Aviation/Aerospace Marketing Plan:Gulfstream’s G650 FeaturedWritten by Administrator
Aviation/Aerospace Marketing Plan:Gulfstream’s G650
The prevailing economic crisis has had a negative impact on private and business class flights, which have been redirected partly to the offers of low-cost carriers (Ferrell & Hartline, 2010). Fuel, pollution control, global economic woes, personnel cutbacks, and recurring safety lapses are the top five frustrations that are fueling the transition in business performance. This transition reflects the need for airlines to cut down air ticket prizes. However, this does not imply that if prizes are right the demand for service is zero. This is often the case especially when price advantage is counterbalanced by the effect of long hours that passengers spend in check-in desks, boarding queues, missed connections or delayed flights and others. Early initiatives planned to offer moderate-cost private flights have not proved effective. This was mainly because of the absence of an aircraft with great speed and passenger capacity. This is the advantage offered by Gulfstream's new G650 aircraft.
This paper provides fundamental insights into the strategic marketing aspects of Gulfstream Aerospace Corporation based on a comprehensive assessment of its business structure, strategies, plans, performance, and initiatives with respect to its new flight model G650. The plan includes an insightful SWOT analysis, giving insights into the company’s internal and external business environment, in terms of the strengths and weaknesses. In addition, the potential opportunities for growth and the threats that exist in the external business environment are examined.
Gulfstream Aerospace Corporation is a subsidiary aircraft company that is based in Falls Church, Virginia (Gulfstream, 2012). It is wholly-owned by General Dynamics, and designs, manufactures, sells, and services the most technologically-advanced commercial-jet aircraft. The company has designed and manufactured 2,000 and more aircrafts since 1958. To serve the transportation needs of its customers, Gulfstream manufacturers a comprehensive line of aircrafts, consisting of high-speed, long-range, and large cabin aircrafts. In addition to the production of aircrafts, the company also offers ownership service through pre-owned aircraft sales. The company provides employment to 12,500 people and more across 12 major locations, in the world. Gulfstream Aerospace Corporation is a leader in aviation equipment, combat vehicles, marine components, information technology, and, armaments and munitions.
General Dynamics is divided into four business segments including information systems and technology, Marine Systems, Combat Systems, and Aerospace (Gulfstream, 2012). Every group is a market leader in the markets it operates, due to careful development of a profile of relevant and affordable products and services. Each segment has got many business units within it. For instance, aerospace two units: Gulfstream and Jet Aviation.
In terms of marketing strategies, the organization implements its strategies in the framework of a balanced model of business, which gives leaders of the various business units a high-level operational flexibility. This allows the various units to stay close to their customers and be responsive to dynamic trends of customer needs and the opportunities arising from advances in technology. Each unit is independent with respect to administrative services. This includes management of human resource, marketing, supply chain, and business development. The company’s unit leaders are responsible for capital allocation and setting the direction of business, in terms of fulfilling financial, regulatory, and legal responsibilities efficiently (Thomson & Martin, 2010). The individual units understand the requirements of the customer. They respond to those needs through the provision of a portfolio of relevant, market-leading, and affordable services and products.
Corporate Social Responsibility
In terms of corporate social responsibility, Gulfstream conducts its business in accordance to the standards of integrity in every country where it conducts business (Gulfstream, 2012). The airline industry has a lot of impact on the environment (Ferrell & Hartline, 2010). Therefore, the company must engage in corporate social responsibility activities. It must reduce the level of carbon dioxide emissions by increasing fuel efficiency. In addition, corporate social responsibility code is vital in ensuring that employees act in consistently, in accordance with Gulfstream’s values so as to protect the reputation of the company. Gulfstream holds the belief that integrity creates confidence in customers, employees, stakeholders, suppliers, and the community
Competitive Market Analysis
The sector involves commercial and defense aircrafts (Karsten, Frank, Pearsly, & Fuchigami, 2012). Commercial aircrafts are those that have 100 seats and over while jets are those that have a capacity of less than 100 seats. Defense and space equipments include aircraft and arsenal, and satellites and launching pads. Commercial planes are of significant interest to this strategy. Passenger miles have an impact on the production of airplanes. Airplane profitability also has a direct association with the production of planes. In the commercial aircraft, the main competitors are
Boeing has been the leader in the manufacture of commercial jet for several decades (Karsten, Frank, Pearsly, & Fuchigami, 2012). It merged with McDonnell Douglas, in 1996, and became the second largest defense contractor in 2000. It is the largest satellite manufacturer, in the space industry.
