Designing loyalty programs for business travelers and market segmentation strategies

Rental Car Retention Program - The rental car industry is quite competitive and complex and, since more and more companies are placing employees on fixed budgets, there is greater competition for the dollar. To effectively design a loyalty program that will meet the needs of a majority, certain information must be collected:

What is the typical business travel like? Demographics, etc.

What are the most important things for a business traveler regarding their rental car?

Which company do they currently prefer and why?

Of a list of incentives, what numerical rank do each of these have by way of importance (dollar discount, coupons for mileage or partner restaurants, free hotel upgrades, free size upgrades, vacation packages for personal use based on volume, better business rates, easier check-in/checkout, travel assistance, etc.)

Are those needs being met now? If so, how -- if not, why? (How to identify, 2010).

Then, research could occur using 4-5 focus groups in major travel cities. Business travelers have very little time, so using online conferencing technologies, prescreening the invitees, and partner with other companies who have similar interests might incentivize the participation. Once the qualitative portion of the data is collected, we will have a basic understanding of what the client needs. Then, to make the results far more meaningful, we will need to collect a larger quantitative sample from different regions, demographic groups, and since we are international, countries. This will be done using several survey methods, each with a small coupon attached to make it worth the client's time. For example:

Place a survey in every car rented for x period of time, attach a coupon or spiff to survey if completed, or even a few dollars off the rental.

For every client that we already have an email, send out an email survey, again, with a quick spiff.

Then, analyze the data and form a more appropriate retention program focusing on basic needs from respondents (Evans and Stroll, 2006; Kiley, 2005).

Part 2 -- Clock Manufacture - Market segmentation is a way to differentiate a group so that the seller of goods or services does not concentrate on the entire universe, but on a group of high potential customers that are more likely to purchase the product. In the case of a clock and watch manufacturer, we would need to know the quality and price point of products to be completely accurate. In this scenario, though, we will assume a higher end approach. Research shows us that over ae of people prefer durability, status, and product quality in watches and clocks. So, the segmentation for this audience would be based on some clear demographic notions (Yankelovich, 1964):

Age -- Men and women 30+

Income Level -- Likely middle high to high income levels. Lower income levels might be content with inexpensive, throw away products, and are less interested in paying more for high quality.

Educational Level -- Probably college or college plus professional degree; assumes higher success ratio and fancier dresser.

Lifestyle Positioning -- Use purchase to boost image and exert success

Cost -- Not really as much of an issue at this range; but simply indicate that only special people can handle this vehicle; all routine maintenance will be covered in full for 5-years. Treat client like VIP.

Positioning venues -- Purchase list of high-end executives and send an invitation for a regional preview luncheon and test drive; consider high-end spokesperson and periodicals. Emphasize fact that this car is not on television because only a few people can appreciate it. Perhaps anticipate demand by having a few options that require customization (color of leather, embossing of initials, etc.) Partner with high-end sound system to customize sound for clients music tastes (Searls, 2006).

Part 4 -- Needing the Unnecessary -- The article "Needing the Unnecessary" traces the advent of consumerism over the past century and finds that the larger percentage of modern products, indeed the very definition of consumerism, is all about providing consumers with many choices for products they do not really need. Culture was in for some rather large changes after World War II. American's suffered through almost two decades of shortages and economic hardship, retooling of factories, and a change in lifestyle expectations. The GI Bill sent thousands to college and helped a number of returning soldiers purchase quality homes. Theoretically, this required intrisic motivation for an entire class subset to relocate, with the needed technology to do so. The catch -- those homes were often in outlying areas, away from the downtown core -- the suburbs were born. American suburbia would not have been possible, however, without the car culture -- one had to get to and from work, to the market, and with growing families, to all the events surrounding the new sense of prosperity and leisure time. This culture allowed for greater independence from simple needs and the ability to focus on wants (Twitchell, 2002).

Marketing then focuses not on those basic Maslow hierarchy needs (food, clothing, etc.), but on things and objects that help people transcence into luxury or lifestyle and then convince the consumer that those are necessary for happiness. Once this is done the consumer, through shared insight and behavior trends, begins to follow the flock, all choices to the wind. Based on the desire to fit in, to acculturate, or to appear successful; the new consumer is convinced that the only way to do this adequately is to purhcase the items they are being told are necessary -- told by the manufacturers.