marketing research on boeing
-
Upload
nazish-sohail -
Category
Business
-
view
11.416 -
download
2
description
Transcript of marketing research on boeing
The Boeing CompanyOverview
PROBLEM DIFINITION
THE CUSTOMERS DID NOT RESPOND THE CUSTOMERS DID NOT RESPOND EFFECTIVELY TO THE SERVICE EFFECTIVELY TO THE SERVICE
PROVIDED BY BOEINGPROVIDED BY BOEING
The Boeing Company
OverviewOverview
How Boeing is OrganizedHow Boeing is Organized
Corporate functions:
Business Development and Strategy
Communications
Engineering, Operations and Technology
Finance/Shared Services Group/Boeing Capital Corp.
Human Resources/Administration
International
Law
Office of Internal Governance
Public Policy
World-class performance
Integrated Defense Systems
Commercial Airplanes
Two businesses supported by nine corporate functions
Company LeadershipCompany Leadership
Mission
To be the number one aerospace company in the
world and among the premier
industrial concerns in terms of quality,
profitability and growth
MISSION STATEMENTMISSION STATEMENT
CULTURE- VALUESCULTURE- VALUES
LEADERSHIP INTEGRITY QUALITY CUSTOMER SATISFACTION PEOPLE WORKING TOGETHER A DIVERSE AND INVOLVED TEAM GOOD CORPORATE CITIZENSHIP ENHANCING SHAREHOLDER VALUE
OBJECTIVESOBJECTIVES
CONTINUOUS IMPROVEMENTS IN QUALITY OF PRODUCTS AND PROCESSES
A HIGHLY SKILLED AND MOTIVATED WORKFORCE
CAPABLE AND FOCUSED MANAGEMENT TECHNICAL EXCELLENCE FINANCIAL STRENGTH COMMITMENT TO INTEGRITY
CORE COMPETENCIESCORE COMPETENCIES
Detailed customer knowledge and focusBoeing seek to understand, anticipate and be responsive to the customers' needs.
Large-scale systems integrationBoeing continuously develop, advance, and protect the technical excellence that allows us to integrate effectively the systems we design and produce.
Lean enterpriseBoeing’s entire enterprise will be a lean operation, characterized by the efficient use of assets, high inventory turns, excellent supplier management, short cycle times, high quality and low transaction costs.
CORE COMPETENCIESCORE COMPETENCIES
ACHIEVEMENTS & REWARDSACHIEVEMENTS & REWARDS
2005 Awards The US Environmental Protection Agency
(US EPA) named Boeing one of its Best Workplaces for Commuters (for company programs that encourage HOV participation.
Vista Fibers presented Boeing's San Antonio Aerospace Support Center with an outstanding achievement award for the center's recycling efforts (recycling more than 180 tons of paper in 2004).
2006 Awards The National Business Group on Health, a
national non-profit organization, named Boeing one of the Best Employers for Healthy Lifestyles.
ACHIEVEMENTS & REWARDSACHIEVEMENTS & REWARDS
SITUATION ANALYSISSITUATION ANALYSIS
PEST ANALYSIS
Political factor Economic factor Social factor Technological factor
SWOT ANALYSIS
Strengths
• Strong global network• Broad product line that covers most major market niches / R&D development
SITUATION ANALYSISSITUATION ANALYSIS
Weaknesses
• A hierarchical, ridged, and semi- autocratic management style, which is a product of its military heritage.• Labour problems.• Dependence on US government and WTO-incompatible subsidies.
SITUATION ANALYSISSITUATION ANALYSIS
Opportunities
• New aircraft to gain market share• Increase demand for point to point routes
SITUATION ANALYSISSITUATION ANALYSIS
Threats
• Slowdown in the commercial jet market• Uncertain airline industry environment
SITUATION ANALYSISSITUATION ANALYSIS
TOP COMPETITORSTOP COMPETITORS
1. Airbus
2. Lockheed Martin
3. Northrop Grumman
VS
COMPETITOR ANALYSISCOMPETITOR ANALYSIS
Extremely high capital requirements
High risks New product development
cost are high Long payback periods
Cyclical demand Only a few can
survive Swings through
boom and bust cycles
A. CHARACTERISTICS OF THE INDUSTRY
Know - how Capital costs Long time horizons
Risks High fixed costs
B. BARRIERS TO ENTRY
COMPETITOR ANALYSISCOMPETITOR ANALYSIS
MARKETING POLICYMARKETING POLICY
Segmentation Boeing uses Geography as its
segmentation tool. Short haul routes appear to reveal that Europe and North America is the more attractive segment.
