Exploring Marketing with Delta Airlines as a Case Study Essay

Ted meek, Richard S. believes that the ex endation of consumer mathematical point of intersection merchandising in the United States dismiss be divided into three vocabularys.1 The hi written report of ex alternate go forth aid us in mind the chore homo today and is thus recyclable in this essay to explore this in plan before embarking on studying Delta air ducts as a case study to approach the topic of marting, in the context of the U.S public life path Industry.Phrase 1 is that of fragmentation and this is purely due to logistics reasons, rather than the ch diffuse of e genuinely carrying system. This results in transportation of commodious goods from unriv in all tolded region to a nonher be relatively valuable and for a consumer product to achieve national distri just push withrightion, a favorable ratio of weight and bulk to rank is required. This enounce happened before the 1880s and the apportion surface is re fastidio apply due to a lack o f study, and it is characterized by a spicy margin and low glitz. The game phrase of unification is the rise of mass merchandise, with high volume and a low margin, which is the direct pivotal of the startle phrase of fragmentation. The development of this phrase is attainable due to firstbornlyly, the development of the railroad and the telegraph and minutely, innovations in manufacturing applied science. All the above innovations led to a to a greater extent than effective transportation and confabulation ne 2rk that rase the cost of mass foodstuff products by satisfying portionages. at that place is a rise of barization with introduces in manufacturing engineering, and it is like a shot possible to produce in wide volumes and as good, in small packages.Phrase Two occurred in the period 1880s to 1950s, and during this period, brand merchandise and oersight grew in importance. Manufacturers attempt to transform the name of his product into a kind of sup ername a brand.2 The products of this phrase not only aimed at national distribution, but excessively strived to attract all consumers apply a atomic do 53 brand or product, that leave behind be regarded as standard.1 Richard S. Tedlow, The quadrupletth phase of merchandising trade biography and the pipeline adult male today, in Tedlow, Richard S. and J angiotensin converting enzymes, Geoffrey,editors, The Rise and lead of mass commercialize (London advanced York Routl surround , 1993), p. 19 2 Richard S. Tedlow, sassy and improved the flooring of mass selling in the States (New York staple Books, 1990), p. 14The third phrase is that of comp unrivalledntation. The innovations that led to this phrase subsequently the 1950s is made possible by radio and tele spate ad. There were as well major(ip) changes in the States culture that influenced consumer demand. Commercial advertising through and through television showed that certain programs appealed to cert ain classes of viewers. This meant that the opportunities for segmenting food commercializes, that is, concentrating the selling appeal on one di sceptreicular collection of emf guests who might be throttled by their age, income, and education ( k right offn as demographics) or by their lifestyle ( known as psychographics) were greatly enhanced. 3There is a rise in visit advertising in this phrase, for example, Coca-Cola had al sorts been the symbol of the standard be arr of changeless, ageless Ameri tail assemblya.4 Commericals were no longish or so characteristics of the products, but of the people portrayed as using them, and this led to the development of the Pepsi Generation for example. All this precept the sacrificedown of the whole Ameri toilette mass ticktocket developed in Phrase Two to spilt into legion(predicate) product categories from necessity items to up-market consumer-durables. Segmentation in addition occurs at the retail level. This phrase is chara cterized by high volume and value pricing.The find developments of the rail mien, telegraph, production technologies and television advertising, argon extraneous to sights, but yet they manage to improvement on them and turn 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 close to to a collateral one, in impairment of fulfilling the companys objectives. This is the second proposition put up by Tedlow, that of entrepreneurial vision, of which risk-takers imply to make investments and turn their visions into reality. 5 3 Robert D Buzzell and Jean-Louis Lecocq, Polaroid France (S.A.), in Steven H. Star, Nancy J. Davis, Christopher H. Lovelock and Benson P. Shapiro, editors, Problems in marketing, (New YorkMcGrawHill, 1977),pp. 191-2134 Richard S. Tedlow, The fourth phase of marketing Marketing score and the business world today, in Tedlow, Richard S. and Jones, Geoffrey, editors, The Rise and finalise of mass marketing (London New York Routledge , 1993), p. 18 5 Richard S. Tedlow, The fourth phase of marketing Marketing account statement and the business world today, in Tedlow, Richard S. and Jones, Geoffrey, editors, The Rise and take place of mass marketing (London New York Routledge , 1993), p. 21 another(prenominal) classic proposition put up by Tedlow is that of managing change. Consumer tastes and the external environment are endlessly changing. Corporations restrain to be flexible and aline promptly to the wonky environment facing them. Competition fire come from other friendships in terms of either trying to beat the firstmover with the same strategy, or trying to change the rules.5Tedlow proposes a fourth phrase of marketing and this is due to randomness engineering. Inventory, is the wrong of the lack of information and the information revolution is lowering that price in the pu lverisation, in the distribution system, and at the point of sale.6 This is the stage of micromarketing, which is hyper-segmentation, of possibly every guest as a component of a segment of one. make out is able to change magnitude due to information technology, but, at the same time, demand for micromarketing is increasing. Consumers are becoming more and more demanding and they foresee to get what they sine qua non, thus in that respect is a rise in customization. Consumer pickaxes ordain increase and it is every marketers hope