly higher than for those in other segments.
The class of travel accorded to those at different
corporate levels represented a significantly different
travel policy for members of this segment, than
those in other segments. Tables 4,5 and 6 show that
members of this segment work for companies that
are the least likely to reward those of a higher
corporate status with a higher class of travel. For all
three levels of management, business class travel
was the most likely grade of travel to be granted to
employees.
An analysis of the importance placed on the
various product elements reveals that the key
benefits, which members of this segment seek
from an airline service, are: flight timings, exclu-
sive business class check-in, exclusive business
class lounge, and flight frequency. This segment
seemed to be unimpressed with many product
elements that are not essential to the flight (such
as in-flight service, seat comfort, and frequent flier
schemes).
83.6% of the membership of this segment
indicated that the timing of the outward flight was
of high importance. They also valued exclusive
products aimed specifically at the business traveller
more highly than those in other segments. 20.0% of
this segment thought that these services were highly
important compared to 13.0% of the third segment
and only 5.8% of the second.
Members of this segment rated flight frequency
as being significantly more important than those
in other segments. 43.6% of the members in this
segment valued this service as being highly
important. Since flight flexibility is important to
this segment, they are prepared to pay for a
ticket which accrues this benefit. The value of
Short haul business travel in the EU: KJ Mason and R Gray
Table 3. Principal distinguishing characteristics of segment 1
Gender
Male
Female
Residential Region
Stansted territory
Within M25
Work Region
Stansted territory
Within M25
Fare Type
Full fare
Euro budget
Ticket Source
Business travel agent
Ticket Booked by Secretary
Travel Policy Decision made by Director
Distinguishing Product Elements Rating
Business Class Check-in
Business Class Lounge
Flight Frequency
Local Airport
Thought to be most important
To company
To traveller
Segment 1 (%) Segment 2 (%) Segment 3 (%)
93.6 90.4 84.0
6.4 9.6 16.0
44.5 53.8 56.1
8.2 6.3 4.1
27.3 34.2 36.6
30.9 20.0 15.0
30.3 23.3 21.4
14.7 6.4 13.2
66.4 65.4 56.9
16.5 15.9 10.6
61.3 54.3 52.4
20.0 7.5 10.6
20.0 5.8 13.0
43.6 7.9 43.1
10.0 52.1 70.3
Timing of Flight Ticket Price Ticket Price
Timing of Flight Local Airport Timing of Flight
Table 4. European flight allowance for company directors
Flight allowance Segment 1 (%) Segment 2 (%) Segment 3 (%)
First Class 17.7 18.5 20.5
Business Class 64.3 55.5 46.3
Economy Class 18.4 26.0 33.2
Table 5. European flight allowance for senior management
Flight Allowance Segment 1 (%) Segment 2 (%) Segment 3 (%)
First Class 7.2 3.4 9.0
Business Class 66.0 58.1 46.0
Economy Class 26.8 38.4 45.0
Table 6. European flight allowance for other management
Flight Allowance Segment 1 (%) Segment 2 (%) Segment 3 (%)
First Class 2.1 0.5 1.0
Business Class 56.3 45.3 35.8
Economy Class 41.7 54.2 63.2
this flexibility seems to be recognized by the The organization and the individual traveller in
organizations for which members of this segment this segment seem to seek similar benefits. Thus it
work, as these organizations set travel policies would seem that the culture in the employing
which tend not to offer additional benefits to organizations has a significant influence on the
those of a higher corporate status, and are membership of this segment. Considering the nature
prepared to pay for higher priced tickets that of this segment it seems appropriate to name it as
provide flight flexibility. schedule driven.
201
Short haul business travel in the EU: KJ Mason and R Gray
Segment 2: The corporate cog segment
The second market segment accounts for 40.5% of
the business travel market. The social profile of this
group is not as high as those in other segments.
While 49.6% of this segment fall into the highest
social classification, it is this segment that is most
likely to have members who are in the B social
grouping.
With regard to the purchase of air travel,
although 69% indicated that they select their air
travel themselves, only 20% book their own flights.
The responsibility of booking air travel falls to
others in the organization.
An analysis of the method by which corporate
travel policy is decided reveals the importance of
travel management and finance departments. A
significantly higher proportion of this segment
(10%) than those in other segments did not know
who decided the travel policy. They also had the
least favourable opinion of their company’s travel
policy. This segment was also the most likely not to
know where their ticket had been purchased or what
type of ticket it was. It would seem, therefore, that
this segment selects the flight they wish to take and
then leave the details of booking, paying for, and
collecting the tickets to others within the organiza-
tion. This would seem to suggest that members of
this segment work for somewhat bureaucratic
organizations.
