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40 Developing an in-depth understanding of the customer profile specific to the airport is impor- tant in planning the future program and maximizing its performance in terms of customer ser- vice, customer satisfaction, sales, and airport revenue. This chapter addresses the several elements to be considered in defining an airportâs customer profile including the following: â¢ The airport and its customers â¢ Passenger segments â¢ Other customer segments â¢ Demographics and market segmentation â¢ Identifying gapsâwhy certain market segments do not patronize concessions â¢ Customer surveys and focus groups 4.1 The Airport and Its Customers Often, international and domestic passengers are processed in separate and distinct con- courses, and the numbers of passengers in each of these segments may be quite different. Con- courses may accommodate different airlines serving different destinations, with one enplaning a significant number of business travelers and another enplaning a high percentage of leisure travelers. The concession program will require some adjustments to best serve each of these segments. Other variables, such as demographics, nationality, destination of passengers, reason for travel, and whether they are O&D or connecting passengers, will affect passenger behavior, their pur- chasing habits, and their wants and needs at the airport. Market researchers use a more sophisticated market segmentation methodology in advertising and marketing research than is usually used in planning an airportâs retail concessions. Market segmentation involves breaking down the universe of potential customers into distinct groups. As an example, one international food and beverage concessionaire has developed a Consumer Profile Matrix based on seven consumer mindsets, ranging from low interest in food to a highly discerning approach, and on six basic need states, ranging from time-driven to environment- driven. At the airport level, a market segmentation approach is used at Dallas/Fort Worth Inter- national Airport. This approach, described in more detail later in this chapter and in a case study included in Chapter 14 of this resource manual, allows the airport board to segment its passen- gers by demographics, âlife stage,â urban density, and other factors to determine propensity to purchase, brand preferences, and other factors used in concession planning. Other nonpassenger segments may also generate a significant portion of the concession sales. The specifics of these additional market segments are also discussed in this chapter. C H A P T E R 4 The Passenger and Customer Profile
The success of any concession program partially results from developing a thorough knowl- edge of the airportâs market segments and adapting the concession mix to the needs, wants, and preferences of these segments. These market segments must first be identified and defined and may vary significantly from one airport to another and from one terminal or concourse to another in the same airport. For example, Terminal 4 at New Yorkâs Kennedy International Airport has a very different customer profile compared to the customer profiles at other terminals at the airport because of the large and diverse number of airlines operating from that terminal. Furthermore, the wants and needs of the customers should be defined in terms of their pref- erences for concession types and categories, products, services, and brands. The definition of these preferences is most often determined using market research tools, such as direct customer surveys. Only after these preferences are defined will it be possible for the airport operator to fine-tune its concession program to respond accordingly, optimizing the locations of conces- sions and maximizing the level of service, gross sales, airport revenue, spend per passenger, and space productivity. 4.2 Passenger Segments Passengers using an airport may be divided into several subgroups that behave quite differ- ently while circulating throughout the terminal building. This behavior affects their propensity to patronize the concession program and influences the locations of the concessions, as well as the products and services offered. Several variables may be used in segmenting an airportâs cus- tomer base. The most common passenger segments are described in this section. 4.2.1 International Departing Passengers The proportion of international passengers flying out of an airport will affect the size and loca- tion(s) of the duty free outlets, the types of specialty shops, and the types of food offered. Market research has demonstrated that international departing passengers have a far greater propensity to spend at airport concessions than other passenger segments. In addition, these passengers are the only ones eligible to purchase goods on a duty and tax free basis at duty free shops, although some duty free operators are now offering a limited selection of tax-paid merchandise to all passengers. Because of their specific check-in and boarding processes, airlines may often require that inter- national passengers arrive at the airport more than 2 hours in advance of their scheduled depar- ture time. This longer dwell time is conducive to shopping and eating. Airport operators should try to capitalize on this longer dwell time as much as possible. Conversely, airlines may place lim- its on how early a passenger can check baggage for a flight, creating demand for landside con- cessions (pre-security). 4.2.2 International Arriving Passengers The international arriving passengers have special needs, such as currency exchange services and baggage carts within the post-security international arrivals zones. International passengers expect these needs to be accommodated, as they are considered customary at international airports. Although arriving passengers typically show minimal interest in food, beverage, and retail concessions compared to departing passengers, careful consideration should be given to conve- niently locating some service concessions of interest to these passengers. International terminals have certain advantages compared with domestic terminals. First, these arriving passengers are deplaning from long international trips and have just experienced the stress of Immigration and The Passenger and Customer Profile 41
