ABSTRACT
Marketing strategy embraces major fundamental components of marketing practice. Despite this importance, executives in Nigerian Aviation Industry have not been market driven as they lagged behind in adopting marketing concept and other promotional efforts in order to increase patronage. Today, only 15 million; 8.6 percent out of 174 million of Nigerian population travelled by air with its dire consequences of suffering from entropy, performance below capacity, inability to provide quality services, abysmal profit and lack of adequate implementation of direct marketing techniques. All these problems necessitated the need to evaluate the relationship between marketing strategies and business performance of domestic airlines in Nigerian Aviation Industry.
This study adopted survey research design. Target population comprised 488 staff of the selected airline and total enumeration method was adopted. Data was collected through the use of structured questionnaire titled:”Marketing Strategies and Business Performance Questionnaire” (MSBPQ) adapted and validated for the study. The Cronbach’s alpha coefficient for the constructs ranges between 0.76 and 0.97. The response rate was 83.4%. The data were analyzed using descriptive and inferential (Pearson Product moment correlation, regression analysis) statistics.
The analysis of the data revealed a moderate positive and significant relationship between Direct Marketing and Sales Growth (r= 0.422, p<0 .05="" also="" and="" capital="" effect="" has="" it="" market="" marketing="" mouth="" on="" online="" p="" positive="" profitability="" r="0.448," revealed="" share="" significant="" sup="" that="" to="" traditional="" working="">2
=.453, F(1, 406)= 336.370; p<0 .05="" customer="" influence="" marketing="" satisfaction="" sup="" transactional="">2=.309, p<0 .05="" and="" business="" effect="" have="" marketing="" on="" performance="" significant="" strategies="" sup="">2=.632, F(5, 402)= 181.336; p<0 .05="" o:p="">
The study concluded that marketing strategies significantly influence business performance of Airline Operators in Nigeria The study recommended that Airline Industry should aggressively be market driven by adopting marketing concept; marketing strategies should be seen as an investment to improve business performance with a view to meet continuous and changing demand of customers; airline operators should interact with and respond to internal and external market factors so as to maintain equitable working balance among the interest groups.
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
In the aviation industry where air travel business is highly competitive, marketing activities are inevitably vital to ensure competitive edge and most airlines are doing just about anything in order to remain relevant and still meet the ever dynamic needs of the passengers. Studies have shown that for these airlines to survive the competition in their industry, they need to take their marketing very seriously (Ibidunni, 2010). The global world of business today is a very dynamic one, in order to satisfy the changing needs of customers, organisations must first know their needs and ensure such needs are met with the services they provide (Smith and Reece, 2012). In the airline industry, passengers pay higher fares at airports for on-spot purchases where a single carrier controls a high fraction of traffic. For airlines to survive in today’s competitive market, it has to treat the marketing drive of its business with top priority to ensure adequate business performance.
Business performance has to do with the combination of management and analytic processes that allow managers of an organisation to achieve pre-determined goals in their business dealings. It is often set to align with the strategic and operational objectives of the organisation in question: In doing this, organisations find it easy to achieve their selected goals for the period (Makhbul, 2011). Measuring business performance in today’s economic environment is an important issue for practicing managers. Generally speaking, business performance is the operational ability to satisfy the desires of the company’s major shareholders, which is often assessed to measure the accomplishment of such organisation (Smith and Reece, 2012).
In today’s business dealings, an organisation’s ability to succeed or fail is largely a product of how best such organisation can satisfy its customers and this act places enormous task and responsibility by way of marketing on any organisation intending to excel at satisfying the customers and clients (Ibidunni, 2010). It starts with identifying accurately the needs of the customers/clients and deciding on how best to handle the products and services in order to satisfy the desires of all prospective buyers and sellers as the case may be. Some indicators employed in measuring business performance are profitability, market share, return on investment (ROI), working capital, sales growth and customer retention (Wood, 2006).
The primary focus of every airline business is to make profit and this is the primary duty of the marketing manager through its marketing department to formulate and implement policies and plans that will maximize the profit per unit of capital employed in the business (Oyekanmi, 2013). Profitability means a suitable price policy which in itself is influenced by cost and market situation factors. In all endeavors, consumer’s satisfaction must be seriously anticipated right from the onset as posited by (Falk, 2011). Profit is the result a business owner considers necessary to make running the business worthwhile, it is comparable to the next-best amount an organisation could earn doing another job. Apart from profitability, another factor that enhances business activities of firms is market share.
The market share of a business is mainly considered to be the unit or revenue of the market accounted for by such business. When nearly 200 senior marketing managers were surveyed, result shows that 67% affirmed they found the "dollar market share" metric very useful, and 61% saw that the "unit market share" as been very useful (Farris, Neil, Phillip and David, 2010). Market share is often monitored for signs of change in the competitive market, and it frequently drives strategic or tactical action (Farris, Neil, Phillip and David, 2010). This makes market share increment one of the important objectives of a business and it enhances sales growth on a long run.
