Introduction
In recent years, a growing economic importance of services especially in western countries could be observed. This increasing importance of the service sector will continue. It is predicted that a positive balance of additional employment in the next years will only be reached in the service sector.
One practical example for the growing importance of services is the European aviation industry. Formerly exclusively dominated by a small number of state-aided airlines, the liberalisation of the industry during the 1990s’ was the starting point for a new era in the aviation industry. The airlines had to face competition and an innovative new sector developed itself to meet the customer needs by offering flights for affordable prices. In 2010 it is expected that the share of low fare air traffic in Europe will reach over 40%. The no-frills-concept of low fare airlines also generated new demand. In 2002 59% of the passengers of low fare airlines would not have travelled by air if the cheap tickets would not have been available.
Goals of this study and Approach
This study will describe the special characteristics of services and the requirements for marketing activities in the service sector compared to other areas. Thereby, special attention will be paid to low fare airlines, which have contributed to the increasing importance of the service sector in general and the aviation service sector in particular due to the reasons already mentioned.
Firstly, the required terms in the context of service marketing will be described and different theoretical approaches will be presented. Several possibilities to define the main terms in the context of this case study will be given. Secondly, the special requirements of service marketing will be shown and compared to the marketing of products. Thirdly, the history and current situation of the low fare airline business will be shown and explained. Afterwards, the special challenges in the marketing of low fare airlines will be discussed. Solutions and possible approaches for a successful marketing of low fare airlines will be presented. The main focus will be on the expansion of the classical marketing mix, i.e. the 3 P people, physical facilities and process management. Finally, a brief outlook will be given which describes possible future developments and highlights several important fields, to which companies should pay attention.
Table of Contents
1. Introduction
1.1. Problem
1.2. Goals of this study
1.3. Approach
2. Service Marketing
2.1. Definition and scope
2.1.1. Marketing
2.1.1.1. Exchange process approach
2.1.1.2. Business philosophy approach
2.1.1.3. Managerial function approach
2.1.1.4. Conclusion
2.1.2. Service
2.1.2.1. Constitutive criteria
2.1.2.2. Statistical approach
2.1.2.3. Performance dimensions
2.1.2.4. Other definition possibilities
2.1.2.5. Conclusion
2.1.3. Service Marketing
2.2. Targets
2.2.1. Quantitative targets
2.2.2. Qualitative targets
2.3. 7 Ps of service marketing
2.3.1. Product
2.3.2. Price
2.3.3. Place
2.3.4. Promotion
2.3.5. People
2.3.6. Physical facilities
2.3.7. Process Management
2.4. Other instrumental approaches for service marketing
2.5. Critical appraisal
3. Additional 3 Ps for services described on the example of low fare airlines
3.1. Market and market environment in Europe
3.1.1. Historical developments
3.1.2. Current situation
3.2. Service marketing mix
3.2.1. People
3.2.2. Physical facilities
3.2.3. Process Management
3.2.4. Correlation with other components of the marketing mix
3.3. Critical appraisal
4. Outlook
Objectives and Topics
This study aims to examine the specific requirements of service marketing by applying an expanded marketing mix (7 Ps) to the aviation industry, specifically focusing on the business models of European low fare airlines.
- Analysis of the fundamental characteristics of services and their implications for marketing.
- Evaluation of the "7 Ps" of the service marketing mix (Product, Price, Place, Promotion, People, Physical facilities, Process Management).
- Investigation of the historical development and current competitive environment of European low fare airlines.
- Examination of how low fare airlines utilize specific service marketing instruments to optimize costs and operations.
- Assessment of future market trends and the necessity for service-oriented adjustments in a consolidating market.
Excerpt from the Book
1.1. Problem
In the recent years, a growing economic importance of services especially in western countries could be observed. The share of people working in the service sector has grown to more than 60% in nearly all western countries. This can be observed in figure 3 in the appendix: In Germany, an increasing share of people was employed in the service sector, with the highest share ever in the 4th quarter 2005. At this point of time, 72,1% of the employees were employed in the tertiary sector. This increasing importance of the service sector will continue, as it is predicted that a positive balance of additional employment in the next years will only be reached in the service sector. Additionally, not only has the service sector the highest share in the employment statistic, but also the biggest part of the gross domestic product.
