Magoosh GRE

Customer profiling, effective market segmentation, marketing success and HR Management Questions

| March 7, 2015

1. Question 2: It has been suggested that customer profiling and effective market segmentation is critical to successful marketing. Using theory, discuss this with reference to Daimler and Mercedes-Benz organisation.

1.1 Overview of Strategy Marketing Planning Process
A strategic marketing plan is essential for any organisation wanting to achieve success in marketing and communication. Broadly, such a plan is an overview of where the organisation is, where it wants to be, and how it will get there. It is likely to include assessments of opportunities currently available, an audit of internal resources, an analysis of the environment in which the organisation operates, and a précis of goals (Groucutt et al 2004). In these terms, Daimler / Mercedes-Benz seem to have a good grip on planning for the future. Not only are they consolidating their position in Europe as leaders in the luxury car market, they are also making inroads into the growing middle-class market emerging from the developing world (Schafer 2010). As the European market reaches saturation point, Mercedes Benz is now actively focussing on these burgeoning upper middle class consumers in the developing economies of China and India (Vadlamani 2010).
1.2 Marketing Audits and Environmental Analysis
A marketing audit is a key stage in generating a strategic marketing plan. It can be seen as an answer to the question of where an organisation is over a defined period of time, and is a “systematic, critical and unbiased” look at all the available information which affect the organisation’s performance over that period of time (Macdonald 2008, p. 38). An environmental analysis looks in detail at the environment in which the organisation performs (Finch et al 2005). In these terms, and very briefly, Daimler / Mercedes Benz might look in detail at a range information including the trends for sales figures in Europe and developing nations and consumer trends amongst the emerging middle classes. An environmental analysis
1.3 Segmentation, Targeting and Positioning
Market segmentation is the process of differentiating the market in terms of key customer groups, based on their defining characteristics and particularly on their needs. This process of segmentation allows an organisation to become more familiar with their customer types, and thus to design, develop and market products which are most suitable for that market segment (McDonald and Dunber 2004). Market targeting is the process of communicating to those customers who are most appropriate for any particular product (Kotler and Armstrong 2010). Market positioning is a closely related concept, but focuses upon how other competitors perform in the market place. How well do other products match the target market? (Parmerlee 2000). In these terms, Daimler / Mercedes Benz are targeted at distinct market segments. On the one hand, their traditional market is the world’s more affluent consumers, but they have recently been exploring new markets with an increasing number of middle class consumers emerging from the developing world (Tanner and Raymond 2010). Daimler’s market position in the small premium car market is strong, particularly in comparison with their rival BMW, helped by strategic partnerships with Renault and Nissan (Schafer 2010)
1.4. Key Marketing Planning Models and Tools
The range of marketing planning tools and models is vast. Obvious examples include SWOT and PESTEL analyses. One useful tool is Porter’s model of industry, which assessed products in terms of their lifestyle and breaks down markets into emerging, transitional and declining (Lancaster and Massingham 2010). In these terms, the European market for Daimler is mature / transitional. Daimler have used market segmentation to assert their position in this market (Daimler 2010). In India and China, Daimler are experiencing an emerging market, as demand increases in the growing middle classes. Here, Daimler are exemplifying Porter’s principle for leaders in such markets by keeping ahead of the field (Porter 2005), for example their investigations into the Chinese market in terms of average age of shopper for luxury items compared with the West (Klaus Maier 2011)
1.5 Setting Marketing Objectives
Setting marketing objectives is a key part in developing a strategic marketing plan (Groucutt et al 2004). For Daimler / Mercedes Benz, this can broadly be defined as twofold: first, consolidating their position as market leader in the mature markets of Europe, and secondly moving into the markets offered by the developing world and securing a position as leaders.

References
Daimler.com (2010) ‘Business Development’, [online] (cited 16th November 2011), available from: http://gb2009.daimler.com/en/management-report/general-conditions/business-development.html ‘
Finch, J E, Ogden, J R and Agden, D (2005) Clep Principles of Marketing: The Best Test Prep for the Clep (5th edn), Research and Education Association, USA
Groucutt, J, Leadley, P and Forsyth, P (2004) Marketing: essential principles, new realities, Kogan Page, London.
Kotler, P and Armstrong, G (2010) Principles of marketing (13th edn.), Pearson Education, Harlow, Essex
Lancaster, L and Massingham, G (2010) Essentials of Marketing Management, Taylor and Francis, Oxon.
McDonald, M and Dunber, I (2004) Market Segmentation: How to do it, How to Profit from it, Elsevier.
McDonald, M (2008) Marketing Planning: Understanding Marketing Plans and Strategy, Kogan Page, London
Maier, K (2011) ‘Importance of China for Mercedes Benz Passenger Cars’, [online] (cited Nov 14th 2011) available from http://www.daimler.com/Projects/c2c/channel/documents/1931898_Daimler_UBS_Paris_DJSchmidt_Handout.pdf
Parmalle, D (2000) Auditing markets, products and marketing plans, McGraw-Hill Professional, Chicago, IL
Schafer, D (2010) ‘Daimler has grand plans for small cars’, Financial Times, 13th June 2010.
Tanner, J and Raymond, M A (2010) Principles of Marketing, Web Books Publishing, USA
Vadlamani, S (2010) ‘Mercedes Opens Used Cars Shop in India- get one for 15 Lac Rupees’, [online] (cited Nov 14th 2011), available from http://asiancorrespondent.com/34457/mercedes-opens-used-car-shop-in-india-own-a-benz-for-15-lac-rupees

2. Question 3: Human Resource Management (HRM). Lufthansa Group. In the current economic climate firms are facing enormous challenges to remain competitive. In the context of such challenges discuss the importance of Human Resource Management in Lufthansa Group’s performance and success. This issue should be discussed in the light of recent theoretical explanations, empirical evidence in the literature and with reference to Lufthansa Group.

