The Importance of Marketing in the U.S. Aviation Industry

The Importance of Marketing in the U.S. Aviation Industry
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Table of Contents TOC \o "1-3" \h \z \u HYPERLINK \l "_Toc70355976" 1.0Introduction PAGEREF _Toc70355976 \h 3 HYPERLINK \l "_Toc70355977" 2.0Development of the Marketing Concept PAGEREF _Toc70355977 \h 3 HYPERLINK \l "_Toc70355978" 3.0Marketing Mix in Aviation Industry PAGEREF _Toc70355978 \h 4 HYPERLINK \l "_Toc70355979" 3.1 Product PAGEREF _Toc70355979 \h 4 HYPERLINK \l "_Toc70355980" 3.2 Price PAGEREF _Toc70355980 \h 4 HYPERLINK \l "_Toc70355981" 3.3. Promotion PAGEREF _Toc70355981 \h 4 HYPERLINK \l "_Toc70355982" 3.4 Place PAGEREF _Toc70355982 \h 5 HYPERLINK \l "_Toc70355983" 4.0Consumer-Oriented Marketing Concept PAGEREF _Toc70355983 \h 5 HYPERLINK \l "_Toc70355984" 5.0Marketing Strategies and Trends PAGEREF _Toc70355984 \h 6 HYPERLINK \l "_Toc70355985" 5.1 Direct marketing PAGEREF _Toc70355985 \h 6 HYPERLINK \l "_Toc70355986" 5.2 Travel agents PAGEREF _Toc70355986 \h 6 HYPERLINK \l "_Toc70355987" 5.3 Computerized reservation systems (CRSs) PAGEREF _Toc70355987 \h 7 HYPERLINK \l "_Toc70355988" 5.4 Business-class services PAGEREF _Toc70355988 \h 7 HYPERLINK \l "_Toc70355989" 5.5 Frequent-flier programs PAGEREF _Toc70355989 \h 7 HYPERLINK \l "_Toc70355990" 5.6 Hub-and-spoke services PAGEREF _Toc70355990 \h 7 HYPERLINK \l "_Toc70355991" 5.7 Code sharing PAGEREF _Toc70355991 \h 8 HYPERLINK \l "_Toc70355992" 5.8 Sales promotion and adverting PAGEREF _Toc70355992 \h 8 HYPERLINK \l "_Toc70355993" 6.0Future Outlook in Airline Marketing PAGEREF _Toc70355993 \h 8 HYPERLINK \l "_Toc70355994" References PAGEREF _Toc70355994 \h 10
The Importance of Marketing in the U.S. Aviation Industry
1 Introduction
Marketing as one of the broadest areas of airline business activities involves directing the flow of services offered by different carriers to their clients to satisfy the needs of customers and achieve set goals. More than half of all employees working in major or national carriers are constantly engaged in marketing campaigns (Wensveen, 2016). Air transport service involves different staff members, including ticket and customer service agents, reservation personnel, flight attendants, baggage handlers, passengers and cargo sales representatives, catering service representatives, and market research analysts. Since marketing is more than mere selling of aviation products, a plethora of business activities such as research and analysis, forecasting, pricing, product development, advertisement, and promotion are integrated into meeting the needs of the airline transport industry. It is important to note, however, that marketing strategies that a firm adopts have to be customer-oriented, and the main objective of marketing campaigns is to facilitate competition, gain adequate market share, and above all, achieve the highest return on investment (ROI). Successful airline companies need to be customer-oriented because firms should create products and services meeting the needs of new and existing customers. The creation of such products meeting customer's needs requires market research. Marketing has become a stimulus to the introduction of innovative products in the market and research and investment. According to Wensveen (2016), in the twenty-first century, global airlines have found that extensive investment in research about passengers and destinations is critical with the increasing competition in the industry. This report introduces important concepts in aviation marketing and its significance in the United States aviation air transport industry, the development of the marketing concept, and the marketing mix in the industry. The report particularly focuses on the consumer-oriented marketing concept adopted during the post-1970s and today's marketing strategies and trends. Finally, the paper concludes with airline marketing's future outlook, drawing from personal views and opinions.
