Impact Of Social Networking In The Airline Industry Marketing Essay

Impact Of Social Networking In The Airline Industry Marketing Essay Social Networking is increasingly emerging as an essential communication tool for the travel industry. The growth of social networking phenomena in the Airline industry initially commenced through sites such as Facebook, Twitter and Myspace since it has been growing with more professionalism with the turn up of new industry specified social networks (e.g., Tripadvisor.com). Without much research on how to engage with potential customers, many airlines have started using Twitter streams. Addressing the customer concerns and complaints is not possible by many airlines on social networking sites since they do not have any defined strategy. (Kirby, 2010). Over 2000 airlines operate more than 23,000 aircrafts, providing service to over 3700 airports in todays Global Airline Industry. The worlds airlines flew almost 28 million scheduled flight departures and over 2 billion passengers were carried in 2006. Over the past 30 years, the growth of air travel has averaged 5% approximately, with annual variations due to the differences in the economic fluctuations and circumstances in different regions of the world. The total revenue for the industry expected by IATA will be about $545 billion in 2010, rise of 13% from $483 billion in 2009. Every corner of the globe has been served by the international airline industry which has contributed in the creation of a global economy. (IATA, 2010a) As many authors have researched about social networking no such book or an article has described social networking impact in the Airline industry perspective. A better understanding of social networking has been brought out in this paper. Evaluation of social networking with the airline industry throughout this research will be an essential platform since most of the companys fear from embracing social networking. The impact of social media on airlines and the directions for successful deployment of social media have been detailed in the report. The aim of this report is to educate and help Airline companies to formulate strategic responses for a brand and distribute opportunities since social networking has being taken into consideration as a marketing tool. Sharing and gathering of exclusive information through social networking helps to decrease the advertising budgets and in return increase the revenue and build brand loyalty. Methodology of the Research The intention of this research is to prove that the Airline industry has a great potential in social networking as it cant be ignored in 2010. As few major airlines such as JetBlue, Virgin America and British Airways have started social networking which has changed their process fundamentally by improving customer satisfaction, reducing costs and increasing brand loyalty. Through an inclusive literature review by following academic literature, white papers, popular media, journal articles and books, the following areas which are associated with social networking on the Airline industry have been explored Critical research about social networking emergence with the purpose to establish the potential impact of it on the Airline industry. To find out how social networking will change the Airline consumer behavior and what should be the strategic response from the industry in response to these changes. What marketing professionals should do to find their feet in the social networking arena in terms of their skills, attitudes and behaviors? In order to ensure credibility, reliability and viability of information which have been used for this article, comparison of that information has been done using different similar sources. Accuracy of that information has been evaluated in the Analysis of Included References (9.0) of this document. Industry Analysis European airline giants such as Cathay Pacific, Emirates, US Airways, Japan Airlines, Air France-KLM and Southwest Airlines have dominated the airline industry. Over 2000 airlines operate more than 23,000 aircrafts, providing service to over 3700 airports in todays Global Airline Industry. The worlds airlines flew almost 28 million scheduled flight departures over 2 billion passengers were carried in 2006. The Airline Industry is an intensively competitive market which was negatively affected by the economic downturn and hike in the oil prices over the past two years. The Airline Industry saw a loss of $16 billion in 2008 followed by $9.9 billion in 2009. According to IATAs most recent financial forecast, carriers are projected to earn $2.5 billion in 2010. (Refer Appendix I for further details) Source: ATW World Airline Report 2010 Figure 1: Revenue/Expenses vs. Net Profits by Year Figure 2: International Passenger and Freight Growth Figure 3: Number of Scheduled International Passengers Carried in 2009 Impact of Social Networking in the Airline Industry Social Networking, incorporating Web 2.0 technologies, has been credited with the ability to expand social contacts, accelerate business processes, improve customer relations, cost-effective recruitment of high-caliber staff and the improvement of morale, motivation and job satisfaction among staff (MessageLabs, 2007a). Is Social Media Evolution or Revolution? Since social networking is emerging and has hit its tipping point, conventional networking sites are cannibalizing and competing with each other for members (Neisser, 2008). Today, Web 2.0 is extremely changing customers expectations and behaviour. Social networks such as Facebook, Myspace, and YouTube etc. will change industries than the Internet since they allow customers to communicate with each other, without the involvement of companies (Boynes, 2008). Figure 4: Growth of Facebook by Country and Top 10 Social Networking Sites Source: Nielsen/NetRatings Report, 2009/2010 Liveliness of Social Networking in the Airline Industry Why? As Social networking in a corporate context will become impossible to be ignored in 2010 most of the major airlines have started using social media to