Question 1: Strategic marketing decision making

Question 1 (a)

What values are going to guide the airport business?

Organization culture is a shared system within people in the organization about the value and

belief or simply describe as the behavior in the organization. The shared value have strong

relationship and influence factor with the organization business activities and decision that they

will make. In this case, King County International Airport (KCIA) is the airport base in

Washington. The airport is one of the main airport there and are a lot of business activities that

been run at KCIA. Businesses run there because of the value and facilities that the management

provides.

The value of the KCIA airport is to serve the diverse set of client in the airport. The management

of the airport will ensure that the staff will provide the best service to their client using the

framework value of the organization and be their organizations strength. The value of KCIA

airport is the way of the staff treat the needs and wants from the customer. The staff will make

sure that all the demands from the customer will be fulfill. In order to fulfill the demands from

the customer the KCIA using the value statement that they have develop. Besides that, KCIA

also need to ensure that the service that they deliver to the customer is the best that they can

serve. For example, the flight is on time according to the schedule and arrive safely. By having

this value, the trust within the customer and KCIA will tougher and they will repeat to use their

service that may impact on increase in their profit and gain. To support the value that guide the

airport business become successful, KCIA using the following tools.

1. Safety – At KCIA, the safety of customer, the management hire safety organization to

control and ensure the safety level of the place is in the safest state from any dangerous

activity and people. They will have security check up before any of the outsider enter the

airport. Besides that, KCIA also been facilitate with a lot of CCTV in order to ensure they

will detect any unusual activity that happen around the KCIA.

In addition, the safety in the airport also include on how the airport management control

all the daily business activities that run at the airport. The KCIA management have their

own Standard Operating Procedure that all the business firm based at the airport need to

follow. The business based at the airport need to follow the SOP in order to ensure the

business activities run smoothly without any conflict.

2. Economic vitality – This is one of the needs and wants from the customer. KCIA offer

more job opportunity and hold major percentage of market share, so that the public may

serve the KCIA with their skill. Other than that, economic vitality is important to attract

potential customer to use KCIA product and services because before the potential

customer invest to run businesses at KCIA, they will look for sustainability.

Sustainability is when the organization are able to sustain, compete in the industry well

and have a goodwill. So it is beneficial to the new comers to park their business there. If

they think that is it worth to run the business there because of these value it will become

income and profit for KCIA.

3. Looking to the future – This is the value where the organization and airport improve and

take corrective action towards their weaknesses that relate with customer demands, needs

and wants. Their weaknesses can be shift to opportunity if they take the corrective action.

They need to find the best solution which can suit the demands and needs from the

customer but need to consider the cost incurred and profit received after the

improvement. The more the organization fulfil the customer needs, the faster they can

growth because the customer will keep repeating use the service.

4. Environmentally sound – This is the difficulties that KCIA face till todays but the

management of KCIA have work towards it to take corrective action and find a solution

not to use the main engine to process their aircraft or other business activities. They will

use small engine to run the activities which have silencer but it will incur a little cost. The

sound will not totally vanished but it only can be reduced. Yet still the organization need

to do it because current situation make the society feel uncomfortable. If they make

public comfortable with their business, the public may be the free tools of marketing to

them because they will talk about the good side of the organization to others.

5. Collaborative in community – this value can relate with the Corporate Social

Responsibility of an organization. Public want the organization to contribute back to the

society and it is one way for them to feel appreciated by using the organization product.

Besides that, on the organization perspective, it is one way on how the organization repay

back to the public on lacking activity that the organization did. In addition, this will also

be a good marketing strategy because if they collaborate with others automatically the

organization will be promoted and may create awareness to the society and user.

Question 1 (b)

How far down the road should the airport look?

The strategic marketing decision making should be evaluated on yearly basis. The performance

and progress of the airport should be evaluated from time to time. The evaluation about down the

road, is whether the performance and progress of the airport in the implementation of its

marketing strategy is going well with the airport vision, mission, and goals or not. In order to

evaluate it, there are certain criteria that should be looked into which related to delivering value

to their customers. The criteria are safety, economic vitality, looking to the future,

environmentally sound, collaborative in community, innovative, national leader, and state-of-the-

art.

In term of safety, it must be evaluated whether the airport have followed the policy of standard

safety requirement for the airport to operate, and be safe and trustable to its clients. The airport

must ensure the efficiency, effectiveness and highest safety and service quality standards of

flight infrastructures, systems and equipment. They also must provide for ongoing review of

operational processes and procedures for maximum compliance with national and international

regulations on operational safety, quality and efficiency/effectiveness and implement systematic,

regular and appropriate training for all personnel. As for example, the airport must ensure to

organize certification safety program such as supervisory fueling safety program and ramp

certification program in 3 months after the airport operates. Airport operations and safety

practices emergency management right must be done before the airport start to operate.