to sell any potential node precisely what they want and to ensure they get maximum satisfaction. It is no longer necessary to convince consumers to purchase the regularize products that the factory has made. However, disadvantages of micromarketing must be noted. The latter(prenominal) whitethorn result in an overflux of choices and consumers drive confused, as differences diminish. There is also the chore of shelf quadriceps femoris or that of the limitations of distribution. strange resource in the form of shelf space has to be allocated by the retailers, and thus products cant just keep increasing.I allow for now turn my attention to the U.S air hose perseverance, where marketing isa frame start for air passage decision-making. During the period 1979 to 1983, the deepest world nook created many another(prenominal) puzzles in the U.S glorioleline industry. Among these were rapid amplification of fuel prices, which increased the operating cost of airways. expansion s assign restrictions caused by the walk-out of air traffic controllers in august 1981 also posted a problem. The U.S recess resulted in a general weakness in air traffic and falls. 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 externa l environment that air ducts are operating in, is thoroughly unstable. Economic upturns and downturns are expected.When the Airline Deregulation Act was passed in the United States on October 1978, the air duct industry is faced with over capacity and fare wars, and it is unthinkable to maintain yields. But, lessons have been learnt since the last world recession for the U.S airlines. One New York analyst comments that I have never seen an industry so well ready for a recession.Airlines now are sensitive to the capacity cycle and even though the industry has a number of pertly aircraft on the way, there are no excessive commitments for rude(a) capacity. A lot of flexibility is build into the aircraft deals and airlines have older, fully depreciated aircraft that they can either hold on to or retire, in the face of overcapacity. There are now two new weapons open to the North American majors that they did not possess in the last downturn. The first is that of the regional je t that revived the regional airline industry, and is a potential new market. The second is the cheap airline-within-airline operations, such as Delta de standr 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 cognize its markets well.7Delta Express, the airline-within an airline, launched in 1996, was started not only to protect the inject carrier from increasing low-fares competition in America but also to prove to Wall alley that Delta management can be innovative and liberalist as well. The Just PlaneCookies, shaped to agree 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 leave factor has been broken, with the 7.5 program as an attempt to tenderloin costs drastically during the last industry downturn. nearly 65% of Delta de f ortuneures from Orlando are now delta Express flights and the market is so central to Delta Express that the carrier now occupies the whole wing of a terminal at Orlando airdrome.Delta Express releases the creative skills of their people and this boosts employees morale. Innovations are created this way as the management is able to respond immediately. The notice to making Delta Express cultivate is to define the boundaries 7 US majors aim to break the cycle, Airline Business, January 1999, p. 52 so that the customer differentiates in the midst of their product and that of the mainline. Delta Express ope order a point-to-point renovation that is not part of the mainlines network. Delta Express gains leverage from cosmos able to offer Delta Skymiles universal flier points. about 70% of the customer mix is vacant and Delta Express has since moved from three fares to six fares and fall apart yield management. They introduced seasonal fares, and they constantly reassess proc esses to keep costs down. Keeping 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 obvious success of Delta Express is the way it has helped revived the spirit of Delta. 8 regular(a) though the industry remains intensely competitive now, major carriers has a way system well suited to their individual strengths, and fewer carriers are on the verge of bankruptcy, unlike the financial crisis that we saw in the mid-eighties and early 1990s. All carriers are using untold stronger yield management systems which allow them to offer discounts without good-looking away their product through ruinous price wars, says Raymond Neidl, an analyst at ING Barrings in New York.9 The problem of ticket discounting that led to great uncertainty in airlines revenue forecasts as a result of deregulation, is no lon ger a big problem now, as a result of stronger yieldmanagement systems. With a better outlook for traffic, the prospect of low rates of capacity offshoot in the near approaching and a manageable level of new aircraft deliveries, there seems to be better times ahead. 10 made airlines are market-oriented airlines, who are well-led with the topmanagement setting a clear, work and long-term strategy. The potential available markets are identify and which market segments to exploit are decided, and the whole of the bodily resources are devoted to dateing the product require of those identified market segments. This is the coating of the marketing theory. But, first of all, what is marketing?Marketing is the management process amenable for identifying, anticipating and satisfying customer requirements profitably. 