Sales growth composed of the amount by which the average sales volume of a company's products or services has grown, typically from year to year (Blois and Ramirez, 2012). The sales growth is often measured sequentially. Sequential growth deals with the Comparism of recent performance of an organisation with the period preceding it. For instance, when a monthly report states that an organisation experienced 5% sequential sales growth, it implies that recent sales have increased by 5% since the previous month (Blois and Ramirez, 2012). Also, the sales growth is closely linked to the working capital of such organisation.
Working capital is the financial metrics which represents operating liquidity available to a business (Black, 2015). It is a part of operating capital that is often calculated as current assets minus current liabilities. Working capital should be positive in order to allow firms the ability to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses (Black, 2015). Working capital is often managed with activities such as inventories, accounts receivable and payable, and cash.
In India, the airlines were responsible for a total of 79.5 million passengers on scheduled services, an increase of 1.8 per cent over 2014. Among the largest airline industry's performance, Indian was among the world’s largest domestic markets that had the fastest domestic passenger growth in 2015 (World Air Transport Statistics (WATS), 2015). Meanwhile, airlines in Africa scored lowest in global industry performance rating for year 2015, particularly in the area of domestic passenger growth. A result recently released by The International Air Transport Association (IATA) showed that African airlines had only 2.2 per cent of the entire market share of passengers for the year under review (WATS, 2015).
Zografos, Andreatta, and Odoni (2013) see the ability of businesses to perform viably as one of the most important issues in both developed and developing countries. Air transportation in Nigeria like other African countries was a very important project that needed urgent establishment during the British colonial rule as the need to reach out to other Colonies including Nigeria by the British government became essential. However, that initial desire could not be sustained over a long period of time due to poor performance in its managerial roles (Akpoghomeh, 2010). Some of the challenges are increase of flight fares, flight cancellations, delays, poor-onboard services, poor customer relations, missing luggage's, huge staff outlay (serving the purpose of its inception) and poor equipment maintenance and breakdowns (Daramola, 2007).
With reports of the varying degree of successes and failures recorded by airlines in Nigeria, it is imperative to attempt to carry out a detail study of the various marketing strategies being adopted by these airlines in carrying out their operations with a view to establishing the place of marketing in their business performances. Previous research indicates that several factors that influence business performance are professional background of the owners, their entrepreneurship capabilities and preferences, cultural and religious beliefs, inadequate marketing strategies, marketing research, as well as the technology and micro environment (Buttner, 2011; Makhbul, 2011). Marketing is one of the most important aspectsof any business and airlines are not an exception.
Marketing itself is an activity with a defined process used for creating, communicating, delivering, and exchanging offers that have attached values for customers, clients, partners, and society at large in exchange for money (American Marketing Association, 2013). Marketing in business setting entails the process of exchange which involves two parties, the buyer and seller. During the process of exchange, value is given up by one party to the other party receiving something of value as well. That is whyKotler & Connor (2013) defines marketing as a process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others. According to American Marketing Association (AMA) (2013), marketing is a broader concept which entails the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organisational goals. The ability of marketing managers to ascertain the right marketing strategy to adopt in the organisation ensures the growth of sales, share and profitability of any organisation.
Marketing strategy in itself is the process of adapting the marketing mix elements to environmental factors (Mavondo, 2000). It evolves as a result of the interplay of the marketing mix elements and the environmental factors, which impact on these elements. It functions by determining the nature, strength, direction, and interaction between marketing mix elements and the environmental factors in a particular situation (Osuagwu, 2001). The marketing variants like the total quality management are mostly concerned with satisfying clients’ needs and wants beneficially. Developing and implementing efficient and effective marketing strategies which adopts relevant dimensions of the marketing concept involve the organic tasks of selecting a target market (customers/clients) in which to operate and developing an efficient and effective marketing ingredient combination. Marketing thought, with its practice, has been moving speedily into the service industry (Kotler and Connor, 1997). Literature, partly, centers on the discussion of whether physical product marketing is similar to, or different from, the marketing of service and concludes that the differences between physical product and service might be a matter of emphasis rather than of nature or kind (Creveling, 2010). Marketing is one of the salient and important organic functions which help to service organisations to meet their business challenges and achieve set goals and objectives (Kotler and Connor, 1997).
Marketing strategy give the avenue whereby organisations make use of their resources to achieve their set goals and objectives with less stress (Waithaka, Muturi and Nyabuto, 2014). Marketing strategy deals with the adapting of marketing mix elements to business environmental forces which involves examination of the marketing mix elements and the environmental factors (Li, Duan, Edwards and Kinman, 2010). Part of the functions of marketing strategy is to determine the nature, strength, direction, and interaction between the marketing mix-elements and the environmental factors in a particular situation (Jain and Punj, 2014).
To ensure the survival of an organisation, there must be in place a sound and robust marketing commitment on the part of sales personnel, when considering the subtle, unstable and seemingly hostile business environments in which contemporary airline business organisations operates, it calls for targeted marketing strategies which could be online, traditional, word of mouth or direct marketing which are tailored to meet the objective of the organisation. It becomes an important part of this study to assert that there is virtually no limit to the types of marketing strategies that a business can adopt. This is due to the fact that new concepts and designs are being discovered daily, and the biggest problem that a business owner will face is choosing which one will best suit his venture, online, offline or traditional, word-of-mouth, or direct marketing (Akinyele, 2010).
