AN IINTEGRATED MARKETING APPROACH
FOR A MEINIUM-SIIZEI)
S UTH AFRICAN AMILIN
IIN A ER GULATEID MARKET
N. LOUW MAY 1996 AN INTEGRATED MARKETING APPROACH FOR A MEDIUM-SIZED
SOUTH AFRICAN AIRLINE IN A DEREGULATED MARKET
by
NICOLAAS SALOMON LOUW
A dissertation submitted
in fulfilment of the requirements for the degree of
MAGISTER COMMERCII
in
MARKETING MANAGEMENT
of the
FACULTY ECONOMIC AND MANAGEMENT SCIENCES
at the
RAND AFRIKAANS UNIVERSITY
SUPERVISOR: PROF. J.A. BENNETT
MAY 1996 ACKNOWLEDGEMENTS
I would like to express my sincere appreciation and gratitude to the following persons and organisations which contributed to this study:
Prof. J. A. Bennett, for his assistance and constructive criticism.
Comair, for granting me this study opportunity - may the next 50 years be
as successful as the previous.
Mary Smith, for proof-reading the dissertation.
My father, for his valued comments and assistance. (i)
TABLE OF CONTENTS
LIST OF TABLES
LIST OF FIGURES
GOAL AND OBJECTIVES OF STUDY 1
1.1 INTRODUCTION
1.2 THE RESEARCH PROBLEM 4
1.3 GOAL AND OBJECTIVES 4
1.4 RESEARCH METHODOLOGY 5
1.5 DIVISION OF CHAPTERS 6
THE MACRO AND MARKET FORCES AFFECTING AIRLINES
IN SOUTH AFRICA 10
2.1 INTRODUCTION 10
2.2 THE MACRO ENVIRONMENT 12
2.2.1 The economic environment 13
2.2.1.1 The South African economy in a world and regional context 14
2.2.1.2 Economic indicators 17
2.2.1.2.1 Economic growth 17
2.2.1.2.2 Inflation 18
2.2.1.2.3 International capital flows 19
2.2.1.2.4 The exchange rate 19
2.2.1.2.5 Economic policy issues 20
2.2.1.3 Tourism and air travel 21 (ii)
2.2.2 The social environment 23
2.2.2.1 Demographics 24
2.2.2.2 Socio-cultural aspects 28
2.2.2.2.1 The changing role of women 28
2.2.2.2.2 The increasing importance of leisure 29
2.2.2.2.3 The rise of singles 29
2.2.2.2.4 Changing sexual attitudes 30
2.2.2.2.5 A growing interest in health consciousness 3 I
2.2.3 The physical environment 31
2.2.4 The international environment 33
2.2. 5 The institutional environment 34
2.2.6 The technological environment 41
2.3 THE MARKET ENVIRONMENT 47
2.3.1 The South African air travel industry 48
2.3.1.1 The South African air travel industry in a world context 48
2.3.1.2 The South African air travel industry in a regional context 51
2.3.1.3 The domestic South African air travel market 52
2.3.2 Comair - a medium-sized South African airline 55
2.3.3 Domestic and regional competitors of Comair 58
2.3.3.1 Air Botswana (BP) 59
2.3.3.2 Air Namibia (SW) 60
2.3.3.3 Air Zimbabwe (UM) 60
2.3.3.4 Nationwide (CE) 61
2.3.3.5 Royal Swazi National Airways (ZC) 61 (iii)
2.3.3.6 SA Express (SAX) 62
2.3.3.7 South African Airways (SA) 62
2.3.3.8 Sunair (BV) 66
2.3.3.9 Zimbabwe Express (Z9) 67
2.4 SUMMARY 67
3. MARKET SEGMENTATION, MARKET TARGETING, MARKET
POSITIONING AND THE DEVELOPMENT OF A MISSION
STATEMENT 72
3.1 INTRODUCTION 72
3.2 MARKET SEGMENTATION 74
3.2.1 Advantages and disadvantages of market segmentation 75
3.2.2 Criteria for effective market segmentation 76
3.2.3 Segmentation of the domestic South African air travel market 77
3.2.3.1 Market segmentation sources for the domestic South African
air travel market 78
3.2.3.2 Segmentation based on purpose of trip 79
3.2.3.3 Segmentation based on demographic, geographic, and
economic characteristics 80
3.2.3.3.1 Demographic segmentation 81
Ethnic group 83
Gender 84
Age 84
Marital status 84 (iv)
(v) Home language 84
3.2.3.3.2 Geographic segmentation 85
Provincial distribution of the domestic South African
flyer 85
City distribution of the domestic South African flyer 86
3.2.3.3.3 Economic segmentation 88
Income 88
Lifestyle measurement (LSM) of the South African
flyer 90
3.2.3.4 Segmentation based on airline user status 92
3.2.3.5 Segmentation based on buyer needs and benefits sought 95
3.2.3.6 Segmentation based on psychographic characteristics and lifestyle 95