Boeing: Selling a Dreamliner

Discuss this in terms of the core benefit, actual product, and augmented product levels of 787 Dreamliner. The 787 Dreamliner core benefit is to provide an evolutionary step in air transportation by “looking at every aspect of the flying experience”. Boeing wanted to provide its corporate clients with an aircraft that falls into the midsized wide body market with ground breaking innovations that would translate into true benefits for its customers. Boeing 787 Dreamliner brings the speed range and capacity of the big jumbo jets to the mid-size market.

It is designed to be the world’s lightest and most fuel efficient passenger jet, providing cost savings to their consumers. By looking at the entire flying experience, Boeing developed new product innovations in the 787 Dreamliner. Such innovations bring 20% less fuel consumption than comparability sized planes, an interior that offers a flexible design aimed at providing multiple configurations for seating capacity, increased cargo capacity, enhanced safety and technology to cut departure delays and improvements to the passenger travel experience.

Boeing prides itself on offering augmented product levels through superior customer relationships both during and after the sale. Boeing invests heavily in managing customer relationships during the lengthy sales cycle, through its sales and service technicians, financial analysts, planners, engineers etc. , all dedicated to finding ways to understand and satisfy airline customer needs. After the sale, the sales executives stay in almost constant contact with the customer to ensure that they stay satisfied.

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In this case of the delayed product delivery, Boeing augmented the product by announcing its commitment to working with its customers to minimize the impact of the delays as well as offering incentives and penalty payments to those customers. There are three major types of buying situations in Business markets. Identify which one better describes the situations of the airline mentioned as buyers of the 787 Dreamliner and explain.

As a customer to the Boeing 787 Dreamliner, I believe this situation is best described as a New Task, A business buying situation in which the buyer purchases a product or service for the first time. Although the customer may have purchased products previously from Boeing, this product line, the 787 Dreamliner, is a brand new, revolutionary product in the market. As such, the customer, not having a previous experience with that particular product, its impact or how it would fit into their own product portfolio would have to perform a complete benefit/risk analysis.

Such investigations are including but not limited to: product specifications, their own price limits, contract payment terms, order quantities, delivery times and service terms. Without an investigation on the new product, the buyer can only leverage historical experiences from Boeing on different product lines and the company’s business reputation. This is not enough to make a purchasing decision. Discuss the customer buying process for a Boeing airplane. In what major ways does this process differ from the buying process a passenger might go through in choosing an airline?

Customers looking to invest in the Boeing 787 Dreamliner will undertake a Complex Buying Behavior for New Products. This behavior is identified for customers who are highly involved in the purchase and perceive significant differences amount brands. Consumers are highly involved with the product is expensive, risky, purchased infrequently or highly expressive. In the situation of buying the 787 Dreamliner, the purchasing cycle can take years of investigation and negotiations before the final contract is signed or the purchase is made.

The length of the purchasing cycle and the behavior of the customer is identified by a number of stages, and these happen after the customer first identifies their need for the airplane. After identifying if there is a need for the Dreamliner in the business, the customer will then go through a learning process about the product. They will investigate the 787 Dreamliner, compare the benefits and features with other competitive offerings. The customer will most likely analyze their finding through a comparative analytical model to help identify differences in the product and the value of those differences.

Not only will the customer look at the core benefit of the product, the product itself, but the customer will also analyze the augmented product levels available to them (such as, warranty, maintenance, financing planners, engineers). It is during this evaluation that Boeing can be instrumental to the customer by managing the customer relationship by offering up an extensive team of company specialists all dedicated to finding ways to work closely with customers through the lengthy buying/discovery process. From here, the customer will develop first beliefs about the product itself.

With only 2 competitors in the market for this type of product, the customer may already have a belief or attitude about the company itself (Boeing). It is now, that the customer will develop a belief, and then an attitude about the product and how the Dreamliner will fulfill their needs and what benefits it will bring to their portfolio. From there, the customer will make a purchase choice. A significant point is, that with this buying behavior, the cognitive dissonance the customer feels is relatively low, provided that the Boeing meets and provides the service and benefits that it marketed to the customer, thus providing customer delight.

If Boeing fails to meet the criteria it set forth with the customer, than, as direct relationship with the price, the cognitive dissonance is very high. In contrast to a long buying cycle and decision making process that customers make in purchasing an airplane to round out their portfolio. The end user (the buyer) goes through a much shorter decision model and most likely fall in the Dissonance-Reducing Buying Behavior or even the Habitual Buying Behavior. I will review the Dissonance-Reducing Buying Behavior first.