Vitality is understood as the state of being strong and active. In term of economic vitality, it must

be evaluated what are the desired performance the airport must achieved in yearly basis. As the

KCIA serves a diverse set of clients, it must be evaluated in one year ahead whether the airport

serves a wider set of clients or not. KCIA must target a bigger number of clients every year to

optimize its growth. Other than that, As the KCIA generates more than 10,000 jobs in the County

which is quite a lots, it is expected in one year ahead the airport should have provided more job

opportunities for the County. This is how economic vitality of the airport is assessed, based on

how much it contributes to the economy. Besides, the market share of the airport should also be

evaluated whether it is increased or not in yearly basis.

Next, in term of future vision of the airport, it must be evaluated on yearly basis whether the

airport have overcome their weaknesses and incrementally grab their opportunities. Keep

improving and growth is demanded for the airport to be better in the future. In order to do that,

they must ensure that they have overcome their weaknesses or at least, have progress to that. For

instance, in recent years, most of the KCIA tenants have experienced a downturn in business.

After the implementation of its marketing strategy, it must be evaluated how the business of its

tenants is going in yearly basis. Besides, the airport also must embrace the opportunity they have

such as KCIA owns and manages 10 buildings located on airport property that generate 26% of

the airports annual income. These buildings are leased primarily to state and local governmental

agencies. New lease and air service opportunities exist with the remodeling of the main terminal

building completed just last year. The airport must evaluate how much it gains from this action

in yearly basis.

The fourth criteria that should be evaluated in order to value the performance and progress of the

airport are whether it is environmentally sound. It must be evaluated whether the airport is

responsible to the environment by organizing the program such as The Airport Environmental

Program which helps airports implement the National Environmental Policy Act (NEPA) and

other Federal environmental laws and regulations. This includes airport noise compatibility

planning (Part 150), airport noise and access restrictions. The level of noise to the community

must be decreased from time to time and there must be an effort for it. The environmental review

for airport development must be assessed and evaluated on yearly basis. For example, if there are

reports of excessive noise to the community, it must be evaluated whether the level of noise has

been reduced by how many percentages for the following year.

Collaborative in community also plays an important role in deciding the criteria where the airport

performance and progress is down the road of its implementation of its marketing strategy.

KCIA has instituted a noise monitoring and flight tracking system, a Federal Aviation Regulation

(FAR) Part 150 Noise and Land Use Compatibility Program, and a Fly Quite Program aimed at

reducing noise in the surrounding communities. By partnering with local residents the airport

will gain the support of the local community, which offers opportunities for continued growth

and development, as well as retention of existing businesses. Besides, KCIA also has instituted a

community outreach program called Roundtable. Roundtable was set up as an advisory board to

make recommendations to airport officials, the County Executive, and County Council on issues

of importance about KCIA to the community. The airport must evaluate the effectiveness of this

outreach program for every 6 or 12 months down the road.

Other than that, the innovative of the airport should also be evaluated in yearly basis or maybe

once for every 2 years. Airports which are rich in invention and creativity are important which it

acts as gateways the world that help travellers during their time at the airport and improve the

overall passenger experience. There are certain innovative ideas that can be implemented in the

airport such as real-time flight tracking service, rolls out iPads to empower agents and reduce

queues, complete self-service bag drop solution, and install sleeping pods for the tired travellers.

These innovative idea must be evaluated by the airport down the road of its marketing strategy

implementation from time to time whether it serves its function to the customers or still relevant

or not for that particular time. Sometimes, the idea must be upgraded to keep up-to-date with the

fast technology advancement.

In term of becoming national leader, the airport aspired to market KCIA as a full service general

aviation airport. It means the airport wants to make people view the KCIA as the airport that

serves full services, facilities, and amenities needed from the airport. Besides, they also want to

market KCIA as a major air cargo facility which aspired to be the leader of the country. They

want to serve as many clients as possible more than any other aircrafts to be a national leader in

this field. The performance and progress of the KCIA in term of anything that they do to become

a national leader should be evaluated in yearly basis to ensure the airport is in the right track in

achieving its goal.

Question 1 (c)

What assumptions about the external environment underpin the airport’s strategy

(regulation, the economy, resource availability, technology, competition, and the market)?

