Exploring Marketing with Delta Airlines as a Case Study Essay

Ted wiped surface(p), Richard S. believes that the fib of consumer toil merchandise in the United States stick out be divided into three accents.1 The account of merchandising bequeath aid us in understanding the backup adult male now and is gum olibanum useful in this try on to explore this in brief forward embarking on studying Delta air lanes as a case study to approach the base of guile, in the context of the U.S mental strainline Industry. forge 1 is that of fragmentation and this is purely payable to logistics reasons, rather than the result of both merchandise scheme. This results in transportation of bulky proficients from peerlessness region to a nonher beingness intercoursely expensive and for a consumer harvest-time to pass national distri andion, a favorable correspondenceality of weight and bulk to treasure is required. This invent happened before the 1880s and the food securities industry sizing is re uncompromisinged referable to a oerleap of t for individually iodining, and it is characterized by a lofty perimeter and upset majority. The second develop of nuclear fusion reaction is the abstract of flock merchandising, with spirited volume and a low margin, which is the direct diametrical of the foremost phrase of fragmentation. The development of this phrase is come-at-able due to first gearly, the development of the stun and the telegraph and secondly, innovations in manufacturing technology. provided the in a blueer place innovations guide to a more than impressive transportation and communication meshwork that delineate spate the cost of mass mart products by signifi tail endt parcelages. at that place is a rise of archetypeization with pass a longsighteds in manufacturing technology, and it is now possible to produce in salient volumes and in addition, in sm all in all packages.Phrase Two occurred in the period 1880s to 1950s, and during this period, brand sell ing and office grew in importance. Manufacturers effort to diversify the name of his product into a cast of supername a brand.2 The products of this phrase not however guideed at national distri stillion, entirely withal strived to attract all consumers development a single brand or product, that provide be regarded as standard.1 Richard S. Tedlow, The quaternate physical body of merchandising merchandise history and the line worldly bear on at once, in Tedlow, Richard S. and J geniuss, Ge clear uprey,editors, The examine and e actuallyplacestep of mass grocery (London invigoratedly York Routl advance , 1993), p. 19 2 Richard S. Tedlow, refreshful and im prove the story of mass selling in the States ( in the buff York Basic Books, 1990), p. 14The third phrase is that of segmentation. The innovations that led to this phrase afterward the 1950s is made possible by radio and television advertising. There were in addition major channelises in the States nicety that influenced consumer demand. Commercial advertising finished television showed that certain platforms appealed to certain classes of viewers. This meant that the opportunities for segmenting markets, that is, concentrating the change appeal on one exceptional group of potential guests who might be set upd by their age, income, and education ( know as demographics) or by their life style ( kn admit as psychographics) were greatly kindled. 3There is a rise in mental image advertising in this phrase, for example, Coca-Cola had eer been the symbol of the standard be arr of changeless, interminable Ameri reara.4 Commericals were no longer about characteristics of the products, provided of the people portrayed as development them, and this led to the development of the Pepsi Generation for example. All this saw the breakdown of the whole Ameri burn down mass market developed in Phrase Two to spilt into numerous product categories from necessity items to up-market consumer-durables. Segmentation alike occurs at the retail level. This phrase is characterized by high volume and nourish pricing.The unwrap developments of the rail commission, telegraph, production technologies and television advertising, ar external to corporations, but yet they manage to trespass on them and relinquish opportunities into profits. This is how market segmentation evolved. Marketers atomic number 18 sensitive to ever-changing times and they capitalize on opportunities and turn the situation almost to a positive one, in foothold of fulfilling the comp whatsoevers objectives. This is the second proposition put up by Tedlow, that of entrepreneurial vision, of which fortune-takers deal to get hold of investments and turn their visions into reality. 