The Dissonance-Reducing Buying Behavior is when the buyer identifies a need they have (flying to a destination), that they are highly involved in the purchase as it maybe be an expensive, infrequent or risky purchased, BUT they see little difference among brands. As such, although the purchase price is expensive, and the buyer doesn’t see much difference between brands, the buyer may investigate options (shop around to learn what is available for pricing) but will buy relatively quickly.

Provided that all pricing is relatively equal in the market (no large seat sales to take advantage of), the customer may do a preliminary scan of price offerings, stop overs, flight times et cetera; the customer will ultimately make a choice and purchase a ticket. As with most purchases, cognitive dissonance will occur with this purchase. It will most likely not be over price, as all options available were of equal value, but it can occur from the service the buyer receives from the airline, or even through beliefs transferred from other’s experiences with that airline.

The Habitual Buying Behavior occurs under conditions of low customer involvement and little significant brand difference. A significant portion of this buying behavior is based on the repetition of the product by the buyer. If the buyer is a frequent flyer, to him/her it may not matter about services, but about brand familiarity rather than brand conviction or brand loyalty. Once again, providing that price is not a factor in the buying decision, the buyer will continually return to the same airline out of habit provided that (s)he does not have a bad experience.

As it is with Dissonance-Reducing Behavior, cognitive dissonance may occur, but most likely when the buyer receives bad service. Given that business and consumer marketers use many of same segmentation variables, which of the four categories of segmentation variables on page 242 of the textbook has Boeing used in planning for the 787 Dreamliner? Explain. Faced with a sullied reputation and suffering financial situation, Boeing fought back by first looking at the market and their products. They identified an opportunity in the mid-size wide-body market.

Their current product line did not have the depth required to attack this market. When developing the Boeing 787 Dreamliner, Boeing segmented their marketing tactics to Psychographic Segmentation, specifically targeting Benefits Sought. This segmentation group divides buyers according to the different benefits they seek from the product. With this understanding and segmentation in mind, Boeing not only developed a product to fit into this category, but Boeing focused on improving the “standard” design including a number of significant changes, (benefits added).

Boeing worked on adding “ground breaking innovations that would translate into true benefits for its customers, the types of benefits that would stand out to buyers and executives at major airlines”. The Boeing 787 Dreamliner brings the speed range and capacity of the big jumbo jets to the mid-size market. It is designed to be the world’s lightest and most fuel efficient passenger jet, providing cost savings to their corporate customers, who in which could pass along the savings to their customers, driving business and market share.

Adding on to this innovation, Boeing developed additional product innovations in the 787 Dreamliner. Such innovations bring 20% less fuel consumption than comparability sized planes, an interior that offers a flexible design aimed at providing multiple configurations for seating capacity, increased cargo capacity, enhanced safety and technology to cut departure delays and improvements to the passenger travel experience.

These changes or innovations are designed to provide their corporate customers with financial benefits through cost savings on fuel and cutting down on departure delays. The enhanced safety technology also provides a costs savings for the customer with increased safety provisions, and maintenance requirement reporting that can lead to reduced down time. The final advances, although aimed at the end user (the flyer), also promote a benefit to the customer. The customer can promote their flights to the flyer” and boast of the 60% noise reduction, more legroom, lighting that automatically adjusts to time zone shifts, and higher cabin pressure and humidity which reduce the common flying symptoms. By developing the 787 Dreamliner with innovations, cost savings, an end user comfort, Boeing was able to segment their market and target their product to the customers most interested in products that provide them with additional benefits. Identify and discuss the sources of competitive advantages for the 787 Dreamliner.

Although the 787 Dreamliner has a “hefty” price tag, as compared to comparable models, at $168M, it also offers a number of competitive advantages over the competition:

• Worlds lightest and most fuel efficient passenger jet o Single piece fuselage made of lightweight carbon materials, eliminating 40000-50000 fasteners and 1500 aluminum sheets o Requiring 20% less fuel than comparable models o Fuel range of 8500 nautical miles and reaching speed of Mach 0. 5, bringing big jet speed and range to the midsize market, rivaling the jumbo jets o Innovations in safety technology o Technology in cutting departure delays and ground based com o Self-monitoring vital functions with maintenance reporting technology to cut on down time o Multiple interior configuration o Increased cargo space
• The flow through (or advantages aimed at the end user or flyer) are to reduce long-haul flying misery and to better imitate the life on the ground: o 60% quieter than other planes in its class More leg room o Lighting that automatically adjust to time zone shifts o Larger over-head capacity to reduce content damage o Cabin pressures and humidity higher to reduce symptoms of flyer promoting a more comfortable ride o 19 inch self-dimming windows o Wireless internet o Entertainment system By looking at the entire flying experience, from maintenance, crew and the passenger, Boeing was better able to create a product that has distinct and definable advantages over that of its competitor.

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