INSTITUTE OF MANAGEMENT DEVELOPMENT AND RESEARCH (IMDR) PGDM- I (2011-2013)

CASE STUDY: Basic Marketing Boeing: Selling a Dream(liner)

PRESENTED TO: Prof. Giribala Dewasthale Prof. Prajakta Pradhan

PRESENTED BY: Group 5 Ayush Madaan (13) Bhanupratap Singh (14) Kanchan Tapadia (22) Mayank Bhadani (29) Poonam Kunkulol (35) Shantanu Das (43) Sumit Rathi (50) Vishek Agarwal (59)

Executive Summary
Boeing: Selling a Dream (liner) Boeing is the largest manufacturer of aircraft. Boeing deals with every day Selling commercial and military aircraft involves some of the most complicated transactions in the world. Boeing invests heavily in managing customer relationships. Individual salespeople head up an extensive team of company specialistssales and service technicians, financial analysts, planners, engineersall dedicated to finding ways to understand and satisfy airline customer needs. In the early 2000s, the company faced two separate cases of cheating to win defense contracts with the U.S. Air Force. The scandals resulted in a Department of Justice investigation, the ousting of Boeings CEO, prison terms for two other executives, and the loss of billions of dollars in business. To make matters even worse, in the face of a scandalous extramarital affair, the next CEO stepped down as well. In the wake of September 11, 2001, Boeing lost its industry lead in commercial airplane sales to Airbus. In April 2004, the giant airplane maker announced the program launch of its 787 Dreamliner, Boeings first all-new aircraft since the 777, launched a decade earlier. The 787 Dreamliner was planned to be a mid-range jet with the capability to reach speeds matching the fastest wide-body, long-range planes, but with greatly improved fuel efficiency. Another major benefit that the Boeing 787 Dreamliner brings to its category is flexibility. Many analysts strongly believe that the 787 Dreamliner will one day be regarded as the plane that charted the next age of commercial aviation. Japans All-Nippon Airways jumped in first with a record order for 50 Dreamliners. In 2005, Boeing shattered its records with orders for 1,002 commercial airplanes, edging within inches of Airbuss lead. That number is even more striking considering that Boeing and Airbus combined for a total of 622 orders in 2004. The sales spike was so dramatic that no one in the industry expected the numbers to repeat. But in 2006, Boeing reclaimed its title as the industry sales leader by surpassing Airbus with orders for 1,044 more jets. Even more stunning, 2007 brought the third straight record-breaking year for Boeing with 1,413 orders.

In 2005, when Jim McNerney took over as CEO for Boeing, he instituted a massive costcutting program that resulted in an 84 percent increase in company earnings on an 8 percent increase in revenue for 2007. McNerney knew that his biggest challenge would be to keep the Dreamliner on track. Boeings promises with respect to deadlines and delivery dates could only be met if all the pieces of the puzzle came together as planned. But by mid-2007, the 787 production process was plagued with problems. By mid-2008, the date of the first 787 delivery had been pushed back three times. Months later, Boeing Commercial Airplanes president Scott Carson announced that Boeing had made solid progress in overcoming start-up issues. He apologized and promised that the company would work closely with each customer to minimize the impact of the delays. The delays began raising havoc with customer relationships. Boeings biggest customer, All Nippon, stated, We are extremely disappointed: This is the third delay in the delivery of the first aircraft and we still have no details about the full delivery schedule. We would urge Boeing to provide us with a 120 percent definitive schedule as soon as possible. Customer options are limitedtheres only one competitor, and its product in this class is substantially inferior to the Dreamliner. And even if customers switch, Airbus does not have planes sitting on the shelves waiting to be purchased. The innovativeness of the current product line, expertise in supply chain management, and the strength of its sales teams in managing customer relationships will all help to resolve the problems with the Dreamliner program. But Boeing had these things going for it before the crisis began. McNerney has made it very clear that he expects more from everyone involved in the 787 Dreamliner program, from the top down. He has reached deeply into the companys executive roster, plucking a team from Boeings defense unit to straighten out the Dreamliner process. He is pushing executives to act more aggressively. Mr. McNerney took over as CEO well after the Dreamliner program was under way, so the current problems are not being attributed to him. But customers and others throughout the industry are watching him closely to see how he handles the situation.

One reason for the delay was an industry-wide shortage of material (fasteners) used for making aircraft. Although fasteners comprise only about 3 per cent of the cost of an aircraft, they became a serious supply-chain issue.