Customs inspection. Second, international passengers reaching their destination are more likely to be met by friends or relatives. Finally, arriving international passengers are more likely to be funneled through a single exit from the secure Customs area, allowing for concessions geared to arriving passengers and their meeters and greeters to be clustered, preferably in visible locations. 4.2.3 Domestic Departing Passengers Departing domestic passengers account for the largest percentage of concession sales at many airports. The types and numbers of these passengers should be carefully considered in determin- ing the concession mix and the location of the concessions and in evaluating the overall perfor- mance of the terminal concession program. These passengers are often encouraged to arrive at the airport at least 2 hours before their flights are scheduled to depart, which, in many cases, allows ample time for clearing security and making purchases at the post-security concessions. In addi- tion, because of the reduction in the offer of onboard food, domestic departing passengers have become major consumers of grab-and-go food that they can take with them on their flight. 4.2.4 Domestic Arriving Passengers Although arriving domestic passengers are most often anxious to leave the airport to reach their ultimate destinations, they may constitute a good market for the purchase of convenience items to take home or to their place of accommodation. A limited amount of concessions offer- ing concession services to domestic arriving passengers may be viable, but the revenue potential is likely to be limited. Arrivals area concessions are often not financially viable on a standalone basis, but may be marginally profitable when packaged with other concession units serving departing passengers. 4.2.5 Connecting Passengers The circulation pattern of connecting passengers within the terminal building is significantly dif- ferent from that of O&D passengers. Furthermore, layover times can be short for connecting pas- sengers, so concessions on these passengersâ circulation path or near the departure gates are best located to take advantage of this segmentâs buying potential. Some connecting passengers may remain airside while others may need to exit the security area to access another secured terminal area. The specific circulation pattern at the airport and the route and volume of passengers should be assessed to ensure that the right assortment of concessions in the right locations is offered to this passenger segment. The importance of this segment can vary considerably from one airport to another, depending on the number of connecting passengers and their behavior patterns. 4.3 Other Customer Segments Concession customer segments may be determined using other segmentation variables, such as demographics, nationality, destination, or trip purpose (business or leisure). These variables greatly influence passenger behavior and the propensity to shop and make purchases at airport concessions. The value of the transaction is also influenced by these variables, as well as by vari- ables such as the income of the passenger. An airportâs customer base also includes nonpassenger segments, such as meeters and greeters waiting for arriving passengers, well-wishers accompanying departing passengers, and employees who can generate a significant portion of a concession programâs sales. These segments are described in more detail in the following sections. 42 Resource Manual for Airport In-Terminal Concessions
4.3.1 Connecting versus Origin and Destination Passengers The volume of connecting passengers within a specific airportâs customer base influences the locations and sizes of concessions and the types of concessions in the concession mix. The propensity of passengers to spend pre- or post-security varies greatly depending on the composition of the passenger market. As part of the research conducted for this study, airport concession managers were asked what they thought would be the preferred split of concession space pre- and post-security. Figure 4-1 shows the combined responses to this question of 32 large and medium hub airport concession managers. The percentage of respondents indicating that 10% or less of space should be located pre-security and the percentage of respondents indicating that 11% to 20% of space should be located pre-security were the same. Figure 4-2 illustrates the average time spent by passengers before and after security at a U.S. West Coast airport. The time varies from one terminal building to the other. Again, only a thorough knowledge of passenger behavior will allow the airport operator to determine the optimal split. The Passenger and Customer Profile 43 Note: 16 large and 16 medium hub concession managers responding. Source: LeighFisher using data from the airport surveys conducted for ACRP Project 01-11. Figure 4-1. Concession managersâ preferences regarding the location of concessions before and after security inspection. Figure 4-2. Average time passengers spend before and after security by terminal at a U.S. west coast airport. 37 70 60 46 0 10 20 30 40 50 60 70 80 Before security After security M in u te s Terminal A Terminal C Source: Survey conducted by LeighFisher in 2004.
