MARKETING RESEARCH PROJECT BY: Jena Moore
EXECUTIVE SUMMARY The research and findings were developed to help identify and solve Boeing’s marketing issue. These findings and recommendations have solely been used to for this mock project done on a college campus setting. The goal for this research report was to develop a greater understanding of market research as whole and develop skills pertaining to the market research industry. This research report includes aspects of the company such as the history, finances, competitors and distribution channels. This project utilizes several different resources and includes both primary and secondary research. I hope you have many insightful thoughts while reading this report.
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TABLE OF CONTENTS BOEING SUMMARY ......................................................................................... 4-5 HISTORY AND OVERVIEW .................................................................................4 THE DREAMLINER 787.................................................................................... 4-5 SITUATION ANALYSIS SUMMARY ............................................................... 6-10 CURRENT PROBLEM AT HAND ..................................................................... 6-7 PROFITS AND SALES..........................................................................................8 COMPETITION SEGMENTS AND MARKET SHARE..................................... 8-10 PRIMARY AND SECONDARY RESEARCH METHODS .............................. 10-12 PRIMARY RESEARCH ................................................................................. 10-12 SECONDARY RESEARCH .................................................................................12 COLLECTED DATA MEASUREMENT ......................................................... 12-16 FOCUS GROUP ........................................................................................... 13-14 SURVEY ....................................................................................................... 14-16 SUMMARY OF RESEARCH FINDINGS ....................................................... 17-20 AWARENESS ............................................................................................... 17-18 SAFETY ........................................................................................................ 18-19 SATISFACTION ............................................................................................ 19-20
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BOEING SUMMARY History and Overview: The Boeing company designs, develops, manufactures, sells, and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight, and launch systems services worldwide. The Boeing Company has established itself as the world’s largest aerospace company, and more importantly, the leading producer of commercial jetliners worldwide. Boeing was founded in 1916 by William Boeing and was originally named Pacific Aero Products. His company’s production of model DH-4B in 1921 was the first model to generate contracts with other companies. This led to a U.S. army and navy contract in 1923 and allowed Boeing’s first expansion of the company. Several of Boeing’s top models became the president’s official transportation. The company continued on to create the Luna Rover Vehicle, which was launched into space with Apollo 11. These successes remained consistent into 1990. During this time, the company added two new segments to increase expansion. They also purchased a smaller company named McDonnell Douglas. This purchase of McDonnell Douglas unfortunately hindered Boeing and forced the company to split six years later. During this time, Boeing began to face lawsuits regarding attempts to illegally obtain other company information. The outcome of these lawsuits resulted in multiple employee firings and cost Boeing billions of dollars. Since then, Boeing has been focused on slowly recovering. Their recent model, the Dreamliner 787, was created to provide the company with its first major success since 1990. The company’s proposal looked promising and received a record breaking 544 pre-orders. However, the airplane has recently been grounded due to engine fire problems. The 787 Dreamliner: Boeing patented the idea for the Dreamliner in 2003. The Dreamliner is a commercial airplane that includes several revolutionary features. These features are:
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Increased cabin humidity and improved pressurized cabins for passengers
Longer flying time capabilities
Usage of lightweight material, allowing for smoother flight
20 percent more fuel efficient than any existing model
Faster cruising speed for shorter flight experiences
Although the commercial airplane was created to positively alter the airline industry, these benefits have put great pressures on Boeing. Complications with the production process have caused delays and setbacks that continue to affect the company.
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BOEING’S SITUATION ANALYSIS Current Problem at Hand: Boeing has landed their newest commercial airplane, the Dreamliner 787. The original release of the model was set to take off in 2007, but the company suffered from several setbacks in production stages. To help cut costs, Boeing decided to utilize a different type of manufacturing chain when creating the Dreamliner. This decision was based on the budget and was intended to keep spending low. Instead of using the traditional supply chain in which outside companies are used to develop raw materials (see figure 3 above), Boeing had companies provide already assembled subparts for the Dreamliner. The company’s plan placed a high emphasis on outsourcing (see figure 4 below).