Tables 4, 5, and 6 show that members of this
segment tend to work for companies that allocate the
airline seat class based on the corporate hierarchical
level of the traveller. This corporate hierarchical bias
is more highly pronounced than for those in the first
segment. For example, 18.5% of company directors
in this segment travel first class, while less than 1%
of employees at a lower level than senior manage-
ment are allowed to travel at this class.
An analysis of the importance placed on the
various product elements reveals that members of
this segment do not rate any single product element
higher than either of the other segments, possibly
because they are less involved in the air purchase
decision. The analysis shows that factor 6, local
airport, is the most important in this segment, and
that price and schedule (factors 4 and 5) are the
most unimportant. Respondents indicated that what
they consider to be important may be in conflict
with what the organization for whom they work
consider to be important. 44% of this segment
thought price was the single most important product
element for their company, while only 5.4% of the
group personally thought it important. With regard
to scheduling, only 30.4% of this segment rated the
timing of the outward flight as highly important.
In-flight service, seat comfort, and frequent flier
schemes were valued most highly by this group.
Such benefits are for the traveller at the cost of the
organization paying for the air travel, and therefore
show that this segment displays elements of self-
interest.
The membership of this segment seems to be
composed of less involved or less interested users of
airline services. Considering the social profile of the
members of this segment (50% of this segment are
either Bs or Cls), it may be argued that the lack of
importance placed on the various product elements
is as a result of the corporate hierarchical bias.
While they select their flight, their choices seem to
be governed by a travel policy which favours those
in the higher corporate positions. They seek benefits
Table 7. Principal distinguishing characteristics of segment 2
Corporate position
A
B
Cl
Flight Selection by Traveller
Flight Booked by
Traveller
Travel manager
Other(s) in department
Fare Type Not Known
Distinguishing Product Elements Ratings
Local Airport
Timing of outward flight
Flight frequency
Ticket price
In-flight service
Seat comfort
Frequent flier programme
Thought to be most important
To company
To traveller
Segment 1 (%) Segment 2 (%) Segment 3 (%)
60.6 49.6 59.4
27.5 41.7 30.3
11.9 8.8 10.2
66.4 69.0 72.4
22.9 20.1 32.2
24.8 29.3 21.2
29.4 29.3 31.4
20.2 34.3 17.7
10.0 52.1 70.3
83.6 30.4 83.7
43.6 7.9 43.1
16.4 5.4 41.1
20.0 21.3 31.7
38.2 40.0 48.0
10.0 11.3 18.7
Timing of Flight Ticket Price Ticket Price
Timing of Flight Local Airport Timing of Flight
202
that accrue to themselves, and they seem to display
a lack of interest in matters that affect their organi-
zation. If, as the analysis seems to suggest, members
of this segment tend to work for bureaucratic, cost
conscious organizations then it would seem the
result of such a corporate culture is to produce
employees who look for areas within their work
regime that benefit themselves, possibly at the cost
of the organization. While members of this segment
fulfil their corporate duties in such a manner to
protect their corporate roles, they endeavour to gain
advantage from their organization in situations
which enable them so to do. They are called corpo-
rate cogs since they seem to act as cogs in the
workings of their corporation. The individual
travellers seem to meet the requirements of their
organization, but try at the same time to gain
personal benefits as opportunities arise.
This segment represents a part of the market
where the influence of corporate stakeholders is
important. The control of business travel expenses
by organisations in this segment may increase as the
liberalisation of air transport in the EU takes effect
in the market. As price setting is now an easily
changeable marketing variable, organizations may
wish to negotiate bulk purchasing deals with airlines
that may take choice from the traveller. There
would seem to be an opportunity for airlines to
develop corporate frequent flier schemes which
reward the purchasing organization rather than the
traveller. Schemes such as these may lead to a
reduction in the decision making power of the
traveller.
Short haul business travel in the EU: IU Mason and R Gray
Segment 3: Informed budgeter segment
Members of the final segment identified from the
benefit market segmentation analysis have been
labelled informed budgeters as they display a good
knowledge of the airline products on offer and
consequently, of the three segments, pay the least
for their air travel.
This segment accounts for 41.3% of the business
travel market. 59.4% fall into the A social classifi-
cation with a further 30.3% in the B grouping.
