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Focus areas
1.  Marketing and distribution in the aviation industry
have transitioned to online platforms
2.  Airline strategy is shaped by business model LCC or
FSNC. Think about the marketing Ps in the context
of each business model – how are they different?
3.  Product development – in the air/on the ground.
Whole journey experience
4.  Pricing – competition/seasonality/elasticity.

TOPIC AREAS
•  Loyalty and Relationships
•  Research, Data collection and analysis
•  Distribution systems in transition
•  Pricing and Revenue Management
•  Product unbundling and ancillary revenues
•  Non-price decision points
•  Advertising and Social Engagement

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Remember the group project tasks……

•  Outline your market’s buying behaviour

•  Consider the distribution models
•  Analyse and segment the market and competitors’
products (e.g. inflight service/ancillary charges)
•  Analyse pricing strategy,
•  Create a detailed market analysis

Market Summary
Market: History, Current, and Future
–  Consider
• market share,
• market shifts,
• pricing
• competition

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Segment Definition
•  Business, Leisure, VFR
•  Premium or discount
•  FSNC or LCC
•  Non-stop or connecting

PRODUCT
•  What is the product?

•  The item (or service) that you

have to offer to the customers.
•  The product should be
evaluated from the customer s
point of view. 

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PRODUCT

•  Product Description 
–  Can you say in one clear sentence why your
product is perfect for a specific buyer and what it
does best? 
•  Product Name 
–  It is more important to be descriptive than creative.

•  What is the Virgin Australia product?

•  Is the Qantas product the same?
 

PRODUCT
Functionality Features & Benefits
    To understand the product from a
customer s point of view, list
–  the functionality,
–  the features, and
–  the benefits of the product. 
•  List functionality and features that could be
added. 
•  Prioritize for the target market segments to
help determine product development and
positioning. 

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PRODUCT ADAPTABILITY
•  Understanding how consumers use the
product, so you can incorporate the necessary
messages into your marketing. 

•  There are five factors for measuring how

"adaptable" a new product is: 
–  Relative advantage of the product:
–  Compatibility:
–  Complexity:
–  Divisibility:
–  Communicability:

PRODUCT ADAPTABILITY
Think about Coke introducing Zero and
Cathay Pacific launching Premium Economy
–  Relative advantage of the product: How superior is
the innovation/product to the product it was
designed to compete against? 
–  Compatibility: Does it fit with current product
usage and customer activity? 
–  Complexity: Will difficulty or confusion arise in
understanding the innovation’s basic idea? 
–  Divisibility: How easily can trial portions of the
product be purchased? 
–  Communicability: How likely is the product to
appear in public places where it is easily seen and
studied by potential users? 

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Competition
•  The competitive landscape
–  Provide an overview of competitors, and
their strengths and weaknesses
–  Position each competitor s product
against your market position

Positioning
•  Positioning of product or service
–  Statement that distinctly defines your
product in its market and against its
competition over time
•  Consumer promise
–  Statement summarising the benefit of
the product to the consumer
• What is Air Asia s promise?
• Is it viable?

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POSITIONING
how your target market defines you
against your competitors. 
•  If you stand out with unique
benefits, you can capture the
market s attention. 
•  Again - important to understand
how your product compares with
your competitor s from the
customers point of view
•  Are your customers promoters or
detractors?  (Social media)

Promoters - Detractors

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POSITIONING ENVIRONMENT
What is the new marketing
environment? 
What is your competitive
advantage?   

•  How is the market now

satisfying the need your
product satisfies?
•  What are the switching costs
for potential users?
•  What are the positions of the
competition?

POSITIONING COMPETITIVE ADVANTAGE

What do you have that
gives you an advantage
over your competitors.
•  Do you offer low cost or high
quality?
•  Does your product offer unique
benefits?
•  Are you the first on the market
with this product?

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POSITIONING COMPETITIVE ADVANTAGE

Positioning Strategies - think about
Qantas premium economy …
–  What are the Product Attributes?
–  What are the benefits to the customers? 
–  When / how can the product be used? 
–  Who are the users. 
–  Is it positioned directly against a competitor
– or away from a Competitor

SEGMENTATION
 
•  Mass Marketing or Undifferentiated Marketing:
–  Go after the whole market with one offer and focus on
common needs rather than differences 
–  Airline example?
–  Air Asia

•  Product-variety Marketing or Differentiated Marketing:

–  target several market segments and design separate offers for
each 
–  Airline example?
–  Singapore Airlines – First, Business etc

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SEGMENTATION
 
•  Target Marketing or Concentrated Marketing:
–  Large share of one or a few sub-markets. Good when
company s resources are limited 
–  Airline example?
–  TIGER

•  Identify a niche market that is being overlooked by

larger competitors.
–  The competitors are mapped to see where there may be some
opportunities. 
–  Airline example?
–  REX