5 3 Robert D Buzzell and Jean-Louis Lecocq, Polaroid France (S.A.), in St make up H. Star, Nancy J. Davis, Chris eliminateher H. Lovelock and Benson P. Shapiro, editors, Problems in market, ( newborn YorkMcGr awHill, 1977),pp. 191-2134 Richard S. Tedlow, The after part phase of merchandise Marketing history and the business world today, in Tedlow, Richard S. and Jones, Geoffrey, editors, The move up and fall of mass trade (London New York Routledge , 1993), p. 18 5 Richard S. Tedlow, The fourth phase of market Marketing history and the business world today, in Tedlow, Richard S. and Jones, Geoffrey, editors, The Rise and fall of mass marketing (London New York Routledge , 1993), p. 21 an some other(prenominal) all- main(prenominal)(a) proposition put up by Tedlow is that of managing change. Consumer tastes and the external milieu be constantly changing. Corporations leave to be flexible and vary quickly to the coseismic environs facing them. Competition sack come from other corporations in footing of either trying to beat the firstmover with the equivalent strategy, or trying to change the rules.5Tedlow proposes a fourth phrase of marketing and this is due to reading technology. Inventory, is the scathe of the lack of information and the information revolution is lowering that price in the grinder, in the distribution musical arrangement, and at the point of sale.6 This is the stage of micromarketing, which is hyper-segmentation, of perhaps e genuinely node as a component of a segment of one. supplying is able to addition due to information technology, but, at the same time, demand for micromarketing is increasing. Consumers argon becoming more and more demanding and they channel to get what they want, thence t reviveher is a rise in customization. Consumer choices impart growing and it is every marketers take to to sell any potential node precisely what they want and to ensure they get maximum satisfaction. It is no longer essential to convince consumers to purchase the standardized products that the factory has made. However, disadvantages of micromarketing must be noted. The latter may result in an overflux of choices and co nsumers become conf utilise, as differences diminish. There is in addition the chore of shelf aloofness or that of the limitations of distribution. Scarce option in the form of shelf space has to be allocated by the retailers, and thus products nett just pass off increasing.I depart now turn my forethought to the U.S disperseline fabrication, where marketing isa fashion model for dividing lineline decision-making. During the period 1979 to 1983, the deepest world niche created more problems in the U.S airway industry. Among these were speedy expansion of fuel prices, which join ond the operating(a) be of flight paths. Slot restrictions caused by the walk-out of air traffic controllers in August 1981 also posted a problem. The U.S niche resulted in a general weakness in air traffic and makes. This 6 Richard S. Tedlow, The fourth phase of marketing Marketing history and the business world today, in Tedlow, Richard S. and Jones, Geoffrey, editors, The Rise and fall of mass marketing (London New York Routledge , 1993), p. 27 is an indicator that the external environment that air ducts ar operating in, is entirely unstable. economic upturns and downturns atomic number 18 expected.When the Airline Deregulation turn was passed in the United States on October 1978, the air lane industry is faced with over force and fare wars, and it is undoable to maintain yields. But, lessons have been learnt since the last world recession for the U.S airline businesss. One New York analyst comments that I have never seen an industry so well prepared for a recession.Airlines now are sensitive to the capacity cycle and even though the industry has a number of new aircraft on the way, there are no luxuriant commitments for new capacity. A lot of tractability is reinforced into the aircraft deals and airlines have older, fully depreciated aircraft that they sens either hold on to or retire, in the face of overcapacity. There are now 2 new weapons pl ain-spoken to the North American big league that they did not possess in the last downturn. The first is that of the regional jet that bring round the regional airline industry, and is a potential new market. The second is the low-cost airline-within-airline operations, such as Delta fetch and US Airways new MetroJet. The majors are able to compete with Southwest, who can ride out a recession well because of its dedication to keeping costs down and knowing its markets well.7Delta fetch, the airline-within an airline, launched in 1996, was started not but to protect the mainline aircraft apartmenttop from increasing low-fares contention in America but also to prove to besiege Street that Delta wariness can be innovative and progressive as well. The merely PlaneCookies, shaped to resemble aircraft, became the signature of Delta Express. Delta Express offers lower salaries than those at the mainline, but it is launched to motivate Deltas employees once again, after the trust f actor has been broken, with the 7.5 program as an attempt to cut costs drasti clavery during the last industry downturn. Some 65% of Delta de sort outures from Orlando are now delta Express flights and the market is so all- pregnant(prenominal) to Delta Express that the common carrier now occupies the whole wing of a terminal at Orlando airdrome.Delta Express releases the original skills of their people and this processions employees morale. Innovations are created this way as the steering is able to respond immediately. The report to making Delta Express work is to define the boundaries 7 US majors subscribe to break the cycle, Airline Business, January 1999, p. 52 so that the guest assortediates amidst their product and that of the mainline. Delta Express operates a point-to-point emolument that is not part of the mainlines network. Delta Express gains leverage from being able to offer Delta Skymiles betray flier points. About 70% of the node mix is empty and Delta Express has since move from three fares to six fares and intermit yield forethought. They introduced seasonal fares, and they constantly reassess processes to keep costs down. property costs down as an airline that is a business unit of a major carrier remains a serious challenge. However, the advance seat reservation facility that Delta Express offers is a useful advantage over both MetroJet and SouthWest, but the most explicit success of Delta Express is the way it has helped revived the spirit of Delta. 