Boeing Company

MKTG 361, Section 001-2

Phase II
October 14th, 2020
Team #4

Emily Craig
Atticus Lavelle
Dawson Marshall
Colin Pendergast
Cate Reese
Caleb Salazar
Introduction
This document was created to expand upon our prior findings presented in our submission of Phase I.
Throughout the report key marketing factors will be discussed including a detailed overview of the company
and industry, the competitive environment, target markets, and marketing problems/challenges. These key
findings are summarized and accompanied by visuals to arrive at a few preliminary marketing strategies.

Company & Industry Analysis

Product/Service Description
Boeing is the world’s largest aerospace company, which is ultimately split into three main sectors, which
include commercial airplanes; defense, space and security; and global services. Founded in 1916, Boeing is
headquartered in Chicago, Illinois, and does business in more than 150 countries around the globe (The Boeing
Company, n.d.). The company has a history of and continues to be a leader in the industry with constant
innovation in aerospace technology.

The company offers a wide range of products and services which it continues to expand to fit the emerging
needs of its customers. Today, the commercial airline sector currently manufactures the 737, 747, 767, 777,
and 787 airplanes and has more than 10,000 Boeing-built commercial jetliners in service. Boeing also designs
and manufactures rotorcraft, electronic and defense systems, missiles, satellites, launch vehicles, and advanced
information and communication systems. This diverse portfolio of products combines to make Boeing one of
the largest U.S. exporters in terms of sales (Orbis: Boeing Company, 2019). These platforms are also
accompanied by around-the-clock global service support to both commercial and defense customers.

Unique Selling Proposition

Boeing’s unique selling proposition is its brand as being the world’s largest aerospace company. Boeing
continually dominates other companies in the multiple industries it dips into, primarily being the commercial
airline industry as well as the defense, space, and security industry. This is the highlighted selling proposition
because consumers tend to buy from companies that are consistently successful and reliable over time. Even in
extreme situations such as Boeing’s 737 Max crashes, this held true. Some trust may have been lost by
Boeing’s current consumers due to this incident. However, their first response was not to switch to a
competitor like Airbus but wait for Boeing’s response which speaks to their reputation.

Lifestyle & Growth Rate

Boeing is in the mature stage of its lifecycle, being in a sector that has seen a decline over the last 10-years at
an annualized rate of 1.0% (Savaskan, 2020). Currently, in the manufacturing industry, revenue has been
adjusted to a 22.7% decline in 2020, due to a decrease in economic activity expected as a result of the
coronavirus pandemic (Savaskan, 2020). This has led to an overall lowered demand for flights from airlines,
which in turn creates a decline in demand for new aircrafts. Looking ahead, it is expected that exports will be a
large component of revenue growth and the manufacturing sector is projected to rebound in the next five years.

NAICS
The NAICS classifies Boeing as an aircraft manufacturing company, code #336411. The industry is made up
of companies who; manufacture or assemble complete aircrafts, develop and make aircraft prototypes, modify
aircrafts, and/or complete aircraft overhaul and rebuilding (NAICS.com, 2020). Boeing is the top business in
its industry in the United States based on annual sales but foreign competitors give Boeing a run for its money.

Competition
While Boeing might be the largest aircraft manufacturer in the United States, Boeing often competes heavily
with a French aircraft manufacturer, Airbus. The international Large Commercial Aircraft (LCA) market is a
duopoly between Boeing and Airbus (Roth, 2020). While these two companies dominate the market, they have
to remain competitive with each other. They do this by; keeping prices competitive, developing new and more
fuel-efficient aircrafts, and providing the most high-quality aftermarket services possible. Recent events with
the failure of the 737 Max aircraft have shifted some airlines to start choosing Airbus over Boeing, but
backorders on the A320 (the 737’s main competitor) have slowed production within Airbus and given Boeing
a break to fix the 737 Max and get it back up in the air (Lineberger, 2020).

Environmental Trends
In the past, Airbus and Boeing competed on things such as; who could produce the biggest and highest volume
of aircrafts, who could log the most annual sales, and who could own a bigger market share (Ryan, 2020).
Nowadays, companies within the aircraft manufacturing industry are struggling to cut costs and keep buyers at
the table amid the COVID-19 pandemic which has hit the industry especially hard.

To cut costs, we have seen the two major players in the industry starting to make hard decisions. Boeing has
reduced outputs, cut staff members, and is sitting down for some “difficult” discussions with buyers (Ryan,
2020). Boeing wants airlines to keep their commitments while accepting a stretched-out delivery schedule that
better accommodates COVID-19 related production issues. Right now, manufacturers are figuring out how to
cut costs while maintaining essential business components. The trend right now is to lay low and cut costs for
now but make plans for ramping up production once the airline industry bounces back.