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Although this plan was intended to create an easier and cheaper assembly of the model, communication issues made the plan falter. In addition to a lack of communication between the contracted companies, a lack of specialty in each supplier also caused problems. Since contracted companies only had specialty in supplying raw materials, their constructions of subparts often contained errors. The combination of these led to the late release of the Dreamliner in 2012. After the Dreamliner launched, Boeing hoped to see great profits and increased orders. Unfortunately this was not the case and an emergency landing with one of their new planes exposed a crucial problem. The landing revealed engine fires and called an immediate grounding for all other Dreamliner planes. Investigators found that the lithium battery technology Boeing developed could not handle the output of the Dreamliner. A federal investigation followed and Boeing went back to the drawing board. Currently, Boeing has been reorganizing their design strategy and awaiting FAA (Federal Aviation Association) approval to run tests on the new changes.
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Current Sales and Profits: Boeing’s sales have remained relatively steady over the last five years; however, there have been some fluctuations. Starting in 2008, the total revenue (RE) and gross profit (P) are listed below:
2008
2009
2010
2011
2012
Revenue (R)
$60,909
$68,281
$64,306
$68,735
$81,698
Profit (P)
$10,557
$11,741
$12,463
$12,868
$13,054
Based on the revenue and profits, Boeing experienced a fair amount of growth in both areas; however, revenue experienced a drop from 2009 to 2010. Boeing’s revenue increased 12% from 2008 to 2009, but decreased 5% from 2009 to 2010. This drop in revenue could be due to the recession. It is likely that the slow economy created fewer consumer purchases, which included fewer traveling customers and resulted in decreased revenue as fewer new planes were purchased. Competitive Segments and Market Share: Boeing operates in five principal categories:
Commercial airplanes Boeing specializes in creating and producing aircrafts for large groups of travelers both nationally and internationally.
Boeing military aircraft (BMA) Boeing works with the U.S Army through contracts to supply aircrafts and helicopters to the U.S. Armed Forces.
Network and space systems (N&SS) Boeing joins forces with NASA to provide aircrafts and vehicles appropriate for space missions and travels.
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Global services and support (GS&S) Boeing offers total life cycle support and maintenance for all of their products worldwide.
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Boeing Capital corporation (BCC) Boeing developed BCC in order to reduce financial risk and control spending. BCC handles all aspects of finances and aids in keeping spending and budget in line.
Competitor Information: Boeing has three major competitors: Lockheed Martin, EADS and Airbus. Lockheed Martin Lockheed Martin is the top contractor for the U.S. military and Defense. The company has been an increasingly large threat to Boeing. Boeing has always exceeded Lockheed due to their size and market segment share, but recently Lockheed has seen a steady, continuing growth for their company. The two competitors are separated by a larger margin of 50 thousand employees (Boeing employing 170,000 and Lockheed employing 120,000) and their revenues are currently separated by $20 million. Recently, Lockheed has closed a gap between themselves and Boeing. Lockheed has been able to maintain a steady growth because of the demand of the Iraq war. EADS EADS N.V. (EADS) is another top competitor for Boeing. The Dutch based company specializes in aerospace, defense and related services. The Company works much like Boeing by operating commercially, but also relies on military contracts. EADS has four main business divisions which include: Airbus Commercial and Military, Eurocopter, Astrium and Cassidian.
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Airbus Airbus is an aircraft manufacturing company based in Europe. The company is well established in the commercial airplane market and manufactures almost half of the world’s jet airplanes. The company’s revenue has remained steady throughout the years. Their most recent annual revenue report shows that their profits remain at about half of Boeing’s. Airbus revenues for 2010 reached $34 billion, while Boeing’s reached an approximate $64 billion. Although the company’s profits remain at half of Boeing’s, they have seen a 10% increase from 2010 to 2011. Airbus continues to grow at a steady pace due to their broad consumer reach and consistent planes. PRIMARY AND SECONDARY RESEARCH METHODS We focused on three different research methods to effectively explore our research objectives. The methods included: focus groups, survey, and online databases. These methods have either been conducted as primary or secondary research. They all cohesively provided us with different types of results and allowed us to expand our breadth of research. In each research method we implemented our broad objectives that included awareness, safety and satisfaction. We also had separate focuses that we concentrated efforts on. Beginning with our first two primary research methods then followed by our secondary research method, below we explain specific goals that pertained to our research. Note: All raw materials for our research will be included in the appendix (ie: Moderator’s guide, questionnaire, sampling plan) Primary Research Focus Group Objective: To develop qualitative data. Focus groups are conducted to help understand the consumer’s thoughts and ideas of the brand. Our objective of our focus group was to gather in depth data about Boeing. We used an explorative method to determine the opinions and ideas that consumers hold. 10
Emphasis:
To allow consumers to discuss opinions freely. Group settings create conversation. Our participants were encouraged to participate in conversation and add any additional comments pertaining to the question. They were encouraged to offer any material that they deemed important.