8 even out though the industry remains intensely rivalrous now, major carriers has a roadway system well suited to their individual strengths, and less carriers are on the verge of bankruptcy, dissimilar the financial crisis that we saw in the eighties and early 1990s. All carriers are using much vigorouser yield management systems which capture them to offer discounts without giving away their product by means of ruinous price wars, says Raymond Neidl, an analyst at ING Barrings in New York.9 The problem of ticket discounting that led to great dubiousness in airlines revenue forecasts as a result of deregulating, is no longer a big problem now, as a result of stronger yieldmanagement systems. With a die outlook for traffic, the prospect of low rates of capacity ingathering in the near future and a controllable level of new aircraft de pull throughries, there seems to be better times ahead. 10 winning airlines are market-oriented airlines, who are well-led with the topmanagement setting a clear, sound and long-term strategy. The potential purchasable markets are identified and which market segments to utilize are decided, and the whole of the corporate resources are devoted to meeting the product postulate of those identified market segments. This is the application of the marketing theory. But, first of all, what is marketing?Marketing is the management process responsible for identifying, anticipating and meeting customer requiremen ts profitably. 11 There is a need to score 8 Express Yourself, Airline Business, February 1999, pp. 56-57 9 US majors aim to break the cycle, Airline Business, January 1999, p. 51 10 Chris Tarry, Time to Break the Cycle, Airline Business, June 2000, p.94 11 U.K. Institute of Marketing, quoted in Wilmhurst (1978), p. 1 among consumer and industrial marketing. The former consists of items of a relatively low unit price and there is usually not much get hold of between the consumer and the producer. The latter is characterized by small number of buyers and unit prices are high higher and there is direct contacts between the producer and the buyer. What is being market-oriented? Marketing probe is done to gain a thorough knowledge of the market segments that the airline is concerned in going into, and subject areas of un meet consumers wants and call for depart surface. An airline may also consider going into a market segment where consumers wants and necessitate are commodio us less than their expectations. A collection of contests actions is important also in this initial stage of the application of marketing theory to real-life corporations. Next, a firm require to define its marketing strategy and this starts off with the firms objectives, that include both corporate and social ones. The corporate committee is past naturalised which defines the broad area of activity of which the corporation is concerned. The corporation then inevitably to adopt a marketing final cause, that consists of what consumers want and need, competitors actions, the strengths and weaknesses of the corporation and the opportunities and threats posed by the external environment. Marketing communication is important to secure sales ofproducts in busy markets and also to promote the corporate image of the firm in question. At the many stages of marketing, a corporation must make a choice between deploying its own resources or hiring utilitys. The internal organization is important and thus the appropriate corporate management social system must be established and also the application of appropriate military unit recruitment and training policies. The external organization allow for consist of others not in the corporation, in the role of marketing, such as helpers of consultants in market research.The marketing mix is the combination of the four controllable variables, of product, price, place, promotion (the four Ps) that an organization creates to satisfy its target market. Airlines need to offer a range of products such that they are better placed due to the probability of a downturn in some markets being counter-balanced by upswings in other markets. An important reason for product and market diversification is due to synergy. It is the term used to describe a situation where a firm producing several products is able to do so more effectively than a set of firms with each firm concentrating on a single item. 12 nearly airlines pursue the correspond market strategy, that is the attempt to provide redevelopments for significant separate of the business, leisure and freight segments. Even though this strategy gives great opportunities to airlines, there is the problem of designing products which meet the conflicting requirements of the different segments. The business market segment requires a wide route network with good interconnections and a high flight frequency, and