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Running Head: MA LE AN MA PL PA II
Macro Level Analysis: Market Plan-Part II
Keith ! "uarles
#$%&'(: Marketing a)stone %e*inar +M#I1,-,A.
%ydney /kolo
0-1'-1,
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Running Head: MA LE AN MA PL PA II
Introduction
1or the second )hase o2 the creation o2 a Marketing Plan 2or Innovative Airlines 3e *ust
evaluate the attractiveness o2 the industry and *arket on a* *acro level and decide on the
research design that 3ill guide us through the *arketing )rocess and 2ul2ill the o45ectives o2 the
research )ro4le*! 6hese t3o ele*ents o2 the *arketing )lan are i*)ortant 4ecause they )rovide
target *arket7 sa*)le *arket7 as 3ell7 as industry characteristics that 3ill that 3ill aid in
deciding 3hether or not to introduce our ne3 service into the current 4usiness traveler *arket!
I. Macro level industry and Market Analysis
Macro-level analysis o2 the airlines industry can 4e )er2or*ed 4y a))lying Porter8s ( 1orces
theory! 6he e9ternal uncontrolla4le 2orces that drive change 3ithin an industry or *arket *ust
4e evaluated 2or )otential o2 threatening the success o2 the ne3 )roduct in the *arket! :alker
and Mullins +,;11. in the te9t4ook Marketing strategy: A decision based approach e9)lains
industry and *arket attractiveness assess*ent 4asics 4y )ro)osing that the industry or *arket8s
attractiveness is su45ect to the *acro level e9ternal in2luences that currently e9ist 3hich are
sha)ed 4y de*ogra)hic7 sociological7 regulatory 7 technological and the natural environ*ent
occurrences and trends! +)!00. A2ter a))lying Porter8s 1ive 1orces analysis a *arketer can rate
the attractiveness o2 a *arket on a *acro level!
Innovative8s Airlines a4ility to )ursue and *aintain stated *issions7 o45ectives7 goals!6he
a4ility to co*)ly 3ith industry critical success 2actors 3ithin the con2ines o2 the a4ove-
*entioned *icro level e9ternal change-drivers 3ill ulti*ately decide 3hether or not the industry
and *arket attractiveness suits the introduction7 )roduction and )roli2eration o2 our ne3 service
in the air carrier industry 4usiness traveler *arket!
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Running Head: MA LE AN MA PL PA II
Airline Industry Five Force Analysis
6he 2ive 2orce analysis consists o2 evaluating the intensity o2 the rival7 threat o2 su4stitutes7
4uyer )o3er7 su))lier )o3er and threat o2 entry! Innovative Airlines is )ro)osing a revolutionary
4usiness idea that 3ill eventually create a niche in the 4usiness traveler *arket < there2ore7 the
2ive 2orces are a))lied in res)ect to a ne3 )roduct7 service or 4usiness idea in a current *arket!
Porter8s 1ive 1orces Analysis 2or Innovative Airlines is as 2ollo3s:
1! Rivalry. 6he e22ect o2 all the co*)etitors in the *arket or industry on attractiveness can
intensi2y or lessen the rivalry! In the te9t Marketing strategy:A decision based approach :alker
and Mullins +,;11. e9)lain that industries and *arkets 3hich have *any high ca)ital 2ir*s 3ith
little or no distinction a*ong the services7 no do*inate 2ir* and lo3-s3itching cost have greater
rivalry intensity! = +)!'&-'>. :e antici)ate highly intense rivalry in the industry and *arket
a2ter the niche has 4een e9)loited in the airline industry 4ased on the 2ollo3ing considerations:
-6he airline industry currently has all o2 these characteristics o2 the rivalry highly intensive!
- antici)ated gro3th rates has increased co*)etition 2or *arket share and out innovative )roduct
3ill 4e du)licated 4y other 2ir*s! 6hus7 our innovation 3ill 4e di22used over ti*e and our
co*)etitive advantage 3ill 4e ad5usted to acco**odate the ne3 co*)etitor8s e*ergence!
