International Marketing

British Airways: Segmentation, Targeting, Positioning

John Dudovskiy

2015

Contents
1.

Introduction ........................................................................................................................ 1

2.

British Airways Market Segmentation ............................................................................... 1

3.

Targeting by British Airways ............................................................................................. 3

4.

Positioning of British Airways Services ............................................................................. 5

5.

Conclusions ........................................................................................................................ 6

References .................................................................................................................................. 8

1. Introduction
The levels of importance of all aspects of marketing and related processes such as marketing
research, consumer behaviour, marketing mix, segmentation, targeting and positioning and
others have substantially increased in airline industry and other industries due to intensity of
competition.

This report contains a brief analysis of segmentation, targeting and positioning strategies used
by British Airways, the UKs largest scheduled airline that flies to more than 400 destinations
worldwide. The amount of revenue generated by British Airways during 2012 has exceeded
GBP 10.8 billions, which is an increase of 8.4 per cent compared to the previous year
(Annual Report, 2012).

The report explains the theory of segmentation, targeting and positioning, followed by
analysis of patters segmentation, targeting and positioning is applied by British Airways.

2. British Airways Market Segmentation

Market segmentation can be defined as the process of disaggregating the total market for a
given product into a number of sub-markets (Chadrasekar, 2010, p.60). In simple terms,
segmentation is dividing population into groups according to certain characteristics. Three
levels of segmentation are identified as mass marketing, segment marketing and niche
marketing (Devashvish, 2011).

Mass marketing is associated with aiming to sell to a broad range of customers, and in airline
industry in particular mass marketing relates to the development of a single flight package for
all customers. Mass marketing may have some cost advantages for businesses, however it
fails to address unique needs of certain groups of people.

Segment marketing, on the other hand, relates to grouping of customers according to their
certain common aspects in general and their needs and wants in particular. Segment
marketing is the most popular type of marketing used many airline companies including
British Airways.

Niche marketing relates to a small group within population whose needs are not being well
satisfied. In airline industry in particular, an example of niche marketing may relate to
offering private jets to be hired by wealthy people for national and international travels.

Segmentation bases can be divided into the following four categories (Boone and Kurtz,
2013): geographic, demographic, psychographic and behavioural. These are broad bases of
segmentation and each of these bases can be divided into more categories.
Segmentation needs to be conducted taking into account specific characteristics of the
relevant industry. Specific factors to be taken into account in segmentation include viability,
accessibility, and measurability of segments.

Moreover, William and Curtis (2008) stress the role of preference segments when conducting
market segmentation and divide preferences into three groups: homogeneous, diffused and
clustered. Homogeneous preferences relate to instances where there are no or little
differences in customer preferences. Diffused preferences, on the other hand, is associated

with a high level of variety in consumer preferences. Lastly, clustered preferences involve
the formation of preference clusters according to specific segments.
According to above classification, preferences of airline companies such as British Airways
can be classified as clustered. In other words, British Airways services are offered to cluster
of individuals within population according to their common needs and characteristics.

3. Targeting by British Airways

Targeting involves choosing specific groups identified as a result of segmentation to sell
products and services to. Target market selection can be facilitated by according to the
following patterns (Gupta and Randhawa, 2008):
a) Business may target single market segment with single product (single-segment
concentration)
b) Business may target different market segments with different products (singlesegment concentration)
c) A set of products may be offered to the same market segment (market specialisation)
d) Several market segments may be targeted with the same product (product
specialisation)
e) All segments in the market may be targeted with a wide range of products

British Airways follows single-segment concentration marketing strategy by offering four

different service packages to different customer segments. Specifically, British Airways
targets different customer segments for its four levels of services: economy, premium
economy, executive and first class.

The following table illustrates bases of segmentation and specifies target customer segment
of each level of British Airways services:

Segmentation bases

Geographic

Economy class
Domestic flights in
UK
Europe and
international flights
Urban & rural

Region

Density
Age

Demographic

Kids, teenagers,
middle-aged, oldaged

Gender
Income
Occupation

Travel and
tourism
industry base

Urban &
rural
Teenagers,
middle-aged

Middle-aged,
old-aged

Middle-aged,
old-aged

Easygoing
Regular travel

Benefits
sought
User status

Affordability

Value

Regular traveller

Regular
traveller

Attitude

Indifferent

Indifferent
positive
Medium

Education

High school
Bachelors

Social
status
Family size

Low, middle
Joint families
Moderate-orientated

Customer
Low
expectations
Customer
Neutral
image
Trip
Regular trip
descriptors

Selected
international
flights
Urban

Personality
Occasions

Low
Students, salaried

First Class

Urban

Male, female
Middle
High
Students,
Businessmen
salaried
Professionals
Technical
Masters
Bachelors
Business
schools
Low,
High
middle
Nuclear
Nuclear
families
families
ModerateAchievementorientated
oriented
Easygoing
Determined
Vacations
Business trips

