MARKETING AUDIT OF BOEING

Masters in Business Administration ACADEMIC ASSESSMENT SUBMISSION FORM STUDENT NUMBER MODULE CODE MODULE TITLE LECTURER NAME DUE DATE SUBMISSION DATE ASSESSMENT TASK WORD COUNT GRADE In submitting this work, I confirm that I have understood UHI regulations relating to plagiarism, and that: I have completed this assigned work by myself, in my own words and using my own notes, figures or rough workings (except where group work specifically forms part of the assignment) I have acknowledged fully any sources used by means of in-text citations, and the creation of a List of References in the UHI approved system of Harvard referencing 1310 STRATEGIC MARKETING MS. JILL ELDER 3.3.2014 3.3.2014 10011165

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Table of Contents
INTRODUCTION ............................................................................................................................................. 4 BACKGROUND OF BOEING ............................................................................................................................ 4 MARKETING AUDIT ....................................................................................................................................... 6 1. 2. 3. EXTERNAL ENVIRONMENT ................................................................................................................ 6 COMPETITIVE ENVIRONMENT .......................................................................................................... 8 MARKETING ENVIRONMENT............................................................................................................. 9

INTERNAL AUDIT ......................................................................................................................................... 11 SWOT ANALYSIS ...................................................................................................................................... 12 EVALUATION OF CURRENT MARKETING STRATEGY ................................................................................... 12 CONCLUSION............................................................................................................................................... 13 GLOSSARY.................................................................................................................................................... 14 APPENDIX 1 ................................................................................................................................................. 14 APPENDIX 2 ................................................................................................................................................. 17 BIBLIOGRAPHY ............................................................................................................................................ 18

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INTRODUCTION
In the competitive world, almost all companies try to sell their product by setting marketing strategies or marketing plan. The marketing plan is designed to achieve the marketing objectives that are set by the organization to meet the organizational goals (The Times 100 Business Case Studies 2014). In order to review the marketing plan and the marketing activities, marketing audit is performed on a regular basis (Kamil 2012; R.M.S.Wilson 2004). This report deals with the marketing audit of Boeing, a US based aircraft manufacturing company. Through marketing audit, external and internal environment changes of the organisations are critically analysed by using informations from books, journals, articles, reports, newspapers and web sources. Moreover, scenario planning is carried out to understand the various consequences arise due to the change in the external environment and their impacts are critically evaluated to review Boeings current marketing strategy. In addition, some models: PESTEL, Porter five forces, and SWOT analysis are used to understand the changing environment. The report is finally concluded by evaluating the current marketing strategy of Boeing.

BACKGROUND OF BOEING
Boeing is a traditional aerospace company founded in 1916 by W.Boeing (W.Gould 1995). Since then Boeing faced many challenging environment to become one of the leading aircraft manufacturing companies in the aerospace industry (Boeing 2014). Boeing has a diversified market; hence, to become a leader of the concern market, Boeing divided its business in to two namely commercial airplane manufacturer and
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defense, space and security aircraft manufacturer (Boeing 2013). However, this report focuses only on the commercial aviation sector. The marketing objective of Boeing is to sell fuel-efficient and high performance aircraft to its customers namely premium and low cost airlines. Since aircraft manufacturing involves too much cost and work force, Boeing follows marketing strategy of selling before manufacturing the product (W.Gould 1995) that allows the company to analyse market demand of that product, understands customer opinion, and make feasible changes according to the customer requirements. Moreover, Boeing delivers various types of aircrafts and services to their customers in 150 countries (Boeing 2014). About 70% of Boeing revenue is mainly from the operators outside US, hence Boeing concentrates more on its global market (Boeing 2014). Boeing believes in service after sales marketing strategy to maintain the loyalty of the international customers (W.Gould 1995). However this is an old strategy of Boeing, innovations are introduced to make the strategy effective to the recent world. For instance, Boeing set up a Boeing Commercial Aviation Service, which works 24 hours to provide technical support, material and other services to its operators around the world that outweighs Boeing from other competitors (Boeing 2013). These marketing strategies are critically reviewed regularly via marketing audit to implement any changes in the marketing plan in order to achieve the marketing objectives. The marketing audit of Boeing is further explained in detail.