re-invent and enhance their clients facing parts which they were doing on a one to one basis. Most of the airlines have created a Facebook or Twitter fan page in regards to this as a start but no one seems like getting the potential out of it by doing active social networking. Social media reveals many transformative opportunities within the airline industry. The Industry is using social network sites to simplify customer contact and response by proactively monitoring and responding to the online chatter. How? The immediate social media based feedback elevates stress and tension for the flyers who have lost their luggage or missed a flight. UKs low cost carriers such as easyJet has over 45,000 followers on Twitter, where Virgin Atlantic and airBaltic have 8000 and with 8500 followers accordingly (Field, 2008). Facebook has been used as a platform by American Airlines in which they have launched Travelbag where the users are able to share their travel experiences and plans and also set up countdowns for upcoming events or trips. According to the airline, they are trying to differentiate and segment its passengers along with identifying their buying habits. Social Networking the Catapult for the Airline Industry Presently, the entire world is evolving towards technological know-how with continuous improvements in ICTA developments in many industries. Airline/Aviation industry has driven a massive growth in all over the world due to ICTA development which has influenced recently. The 12th annual SITA/Airline Business Airline IT Trends Survey, out of 129 airlines that took part, 56% expected an increase in IT spending next year, with only 10% expecting a decrease. As being recovered from the economic downturn, the survey shows how global cost pressures continue to influence IT strategies. Figure 5: ICTA Spending in Airline Industry Source: The Airline IT Trends Survey. 2010 The above mentioned ICTA trends are evident resources that infrastructure and spending are available to drive the change and impact which has been created by social networking Taneja (2008) Flying ahead of the airplane has mentioned that Social Networking/Media is increasingly emerging as an essential communication tool for the travel industry. The growth of social networking phenomena in the Airline industry initially commenced through sites such as Facebook and Bebo since it has been growing with more professionalism with the turn up of new industry specified social networks. Presently people are looking to complete their activities via their mobile phones. With the arrival of social networking it has become an essential part of their life as they get used to mobile social networking. This is a potential impact for the Airline industry as they have already started online digital marketing such as E-tickets, E-flyers, etc. How Consumers Drive the Fundamental Change With the growth of the internet many firms use online consumer reviews as marketing tools which are also strategically manipulated since it can help the consumers to discover quality products (Dellarocas 2003). According to a survey by an Internet marketing Research Company comScore (2007), 24% of the internet users access online reviews before making payments for services delivered offline. Li and Bernoff (2008) argues that the consumers expect 24 hours customer service capabilities along with broad self-serve online options. Return on Influence would be another suitable theory in the matter of WOM and Marketing should be strategically carried out by influencing and identifying those who have the most influence over others (Brogan and Smith, 2008). Around 60% of the worlds population visit social networking sites such as Facebook and MySpace or blogging sites as according to the Nielsen Global Online study. Figure 6: Global Social Network Traffic Source: Nielsen/NetRatings Report, 2009/2010 Traditional behavior before the introduction of social media Before social networking became an intermediate support for the airline passengers, they have been gathering information, planning their trips and reserving their tickets through particular airline companies or travel agents. Customer service was also not regular, identical and reasonable among all passengers. Flight availabilities, delays etc. couldnt be informed to consumers. The places such as blogs, forums and specialized websites were limited to talk about the negative and positive impacts which have been faced by the passengers. Traditional versus Online Consumer behavior Traditional ways of consumer behavior has changed fundamentally by social networking since it has overhauled traditional methods of communication with the use of Word of Mouth method to create a positive effect. WOM was considered as an alternative to the traditional marketing tools by several books. According to (Misner, 1999) it is a least understood strategy but yet effective. Since traditional ways of communication are diminishing, marketers are interested in understanding WOM (Nail, 2005). Presently mobile social networking has emerged to help social networking spread all over the world. According to Nielsen Mobile, the U.K. and U.S. stands ahead of many markets in mobile social networking. Social networks were accessed on phones by 1.6% of U.S. mobile subscribers and 1.7% of U.K. mobile subscribers in December 2007 January 2008 as compared to 0.6% in France, 0.2% in Germany and 0.8% in Spain. Figure 7: Personnel vs. Social Benefit in Social Networking Figure 8: Where Do Consumers Search Info According to a study done by  OTX Research  on behalf of  DEI shows that consumers currently obtain information of brands, companies or products with the use of social media. According to the Nielsen online report, users from each segment visit social networking sites as part of their normal routine activities. The emerge of social networking has exposed particular industry products and services and hence majority of the young users are the key influences and are involved in purchasing decisions rather than depending on their parents who were previously