It was founded in 1970. Boeing is its largest commercial competitor, in terms of commercial jet manufacturing (Karsten, Frank, Pearsly, & Fuchigami, 2012). In 2001, it controlled 55% of the large-capacity passenger aircraft.
Bombardier is the world’s leading manufacturer of small planes. It is based in Canada and makes jets with capacity of 25-90 seats (Karsten, Frank, Pearsly, & Fuchigami, 2012). It controls 36% of the world market for business in jets.
It is a company founded in Brazil. It has 11,000 employees. Historically, its planes have a capacity of 30-50 passenger seats (Karsten, Frank, Pearsly, & Fuchigami, 2012). It is currently developing advanced jetliner family with 70-110 seat capacity.
In considering factors about the customer, it is fundamental to analyze passenger traffic. These questions are essential: Where do people want to fly? Why do they want to travel? How much can they afford or are they willing to pay? Technology is also a fundamental factor for consideration. Due to technology, there are changing trends in consumer demand. New technology has spurred higher seat aircraft. Older aircrafts are being eliminated due to regulations concerning noise.
External Business Environment
In all sectors, companies are affected by the environments in which they conduct business. Several factors can influence the company’s performance. If managers have knowledge of what is happening in the society, they are better placed to make the right decisions. However, there are also factors that place the company at risk of bankruptcy. The business performance of Gulfstream is dependent on many factors in the external environment.
The interest rates influence the behavior of consumers (Ferrell & Hartline, 2010). In the recent past, the United States has had an economic downturn. Due to variable interest rates, the companies went into financial distress. Companies are still recovering from the impact of inflation. Customers are more likely to save than spend because of that effect. Currency rates are also very fundamental. This is because the purchasing power of the customer is dependent on it. Stock prices also have a significant impact on the financial stability of a company.
The technological advances are a vital aspect of the success of Gulfstream. This means that all products manufactured by Gulfstream must be modern to gain competitive advantage. Reliability, performance, and comfort are features of Gulfstream that maintain the company’s reputation. The company must invest in technology and recognize the effect of change in the products of its rival companies. In this sense, research and development is a fundamental component of competition in the aircraft manufacturing industry.
Social and Cultural Factors
The trend I social developments also affect the business prospects of Gulfstream (Ferrell & Hartline, 2010). The population is aging fast, and trends of their needs are evolving at the same pace. This implies that Gulfstream may have to use much effort on how their planes are comfortable because aging population is more influenced by that feature than young people. In addition, the language or configuration relevant will vary depending on the location from which the customer originates. Gulfstream has a broad range of products based on the consideration of customer characteristics including origin, age, beliefs, and mentality. To provide products that meet diverse consumer needs, Gulfstream manufactures exceptional planes for business, personal use, and emergency services. In addition, the company also provides rental planes for specific functions in many countries in which it operates. In order to be successful, the company must have knowledge of the cultural and social environment.
The policies made by various governments also affect business activities. Since September 11, 2001, political influence has had a great impact on the airline sector (Thomson & Martin, 2010). Because of security, governments are introducing policies, laws, and regulations that have a direct impact on the performance on the airline companies. This is to make sure that travelers reach their destinations safely. The planes must comply with regulations and standards put in place by the government. Terrorism and other security problems have had an impact on Gulfstream, in terms of sales. The company must ensure that it builds planes that protect the safety of the passengers.
Gulfstream is a part of General Dynamics and, hence, is part of a great brand that constructs not only airplanes, but also marine, armaments, and vehicle equipment that are regarded as technologically-advanced and high-quality products (Gulfstream, 2012). This accords Gulfstream the advantage to be recognized as part of a large respectable company. G650 is an iconic product in terms of culture, speed, innovation, class, and luxury. Through technological improvement, Gulfstream has been making state-of-the-art aircrafts, which consumes less fuel. Gulfstream’s parent company, General Dynamics, is a global leader in aircraft and other products. Observed from a technological point of view, Gulfstream has a lot of resources. In 2013, the company is making technological advances in structures, fuel efficiency, and aerodynamics.