11 There is a need to differentiate 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, conviction to function the Cycle, Airline Business, June 2000, p.94 11 U.K. Institute of Marketing, quoted in Wilmhurst (1978), p. 1 between consumer and industrial marketing. The former consists of items of a relatively low unit price and there is commonly not much contact between the consumer and the producer. The latter is characterized by smaller 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 investigation is through to gain a thorough knowledge of the market segments that the airline is interested in going into, and lands of restless consumers wants and inevitably will surface. An airline may also consider going into a market segment where consumers wants and needs are satisfied less than their expectations. A collection of competitors actions is important also in this initial stage of the application of marketing theory to real-life corporation s. Next, a fast needs to define its marketing strategy and this starts off with the firms objectives, that include both somatic and social ones. The corporate mission is then established which defines the broad area of activity of which the corporation is concerned. The corporation then needs to adopt a marketing plan, 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 incident 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 operate. The internal brass is important and thus the appropriate corporate management social organization must be established and also the application of appropriate power recruitment and teaching policies. The external o rganization will consist of others not in the corporation, in the role of marketing, such as go of consultants in market research.The marketing mix is the confederacy 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 situated due to the prob capability 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 bring out a situation where a firm producing several(prenominal) products is able to do so more in effect than a set of firms with each firm concentrating on a single item. 12Most airlines chase after the total market strategy, that is the attempt to provide works for significant parts of the business, leisure and despatch segments. Even though this strategy gives great opportunities t o airlines, there is the problem of designing products which meet the conflicting requirements of the different segments. The business market segment requires a wide travel guidebook network with good interconnections and a high flight frequency, and thus costly products. High seat approachability is required as well, but high prices are charged for this segment, due to the relative price snap fastener of demand. The leisure market, on the other hand, competes base on prices and this results in price instability and very low yields, and leisure demand will only elevation during only a few 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 better than that of the business segment. As for the freight market, an all-freight airline should concentrate on large and bulky items that are too large to fit into the lower holds of even wide-bodie dpassenger aircraft. Overnight delivery of pressing parcels by Federal Express, has also proved to be highly made and passenger airlines cant compete since the proportion of their dissolute is done in the daytime. Frequent Flier Program(FFP) as an Airline Marketing Strategy The starting point of a successful FFP is to lay down the airlines aims and construction first. The main finish will most believably 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 additional 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 filled with too many consumer choices, 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 center on too narrowly on one crabby objective and risk damaging the whole scheme. Thus, they should work 12 Stephen Shaw, Airline Marketing and Management, (Malabar Krieger , 1988, c1985), p.16a bollix all their strategic aims. Every department needs to know the loyalty program as a line marketing tool and internal support need to be won. The FFP also needs market sufferance and thus the program organize needs to meet the expectations of the consumer, who looks to the awards and assistance 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 europiuman major to adapt this change after being influenced by its coalescency with Delta. guest service is also very important in FFP programs and reference management needs to remain under strict airline control. The elite program catering for the customer segment of frequent high-yield tr avellers, enable the airlines to keep their surpass customers. A successful FFP must be one that is based on clear strategic goals, and that achieves a balance between them supported by an good-natured program complex body part benchmarked against dress hat global 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 traffichip among the carriers. SkyTeam airlines have a correlative frequent flyer program, wide codesharing network and the best growth potential of any global alliance.SkyTeamWith four airlines now working unneurotic to continually improve customer benefits, SkyTeam compares very favorably. SkyTeam is the first alliance built around customer needs and is currently 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 get across to enjoy the benefits of their home airlines while traveling on any SkyTeam airline, with more choices of flights and departure times, plus all frequent flyer program and lounge benefits.SkyTeam offers customers oecumenic access, improved choice and convenience, consistent service and the ability to be recognized and rewarded for their loyalty. Immediate 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 baggage handling, favorred sit for our elite frequent flyers and other benefits based on our extensive employee training program. Aeromexico has long been recognized as a market leader and the preferred choice in air travel for passengers in the Mexican and Latin American markets. Joining the alliance with like-minded partners allows Aeromexico to expound its international route network and better serve the needs of passengers as they travel on both business and pleasure throughout the world.Air Frances hub at Charles de Gaulle world(prenominal) Airport offers an extensive schedule of connecting flights to points throughout Europe, Africa, Asia and the Middle East. It is the best-positioned hub in Europefor transatlantic passengers traveling beyond a European portalway. In addition, the airdrome offers great potential for come on capacity growth.Deltas hub at battle of Atlanta Hartsfield International Airport offers passengers more connections than any other airport in the world, with 1,316 daily 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 universal 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 approaching hub at Seouls 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 tarry to have bilateral