Double-digit growth in revenue and earnings
INVESTOR RELATIONSINVESTOR RELATIONS
$18
$12
$6
$0
$14.7
$16.5
Revenue
Billions
2006Q3 2007Q3
$0.0
$1.0
$1.50
$0.5
$0.89
$1.44
EPS
+12%
+62%
2006Q3 2007Q3
Per share
Revenue and Earnings
INTRODUCTION TO RESEARCH INTRODUCTION TO RESEARCH AREAAREA
CONNEXIONCONNEXION
Overview Launched on May 17
2004 Connexion offered a
satellite-based internet connection
Connexion by Boeing pricing was designed to provide affordable Internet access
CONNEXIONCONNEXION
The Market Connexion by Boeing's real-time, high-
speed Internet and data communications service is designed to meet the needs of commercial airline operators and their passengers, as well as executive aircraft for business and government.
CONNEXIONCONNEXION
The Connexion by Boeing service is installed on more than 140 aircrafts. operated by Lufthansa, SAS (Scandinavian Airlines System), ANA, Japan Airlines, Singapore Airlines, China Airlines, Korean Air, Asiana Airlines, El Al Israel Airlines, and Etihad Airways.
CONNEXION-CONNEXION-Market
As part of its service evolution, Connexion by Boeing has expanded the availability of its live global television service, which features four channels of news, financial and sports news-related programming delivered directly to passengers’ laptop computers.
CONNEXION-CONNEXION-Market
ENABELING TECHNOLOGYENABELING TECHNOLOGY
Connexion by Boeing uses a worldwide network of geosynchronous satellites and ground-based receiving stations to relay data between aircraft and the global information network. An advanced-technology antenna designed and built by Mitsubishi Electric Co. enables aircraft to maintain high-quality connectivity, even at high latitudes.
CONNEXION-COSTCONNEXION-COST
COSTCOST Research results shows that Connexion's
system costs about $500,000 or more to install on an aircraft.
American, Delta and United, which initially wanted to invest in Connexion, pulled out in 2001 as potential partners. High cost resulting in large expenditures before getting a single paying customer
CONNEXION-EFFICIENCYCONNEXION-EFFICIENCY
Speed was 150-200kbps Boeing's Connexion
service won the "World's Leading High Speed Inflight Internet Service Provider" award from the World Travel Awards organization in London for 3 years running.
CONNEXION-PRICINGCONNEXION-PRICING
Pricing for In-Flight Internet
The prices varied from airline to airline, but were typically…
options duration price
Flat rate option (Unlimited access to the Internet)
Metered Pricing Option(with rates of $0.25 per
minute thereafter)
More than 6 hours- for long-haul flights
between three and six hours- medium-haul flights
flights less than three hours.
30-minute starter package
$29.95
$19.95
$14.95
$9.95
CONNEXION-PRICINGCONNEXION-PRICING
CONNEXION-USERSCONNEXION-USERS
Research results shows that users are very sensitive to price
FIELD WORKFIELD WORK
Data Collection process: Secondary Data External data
Governmental Sources Internet database
Bibliographic databases
E-mails Telephonic interviews
Secondary data used in our research project includes:
External dataExternal data General business dataGeneral business data Market Analysis GuideMarket Analysis Guide Government sourcesGovernment sources
FIELD WORKFIELD WORK
FIELD WORK-EVALUATIONFIELD WORK-EVALUATION
TIME AND COST
TIME: It took about 40 days
to gather the information needed, analyzing data, drawing statistical conclusions and to draw final findings & recommendations.
COST
Opportunity cost Energy Billings Personal activities Time spend on surfing
FIELD WORK-EVALUATIONFIELD WORK-EVALUATION
STATISTICAL ANALYSISSTATISTICAL ANALYSIS
Statistical analysis results conclude that in case of Boeing’s flight internet service price and consumer buying behaviour are closely related to each other
GRAPHICAL REPRESENTATIONGRAPHICAL REPRESENTATION
price vs buying behaviour
0
50
100
150
price
bu
yer
pre
fere
nce
10
15
25
30
10 60
15 100
25 38
GENERAL SURVEYGENERAL SURVEY
The survey also asked respondents about the kinds of activities done while connected with the Connexion by Boeing service
GENERAL SURVEY-GRAPHICALLYGENERAL SURVEY-GRAPHICALLY
work e-mail
personal e-mail
browsing
chat
90%
76%
41%
69%
FINDINGS & FINDINGS & RECOMMENDATIONSRECOMMENDATIONS
FINDINGS & RECOMMENDATIONSFINDINGS & RECOMMENDATIONS
MAJOR FINDINGS
Cost of system Connexion's system costs about $500,000 or
more to install on an aircraft Boeing's failed Connexion online service was
costly to install and operate, resulting in large expenditures before getting a single paying customer. An industrywide downturn triggered by the 2001 terrorist attacks made the system an even tougher sell to struggling airlines.