We also see trends that pre-date COVID-19. In the past 10 years, Airbus and Boeing have competed heavily to
design, produce, and market high efficiency and technologically superior aircrafts. Increasing engine
efficiency, reducing fuel usage while maintaining range, and losing weight off the aircraft are three
technological improvements we see being utilized in aircrafts today. These improvements increase
performance and are more environmentally conscious. Designing aircrafts that are more efficient and
environmentally friendly are amazing selling points for manufacturers like Boeing or Airbus and it is a trend
both companies have shown in their new products (Roth, 2020).

Seasonal Trends
In 2019, Boeing had revealed that they experienced 10-years of aircraft sales that surpassed any other time in
history. Air travel demand increased at about two times that of the global economy (Josephs, 2019). Airlines
competed to fit an increasing number of seats on their planes, allowing flights to fly fuller than ever before.
This, in turn, increased the number of aircraft orders for Boeing and concerns began to arise in regard to
meeting the high demand for their planes. Boeing began experiencing backlogs due to the number of orders
airlines were demanding. When Boeing was at its busiest, Boeing and Airbus racked up more than 20,000
jetliners from 2009 to 2019, a 66% increase from the previous decade (Josephs, 2019).

These trends have now shifted due to the COVID-19 pandemic and the two 737 Max crashes. Boeing recently
lowered its 10-year outlook for their aircraft demand industry-wide by 11% from the previous year and Boeing
stock fell (Rich, 2020). Replacement of older and more outdated planes will be a driver for near-term orders
due to airliners wanting to hold off on expanding services. In one of Boeing's most recent 20-year forecasts,
they are expecting 43,110 orders and deliveries of new aircrafts by 2039, which is down from a prior
expectation of 44,040 aircrafts by 2038 (Rich, 2020). Boeing aircraft production will be constrained for some
time and this might be a trend for a couple more periods to come.

SWOTT Analysis
Strengths & Weaknesses
Boeing has several strengths that aid in the company’s success and allow them to expand. These points can be
referenced in Figure 1 on the attachments page along with the rest of the SWOTT analysis. Boeing has been
established as the U.S. government's 2nd biggest defense contractor, guaranteeing ongoing revenue and
business proving their dominant market position (EBSCO, 2020). Boeing also prides itself in R&D with more
than $3 billion invested yearly, driving innovation in defense and aerospace markets (The Boeing Company,
2020). Their focus on R&D allows Boeing to maintain a competitive edge over other companies in their
industry while also staying ahead on industry trends. Boeing also has a very diversified geographic base which
helps to ensure they do not rely on any specific market for revenue, reducing business risks in their industry.
Finally, Boeing is always working on enhancing their product line, they have been focusing specifically on
sustainable fuels that are environmentally friendly and aid in reducing emission (Bhasin, 2019). Boeing’s
strengths characteristically stem from being an assertive minded company, giving them an edge over other
companies in the industry.

While Boeing has some distinctive strengths, the company also comes with some weaknesses. For one, it is
dependent on U.S. government contracts which have made up about 27% of sales since 2015, this is risky in
the long-term due to external economic or political factors (Bhasin, 2019). These contracts are usually with the
US Department of Defense (DoD) and NASA and with the high dependency the company has on these specific
buyers also comes a lot of buying power from those in the defense, space, and security market. Although the
weakness of dependency is a risk factor for Boeing, it is also a risk that provides a lot of benefits in the long
run (SWOT & PESTLE.com, 2020). Boeing has also experienced a decline in reputation from its 737 Max
safety issues in 2017 which have made them subject to a lot of criticism (SWOT & PESTLE.com, 2020).
Internally, Boeing experiences labor issues with about 38% of its workforce unionized, so they often get
impacted by work stoppages (Bhasin, 2019). These stoppages create unproductivity and sometimes will make
the company be slow to deliver which needs to be watched closely if they want to get products up and running
such as solving the problem that is the 737 Max. While these weaknesses hurt Boeing, they do not outweigh
the company’s success and perseverance.

Opportunities & Threats

Boeing’s opportunities present the company with the potential of growth. Due to increasing globalization and
the need to travel, there is a higher demand for commercial airplanes and Boeing has the opportunity to fill this
need (Bhasin, 2019). There is an increasing population of air travelers mainly due to a growing middle class in
emerging countries, which is likely to increase the demand for aircrafts. Boeing’s defense market will be able
to grow, with rising tensions internationally, creating a higher demand in defense and security products. There
is a growing vulnerability of communication and IT markets to increasing threats of terrorist attacks and
hacking, providing an opportunity for Boeing to benefit from expanding demand for cybersecurity. Lastly,
Boeing’s 787 has the ability to make longer flights eliminating the need for connections, this is appealing to
international travelers, creating opportunities for increased point-to-point routes (Bhasin, 2019). Boeing has
existing opportunities, but it is important that they follow through with them.