SEGMENTATION POSITIONING
The differences that are promoted for a product
must be: 
•  Important: Delivers a highly valued benefit to
the target buyers 
•  Distinctive: Competitors do not offer the
difference, or the company can offer it in a
more distinctive way 
•  Superior: The difference is superior to other
ways that the customer might obtain the same
benefit 

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SEGMENTATION POSITIONING
The differences that are promoted for a product
must be: 
•  Communicable: The difference can be
explained and communicated to the target
buyers 
•  Preemptive: Competitors cannot easily copy
the difference  (price is not preemptive)
•  Affordable: Buyers can afford to pay the
difference 
•  Profitable: Company can introduce the
difference profitably 

Advertising
Strategy and execution
–  Overview of strategy
–  Overview of media and
timing
–  Overview of ad spending

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Communication Strategies
•  Messaging by audience – remember the
segment you are marketing to!
•  Know the Target Consumer demographics
•  Who else is talking to you audience? (Airports,
web aggregators, hotels)
•  Does anyone own the customer relationship

Other Promotion
•  Direct marketing
–  Overview of strategy, vehicles, and timing
–  Overview of response targets, goals, and budget
•  Third-party marketing
–  Co-marketing arrangements with other companies
•  Marketing programs
–  Other promotional programs

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Distribution
•  Distribution strategy
•  Channels of distribution
–  Identify preferred channels of distribution
•  Distribution variances by channel
•  What percent share of distribution will be contributed
by each channel – a pie chart might be helpful – and
what impact does this have on revenue management

PLACE DISTRIBUTION CHANNEL

……. making your product available to the
consumer. Emerging role of mobile…
Functions 
•  Information: gather and distribute marketing
research 
•  Promotion: develop and communicate offers 
•  Contact: communicate with prospective buyers 
•  Matching: fit the offer to the buyer's needs 
•  Negotiation: agree on price and terms 
•  Physical distribution: transport and store 
•  Financing: funds to cover the channel costs 

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WHAT ARE THE CHANNELS

FOR AIRLINES?
•  GDS
–  Travel agent
•  Tour operators
•  Internet
–  Own website
–  Travel Portal
•  Mobile apps
•  Retail office
•  Airport

Pricing
Pricing
–  Summarise specific pricing or pricing
strategies
–  Compare to similar products/destinations
–  Identify price’s role in revenue management

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PRICE
General Pricing Approaches 

•  Product Line: Setting price steps between

product line items 
•  Optional Product: Pricing optional or
accessory products 
•  Captive Product: Pricing products that
must be used with the main product 
•  By-Product: Pricing low value by product
to get rid of them 
•  Product Bundle: Pricing bundles of
products sold together 

PRICING A NEW PRODUCT

 
•  Market-Skimming: Initially set high prices to "skim"
revenue layer by layer from the market. Works when: 
–  Quality and image support the higher price
–  Enough buyers want the product at that price
–  Cost of producing a small volume cannot be high
–  Competitors should not be able to enter the market easily
•  Market Penetration: Set a low initial price in order to
penetrate the market quickly and deeply to win a large
market share. Works when: 
–  Market is highly price sensitive
–  Production and distribution costs fall as sales volume
increases
–  Low price helps keep out the competition

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PRICE ADJUSTMENT
When situations change: 
•  Discount & Allowance: reduced prices to reward
customer responses eg paying early
•  Discriminatory: adjust prices to allow for differences
in customers, products, and locations 
•  Psychological: prices for psychological (optical)
effects. Ex: $299 vs. $300 
•  Value: adjusting prices to offer a combination of
quality and service at a fair price 
•  Promotional: temporarily reduce prices to increase
short-run sales 
•  Geographical: adjust prices to account for geographic
location of customer. 
•  International: adjust prices in international markets 

Packaging and Fulfillment

•  The customer proposition

Discuss the customer’s likely

booking. How does the customer
obtain and use the product?

Is this the same for all airlines and

all customer types?

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Launch Strategies
•  Launch plan
–  When a sale is announced?
•  Promotion budget
•  WOMO
•  Social media
•  Backup material with detailed budget
information for review

Success Metrics
•  Short term penetration
•  Next year goals
•  Longer term growth
•  Measures of success/failure
•  Requirements for success

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PROMOTION
Promotion is the mix of advertising,
personal selling, sales promotion, and
public relations a company uses to
pursue its advertising and marketing
objectives. 

PROMOTION OBJECTIVES
Unawareness>Awareness>Knowledge>
Attitude>Intention>Purchase

Measuring Response 

•  Testing different offers, advertisements, direct mail letters,

lists, and promotion techniques can tell you what method
is most effective. BUT testing is expensive.  

•  If you decide to test, make sure you have a method for

measuring response.

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Product positions…

Narrow
Differentiation Broad
Differentiation
Features

Cost
Leadership

Range of Markets

You could map these as…

Dragonair Qantas/SIA
Features

?
Ryanair

Range of Markets

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