Exploring Marketing with Delta Airlines as a Case Study Essay Example

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This approach enables the management to respond immediately, resulting in the creation of innovations. In order for Delta Express to be successful, it is important to clearly define the boundaries between the company and the US majors, as mentioned in the article "7 US majors aim to break the cycle" from Airline Business in January 1999 (p.2). Delta Express provides a point-to-point service that is separate from the mainliners network. One advantage of Delta Express is that it is able to offer Delta Similes frequent flier points. The customer base of Delta Express consists mostly of leisure travelers, accounting for about 70% of their customers. In order to minimize costs, Delta Express frequently adjusts their fares and consistently evaluates their processes.

As an airline affiliated with a major carrier, Delta Express faces the ongoing challenge of keeping costs low. However, it has gained an advantage over Metronome and Southwest by offering an advance seat reservation facility. The most notable achievement of Delta Express, though, is its role in rejuvenating the spirit of Delta. Despite the intense competition in the industry, major carriers now have route systems that align well with their unique strengths, and fewer carriers are at risk of bankruptcy compared to the financial crisis of the 80s and early 90s.

AID carriers now utilize stronger yield management systems that allow for discounted prices without engaging in ruinous price wars. This has resolved the issue of ticket discounting that previously created uncertainty in airlines' revenue forecasts due to deregulation. With a positive outlook for traffic, low rates of capacity growth in the near future, and manageable levels of new aircraft deliveries, better times seem

to be ahead. Successful airlines are those that have a market-oriented approach and a clear long-term strategy. They identify potential markets and decide which market segments to target, dedicating corporate resources to meeting the needs of these segments. This aligns with the principles of marketing, which is the management process responsible for identifying, anticipating, and satisfying customer requirements profitably.

Reference:
[8] Express Yourself, Airline Business, February 1999, p.56-57
[9] US majors aim to break the cycle, Airline Business, January 1999, p.51
[10] Chris Tarry, Time to Break the Cycle, Airline Business, June 2000, p.According to the U. K. Institute of Marketing (quoted in Wiltshire, 1978, p.1), there is a distinction between consumer marketing and industrial marketing. Consumer marketing typically involves products with a lower unit price and minimal interaction between the consumer and producer.

The second type is characterized by a smaller customer base and higher prices per unit, along with a direct relationship between the producer and the buyer. Market orientation refers to comprehensively understanding specific market segments that the airline aims to enter and identifying areas where consumer demands and desires are unmet through conducting marketing research. Furthermore, an airline may consider entering a market segment where consumer expectations remain unsatisfied.

In order to apply marketing theory to real-life corporations, it is crucial to analyze competitors' actions. This analysis helps a firm in developing its marketing strategy, considering both corporate and social objectives. The first step involves defining the corporation's broad area of activity through a corporate mission. Subsequently, the firm must create a marketing plan that considers consumer wants and needs, imitators' actions, the corporation's strengths and weaknesses, as well as external opportunities and threats.

In

order to ensure product sales in specific markets and achieve successful marketing, companies must decide between utilizing their own resources or outsourcing services. Establishing an appropriate corporate management structure, implementing effective personnel recruitment and training policies are crucial for internal organization. On the other hand, external organization involves collaborating with external entities, such as market research consultants, who play a role in marketing activities.

The marketing mix is the combination of the four controllable variables, including product, price, place, and promotion, that an organization uses to satisfy its target market. Airlines must offer a range of products to balance potential downturns in certain markets with upswings in others. The concept of synergy plays a crucial role in product and market diversification, as it enables a company producing multiple products to do so more effectively than individual firms focusing on single items. Many airlines pursue a total market strategy aiming to cater to business, leisure, and freight segments. However, designing products to meet the conflicting needs of these different segments can be challenging. The business market requires an extensive route network with strong interconnections and high flight frequency, leading to costly products. Despite the need for high seat accessibility, this segment's demand is relatively price-sensitive, resulting in higher prices.

The leisure market has lower prices and unstable yields, with peak demand occurring only a few times a year. However, its products can be offered cheaply and it is potentially the largest segment of the airline market. In comparison, the business segment has poorer long-term prospects. On the other hand, in the freight market, an all-freight airline should focus on larger items that cannot fit into the

lower holds of wide-bodied passenger aircraft.

Federal Express has been highly successful in overnight delivery of urgent parcels, while passenger airlines struggle to compete due to their daytime flying schedule. One effective airline marketing strategy is the Frequent Flier Program (OFF), which aims to increase seat sales by generating repeat business among loyal customers and attracting new customers.

The OFF database can serve as a marketing information source, providing an opportunity to earn extra revenue by trading OFF points with associated partners. It also enables consumers to distinguish products in an overcrowded consumer market, as mentioned in Toehold's fourth marketing phrase. Regular access and necessary redevelopment are essential to adapt to ever-changing market conditions. Airlines should avoid focusing too narrowly on one objective to prevent any potential harm to the entire program.

