Aviation Management College

AIRLINE MARKETING

DISTRIBUTING THE PRODUCT

AIRLINE MARKETING

The airport consumer has a very attractive demographic profile

1048628 50 male 50 female

1048628 Average annual income = $95000

1048628 Dominant age group 35-54

1048628 Over 80 college graduates (USA)

AIRLINE MARKETING

PRODUCT DISTRIBUTION

The marketing links between the customers and the product are known as Distribution Channels

Airline uses various channels of distribution to reach its target market

The trend keeps on changing as the world progress with new technology and innovation

1 Types of Distribution Channel

a) Direct Route

- The airline market the product direct to the final customer - No intermediaries- Normal in B 2 B- Mostly in less costly product- With extensive advertising to target market- Using mail order or the Internet

AIRLINE MARKETINGProduct Distribution

a) Direct Route

Advantages

No mark-ups or commission to intermediaries

Airline able to control marketing activities

1 Types of Distribution Channel - cont

b) Using Wholesalers

- Wholesalers buy in bulk from various airlines- Have the power to negotiate appropriate discounts- They sell the product direct or through retailers

Disadvantage need to give competitive discount

Advantages unsold good cannot be returned

c Using Agency

- Common with intangible goods- To offer to wide geographical coverage- Agency tend to push product with higher commission- Popular in the 1990s

Examples 1- Manufactureswholesaler relationship

General Electric Aviation buys a large number of aircraft from manufactures and leased it to airlines

GPA largest aircraft leasing company in 1990s went bankrupt because of recession

Example 2-Airlinewholesaler relationship

Airlines sales bulk seats to charter airlines or tour operators

Package it with accommodation surface transfers etc

Special package for different target group eg golfers historical tours etc

Tour operators responsible for retailing it to the final customers

Example 3 ndash Agency relationship

Using the travel agency system to sell productAgency able to provide up-to-date information on the productThe trend is declining from 90 to now 80

2 The Travel Agency

a) Advantages

- Geographical coverage- Minimise manpower structure- Reduce the cost or air travel administrations

2 The Travel Agency

b) Disadvantages

- Increased in commission rates - Customers using credit cards- Finance agentrsquos battle- Proliferation of sales outlets- Retail discounts - Loyalty amp buy clients

3 Present amp Current Distribution Channel

a) Commission structure

- Commission reduced or eliminated - Capped at a maximum- Significant reduced on expensive tickets

b) Travel Agent on Task-Based system

- Not paid on percentage of ticket price- Payment based on each task undertaken- Payment for making the bookings- Payment for issuing the tickets- Payment for dealing with payments

c) Implication on Travel Agent

- Drop in ticket sales- Airline website getting popular- Emergence of on-line Travel Agent- Commission-based to management fees

d) Future Trend

- Selling through Airline Shops at hotel shopping complexes- Selling via call centers telephone o on-line- Business using the internet- New airlines beginning to ignore the agency role

4 Distribution Channel in the Air Freight Market

a) Freight Forwarder - similar role as travel agentb) Forwarder roles in Express market ndash minimalc) Integrated Carriers dominanced) Fewer forwarder ndash mergers amp takeovere) Forwarder hold 90 of lsquoHeavy Freightrdquo marketf) Airline strategy

- buy forwarding company- set up forwarding subsidiary

5 Conclusion

a) Distribution strategy - an important agendab) Airline to control distribution channel c) Long term benefit vs short term gains

AshariAbuHasanAZAretailConsult

AIRLINE MARKETING

ADVERTISING amp PROMOTION

AIRLINE MARKETINGAdvertising amp Promotion

1 The advantages of Advertising

a) To promote corporate image and brand value (the amount that a brand is worth in terms of income potential

income reputation prestige and market value)b) Helps to build sub-brands eg business class FFP special product packagec) Use to provide technical information such as new routes new aircraft etcd) To sell special offers discount fares FFP bonus etce) Helps in staff motivation

2 The features of good advertising

a) A good research data on feedbackb) Provide checklist with the right question to the customersc) Getting a professional or consultant

to analyses the result avoid biasnessd) Ensure the ad is compatible with

airlinesrsquo brand values

3 The role of Advertising

a) Ads [placed in trade magazines which circulates among forwarding

communityb) It describes the benefits one airline against the otherc) It emphasis on the quality of ground handlingd) It main task is to convert surface traffic

into air travel and freight business

4 Promoting Sales in the Air Freight Market

a) Background

- Competition from trucking and ferries (short- haul) deep-sea containers (long-haul)- Cheaper freight rates- Freight forwarders 90- Majority smaller consignments- Forwarders consolidation and deciding airline