influenced with the traditional method. Figure 9: Use of Social Networking Sites by Age Source: Nielsen/NetRatings Report, 2009/2010 AISAS (AIDA) Model This model was another version of the traditional AIDA (Attention, Interest, Desire and Action) model to accurately describe consumer behavior on the internet. AISAS online consumer behavior model concept was developed by the Dentsu Group and it is being used since 2004 to describe online consumer behavior. Figure 10: AISAS (AIDA) Model Source: Concept developed by Dentsu Group How AISAS models Work with Social Networking Social networking sites have the ability to get the attention of consumers by displaying banners, information, etc as they cannot rely on traditional one-way methods of communication e.g. TV and print ads. Interested customers will be searching for more information to take decisions. This helps companies to spread their message for a low cost since interested consumers who are unable to buy the product can still share details through social networking as this model can work in many ways than the traditional AIDA model. In terms of communication it may work in four ways as explained in the above diagram. Social networking can be used to get the initial attention towards a company by publishing photos, videos, advertisements, current affairs and through connecting people. In order to hold the attention of the consumers, news articles, future promotions, travel packages, CSR factors and service information can be sent. Once the interest is built, promotions such as low cost tickets and other offers will make the consumers to search more information before taking decisions. This will enable to create desire and make their service believable and collect reasons to buy. Social networking can do this process predominantly as it can direct the consumers to e-ticket sites or a travel agent who is available online and make a purchase. Positive or negative feedback will be shared as per individual experience. Consumers can upload photos and share experiences with one another. Attention Interest Search Actions Share Consumer Satisfaction effects in Social Networking Airline Industries can increase the customer satisfaction with the help of social networking since it can provide better services, suggest or share ideas to others. Regarding the consumer behavior, companies have given more consideration to satisfaction. Figure 11: Conceptualized Model: Satisfaction effect of the consumer Why Consumers are moving towards social networking sites The passengers can make the best choice and get a clear picture of what to expect from each airline such as services and products E.g.-: meals drinks offered, in-flight entertainment, crew service standards etc. and also share their ideas by uploading pictures, videos and status updates about their personnel experiences on Facebook, Twitter etc. Figure 12: Technographics ladder: Consumer Behavior in Social Networking Source: Forrester Research, 2006 Internet ticket reservation has been accelerated by social media as most of the airline consumers are selling and promoting their tickets using social networks. E.g, JetBlueCheeps: A Twitter stream devoted to last-minute fares sales. There are uncontrollable events which cannot be prevented such as weather delays, union strikes etc. which causes a negative impression on the minds of the customers. Therefore the airline sites should be able to address such situations. E.g., The CEO of JetBlue went on Youtube and addressed the concerns of the people due to Snow storm delays which occurred on the 14th February 2007 which received a positive feedback. Why consumers are involving in Social networking With the availability of many touch points the consumers can make correct decisions with referrals and recommendations. Although there are some voices withholding assents with regards to social media as a marketing tool, social media have essential applications for customer relationship management programs, marketing campaigns and public relations activities. The following diagram describes how the Airline consumers are involving with social networking sites. Figure 13: Airline Consumer Involvement in Social Networking Benefits of social networking to the airline consumers Share their own ideas and plan trips with more ease Travel applications have been introduced by social networks such as TripIt and Dopplr Purchase air tickets at a low rate and get further discounts from social networking sites Disintermediation such as Travel agents More convenience and less time consuming to make the correct decision Get additional information about airline brands Greater expectations of customer service and managing relationships Free availability of valuable information Findings and Discussions Social Media platforms improve reach and promote campaign messages and airline industry activities. Through the research it has been identified it will be able to capture the public mood, emotion and knowledge about airline related issues. This will enable a range of opportunities to tailor messages and engage the public in a conversation about airline promotions with transparency which would improve loyalty and trust. Creating of a Facebook, Myspace, Twitter, Blog or forum under a company name is not social networking (Hernandez, June 2010). Presently most of the airlines have social networking but apart from few airlines majority are not doing active social networking which means they dont practice social networking components to build their market. Following are the few examples of how some major players actively engage in social networking. October 5th 2010 Malaysia Airlines won the Best Use Of Social Media To Drive Revenue Award at the inaugural Simpliflying-Airline Business Social Media Excellence Awards for Airlines. (Malaysia Airlines, 2010) As per facts/statistics that have been published in the previous chapters, the consumer behavior is changing very rapidly towards social media. In order to cope with these changes airline companies needs to have good strategies and specified skills