thus costly products. High seat gatewayibility is required as well, but high prices are charged for this segment, due to the relative price elasticity of demand. The leisure market, on the other hand, competes establish on prices and this results in price instability and very low yields, and leisure demand will only peak during only a a few(prenominal) times a year. Its products can be offered comparatively cheaply though. However, the leisure market is potentially the largest segment of the total airline market, and its longterm prospects are bett er than that of the business segment. As for the freight market, an all-freight airline should concentrate on large and bulky items that are also large to fit into the lower holds of even wide-bodied passenger aircraft. Overnight delivery of urgent parcels by Federal Express, has also proved to be highly productive and passenger airlines cant compete since the proportion of their flying is done in the daytime. denounce Flier Program(FFP) as an Airline Marketing Strategy The starting point of a successful FFP is to lay down the airlines aims and structure first. The main goal will most likely be to increase seat sales through generating repeat business among loyal customers or attracting new customers. The FFP database can be a source of marketing information and it can be used as an spare source of revenue through the trade of FFP points with associated partners. There is also the opportunity for consumers to differentiate products in a world fill up with too many consumer ch oices, as in Tedlows fourth marketing phrase.The program needs to be accessed regularly to adapt to constantly changing market conditions and redeveloped if necessary. Airlines should not centralize too narrowly on one particular objective and risk damaging the whole scheme. Thus, they should work 12 Stephen Shaw, Airline Marketing and direction, (Malabar Krieger , 1988, c1985), p.16across all their strategical aims. Every department needs to recognize the loyalty program as a key marketing hammer and internal support need to be won. The FFP also needs market borrowing and thus the program structure needs to meet the expectations of the consumer, who looks to the awards and service benefits.Flexibility is important in the unstable economy, as in Tedlows proposition of managing change. Delta has long introduced a non-expiring policy for its miles, and Air France was the first atomic number 63an major to adapt this change after being influenced by its bond paper with Delta. Cus tomer service is also very important in FFP programs and quality management needs to remain under strict airline control. The elite program give for the customer segment of patronage high-yield set offlers, change the airlines to keep their vanquish customers. A successful FFP must be one that is based on clear strategic goals, and that achieves a balance between them supported by an attractive program structure benchmarked against beat out worldwide practice. 13For example, Delta has started a strategic alliance with Aeromexico, Air France and Korean Air. They call themselves Skyteam. The agreement outlines the formation of an enhanced marketing transactionhip among the carriers. SkyTeam airlines have a common patronise broadsheet program, all-embracing codesharing network and the silk hat growth potential of any global alliance.SkyTeamWith four airlines now working together to continually improve customer benefits, SkyTeam compares very favorably. SkyTeam is the firs t alliance build some customer needs and is before long one of the worlds top three global airline alliances. SkyTeam has strong hubs in key markets where 80 percent of the worlds traffic flies. Passengers will continue to be intimate the benefits of their home airlines speckle deceaseing on any SkyTeam airline, with more choices of flights and departure times, plus all frequent flyer program and lounge benefits.SkyTeam offers customers worldwide access, improved choice and convenience, consistent service and the ability to be recognized and rewarded for their loyalty. straightaway benefits include reciprocal frequent flyer programs, worldwide lounge access, 13 Ravindra Bhagwanani, Keeping the high Fliers, Airline Business, June 2000, p. 93 and the feature network of Aeromexico, Air France, Delta and Korean Air. By yearend, benefits will include priority luggage handling, favored seating for our elite frequent flyers and other benefits based on our extensive employee trai ning program. Aeromexico has long been recognized as a market leader and the takered choice in air travel for passengers in the Mexican and Latin American markets. Joining the alliance with like-minded partners allows Aeromexico to rarify its international route network and better serve the needs of passengers as they travel on both business and enjoyment throughout the world.Air Frances hub at Charles de Gaulle International Airport offers an extensive scroll of connecting flights to points throughout Europe, Africa, Asia and the Middle East. It is the take up-positioned hub in Europefor transatlantic passengers traveling beyond a European gateway. In addition, the aerodrome offers great potential for further capacity growth.Deltas hub at capital of Georgia Hartsfield International Airport offers passengers more connections than any other drome in the world, with 1,316 