4.3.2 Business versus Leisure Travelers Passenger surveys and studies have demonstrated that business and leisure travelers exhibit different behavior and spending patterns. The typical leisure traveler, who is using discretionary income to travel, is naturally more sensitive to pricing than the business traveler on a corporate expense account. The proportions of business and leisure travelers affect the mix of products, services, and concessions in a concession program, as well as the pricing strategy. Business travelers tend to arrive at the airport much closer to their departure times and thus have shorter dwell times in the terminal building. Concessions must be located directly on their circulation path, as these travelers do not have much discretionary time or inclination to wan- der and browse in a terminal to find what they might like to purchase. On the other hand, leisure travelers, especially those who do not fly frequently, are more likely to arrive at the airport earlier than business travelers and, thus, have longer dwell times in the terminal to browse and shop. Additionally, leisure travelers are more likely to be accompanied by family members or other traveling companions, which will also influence the products/services included in the concession mix. 4.3.3 Meeters and Greeters Surveys have shown that the ratio of meeters and greeters to passengers varies significantly with the demographics of the passengers served at an airport. This ratio is much higher for some nationalities than others. Meeters and greeters tend to remain in the arrivals area and are not likely to wander far from the location where they can meet arriving passengers. The optimum concession locations to serve this market vary depending on the terminal. In some cases, meeters and greeters congregate on the departures level near the exit from security or in conveniently located âmeeting placesâ established by the airport operator. In other termi- nals, arriving passengers exit the secure zone in the baggage claim area. Where passenger flow is dispersed among many exits from the secure area, the opportunity to create a critical mass of concessions in one location and a profitable concession program is reduced. Ideally, meeters and greeters would wait on the same level as baggage claim, creating a larger market for concessions in the arrivals area. 4.3.4 Well-Wishers Similar to meeters and greeters, well-wishers, or people accompanying departing passengers, are not allowed in the post-security areas. Pre-security concessions offer an opportunity to serve this segment before the accompanying passengers enplane. For example, people accompanying departing passengers may wish to have a meal or a beverage with the passenger(s) they accompany before they proceed through security. The optimal amount and the proportion of pre-security concessions are influenced by the specific ratio of people accompanying departing passengers to departing passengers at an airport. Cultural differences can affect demand in this market segment; people accompanying depart- ing passengers from some cultures are more likely to spend time with passengers at the airport before they leave on a trip. 4.3.5 Employees Employees represent an important market segment of potentially repeat customers and may generate a significant portion of concession gross sales, especially in the food and beverage and 44 Resource Manual for Airport In-Terminal Concessions
convenience retail categories. This segment is often overlooked, but surveys have indicated that employees can account for as much as 40% of some quick-serve sales, particularly for fast food concepts with low price points. To illustrate this fact, Figure 4-3 shows the proportion of employ- ees visiting retail and food/beverage concessions on a daily and weekly basis at a U.S. West Coast international airport as determined through a survey. Figure 4-4 illustrates the average weekly expenditure of airport employees in retail and food and beverage concessions at the same airport. While some employees may only have pre-security access, some have a security clearance and may be potential customers for post-security concessions. It is therefore important that the air- port operator consider the proportion of employees with post-security access when determin- ing the concession mix and price points. The Passenger and Customer Profile 45 Figure 4-3. Percentage of airport employees visiting concessions at a U.S. west coast international airport. Figure 4-4. Average employee expenditures per week at airport concessions. 45% 26 % 4% 18 % 0% 10% 20% 30% 40% 50% Visit daily Visit weekly Re ta il Fo od an d be ve ra ge Source: Survey conducted by LeighFisher in 2004. $6.44 $38.50 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 Retail Food and beverage Average expenditure per week Source: Survey conducted by LeighFisher in 2004.
