The aeronautical industry requires good marketing strategies to promote its services just like any other industry. Businesses that offer flight charter services need cutting-edge business-to-business marketing policies in order to remain ahead of the competition. Airlines and aircraft manufacturers marketing strategies requires a disciplined approach that ensures returns on investments (ROI) and realization of organizational goals. Marketing airline products and services can be a complex task because it targets consumers and organizations with above-average purchasing power. Essentially, airline companies must have strategic Business to Consumer (B2C) and Business to Business (B2B) marketing policies. Airplane manufacturing companies such as Airbus and Boeing purchase decisions from airlines such as Malaysia Airlines and American Airlines and hence return on investment (ROI) is a critical focus for corporate decision-makers. This paper examines the various B2B marketing strategies used by airlines and aircraft manufacturers to remain afloat in this era of cutthroat business competition.
Market segmentation and positioning is an important foundation for successful B2B marketing in the aviation industry. According to Fill and Fill (2005), market segmentation in B2B markets is a technique of identifying a segment of potential customers who have similar characteristics which can be used to explain and predict responses to market changes. The basis of market segmentation is broadly based on market and buyer characteristics (Martin, 2011). Segmentation, targeting and positioning (STP) enables airplane manufacturers such as Bombardier, Airbus, Boeing and Embraer to develop distinct marketing programs for each of the identified segments. The relationship between Boeing and American Airlines has sustained business partnership between the two companies since 1936. Ray Conner, president, and CEO of Boeing Commercial Airplanes concedes that the trust between American Airlines and Boeing built over the years has inspired the plane manufacturer to develop and deliver value airplanes that have enabled the premier Airline to remain on top of the competitive business environment (Boeing, 2021). The main target for Boeing Commercial planes is American Airlines which was among the premier commercial passenger airlines. Over time, the commercial airline segment has expanded and Boeing sells commercial planes such as Boeing 737 Max and Boeing 777 to Qatar Airways, Turkish Airline, Air France and Malaysia Airlines. Strategic market segmentation promotes satisfactory B2B business relationships in the aviation industry.
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Product segmentation and differentiation is an important B2B strategy used by airline manufacturers to sell their products to airlines (Martin. 2011). Engineered-to Order (ETO) designing is used to enhance product differentiation and add value across the range of products (Fill & Fill, 2005). For instance, the product niche of Airbus comprises commercial passenger aircraft with a fleet capacity of between 100 to 600 seats ideal for international flights. Passenger aircraft contribute to over 70 percent of the total revenue of the company. Embraer manufactures aircraft with a passenger capacity of up to 124 seats hence ideal for local flights. Additionally, Airbus manufactures Airbus defense and space and helicopters Boeing on the other hand manufacture a variety of products ranging from commercial, defense, and space aircraft. One of the outstanding features of Boeing is that it offers support to customers throughout the product cycle spanning from aircraft acquisition, maintenance and engineering, upgrading, and transitioning their clients to new models. Product differentiation distinguishes the various airplane manufacturers and offers airlines a variety to choose from depending on organizational needs.
An all-inclusive branding approach ranging from designing, developing to implementation of marketing programs creates a reputable corporate culture which is critical in B2B marketing. Branding is a method used by businesses in packaging of information in order to create product or service differentiation, positioning, and competitive advantage (Fill & Fill, 2005). According to Holt (2002), branding is a strategic endeavor guided by a strategic view that to form and leverage the overall perception of the culture of the product. The importance of creating and sustaining a strong brand in the aviation business cannot be overemphasized. One of the critical considerations in the aviation business is safety, reliability, dignity, and dependability. Safety relates to the architecture, technology used, and economic sustainability in the manufacturing of airplanes. On the other hand, dignity, reliability, and dependability relate to the services offered by airlines. Given the interrelationships between charter companies and airplane companies, a strong brand is a hallmark marketing strategy. Boeing and Airbus have operated as a duopoly in the manufacturing of commercial planes for various airlines. They are synonymous with high capacity and safe commercial planes which have forged lucrative business partnerships with leading airlines such as Malaysian Airlines, Qatar Airways, American Airlines, and Turkish Airlines. The high-capacity planes have maintained commendable safety levels as shown by the minimal air crashes. These two companies have a safety tag because their branding is premised on the use of cutting-edge technology in manufacturing of airplanes and hence the preferred brands by airlines. To foster a strong brand, Airbus invests two billion euros annually in eco-innovation research. The aim is to reduce carbon dioxide emissions from Airbus Aircraft up to 50 percent by 2050. However, the recent plane crashes of the Boeing 737 Max greatly dented the good brand of the company. All airlines grounded Boeing 737 Max passenger airliner in March 2019 due to safety concerns. Later that month, All the 387 aircraft were banned from service denting the good image and culture of Boeing. Evidently, a good brand goes beyond a public perception to quality and safety. Therefore, branding is an important B2B marketing strategy because it positions an organization using its unique product attributes.