External factor is one of the important factors that will influence the direction of an organization.

If the external factor in the way of supporting the organization, so the organization may easily

move forward and achieve their target or if not the organization may face difficulties but they

need to counter the problem well in order to success. External factor can come from various

aspect that will give advantage and disadvantage to the organization. The assumption and

prediction of external factor is to make sure the organization easily develop their business plan.

The airport business will always relate with laws and regulations. Laws and regulations are

focusing on the business activity itself and new entrance to the market. There will be some

condition and restriction that an organization needs to follow. The restriction is made up because

it may want to secure the end user that use the airport service and product. This is because most

of the businesses run at the airport are businesses that are not run at other place. For example, at

the airport there is business to post item using the air that will ensure the item arrived faster

compared using other transportation system. So in the regulation, there will state the maximum

price that the organization may charge even there are solely organizations that run such business.

Other than that, there will be government intervention for airport business. There are advantage

and disadvantage from government intervention. The advantages are the government will not

allow new entrance to open such business like airport business. So that, the organization has no

competitor conduct the business. Other than that, the government wants to secured the business

activities quality at the airport because mostly the business there is an international related

business.

In addition, the external assumption factor that the organization needs to have is from economic

perspective. The economic condition is unpredictable but to do the business plan the organization

can consider the economic condition is stable. This is because the organization can read the trend

of the economic than they can plan based on the economic trend. The organization also need not

to worry about the economic because if the economic downturn occurred the government will

help the organization by giving some fund in order to ensure the organization still operate.

Other external factor that organization needs to look at is on the resource availability. The

resource is focusing on the labor and product that they sell. The organization may assume that

there will be no scarcity to fulfill the demand from the consumer because the organization may

use their strategy to avoid scarcity. The technology advancement also is one of the external

marketing strategies that the organization needs to consider. The technology that the organization

uses will be the measurement that the organization can compete with other organization. The

technology will keep up to date and change so the organization need to coop with the latest

technology in order to run the business in the most efficient and effective way.

Lastly, the organization also needs to know their focus on target market. The organization cannot

market their product to all segment of market structure. They need to focus on certain target

market and promote it well. Then only the organization will achieve their target if they focus.

The assumption need to consider as fixed and nothing can change then only the business plan

that the organization develop can be used to run the business activities.

Question 2: Addressing products and services

Question 2 (a)

What existing and new products and services can the airport offer or not offer?

Airport products, services, and facilities of an airport are an important factor for an airport to be

competitive depending on the quality of the products, services, and facilities provided. The

range, level, and quality of aviation products, services, and facilities being provided at an airport

can play a key role in achieving the goals established for the airport.

Most major airports provide commercial outlets for products or services. These include clothing

boutique, food court and restaurants, and shops. Generally, the price charged for these products

is higher than the normal or outside airport. However, some airports have regulated costs to keep

them comparable with street prices. Airports may also have VIP services which include the

express check-in and dedicated check-in counters.

Other than passenger services, airports also move cargo around the world. Airports will have

specific terminal where international airports cargo has to be stored. Airports also have fixed

base operators, which refers to commercial entities that provide services such as fuel, catering,

parking, ground transportation, maintenance, flight planning, aircraft rental, hangar rental, and so

technology. New products or service that may be offered by an airport is including kiosk which

will incur fewer costs instead of providing new outlets or shops. Additionally, cinemas also may

be offered to passengers for entertainment while waiting for boarding.

The availability of aviation fuels is one of the key factors driving the decision of based or

transient aircraft operators to select one airport over another. By providing aviation fuels,

aviation businesses can generate revenue through fuel sales, and airport sponsors can recover

costs through fees which help maximize financial self-sufficiency. Apart from fuel, ground

transportation is very important service provided in an airport because it helps passengers to

reach the airport easily. Such ground transportation that exists in an airport including shuttle bus,

train, limousine, and taxi or cab. Maintenance is also one of the crucial activities in the airport.

Runways and transportation systems have to be maintained in order to ensure the safety of

runways and ground facilities. In terms of technology such as barcode scanner for check-in,

WiFi, X-ray machines for bag scanning, and so on are provided at the airport for the ease of the

customers as well as for safety matters.