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MARKETING AUDIT
Marketing audit checks optimum and efficient use of company resources against the market demand. Marketing audit consists of internal audit and external audit to understand the changing environment that has an impact on marketing strategy (The Charted Institute of Marketing n.d). The external audit covers micro and macro environment of the organisation by focusing on three factors that are analysed by various models such as 1. External environment of organization- PESTEL analysis 2. Competitive Environment Porter five forces and 3. Market environment Moreover, scenario planning of external and competitive environment is discussed further in this topic.

1. EXTERNAL ENVIRONMENT
The External environment of the organistion should be considered to minimize the impact of risk in selling the products in future and also to foresee the opportunities in expanding the business globally. The main PESTEL factors that has an impact on the companys marketing plan are Political, Economy and Technological factors. Social, environment and legal have less impact; hence, these are discussed in Appendix 1

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POLITICAL: The strategy of expanding the business globally is affected by the WTO restrictions (World Trade Organisation 2011). Therefore, Boeing should find an alternative source of entry in to the market of restricted country. For example, instead of a direct entry Boeing can enter in to that market through alliance policy or negotiating mutual beneficial trade agreement with that country. Hence, Boeing can deliver its product even in the non-free trade countries. ECONOMIC: Boeing has a promising future economy with its long-term demand of 35,280 aircrafts that has a value of $4.8 trillion (Boeing 2013). Hence, on the basis of current marketing strategy Boeing managed to be successful leader of the aviation market. However, Boeing experience recent disputes in getting government subsidies (World Trade Organisation 2011). This results in manufacturing delays, which in turn affect the on time delivery of the aircrafts. Moreover, insufficient funds may affect the marketing strategy of producing customer-oriented products. TECHNOLOGY Through technology, Boeing not only maintains the stronger global network but also improvise its marketing strategy by implementing new innovations in the products as well as in the service. For instance introducing 24-hour technical support to the operators made Boeing user-friendly organisation. Moreover, by manufacturing new lighter and fuel efficient aircrafts enhances the market demand.

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SCENARIO PLANNING Airbus complained to the WTO about Boeing regarding the usage of US government military subsides in the commercial aviation research and development. If Boeing failed to get the government subsidies, it will experience major problem in commercial market and will greatly affect the quality of product and service. Hence, Boeing should find an alternate source for the funds and also implement new marketing strategy to increase the market demand of the existing products.

2. COMPETITIVE ENVIRONMENT
Analysing the competitive environment is mandatory to maintain the competitive advantage of organisation. Hence, this is analysed with the help of porter five forces as follows PORTER FIVE FORCES In this only the major force that affect the marketing plan are discussed and remaining are mentioned in Appendix 2 Boeing has high rivalry in the market because of the European aircraft manufacturer Airbus. Hence, this lead to the higher buyer power. Since Boeing and Airbus produce almost same products, airlines can switch to any organisation. In order to maintain the competitive advantage, Boeing uses service after sales marketing strategy to differentiate its service from the competitors (W.Gould 1995).

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However, buyer power may vary because of the type of airline. Low cost airline will try to have one type of aircraft to reduce maintenance and training costs and also the requirement of seating capacity is distinct hence they do not have much options in selecting manufacturer.

3. MARKETING ENVIRONMENT
Boeing is in a growing market environment since 1990 to 2010 that can be seen from the figure 1, which shows revenue of passengers per kilometer (RPK). Moreover, figure 2 depicts increase in aircraft demand in developing countries due to the introduction of low cast airlines and change in the socio culture in that country. Hence, Boeing has growing market with higher product demand.

