Transcript in Airline Marketing

Aviation Management
College
AIRLINE MARKETING
Product Analysis
In
Airline Marketing
-CONT-
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Lecture 28/01/10
Managing a Product Portfolio
– Boston Box
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Managing a Product Portfolio – Boston Box
Background
- US Boston Consulting Group 1963
- Using product range & portfolio
- Using 2 variables:
- a) The size of total market
- b) The share of the market or market share
Product Analysis
In Airline Marketing
Aviation Management
College
AIRLINE MARKETING
Managing a Product Portfolio – Boston Box
i)
WILDCAT - Characteristics
-
Product with low market share
The overall market is growing
Invest to increase market share
Using ‘4 Ps’ of Marketing Mix
Product Analysis
In Airline Marketing
Aviation Management
College
AIRLINE MARKETING
Managing a Product Portfolio – Boston Box
i)
Wildcat - Using ‘4 Ps’ of Marketing Mix
-
Product specs equal or better
Competitive pricing
Advertising & promotion activities
Using the right distribution channels
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Managing a Product Portfolio – Boston Box
Product Analysis
In Airline Marketing
Aviation Management
College
AIRLINE MARKETING
Managing a Product Portfolio – Boston Box
i)
Wildcat – in Airline Marketing
-
Airline route as product; frequencies,
connections, package
International market; image & status,
withdrawal, an advantage to competitor
and difficult to re-enter
-
Product Analysis
In Airline Marketing
Aviation Management
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AIRLINE MARKETING
Managing a Product Portfolio – Boston Box
ii) THE STAR - Characteristics
-
Product has good market share
The market is growing
The best product to the firm
The product produce max profit
Need to spend heavily to defend market
Product Analysis
In Airline Marketing
Aviation Management
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AIRLINE MARKETING
Managing a Product Portfolio – Boston Box
ii) STAR – product investment
-
Advertising & promotion
Pricing strategy; competitive
High volume sales
Thin profit margins
Aviation Management
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Product Analysis
In Airline Marketing
AIRLINE MARKETING
Managing a Product Portfolio – Boston Box
ii) STAR – in Airline Marketing
-
Aero-engine market powering large jet aircraft
Players: GE, Pratt & Whitney & Rolls
Competition is intense
Spend large sum to defend market
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Managing a Product Portfolio – Boston Box
ii) STAR – in Airline Marketing
-
Spend large amount on continuous product
development & improvement program.
Stiff pricing sometimes sold below cost
Profit from sales of spares & lifetime product
support
All with huge sales revenues, often thin margins
Product Analysis
In Airline Marketing
Aviation Management
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AIRLINE MARKETING
Managing a Product Portfolio – Boston Box
ii) STAR – for Cost Leader Airlines (LCC)
-
Intra European route & Asian regional routes
Attracts new players
Growing market
Competitive pricing
High sales revenue
Low profit margins
Product Analysis
In Airline Marketing
Aviation Management
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AIRLINE MARKETING
Managing a Product Portfolio – Boston Box
iii) CASH COW PRODUCT – characteristics
-
Product have good market share
Market is in maturity stage (not growing)
Market not attractive to new entrants
A major source for profit because no/less
spending to protect market share
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Managing a Product Portfolio – Boston Box
iii) CASH COW PRODUCT – in Airline Marketing
-
-
Smaller engine market; a monopoly by The
Tay of Rolls-Royce
Fokker & Gulfstream jets, stagnant market
Now Fokker has gone bankrupt from 1996
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Managing a Product Portfolio – Boston Box
iv) DOG PRODUCTS – characteristics
-
Low market share
Market is small & not growing
Ready to discontinue product
No spending, money used for other product
Aviation Management
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Product Analysis
In Airline Marketing
AIRLINE MARKETING
Balancing Risk & Opportunity – the Ansoff Matrix
A marketing tool created by Igor Ansoff and first
published in his article "Strategies for
Diversification" in the Harvard Business Review
(1957).
The matrix allows marketers to consider ways to
grow the business via existing and/or new
products, in existing and/or new markets
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Balancing Risk & Opportunity – the Ansoff Matrix
There are four possible product/market
combinations. This matrix helps companies
decide what course of action should be taken
given current performance. The matrix consists of
four strategies:
Aviation Management
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Product Analysis
In Airline Marketing
AIRLINE MARKETING
Balancing Risk & Opportunity – the Ansoff Matrix
Aviation Management
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Product Analysis
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AIRLINE MARKETING
Customer Service-Related Product Features
3. Inflight-service
-
Wider seats & aisle
Inflight cabin service
Food & bevereges
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Balancing Risk & Opportunity – the Ansoff Matrix
1, Market Penetration
- Market our existing products to existing customers.
- Able to increase sales/revenue
- e.g., promoting the product, repositioning the
brand, etc.
