AST 205 Chapter 3

FBO Marketing

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What we’ll cover

• The need for marketing in G.A.

• Ways the FBO’s market

• The 4 P’s of marketing

• The world’s natural markets

• How to achieve market growth

• What is a market niche?

• Pricing- Cost plus and Demand

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Why G.A. needs to advertise (the 4th P- Promotion)

• Product- FBO’s are unique because they sell both Products and Services.

• FBO’s compete with other modes of transportation

• Competes with other hobbies for peoples time, money, and interest

• Must relate to a wide range of clientele- corporate executives to the casual flyer

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The worlds 3 natural markets:

• Those with any discretionary income- up to 80% of the population-

• Young Professionals- 25 – 35% of those with discretionary income- + $55,000 per year

• The wealthy- 2% - 4% of the population with discretionary income

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Marketing Defined

• Why an FBO needs to market- unique aspects– Competes with other modes of

transportation

– Competes withother hobbies for people’s time and $

– Must sell both products & services

– Must accomodate corporate execs. as well as the casual flyer

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Marketing ctn.

• What are some ways that FBO’s market? – Yellow pages

– Limited T.V.

– Signage

– Websites (their own and others)

– Newspaper

– Fly-ins

– Others?

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All marketing is based on the 4 P’s:

• Product

• Price

• Place

• Promotion

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• The world’s 3 natural markets:– Those with discretionary income-

80% of the population

– Young Professionals- up to 25% of pop. and growing

– The wealthy- less than 2% of the population

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Aviation Stats.

• Aviation related statistics of this population-

• Roughly .002% of the population are pilots

• 1 person in 1,500 owns an aircraft

• Non-pilots use G.A. for traveling 25% of the time

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CURRENT & FUTURE TRENDS

• Modern FBO’s need to become more customer oriented- find unique ways to attract and maintain customers.

• Technology and the economy will drive the market

• Pilots/aircraft will need to become more neighbor friendly- Noise

• 1988 FAA 10 year G.A. activity forecast-– Said society was experiencing a fundamental

shift in tastes and preferences- away from aviation

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Economic characteristics of FBO products/services

• -Air travel is an incidental need- dependant on another purpose

• -Follows the economy in greater cycles

• Products/services should be counter recessionary:– Used Aircraft

– A/C Refurbishments instead of new

– Engine overhauls instead of new or rebuilds

– Avionics repair instead of new

– Recurrent training instead of new students

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Good Marketing begins with a good self-assessment

• What is the local economic condition?

• What is happening to the local market?

• What has been my past performance?

• What are my future plans for sales?

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There are only 4 ways to grow your market- Sell:

• New Products to Existing Customers

• Existing Products to New Customers

• New Products to New Customers

• More Products to Existing Customers

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The 4 P’s- Product

• Choose the best mix of products and services based on:– Past performance

– Local market demands- research-based

– A market you create

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The 4 P’s- Price

• A. Cost Based- “cost plus” or wholesale plus an added margin for profit– requires you know your fixed and

variable costs

– For example: Fuel sales- • Fixed- Those that don’t change with

volume sold such as equipment lease payments etc.

• Variable- those that change with the level of volume sold such as your cost of fuel and any additives such as “Prist”.

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Pricing ctn.- demand-based

• Demand Based- Charging what the market will bear. More complicated as it requires you to know the concepts of:– Scarcity- goods that are scarce or “in

demand” will bring a higher price• Q) What are some items that have been in

demand recently?

– Elasticity- For most goods, as price goes up, demand goes down and quantity available goes up and visa versa.

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Other Pricing Policies

• One price or flex pricing- peak or off peak

• Price w.r.t. perceived value

• Product life style pricing

• Promotional Pricing

• Geographic Pricing/-Market channel (distributors)

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Place/Promotion

• Place in the FBO realm is limited to airports and some limited online sales

• Promotion- previously discussed

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All of this information is gathered into your marketing plan- placed in your

business plan

• Questions?