Figure 1: Aviation Market trend since 1990 to 2010 (Boeing 2013)

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Figure 2: Demand by region of Boeing (Boeing 2014) However, Boeing has less market demand in some regions such as Europe, Latin America and therefore gained less profit in the year 2012 in those regions (Refer figure 3). Moreover, the figure also explains the strength of the Boeing that is Asia Pacific region. Hence, Boeing should overcome the weakness by adapting new marketing strategy and also improvise the existing strategy to maintain the customer loyalty.

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Figure 3: Regional Profitability Outlook (Boeing 2013).

INTERNAL AUDIT
The organisation should know its strength and weakness to sustain in the competitive market. Moreover should use the opportunities arose due to the changing environment and take prior actions to reduce the impact of future threats. To understand all these factors and to improvise the organizations marketing activities internal audit is carried out. The internal audit of Boeing can be easily performed through SWOT analysis, which is further discussed

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SWOT ANALYSIS
Through this analysis company will understand its position in the market and steps to be taken to prevent the risk factors. Since main revenue of Boeing lies in the international customers, Boeing maintains close relationship with global customers through conference, annual meet and providing various services. At present lack of funding from the government is main weakness in expansion of the business. Skilled staff and technology provide great opportunity in marketing activities. The main threat of Boeing is various suppliers, if one supplier faces a problem then that affects the whole manufacturing process. For instance, the recent delay in the delivery of B777 and B787 is due to the Japan Earth quake since 35% of the parts are manufactured in Japan (Chicago Tribuue 2013). Hence, Boeing should take necessary actions to prevent these risks.

EVALUATION OF CURRENT MARKETING STRATEGY

By considering the future market demand, current marketing strategy is well in force. However, improvisation of marketing strategy is required to maintain the loyalty of the global customers such as introducing R&D in all the countries. Moreover, the unavailability of government funding is a major problem of Boeing as far now, hence improvisation of marketing strategy is mandatory to sell the existing products and thereby increase the revenue of the organisation.

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CONCLUSION
On the whole, the marketing strategy used by Boeing is reviewed to understand the effectiveness of the marketing plan. The marketing audit can be concluded by saying that the current marketing strategies are good; however, improvisation of marketing strategy is required to overcome the weakness and enhance the competitive advantage. Moreover, new marketing strategies should be implemented to compete the economic fluctuations that is to take more orders to reduce the manufacturing cost.

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GLOSSARY
US- UNITED STATES of AMERICA R&D- RESEARCH AND DEVELOPMENT PROGRAMME

APPENDIX 1
PESTEL ANALYSIS OF BOEING
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POLITICAL The support or interventions of the government affect the buying of the aircrafts. For instance, China being major market of Boeing using about 700 Boeing aircrafts decides to be a loyal customer for the next twenty years (Boeing 2009). This allows the China government to gain a political leverage in U.S. and hence increase the opportunity of trading more in China. World Trade Organisation (WTO) has great impact on the Boeings decision of expanding globally. WTO allows Boeing to have successful negotiation of mutually beneficial trade agreements with international countries (Boeing 2009). However, WTO also restricts Boeing in trading with other countries due to the countries trade restriction policy. ECONOMIC Favoring Exchange rates Dispute in Government subsidies has great impact on the economy of the organization (World Trade Organisation 2011). Increase in fuel price made the airlines to demand for the fuel-efficient aircrafts. Hence, Boeing should invest more in research and development of new aircrafts that are fuel-efficient. SOCIO CULTURAL According to International Air Transport Association survey, many business travelers prefer economic class rather than business class seats. Hence major