,! 6hreat o2 su4stitutes! 6he threat o2 su4stitutes is rated lo3 2or this *arketing o22ering in the
industry and *arket 4ecause on the uni?ueness o2 the innovation! :alker and Mullins +,;11.
state7 = su4stitute )roducts )ut a ceiling on the )ro2ita4ility o2 an industry 4y li*iting the )rice
that it can 4e charged7 es)ecially 3hen su))ly e9ceeds de*and! = +)!'0. In the short run
Innovative Airline 3ill )ros)er 2ro* the ne3 4usiness idea@ service! #y grou)ing the acade*ic
and govern*ent 4usiness travel into one *arket niche 3ith acco**odations in-2light 2or
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Running Head: MA LE AN MA PL PA II
technological and co**unication needs our ne3 service 3ill encounter *ini*al risks 2ro* the
=su4stitute e22ectB on inco*e 4y *eans o2 )roduct di22erentiation in the industry and *arket!
-! #uyer Po3er! #uyer )o3er in the airline industry and *arket is *oderately high 4ecause
there is so *any airlines to choose 2ro* consu*ers )it one 2ir* against another and the cost o2
s3itching 2ro* one airline to another is *ini*al! :alker and Mullins +,;1;. state7 = an
industry8s custo*ers constantly look 2or reduced )rices7 i*)roved )roduct ?uality and added
services and thus can e22ect co*)etition 3ithin an industry!B 6hus our innovation 3ill eventually
decrease the 4uyer )o3er 4ut only to rise again as ne3 2ir*s enter the niche +*arket. and
industry 4uying )o3er 3ill increase )ro)ortionately in the long run!
A! %u))lier Po3er. %u))lier )o3er is high as technological advances7 societal and govern*ental
in2luences have an e22ect on co*)etition in the industry and *arkets! 6he need to e?ui) our
aircra2t 3ith =state o2 the art technological engineering and accessories is a critical success
2actor< there2ore sellers o2 aeronautical e?ui)*ent have an advantage! Covern*ental regulation
and societal sa2ety7 e22iciency and co*2ort concerns in-2light also )rovide )o3er to the sellers
4ecause the high tech e?ui)*ent 3ill 4eco*e industry and *arket standards!
Threat of Entry
6he threat to entry is high 4ecause the ne3 service 3e o22er 3ill 4e du)licated eventually and
2ir*s 3ills decrease our 4arrier to entry 3hich once 3as the innovation o2 a )roduct 3ithin a
current *arket! :alker and Mullins +,;11. state7 = ne3 co*)etitors add ca)acity to the industry
and 4ring 3ith the* the need to gain *arket share7 there4y *aking co*)etition *ore intense! =
+)!'>. 6he industry and *arket attractiveness is e22ected negatively 4y the entry o2 ne3
co*)etitors into our ne3 *arket niche in the long run!
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Running Head: MA LE AN MA PL PA II
Industry Growth Rates
A2ter the %e)te*4er 117 ,;;1 tragedy occurred the airline industry and rising 2uel costs
su22ered *a5or dra34acks and )ro2its decreased across industries! Alan Levin +,;1,. states7 =
stung 4y the %e)t! 117 ,;;17 terrorist attacks7 high 2uel )rices and a sour econo*y7 the airline
industry has res)onded 4y slashing ca)acity! ho3ever recent 2orecast are o)ti*istic 2or the
recovery 2ro* the negative e22ect on airline gro3th rates caused 4y the uncontrolla4le *acro
level in2luences! Alan Levin +,;1,. 2urther states7 = A2ter a decade in 3hich the airlines lost a
collective D&; 4illion7 the 1AA says the industry turned a )ro2it last year o2 D'!( 4illion as the
$!%! econo*y re4ounded 2ro* recession and air 2ares rose! = +)!1. 6here2ore7 )ro2ita4ility
3ithin the industry and *arkets is on the rise and )otential 2or gro3th is 2avora4le!
Innovatives Growth Rates
As the industry8s gro3th rate rises Innovative Airlines< Inc! )lans to ca)italiEe on the trend as
it develo)s 4y o22ering an innovative )roduct in a gro3ing industry 3hile *aintaining already
esta4lished strategic 4usiness units!