The airline industry was hard-hit during the recession. Due to the rising prices of gases and reduced consumption power, people did not fly as much as often do. For Gulfstream, the company had to lay off some of the employees. It addition, the company witnessed a drop in its earnings, in line with the forecasts that had been made projected following the recession. The other weakness is that Gulfstream is unable to compete with market giants such as Boeing and Airbus because it produces jets only at the moment. The giant companies are more diversified than Gulfstream because they make passenger airplanes that carry a higher number of people than Gulfstream.
Gulfstream invests money in research and development heavily (Gulfstream, 2012). Innovation is the central line of strategic development as the company seeks to develop efficient technologies that allow it to produce aircrafts at low prices while making them efficient operating at high speeds. The company is in the process of diversifying their line of aircrafts. In terms of the current inventions, G650 is their latest innovation of business jets. This latest model competes with the great brands of Airbus and Boeing and exerts pressure on them to produce aircrafts that match the technological advances of Gulfstream, and to reduce fuel costs because their innovations are unaffordable and lurking behind. In addition to low fuel costs and use of advanced materials, Gulfstream also focuses on reducing noise and emissions. The rise of Gulfstream implies a reduction in market share for both Airbus and Boeing. Innovation makes the company more competitive than its competitors. This opens the way for the possibility of price wars taking place among companies in the industry.
Gulfstream is focused in improving its air fleet and establishing new ways to be fuel efficient (Gulfstream, 2012). This implies that the company’s investment in research and development is overwhelming. The company is reinvesting a lot of money and so is not making much profit in the end. This is an ideal strategy for the future, but in the short term it is unattractive. Gulfstream has become competitive with the industry’s best corporations that claim a large market share. It challenges these companies in terms of technological innovations. Because of the entry of additional small-scale companies such as the United Aircraft Corporation and Avic Aircraft competition is starting to catch up. In addition, the nature of competition in the air transport industry causes fear among employees because of the potential lay off.
The Five forces model
Gulfstream is involved in a business sector where threats to entry are high. Large companies have established base in the sector and supply the sector with services almost entirely. It is almost impossible for a new company to enter the sector. The brands of large companies are popular and have technological support to maintain their position.
In the airplane sector, substitutes are many. Every product has its own function in the industry. For instance, there are no substitutes for large passenger commercial transport. Therefore, the threat to Gulfstream is an aircraft with similar specifications constructed by another company.
In the airline industry, buyers have a moderate bargaining power. There are not many manufacturers are so customers do not have much choice on the products. However, the manufacture of airplanes has a high cost, but this may be offset by relatively high margins. Therefore, a company will have to ensure competitive if it is to retain its customers.
In the same way as customers, suppliers have a relatively moderate power. Suppliers would want to maintain their customer by ensuring good relationship.
Rivals are several. Airbus, Boeing, Bombardier, and Embraer are some of the companies that are rivals of Gulfstream. It has to try all means to keep its customers because private jets are not popular purchases. In this industry, it is difficult to gain a customer than to maintain. Sufficient and appropriate marketing must be done to ensure customer satisfaction.
Objectives of Marketing Plan
The Objective of Gulfstream’s strategic marketing plan is to manage and utilize the company’s resources (facilities, finances, staff, reputation, and staff) to achieve effectiveness, growth, and profitability.
- To develop a system-wide master plan for G650’s future utilization
- Re-organize the organization to engage executive and lower level staff
- Launch a measurement and reporting system that is organization-wide
Differentiation and Positioning Strategies
The world aerospace sector is at an optimally promising point in time where it is experiencing a rising demand for corporate jet and commercial aircraft (Karsten, Frank, Pearsly, & Fuchigami, 2012). For the primes such as Boeing and Airbus, it is a boom-time environment. The rising demand is driving opportunities for growth for longer components, systems, and suppliers across the supply chain. The economy is rebounding from the recession, presenting an opportunity for private firms to make investments in the airspace sector so as to benefit the favorable market characteristics. However, there are challenges that companies must overcome.
- Create winning strategies for investment in a consolidating market
- Compete for business opportunity against the principal industry players, who are aggressive and acquisitive.
