Business Market of Airlines
What is the Business Market of an Airline Industry?
Business market has been defined as a market that is characterized by fewer customers and larger transactions. Customization is the key and the usage of the product or service determines its value. Brand name means little to customers and there is no retailing. Also, selling is a complex process and the target of the sales pitch may not always be the end product's users (NarayanDas 2005).
This kind of market is different from customer markets and, service is the cornerstone of business markets. The products are customized to meet the needs of different customers in different geographical or operational regions. Also, every company operating in a business market strives to attain customer loyalty though the means by which they create and sustain it varies between industries.
With regards to the airline industry, business markets determine many aspects of their operations including their pricing, routes, frequency of operations and the kind and size of air-crafts that should be used in a particular market. Identifying and operating in each business market is a complex strategy and it involves numerous aspects such as aircraft, personnel, governments, suppliers, financing, customer support and marketing.
Customer Characteristics in the Gulf region
The Gulf region is one of the fastest growing places in the world and the increasing oil price is booming its economies. It has a GDP of $1.1 Trillion and the population is increasing slowly and steadily and is currently at 1.96 million. In fact, this region grew by 11% in 2009 when other regions were beset by economic problems. This segment is serviced by 38 airline companies that operate in 112 airports (embrarercommercialjets.com, 2011)
SWOT Analysis
An examination of...
The companies that operate in the gulf have many inherent strengths. This region is rich in oil and this makes it easier and cheaper for airlines to fuel. This region is geographically located between the east and west and this makes it a favorable route for anyone traveling from the west to east or vice-versa.
The weaknesses are also numerous. The air cargo traffic is less compared to other regions because of the easy access to ports and the nature of goods that flows in is mostly non-perishable. Also, the trade between the countries in the middle east is only a fraction of what it is in Asia and Europe. Another problem is that the airline industry is highly regulated by the Government and this prevents the management from making strategic decisions to exploit opportunities as they come up. A good part of the region is a no-fly zone and so it is restricted only for military aircrafts. So, the existing space is hugely crammed for increasing air traffic. (Clarke, 2011).
The opportunities are the booming population that comprises of a young demographic crowd that is looking to cash in on the advantages of globalization. Also, the huge expatriate population that live here travel back to their home countries frequently and this means more passenger traffic for the airlines. The threats continue to be the overcapacity and tight regulations from the Government. "Overcapacity, poor management and regulatory restrictions are threatening the financial viability of many low-cost carriers in the Middle East, as is reflected in the demise of Sama Airlines in Saudi Arabia" (Flottau, 2010, p.24).
Porter's Five Forces
Porter's five forces are the threat by the entry of new competitors, threat of substitute, bargaining power of customers, bargaining power of suppliers and…