To maintain an effective flow of conversation. The key to focus groups is to create an open flow of conversation. Sometimes conversations can easily be taken off track or stopped. To implement a balance, we eliminated any one word answer questions. We also had several people positioned on the side to give advice on when to move on to the next question if conversation veered off.
To ensure an unbiased, encouraging moderator. In order for participants to express opinions freely and maintain an effective flow of conversation, the moderator must have effective communication skills. We emphasized this by holding several trial runs for our moderator and removing questions that had any leading words.
Survey Objective: To develop quantitative, yet customized data. Our method of surveying was self-administered and online. This type of survey was used because it creates data in the form of numbers. It allowed us to gather a large amount of responses in a short amount of time. This type of data allowed us to measure Boeing’s targets and interest level. Emphasis:
To create easy, convenient questions. Surveys should contain simple worded questions in order to make sure the participant is not thoroughly challenged. We implemented this by eliminating complicated jargon and
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open ended questions. We also kept the amount of questions to fewer than 20 to help create a faster experience for the participant.
To use proper filter questions for specific demographics. Unfortunately surveys will always contain errors. However, we attempted to minimize this by creating a strong focus on this area in order to reduce error and help data stay unbiased. Our efforts came from our filter questions that we provided throughout the survey. Participants were skipped through specific questions if they did not qualify. In addition to skip logic in the questionnaire, we also created a question before the survey to ensure we only had participants who had flown before.
Secondary Research Reliable Online Databases Objective: To effectively gather published data as support. In addition to using exclusively collected data, it is important to utilize trustworthy data to support research. We incorporated this by researching on online databases such as Gale’s Business Insights, Ebsco Host, and Hoovers. Emphasis:
To use relevant, updated information. Our data reflects the most recently published material. We made sure our material was relevant in order to effectively establish issues and objectives currently happening. COLLECTED DATA MEASUREMENTS
The primary research methods we used required an analysis of raw data. Below is the data we collected from each type of research.
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Focus Group Collected Data There was a great amount of valuable data from this method of research. Some specific questions and answers that gave us great insight include: Q: “How would you feel if a plane were to offer better fuel efficiency?” A: Participants responded well and enjoyed the idea of better fuel efficiency. An interesting notion was their connection to a cheaper ticket. Despite us mentioning any link between fuel efficiency and cheaper tickets, almost all participants commented on an assumed reduction of price for tickets if the airplane were to use less gas. Q: “How have you heard of Boeing?” A: Participants only mentioned the news that surrounded the company recently. Many answers included a response of either ‘fire problems’ or ‘plane problems’. Almost all were unaware of how long Boeing has been around and said they only heard ‘bits and pieces’ of what happened with their recent grounding of planes. Q: “If Boeing were an animal, what would it be?” A: Participants had varying opinions. One respondent answered a lion because Boeing is confident, they show off, and they attack competitors. Another response included a bird because Boeing can be seen ‘going south’ due to recent news. One participant answered a chameleon because the company changes to fit into their environment, even if they
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don’t belong. They furthered this response by adding that Boeing should not venture out into far-fetched ideas and stick to what they know. Survey Collected Data We had a total of 116 qualified respondents. Specific questions and answers are visually displayed below to show examples of data that was collected.
This question generated a broad response. Results from this chart revealed that the percentage is mainly split into two categories: Domestic (51 percent) and Both (42 percent). This shows that flyers either just fly domestic or both international and domestic. It shows that people rarely fly just internationally.
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This question reveals that our participants are largely what we consider “nonfrequent flyers.� This means that they have flown less than three times in the past year. Non-frequent flyers made up a total of 73 percent, while frequent flyers made up 27 percent.
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This type of question is an example of our logic that we used throughout our survey. In this specific question, there were only a total of 21 respondents. There were two questions prior to this question that respondents needed to qualify for. They were: “Have you heard of Boeing?” and “Are you aware of Boeing’s other business involvements?” If respondents answered “no” to either question, they were automatically redirected to another question not pertaining to Boeing. The results of this question revealed that participants who did qualify to answer knew most segments Boeing competes in. The only segment that Boeing does not offer services in is “Boats and underwater apparatus,” which only 18 percent chose. All other options yielded above 75 percent.
This question is an example of how we were able to compare data. To generate these answers, we filtered respondents who chose ‘Full-time employee’ as their occupation. Above are the answers for that group specifically. These results showed that full-time employees are generally aware of Boeing (81 percent).