Alan Levin +,;1,. in the article FAA predicts steady growth for airline industry gives details o2
the 2orecast 2or airline industry gro3th as:
Fo*estic airline )assengers are e9)ected to increase 4y -G this year over last and then cli*4
4y an average o2 ,!(G annually 2or the re*ainder o2 the ne9t ,; years! International tra22ic is
2orecast to surge this year 4y >!0G and continue gro3ing 4y A!-G7 the 1AA says! +)!1.
Innovative Airline 2orecasts its do*estic air travel to gro3 4y an average o2 , !( G )er year
2or the ne9t ,; years )essi*istically and ( G o)ti*istically7 as our innovation 3ill s)ur ra)id
early gro3th and sustaina4le gro3th 2ro* year to year even a2ter the di22usion o2 our innovation
due to our continued technological advances and re)ositioning our service in the *arket to
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Running Head: MA LE AN MA PL PA II
de2end our co*)etitive advantage! In other 3ords7 as the co*)etition reverse engineers our
techni?ue and intelligence 3e 3ill reverse engineer their )rogress and learn 2ro* the* in order
to de2end our di22erentiation in the industry and the *arket! Innovative naively 2orecasts
international air travel to gro3 *odestly 4y A! ( G and o)ti*istically 4y > G on a yearly 4asis
as international govern*ent and acade*ic travel 3ill continue to gro3!
Critical Success Factors
In order to sustain a co*)etitive advantage in the industry and the *arket Innovative Airlines
*ust *eet the conditions o2 the ritical %uccess 1actors +%1.! List 4elo3 are the critical
success 2actors 2or the airline industry!
-li*it 2light delays and cancellations
-co*)liance 3ith govern*ental regulations and societal concerns
-stay u)dated 3ith *ost recent technological advances to kee) do3n 2uel costs and u)grade
)hysical evidence
-di22erentiate )roduct in industry and *arket
Alvin Levin +,;1,. states = airline delays have 2allen signi2icantly since airlines7 2acing high 2uel
costs and heavy losses7 4egan reducing 2lights in ,;;0! = +)!1. 6here2ore7 delays7 2uel costs and
2light reductions have e22ected 2ir*8s success in the airline industry and re)resent =roo*s 2or
i*)rove*entH 3hich could actually *ean *ore *arket share! Alan Levin +,;1,. 2urther states7 =
Bonly a *oderniEed air trans)ortation syste* 3ill 4e a4le to kee) u) 3ith our 2orecasted
de*and7B says 1AA Ad*inistrator Randy #a44itt! = +)! 1. 6here2ore7 technological innovation
3ill )lay a key role in the success o2 airlines in the gro3ing *arket! Innovative airlines co*)lies
3ith societal and govern*ental standards 4y virtue o2 its esta4lished 4usiness )olicies in its
current 4usiness units and 3ill e9)and those )olicies into the ne3 *arket niche! As 3e
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Running Head: MA LE AN MA PL PA II
continuously seek to i*)rove our *arket o22ering through technological advances7 *anagerial
leadershi)7 and *arket re-)ositioning Innovative Airlines 3ill achieve the critical success 2actors
and strive to e9cel 4eyond industry and *arket averages in 2uel7 2light and environ*ental
e22iciencies!
verall attractiveness
6he overall attractiveness o2 the industry and the ne3 *arket created is )erceived as
2avora4le 2or the ne3 service! 6he 4usiness travel *arket seg*ent already e9ists and the
consolidation o2 acade*ic and govern*ent 4usiness air travel e9)ands the 4usiness travel
*arket! Alan Levin +,;1,. states7 = the e*4attled airline industry 3ill see solid long-ter* gro3th
over the ne9t ,; years 3ith yearly )assenger totals cli*4ing 2ro* >1- *illion to nearly 1!-
4illion7 the govern*ent )redicted today! = (p.1) 6hus7 the industry and its *arkets are lucrative
and 3ill attract *any e9isting 2ir*s into ne3 *arkets7 as 3ell as7 ne3 2ir*s into e9isting
*arkets! Increases in total industry aircra2t )assengers allo3 2ir*s to gain *arket share 3ithout
taking it 2ro* co*)etitors and conse?uently adds to the overall attractiveness o2 the industry and
*arket as 3ell as 4ecause our innovation 3ill ca)ture a large )ercentage o2 the ne3 custo*ers
3ith our innovation!
