The weaknesses associated with Z-Wing are:
• Their market share is sliding—Z-Wing 50%, Janssen 47%
• Budget constraints
• The level of customer service is low
• Market research is weak. Z-Wing has allowed the competition to increase its market share, while Z-Wing is stagnant.
Z-Wing has the opportunity to introduce new aircraft, and scan the marketplace in order to build sustainable customer relationships. The organization can enter into new markets by developing new products, such as private, corporate, and military jets, and by providing new services such as low cost routes and a customer support system. The threats to realizing the goals of the organization are local, state, and federal regulations, Janssen, the economy, and negative publicity. The trend most prevalent in the industry is the consumers are demanding more, so the company is demanding more from its equipment as well as its most valuable asset, the employees.
Competition
Janssen is the strongest competitor and as such, Z-Wing must create a niche in the aircraft industry that sets it apart from Janssen. Z-Wing has the In Touch system in place but comparable products are already in the market. Z-Wing has to offer something unique to their airline customers so the company can continue to be the market leader.
Product Offering
• In Touch system—Internet, intranet, broadband services available to crewmembers and customers
• E-service portal—24/7 access to maintenance manuals, engineering drawings, parts lists, etc.
• Aircraft models 824, 878, and 888
• Possible upgrade to the best selling 888
Threat of Entry
Risk of new entry of competitors is low. The airline industry contains many factors that prevent other companies from entering the industry. Barriers to entry include capital necessities, economies of scale, switching costs, and brand value. The airline industry has an abundant amount of capital. Banks extend credit to airline companies. The industry is saturated since it’s relatively easy for weaker airlines to acquire credit.
Brand recognition is vital in the airline industry, and profits the larger airlines. Large companies spend millions on advertising and marketing efforts. Airlines offer incentives and frequent flier programs to attract travelers to fly with particular companies. Barriers to entry are also sharp because of the hub system. Airlines can offer travelers more choices while tying up a smaller amount of capital through their hubs. The hub system creates market strength for the large airlines.
The threats of bargaining power by suppliers consist of the threat of forward integration and the concentration of suppliers in the industry. Boeing and Airbus supply most commercial fixed-wing air carriers. The threat of forward integration is low. Supplier power diminishes the ability of the competitors to earn superior profits.
Buyers are presented many choices when choosing an airline carrier. Pricing information is very easy to compare because of the Internet. Demand is very elastic, but airlines can adjust prices to match other competitors and force buyers to pay the market price until a price war occurs. Buyers usually choose the best price, or a particular company that they usually fly with.
Substitutes for airline and travel include automobiles, busses, and trains. Buyers may be more prone to fly to their destination. When deciding to fly, the decision deals with personal preference, time, money, and convenience. Usually, flying is the most convenient choice of all.
The airline industry is consolidated and very competitive. Industry growth is moderate, and airlines are struggling to take away share form each other. In the airline industry it is easy to gain entry, but difficult to exit.
The executive team realizes that no matter what products the company offers, the customers are what matters most. The success of the company depends on how effective the company manages their relationship with the customers. “In order for a company to succeed, the customer must come first, you’re customers are the reason you are in business” (Schmidt, 2005).Employees need to be receptive to the new systems and products. The reception can be enhanced through proper training of the employees and managers speaking with one voice about the new products and services and changes.
Critical Issues
• Prioritization of the business needs that require support
• Functionalities for the CRM application offered by the lead software vendor
• Return on investment
Historical Results
• ERP implementation was a failure.
• In Touch was introduced and is successful and warrants enhancement.
• Adoption rate of the CRM system after being in place for two years is high.
Macroenvironment
The environment must be scanned to assess the opportunities and threats in the organization as well as the aircraft industry. Factors such as the economy, the political climate, governmental rules and regulations, and legal ramifications should be analyzed. Technology, socio-cultural issues such as demographics, customer awareness and attitude and the availability of current and future suppliers must be assessed. The leaders must shift from strategy formulation to strategy implementation which is accomplished through identifying short-term objectives, initiating specific functional tactics, communicating policies that empower people in the organization, and designing effective rewards. (Pearce & Robinson, 2004).
Marketing Mix
The Four P’s of Marketing are the four strategies to the marketing mix. The marketing mix refers to the way in which a company allocates its marketing budget between the various communications media. It includes product, price, promotion, and place. They are the variables that marketing managers can control in order to best satisfy their customers in the target market. They are all interconnected. Action in one affects the decisions in another.
• Product – any tangible object, idea, or service provided to customers.
• Price – determining what to charge for the product or service.
• Promotion – the actual marketing of the product or service. The task of making customers aware of the product in a positive way so that they will want to buy it.
• Place – getting the right product to the right place at the right time in the right amount and in the right condition.
Marketing Strategy
The face of aviation is gradually evolving. The long-standing problems of the industry in the form of large numbers of network carriers and substantial over-capacity in many markets were exacerbated by the events of September 11th. This is likely to pave the way for some acceleration in the process of airline restructuring and consolidation. Experts believe that there is not room for the current multitude of carriers in Europe, and that these will eventually be whittled down to three or four major airlines, with the others absorbed or restructured to focus more on regional traffic. This also represents an opportunity for 'no-frills' carriers to increase their market share. Along with this, some restructuring of the industry’s complex and outdated regulatory system will be required.