from their marketing experts. (Please refer Recommendation section for further details.) Besides the famous conventional social networking sites there are airline specific websites, forums and blogs in different languages such as Tripadvisor.com, Flying.org, Aerhub.com, genflylounge.com, and Aircollector.com, etc With the ever shrinking global differences and the ever evolving technology highway, the airline industry has great potential to expand as the global opportunities have increased and the world is becoming a local market for all the businesses. This has paved way to increased travel opportunities, which could be targeted efficiently through the increased use of social media. Summary of the Research Paper According to the literature review, social media plays a significant role in the modern marketing world. Although there are some voices withholding assents with regards to social media as a marketing tool, it has essential applications for customer relationship management programs, marketing campaigns and public relations activities. As most of the Airline companies have not embraced social networking prominently there are potential opportunities which the Airline industry can snatch and make Social media as a marketing tool. With the emergence of social networking and mobile phenomenon behaviors, attitudes of customers are changing rapidly as they are looking forward for more convincing and unique customer services. To facilitate this fundamental change Airline companies must have to build a strong strategic response which can increase their company goodwill, market share and image by attracting more consumers. Special set of skills, attitudes and behaviors needs to be adapted by marketing professionals in the industry to make the best out of social networking. More research is required to articulate the accurate impact of social media on consumer awareness, behavioral change, nature of competition and B2B opportunities. Coordination of social media material and collaboration with airline companies at all levels of the government will become increasingly critical. Recommendations Social networking: Building the Airline industry Market Social networking has been able to revolutionize many industries by helping to build market share and earn more revenue since it can be used as a marketing tool. Airline companies would greatly benefit through social networking since it has a greater visibility into the customer needs and their opinions and facilitate quick and direct interaction. In 2007 the use of social networking deeply became popular among the internet users. (Nilesen, 2009). By the Airline industry, Social media marketing is taking off in a major way with sites like Facebook and Twitter E.g., Westjet have been investing in Facebook and Twitter during the past six months for opening and enhancing communication with the consumers (Field, 2008). Strategic Response to Emerge As a Social Marketing Pioneer Even though majority of airlines havent embraced social networking utterly, components of it such as online advertising is being used since longtime ago. Advertising will not be a good strategic response to emerge social networking in the airline industry. In order to reply to this fundamental macro theme the airline industry must have a proper strategy to get the potential of this which will open up new opportunities. According to a new forecast from ZenithOptimedia (www.zenithoptimedia.com), online-marketing will account for a greater proportion in the global ad sector in 2012 than it does now-17.1 per cent of overall ad spending in two years time compared with 12.7 per cent in 2009. Creating a buzz around services is the requirement for airline companies. It doesnt start from creating a Blog or creating a video, its a social media strategy that encompasses social media and word-of-mouth marketing. There are so many social marketing tools that can be used to fulfill the potential of internet business. Figure 14: Development of Strategies (Sims and Smith, 2003) According to the above mentioned framework when developing a strategy, Airline companies should consider three factors mainly. What Basis?: Every Airline company defines their basis (corporate main purpose) when it has been started such as cost leadership, differentiation, cost differentiation focus according to Porters generic strategy. Which Direction?: As social networking has become a frontier in communication, usage of proper social media can change the direction of Airline companies. According to many authors, consumers are embracing new media experiences with a staggering speed. How?: Airlines need to develop a technological savvy skill in order to drive the growth of social networking in terms of market development. This means that the marketing professionals should develop their skills and behavior in response to the emerged macro environmental theme. (Refer chapter 8.2 for further details) According to the Ansoff Matrix, by becoming a social media leader, Airline companies can develop their market since it is highly penetrated. Figure 15: Ansoff Matrix for the Airline Industry (Ansoffs, 1957) There are so many categorizations with the industry such as budget, low cost, premium, national and regional, etc. Requirements will always be different to each other. Following are the main factors that airlines should consider before compiling a market development strategy. What is the pitch and the strategic intentions Anticipation of the market development initiative (Awareness, sales and loyalty) Current Relationship with the passengers How is the current behavior in terms of social media The ways you are going to address them to build the market Execution and Identifying success Most of the airline companies are using traditional digital marketing steps such as email campaigns, online banners, etc. To get the use of social media they need to use digital marketing moderately in a different way. Figure 16: Change in Online Marketing Usage/Spending in 2009 (Source: Ad-Olgy Research, 2008) New Cynosure for Market Building, Customer