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SUMMARY OF RESEARCH FINDINGS Our analysis of the data is segmented into our three broad research objectives mentioned earlier. The segments contain an analysis and recommendations to the company for each of our primary methods of research. Awareness Focus Group: Our participants from our focus group were largely unaware of Boeing. Half of participants said they are unaware of any brands of plane that they are flying. This reveals that Boeing has not created a strong awareness level for their commercial plane flyers. This could stem from their B2B focus. Boeing focuses on providing products for other businesses instead of direct consumers. Although consumers may use their products, they are not their direct customer. Another question that revealed large unawareness was when participants were asked how they heard about Boeing. Most participants answered that they heard about the company through recent news about a plane catching on fire while in flight. Even though that answer is partially correct, it shows unawareness because most participants had no recollection or knowledge of the company beforehand. This is damaging for the company because consumers are only hearing about the negative events associated with Boeing. Recommendations: To better the company’s awareness level in the eyes in everyday consumers, they could launch a marketing campaign that focuses on gaining positive attention around the company. They could integrate advertisements that relate to the consumer in order to increase knowledge about the company. Survey: Our analysis of results showed that frequent flyers are more aware of current situations in the airline industry. Frequent flyers (people who have flown 3 or more times a year) were more knowledgeable and aware when compared to nonfrequent flyers. Eighty percent of frequent flyers knew the cause of the Dreamliner’s problems. When non-frequent flyers were asked, only 50 percent knew about the cause of the Dreamliner’s problem. This revelation could have a negative impact; however, because our results showed that only 20 percent of participants were frequent flyers,
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this comparison would need to be investigated further. This research method also yielded different results than the focus group. There was a much greater percentage (80) that knew about Boeing. This could be from the increased number of people asked and larger demographics. Recommendations: For more successful business in the future, Boeing should advertise through mass media and television. They should also develop advertisements that appeal to non-frequent flyers. By catering to this demographic, it could create a heightened awareness level. Safety Focus Group: We concluded an overwhelmingly importance level for safety. Some participants said they would never fly on an airplane that had a mechanical issue. The earliest amount of time it would take participants to fly in an airplane after mechanical problems would be at least 3 months. This analysis did not matched up when participants were asked if they were aware of the brand of plane they were flying on. Only half of the participants were ‘semi-aware’ of what plane they were flying. This reveals that although consumers say safety is crucial, they may not realize that they have/or could have flown on a plane with mechanical issues. Recommendations: Boeing could use this to their advantage by focusing on their planes safety with the consumers. If they can effectively create awareness for the company, they can bolster their company around safety. By doing this, they will create a strong brand image because consumers overwhelmingly hold safety as a very important factor when deciding to fly. Survey: We developed very similar conclusions from our survey. When asked ‘If there was a safety issue with an airline, how long would it take you to fly with that airline after the issue was resolved’, over 65 percent of respondents answered ‘3-6 months’ or ‘never’. This contrasted from the answers that were collected from the question ‘are you aware of the brand of plane you fly on’. These answers revealed that only 46 percent either are ‘aware’ of what brand airplane they are flying. From those responses, we can
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conclude that there is a 19 percent gap between consumers that are worried about safety, but are not aware of the plane they are flying. This shows that although this 19 percent is highly concerned for their safety, they may not be aware of the plane’s previous safety issues that could have occurred recently. Recommendations: Because of the close similarities of data that we found when analyzing our focus group answers, we believe the same recommendations would apply. Consumer Satisfaction Focus Group: When analyzing results, it was evident that consumers have a strict definition of customer satisfaction. When asked about customer satisfaction of the plane, participants strictly spoke on items such as: free food, comfy pillow, and easy baggage check. This revealed that consumers do not put a great amount of thought into how the plane feels. An example of this would be increased humidity and a lighter flying experience. This is negative for Boeing because they are currently placing a large focus on luxury amenities and our results revealed that flyers have little concern or interest in that area. Half of the participants agreed that don’t mind the current accommodations that airplanes provide. Recommendations: Based on these findings, Boeing should not continue to focus on luxury accommodations. The company should focus on other routes such as safety or fuel efficiency because they rate higher in the consumer’s eyes. Survey: Results from our survey showed very similar responses. When participants were asked to use a compared rating scale, the option ‘enhanced comfort of the plane’ was rated as least important. Safety was the most important, followed by shorter flying time. This is a negative for Boeing; however, there is a great opportunity for the company if they re-focus their efforts elsewhere. Recommendations: Boeing should shift focus and emphasize safety or fuel efficiency because that is what the consumer is closely identifying with. They should use
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awareness as beginning point in their strategy and branch off with safety and fuel efficiency. SURVEY ERROR Our research results were not completely accurate due to several types of errors we experienced. Both of our methods of research contained systematic errors. One systematic error that occurred was convenience bias. This error occurred because of what outlets we used to distribute the survey (i.e. social media, word of mouth, texting). In addition to an un-diversified group, time and money prevented us from reaching a large population. We should also be aware that these research methods were conducted in a college environment instead of a professional work environment. Our survey tended to draw more error due to the method of distribution (online,self-administered). Non-Response Error prevented us from reaching the entire population and stemmed from our inability to require everybody to complete the survey. Another error that we identified in our survey was a glitch in question options. When asked which airline participants fly most often, SouthWest Airlines was offered twice. Another error that could have occurred is apathy bias. This results when the participants perceives the questionnaire as too long and speeds though. These systematic errors have helped us learn how to effectively create a survey that contains minimum bias. We have also learned that it is vital to properly distribute surveys via reliable outlets instead of social media.