- Product is not altered and we do not seek any new
customers.
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Balancing Risk & Opportunity – the Ansoff Matrix
1. Market Penetration
(existing markets, existing products):
- company enters/penetrates a market with current
product
- by gaining competitors' customers (part of their
market share).
- other ways include attracting non-users of your
product or convincing current clients to use more
- with advertising or other promotions.
- on is the least risky way for a company to grow.
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Balancing Risk & Opportunity – the Ansoff Matrix
2. Market Development
- market existing product range in a new market
-product remains the same, but promote to a new
customers
- Exporting the product, or marketing it in a new
region
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Balancing Risk & Opportunity – the Ansoff Matrix
2. Market development
- (new markets, existing products):
- established product in the marketplace can be
targeted to a different customer segment,
- as a strategy to earn more revenue for the firm.
- Eg.,, Lucozade was first marketed for sick children
and then rebranded to target athletes.
- developing a new market for an existing product.
- the market need not be new in itself, but the
market is new to the company.
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Balancing Risk & Opportunity – the Ansoff Matrix
3. Product Development
-new product to be marketed to our existing
customers.
-develop and innovate new product offerings to
replace existing ones.
-products are then marketed to our existing
customers.
- often happens with the auto markets where existing
models are updated or replaced and then marketed
to existing customers.
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Balancing Risk & Opportunity – the Ansoff Matrix
3. Product development
(existing markets, new products):
- developing new products for to the same market
- old product but new to the company
- Eg., McDonald's within the fast-food industry, but
frequently markets new burgers.
- when a firm creates new products, it gain new
customers for these products.
- new product development, a crucial business
strategy for firms to stay competitive.
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Balancing Risk & Opportunity – the Ansoff Matrix
4. Diversification
New products to new customers. Two types of diversification,
a) Related diversification - remain in a market which we are
familiar. Eg., a soup manufacturer diversifies into cake (food
industry).
b) Unrelated diversification - we have no previous industry nor
market experience. For example a soup manufacturer invests in
the rail business.
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Balancing Risk & Opportunity – the Ansoff Matrix
4. Diversification
- (new markets, new products):
- Virgin Cola, Virgin Megastores, Virgin Airlines
- Telecommunications are examples of new
products created by the Virgin Group of UK, to
leverage the Virgin brand.
- This resulted in the company entering new
markets where it had no presence before
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Balancing Risk & Opportunity – the Ansoff Matrix
4.
Diversification
Federal Express (FedEx):
-
door 2 door service,
smaller shipments
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Balancing Risk & Opportunity – the Ansoff Matrix
Lesson From Ansoff Matrix
To achieve the correct balance between risk &
opportunity:
1. Firm must have product that fit into each of the
four boxes
2. Need establish product &market for short term
profit
3. To grow business must create new product &
market
Aviation Management
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Product Analysis
In Airline Marketing
AIRLINE MARKETING
Fleet & Schedules-Related Product Features
1.Cabin Configuration & Classes of Service
LCC airline (trade-off between comfort and price)
– single class, to put as many sits
- Safety is not a major concern
- Lack of pax comfort
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Fleet & Schedules-Related Product Features
2. Network, Frequencies & Timing
(compromise between product quality & cost)
-Routes are more often regulated
-Frequencies are also determined by regulatory factors
-Timing eg. Long haul not stop, now more efficient by
the introduction of new aircraft B777 and A330
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Fleet & Schedules-Related Product Features
3. Puctuality (trade-offs cost vs. punctuality
- New aircraft vs old/2nd hand (replacing policy)
- Invest in Auto-Landing-Capability for poor visibility
condition
- Scheduled maintenance & sufficient spares
- Schedules Planning: max aircraft utilization, low cost
- Punctual arrivals importance: connections, business
meetings, emergencies
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Customer Service-Related Product Features
1. Point-of sale service
-travel agent
- Global distribution system –computer reservation
- Internet bookings
Aviation Management
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Product Analysis
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Customer Service-Related Product Features
2. Airport Service
-
Low-fare airlines
Few counters, longer check-ins
No seat numbers
Traditional Airlines-frequent buss traveler
Limousine service
Check-in & transfers services
Preferential baggage service
Departure/arrival lounge
AIRLINE MARKETING
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Customer Service-Related Product Features
3. Inflight-service
-
Wider seats & aisle
Inflight cabin service
Food & bevereges
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
The Air Freight Market
1. Air Freight Capacity
-
Cabin door size: length and square sizes
limitations
Design density: weight capacity & volume
metric
Special freighter aircraft
Aviation Management
College
Product Analysis
In Airline Marketing
Lesson Learnt
AIRLINE MARKETING
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING
Aviation Management
College
Product Analysis
In Airline Marketing
AIRLINE MARKETING