Therefore, it is crucial for airlines to consider their loyalty program as an essential marketing tool and to gain internal support. The Office of Fair Trading (OFF) also emphasizes the importance of market acceptance, which is why the program structure should meet consumers' expectations while offering awards and service benefits. In an unstable economy, flexibility is vital, as demonstrated by Delta's introduction of a non-expiring policy for its miles. Additionally, Air France became the first major European airline to adopt this change after being influenced by its alliance with Delta.

Customer service is crucial in OFF programs, and airlines must maintain tight control over quality management. The elite program, which targets frequent high-yield travelers, allows airlines to retain their most valuable customers. A successful OFF program should have clearly defined strategic goals and strike a balance between them. Additionally, the program structure

should be appealing and in line with global best practices. For instance, Delta has formed a strategic alliance with Aeronautic, Air France, and Korean Air, collectively known as Ecosystem.

The agreement establishes a stronger marketing relationship between the carriers, known as Steam airlines. Steam airlines offer a mutual frequent flyer program, a wide costarring network, and exceptional growth potential within the global alliance. With four airlines collaborating to enhance customer benefits, Steam is highly regarded. It is the first alliance designed around customer needs and currently ranks among the top three global airline alliances worldwide. Moreover, Steam boasts robust hubs in major markets that handle 80 percent of global air traffic.

Passengers on any Steam airline can enjoy the benefits of their home airlines while traveling, including more flight options and departure times. They also have access to all frequent flyer program benefits and lounge benefits. Steam provides customers with worldwide access, increased choice and convenience, dedicated service, and the opportunity to receive recognition and rewards for their loyalty. Immediate advantages of flying with Steam include reciprocal frequent flyer programs, worldwide lounge access, and access to the combined network of Aeronautic, Air France, Delta, and Korean Air.

Aeronautic, a prominent figure in the Mexican and Latin American air travel sectors, offers various advantages to its passengers. These include priority baggage handling and preferred seating for elite frequent flyers. Aeronautic is highly favored by many travelers and aspires to enhance its global route network by partnering with similar airlines. This collaboration enables them to cater to the diverse requirements of both business and leisure travelers around the world.

Air France's main base of operations at Charles

De Gaulle International Airport offers a wide range of connecting flights to various destinations in Europe, Africa, Asia, and the Middle East. This hub is particularly advantageous for transatlantic travelers looking to go beyond a European gateway. Furthermore, there is ample potential for further expansion at this airport.

Delta operates its hub at Atlanta Hartsfield International Airport, providing passengers with an extensive selection of destinations. Travelers have access to a comprehensive global flight network, which includes 5,390 daily flights serving 356 cities across 57 countries. This network encompasses Delta itself as well as Delta Express, Delta Shuttle, the Delta Connection carriers, and Delta's Worldwide Partners.

Korean Air's hub in Seoul is the top Asian hub for Steam, providing service to 78 cities in Asia. The upcoming hub at Soul's new Inch Airport will be the leading hub in Asia and one of the few major hub airports worldwide that can expand. Steam is a global alliance involving four airlines and has plans to explore all synergy possibilities. Additionally, each carrier will maintain bilateral relationships with airlines in their respective markets. Notably, Steam holds great potential in the field of cargo.

Delta and Air France have already announced a Joint agreement and aim to further extend it to a multi-lateral level. This aligns with the overarching total market strategy mentioned earlier, where strategic alliances bring together a collective pool of resources to cater to more routes and consumers. Notably, Steam is the first alliance that revolves around meeting customer needs. To trace Delta Airlines' origins, the company started out modestly in 1928 as a crop-dusting operation in Monroe, Louisiana, becoming the nation's first professional crop duster. C

founded Delta.

E Holman led the company for 38 years and relocated Delta's headquarters to Atlanta in the early years of the sass decade. Delta's operations and management mainly revolved around this hub. Despite actively opposing deregulation, Delta entered the phase with several advantages. It managed to secure a position among the Big five by pursuing growth. In 1953, Delta expanded its presence in the Southeast through the acquisition of Citizens and Southern Airlines. Additionally, it extended its reach northward with the acquisition of Northeast in 1972.

In 1986, Delta merged with Western Air Lines, located in Salt Lake City. Delta had a reputation for paying its workers well and maintaining good labor relations, resulting in high productivity, outstanding service, and satisfied employees. Unlike other airlines, Delta had few union contracts and had never laid off any workers. Despite the industry-wide labor issues caused by deregulation, Delta's labor-management relations were harmonious at its headquarters in Atlanta.

In 1986, Delta's employees personally purchased a Jet for the company. Working for Delta guarantees lifelong job security, but the airline has faced challenges due to high salary and labor costs, making it the industry's leader in labor expenditure. Fortunately, Delta has generally been profitable, with the exception of 1983 when it incurred a loss. This loss was due to a market survey conducted in 1982, which revealed that Delta had gained a reputation for being slow to adapt to the newly regulated environment. The concept of hub-and-spoke networks has been a critical aspect of route planning amidst airline deregulation.

