Aviation Management College AIRLINE MARKETING Aviation Management College Product Analysis In Airline Marketing

Aviation Management College Product Analysis In Airline Marketing

Aviation Management College What is the Product of Airline Business? Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College What is the Product of Airline Business? An intangible one

Aviation Management College Product Analysis In Airline Marketing Aviation Management College Product Life cycle Introductory stage New product Less promotion 60% to 70% failure Eg., Concord, Boeing 717, Airbus 318

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Product Life cycle Introductory stage - success factors - Relative advantage – better, value for money than the replacement Compatibility – gradual change vs. radical change Complexity – easy to use or to adapt Divisibility – with smaller steps or trial basis Communicability – easily understood, and accepted

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Product Life cycle b Growth Phase Sales accelerate Advertising & promotion bare fruits Benefits from imitation buying

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Product Life cycle b Growth Phase - challenges Production rates increases to meet demand Competitors are responding with rival product Operating cost increases with sales and production Balance growth between meeting demand & over production/expansion

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Product Life cycle c) Maturity stage Sales begin to slow down Most people have got it Market saturated with competition Market changes from growth to replacement

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Product Life cycle Maturity stage – responding to challenges Developing and introduction cost have been recovered Still able to make profit at lower prices Enjoys economies of scales Production efficiencies Increase financial flexibility

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Product Life cycle c) Maturity stage- challenges Use R&D to produce new product Replace product before abandoning Produce for other

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Product Life cycle d) Decline stage - Market stop buying A lot of rivals Stop producing and slowly withdraw from market

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Product Life cycle d) Decline stage – challenges R&D during maturity stage – going concern Replacement available before declining stage Product introduction at declining stage

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Product Life Cycle in Aviation Industry Boeing 737 - started 1960 737-100 sales was poor - 1972 financial crisis worsen situation - Continue R&D 1970 produced 737-200 - Sold 200 planes in 10 yrs - 1980 maturity stage & competition A320 - Early 1980 introduced -300,-400,-500 - Until 1990 sold 2000 planes

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Product Life Cycle in Aviation Industry Boeing 737 - cont 1994 threat from A-319,318,321 Launch 737-600,-700,-800,-900

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Product Life Cycle in Aviation Industry PLC of Frequent Flyer Programmes (FFP) 1981 introduction by AA 1990 Growing with millions of members 2000 Maturity, other Airlines join in now moving to Decline stage,

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Product Life Cycle in Aviation Industry Frequent Flyer Programmes-Declining Signs irresponsible employee; unnecessary travel point awarded to corporate x-individual points converted to corporate discounts Points can be collected from other airlines - Points can we accrued by other source

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Product Life Cycle in Aviation Industry PLC of Leisure & Vacation Market Introductory stage attracts innovators High disposable income Well-educated Adventures, willing to try new purchases Status conscious Showy characters

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Product Life Cycle in Aviation Industry PLC of Leisure & Vacation Market b) Growth stage of Innovators New destination Exciting adventure Interesting events Good package Image advertisement High price

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Product Life Cycle in Aviation Industry PLC of Leisure & Vacation Market c) Maturity stage of Innovators More people are joining the package Affordable to the mid-low income travelers Becoming crowded and noisy

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Product Life Cycle in Aviation Industry PLC of Leisure & Vacation Market d) Decline stage of Innovators Product become old-fashioned Lack privacy and exclusivity Operators concerned with volume Service and quality declining Market full of laggards

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Product Life Cycle in Aviation Industry PLC of Leisure & Vacation Market e) Introductory stage attracts Laggards - the last to adopt an innovation. typically tend to be focused on “traditions”, lowest social status, lowest financial fluidity, oldest of all other adopters, in contact with only family and close friends,

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Product Life Cycle in Aviation Industry PLC of Leisure & Vacation Market e) Introductory stage attracts Laggards

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College 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

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Managing a Product Portfolio – Boston Box WILDCAT - Characteristics Product with low market share The overall market is growing Invest to increase market share Using ‘4 Ps’ of Marketing Mix

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Managing a Product Portfolio – Boston Box 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 Aviation Management College Managing a Product Portfolio – Boston Box

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Managing a Product Portfolio – Boston Box 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

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Managing a Product Portfolio – Boston Box 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

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Managing a Product Portfolio – Boston Box STAR – product investment Advertising & promotion Pricing strategy; competitive High volume sales Thin profit margins

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Managing a Product Portfolio – Boston Box 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 Aviation Management College Managing a Product Portfolio – Boston Box 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

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Managing a Product Portfolio – Boston Box 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

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Managing a Product Portfolio – Boston Box 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 Aviation Management College Managing a Product Portfolio – Boston Box 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 Aviation Management College Managing a Product Portfolio – Boston Box DOG PRODUCTS – characteristics Low market share Market is small & not growing Ready to discontinue product - No spending, money used for other product -

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College 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 Aviation Management College 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 College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Balancing Risk & Opportunity – the Ansoff Matrix

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College Balancing Risk & Opportunity – the Ansoff Matrix 1, Market Penetration Here we market our existing products to our existing customers. This means increasing our revenue by, for example, promoting the product, repositioning the brand, and so on. However, the product is not altered and we do not seek any new customers.

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College 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 Aviation Management College Balancing Risk & Opportunity – the Ansoff Matrix 2. Market Development Here we market our existing product range in a new market. This means that the product remains the same, but it is marketed to a new audience. Exporting the product, or marketing it in a new region, are examples of market development.

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College 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 Aviation Management College Balancing Risk & Opportunity – the Ansoff Matrix 3. Product Development This is a new product to be marketed to our existing customers. Here we develop and innovate new product offerings to replace existing ones. Such products are then marketed to our existing customers. This 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 Aviation Management College 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 Aviation Management College Balancing Risk & Opportunity – the Ansoff Matrix 4. Diversification New products to new customers. Two types of diversification, Related diversification - remain in a market which we are familiar. Eg., a soup manufacturer diversifies into cake (food industry). 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 Aviation Management College Balancing Risk & Opportunity – the Ansoff Matrix 4. Diversification - (new markets, new products): Virgin Cola, Virgin Megastores, Virgin Airlines, Virgin 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 Aviation Management College 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 Aviation Management College Balancing Risk & Opportunity – the Ansoff Matrix 4. Diversification Market completely new products to new customers. Two types of diversification, Related diversification - we remain in a market or industry which we are familiar. For example, a soup manufacturer diversifies into cake manufacture (i.e. the food industry). 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 Aviation Management College Balancing Risk & Opportunity – the Ansoff Matrix

Aviation Management College Product Analysis In Airline Marketing AIRLINE MARKETING Aviation Management College