2 Development of the Marketing Concept
Before World War II, the concept of customer-oriented marketing had not been birthed, and marketing strategists executed largely product-oriented campaigns. In this early approach, customers accepted services presented to them by existing airlines. Rather than focusing on passengers, carriers were concerned with mail carriage as there were huge profits gained from carrying the mails, and there were no complaints even when they arrived late. Besides, since most people loved traveling using automobiles and railroads, demand for air travel was low, making the period a production-oriented era in the history of airline marketing (Wensveen, 2016). At the same time, airline companies were struggling to launch a new way of transport using their capital investments instead of their earnings or profits. A big blow to the marketing activities was that many airlines employed personnel who acquired technical skills in the military but lacked experience in marketing airline services. However, a period after WWII until the 1960s, the evolution of marketing strategies saw airlines providing high-quality, sale-oriented, and more frequent services to customers (Wensveen, 2016). Several airline companies entered the market to respond to the increasing demand for airline transport services during this time. However, entry into the market by more airline companies in the 1970s plagued the air transport sector that resulted in stiff competition (Wensveen, 2016). With an intensified competition in the aviation market, a marketing concept that was more focused on the needs of the customers was born in the airline business. This concept involved numerous tests and surveys on new products that were designed to understand what customers demanded. Unlike the short-gun approach of sale-oriented marketing, consumer-oriented marketing targets the market to identify specific customer segments that companies need to appeal to with their products and service offerings. As increasing numbers of airline companies embraced the latter approach, they realized the type and amount of activities required to reach their market targets. In marketing terms, such activities are known as the marketing mix.
3 Marketing Mix in Aviation Industry
Marketing mix encompasses varying amounts and types of controllable variables in marketing decisions that firms employ in their campaigns at a given period. In marketing terminology, these variables are known as the “4Ps,” an acronym for product, price, promotion, and place (Wensveen, 2016). Businesses can control the four elements or marketing actors in reaching their target markets. Therefore, business activities aimed at directing the flow of services to their customers must focus on the 4Ps. Since these factors are present in almost all marketing scenarios, the task of airline marketing strategists and marketers is to determine the magnitude of emphasizing a particular element rather than choosing any one of them from the list. However, the aviation industry is faced with challenges of variables that are beyond its control, including social and cultural differences, regulatory and political climate, economic factors in countries of operation, existing structures of competition, company resources, and goals of top executives. Therefore, while designing a marketing strategy, it is critical to consider both controllable and uncontrollable variables in the market. This section describes and analyzes the marketing mix or the 4Ps and their relevance in the aviation industry.
3.1 Product
Rather than defining a "product" as a physical item with a specific appearance and use, the term "product" in the marketing mix refers to the psychological, functional, convenience, reliability, and aesthetic qualities of goods or services that customers buy. In the context of the aviation industry, airline products include convenience, reliability and on-time, safety, cabin, ground service, and availability of seats. In this respect, product in the airline transport market looks at the kind of airport infrastructure, aviation products and services, and available facilities (Wensveen, 2016). Besides, the product aspect of 4Ps also describes the level, range, and quality of airline services that would drive customers' decisions to select one airline over another.
3.2 Price
The strategy used in establishing pricing in the aviation industry determines the uptake of products and services by customers. Such pricing strategies could be based on costs, value, target margins or returns, buyer psychology, market, or a combination of the factors (Wensveen, 2016). In setting prices, airline owners also consider how the competitors will react to their pricing strategies, and pricing is a critical element in the customers’ process of choosing a specific airline.
3.3. Promotion
Promotional activities provide an effective means for carriers to communicate with their customers. Airlines can devise a robust advertising strategy that combines various marketing tools to drive consumer demand. This includes creating loyalty programs like frequent flier programs which reward customers for being repeat clients. Customers have the opportunity to accumulate points then redeem them for air travel. In this way, an airline can draw more clients to their business (Wensveen, 2016). Other strategies include offering customers give away items, sweepstakes, and price discounts. An advertising strategy should also include travel agencies which can use their sales personnel to inform prospective clients of the latest offers. The ultimate target for promotional programs to airline companies is to boost revenue by demonstrating to potential customers the superiority of the airline service (Wensveen, 2016). Promotion is a continuous process as the airline must ensure customers know the services and can be found at the right price, place, and time and retain and expand their customer base.
3.4 Place
Airline services must be readily available to customers to ensure they can access their product whenever they want. This means an airline should invest in convenient offices both offline and online where customers can get travel information and book flights. Sales offices can be strategically located in a city, for example, near the airport or along a major city street. Sometimes, airlines can use portable booths in office buildings to provide a place for purchasing air tickets. Over the decades, travel agencies have emerged as a critical component of the place element in the airline marketing mix (Wensveen, 2016). These entities organize various trips, vacations, or tours in conjunction with airline companies. They effectively sell air transportation for carriers, and customers can know the right place to purchase the product. However, with the rise of the internet, many airlines have embraced direct selling, eliminating a travel agent in the process. Many reputable airline websites are now available such as Priceline, Orbitz, and Travelocity, which provide customers with the best travel offers and online booking services.
4 Consumer-Oriented Marketing Concept
The 1970s marked a period when the airline industry matured and consumer-oriented marketing concepts gained significance which abolished the production-sales-oriented marketing concepts (Wensveen, 2016). At this stage, the weaker competitors collapsed, and the industry was composed of more stable competitors with extensive knowledge of the market. As a result, airlines saw the need to understand customer’s requirements, enabling them to create products that will stimulate their demand. This necessitated thorough market research to identify their interests. The customer-responsive approach would help them develop personalized services that will attract more clients to their airlines. The airlines needed to learn some of the pertinent i...