Q:1 MARKET STRUCTURE AND DEMAND FOR THE DREAMLINER AND ITS IMPLICATIONS: The market structure for the Dreamliner is an oligopoly. Since 787 Dreamliner was lighter, had more speed, reduced the fatigue of passengers, used 20% less fuel than comparably sized plans, there was an increased in demand for its purchase: In 2005 the order was of 1002 aircrafts and in 2006 order raised to 1044 and in 2007 there was a vast order of 1415. IMPLICATIONS: To look over what market strategies are followed by its competitors Airbus with regards to the A380. To look over price change. According to the chief project engineer for the 787.Its not just an evolutionary step.From his perspective it almost borders on revolutionary.This statement is supported by many industry insiders.With such support,the airline companies insist to take chance and place orders even with the understanding that the delivery time was atleast 4 years. Q2)EXAMPLES OF MAJOR TYPES OF BUYING SITUATION : The main type of buying situation in this case is NEW TASK which generally means a purchase decision that requires through research such as a new product. Q.3 FEATURES OF DREAMLINER AND CUSTOMER BENEFITS FROM EACH: The 787 Dreamliner will be the worlds first large commercial jetliner with an airframe made of carbon fibre composite rather than aluminium. It promises the economics of large jet transports to the middle of the market, using 20% less fuel than any other airplane of its size. It is the worlds lightest and more fuel efficient passenger jet from the beginning, it set out to create a jet with ground breaking innovations that would translate into true benefits for its customers.

Flexibility is a major benefit of it. Its designed for multiple configurations that carry 210 to 330 passengers. Its also increased cargo capacity, a fuel range of up to 8500 nautical miles, and a maximum speed of Mach 0.85. The cockpit of its also loaded with tech toys that will enhance safety and cut departure delay. The advanced system was that self monitors the planes vital functions. It is 60% quieter than other planes on its class. The Dreamliner features more legroom, lighting that automatically adjusts to time zone shifts, and higher cabin pressure and humidity, making the flying experience more comfortable and reducing common flying symptoms like headaches, dry mouth, and fatigue. Q. 4 THE STAGES IN BUYING BEHAVIOUR OF BOEING: A) need recognition : a) in the case of customers of Boeing airplanes its customers have a need for the product when their is demand for flights by the passengers. Two types of airplanes are demanded. Commercial and militart.b) in the case of buying process of a passenger , the need is temparory as they might need it to travel long distances in short time . Also when their is no other transport option available their is a need of airplane. B ) information search: a) in case of Boeings customers they have a very extensive and agressive search process before buying these kinds of products. They gather a lot of information and make decisions after weeks or even months as their is a huge inverstment and risk .b) the information search is generally online and the customers serach for the availability of tickets according to their preferences. C ) evaluation of alternatives : a) the customers of boeing airplanes don't have many options or alternatives to choose from as their are very few companies who product commercial planes.b) the passengers might have many alternatives with regard to price , available airplanes , avalilable timings , various classes to choose from etc. D) pruchase decison : a) boings customers take really long , even months or weeks to make a decsion regarding the purchase , as it have to take into consideration a lot of things like safety for the passengars , fuel efficiency , spped etc.b) the

passengers would pruchase a ticket if they get the desired airline according to their timing requirements , price , hospitality etc. E ) post purchse behaviour : a) the customers look for high quality post pruchase service . They will be happy if the airlines give all these things they mentioned during the purchase.b ) the passengers will be very happy if they have a safe trip and get good hospitality at a resonable price .

Q5) The company should apolozise to their customer for the delay of delivery.They should try to deliver the airplane on time. They should try to concentrate 240 programmes in the company. Concentrate on the 787 project. They should improve on building strong customer relationship.

Minutes of Meeting
Name of the case: Boeing: Selling a Dream(liner) Date and Time: 19th Mar 4:30 pm. Location: IMDR Quadrangle. Present Students: Ayush Madan, Bhanupratap Singh, Kanchan Tapadia, Mayank Bhadani, Poonam Kunkulol, Shantanu Das, Sumit Rathi, Vishek Agarwal.

Minutes: Ayush gave summary of what exactly the case is? Kanchan and Mayank had given the structure of market as in which category it falls. But they had differences whether it is Oligopoly or monopoly. She also stated the type of Demand. Vishek suggested the major type of buying situations and its implication. Bhanupratap spoke about the customer buying behaviour. Shantanu and Sumit discussed about each features of Dreamliner and customer benefits of it.

 Poonam jotted down the points coming out of the discussion and prepare minutes of meetings. The recommendations about the marketing were discussed taking into consideration of all the outputs coming from group.