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income of the airline lies on the business travelers, the airlines demands for more economic seating aircrafts and therefore Boeing featured a new aircraft with a different seating configuration and calling that class as Premium economy class (C.Taylor 2010). Thus, Boeing manufactures the aircraft according to the customer requirement. TECHNOLOGY Technology is main driving force of Boeing, Boeing spend millions of dollars in research and development of new technologies. The use of 50% composites in its new 787 Dreamliner becomes a breakthrough in the aviation market (Brosius 2007). Moreover, actively collaborate with other institution and universities to innovate new technologies that can differentiate its product from competitors. Thus strengthens the market position of Boeing. ENVIRONMENT Boeing always manufactures aircraft that consumes less fuel that in turn emit less carbon dioxide. Boeing uses its technology factor to reduce the carbon footprints and more over support the research process of finding alternate fuel for the aircraft. LEGAL Since Boeing is a part of aviation market, it is bound to follow the required standards set by Federal Aviation Administration in manufacturing the products. However, this has a least impact in the selling of the product.
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APPENDIX 2
PORTER FIVE FORCES 1. Barriers to Entry - Analysis=High New airplanes and engines require extremely high investments accompanied with great risk and the inability to get a positive return on that investment for many years. Aerospace industry requires large amounts of continuous investment in research and development due to the complexity of the industry. 2. Supplier Power -Analysis=Weak Firms in the aerospace industry have several supplier which to choose from. Boeing has round 22,000 suppliers Globally (Boeing 2014).

3. Buyer Power - Analysis=High Airlines are cutting their investments, which forces a deadly competition in the aircraft industry. Due to the competition, Buyers (Airlines) force advantageous reductions in the price of Aircrafts. Aerospace firms compete for large orders from airlines to try to recover their high costs 4. Threat of Substitutes - Analysis=Weak The ability of aircraft covering large distance in a shorter duration of time being a deciding factor in choosing the air journey. Hence, almost no substitutes for long haul aircrafts.

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Exception: for short distances over land, aircrafts may compete against automobiles and trains. 5. Competitive rivalry - Analysis= High Two firms competing in the Aircraft industry, Boeing and Airbus. The two firms are equally balanced and have little differentiation in their products.

BIBLIOGRAPHY
Boeing (2009) Boeing's Right There [11 Febraury 2014]

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Boeing (2013) About Us: Commercial Airplanes [online]. Available from <http://www.boeing.com/boeing/companyoffices/aboutus/brief/commercial.page?> [ November 2013] Boeing (2013) Current Market Outlook 2013-2032 [ February 2014] Boeing (2014) The Boeing Compnay Overview [ 15 2014] Brosius, D. (2007) B787 Update [online]. Available from <http://www.compositesworld.com/articles/boeing-787-update> [ Febraury 2014] C.Taylor (2010) Putting Premium on Economy [online]. Available from <http://www.boeing.com/Features/2010/05/bca_premium_on_economy_05_03_10.html> [20 Febraury 2014] Chicago Tribuue (2013) Boeing Production in Japan [online]. Available from <http://articles.chicagotribune.com/2013-11-12/business/chi-mitsubishi-boeing-777x-wing-offer20131112_1_787-dreamliner-boeing-workers-mitsubishi-heavy-industries-ltd> [ Febrary 2014] Kamil, L. (2012) Marketing Audit as a Method of the Evaluation of the Marketing Plan [15 February 2014] P. Kotler, W.T.G. & Rodgers, W.H. (1989) 'The Marketing Audit Comes of Age.' MIT Solan Management Review [12 Febraury 2014] R.M.S.Wilson, C.G. (2004) Strategic Marketing Management 3rd edn. Oxford: Taylor & Francis Ltd The Charted Institute of Marketing (n.d) Marketing Audit [online]. Available from <http://www.cim.co.uk/marketingplanningtool/tech/tech5.asp> [9 Febraury 2014] The Times 100 Business Case Studies (2014) 'Marketing Theory.' The Times 100 Business Case Studies [5 February 2014] Tybout, A.M. & Hauser, J.R. (2001) 'Marketing Audit.' Journal of Marketing 45(3), a2101 [10 February 2014] W.Gould (1995) Business in Action Boeing. Avon: Cherrytree Press World Trade Organisation (2011) WTO Issues Panel Report on Boeing Dispute [online]. Available from <http://www.wto.org/english/news_e/news11_e/353r_e.htm> [16 Febraury 2014]

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