Analysis of the most popular sales outlets to this
segment reveals that these consumers are more
likely to purchase their airline tickets directly from
the airline, than those in other segments. 20.7% of
this group use this channel at the expense of
business travel agents which have significantly lower
penetration in this segment although this source is
still important as it accounts for 56.9% of the
business.
With regard to fare type, this segment is the most
likely to use the lower classes of ticket. 20.2% of the
respondents in this segment were travelling on Pex
tickets and a further 18.9% held Apex tickets. These
fare types are fairly restricted in terms of the reser-
vation flexibility and refund capability. It is this
segment that is most likely to pay for the ticket out
of their own money (19.6%) and then claim the
expenditure back from their organization, or to pay
by credit card (13.1%). It would seem that this
involvement in the purchase of the ticket leads to
more careful budgeting by the members of this
segment.
Table 8. Principal distinguishing characteristics of segment 3
Corporate position
A
B
Residential Region
Stansted territory
Scotland
Fare Type
Apex
Pex
Ticket Source
Direct from airline
Business travel agent
Payment Method
Traveller
Company account
Credit card
Distinguishing Product Elements Rating
Ticket price
Local airport
Timing of outward flight
Ease of reservation
Lack of ticket restrictions
Thought to be most important
To company
To traveller
Segment 1 (%)
60.6 49.6 59.4
27.5 41.7 30.3
44.5 53.8 56.1
5.5 8.8 13.8
7.3 8.9 18.9
16.5 18.6 20.2
12.7 9.2 20.7
66.4 65.4 56.9
16.4 8.4 19.6
69.1 77.7 61.6
11.8 8.8 13.1
16.4 5.4 41.1
10.0 52.1 70.3
83.6 30.4 83.7
19.1 9.2 34.6
19.1 6.3 26.0
Timing of Flight Ticket Price Ticket Price
Timing of Flight Local Airport Timing of Flight
Segment 2 (%) Segment 3 (%)
203
Short haul business travel in the EU: KJ Mason and R Gray
Analysis of travel management policies of the
organizations employing members of this segment
reveals that these organizations tend to display more
careful budgetary behaviour. Tables 4, 5 and 6 show
that members of this segment were the least likely to
be allocated business class tickets, irrespective of corpo-
rate status and most likely to be awarded economy
tickets. With regard to policy making, members of this
group were significantly more likely to set their own
travel policy than those in other segments. It would
seem therefore that the members of this segment tend
also to be the policy makers in the organizations for
which they work, and consequently set a travel policy
based on their knowledge of the market.
An analysis of the importance placed on the
various product elements by the members of this
segment indicates that these travellers consider that
all the elements of the airline product are important.
Table I shows that this segment rated all the six
identified purchase factors as important. While this
profile may indicate that the members of this
segment are less discriminating than those in other
segments the factors with the greatest magnitude,
factors 4, 5 and 6, may be identified as the most
important to this segment. Factor 4 (price) and
factor 6 (local airport) have already been identified
as being salient benefits sought by this segment. The
scheduling elements of the airline product, flight
timing and frequency were both rated as highly
important. 83.7% thought the timing of the outward
flight to be highly important. While the timing of the
return flight was viewed as slightly less important,
74% of respondents in this segment gave this
element a rating of “high importance”.
35% of this segment rated ease of reservation
highly, compared to 19% of segment 1, and only 9%
of segment 2. This is not surprising, given that the
members are more highly involved in the purchase.
Another product element rating that distinguishes
this segment is lack of ticket restrictions. The high
rating given to lack of ticket restrictions (see Table
8) seems strange considering the cost conscious
nature of the members of this segment, however, it
might provide evidence of this segment’s greater
awareness of the fare types available.
It would seem that the members of this segment
travel frequently. Their experience has led to a
knowledge of the products on offer, consequently
members of this segment are more likely to book
directly from the airline, and select the cheapest fare
type meeting their requirements. It is this behaviour
that indicates that this segment is populated with
consumers who know the product well and try to
spend as little as possible on their ticket. Therefore,
they are called informed budgeters.
Strategy development
Having identified three market segments, a
company must select which market segments to
target. Airlines will need to allocate limited
resources in a manner which will reap most benefit.
An airline may not have the required resources to
target the schedule driven segment. A strategy
aimed at this market would require investment in
new routes, extra frequencies and thus new aircraft.