As for KCIA, its products and services include passenger services, air cargo, fixed base

operators, airfield operations, and airfield operations. The airport provides limited passenger

service and is the primary air cargo airport in the region. It is the site for the final production and

delivery of the Boeing 737 and 757 aircraft, and a testing center for the Boeing 777 and military

AWACS program. KCIA also provides all the facilities necessary to support jet and piston

driven aircraft and helicopter activity. There are also four fixed base operators at KCIA. It is an

important part of any airport’s ecosystem, typically providing services and amenities that support

other markets such as corporate flight departments, general aviation and transient aircraft. They

are a critical element in making KCIA a vibrant, safe and secure “world class” airport.

Question 2 (b)

What criteria can the airport use to evaluate a new product or service opportunities?

Evaluating a new product or service opportunity may be crucial for an airport to attract

additional activity or business, keep existing tenants, increase the number of based aircraft and

hangars, attract passengers, solidify existing service, and pursue new air service opportunities.

There are few criteria that can be used to evaluate a new product or service opportunity.

Studying and measuring other organizations including those outside airports that demonstrate

world-class performance is an important tool. In other words, it is called situational analysis

which includes internal assessment and external assessment. Internal assessment deals with

identifying the internal strengths and weaknesses, while external assessment focuses on the

opportunities and threats presented by changes in the external environment, the structure of the

airport industry, and the airport’s operating environment.

As for KCIA, it may analyze its SWOT analysis. KCIA serves a diverse set of clients, ranging

from private pilots to large corporate aircraft operations, as well as government organizations,

retailers, wholesalers, and a variety of other services. These set of clients is very important for

KCIA to increase its income since it has a strong demand for available airfield land and facilities.

In order to keep this existing customer and providing them with new products, services, and

facilities, KCIA has to analyze the demand in the market for aviation products, services, and

facilities and compare to the capacity at the airport to identify any deficiencies.

Another criterion to evaluate KCIA’s new product or service opportunity is by looking at its

location. There are a number of business activities located surrounding KCIA. Some of the

businesses are located on the west side of the airport, while others are located on the east side.

These businesses are extremely diverse in nature and will attract new potential customers, thus

KCIA may develop new products or services.

Question 3: Addressing customers and markets

Question 3 (a)

What existing and new customer groups can the airport serve or not serve?

In order to make sure that customers use our products or services, the customers need to know

what we offers before the customers could buy the products or services. In this context, the

airport manager should define their target and it is important. Therefore, in identifying new

customers, the airport will serve existing and new customer groups by looking at the target

market and target customer. In doing that, price, profit and cost would be consider. Pricing

policy of the airport would be the benchmark of their target market other than their aim to get

revenue and increase profit. By looking at the target market, the airport would identify the price

that will be charge for the particular target market.

Building a good public relation is also what the airport should serve not only for existing

customers but also new potential customers. Earned media is one of it where many airports are

expert in getting media attention through press releases, featured articles and stories. The airport

also could be recognized by having a special awards and excellent performance. Earned media

involves radio, television, newspaper, magazines and internet.

Usually over the years, events that are common form of public relations practice by airports. Air

shows, open houses and educational programs are the usual offered by the airport because the

airport manager believes that these would build community awareness about airport, its facilities

and services offered. In doing decision, the airport manager should ask some important question

that related to the internal and external factor of the industry.

Other than that, the airport should practice sponsorship where new customers will recognize its

name as well as the existing customer would stay for the airport services. Customers are money

for the airport because the airport would not operate without customers. Apart of sponsorship,

the airport could practice volunteering which there are many good causes to support including

education, health care, housing, the environment, and others.

Building a strong community would be the positive outcome when the airport serves the existing

customers and also new potential customers with a proper attention.

Question 3 (b)

What criteria will the airport use to evaluate a new market opportunity?

There are few criteria that a business could be evaluate in looking for new marketing opportunity

which includes understanding market opportunities, measuring market opportunities and have

market segment, target and also positioning decisions. In understanding the market opportunities,

the organization required to do some research on external environment which the organization

serve and the industry that the organization in.

In evaluating a new marketing opportunity, airport managers could identify criteria through

strengths, weaknesses, opportunities and threats (SWOT) analysis which focus on the

organization’s strengths and opportunities. Meanwhile the competitor’s weaknesses would be

referred for the airport to discover its opportunities. But then, SWOT analysis fails organization

to organize the output into answers to important strategic questions. SWOT analysis would help

a business to achieve its competitive advantage as environment is also changing (Ab Talib &

Abdul Hamid, 2013).

Apart of that, increase customer satisfaction should be considered for a new marketing

opportunity. All business need to achieve customer satisfaction so that customer will use again

the services or products. As for aviation industry, customer satisfaction is really important in

terms of facilities availability, punctuality of time, low cost charge and competitive advantage

that the airport have.