4.4 Demographics and Market Segmentation The demographics of passengers and other customer market segments have a strong influence on customer needs and wants and on the concession mix and the products/services offered at the concession units in each commercial zone of a terminal building. A good example is the major international fast food chain, McDonaldâs, which adapts its products to satisfy the needs and wants of its specific markets around the world. In Belgium and Germany, McDonaldâs serves beer, while at its units in India, beef is not on the menu. In Costa Rica, rice and beans are available in addition to fries, as are shrimp burgers in Japan. Customizing the offer to meet local needs makes sense for concessionaires, as well as for airport operators. Demographics also have a major influence on the discretionary revenue of individual pas- sengers and their propensity to shop, which, in turn, influences the targeting of the conces- sion. For example, should the concessionaire be selling high-end, medium-end, or lower-end watches? Or should it be selling different watches in different terminals, with high-end watches in the international terminal and lower-priced watches in terminals used by leisure travelers? The destination of outbound passengers, especially international passengers, can also signif- icantly influence shopping behavior and spending patterns and, in turn, significantly affect the performance of a concession program as well as its composition. Figure 4-5 illustrates the results of a recent survey of a major Eastern U.S. international airport terminal. At that specific airport, passengers traveling to Britain/Ireland had an average spend rate significantly higher than other groups, followed closely by passengers headed to Asia and Eastern Europe. This information differs from the information collected by nationality, as it relates to preferences for all passengers traveling to a specific destination regardless of nationality. 46 Resource Manual for Airport In-Terminal Concessions Figure 4-5. Average total spend rate per enplaned passen- ger by destination. $3 .1 0 $4. 60 $5 .4 0 $8. 10 $8. 60 $10. 30 $12. 90 $13 .9 0 $14. 40 $25. 30 $27. 40 $39 .0 0 $0 .0 0 $ 10. 00 $20. 00 $30 .0 0 $ 40 .0 0 $ 50. 00 Me xi co Middle Ea st Ca ri bb ean Af ri ca S out h As ia S out h Am er ic a C ent ra l Am er ic a U. S. an d Ca n ada We st er n Eu r ope Ea st er n Eu r ope As ia U. K. a nd Ir el and Source: LeighFisher, from survey conducted at a major eastern U.S. airportâs international terminal in 2007.
Information relevant to successful airport concession planning can be gathered through or extracted from customer surveys. Information typically collected through such surveys includes the following: â¢ Household income â¢ Age â¢ Nationality (discussed below) â¢ Travel characteristics of the airportâs passengers (e.g., O&D or connecting, trip destination, number of flights per year, number of non-travelers accompanying them, average time at air- port, average time spent before and after security, business vs. leisure travel) â¢ Average spend by â Nationality â Destination â Airline â O&D/connecting â Business vs. leisure â Age â Household income In addition to demographic data, surveys may also collect customer preferences that can be asso- ciated with the demographic data, including preferences for restaurants and shops not currently at the airport and passengersâ assessments of how well the current program meets their needs, includ- ing strengths and weaknesses. The global performance of a concession program is linked to all of these factors, as they provide valuable information regarding an airportâs concession program. The more a concession program is adapted to these characteristics, the better its performance will be. The differences in spending by international destinations are significant. The same principle can be applied to domestic passengers through survey research, with spending patterns identi- fied for an airportâs major markets. The differences may not be as great, but the information can be helpful in tailoring an airportâs concession program. 4.5 Identifying GapsâWhy Certain Market Segments Do Not Patronize Concessions Even well-planned concession programs are not patronized by a percentage of passengers. Fig- ure 4-6 presents some of the reasons given in a passenger survey for not buying. Figure 4-6 indi- cates that some consumers still think that prices at airport concessions are higher than street prices. 4.6 Customer Surveys and Focus Groups The importance of gaining an in-depth knowledge of the various segments of an airportâs cus- tomer baseâin terms of demographics, wants, needs, and preferencesâto be able to develop a concession program that will perform well was discussed in previous sections. An airport oper- ator can gain this knowledge in several ways. The methods used most frequently are customer surveys and focus groups. A wide variety of survey methodologies are available to airport oper- ators. For more details on these methodologies, please refer to ACRP Report 26: Guidebook for Conducting Airport User Surveys (Biggs et al. 2009). The surveys and interviews conducted as part of this research project indicate that approxi- mately 80% of airport operators conduct some type of customer/passenger survey. However, a The Passenger and Customer Profile 47
