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AIRLINE MARKETING. Aviation Management College. DISTRIBUTING THE PRODUCT. AIRLINE MARKETING. DISTRIBUTING THE PRODUCT. Aviation Management College. AIRLINE MARKETING. Aviation Management College. PRODUCT DISTRIBUTION

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slide1

AIRLINE MARKETING

Aviation Management College

DISTRIBUTING

THE PRODUCT

slide2

AIRLINE MARKETING

DISTRIBUTING

THE PRODUCT

Aviation Management College

slide3

AIRLINE MARKETING

Aviation Management College

PRODUCT DISTRIBUTION

The marketing links between the customers and the product are known as Distribution Channels.

Airline uses various channels of distribution to reach its target market.

The trend keeps on changing as the world progress with new technology and innovation.

slide4

AIRLINE MARKETING

Product Distribution

Aviation Management College

  • Types of Distribution Channel
  • Direct Route
  • The airline market the product direct to the
  • final customer.
  • - No intermediaries
  • - Normal in B 2 B
  • - Mostly in less costly product
  • - With extensive advertising to target market
  • - Using mail order or the Internet
slide5

AIRLINE MARKETING

Product Distribution

Aviation Management College

  • Types of Distribution Channel
  • a) Direct Route
  • Advantages
  • No mark-ups or commission to intermediaries
  • Airline able to control marketing activities
slide6

AIRLINE MARKETING

Product Distribution

Aviation Management College

  • Types of Distribution Channel - cont
  • Using Wholesalers
  • Wholesalers buy in bulk from various airlines
  • Have the power to negotiate appropriate discounts
  • - They sell the product direct or through retailers
  • Disadvantage, need to give competitive discount
  • Advantages, unsold good cannot be returned
slide7

AIRLINE MARKETING

Product Distribution

Aviation Management College

  • 1. Types of Distribution Channel - cont
  • c. Using Agency
  • - Common with intangible goods
  • - To offer to wide geographical coverage
  • - Agency tend to push product with higher commission
  • - Popular in the 1990s
slide8

AIRLINE MARKETING

Product Distribution

Aviation Management College

1. Types of Distribution Channel - cont

Examples 1- Manufactures/wholesaler relationship:

General Electric Aviation buys a large number of aircraft from manufactures and leased it to airlines.

GPA, largest aircraft leasing company in 1990s went bankrupt because of recession

slide9

AIRLINE MARKETING

Product Distribution

Aviation Management College

1. Types of Distribution Channel - cont

Example 2-Airline/wholesaler relationship:

Airlines sales bulk seats to charter airlines or tour operators,

Package it with accommodation, surface transfers, etc.

Special package for different target group e.g., golfers, historical tours, etc.

Tour operators responsible for retailing it to the final customers

slide10

AIRLINE MARKETING

Product Distribution

Aviation Management College

1. Types of Distribution Channel - cont

Example 3 – Agency relationship:

Using the travel agency system to sell product

Agency able to provide up-to-date information on the product

The trend is declining from 90% to now 80%

slide11

AIRLINE MARKETING

Product Distribution

Aviation Management College

  • The Travel Agency
  • Advantages
  • - Geographical coverage
  • - Minimise manpower structure
  • - Reduce the cost or air travel
  • administrations
slide12

AIRLINE MARKETING

Product Distribution

Aviation Management College

  • 2. The Travel Agency
  • Disadvantages
  • - Increased in commission rates:
  • - Customers using credit cards
  • - Finance agent’s battle
  • - Proliferation of sales outlets
  • - Retail discounts,
  • - Loyalty & buy clients
slide13

AIRLINE MARKETING

Product Distribution

Aviation Management College

  • Present & Current Distribution Channel
  • Commission structure
  • - Commission reduced or eliminated
  • - Capped at a maximum
  • - Significant reduced on expensive tickets
slide14

AIRLINE MARKETING

Product Distribution

Aviation Management College

  • 3. Present & Current Distribution Channel
  • Travel Agent on Task-Based system
  • - Not paid on percentage of ticket price
  • - Payment based on each task undertaken
  • - Payment for making the bookings
  • - Payment for issuing the tickets
  • - Payment for dealing with payments
slide15

AIRLINE MARKETING

Product Distribution

Aviation Management College

  • 3. Present & Current Distribution Channel
  • Implication on Travel Agent
  • - Drop in ticket sales
  • - Airline website getting popular
  • - Emergence of on-line Travel Agent
  • - Commission-based to management fees
slide16