- Freight market growing faster than the pax market

- Challenges in effective marketing communication

- Issues may not be similar to pax market

b) The Sales Task

- Competition from surface transport- Efforts aimed at the freight forwarding industry- Concentrates on the Senior Management team of

large forwarding firms- Also the clerks who is responsible for routing and

carrier choice decisions for individual consignment

b) The Sales Task - cont

- Special task to convert surface transport traffic into air freight

- Presently only 2-4 of total goods by weight move by air

- Major forwarding firms have interest in both air and surface traffic

c) Marketing Communication

- Using Freight Sales Executive to do personal selling

- Generous offer to corporate key decision makers- Advertising and promotion in trade forwarder

magazines

- Aggressive personal selling approach to convert surface traffic to air freight

- Study and research on the cost-effectiveness of air freight

- Advertise the result of the study in Financial and Business magazines

Gong Hee Fatt Chai

AIRLINE MARKETING

The airport consumer has a very attractive demographic profile

1048628 50 male 50 female

1048628 Average annual income = $95000

1048628 Dominant age group 35-54

1048628 Over 80 college graduates (USA)

AIRLINE MARKETING

a) Direct Route

Advantages

c Using Agency

2 The Travel Agency

a) Advantages

2 The Travel Agency

b) Disadvantages

d) Future Trend

5 Conclusion

AIRLINE MARKETING

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

AIRLINE MARKETING

a) Direct Route

Advantages

c Using Agency

2 The Travel Agency

a) Advantages

2 The Travel Agency

b) Disadvantages

d) Future Trend

5 Conclusion

AIRLINE MARKETING

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

a) Direct Route

Advantages

c Using Agency

2 The Travel Agency

a) Advantages

2 The Travel Agency

b) Disadvantages

d) Future Trend

5 Conclusion

AIRLINE MARKETING

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

a) Direct Route

Advantages

c Using Agency

2 The Travel Agency

a) Advantages

2 The Travel Agency

b) Disadvantages

d) Future Trend

5 Conclusion

AIRLINE MARKETING

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

c Using Agency

2 The Travel Agency

a) Advantages

2 The Travel Agency

b) Disadvantages

d) Future Trend

5 Conclusion

AIRLINE MARKETING

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

c Using Agency

2 The Travel Agency

a) Advantages

2 The Travel Agency

b) Disadvantages

d) Future Trend

5 Conclusion

AIRLINE MARKETING

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

2 The Travel Agency

a) Advantages

2 The Travel Agency

b) Disadvantages

d) Future Trend

5 Conclusion

AIRLINE MARKETING

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

2 The Travel Agency

a) Advantages

2 The Travel Agency

b) Disadvantages

d) Future Trend

5 Conclusion

AIRLINE MARKETING

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

2 The Travel Agency

a) Advantages

2 The Travel Agency

b) Disadvantages

d) Future Trend

5 Conclusion

AIRLINE MARKETING

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

2 The Travel Agency

a) Advantages

2 The Travel Agency

b) Disadvantages

d) Future Trend

5 Conclusion

AIRLINE MARKETING

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

2 The Travel Agency

b) Disadvantages

d) Future Trend

5 Conclusion

AIRLINE MARKETING

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

d) Future Trend

5 Conclusion

AIRLINE MARKETING

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

d) Future Trend

5 Conclusion

AIRLINE MARKETING

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

d) Future Trend

5 Conclusion

AIRLINE MARKETING

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

d) Future Trend

5 Conclusion

AIRLINE MARKETING

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

5 Conclusion

AIRLINE MARKETING

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

5 Conclusion

AIRLINE MARKETING

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

AIRLINE MARKETING

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

a) Background

b) The Sales Task

magazines

Gong Hee Fatt Chai

b) The Sales Task

magazines

Gong Hee Fatt Chai

b) The Sales Task

magazines

Gong Hee Fatt Chai

magazines

Gong Hee Fatt Chai

magazines

Gong Hee Fatt Chai

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Aviation Management College