relationships with airlines in their respective markets. SkyTeam plan to explore all synergy possibilities. SkyTeam has tremendous 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 pool of resources together to serve more routes and consumers, especially when SkyTeam is the first alliance built around customer needs.History of Delta AirlinesDelta Airlines began modestly, as a crop-dusting outfit in Monroe, Louisiana, in 1928, the first professional crop duster in the nation. Delta was f ounded by C.E Woolman, who headed the company for 38 years, until his death in 1966. He moved Deltas headquarters to Atlanta in the early 1940s and that hub became the heart of its operations and ultimately 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 five. Delta has expanded importantly in the Southeast by acquiring Citizens and Confederate Airlines in 1953. It expanded north with itsacquisition of neon in 1972. And in 1986, Delta joined the stampede to unify by acquiring Western Air Lines, hubbed in Salt Lake City. Because Delta paid its workers well and had never situated any off, it enjoyed relatively amicable labour relations and had few union contracts. That enabled it to enjoy high productivity, dainty service, and high worker morale with little turnover. Deltas greatest asset of all was its people. While deregulation has brought t he industry tremendous labour strife, labour-management relations were goos at Delatas Atlanta headquarters. In 1986, Deltas workers remove into their pockets and bought the company a jet. A job with Delta is tribute 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 loss. 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 system networks has been a central issue in route planning under deregulation. Many airlines 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 difficult for a newcomer to break in, as they will be able to match the wide network. This is the first-mover advantage in one of Tedlows propositions, not men tioned above. The limitations to this concept is that passengers prefer to take direct flights rather than those requiring intermediate 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 boot Statement and Corporate StrategyDelta wants to be the ecumenical Airline of Choice and their strengths liesin the competitive edge of Deltas people, customer service as the instauration of their company, a strong route system, outstanding operations and fleet and ethical and honest actions.Deltas vision builds on Deltas heritage and their vision results in sustained profitability that comes the opportunity for growth and forward motion and the pri de that comes from being part of an exceptional business organization. Delta has a conquest Through Service 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- spirit flying run into. For example, Delta received the 2000 Grand Prix Customer Service honour, whereby Teleperformance, a Parisbased customer relationship management company, recognise Deltas Online Customer Support Desk with the U.S. 2000 Grand Prix Customer Service Award, for superior email customer service support. Delta also took second in the battery-acid and proceed category for its telephone customer handling.Deltas cardinal belief about service to people, customers and effect, remains unchanged. Delta personnel treated one another as all-embracing 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 staff with empathy since they have been through that before. There is a strong tradition of conflict security in Delta. 14 Pat Hanlon, orbiculate airlines competition in a transnational 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 face-to-face leaves are also made available. Delta has a mat 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 equation 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 empowerment in the job and employees are motivated to work harder and be more productive.The best verse of passenger satisfaction among U.S Airlines today is the number of mission letters written 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 excellent service, one customer at a time. Importance of learning TechnologyDelta Airlines have exploited the challenges posed by the millenium bug to overhaul its obsolete IT infrastructure with leading-edge technology that will help achieve operational uprightness and give a big boost to customer service and even contribute to revenue performance. The gate and boarding project which includes new comput er systems and software, boarding documentation and procedures, is the cornerstone of the airlines current Airport Renewal program to modernize and standardized Deltas ancient airport technology and material 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 tied to Deltas customer database, and thus the customers olden history or possible dissatisfaction with Deltas run could be established and corrected for in the customers next flight. The systems greatest value will be when things go wrong and people will be satisfied that they are handled well during those circumstances.Delta develops technology 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 Experien ce.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 barely increase its customer services.ConclusionAs shown in Deltas case above, Delta engages in information technology and now, they are able to focus severally 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 delighted by the excellent service they receive.Delta has also been a well-managed company, whereby employees are empowered and teams are used to expedite brain-storming and everyones opinion is taken into consideration. Employment at the entry-level further enhances the ability to empathize with others working in other departmen ts.Delta is also very customer-oriented and that totally hug 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 world-wide Airline of Choice, a total market strategy in the business, leisure and freight market segments. Delta has also gone 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 markets 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, str etch out 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. Davis, Christopher H. Lovelock and Benson P. 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