Boeing to End In-Flight Internet Service
Boeing to End In-Flight Internet Service Connexion suffered a major setback with
potential U.S. airlines after the 2001 terrorist attacks triggered an industry-wide downturn.
Boeing published a marketing survey report of airline passengers
FINDINGS & RECOMMENDATIONS-FINDINGSFINDINGS & RECOMMENDATIONS-FINDINGS
only a handful of people — in the “low single digits” — on each Connexion-equipped flight were actually using it
FINDINGS & RECOMMENDATIONS-FINDINGSFINDINGS & RECOMMENDATIONS-FINDINGS
Marketing Stupidity Results in Colossal Failure of Boeing Connexion Service
According to data released by Boeing, "more than 20,000 passengers have used the Connexion by Boeing service during its first year of availability."
one person on every 3 flights using the service. Not such a stunning success anymore.
FINDINGS & RECOMMENDATIONS-FINDINGSFINDINGS & RECOMMENDATIONS-FINDINGS
Revenue Assume that everyone
who used the service paid the top daily rate during that first year of $30. 20,000 paying customers at $30 each is a grand total of $600,000 revenue.
FINDINGS & RECOMMENDATIONS-FINDINGSFINDINGS & RECOMMENDATIONS-FINDINGS
lets give a nice round number and say they had $500,000 in air-time revenue from end consumers. This for a technology that cost over $500,000 per plane to install (140 aircraft had been outfitted at the time)
Connexion had $25M in revenue, but also notes that over $1B was invested over 6 years.
FINDINGS & RECOMMENDATIONS-FINDINGSFINDINGS & RECOMMENDATIONS-FINDINGS
Losses the losses due to Connexion were
approximately the $200M annually. To generate $200M in revenue and break even, Connexion needed 400x the usage
Or, instead of 1 person every 3 flights, an average of about 130 paying customers on each and every flight.
FINDINGS & RECOMMENDATIONS-FINDINGSFINDINGS & RECOMMENDATIONS-FINDINGS
Counting the Marketing Mistakes "Extensive" market research by Boeing came
up with a definitive statement that "38% of frequent travelers are willing to pay at least $25 per flight for full, high-speed access to the Internet and their corporate network".
Clearly, Boeing believed that it they built it, the users would come, and had boxed themselves into a cost structure that embedded this assumption.
FINDINGS & RECOMMENDATIONS-FINDINGSFINDINGS & RECOMMENDATIONS-FINDINGS
Survey Question Q: at this price level, how often would at this price level, how often would
you use the service?you use the service?
FINDINGS & RECOMMENDATIONS-FINDINGSFINDINGS & RECOMMENDATIONS-FINDINGS
Other Factors affecting the service
Loss of sleep time Other activities competing for time. Scoble notes that most flights don't
have access to power. Desire to be off the grid
FINDINGS & RECOMMENDATIONS-FINDINGSFINDINGS & RECOMMENDATIONS-FINDINGS
Lack of space. Poor promotion by airlines. Lack of uptake by US carriers. Lack of direct communication with end-
users.
FINDINGS & RECOMMENDATIONS-FINDINGSFINDINGS & RECOMMENDATIONS-FINDINGS
Other Factors affecting the service
Poor Marketing
Bottom Line…
Other Factors affecting the service
FINDINGS & RECOMMENDATIONS-FINDINGSFINDINGS & RECOMMENDATIONS-FINDINGS
FINDINGS & RECOMMENDATIONSFINDINGS & RECOMMENDATIONS
RECOMMENDATIONS
What could they have done differently?
Ask smarter research survey questions Use a strategy more akin to the early
dotcom successes like Amazon and Yahoo and Google.
RECOMMENDATIONSRECOMMENDATIONS
What could they have done What could they have done differently?differently?
FINDINGS & RECOMMENDATIONSFINDINGS & RECOMMENDATIONS
Understand that the airlines Understand that the airlines weren't really their customers, weren't really their customers, just gatekeepersjust gatekeepers
RECOMMENDATIONS
What could they have done differently?
Realize that there was a potential network effect to be gained by being first out of the blocks.
Accessibility.
FINDINGS & RECOMMENDATIONSFINDINGS & RECOMMENDATIONS
RECOMMENDATIONS
Boeing should do the following to get fruitful results
-Make proper plan -use ground based system -market its service in a proper way -identify their real customers’ need -maintain separate account for this service
FINDINGS & RECOMMENDATIONSFINDINGS & RECOMMENDATIONS
END OF SLIDE SHOWEND OF SLIDE SHOW
Prepared by Nazish Sohail