In terms of increasing profit also would be the criteria used by the airport. Kiosk for instance, the

airport could gain more revenue and also no cost incur to build the kiosk. In allowing kiosk to

sell their products, the airport should filter types of products being sell. When there is high

demand of the product, then the airport should give a space for the kiosk rental doing their

business at the airport. Branded products which only could be found at the airport also should be

the competitive advantage of the kiosk to other kiosk competitors which are in other airports.

KCIA has discovered their business opportunity. Firstly, strong demand for available airfield and

facilities and then having a master plan and financial program which lead to improvements.

Next, KCIA also generate income from its services of lease, annually. Furthermore, doing their

own training and inspection reduces its expenses. Other than that, KCIA also have its

competitive advantage which are related to corporate social responsibilities (CSR) includes Fly

Quite Program, Roundtable and Opportunity Skyway. Having a Boeing’s Museum of Flight at

the airport also one of the KCIA competitive advantage where it is not a tenant and between

KCIA staff and the museum, they are airport family.

Other than SWOT analysis, the seven domains of attractive opportunities would also help airport

manager to discover new marketing opportunity. There is market attractiveness, target segment

benefits and attractiveness, industry attractiveness, sustainable advantage, mission, aspirations,

propensity for risk, ability to execute on CSFs and connectedness up, down, and across value

chain.

As for KCIA, market attractiveness which is at market domain and macro level, would be not

really a problem as it is a monopoly business that exist in the King County. KCIA also could

gain annual revenue $2.7million from the lease business. For the second domain, KCIA

managers need to discover in micro level in terms of the target segment that would use the

airport services. In this situation, the airport manager should discover their target market as well

as shows its competitive advantages that would attract the new target market. When the market is

being practice to the target market, the airport should get the customers feedback so that, the

airport could see if the decision of expanding target market is a success.

Meanwhile at the industry domain and macro level, the airport manager should look at the

industry attractiveness. In this segment, the airport manager should know its competitors in the

industry since it requires high starting cost to enter the aviation industry. KCIA has instituted a

noise monitoring and flight tracking system that makes the airport attractive among competitors

in aviation industry. This is because to have own regulation related to transport should be on par

with the regulation made by the government. Also in industry domain but at micro level,

sustainable advantage could be achieved by the airport if the airport manager discovers or

explore competencies that the airport should have to make them maintain in the industry as well

as maintain the customers. Airport branding could be the point in making customers remember

about KCIA. Implementing Corporate Social Responsibilities (CSR) for the community at the

county would be the branding for KCIA. Looking at one of KCIA strength, it gives job to the

county community which it would make the community value the airport more than its function

of serves general services for Boeing especially.

Being a team is important in achieving a goal in any organization. So, in order to achieve

KCIA’s missions, all the staffs that related to KCIA should be working together to achieve their

appropriate goals. The airport manager also needs to have the ability to execute on critical

success factors so that when a situation happened unexpectedly, the manager could recover the

conflict. Being a team should always be connected so that the team member would not lose track

and there would be a leader that could lead the right way if there is a mistake. In simple words,

relationship between those who are related to the business should be in a good condition. When

there is a good networking between each other, the airport could gain another potential customer

that could increase the airport revenue and lower the cost by gaining another supplier or

manufacturer that could be trusted.

Question 4: Addressing competitive advantages

Question 4 (a)

What factors (price and/or the various dimensions of quality) are meaningful to the

airport’s customers?

Customer satisfaction is given top priority in civil aviation industry. The highly competitive

global aviation arena causes airports to vie for the top position with lot of importance being

given to the customer service. Thus, airport managers have to retain the existing customers and

attract additional customers by taking into considerations the factors that are meaningful to them.

One of the factors that are meaningful to the airport’s customers is price. Price plays an

important role to customers because they are concern about the quality of the products or

services with the amount they had paid for them. Airport managers should identify specific

programs and practices to adopt and customize the practice, service or product to the airport. For

example, many airports now require street pricing in concession management programs.

Customers also concern about the physical environment and facilities provided by the airport.

This is another factor that is meaningful to them. Physical environment is the first thing that

people see when they enter a facility. It creates the first impression that is so hard to change later,

particularly if the impression is negative. Physical environment is used for customers to infer

facts about the aspects of an operation. For example, dirty restrooms suggest a disinterested or

disorganized management. Another example is parking which is also an issue to be taken into

consideration since it is the peoples’ first interaction with the airport.