Sustainable aviation is anchored on eco-efficient economic, social, and environmental bearings. To address the eco-sustainability, Airbus entered into eco-partnership which has proved critical in effective B2B marketing of their products (Schneider et al., 2013). Airbus works in collaboration with airlines to develop sustainability in the aeronautical industry. For instance, Airbus entered into a partnership with Air France in 2011 that launched the first perfect flight in the world. The core elements of the agreement were the use of fuel-efficient jetliners, sustainable aviation fuels, streamlined ATM procedures, and optimized operations. Further, in March 2021, the two companies joined forces with Total and Groupe ADP to launch long-haul flights powered by Sustainable Aviation Fuel (SAF) (Air France KLM group, 2021). The agreement has since fostered business activities between Airbus and Air France.
Pricing is a key determinant of an efficient B2B marketing strategy in the aeronautical business. This critical business component is critical in driving business volumes between the charter companies and commercial airline manufacturers. Buying an airplane can significantly dent the cashflows of airlines. Because airlines require a fleet of aircraft to grow and expand revenue, acquiring them can ground business operations due to their expensive nature. Since aircraft are expensive to buy, airlines opt to lease due to the lower overall costs (Fill & Fill, 2005). The lessor includes companies that manufacture aircraft such as Boeing, Embraer and Airbus or companies which purchase airplanes from the manufacturers. The leases attract monthly rental fees over a fixed period of time. Leasing is convenient because business operations continue unperturbed by otherwise hefty cash outlays which would stagnate operations in case of purchasing. The operating leases create value for both the lessee and the lessor. Wet leases include aircraft, crew, maintenance, and insurance all provided by the lessor. Damp leases which are common with Air Belgium include aircraft, flight crew, and maintenance from the lessor while the lessee provides cabin crew. Leasing enables airlines to keep low debts and achieve greater financial agility.
Airline manufacturers use tie-ups with various international carriers to market and distribute their products (Schneider et al., 2013). The distribution of aircraft includes spare parts too which are strategically located for ease of access. Boeing sells their product in tie-ups with airlines such as Air India, Jet Airways and Lufthansa. Their distributions which are strategically located in ten different places significantly reduces shipping costs and reduces delivery time.
E-commerce is a strategic B2B marketing tool which involves online transactions and exchange of information. Fill and Fill (2005) define e-commerce as the online buying and selling of goods and services or transmission of funds or data. It ensures high transaction speeds and security of data shared. The tremendous potential of e-commerce has enhanced business transactions and promoted efficiency in the transmission of knowledge in the aeronautical industry. Big data processing, communication, and transactions via the internet have helped aircraft manufacturers such as Airbus and Boeing predict demand and supply cycles and hence determine their production levels (Schneider et al., 2013). On the other hand, airline companies are able to model demand for airline services and make strategic decisions of satisfying the projected demand and supply. American Airlines pioneered the computer-reservation system of tracking seats availability for the hundreds of flights operated daily. This service has not only revolutionalized customer experiences in ticketing and pricing but also consolidated global aircraft data. This data is a critical marketing tool especially in the acquisition of new aircraft where trade volumes are used to negotiate leases. E-commerce has streamlined operations through customization of airline services which in turn enable aircraft manufacturers to custom-design aircraft for the different market segments. Business to Business costs has been reduced by a tune of between 5 – 20 percent through efficiency in tendering processes, ease of communication, and online learning. The e-marketplace has significantly helped airlines and aircraft manufacturers customize consumer services and manage revenues.
Business intelligence (BI) systems are widely used as a marketing tool in the aerospace industry. This strategy involves analysis of data of an organization to come up with strategic initiatives (Fill & Fill, 2005). Airlines use data modeling techniques and data management tools to make strategic decisions. Web-enabled databases facilitate real-time wireless communication and exchange of information. The intelligence system has a heightened response to customer requests and service feedback. Search and retrieval of information through the business intelligence systems helps in identifying potential buyers and possible collaborators in the aviation industry. Data integration incorporates supply chain, production, sales, and effective communication that warrants desirable integrity in business transactions (Martin, 2011). Airbus uses business intelligence systems in designing aircraft that are environmentally friendly (Airbus, 2021). Virgin America uses deep data analysis to design 3D printed aircraft that are lighter, consume less fuel, and have low carbon emissions Importantly, Airline manufacturers prescribe plane repair and maintenance using business intelligence systems. Airlines use business intelligence systems to process big data and obtain information that they use in making strategic marketing decisions that address organizational and customer needs.
Business to Business (B2B) marketing in the aeronautical industry uses a mix of various strategies. The main strategies discussed include market segmentation and positioning, product differentiation, branding, pricing, e-commerce, business intelligence systems, and eco-efficient partnerships. Owing to the cut-throat competition in the industry, airlines ad airline manufacturers employ a mix of several strategies to achieve a competitive advantage. Additionally, organizations in the industry are engaged in relational exchanges hance playing a complementary role. This strategy is essential in developing long-term organizational interrelationships between airline charter companies and airline manufacturers. Technological advancements have eased the supply chain process and enhanced accountability, efficiency, and innovation.
References
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Boeing: American Airlines' Partnership with Boeing. (2021). Retrieved 28 May 2021, from https://www.boeing.com/commercial/customers/american-airlines/new-american.page
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