ABSTRACT
This chapter explores how a service concept can be moulded out of the ideas at the highest level of aggregation, 'the available market' is comprised of passengers and cargo moving between geographical points the airline in question is free to serve. Because we are dealing with a network industry, however, airlines may also carry passengers making interline connections as part of journeys in markets which are only partly served by any one of the carriers used for those journeys. An accurate and actionable understanding of customers – particularly how they define and perceive value – is an organizational resource. An understanding that is better than competitors' understandings, that leads to actionable knowledge, and that allows us to generate the desired customer behaviour – notably purchase and loyalty – is a potential source of competitive advantage. Market segmentation is a practical first use for customer understanding.