Also, the importance of services becomes obvious, when the following figures are considered: In Germany, only 10 to 25% of the whole industrial value added originates directly from the production of a product. The other 75 to 90% result from intra-corporate services. Plus, intra-corporate services have the biggest share of all intermediate inputs used by corporations.
One practical example for the growing importance of services is the European aviation industry. Formerly exclusively dominated by a small number of state-aided airlines embedded in a system of national regulations, the liberalisation of the industry during the 1990s’ was the starting point for a new era in the aviation industry. The airlines had to face competition and an innovative new sector, the sector of low fare airlines, developed itself to meet the customer needs by offering flights for affordable prices. As a consequence traditional airlines had to revise their concept and strategy in order to avoid a significant loss of market share. In 2010 it is expected that the share of low fare air traffic in Europe will reach over 40%.
Summary of Chapters
1. Introduction: This chapter highlights the rising economic importance of the service sector and identifies the European low fare airline industry as a key example for this shift, outlining the scope and goals of the study.
2. Service Marketing: This section provides a comprehensive theoretical framework, defining services through constitutive criteria and performance dimensions, and introduces the expanded 7 Ps marketing mix.
3. Additional 3 Ps for services described on the example of low fare airlines: This chapter applies the theoretical 7 Ps framework to the practical business models of low fare airlines, analyzing market developments and service strategies.
4. Outlook: The final chapter summarizes future challenges, emphasizing that while price remains the dominant factor, airlines must integrate other marketing mix elements to maintain a competitive edge during market consolidation.
Keywords
Service Marketing, Low Fare Airlines, Marketing Mix, 7 Ps, Customer Satisfaction, No-Frills, Aviation Industry, Service Quality, Process Management, Price Strategy, Personnel Management, Market Liberalisation, Competitive Advantage, Service Sector, Internal Marketing.
Frequently Asked Questions
What is the core focus of this research paper?
The paper examines how service marketing principles are applied in the specific context of European low fare airlines, utilizing the "7 Ps" framework to analyze their unique business strategies.
Which theoretical model forms the basis of the analysis?
The authors use the expanded service marketing mix, specifically the 7 Ps model (Product, Price, Place, Promotion, People, Physical facilities, Process Management), originally proposed by Magrath.
What is the primary objective of this study?
The objective is to describe the characteristics of services, the specific marketing requirements for service providers, and how low fare airlines balance low-cost strategies with the need for service consistency.
What scientific methods are utilized in the work?
The work employs a qualitative case study approach, synthesizing existing literature on service management and analyzing empirical data regarding the low fare airline industry in Europe.
What is addressed in the main part of the document?
The main part covers the theoretical definitions of services, the detailed components of the 7 Ps marketing mix, and a practical application of these tools within the operational context of low cost carriers.
Which key terminology characterizes this work?
Core terms include service marketing, no-frills concept, turnaround management, cost-per-seat, and the 7 Ps marketing framework.
How does the "no-frills" concept impact the personnel management of these airlines?
Flight attendants often face high pressure, lower wages, and increased workloads (such as cleaning tasks), leading to a conflict between minimizing personnel costs and maintaining service quality standards.
What role do "physical facilities" play in the airline business model?
Physical facilities are primarily used for cost-efficiency and standardization; for example, by removing service classes and utilizing uniform aircraft types to maximize seat capacity and operational speed.
How does the author evaluate the "turnaround time" strategy?
The author notes that while short turnaround times are essential for cost-effectiveness, they raise critical questions regarding safety maintenance and employee exhaustion.
What is the author's final conclusion on the long-term viability of low fare airlines?
The outlook suggests that as the market consolidates, airlines will need to look beyond pure price competition and leverage the "7 Ps" to create unique selling propositions, provided they can manage the tension between aggressive cost-cutting and customer expectations.
- Quote paper
- Andreas Klein (Author), Kathrin Stiel (Author), Julian Brands (Author), 2006, Marketing for services - theoretical aspects and practical examples from European low fare airlines, Munich, GRIN Verlag, https://www.grin.com/document/69227