Interaction of airport staff with customers is also important. The primary purpose of airports is to

meet the needs of its customers in a profitable or at least cost-effective manner. Failure to do this

will lead to an inefficient system. However, customer needs do change as well as for airports.

Airports should serve customers the best possible way to ensure their comfort. Staffs should be

friendly with customers so that customers will feel appreciated, for example assisting them with

smile if they need any help.

At KCIA, one of their opportunities is having a master plan for various improvement including

runway, taxiway, and environmental mitigation in support for aviation users, industry, and the

community. Other than that, KCIA also instituted a noise monitoring program and a community

outreach program called Roundtable. Another outreach program is Opportunity Skyway, which

supports KCIA’s good relation with nearby communities. The program is an airport based

education program that uses aviation to promote academic and vocational learning while

encouraging career exploration in aviation related industries. These can be considered as KCIA’s

corporate social responsibility to the community as whole. These programs will in turn present a

good image of KCIA itself, thus will attract additional potential customers. This will influence

customer perceptions of the airport.

Question 4 (b)

Which factors can represent an airport’s competitive advantage?

New possibilities for airport competition are due to the commercialization and privatization of

airports in combination with the deregulation of the aviation market. This will lead to increase in

opportunities for airport to come out with new strategies to gain competitive advantage. To be

competitive in the aviation market, an airport should first undertake a competitive analysis of the

industry through Porter’s five forces and assessing the extent of influence which an airport

operator has over the factors which affect an airport’s competitiveness. The concept of

competitive advantage causes airport managers to focus on meeting and anticipating the

expectations of airport customer’s by comparing their airport’s performance to other airport or

other transportation modes. An understanding of the competition’s strength and weaknesses is

required and it should be done through benchmark analysis. This benchmark analysis can be

used to analyze the related business located at the airport on how they may respond or pursue

their business activity. In order to be competitive in the aviation market, factors such as location,

existing tenants, capabilities and services that are already provided at the airport need to be

analyzed.

At KCIA, its strength and opportunities may help to be competitive in the aviation market. KCIA

serves a diverse set of clients, ranging from private pilots to large corporate aircraft operations,

as well as government organizations, retailers, wholesalers and variety of other services. Boeing

Aircraft Company is one of KCIA’s clients that maintain a significant production facility at the

airport. Other than that, by having the airport tenants, KCIA generates more than 10, 000 jobs in

the County and is responsible for $1.6 billion in sales. The airport supports the earning of $0.5

billion in labor income per year. Finally, $39 million in state and local taxes are generated by the

airport each year. At KCIA, there are approximately 150 businesses including air cargo,

companies, flight schools, charter operations, and helicopter operations and it is sold outside the

county economy. Additionally, KCIA has to runways and four fixed base operators. By having

these, KCIA provides all the facilities necessary to support jet and piston driven aircraft and

helicopter activity. KCIA is also an FAA-designated General Aviation Reliever Airport for Sea-

Tac International Airport, making the airport eligible for FAA reliever airport grant funding.

KCIA opportunities also may be one of the factors that contribute to KCIA competitive

advantage. It has a strong demand for available airfield land and facilities. At the same time lease

revenues appear to be stabilizing with the Boeing Company generating $2.7 million annually.

The strong demand will become the advantage for KCIA to provide new products or services,

thus will increase the income of the particular airport. Other lease revenues indicate a modest

growth while lease rates are adjusted on a three year appraisal cycle. KCIA also has a master

plan and financial program which outlines a schedule for runway improvements, taxiway

improvements, and environmental mitigation in support of aviation users, industry, and the

community. Improved facilities will attract additional activity or business and passengers to

KCIA, may keep the existing tenants, increase the number of based aircraft and hangars, and

pursue new air service opportunities. Other than that, KCIA owns and manages 10 buildings

located on airport property that generate 26% of the airports annual income. These buildings are

leased primarily to state and local governmental agencies. KCIA also has instituted a noise

monitoring system and a community outreach program called Roundtable. These two programs

can be considered as corporate social responsibility of KCIA, which represents a good image of

KCIA to the community holistically. Opportunity Skyway, another outreach program, supports

KCIA’s efforts to foster good relations with nearby communities. It also serves Federal Aviation

Administration goals to support and promote aviation education. The program is an airport based

education program that uses aviation to promote academic and vocational learning while

encouraging career exploration in aviation related industries. Additionally, KCIA is also the

location for other business activities, which some of them are located on the west side of the

airport, while others are on the east side. They are diverse in nature. These businesses include

Boeing’s Museum of Flight, although it is not an airport tenant. Several producer service

businesses with no relationship to the airport simply rent office space through KCI tenants. The

opportunity to lease more space to these types of tenants is a possibility. In turn, it will increase

KCIA annual income and can provide more job opportunities, thus being a competitive

advantage international airport.