Direct marketing strategy is often used by several airline operators because they see it as a powerful tool to attract and keep both old and new customers. It is a successful way some organisations are using to generate huge sales from existing and new customers (Edmund, 2011). Airlines, just like other organizations, make use of direct marketing to provide physical marketing materials to consumers to communicate information about a product or services being marketed by the organisation (O'guinn, 2013). Direct marketing is a form of advertising which allows businesses effectively communicate directly to customers through several media such as, cell phone, email, website, online advertisements, database marketing, fliers, catalog distribution, promotional letters and targeted mail (Ayyadurai, 2013).
Word of mouth Marketing is seen as the most effective and powerful marketing strategy any company can employ (Lang and Hyde, 2013). The benefit of this strategy is that it can instantly turn a consumer into a regular paying customer. This type of strategy is a by-product of the traditional and online marketing strategies (Lang and Lawson, 2013). The consumers show satisfaction through their word of mouth marketing to their friends on what was provided in exchange for their patronage (Thomas, 2012). Because word of mouth marketing is placed on the shoulders of satisfied customers who then share this satisfaction with people who trust them, this trust is then transferred to the business.
Another marketing strategy examined in the course of the study is traditional marketing which also known as offline in marketing. In the past, traditional marketing used to be the only main focus for advertisers then, but now, it is no longer the same. This type of marketing strategy is seen in two groups namely; print, and collectively, electronics (Armstrong and Overton, 2010). It is still highly effective, relevant and consistently produces good results. Also, online marketing is another strategy which is seen as the newest and sometime perceived by many businesses as the most powerful, as it has opened diverse types of marketing strategies that have completely changed the face of marketing (Rappaport, 2009). While using online marketing, a business owner or marketing manager can find numerous methods to explore a new business idea. Some of these ideas include affiliate marketing, article marketing, social networking, and blogging. Affiliate marketing can take a similar form as print based traditional marketing by placing banner advertisements on websites, but can reach so many more people. Chekitan and Don (2013) posit that article marketing and blogging on the other hand allows for two strategies at the same time. They can both be used to promote any product or services directly, or can be used for driving traffic (customers) to a website for the same purpose. Rappaport (2009) observed that social networking is the online version of word of mouth marketing and has the ability to "personally touch" a huge number of people instantly with basically the touch of a button (mouse).
Marketing strategy development, planning and implementation process involves a lot, such as, managerial experience, it has a high level of uncertainty, it requires intensive business knowledge, with a broad strategic information needed for success, rigorous process involving decision making by organisational managers, placing emphasis on its unique strengths to ensure better customer value over a long period of time (Jain and Punj, 2014). It is somehow difficult for businesses to constantly realize efficient and effective marketing strategy (Li, Duan, Edwards and Kinman, 2010). This could be associated with unstable business environmental factors, which will then stand as a difficult task for organisational marketing strategists to decide which strategy is best suitable for achieving the set goal for the year. McDonald (2012) was of the opinion that many factors prevent organisational managers from designing and implementing efficient and effective marketing strategies. The fact is that environmental factors were seen as major issues drastically affecting the efficiency and effectiveness of managers in strategic marketing issues (McDonald, 2012). The marketing strategies of airline operators in Nigerian companies are expected to be adaptable to these environmental factors in order to achieve set business performance goals and objective in a long run, though it seems to have witnessed some form of corporate performance over the years which can be attributed to their district level of market share and more needs to be done on the adoption of effective marketing strategies to improve business performance.
1.2 Statement of the Problem
Air transport in Nigeria has been growing in relation to the Gross National Product (GNP) as it accounts for a large part of transport expenditure in the economy (Oyekanmi, 2013). The share of freight movement on a tonne per kilometer is small compared to other modes; airlines carry high value, perishable goods and provide emergency services that make them an important part of the total transport system. Its transport system helps to improve quality of life by broadening people’s leisure and cultural experiences with a wider choice of holiday destinations around the world and an affordable means to visit distant friends and relatives.
Effective direct marketing strategy has been classified as one of the fundamental key for the growth of any business organisation because no business can survive without the marketing or sales of its products or services. Extensive marketing has been recognized as the important factor for the sales growth of any business and not just funding or capital should be consider as the growth of a business (Waithaka, Mutiri and Nyabuto, 2014). For an enterprise to survive, it is very crucial to have effective sales strategies that will win over its competitors in the industry but most of the customers are cautious about the abuse of direct marketing and are always worried that they may become victims of fraud (Yen, Chen and Chen, 2008). Traditionally, executives in Nigeria aviation industries have not been market driven, they have lagged behind in accepting the marketing concept and have generally been slow in adopting promotional methods, product strategy and other marketing techniques (Uhuegho, Olaniyi and Nwokocha, 2014).....
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