Killing Time in Airport Shopping Malls Essay
- Length: 8 pages
- Sources: 6
- Subject: Business
- Type: Essay
- Paper: #69961815
Excerpt from Essay :
Flight View, the company behind mobile applications that track real-time flight information, polled 2,600 travelers on what they want on-the-go while shopping in airports (Rogers, 2014). Market research anthropologists who track cultural trends identified extensive changes to non-aeronautical services located in airport terminals (Mattlin & Currie, 2011). Airport retail shopping has changed dramatically over the past decade, morphing into airport cities or airport town squares (Clifford, 2011). The range of retail shops has expended to encompass a wide array of services and -- as airlines curtailed catering on flights -- food-to-go became a central element of the customer experience (Mattlin & Currie, 2011).
The mall company Westfield Group manages airside retail sites at airports located in Boston, Miami, and Newark. Their market research studies indicate that travelers on domestic flights spend an average of more than one hour just waiting in airports after they have passed through security (Rogers, 2014).
MarketPlace Development, a company that manages and leases retail space at the Philadelphia International Airport and at La Guardia Airport, reports that the relationship between the airlines and the airports has changed dramatically. The costs of operating an airport can no longer be borne by the airlines alone. Indeed, airports must be self-sustaining, going enterprises in which retail functions as a robust source of revenue. According to the aviation industry consultants, MAC Consulting and Intervistas, the airlines themselves account for as much as 41% of the overall airport revenue, while retail operations, including food and beverages, account for 19% of total revenue. The remaining percentages of total airport revenue come from car rental companies and airport parking.
Airside retail management companies will need to articulate business operational and marketing plans that are responsive to emerging customer expectations and to the increased potential for revenue generation through airside retail services. On average, airports that have modern retail management and configuration earn roughly 80% of their retail food and beverage revenue from airside operations (Mattlin & Currie, 2011). In order to maximize non-aeronautical revenue, a company must engage in comprehensive business planning, programming, and implementation, and must navigate a business model shift from an infrastructure approach to a market approach (Mattlin & Currie, 2011).
A comprehensive industry outlook study and expertise in travel retail strategy consulting provided the basis for a study conducted by the Arthur D. Little firm, examined best practices in top-performing airports (Bamberger, et al., 2008). The study confirmed that the airports efforts to develop non-aeronautical revenue sources have been the key driver of robust growth in the airport retail sector (Bamberger, et al., 2008). Should air traffic continue to decline, the airports will be all the more strategic and likely more dependent upon alternate sources of revenue, which will increase pressure on the airside retail establishments (Bamberger, et al., 2008). According to the study, airports are not finding easy to improve performance and optimize the management of retail food, beverage, and concessionary businesses on their premises (Bamberger, et al., 2008). In addition, retail operators are sandwiched in between the new expectations of airports and of consumers, and the need to reconfigure their operations and facilities to accommodate the different sort of transactions that airport shopping entails (Bamberger, et al., 2008).
Non-aeronautical revenue sources show the greatest growth potential of all sources of airport revenue, and they are among the most important to an airport because of changing consumer expectations (Mattlin & Currie, 2011). Indeed, food, beverage, and concession revenue in airports grew by 30% over the ten-year period from 1999 to 2009, from $1.0 billion to $1.3 billion (Mattlin & Currie, 2011). At 32.9%, medium hub airports had the greatest increase in sales over a ten-year period from 1999 to 2009. Small hub airports increased 31.1% and large hub airports increased 29.2% (Mattlin & Currie, 2011).
A shift from main street marketing to local branding is consistent with the airport functioning as a gateway to the market (Mattlin & Currie, 2011). According to the 2010 AIC-NA Benchmarking study, the origin of brands in retail outlets located in airports reflected these percentages: 25% were airport brands, 25% were local and regional brands, and 50% were national and international brands (Mattlin & Currie, 2011).
Dufry AG is one of the world's leading global travel retailers, serving travelers in 45 countries with over 1,200 shops. Dufry duty free and duty paid shops are located within 157 airports, but also in travel retail channels such as seaports and on-board cruise liners. The Company has its global head office in Basel, Switzerland.
Dufry is posed to conduct an analysis of its strengths, weaknesses, and other constraints, and to develop specific actions that will address expected profit, sales targets, and budgets as the company transitions to a more globally-oriented marketing plan and competitive strategies. In view of this, a research objective is to determine the cultural constraints imposed by uncontrollable elements of the environment that will require adjustments to priorities and transformation of the current marketing plan.
The FightView survey outcomes provide a foundation for further market research activity specific to Dufry business and marketing interests (Rogers, 2014). The author proposes to explore the fit between the changed non-aeronautical retail landscape and the marketing, sales, and growth performance of Dufry AG operations. A fundamental objective is to identify promising marketing strategies and salient opportunities.
As this research is both exploratory and descriptive in nature, a mixed-methods approach to data collection and data analysis will be used. Phenomenological philosophy and an inductive approach undergird this research; as such, the individual accounts of study participants are considered important and valid sources of data.
Several forms of data collection will be employed in this study, including primary research in the form of survey questionnaires administered to currently traveling individuals, and secondary research in the form of document and content review that will encompass a broad swath of print and digital resources.
In a mixed methods inductive approach, inquiry is guided through the use of research questions that are derived from a review of the literature and expert understanding of the context and field of study. The research topic is global marketing strategies within the travel retail industry. The literature review includes research in the areas customer-focused organizations, international and global retailing, and strategic marketing.
The research questions represent key areas of consideration against a backdrop of developing strategy that equally serves domestic and international marketing initiatives. Triangulation of data will assist with reliability, enable the researchers to identify emerging themes, and foster the development of actionable insights.
The following research questions have emerged from the literature search.
Research Question #1: What capacity is required of an airside retail management and service provider to engage in global marketing?
Research Question #2: Which components of a marketing mix and target markets exhibit the most promise for a global marketing approach to local thinking?
Research Question #3: What competitive strategies enable a move from a domestic market to a foreign market without unacceptable loss of traction and profit?
Research Question #4: What techniques are needed for monitoring and ensuring implementation control of a combined domestic and international marketing plan.
Research Question #5: In what particular ways must domestic and global marketing must differ in order to accommodate the differences in culture, demographics, habits, psychographic characteristics, and purchasing power of the markets?
Sampling Plan and Frame
The sampling plan is designed to tap into the mindsets, concerns, and behaviors of current travelers by employing a non-probability convenience sample of roughly 400 men and women aged between 18 and 59 in several airport environments. Two to three qualifying questions will be asked of travelers who agree to respond which will denote their ages, their frequency of travel status, their destination, and whether they are traveling for work or pleasure.
In order to obtain insight into the mindset, concerns, and behavior of travelers, a survey will be conducted in vivo within a variety of airport settings. According to the sampling frame, a variety of airports located in different regions and representing a fair spectrum of size categories will be selected as venues for the survey research. The researchers will need to contact airport management early in the study in order to secure permission to conduct the study and a confirmed schedule being on-site.
The survey questionnaires will include both closed-end and open-end items in order to collect and analyze both qualitative and quantitative data. Survey questions items will target the travel shopping experience within airports, and the impact of technology used for marketing, advertising, and sales. A pilot test of the questionnaire will be carried out in order to ensure adequate validity and reliability.
Business intelligence gathering techniques will be used to explore key metrics of competitors in the retail travel industry. Key indicators and key metrics include measures such as point of sale (POS) purchase statistics, marketing attributes such as basket mix comparisons, industry-wide brand and cultural trends, and a variety of consumer purchase behaviors. The competitive environment will be assessed using classic…