Industrial consolidation occurs and gives rise to increased supplier power. In this situation, price optimization may be a powerful driver of value, which is often underutilized. Customer segmentation that is accurate and accurate analysis of margin data can identify pricing practices that are suboptimal and vital upside potential.
New Market Entry
A principal portion of future demand will originate fromfuture demands in global markets. Therefore, firms will require a keen understanding of airline customer needs in the new regions. Companies that can tailor their products and services to meet these needs have the upper hand to capture new markets. These needs include product, cost, performance, sales channel, and others.
The aerospace industry is engineering driven. Significant benefits can be gained through consideration of customer needs applying the outside-in approach to the development of product. Detailed field research, fact-based customer segmentation, and analytical techniques that are effective such as conjoint analysis are instrumental in uncovering valuable feature gaps, in the market.
New Business Models
In some instances of fierce competition, moving beyond the company’s traditional model can result in an increased potential for value creation. This means going beyond just changing locations of manufacturing plants. For example, assets that are being removed from larger entities may be very useful when removed from their parent companies (data sets or software may be fundamental in this respect). Firms must identify and take advantage of these opportunities early in the process. Conducting a deep customer research can help to validate break-out strategies.
In the aerospace industry, the product strategy is based on the consideration of the following items: design, range, quality, features, and brand name. The features exhibited by a product are not significant, but the benefits that the product offer. Therefore, Gulfstream must develop products that have benefits to the client.
Place is determined by the distribution channels, methods of distribution, location, and coverage. In terms of place, flight entertainment, baggage handling, facilities at the airport, meal service, and delivery of service are important factors for Gulfstream to consider.
The price strategy may be implemented as list price, discounts, commission, surcharges, and extras. Therefore, Gulfstream must consider options including premium pricing, value for money, cheap value pricing, low cost pricing, and fax fares, in its pricing functions. This depends on the target customers.
Promotion is affected by advertising, salesmanship, publicity, and advertising (Flouris & Dostaler, 2007). For instance, airlines must include in their advertisements the image of the country, tourist attractions, scenic beauty, and rich heritage to attract tourist. The public relations officer, travel agents, and receptionist are vital agents in publicizing the aerospace business. Travel agents, frontline staff, and tour operators are essential in promoting airlines business.
Implementation and Control
This marketing strategy will be implemented through the organizational culture (Ferrell & Hartline, 2010). In this approach, the marketing strategy is rolled out as part of the general mission and vision of Gulfstream (Phillips & Kaps, 2005). The strategy is embedded or integrated in the company’s culture. The company’s top executives manage the company’s culture to ensure that the entire group of employees is well informed of the culture. This approach to implementation and control ensures ownership of the culture by eliminating the structures that act as barriers between the implementers and strategists. The company-wide commitment to the organizational goals is increased. In addition, it promotes empowerment of employees. Through cultural development, marketing implementation is much easy to achieve.
Marketing Control Framework
These are actions that are taken before the implementation of the marketing strategy (Ferrell & Hartline, 2010).
- Employee recruitment, selection, and training processes
- Human resource allocations
- Research and development expenditures
- Capital outlays
- Allocation of financial resources
These are actions taken at the course of strategy implementation process.
- Employee compensation and evaluation systems
- Employee empowerment
- Management commitment to employees
- Management commitment to the marketing plan
- Internal communication programs
These are evaluated after strategy implementation. They include
- Formal performance standards (market share, sales, profitability)
- Marketing audits
Timing of Implementation Activities
Ferrell, O. & Hartline, M. (2010) “Marketing Strategy (5th ed.)” Mason, OH: Cengage
Flouris, T. & Dostaler, I. (2007) “Strategic Management as a Key to Educating the New Aviation Professional” International Journal of Professional Aviation Training & Testing Research, 1(1):1-13
Gulfstream (2012) “Gulfstream: The World’s most advanced Business Jet Aircraft” www.gulfstream.com
Karsten, K., Frank, N., Pearsly, M., & Fuchigami, S. (2012) “Aesrospace Sector Analysis”
Phillips, E. & Kaps, R. (2005) “Defining aviation management” Collegiate Aviation Review, 23(1): 65
Thomson, J. & Martin, F. (2010) “Strategic Management” Mason, OH: Cengage