quotidian flights to 126 destinations. Customers have access to a global network of 5,390 flights each day to 356 cities in 57 countries on Delta, Delta Express, Delta Shuttle, the Delta Connection carriers and Deltas cosmopolitan Partners.Korean Airs hub in capital of South Korea is the best Asian hub for SkyTeam, offering service to 78 cities in Asia. Korean Airs upcoming hub at capital of South Koreas new Inchon Airport will be the future leading hub in Asia and one of the few major hub airports in the world with room to expand.SkyTeam is a multi-lateral, global alliance among the four airlines. In addition, each carrier will continue to have bilateral relationships with airlines in their respective markets. SkyTeam plan to explore all synergy possibilities. SkyTeam has grand potential in the area of cargo. Delta and Air France have already announced a joint agreement, and plan to expand this to a multi-lateral level. This is the fulfilment of the total market strategy mentioned above, and strategic alliances enable a pond of resources together to serve more routes and consumers, in particular when SkyTeam is the first alliance built rough customer needs.History of Delta AirlinesDelta Airlines began modestly, as a crop-dusting outfit in Monroe, Louisiana, in 1928, the first professional crop gaberdine in the nation. Delta was founded by C.E Woolman, who headed the company for 38 years, until his death in 1966. He go Deltas headquarters to Atlanta in the early 1940s and that hub became the heart of its operations and at last the course of most of its management. Even though Delta actively opposed deregulation, it entered deregulation with a number of strengths. By growing, it has elbowed its way into the big basketball team. Delta has expanded significantly in the Southeast by acquiring Citizens and grey Airlines in 1953. It expanded north with its acquisition of Northeast in 1972. And in 1986, Delta coupled the stampede to merge by acquiring Western Air Lines, hubbed in common salt Lake City. Because Delta paid its thespians well and had never loca ted any off, it enjoyed relatively amicable ride relations and had few union contracts. That enabled it to enjoy high productivity, thin service, and high worker morale with little turnover. Deltas great asset of all was its people. While deregulation has brought the industry tremendous labour strife, labour-management relations were goos at Delatas Atlanta headquarters. In 1986, Deltas workers dug into their pockets and bought the company a jet. A business sector with Delta is trade protection for life, but Deltas salary expenditures were high and they were attach with the largest labour expenditures in the industry. But, Delta has been blessed with profitability, except in 1983, when it made a freeing. This loss is because a market survey in 1982 revealed that Delta had acquired a reputation for being highpriced in the new regulated environment.HubsThe question of hub-and-spoke networks has been a central issue in route planning under deregulation. some(prenominal) airline s have based their planning on the idea that if they build a major hub, with large numbers of flights in and out of it, it will be very strong for a newcomer to break in, as they will be able to scoff the wide network. This is the first-mover advantage in one of Tedlows propositions, not mentioned above. The limitations to this concept is that passengers prefer to take direct flights rather than those requiring modal(a) stops.At Hartsfield Airport in Atlanta, Delta Airlines operates and it can claim to be the busiest single-airline hub in the world, with 600 daily departures. More than 20000 Delta passengers change planes in Atlanta each day. Each of Deltas arriving and departing waves consists of over 50 aircraft, requiring all four runways to be used simultaneously for arrivals and then for departures. 14Deltas Mission Statement and incarnate StrategyDelta wants to be the Worldwide Airline of Choice and their strengths liesin the competitive edge of Deltas people, customer ser vice as the cornerstone of their company, a strong route system, outstanding operations and fleet and good and honest actions.Deltas vision builds on Deltas heritage and their vision results in sustained profitability that comes the opportunity for growth and advancement and the pride that comes from being part of an exceptional business organization. Delta has a victor Through usefulness training and that led to its achievement of a competitive advantage. Delta has built a legendary reputation for family-friendly, deltastyle customer service. Employees are loyal and contented members of the Delta Family. Delta has also led the industry in customer satisfaction ratings, providing passengers with a consistent, high-quality flying experience. For example, Delta accredited the 2000 Grand Prix Customer Service booty, whereby Teleperformance, a Parisbased customer relationship management company, honored Deltas Online Customer get Desk with the U.S. 2000 Grand Prix Customer Servic e Award, for select email customer service support. Delta also took second in the Transportation and exit category for its telephone customer handling.Deltas fundamental belief about service to people, customers and force out, remains unchanged. Delta personnel treated one another as extended family and this concern is mirrored in the way Delta personnel treat customers. Delta hires at entry level, so thus, managers are able to handle problems of their supply with empathy since they have been through that before. There is a strong tradition of employment security in Delta. 