AIRLINE MARKETING

Product Distribution

Aviation Management College

  • 3. Present & Current Distribution Channel
  • Future Trend
  • Selling through Airline Shops at hotel,
  • shopping complexes
  • Selling via call centers, telephone o
  • on-line
  • Business using the internet
  • New airlines beginning to ignore the
  • agency role
slide17

AIRLINE MARKETING

Product Distribution

Aviation Management College

4. Distribution Channel in the Air Freight Market

Freight Forwarder - similar role as travel agent

Forwarder roles in Express market – minimal

Integrated Carriers dominance

Fewer forwarder – mergers & takeover

Forwarder hold 90% of ‘Heavy Freight” market

Airline strategy:

- buy forwarding company

- set up forwarding subsidiary

slide18

AIRLINE MARKETING

Product Distribution

Aviation Management College

5. Conclusion

Distribution strategy - an important agenda

Airline to control distribution channel

Long term benefit vs. short term gains

slide19

AIRLINE MARKETING

ADVERTISING & PROMOTION

Aviation Management College

AshariAbuHasan

AZAretailConsult

slide20

AIRLINE MARKETING

Advertising & Promotion

Aviation Management College

  • The advantages of Advertising
  • To promote corporate image and brand value (the
  • amount that a brand is worth in terms of income, potential income, reputation, prestige, and market value.)
  • Helps to build sub-brands e.g., business class, FFP,
  • special product package.
  • Use to provide technical information such as new
  • routes, new aircraft, etc.
  • d) To sell special offers, discount fares, FFP bonus, etc
  • e) Helps in staff motivation
slide21

AIRLINE MARKETING

Advertising & Promotion

Aviation Management College

  • The features of good advertising
  • a) A good research data on feedback
  • b) Provide checklist with the right question to the customers
  • Getting a professional or consultant to analyses the result, avoid biasness
  • d) Ensure the ad is compatible with airlines’ brand values
slide22

AIRLINE MARKETING

Advertising & Promotion

Aviation Management College

  • The role of Advertising
  • a) Ads [placed in trade magazines which circulates among forwarding community
  • b) It describes the benefits one airline against the other,
  • c) It emphasis on the quality of ground handling,
  • d) It main task is to convert surface traffic into air travel and freight business,
slide23

AIRLINE MARKETING

Advertising & Promotion

Aviation Management College

  • 4. Promoting Sales in the Air Freight Market
  • a) Background
  • Competition from trucking and ferries (short-
  • haul), deep-sea containers (long-haul)
  • - Cheaper freight rates
  • - Freight forwarders 90%
  • - Majority smaller consignments
  • - Forwarders, consolidation and deciding
  • airline
slide24

AIRLINE MARKETING

Advertising & Promotion

Aviation Management College

  • 4. Promoting Sales in the Air Freight Market
  • Freight market growing faster than the pax market
  • Challenges in effective marketing communication
  • Issues may not be similar to pax market
slide25

AIRLINE MARKETING

Advertising & Promotion

Aviation Management College

  • 4. Promoting Sales in the Air Freight Market
  • b) The Sales Task
  • Competition from surface transport
  • Efforts aimed at the freight forwarding industry
  • Concentrates on the Senior Management team of large forwarding firms
  • Also the clerks who is responsible for routing and carrier choice decisions for individual consignment
slide26

AIRLINE MARKETING

Advertising & Promotion

Aviation Management College

  • 4. Promoting Sales in the Air Freight Market
  • The Sales Task - cont
  • Special task, to convert surface transport traffic into air freight
  • Presently only 2-4% of total goods by weight move by air
  • Major forwarding firms have interest in both air and surface traffic
slide27

AIRLINE MARKETING

Advertising & Promotion

Aviation Management College

  • 4. Promoting Sales in the Air Freight Market
  • Marketing Communication
  • - Using Freight Sales Executive to do personal selling
  • Generous offer to corporate key decision makers
  • Advertising and promotion in trade forwarder magazines
slide28

AIRLINE MARKETING

Advertising & Promotion

Aviation Management College

  • 4. Promoting Sales in the Air Freight Market
  • Marketing Communication
  • - Aggressive personal selling approach to convert surface traffic to air freight
  • Study and research on the cost-effectiveness of air freight
  • Advertise the result of the study in Financial and Business magazines