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Boeing Case Study For Marketing Services

1141 words - 5 pages

I.Introduction"Boeing has long talked about expanding into the services area...." Does it make sense? This is the question that we will try to answer in this paper by analyzing the market conditions, the customer needs, and Boeing's core capabilities.Within the commercial aircraft industry, Boeing's focus for value-added service relates primarily to the transport airplane segment, which is expected to grow in the following years.The most important driver for the commercial aircraft market is the trend in airline passenger traffic, which is mainly influenced by:-Economic growth-Political stability-Other factors such as, industry profitability, environmental constraints, technology, price, ...view middle of the document...

Revenues in 1998 were about $35.5 billion.The total market for new aircraft was an estimated $50 billion in 1998 (based on extrapolation of case Exhibit 3), of which 2/3 was Boeing's revenue. This means that approximately $33.3 billion could be attributed to new aircraft, while the remaining $2.2 billion comes from services. Of this, approximately $0.7 billion comes from leasing activities (case Exhibit 6), and so the other $1.5 billion comes from maintenance.The total value-added services market, however, is much bigger. For example, the top two aviation finance/leasing companies (GECAS and ILFC) make combined revenue of about $4 billion. Lufthansa Teknik, S Air Services, SIA EC and BA Engineering are main players in the Maintenance and overhaul business, with combined revenues of $4 billion. The case says that total M R O revenues to be $26 billion, so this market is still fragmented with many small players.The case says that total value added services to be $400 billion in revenues per year; however the other numbers in the case show only $6.5 billion to the top few competitors in leasing and maintenance. Therefore, there is still room for a single company to dominate the market, and Boeing appears as a main candidate.III.Customer Activity CycleDuring Pre-sale, customers can be involved in co-design of the plane. Also, Boeing has to market the new plane, and prepare new infrastructure (such as airport requirements and technical training). The Pre-sale phase usually is only a small fraction of the activity cycle. As for during the sale, the amount of customer involvement is also minimal.The customer spends much more time in the post-sale part of the cycle. A commercial plane has a 20 year life span. During this time, these planes must be maintained, and modified. Old planes must then be disposed or resold. The customer spends much more time dealing with these issues. Therefore, from the service perspective, it makes strategic and intuitive sense to project a greater presence in the post-sale phase.IV.Marketing optionsIn an industry where economies of scale rule, the role of pre-sale and...

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