The transportation market can be divided into segments, each with its own needs and wants. The key to successful marketing is understanding these different segments and targeting them with the right products.
One of the most popular methods for performing market segmentation uses demographic factors like age, gender and income.
Other methods use psychographic factors like lifestyle, motivations, values, likes and dislikes as well as behavioral factors like purchasing habits, how someone intends to use a product or service, how often, the benefits they seek, or their brand preference.
In this article, we will perform transportation market segmentation using the following 7 variables: type of transportation, price range, comfort level, transportation technology, services offered, the occasion of travel, and frequency of travel.
But first, let’s start by understanding why it is important to use market segmentation when offering transportation services.
The Importance of Segmentation of the Transportation Market
The segmentation of the transportation market is essential because it allows governments and transportation service providers to target specific groups of travelers and commuters with precision.
By understanding the needs and wants of different segments, transportation providers can offer services that are more likely to appeal to them and more likely to be used by travelers to get from one place to another.
The market for transportation ranges from those just looking for a cab to get to the airport to a business chartering an executive jet for a weekend retreat.
There exist transportation options for every budget and every comfort level, but not all types of transportation are useful for all people.
By segmenting the market, businesses can identify which type of transportation is most popular with each group and target their marketing and sales efforts accordingly.
Variables for Transportation Market Segmentation
Transportation market segmentation can be performed along the following 7 axes:
- Type of Transportation
- Price range
- Comfort Level
- Technology
- Services Offered
- Occasion of Use
- Frequency of Use
Different people have different needs, wants and motivations for purchasing a product or service.
And so most transportation services do not cater to all travelers. Instead, they focus on those segments of the market that they can serve the best.
With market segmentation, they can target specific groups of consumers with tailor-made products or services that satisfy their needs.
For instance, a bus provider in a large city will target a market of students or commuters traveling over relatively short distances. The provider will not tackle long-distance travel but instead leave it to another provider that specializes in long-distance travel or even a train service or an airline.
It is therefore essential that businesses decide which segments they want to target and then design their transportation services, marketing, and sales strategy accordingly.
Let’s now look in detail at each of the 7 variables used in transportation market segmentation.
#1. Segmentation Based on Type of Transportation
The type of transportation plays a major role in a customer’s decision whether to take it or not.
For instance, if someone’s looking for the quickest way to get to the office from home, a local metro might be faster than driving through traffic.
On the other hand, if they are looking to travel from one coast to the other, taking a plane might be the only type of transportation available to them.
Broadly speaking, the different types of transportation include:
- Plane
- Train
- Taxi
- Self-driving
- Uber, Lyft
- Ferry
- Ship
- Trucks
- Private Jets
- Helicopters
- Limo Services
… and a few other less common ones like tractors and horse-drawn carriages.
Businesses that focus on a specific type of transportation service often have a competitive advantage because they can design their products specifically for the customers who are likely to use their service.
#2. Transportation Market Segmentation Based on Price Range
Price is, of course, a major factor that influences purchase behavior.
When it comes to transportation, those with more money to spend are often willing to pay more for convenience, comfort, and time-saving.
On the other hand, those on a tight budget might be looking for the cheapest transportation option available that can still get them from A to B without too much hassle.
For instance, some people taking a flight might be willing to spend more on a first-class ticket with all its comforts, while those looking for the cheapest option will choose to fly economy or take a budget airline.
Businesses need to decide which price point they want to target with their products.
They also need to make sure that their products are priced in line with what their target market is willing to pay.
Transportation Service Providers often use price segmentation techniques to maximize their revenue and profit by extracting the most revenue out of each customer based on their willingness to pay.
#3. Transportation Market Segmentation Based on Comfort
For many people, the choice of transportation comes down to the level of comfort they can expect.
For instance, those who are looking to travel in style and comfort might choose a private jet or limo service, while those who are happy to sacrifice some comfort for a lower price might choose a budget airline or even a bus.
When it comes to flying, comfort can be broken down into several sub-factors, such as:
- legroom
- food and drinks
- in-flight entertainment
- Wi-Fi availability
- seat comfort
- luggage allowance
- ease of checking in
- ease of boarding and deplaning
Comfort can sometimes be counterintuitive. For instance, a family of five with small children may prefer to drive their own car because it is more comfortable for them than flying and dealing with all the hassles of airports.
#4. Segmentation Based on Transportation Technology
Most people do not directly choose a transportation service based on the technology used, but technology does have an indirect effect.
For instance, the technological innovations that gave rise to the TGV trains in France, the Shinkansen in Japan, and the Bullet Train in China made these transportation options much more popular.
The technological advancements in the transportation industry are often driven by the need to move people and goods more efficiently, safely, and comfortably.
Some of the latest transportation technology trends include:
- Autonomous vehicles
- Electric vehicles
- Connected vehicles
- Shared mobility
- On-demand transportation
- Multimodal transportation
One way that technology does impact a traveler’s choice of mode of transport is their carbon footprint.
Those worried about what impact their travel choice may have on the environment may choose a mode of travel that has the least negative impact on the environment even if it means taking longer to get someplace and costing more.
#5. Segmentation Based on Services Offered
Often transportation is more than just getting someone from point A to point B. Many people when they choose a transportation option are also choosing the services and service quality that comes with it.
For instance, when people take a taxi, they are not just paying for the transportation but also for the door-to-door service and (hopefully) the expertise of the driver.
People who choose to fly first class or business class on an airplane are often doing so because they want the added service that comes with it, such as:
- Priority boarding
- Lounge access
- Free checked baggage
- Amenity kits
- Meals and drinks
- More legroom and seat recline
- Better in-flight entertainment
Service is an important part of transportation because it can make the difference between a pleasant experience and a terrible one.
For instance, those who have had to deal with lost luggage or missed connections can attest to the importance of good service.
Transportation service providers need to decide where on the services spectrum they want to place their offering and price it accordingly.
#6. Segmentation Based on Occasion of Travel
Some people need a transportation service every day, such as those who commute to work or school.
For others, transportation is only needed on special occasions, such as when going on vacation or traveling for business.
The occasion of travel can have a big impact on the transportation mode chosen.
For instance, those traveling for business are often more concerned with getting to their destination on time and may be less worried about the cost, while those going on vacation might be more interested in finding a transportation option that is comfortable and enjoyable.
Certain occasions always create travel challenges and this too impacts people’s choice of transportation. For example, each year at Thanksgiving, there is a mad rush to the airport as people try to get home in time for the holiday.
This often results in long lines and delays, which is why many people choose to drive instead.
Transportation businesses need to be aware of transportation trends related to special occasions so that they can plan accordingly.
#7. Segmentation Based on Frequency of Travel
How often someone travels can also dictate their transportation choice.
Those who travel frequently are often more concerned with convenience and efficiency, while those who travel less often might be more interested in the cost or the experience.
Frequent travelers often have loyalty programs with transportation providers and this can impact their transportation decisions.
For instance, someone who has airline miles with a particular airline will choose to fly the same airline each time to accrue more miles.
Likewise, someone who takes the metro to work each day will buy a monthly pass with an unlimited use option to save time and money.
Conclusion
As you can see, the transportation market can be segmented using many variables and can be analyzed from different angles.
In this article, we performed transportation market segmentation following these 7 factors: type of transportation, price range, comfort level, transportation technology, services offered, the occasion of travel, and frequency of travel.
Transportation Service Providers often use market segmentation to better understand their customers and figure out how to appeal to them.
With transportation market segmentation, they can better understand which of their services are likely to sell well and can target their audiences more effectively.