The analysis shows that this group is not loyal to
either a specific airport or airline. It is possibly
unwise, therefore, to develop a strategy targeted
specifically at this group. As an airline grows it is
likely to gain a proportionately larger share of this
market. A strategy of consolidation may be
adopted.
The corporate cog market is attractive and may
be developed through the introduction and promo-
tion of new products. The products should offer
benefits both to the user, in terms of in-flight
comfort and frequent flier benefits, and to the
organization. Currently airlines seem to wish to
concentrate on marketing efforts directed at the
user. The research has shown that organizations are
taking a more involved role in travel management,
and therefore the introduction of products aimed at
the organization, such as organization loyalty
schemes, might ensure a high volume consumption
in this market.
The informed budgeter market represents a large
proportion of the market. To increase sales volume
purchased by this segment, an airline will need to
extend its geographic catchment area. To do this an
airline may concentrate sales and promotional activ-
ity in the periphery of the catchment areas.
Marketing communication should concentrate on the
benefits of airport access, flight services, and price.
Conclusion
The research has shown that by using a stakeholder
approach the business traveller market, which is a
hybrid consumer-industrial market, can be
segmented on the benefits sought. Such an approach
overcomes the problems associated with the identi-
fication and analysis of the decision making unit.
The research provides an analysis of the market
size, structure and buyer behaviour of the market.
It indicates that not all business travellers seek the
same benefits, and that the benefits sought by
business travellers differ significantly depending on
the nature of the organization that employs them.
The study was undertaken at a time of great
change in the EU airline industry. The way in which
this market changes will provide a very interesting
area for future studies. The study has revealed the
emerging role of travel managers in the business
travel market. Greater competition between
airlines, caused by the liberalization, will lead to a
more complex market where there will be potential
for organizations to lower travel expenditure. Travel
management expertise will be increasingly in
204
demand as organizations attempt to reap that poten-
tial. Future research might investigate development
in two areas. Firstly, the growth of in-house travel
management, and the growth of trading on the
internet may lead to a decline in business for inter-
mediaries (i.e. travel agents). How travel agents
address this potential threat may lead to some inter-
esting changes in the industry. Secondly, as in-house
travel management becomes more important, the
autonomy that business travellers have enjoyed may
decrease. Investigation needs to be undertaken as to
whether airlines should continue to target the
individual traveller, or choose to focus more on
purchasing organizations (possibly in the form of
corporate frequent flier bonuses).
References
American Express (1993/94) Business Travel and Expense
Management Report, Unpublished report, American Express
Europe Ltd, UK
Brunning, E, Kovacic, M and Oberdick, L (1985) ‘Segmentation
analysis of domestic airline passenger markets’ Journal of the
Academy of Marketing Science 13, 17-31
Doganis, R (1991) Flying Off Course: The Economics of
International Airlines, 2nd edn, Harpers Collins, London
Appendix
Short haul business travel in the EU: KJ Mason and R Gray
Good, W, Wilson M and McWhirter, B (1985) ‘Passenger prefer-
ence for airline fare plans’ Journal of Travel Research 23,
17-22.
Green, P and Tull, D (1978) Research for Marketing Decisions.
4th edn, Prentice Hall, New York
Haas, R (1989) Industrial Marketing Management: Text and
Cases, PWS-Kent Publishing, Boston, MA
Industrial Marketing Committee Review Board (1954)
‘Fundamental differences between industrial and consumer
marketing’ Journal of Marketing 19, 152-158
Mason, KJ (1995) A Stakeholder Approach to the Segmentation
of the Short Haul Business Air Travel Market, Unpublished
PhD, Faculty of Science, University of Plymouth
Mason, KJ and Gray, R (1993) ‘The future of the airline indus-
try in Europe’ Proceedings of the European Business and
Economic Development Conference, University of Leicester,
April, pp. 17-21
McIntrye, R and Blashfield, R (1980) ‘A nearest-centroid
technique for evaluating the minimum variance
clustering procedure’ Multivariate Behaviour Research 15,
225-238
Punj, G and Stewart, D (1983) ‘Cluster analysis in marketing
research: review and suggestions for application’ Journal of
Marketing Research XX, 134-148
Ritchie, J, Johnston, E and Jones, V (1980) Competition, fares,
and fences-perspectives of the air traveller’ Journal of Travel
Research Winter, 17-25
Shaw, S (1985) Airline Marketing and Management, 2nd edn,
Pitman, London
Wickers (1994) ‘Point to Point’ The Sunday Times 22nd May,
9-38
Data collected by survey of business travellers
Data collected regarding the organization and the
