Name: Pham Thuy Linh - FB4A
Market segmentation case study
“SILVERJET – A fallen star”
Market segmentation is one of significant tools in business which divides consumers into groups based on common needs; it not only brings a number of benefits to both the consumer and the organization but also causes the failure of organization. SilverJet is a typical example; it was found by Lawrence Hunt in 2006 and bankrupted in 2008. Even though it gained some achievements, it was ended because of some serious mistakes.
Before explaining about the reasons of failure of SilverJet, we should know about the segmentation bases used by airline and SilverJet, and the importance ...view middle of the document...
In SilverJet case, they also used demographic, psychographic and behavior segmentation. Their business strategy was cost leadership; they just only focused on providing the low cost business class for about one third of the price of British Airways ticket because the ticket price didn’t need to be high like in a large firm and it still made profit. SilverJet offered $2200 for a return trip from London Luton to New York; check in as late as 30 minutes before departure with a dedicated terminal and security process at Luton; six feet three inches long beds, food and drink delivered by hand rather than with trolleys; a woman only lavatory on board and a $20 carbon offset fee on every ticket that made customers convenient. Therefore, Silver Jet gained some achievements, they got 80% load factor in seven months instead of nine months with no complaint and won the Sunday Times best airline of the year award; breakeven point was at 65% load factor; opened a new route to Dubai in November.
Protecting the environment has become the most important things in the 21st century. In January 2007, SilverJet was awarded by The Institute of Transport Management as “Environmentally Aware Airline 2007” in recognition of the stance the company has taken regarding carbon emissions(2). SilverJet was the first airline to make a carbon offset contribution mandatory ($20 on every ticket) while several airlines and (online) travel agencies offered carbon dioxide offsets as part of their booking process. The contribution seems less like an additional tax and more like a charitable...