In the longer term, Z-Wing’s trend growth may itself slow gradually as the big air travel markets mature. In addition, falling yields, which have boosted air travel growth in the past, cannot be relied upon to persist, at least at the rate they have for the past decade or so. If cost trends are less favorable; for example because of increasing fuel costs, congestion and other environmental restrictions, as well as the prospect of higher security and insurance costs to reflect the risks of terrorism the scope for lower yields would be less, and this might reduce future growth trends.
A key issue will be the extent to which favorable cost trends such as the impact of the Internet on distribution costs and cost synergies from industry consolidation can offset these upward pressures on prices and costs. The full-service airlines, saddled with big networks and strongly unionized workforces, cannot easily embrace the management strategies of the no-frills airlines. Moreover, their scope for defensive mergers is limited by competition policy.
Z-wing has to consider whether it should respond to new entrants by ceding niche segments or by competing aggressively on price, routes and service in an attempt to drive the entrant out of the market. To make the strategic decision market research on the size of different combinations of pricing and service is needed. Z-Wing also needs to know how much it costs the competitor to serve, and how much capacity the competitor has for, every route in question. Finally, the new entrant’s competitive objectives are of relevance to anticipate how it would respond to any strategic moves Z-Wing might make.
By obtaining this information residual uncertainty would be limited, and the incumbent airline would be able to build a confident business case around its strategy. It is advisable that Z-Wing targets mainly leisure travelers as business often demand frequent flights to a wide range of destinations, seek quality service and frequent flyer programs and are willing to pay a premium for these benefits. Also, trying to appeal to widely different customer needs runs counter to the overall trend in service industries, in which distinctive approaches, tailored to different customers, have generally come to dominate. No real opportunity offers the long-haul business as it is very different, both technically and in customer needs, to short-haul travel.
A detailed marketing plan will be constructed that contains details associated with expanding old markets and entering new markets. Financing will be procured for new capital projects. Simultaneously business operations will be ramped up to support increased demand. Z-Wing’s financial plan was devised to have a better knowledge of valuable financial information. The first step was to track cash and restructure the balance sheets. The next step was to restructure the fleet which required them to reduce the number of fleet types they offered. They also had to match airplane size to market size to minimize empty seats. This was huge considering old traditions had little emphasis on interdepartmental communication and marketing had no way to help other departments.
Implementation Plan
The implementation of Z-Wing’s marketing plan must be immediate and fast paced. In order for Z-Wing to be successful they must have a clear and concise implementation plan which meets specific milestone dates. After implementing a marketing plan it is critical the results of the plan implemented be evaluated. This is an on-going process and must be completed regularly to ensure the desired results are being achieved against the end-stated goals. This will help the executive management team make necessary adjustments, develop growth plans, and determine if they made the right selection and if the implementation plan was a success. There are several factors and expected values to be measured in order for a project to be considered a success. The measure of success for each metrics can be determined by the level of accomplishment versus the targeted goal. For example, increasing customer satisfaction by 30% within 12 months can be measure by comparing the overall customer satisfaction result to that of the initial overall satisfaction result at the beginning of the period.
Conclusion
Throughout this paper we have examined the steps of implementing a marketing plan in regards to the Z-Wing scenario. The first step in this process is for the leadership team to conduct a situation analysis. This involves identifying and analyzing the primary issues, opportunities, stakeholders and potential ethical dilemmas surrounding the strategic plan and goals presented to the leadership team. The path is clear and the worked ahead is well defined. Using financial leverage is a powerful way to fuel expansion but it also significantly increases risk. But through financial due diligence Z-Wing will continually assess their cash flows to insure that the airline remains solvent. Keeping an eye on the statement of cash flows is essential to keeping a high growth company on track. Z-Wing has the potential to be one of the leaders in the industry. Z-Wing should continue to focus on price and attempt to connect the dots in its network, which cost less than opening new cities. Thereby, it needs to make sure that a growth in its network and fleet does not lead to higher operating costs. It should also consider putting more emphasis on direct marketing by e.g. introducing a customer retention scheme. To differentiate its brand further on promotional lines, Z-Wing could introduce a CRM (cause related marketing) scheme, developing a reputation for being a ‘caring airline’, e.g. by selling shares in forest help programs over its website, collecting foreign currency on flights for charity, thereby giving its passengers ‘a sense of psychological comfort and well-being’ when they choose to fly with Z-Wing. Overall, Z-Wing has to develop a realistic and accurate assessment of the market-niche to be served. A relentless commitment to quality service and cost control is as important as the discipline to establish a growth plan.
References
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Pearce, J., & Robinson, R. (2004). Strategic management: formulation, implementation, and
control. (9th ed.). New York. McGraw-Hill.
Scenario One. Retrieved October 22, 2007 from University of Phoenix, rEsource, MBA 570.
Schmidt, D. (2005). Loyalty leader quick tips issue #128- is the customer
always right? Retrieved from
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