II. !RIMAR" RESEARC# S!ECIFICATI$S
Market Research !ro%le& and 'esi(n
#e2ore 3e can introduce the ne3 service into *arket 3e need to 2ind out i2 the current
govern*ental and acade*ic 4usiness traveler *arket is su4stantial enough to 3arrant targeting
as a niche! E9)loratory and descri)tive *ethods 3ill 4e used to conduct the research!
hurchill I Iaco4ucci +,;1;. in the te9t Marketing research: Methodological 2oundations
e9)lain the characteristics o2 5udg*ent sa*)ling as 2ollo3s:
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Running Head: MA LE AN MA PL PA II
Pur)osive 5udg*ent sa*)les *ay 4e used in e9)loratory designs! :hen searching 2or ideas
and insights7 the researcher is not interested in sa*)ling a cross-section o2 o)inion 4ut rather
in sa*)ling those 3ho can o22er so*e )ers)ective on the research ?uestion! +)!,0>.
6he e9)loratory research 3ill 4e conducted through surveys sent to *a5or acade*ic and
govern*ent agencies 3ithin the states o2 Ne3 Jork7 :ashington F7 Fetroit7 hicago7 Atlanta
and ali2ornia and Minnesota o2 3hich 3e have *a5or ter*inals in ali2ornia7 Ne3 Jork ity7
NJ7 Fetroit and Atlanta! 6he surveys 3ill 4e ad*inistered 4y )ersonal in-de)th intervie3s over
the internet 4y Innovative8s Airlines current *arketing de)art*ent 3ith acade*ic and
govern*ent o22icials 3ho decide the traveling 4udget )er agency 4y containing ?uantitative and
?ualitative data regarding the use o2 acade*ic and govern*ent 4ased e9)enditures to travel on
4usiness! ynthia Russell +,;;0. states7 =the design delineates the )lan or 4lue)rint o2 the study!
Non-e9)eri*ental designs7 3hich include descri)tive and correlational designs7 e9a*ine
)heno*ena as they naturally occur7 so no *ani)ulation is involved! +)!1. %o*e o2 the areas o2
discussion to 4e addressed during the intervie3s are as 2ollo3s:
-Ho3 *uch is the 4udget 2or 4usiness travel 2or the agencyK
-:hat is the )eak season 2or 4usiness travel 2or the agencyK
-Ho3 *uch does the average 4usiness traveler s)end )er tri) in a yearK
-:hat are the *a5or co*)laints o2 the 4usiness travelers regarding the service encountered
during 4usiness travelK
-:ere the acco**odations 4e2ore7 during and a2ter the 2light suited 2or your uni?ue 4usiness
travel needs and )re2erencesK
-Has the 4udget ever 4een e9ceeded and i2 so 4y ho3 *uchK
-:hat is the total a*ount o2 *iles 2lo3n on o22icial co*)any 4usiness 2or the agencyK
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Running Head: MA LE AN MA PL PA II
-:hat is the average a*ount o2 *iles 2lo3n )er traveler 2or your agencyK
6he a4ove-*entioned ?uestions 3ill )rovide Innovative 3ith an insight on the overall
satis2action and )erceived value o2 the current 4usiness traveler8s e9)enditures and in-2light
e9)erience 3hich in turn 3ill aid in researching to see 3hether or not a su4stantial )art o2 their
res)ective agency 4usiness travel 3ould )re2er an alternative 4usiness travel o)tion!
