MARKETING STRATEGIES AND BUSINESS PERFORMANCE OF DOMESTIC AIRLINES IN NIGERIA

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.