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APPENDIX AND WORKS CITED
The following pages include these documents in order: SWOT Analysis Moderator’s Guide Questionnaire Questions Works Cited
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SWOT ANALYSIS Strength ●
Leader in aerospace industry
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Has wide market reach
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Strong focus on Research and development
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Increased operational performance
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High standing in business segments
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Very diverse company (defense for military, air transport, military flight, satellites, linked to NASA for space operations, communication systems)
Weakness ●
High dependency on government
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High dependency on out sourcing and subcontractors
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Slow production process
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Extremely expensive to research/operate/design/build any product
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Constant rules/regulations to be kept up with that have political and national ties ( airport security, military grade equipment)
Opportunities ●
Increased air travel
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Increased defense spending
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Purchase of Solutions Made Simple communication system
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Big presence in expanding global market
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Technology constantly broadening in space programs
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Increasing demand for commercial airplanes
Threats ●
Intense competition and pricing pressure
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Risks concerning labor issues
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Constant government control and demand for air travel/import and exporting
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â—?
Competitors present and on the rise
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MODERATOR’S GUIDE Do you travel? yes/no When traveling, what kind of transportation do you use? Fly
Drive
Bus
Train
Boat
Other
How often do you travel, by airplane? weekly few times a year
monthly
every few months
once every few years
never
Have you ever flown internationally? yes/ no How often? Which countries? Which airlines do you fly most frequently? Why? Do you have a preferred carrier/airplane? Why? Describe any concerns you might have with airline safety. From the companies you travel with, which one do you feel safest to fly with? Do you research the plane before you travel? Have you ever been concerned about your safety when flying? Describe: What is your fear factor associated with flying?
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What do you know about the Boeing Company? What do you know/heard about the Dreamliner? List some special features of the Dreamliner. If Boeing was an animal what would it be and why? Did you know that the Dreamliner is 20% more fuel efficient than any other aircraft? How important is fuel efficiency to you? Which is more important to you, fuel efficiency or concern about the safety of the plane? Why? Does the battery problem associated with Boeing’s Dreamliner concern you? Once the Dreamliner is fixed and released back into the industry are you going to feel safe flying in it?
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Works Cited "About Us." Boeing: Boeing in Brief Home. The Boeing Corporation, Jan. 2013. Web. 17 Feb. 2013. "About Us." Lockheed Martin · Lockheed Martin. Lockheed Martin Corporation, Web. 19 Feb. 2013. "Boeing Co." Colum.edu. Web. 13 Feb. 2013. Irving, C. (2013). Dreamliner's Nightmare. Newsweek, 161(2), 1. Ostrower, Jon. "Boeing Pares Dreamline Workforce." Wallstreetjournal.com. N.p., 28 Feb. 2013. Web. 28 Feb. 2013. Tang, C. S., & Zimmerman, J. D. (2009). Managing New Product Development and Supply Chain Risks: The Boeing 787 Case. Supply Chain Forum: International Journal, 10(2), 74-86. Reuters. (2013, February 4). JAL says 787 grounding to cost $8m, seeks compensation talks. Times of Oman (Muscat, Oman). Ray, S. (2011). Boeing's $16 Billion Dreamliner Problem. Bloomberg Businessweek, (4244), 2224.
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