The first-mover advantage in the airline industry suggests that if airlines establish a hub with a high volume of

flights, it becomes difficult for new airlines to enter the market. This advantage enables established airlines to compete with the wide network offered by new entrants. However, this concept has its limitations as passengers generally prefer non-stop flights. A prime example of a single-airline hub is Delta Airlines at Hartsfield Airport in Atlanta, which operates 600 departures every day.

More than 20000 Delta passengers change planes in Atlanta daily, with each wave including over 50 aircraft. This necessitates the simultaneous use of all four runways for arrivals and departures. Delta's Mission Statement and Corporate Strategy emphasize their goal of becoming the favored airline, with their strengths lying in their competitive edge provided by their people, customer service being the cornerstone of their company, a robust route system, exceptional operations and fleet, and ethical conduct.

Delta's vision is based on their heritage, resulting in sustained profitability, growth, advancement, and pride within the exceptional business organization. Delta's Success Through Service training has given them a competitive advantage. They have gained a legendary reputation for their family-friendly and long-lasting customer service. Employees are satisfied members of the Delta Family. Additionally, Delta has been at the forefront of the industry in customer satisfaction ratings, ensuring passengers a consistent and high-quality flying experience.

The 02000 Grand PRI Customer Service Awards were given to Delta for their outstanding email customer service support at their Online Customer Support Desk. They were honored by Teleconference, a customer relationship management company. Additionally, Delta placed second in the Transportation and Travel category for their telephone customer handling. Delta's core belief in providing excellent service to both their customers and personnel has not wavered.

The way Delta personnel treat each other as extended family is reflected in their treatment of customers.

Delta's hiring process focuses on entry-level positions, allowing managers to empathize with their staff's issues due to their own prior experiences. Delta has a strong commitment to employment security, as noted by Pat Hanson in her book Global Airlines: Competition in a Transnational Industry (1996). During economic downturns, the company reallocates excess staff to other roles and offers alternative options like job sharing and voluntary personal leaves. Delta maintains a flat and streamlined management structure, encouraging cross utilization and enabling employees to gain a broader perspective of their organization.

Delta Airlines places a significant emphasis on the human aspect of profitability, resulting in a robust compensation system that recognizes the people-oriented nature of the business and the significance of experience. This approach allows Delta to attract and retain top talent. Teamwork is ingrained within Delta's culture, fostering mutual respect among employees. The job environment promotes empowerment, motivating employees to enhance their productivity. Currently, the primary indicator of customer satisfaction among U.S. airlines is the quantity of complaint letters individuals directly address to the Department of Transportation.

Since 1971, Delta has consistently held the top position in passenger satisfaction among major U.S. airlines, with the best verbal record per 100,000 customers boarded. Delta understands that the only way to become the best is by continuously striving for excellence. Recognizing the importance of Information Technology, Delta Airlines has used the challenges presented by the millennium bug as an opportunity to upgrade its outdated IT infrastructure. By incorporating cutting-edge technology, Delta aims to achieve operational excellence, enhance customer service, and even

improve revenue performance.

The gate and boarding project is a crucial part of the airliner's ongoing Airport Renewal program aimed at modernizing and standardizing Delta's outdated airport technology and physical infrastructure. The project encompasses the implementation of new computer systems and software, as well as improvements in boarding documentation and procedures. By integrating with Delta's customer database, the system not only simplifies operations but also significantly enhances Delta's capacity to identify and cater to its valued customers or those requiring extra attention. Moreover, the system enables the identification and rectification of any past issues or dissatisfaction a customer may have had with Delta's services, ensuring a better experience on their next flight.

The main value of the system is evident when issues arise and people can witness efficient handling of those situations. Delta prioritizes developing technology around processes rather than specific functions. They have been modifying and planning their technology based on customer needs, rather than focusing on reservation systems, airports, and the Internet. Ultimately, Delta is focused on enhancing the customer experience. By implementing a standardized technology infrastructure at all locations, Delta is able to reduce costs by $30 million annually, while significantly improving customer service. Furthermore, Delta continues to explore new technologies that can further enhance their customer service offerings. This demonstrates Delta's dedication to leveraging information technology to cater to each individual customer's needs, resulting in improved customer service and the elimination of micromanagement. As an airline, Delta places a strong emphasis on providing excellent service rather than overwhelming customers with numerous product options.

Delta is a well-managed company that values employee empowerment and encourages team collaboration for brainstorming. The company emphasizes

the importance of considering everyone's opinion. Working at an entry-level position at Delta also helps employees develop empathy towards colleagues in different departments. Delta is highly focused on customer satisfaction, aligning with the marketing concept of prioritizing customer needs and wants. By excelling globally, Delta has become one of America's top five companies and operates one of the busiest hubs in Atlanta.

The text highlights Delta's adherence to sound marketing principles, which include their mission statement of becoming the preferred airline in the business, leisure, and freight market segments. Furthermore, they have formed strategic alliances in Keyset to improve customer service. Delta has also placed emphasis on standardizing its operations through its technology infrastructure, an integral part of their widespread standardization efforts in Toeholds Phrase two.