"uantitative data 3ill 4e solicited 2ro* current acade*ic and govern*ent 4usiness travelers
o4tained 2ro* surveys sent via internet concerning the co*2ort7 e22iciency7 acco**odativeness
and air 2are )ackage )ricing they are currently e9)eriencing as co*)ared to our ne3 service
o22ering! %tatistics revealing the *ean and standard error o2 the survey res)onses 3ill 4e used to
descri4e the sa*)le )o)ulations )re2erence 2or the ne3 service or the current 4usiness travel
service! ynthia Russell +,;;0. 2urther states7 =i2 a descri)tive study is )lanned7 then descri)tive
statistics are antici)ated e!g! *eans7 *odes7 *edians! +)!1. %o*e o2 the ?uestions that 3ill 4e
ad*inistered to the 4usiness travelers on the survey are as 2ollo3s
-Ho3 o2ten do you travel on o22icial 4usiness 2or the co*)anyK A scale 3ith 4e )resented 3ith
intervals! E9! 1-(; ti*es )er year7 (;-1;; ti*es )er year7 etc!
-:hat is the *a5or disa))oint*ent 3ith your current 4usiness travel airline service! Re)resented
in categories such as ti*eliness o2 2light de)arture7 in-2light service and acco**odations
ticket )rices7 4aggage handling7 etcK
-Ho3 3ould you rate the sa2ety *easures taken 4y your current air travel )rovider on a scale o2
1-1; 3ith 1 4eing the lo3est ratingK
-:ould you 4e 3illing to change airlines i2 the disa))oint*ents *entioned in the a4ove ?uestion
3ere eli*inatedK It 3ill 4e *easured on a scale o2 degrees as 2ollo3s:
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Running Head: MA LE AN MA PL PA II
Purchase intent G res)onse Rule of hu!b Reduction " of !arket likely to
change
Fe2initely 3ould change E9! 1( G Multi)lied 4y !0 !1( L !0 M 1, G
)ro4a4ly 3ould change
Neutral
Pro4a4ly 3ould not change
Fe2initely 3ould not change
-Has the a*ount o2 4usiness 2lights increased or decreased 2or you over the )ast ( years!K
6he ?uantitative data concerning the individual 4usiness traveler travel e9)enditures and
e9)eriences 3ill 4e totaled and *easured 2or sa*)le *ean and standard error in order to descri4e
the sa*)le )o)ulation on the average regarding )re2erence 2or the current air travel and their
)otential to s3itch to our ne3 innovative service that 3ill 4e constructed as a a )ro*otional
)ackage and )resented 3ith the survey 3ith a s)ecial o22er included 3hich allo3s the 2light
)ackage to 4e ad5usted to suit each agency 4ased on their s)eci2ic travel needs and 4udget!
:alker and Mullins +,;11. in the te9t Marketing research: A decision based approach e9)lains
the survey 2orecasting *ethod as:
Another co**on 3ay to 2orecast sales or esti*ate *arket )otential is to conduct surveys or
2ocus grou)s! 6hese *ethods can 4e done 3ith various kinds o2 res)ondents! consu*ers7
a2ter 4eing sho3n a state*ent o2 the )roduct conce)t 2or a )rototy)e or sa*)le o2 the
)roduct7 can 4e asked ho3 likely there are to 4uy7 creating a =survey o2 4uyer8s intention!
+)!11&.
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Running Head: MA LE AN MA PL PA II
6he ?uantitative data 3ill 4asically 4e coded7 inter)reted7 translated into ?ualitative ter*s and
co*)ared to the ?ualitative data gained 2ro* the in-de)th intervie3s to assess the research
)ro4le* o2 3hether or not a su4stantial *arket e9ists 2or the services o22ered 4y our innovation!
6he secondary sources o2 in2or*ation 3hich contain statistics regarding )ro5ected gro3th rates
o2 the airline industry 2or the ne9t t3enty years 4y 1ederal Aviation Authority 3as used to *ake
an intuitive trend 5udg*ent 2orecast o2 Innovative8s 2uture gro3th! :alker and Mullins +,;11.
state7 = nevertheless7 the i*)ortance o2 e9)erienced 5udg*ent in 2orecasting7 3hether it is used
solely and intuitively or in concert 3ith evidence-4ased *ethods7 cannot 4e discounted!B +)!110.