traveller
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Postcode of organization
Main activity of organization
Number of employees in organization
Whether the organization has a travel depart-
ment or manager
Whether the organization has a travel policy
Description of travel policy
Flight selection, booking, and payment methods
employed
Does the company have preferred airlines
The class of travel each level of the hierarchy is
permitted to take
Corporate position of traveller
Traveller attitude toward travel policy
Origin and destination
Fare type
Number of trips made by the traveller in the last
12 months
Length of stay at destination
Age, gender, and home postcode of traveller
Importance placed on the following product
attributes
1 Timing of outward flight
2 Timing of return flight
3 Flight frequency
4 Ticket price
5 Ticket discount
6 Ease of reservation
7 Lack of ticket restrictions
8 Direct route
9 Seat allocation at reservation
10 Parking assistance
11 Quality of ground service
12 Flight from local airport
13 Return boarding card on departure
14 Business lounge available
15 City centre check-in
16 Exclusive business class check-in
17 In-flight service
18 Seat comfort
19 Duty free available
20 Frequent flier programme
21 Airline punctuality
22 Past experience of an airline
23 Airline safety record
205
... Southwest from USA is the initiator of the low cost airlines business model but the phenomenon spread worldwide in the 1990s and in 1992 this model adopted by Ryanair in Europe (Ito et al, 2003). In the airline business, the market is often segmented by trip duration (long or short-haul) and by trip purpose (the need to travel for leisure or for business purpose) because the traveler with different journey lengths and different purposes for travelling have different needs (Mason and Gray, 1995, Fourie and Lubbe, 2006, Dresner, 2006. The airlines that have business travellers as their primary target market segment are such as Singapore airlines, British Airways which also known full service carrier whereas, low cost carriers that their primary target market segment is for leisure travellers, such as Air Asia, Jet star, EasyJet and Ryanair (O'Connell and Williams, 2005, Forsyth, 2003, Lindstädt and Fauser, 2004). ...
... Eğlence amaçlı pazar ise tatil ya da akraba ve eş dost ziyareti olarak ikiye ayrılmaktadır (Shaw, 2007:22-37). Gerek İngilizce gerekse Türkçe yazın şehir ya da ülke çifti pazarlarını dikkate almadan pazar bölümlendirme uygulamasının sonuçlarını doğrudan " pazar " olarak adlandırabilmektedir (Mason veGray, 1995;Okumuş ve Asil, 2008;Ataman, Behram ve Eşgi, 2011). Örneğin İstanbul–Berlin havayolu pazarındaki bölümlendirmeden söz etmek yerine " iş amaçlı yolcu pazarı " kavramı öne çıkartılabilmektedir. Oysa bu yaklaşım kitabımızın temel konusu olan ekonomik düzenlemeler açısından sorunludur. ...
... The few existing studies have segmented the market based on different service attributes and trip-and traveler-related characteristics. One of the earliest studies (Weaver, Mc-Cleary, & Jinlin, 1993) profiled the business traveler by analyzing 55 relevant attributes when selecting hotels, while Mason and Gray (1995) investigated the short haul business air travel market using a benefit segmentation approach. At the turn of the millennium, Swarbrooke and Horner (2001) established tourist segments according to the type of trip that they undertake and using a more specific approach, Smith and Carmichael (2006) undertook a study on the habits of consumption of the female business travelers in Canada. ...
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As travel is part of their work, business travelers are assumed to be focused on carrying out a work-related task, rather than feeling emotionally stimulated during their trip. Due to this belief, there is limited research on consumer emotions within this segment of the travel market. However, not only is business travel an experience and therefore it involves emotions, but many business trips have a strong leisure component and business travel decision making is often emotionally charged. This paper segments the business travel market based on emotions, satisfaction, and behavioral intention. Using a sample of 400 managers in small- and medium-sized companies, the study demonstrates that the relationship between emotions and satisfaction is not unidirectional as far as business tourism is concerned. For two of the four segments, the valence of emotions translated into an opposite level of satisfaction/intention. The segments were found to differ in personal and trip-related variables.
... The second attribute of this group is the price sensitivity. This pricesensitivity was also shown by Mason (1995 According to long-haul flights, the Price-Sensitive Business Traveler is more focused on short to medium haul flights less than 6h. Therefore, the average number of long-haul flights per year was stated with 1.3 trips, which is less compare to the Premium Private Traveler but more than for the Private Traveler. ...
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The future of the airline industry in Europe
  • Mason