Psychographic Lifestyle

Behavioural

Target segment
Premium
Executive
Economy
Club
Selected
Europe and
international international
flights
flights

Luxury
Convenience
First timer,
Regular
traveller
Positive
enthusiastic
High

Neutral to
Positive
positive
Recreational Business

High
Businessmen
Professionals
Masters
Business
schools
High
Newly
married
Achievementoriented
Ambitious
Honeymoon
Business trips
Luxury
First timer,
Regular
traveller
Enthusiastic
High
Highly
positive
Business
Honeymoon

British Airways Customer Target Segment

Table adapted from Loudon et al. (2010)

4. Positioning of British Airways Services

Positioning is associated with the selection of the marketing mix the most suitable for the
target customer segment. There are eight major types of positioning and brief explanation of
each type is presented in the following table:

Types of positioning
Mono-segment
Multi-segment
Standby
Anticipatory
Imitative
Adaptive
Defensive

Stop-gap

Explanation
Positioning appeal is made towards a single customer segment
More than one segments are exploited at the same time with different
products or service packages
Specific positioning of the product/service awaiting changes in the market to
find demand
Positioning of products or services for a market segment that has low
turnover with the anticipation that the turnover will increase in the future
Close imitation of positioning strategies of market leaders
Periodical repositioning of products and services according to changes in the
segment
This type of positioning is usually used by market leaders through
introducing an additional brand in the same industry in order to deter other
companies from entering the industry
Making investments in currently unprofitable brand due to profitability
expectations on long-term perspective

Types of positioning and their explanation

Adapted from Bennett et al. (2011)

It is important for all four elements of the marketing mix to be developed to satisfy needs and
wants of target customer segment in the most efficient and attractive manner. Core elements
of marketing mix are specified as product, price, place and promotion, each of these elements
is positioned by British Airways in the following manner:

Product element of marketing mix in this case relates to the service of travelling by plane and
products consumed during the flight. Economy class services include minimum space during
the flight and food, whereas subsequent classes are associated with more comfort in various
levels.
5

Pricing strategy pursued by British Airways differs for each individual customer segment.
Economy class is the cheapest more comfort in Premium Economy, Executive and First class
come for extra prices. Specific variables impacting British Airways pricing strategy in
relation to each segment include price point, structure of discounts, residual value and others.

Place elements of marketing mix relates to the location of purchase of products and services.
British Airways services are mainly distributed through online sales channels, as well as,
individual and organisational travel agents.

Promotion element of marketing mix of British Airways is associated with its latest slogan of
One World as the indication of the global reach for the airline company. British Airways
uses a set of marketing channels such as media and advertising, publicity and events, and
sponsorship of charitable and other events. British Airways marketing strategy is aimed at
making an appeal to all of its customer segments specified above in an integrated manner.

For example, British Airways brand image has been greatly improved through its sponsorship
of London 2012 Olympics and Paralympics GB team in Beijing Olympics games in 2008
(Marketing Week, 2012, online).

5. Conclusions
Appropriate market segmentation, effective targeting and attractive positioning are critical
success factors for any business because no product and service can be equally valued by all
members of population due to the differences amongst population members in many levels.

As one of the largest airline companies in the world British Airways pursues multisegmentation marketing strategy four its four levels of services: economy, premium
economy, executive and first class. Each individual element of marketing mix has been
developed accordingly in order to position these four levels of services to their respective
target segments in an attractive manner.

In order to achieve long-term growth, it is important for British Airways to be concentrating

on enhancing value perception of its services by present and perspective customers within
target segment. Service value perception can be effectively increased by British Airways toplevel and marketing management by maintaining strategic customer relationships in relation
to all segments and application of creativity and innovation to many business processes.

References
Annual Report and Accounts (2012) British Airways Plc
BA and Olympics Sponsorship: How Being Bold Paid Off (2012) Marketing Week,
Available at: http://www.marketingweek.co.uk/sectors/travel-and-leisure/ba-andolympic-sponsorship-how-being-bold-paid-off/4004639.article
Bennett, J.A. & Strydom, J.W. Introduction to Travel and Tourism Marketing Juta Online
Boone, L.E. & Kurtz, D.L. (2013) Contemporary Marketing Cengage Learning
Chandraserkar, K.S. (2010) Marketing Management: Text & Cases Tata McGraw-Hill
Education
Dasgupta, D. (2011) Tourism Marketing Pearson Education India
Gupta, S. & Randhawa, G. (2008) Retail Management Atlantic Publishers & Distributors
Loudon, D., Stevens, R. & Wrenn, B. (2010) Marketing Management: Text and Cases
Routledge
William, J. & Curtis, T. (2008) Marketing Management in Practice Routledge