Question 5: Addressing product and market emphasis

Question 5 (a)

In which of our current product or market areas should the airport place its greatest

emphasis (resources and attention)?

First and foremost, when we talk about the product and market emphasis of the KCIA airport, we

should focus on internal factor that could be taken into action by the management. If we look at

airport’s SWOT, the KCIA must focus on its strength and opportunity in order to know which

product and market areas should the airport place its greatest emphasis. The KCIA must analyze

what are the resources and attention that it should be concerned. After the SWOT has been go

through, by looking to the opportunity in KCIA’s SWOT, it would be a smart decision if the

KCIA emphasizes it resources and attention to leverage its location, marketplace, and resources

to achieve maximum efficiencies with regard to field capacity, the Boeing Company, industrial

land and cargo development. As the efficiency is maximized, the cost could be minimized which

consequently resulted in the increase of profit. For instance, when the airport increases the field

capacity of the KCIA, it would increase the number of clients it serves. This eventually would

generate more income for the airport.

Question 5 (b)

In what new product or market areas should the airport place its greatest emphasis?

The new product or market areas that the airport should emphasize is their new land and facility

enlargement as the majority of the KCIA revenue comes from its land and facility rent to state

and local governmental agencies. New lease and air service opportunities exist with the

remodeling of the main terminal building completed just last year will bring a lot of revenue for

the airport. If we look at the data, KCIA annual revenue in 2002 for the land and facility rent is

as big as 77% of its total revenue. That was a huge percentage for the airport that clearly justify

why they must emphasize on this in the implementation of its marketing strategy. Besides, KCIA

also owns and manages 10 buildings located on airport property that generate 26% of the airports

annual income. As it was an airport, it really makes sense for them to emphasize on its facilities

to their clients which was the fundamental reason it was built at the first place. By providing

enough facility to those who needed, it eventually will generate revenue for the airport and as the

airport makes an effort to maximize it, it will also maximize their revenue.

Question 6: Addressing strategy implementation

Question 6 (a)

What financial and non-financial measures can the airport use to assess the viability of the

strategy?

Liquidity ratio is the measurement of the ability of an organization to pay the debt within short

period or to set off the current asset with current liabilities. Basically, the higher the ratio, the

saver the organization in paying debt. Common liquidity ratio is current ratio, quick ratio and

operating cash flow ratio. If KCIA using this financial ratio, the possibility to have a good

measurement is high because their business activity will receive money every single day which is

liquid asset. Besides that, KCIA also will have a fixed income from the tenant and business firm

that operation the airport. Even though the organization have huge amount of debt, the asset may

cover the debt. So that, the organization will have a good measures that will reflect on good

viability in market.

Leverage ratio is the combination of owner’s equity and debt to finance the business activities. A

leverage ratio is evaluates the ability of a company to meet financial requirement. The main

factors considered in leverage ratio are include debt, equity, assets and interest expenses. By

using this measure, the organization are not too viable because the organization still using the

owner equity. The leverage ratio is just like the liquidity ratio but the difference is just that the

organization are using the owner’s equity. Too much debt in the organization will downgrade the

organization. As for KCIA, this formula is less applicable since the organization is well establish

and have their own assets and manage to set off the debt and cover the expenses for the

operation.

In addition, activity ratios measure a firm's ability to convert different accounts in balance sheets

into cash or sales. In determining whether a company's management is doing a good enough job

of generating revenues and cash from its resources, an organization can measure based on the

efficiency of its assets, leverage or other such balance sheet items. KCIA have a good activity

ratio because the company able to generate revenue and cash from the resource available. In

order to increase their revenue, the organization need to fully utilize the resource or do some

improvement on current assets. So that the organization will generate more money into their cash

flow.

Profitability ratios are a class of financial metrics that are used to assess a business's ability to

create earnings as compared to its expenses during a specific period of time. Having a higher

value relative to a competitor's ratio or the same ratio from a previous period is indicative that

the company is doing well. This ratio compared the profitability within other airport. As for

KCIA, the profitability ratio must be higher because the airport have several of business activity

compared to other airport which only have aircraft activities. So that, by looking at this ratio,

KCIA will have a good financial measures.