much smaller share of airport operators conduct customized surveys of various customer seg- ments specifically designed to acquire better knowledge of the customer base, demographics, wants, needs, and preferences to help adapt concession programs to accommodate these parameters. As discussed earlier, employees can generate a significant amount of concession program gross sales, especially food and beverage. The survey conducted for this study indicated that only about one-third of airport operators reported surveying employees, and just under half of airport oper- ators reported surveying meeters/greeters and farewellers. Although these segments are small in relation to the departing passenger segment, identifying the needs and wants of these market seg- ments can strengthen the overall concession program and provide long-term incremental revenues for the airport enterprise. 4.6.1 Passenger Surveys Several factors should be considered when selecting a passenger survey methodology, includ- ing speed, complexity of the inquiry, flow control, visual aids, and confidentiality. The most common type of airport user survey, the passenger intercept survey, focuses on pas- senger characteristics, preferences, and satisfaction with the airport. Usually completed by trained survey staff at holdrooms, the intercept survey can obtain valuable information from pas- sengers who have formed impressions after their use of concessions and just prior to their leav- ing the airport. About one-third of airport concession managers indicated that surveys were conducted at their airports more than once per year, while only 18% of airport operators conducted surveys annu- ally. About one-quarter of airport operators indicated that they conduct surveys only at the time of new program development or never. These results are presented graphically in Figure 4-7. Fig- ure 4-8 illustrates the percentages of airport operators using various sample sizes in their passen- ger surveys. Sample sizes will vary according to survey objectives, number of terminals, and other factors. ACRP Report 26: Guidebook for Conducting Airport User Surveys is a comprehensive resource on airport survey research. 48 Resource Manual for Airport In-Terminal Concessions 0% 10% 20% 30% 40% 50% 60% 70% 80% Shop closed Could not find shop Did not have time Did not have products I wanted Prices are too high Did not want to buy anything Terminal C Terminal A Source: Survey conducted by LeighFisher In 2004. Figure 4-6. Reasons given for not patronizing airport concessions (U.S. west coast airport).
4.6.2 Meeter/Greeter and Well-Wishers Surveys Surveys of meeters and greeters should focus on the characteristics of those meeting passengers, the number of persons in the party, the distance traveled to the airport, the typical amount of time spent at the airport, and customer buying or preferences for types of concessions. Numbers of meeters and greeters are often estimated for airport or terminal master plans using broad-based estimates based on other airports or using a rule-of-thumb ratio of meeters/greeters to passengers. These kinds of estimating methods can easily overestimate or underestimate the numbers of per- sons meeting/greeting passengers. Verifying the strength of the potential market through a survey can help the airport operator (and its concessionaires) avoid making costly mistakes. In some parts of a country, cultural differences result in stronger demand. For example, persons of Hispanic origin in Miami tend to arrive at the airport in large groups to meet arriving pas- sengers, as do persons of Italian descent in Montreal. In Los Angeles and San Francisco, Asian The Passenger and Customer Profile 49 Figure 4-7. Frequency of passenger surveys conducted by airport operators. Figure 4-8. Sample sizes used by airport operators in passenger surveys. Source: LeighFisher using data from the airport surveys conducted for ACRP Project 01-11. 27% 18% 16% 7% 33% 0% 5% 10% 15% 20% 25% 30% 35% More frequently than annually Less than annually Annually Only at the time of new program development Never Source: LeighFisher using data from the airport surveys conducted for ACRP Project 01-11.