The airline industry has been in a state of constant flux since its inception, and current times are no exception. The recent financial downturn in 2008/9, and fuel price increases in 2008 have had a severe impact on flying with a downturn in revenue, although growth is fast-paced in developing nations (Zacks Equity Research 2011). Human Resources Management (HRM) can make an important contribution to an organization’s capacity to weather such flux. Recent notions of the nature of HRM have moved away from a reactive, administration-biased function to one which embraces the strategic vision of the organisation. As such, HRM is now seen as strategic, involved in company goals, aware of corporate values, and a proactive force for achieving organisational priorities (Armstrong 2008). This is perhaps particularly true of the airline industry in general, as, like other service industries, it is a human-facing profession where person-to-person contact is a part of the flying experience. Managing human behaviour is therefore an integral part of HRM in airlines, and can lead to competitive advantage through satisfied customers (Walker and Miller 2009).
Lufthansa, the German airline, is currently one of the leading airlines of the world with a total staff number exceeding 117,000 (Lufthansa, 2010). They have had a remarkable recovery from 1991, where they were on the brink of bankruptcy, going on to achieve record profits by 1998 (Bruch 2011). Some attribute this success to an integrated strategic HR policy which effectively manages the integration operations of all the partnering airlines in the network. Lufthansa also opened communication channels and encouraged feedback from employees, as well as promoting continuing education and learning (Branke 2011). As such, they seem to be operating a strategy of empowerment as an HR principle. Empowering employees to feel more in control of their working role is suggested as a way of improving employee performance. This strategy has led to success for other operators in the Industry. For example, Southwest Airlines in the USA grew from regional to national operator through introducing a culture of inclusivity for employees, promoting team working and empowering workers (Page and Connell 2006). Lufthansa have therefore already demonstrated that their commitment to HRM can lead to performance benefits for the organisation. They continue to invest heavily in HR, for example their ETWeb™ Enterprise software solution that adds transparency to the alliance network’s HR potential, and allows vacancies to be filled quickly from the available pool of talent. They also integrate new technologies in other ways, for example the use of software to administer, monitor and evaluate scores for the executive asset management tests further automates the HR task and brings in more transparency (Branke 2011). The organisation pride themselves on their HR practices, and consider them to be the core of the organizational success over the last 15 years.

However, Lufthansa face continuing problems in the face of economic uncertainty, and the increasing numbers of budget airlines appearing in the industry (Gross and Schroder 2007). Lufthansa need to be continually striving to improve their HR function in order to manage their performance and success. Lufthansa might perhaps avoid competing upon price by adding value through improving the experiences of passengers. Southwest Airlines, mentioned above, realised that the “spirit of its people” was vitally important in customer satisfaction, and used their staff as a key means of differentiating their organisation in a competitive market place. A key aspect of this was using employees as a means of branding, through training to produce a consistent “look, feel and tone” of customer to employee contact (Ulrich 2005). At the same time, research has also suggested that where employees who are satisfied with their working conditions, customers and clients are also more satisfied with their experience of the organisation (Storey 2009). Another area which HRM might address is the satisfaction of pilots. The management of pilots is important to the success of any airline, as they enjoy considerable industrial voice, and it is essential to ensure they are happily employed (Harvey 2007). Much theoretical work in the area of HRM looked at the links between job satisfaction, employee attitudes, ‘churn’ (staff turnover) and organisational performance, with the suggestion that HRM can contribute to the organisation through improving employees experience of their role (Millmore 2007). There are therefore different ways in which Lufthansa can build upon their achievements so far through the direct involvement of HRM.
References

Armstrong, A (2008) Strategic Human Resource Management: A Guide to Action (4th edn.) Kogan Page Publishers, London

Branke, S (2011) ‘ExecuTrack: Strategic Executive Planning gets a lift’, [online] (cited 14th November 2011) available from
http://www.nixfon.com/pdf/CaseStudies/casestudy_lufthansa.pdf

Gross, S and Schroder, A (2007) Handbook of low cost airlines: strategies, business processes and market environment, Erich Schmidt Verlag GmbH, Germany.

Harvey, G (2007) Management in the Airline Industry, Pearson Education, Harlow, Essex.

Lufthansa.com (2010) ‘Annual report 2010’ [online] (cited 14th November 2011) available from http://reports.lufthansa.com/2010/ar/groupmanagementreport/employees.html

Millmore, M (2007) Volume 19 of Routledge research in employment relations, Routledge, London

Page, S and Connell, J (2006) Tourism: a modern synthesis (2nd edn), Cengage Learning EMEA, UK/USA.

Storey, J (2009) The Routledge companion to strategic human resource management, Taylor & Francis, Oxon

Walker, J R and Miller, J R Supervision in the Hospitality Industry: Leading Human Resources (6th edn.), John Wiley and Sons, Hoboken, NJ

Ulrich, D (2009) The Routledge companion to strategic human resource management, Taylor & Francis, Oxon.

Ulrich, D (2005) The future of human resource management: 64 thought leaders explore the critical HR issues of today and tomorrow, John Wiley and Sons, Hoboken, NJ.

Zacks Equity Research (2011) ‘Airline Industry Outlook’, [online] (cited 16th November 2011) available from
http://www.zacks.com/stock/news/46361/Airline+Industry+Outlook

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