Service and Goodwill A Market development strategy should be mainly backed up by social networking components. With this strategy more results with a less marketing budget can be expected than traditional marketing procedures. Many airline companies accept social media as emerging and a proper digital marketing tool. Figure 17: Social Networking Components (The Digital EcoSystem) (Infuz Whitepaper, 2010) How Social Media helps to build the Airline Market Figure 18: Traditional Process vs. Social Networking Process The following section will describe how social networking can be used as a prominent marketing tool to develop the market according to Ansoffs Market development strategy Identification of New Segments: Social networking has been used by many consumer segments which will enable to identify new customer segments other than targeting offline. (Please refer Figure 19) Take advantage: Opportunities to reach an audience would be by Blogging, Twittering and maintaining Facebook fan sites which would ease the decision making process and allow them to share ideas. Spark discussions: With social media, companies can interact with their customers regarding their thoughts about the operations of the company. Channels should be kept distinct: Channels such as blogs, Twitter, Facebook etc. can be used for spreading news, promotions etc. and enable the users to visit different outlets rather than sticking to one. Composition: It consists of the means which the message should be delivered such as channels, digital tools etc. Exposure: Once the digital tools are selected the organization needs to find the ways these tools need to be implemented. Content Ideas: This consists of the process in which the organization ensures that the public receives the message which can be through news feeds, promotions etc. Monitoring and Controlling: Gaining control and continuous monitoring of digital medium activities against set KPIs. Have fun: There should be fun as a team and it should help the company to position them as friendly, customer driven and a convenience Airline. Figure 19: Social Networking Site User Segments (Ofcom, 2008) How the Marketing Professionals Should Adapt to the Change As per the above discussions, social networking is emerging rapidly without any obstacles. Social networking components can be used as digital marketing tools such as online advertising, sharing, blogging, etc to increase the market share and brand loyalty. To keep competitive sales, marketing professionals need to keep their skills up-to-date and effective (Victor et al, 2009). Todays economical condition is extremely different to that of five, ten or twenty years ago. Long complex proposals and contracts are the norm these days. According to Cheverton (2004) there are few important skill types that marketing professionals should acclimatize according to the macro environmental changes occurring rapidly. Those are Communication Skills, Social Skills, Flexibility, Openness to Diversity, Thinking Skills, Personal Development and Learning Skills. Social media marketing will be unsuccessful if it doesnt match with the corporate culture or people are resistant to change. Following are the few of new skills, attitudes and behaviors which requires to be adapted by marketing professionals. Figure 20: Social Networking Skills, Attitudes and Behaviors Marketers should offer various competitive prices, promotions, and tactics in order to build their market. Skill/Attitude/Behavior Description Expert researchers A deep research would provide information for making the correct decisions and overlay a solid platform for doing the required tasks in order to develop a simple tactic or a social media plan. Business acumen The requirement for the growth of the business needs to be figured out and acumen social media tactics will fulfill it. Strategic thinking and planning If the company wants to target the right group of people, it is very essential to think beyond single tactics and instead take all the tactics which can help to achieve the objectives. Strong journalistic writing and storytelling Communication leads to success in social media which in turn creates an opportunity for businesses to share their stories directly with the people. Video/Image production Videos and images should be uploaded on social networking sites to attract consumers. Innovative and Creative Innovative ideas needs to be generated in terms of advertising, networking, connecting people, etc. Relationship development Social media relationship development is all about the value the brand can give to others rather than the benefit others can give to the brand. Experts in social media platforms Expert knowledge in social media should be adapted by marketing professionals to build their company. Self-Directed Learning In order to stay competitive in the market, further learning about social media can be completed by supporting groups and discussions, reading blogs and visiting sales training web sites. Restive Curiosity People in every industry are very curious and restless regarding new developments and are always finding new alternative ways to accomplish tasks. Analysis of Included References Source Description Credibility Reliability Merits Relevance Principles of Marketing This book looks at the major decisions that marketing Managers face in their efforts to balance an organizations objectives Many peer reviews specially from industry experts, CEOs Authors: Philip Kotler, Gary Armstrong, Veronica Wong, John A. Saunders (Written by well know masters in the marketing arena) High Marketing in Travel and Tourism This book aims to guide and support readers through the complexities of tourism marketing in the 21st Century. The report has been reviewed and used content for other publications Illustration: 4 Editions Butterworth-Heinemann (well known publisher) Authors: Victor Middleton has been an independent management consultant, academic and author since 1984. Professor at Oxford Brookes University and the University of Central Lancashire. Medium Journal of Marketin