Status of the Industry Marketing Term Paper

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Description of high/low marketing strategy

The marketing strategy of choice, however, is simply to accentuate low costs by cutting frills and eliminating hub-based systems in favor of short nonstop hops for even the largest national carriers. This is the model followed by such successful low-cost carriers as Jet Blue and Southwest Airlines.

These airlines are able to go up against giants like United and American by slashing fares, marketing their no-frills image and flying short distances and choosing cheaper, slightly out of the way airports.

For instance, Jet Blue flies not to Miami but to Ft. Lauderdale and even though Delta might fly to Miami, Jet Blue will still get the fare because of its lower price and no-frills marketing strategy.

Airlines have to realize that this is a price-sensitive market and only spend marketing dollars on advertising low-cost fares and the fact that fliers are not being charged for peanut bags they believe they simply do not want or need. (Mercer Management Consulting, 2002)

However, they must also market to the few but extremely deep-pocketed fliers who fly in luxury regardless of price. But there, they must not offer mid-level products such as United Airlines over Jet Blue: That difference is minimal and negligible. No, rather, they must offer low-cost flying choices and then a few extremely high level products. The minimal difference between mid-level products and low-cost products in marketing has been proven useless.

Why low/high cost marketing strategy is the best

This strategy of marketing primarily to the lowest cost and highest priced markets is the most successful because it entirely galvanizes the market in a natural pattern. There are those fliers who sacrifice quality and convenience for price, regardless of how small those price differentials are, and these fliers make up the bulk of the market. Then there are those fliers who do not care at all about price and in fact choose the most luxurious options sometimes solely because of their high price.

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There simply exists very little market for products that offer some luxuries and a higher price: As a result, commercial aviation marketing staffs must concede that this traditional market after which they've always gone has simply eroded during the internet generation, and simply cease marketing to it. (Adams, 2005)

Examples of the low/high cost strategy

Already the major airlines are starting low-cost subsidiary airlines to comply with this marketing strategy: Delta has started Song, and United has started Ted. The marketing strategies here are to stress the low ticket cost, fly only short hops not necessarily from the hubs, to offer no frills and to market the fact that no frills are offered.

Also, the marketing departments at these low-cost carriers are focusing on a much friendlier, down-to-earth, casual image for their products. These low-cost carriers offer little, and the less they offer and the better it's marketed, the more revenue they will generate in ticket sales. (Adams, 2005)

On the other end, only Lufthansa has begun a super high level marketing strategy. Lufthansa offers a luxury package to its premium frequent fliers - those who fly over 600,000 miles in two years. These individuals, who are enormously well-heeled or hold positions with organizations that give them blank cheques on travel expenses, receive premium treatment like layover massages, free gourmet meals and fine wine and also transport via Porsche automobile from the terminal to the plane.

Conclusion

In conclusion, the airline industry is suffering and marketing must take the lead in admitting that times have changed and marketing strategies must change accordingly. As a result, marketing staffs must focus on the low-cost market and on the super high cost market, and refuse to spend marketing dollars on a non-existent mid-level market......

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