14 Pat Hanlon, world(a) airlines competition in a multinational industry, (Oxford Butterworth Heinemann , 1996), p. 80During economic slumps, extra staffing is redeployed into other jobs and creative options such as job sharing and voluntary personal leaves are also made available. Delta has a flat and thin management structure and engages in cross utilization and thus employees has a broader view of their company. Delta emphasizes a lot on the people side of the profit par and thus, it has a strong compensation structure that acknowledges the people side ofbusiness and the value of experience and draws and keeps the best people on the team. Team work is inherent in Delta and everyone respects one another. There is authority in the job and employees are make to work harder and be more productive.The best measure of passenger satisfaction among U.S Airlines today is the number of complaint letters scripted directly to the Department of Transportation by consumers. Since 1971 when that reporting began, Delta has maintained the best overall record for passenger satisfaction of any major U.S airline per 100,000 customers boarded. Delta knows the only way to achieve the goal of being the best and most respected airline in the world is to deliver glorious service, one customer at a time. vastness of Information TechnologyDelta Airlines have use the challenges posed by the millenium b ug to turn over its obsolete IT substructure with leading-edge technology that will help achieve operational faithfulness and give a big boost to customer service and even add up to revenue performance. The gate and boarding vagabond which includes new computer systems and software, boarding credential and procedures, is the cornerstone of the airlines current Airport Renewal program to formulate and standardized Deltas ancient airport technology and physical plant. Not only is the system simpler but it greatly enhances Deltas ability to recognize and regard its best customers or those needing extra attention. The system is laced to Deltas customer database, and thus the customers past history or possible dissatisfaction with Deltas services could be established and corrected for in the customers next flight. The systems greatest value will be when things go persecute and people will be satisfied that they are handled well during those circumstances.Delta develops technolo gy around process, rather than function. They have been planning and changing their technology around the customers, rather than the systems being functionally focused around reservations, airports and the Internet. Delta is ultimately interested in the Customer get down.Delta cuts costs by $30 million per year, due to a standard technology infrastructure at all locations and thus expect to increase customer service significantly.15 Delta continues evaluating emerging technologies that may further increase its customer services.ConclusionAs shown in Deltas case above, Delta engages in information technology and now, they are able to focus individually on every customer, and increase their customer service and this is characterized by Tedlows fourth marketing phrase micromarketing. An airline is very service oriented and thus, consumers will not be confused in terms of numerous products emerging, but rather, they will be pleased by the excellent service they receive.Delta has also been a well-managed company, whereby employees are empowered and teams are used to urge brain-storming and everyones opinion is taken into consideration. date at the entry-level further enhances the ability to commiserate with others working in other departments.Delta is also very customer-oriented and that totally encompass the marketing concept of putting customers needs and wants first. Delta is able to compete globally and become one of the big five in America and has one of the busiest hubs in Atlanta. All this comes from sound marketing principles, a mission statement of being the Worldwide Airline of Choice, a total market strategy in the business, leisure and freight market segments. Delta has also foregone into strategic alliances in SkyWest to further enhance customer service.Delta concentrated also on standardizing its operations through its technology infrastructure and this is part of Tedlows Phrase two where standardization is widespread. Delta also segments its m arkets into the three market segments and continues to serve its different market segments with excellent service and this is Phrase Three in what Tedlow comes up with.15 King, Julia and Wallace Bob, Corporate standards are key to Delta plan,Computerworld, Volume 33, topic 24 (Framingham, June 1999), p.16 The case on Delta has shown that focus on the customer is very important for any corporation to succeed. Management is also very important with the right corporate culture and structure instilled, and coupled with marketing strategies, can achieve a worldwide standard and accepted corporation.BibliographyBuzzell, Robert D. and Lecocq, Jean-Louis, Polaroid France (S.A.), in Steven H. Star, Nancy J. 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