residents travel to the airport to spend time and enjoy a meal with the traveler before departure. This cultural trait can be best observed at airports in Asia, such as Singapore Changi and Seoul Incheon International Airports, where there are multiple restaurants, both casual and formal, in addition to quick-serve food courts in pre-security departure areas. Narita International Airportâs Terminal 2 has 15 pre-security food and beverage units, including Japanese, Chinese, and west- ern restaurants. Understanding the available opportunities can help airport and concession managers make sound long-term concession planning decisions. Survey questions for meeters/greeters and well- wishers typically cover the following: â¢ Number of persons in party â¢ Age group â¢ Gender â¢ Frequency of visits to airport â¢ Opinion on concessions and services in terminal â¢ Preferences for concessions and services â¢ Time spent in airport â¢ Amount spent in airport â¢ Distance traveled to airport â¢ Household income 4.6.3 Airport Employee Surveys Employee surveys are usually conducted to measure satisfaction with airport facilities and services, obtain information for transportation or concession planning, and address issues such as communications and knowledge of airport procedures. The survey questions typically cover the following topics: â¢ Category of employer (airline, airport, tenant, or other) â¢ Full-time or part-time employee â¢ Frequency of concession visits and average spend per concession category â¢ Opinion on location of concessions within terminal â¢ Preferences in terms of brands, products, etc. â¢ Age group â¢ Household income â¢ Gender 4.6.4 Other Surveys Several other survey methods are available to airport operators, such as the following: â¢ Self-completed surveys, which are handed out to passengers at or near their holdrooms, com- pleted by the respondent, and then returned either in person or by mail. If the surveyor remains near the passengers while they complete the survey, he or she can act as a resource if some respondents have questions about some of the questions. â¢ Mail surveys, which are infrequently used at airports, mostly because of the wide distribution of airport customers around the world. This type of survey often yields a low response rate. â¢ Telephone surveys, which are useful for surveying households and businesses in the area served by the airport, but not practical for surveying passengers. Face-to-face interviews at the airport are much more efficient than randomly telephoning the population of an airportâs catchment area. â¢ Internet surveys, which are extremely inexpensive and have become increasingly popular in recent years. Although convenient in certain situations, these surveys have been criticized, 50 Resource Manual for Airport In-Terminal Concessions
mostly because the sample of respondents could be biased. For example, people who are dis- satisfied with one or more aspects of airport service and wish to complain about it have a greater likelihood of responding to an Internet-based survey than fully satisfied customers. 4.6.5 Focus Groups Focus groups are used when the detailed opinions of members of a specific group are desired. Focus groups provide an opportunity for the airport operator or concession manager to discuss certain issues in more depth than could be achieved using a standard customer survey, with rep- resentatives of certain market segments, and to obtain qualitative data about the airport conces- sion program. The selection of individuals forming the focus group is of paramount importance, as these individuals greatly affect the results. A trained facilitator should be used to lead the dis- cussions and elicit in-depth opinions and their underlying rationale. 4.6.6 Concessionaire Interviews One often overlooked source of information that can be helpful in understanding an airportâs customers is the existing airport concessionaires. Concessionaires, particularly local managers, are on the front lines of customer service and can provide a wealth of knowledge about current customer behavior, gaps in the current concession program, and preferences of particular mar- ket segments. Regional managers and business development representatives of major concession companies can also help airport operators in understanding broader industry trends and how they may apply at specific airports. Concession consultants routinely interview current conces- sionaires when preparing concession plans for clients. While concessionaire representatives may be advocates of a particular view or policy that benefits their company, they can be a good source of front line information. Regular meetings with concessionaires are recommended as a means to develop an understanding of the market from those who serve it. 4.6.7 Advanced Market Research Techniques Consumer product companies use market research to understand their customersâ demographic status and lifestyle preferences. Consumer research firms conduct broad-based research of buying trends, income, lifestyles, family status, and residence using census and zip code data typically used in market research, advertising, retail location decisions, and other commercial applications. This extensive demographic research has been applied at Dallas/Fort Worth International Air- port using the Nielsen companyâs Claritas market demographic identification and segmentation system. Capturing the zip codes of the airportâs originating and connecting passengers allows seg- mentation of passenger profiles into 63 distinct lifestyle groups that identify shopping and media preferences as well as key demographic and socioeconomic characteristics. Lifestyle groups are also characterized by urban density into four groupsâurban, suburban, town and rural, and second cityâand further classified according to socioeconomic rank and âlife stageâ group, based on the presence and age of children. This market research enables airport concessions staff to develop an in-depth understanding of their customers and their preferences for brands, products, and services. This information is also provided to current and prospective concessionaires, to enable them to better understand their cus- tomers. Furthermore, there is wide variation in the characteristics of the market in each of the air- portâs five terminals, allowing for further segmentation and tailoring of the concession offerings. The application of these advance market research techniques is discussed further in the case study of Dallas/Fort Worth International Airport included in Chapter 14. The Passenger and Customer Profile 51