Besides the financial performance, to measure the efficiency the airport may also look at non-

financial performance which are aircraft operation, based aircraft and noise complaint. Based

aircraft is the “home” of the plan. The organization can measure the efficiency of the aircraft

operation and based operation using the level of safety and the quality of service provided

include safety arrived and punctuality. The organization may do survey on customer satisfaction

and see the rate of repeating customer using the airport service and product. As for the noise

complaint, the airport can measure it after take the corrective action by looking the number of

complaint and seek for feedback from the society.

So as for the conclusion, if the organization or other potential customer want to invest in KCIA

and they look at financial performance t will give a positive view of KCIA because the financial

performance is good. If they look from non-financial measure, it is depend on how they value it

and compare it with other organization.

Question 6 (b)

What strategy should the airport implement to ensure that departmental goals, process

goals, position and people goals, organizational design and management support the

mission of KCIA?

Marketing strategies could be different for each airport depends on the geographical location and

also its executive leadership. Economic situation also could change the marketing strategy.

Primarily, identify the target market and customer is vital in order to implement marketing

strategy. Other than that, the 4 P’s involves product, place, price and promotion are also

important. By having a scope on what to focus on, then, the strategy would be implement

accordingly.

In order to make airport manager recommend the appropriate marketing strategies for KCIA

firstly, the airport manager should understand the customers as well as analysing SWOT analysis

to ensure that departmental goals, process goals, organization design and management support

the mission of KCIA.

In defining target market, the airport manager should go to customer of aviation industry since

the services are for them and the airport offered general services to the customers. In identifying

the target customer, geographic location, customer groups, demographic and psychographic

characteristics could be used. For geographic location, the airport manager should discover the

geographic of the airport itself, how far to reach customers in the community. Meanwhile for

customer groups, the airport could focus on aircraft owners, pilots, tenants or passengers. For

KCIA, the airport serves diverse set of clients from private pilots to large corporate aircraft

operations, as well as government organizations, retailer, wholesalers and variety of other

services. The airport manager also should target customers according to demographic factor for

instance, range of profit for customer who want to rent a business space at the airport. Since

KCIA is also the location of a number of other business activities, this could increase the

airport’s revenue. Other than that, target customer based on the psychographics factor would be

based on the interest, attitudes or opinions. For KCIA, the customers are those who are interested

in using the general services.

Deliver the message to the target customer would be difficult. To test the message delivery

successful, select members of target customers would help. The message could indicate that the

airport is located close to major centres of business and industry and aviation products, services,

or facilities are competitively priced.

The next step in implementing marketing strategy is choose the tactics. Meaning that the way

how the airport manager would communicate with the target customer. In doing so, the tactics

would be successful when the resources for instance, time and funding, are available. Therefore,

this step begins by brainstorming the possibilities.

For the last step, select the tools. There are so many tools that can implement the marketing

strategy. Social media is a fast-paced form of communication which needs to be proactively

monitored throughout the day. If information and comments become stale, social media users’

may abandon the connection to the airport, rendering this marketing tool unproductive.

Promotion strategy in this industry would be moderate where KCIA offer services that are more

to general services that mostly serve Boeing company. But then, the airport is operated because

of the customer. If promotion does not really being exposed, the customer will still come to get

the services as long as the customer satisfied, they will come again to get the airport services.

Service life cycle

There are four stages of services life cycle that consists of introduction of the service, growth of

the service, maturity and decline of the service. For KCIA, the services that offered by the airport

will be at the maturity stage because the service is existing services and customers know about

the services. The aim in this stage is also to preserve market share and maximize profit.

Therefore, for the service, the airport manager would upgrade or improvise the existing services

and then customers would see the competitive advantage and make them different from another

competitor. In addition, the airport also practices low cost defender which they would gain

economies of scale. In maintaining the services in maturity stage, the airport also should build

good rapport with customers, increase research and development of the services also reposition

the brand so that the customer would know more about the airport. Innovation of the product also

would be welcomed by the customer so that it would differentiate from other competitors.

Growth strategy

The airport has its services which is in existing market, the services growth strategy would be at

the market penetration strategy. At this segment, the organization increase their market share as

well as sales. There would be some elements that need for consideration in growth strategy. By

having a marketing strategies, airport manager need to analyse physical, economic, community

and regulatory constraints to develop a plan that meets its business objectives.

In other situation, services development strategies could be implement by the airport manager

when there is a new service in the current market. In this segment, the existing services has been

improved and still in the same market. For example, in terms of facilities in the airport.

Generally, we see that there is kiosk for customers buy food and beverages. But then, new

services improvement could be there is a cinema in the airport to serve entertainment for those

who are search for entertainment.