Innovative Airlines used the )ri*ary data gained 2ro* the surveys ad*inistered to the 4usiness
traveler8s the*selves7 the travel e9)enditures decision *aker insights )er 2ro* the in-de)th
intervie3 to esti*ate the target *arket siEe and the secondary data containing airline industry
gro3th rate 2orecasts )rovided 4y the 1ederal Aviation Authority +1AA. 2or a 5udg*ent 2orecast
o2 our 2uture gro3th 3ithin the industry! More de2initive research *ethods 3ill 4e used to
evaluate the *icro-level 2orecasts 2or our ne3 service!
Sa&)lin( &ethods
6he = 5udg*ent sa*)leH 2or the )ersonal intervie3s 3ere chosen 4ased on their a22iliation 3ith
govern*ent and acade*ic organiEations 6he sa*)le 2or the ?uantitative survey data 3as also
chosen 4ased u)on the )ersonal intervie3 contacts su4*ission o2 the survey to the to) nine
4usiness@ acade*ic travelers o2 their agency!
Sa&)le si*e
6he 2ollo3ing 4reak do3n o2 ho3 the actual nu*4er 2or the sa*)le )o)ulation sho3s constructs
the sa*)le siEe :
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Running Head: MA LE AN MA PL PA II
-/ne acade*ic agency and one govern*ent agency *ay 4e contacted )er ( city geogra)hic
sco)e! In all ten agencies are sa*)led! %a*)le siEe totaling ( acade*ic agencies7 ( govern*ent
agencies 3hich translates into 1; )ersonal intervie3s +sa*)le siEe o2 ten. )lus 2ro* each agency
3e are soliciting surveys the 2ro* ' to) 4usiness @ acade*ic travelers )er agency 3hich adds ';
*ore res)ondents 2or a total sa*)le siEe 1;;!
Sa&)lin( +ias
#ecause this is a innovation o2 an e9isting service7 3e have to assess the )o)ulation siEe
4ased on the consensus o2 4usiness and travel clients 2or the industry as a 3hole! 6his study is to
gain insight into the )ros)ect o2 consolidating 4usiness and acade*ic travel into one
distinguisha4le class and 3ould that class 4e large enough to su4stantiate it is a ne3 *arket
niche or su4seg*ent to the 4usiness traveler class! 6her2ore7 3e are not seeking to conclude that
the sa*)le taken is indicative o2 the 3hole )o)ulation 4ut 3e are seeking indication o2 the
a*ount and o2 govern*ent@acade*ic travelers 3ho seek *ore co*)etitive 2airs and s)ecial
acco**odations 2or the 2lights!
Conclusion
6he research conducted 3as 2or the )ur)ose o2 gaining an insight into the 4usiness travelers
needs and 3ants and i2 they 2eel their s)ecial acco**odations are 4eing recogniEed and *et 4y
their current air carrier service! 6he research is done to lessen the risks o2 investing our ne3
)roduct in a current *arket! 6he kno3ledge ac?uired 2ro* the research 3ere e9)loratory and
descri)tive in nature as our venture is un)recedented in the industry! /ur design 2or this research
*et the e9)loratory and descri)tive needs associated 3ith our *arketing )ro4le*!
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Running Head: MA LE AN MA PL PA II
REFERE$CES
hurchill7 C! I Iaco4ucci7 F! +,;1;). Marketing research: Methodological foundations +1;th
ed!.! $%A: engage Learning
Levin7 A! +,;1,.! FAA predicts steady growth for airline industry. Retrieved on 0-1'-1, 2ro*
htt):@@travel!usatoday!co*@2lights@story@,;11@;,@1AA-)redicts-steady-gro3th-2or-airline-
industry@A->(,;&,@1
Russell ! +,;;(.! #$aluating %uantitati$e research reports. Retrieved on 0-;--1, 2ro*
htt):@@search!)ro?uest!co*@docvie3@,1&(-;0>A@1-0AF,#;&'-1E0,,1
E@1KaccountidM-,(,1
:alker Nr!7 /! !7 I Mullins7 N! :! +,;11.! Marketing strategy: A decision&focused approach
+>th ed!.! #oston7 MA: McCra3-Hill Ir3in! I%#N: '>0;;>--011(,!