Boeing has threats beyond the company’s control that can result in negative impacts. The markets Boeing
operates in are all highly competitive and some of their competitors may have specialized or have more
extensive manufacturing, engineering, and marketing capabilities than Boeing does in certain areas. Boeing
faces firm competition from its competitors, specifically, Airbus and Raytheon Technologies. Boeing has
experienced a string of mechanical malfunctions and crashes with their 737 Max, which led to the grounding
of all 737 Maxes and a loss of billions (Kannan, 2020). Finally, the Coronavirus has hit the airline industry
particularly hard, at one point there was practically no flight activity, resulting in no demand for new planes or
parts. Boeing’s intense competition in different divisions has the potential to weaken its market share and
reduce the company’s profit margins. Although Boeing realizes its dominance in the commercial airline
market, these threats show that the company needs to improve its game to stay dominant in their industry.

Trends
Over the years Boeing has seen a few key trends which have helped them grow for the most part. The
commercial airline industry has continued to increase resulting in more markets to reach but also more
competition (SWOT & PESTLE.com, 2020). The biggest competitor for Boeing in the commercial airline
industry is Airbus and they continually go head to head with Boeing as far as production level but are yet to go
as far as surpassing Boeing’s profitability (Lineberger, 2020). Boeing’s increasing government utilization
particularly in the defense sector has seen a huge revenue growth as the defense market continues to grow.
These increases in spending can be constituted by the increasing foreign conflict in which products are made
for the DoD and a growing number of space missions that NASA has been utilizing Boeing for help
(Lineberger, 2020). Also, Boeing continues to have consistent product development with 5 families of planes
and the development of new products such as the Boeing 787-10 Dreamliner. Other than increased
competition, which Boeing has proven they know how to handle, these trends prove to benefit Boeing.
Competitive Analysis
Competitive Landscape
Boeing is one of the largest Aerospace companies in the world and is a major player in both the commercial
airline manufacturing industry and as a defense contractor. Boeing’s dominance in the commercial airline
manufacturing industry is best shown through the sheer number of Boeing planes in the sky today, which
according to Boeing, is over 10,000 (Business Insights: Global, 2020). This industry could be called a duopoly
as Boeing’s only real competitor in this industry is Airbus. The two firms each have a market share of around
45% for a combined market share of almost 90% (Morris, 2016).

Boeing has the second-largest contract with the US Department of Defense worth $26.3 billion or 6.8% of the
annual budget (Usaspending, 2020). Our main competitors in the industry are other large DoD contractors like
Lockheed Martin, General Dynamics, Raytheon, and Northrop Grumman. Lockheed Martin currently has the
largest contract worth $47.8 billion, or 12.5% (Usaspending, 2020). Boeing also has the second-largest
contract with NASA worth $2.3 billion.; many of our main competitors in this industry are shared with the
defense industry. Lockheed Martin is the third-largest NASA contractor with a contract worth $1.3 billion
(Top 20 NASA Contractors, 2019).

Micro & Macro Competition

Despite operating as a duopoly, Boeing’s preliminary micro competitor is Airbus. In fact, Qantas Airways
Ltd., a long-time Boeing customer, recently picked Airbus as their provider for ultra-long-range aircrafts that
would be a consistent contribution to their services and business (Whitley, 2020). This contract was in process
for over two years. In those two years, Boeing, unfortunately, underwent several plane failures that delivered a
blow to the company’s reputation as a trustworthy provider. On the other hand, AirBus used product
differentiation to fit an additional fuel tank to their aircraft, which would give the plane the required range to
fit the needs that Qantas was looking for. To maximize future contracts and trust from customers, Boeing must
regain their status of being the best aircraft provider and regain customer loyalty.

The deeper issue resides not in AirBus’s capabilities to overpower Boeing, rather it lies in the influence that
the international airline industry providers have on their respective consumers. Boeing is known to be the top
provider in its industry around the globe, but due to the recent crashes of the 737 Max, international airline
companies such as Air China are looking for a new source to establish as their top provider (Einhorn, 2020). In
China, past Boeing customers are looking to local providers like Comac to create new contracts. This direct
macro competition to Boeing could create a wave of influence in other parts of the world like Europe, where
Airbus has their headquarters.

Marketing Analysis
Target Market Segmentation
Boeing’s target markets are incredibly diverse and are a part of many different industries as seen in Figure 2 on
the attachments page. The commercial airline, defense, and space industries have several key players across
the globe. Therefore the best way to segment their markets is through geographical segmentation. The two
segmentation bases we have chosen are domestic and international entities, as seen in Figure 3 on the
attachments page. This distinction is important because while most of Boeing’s clients are based in the United
States, a growing number of clients are located outside of the country. As stated by Stone & Shalal (2018),
“Boeing could generate more than 40 percent of its defense sales from international customers in a decade.”

To best direct their products, Boeing uses a head-to-head positioning strategy to gain the loyalty of their
customers in several markets. Being cautious of the company’s target segments, Boeing can successfully
execute its marketing program actions and proceed as the dominant company in the Aerospace and Defense
Industry. Boeing sells its catalog of passenger and cargo aircrafts to commercial airlines of every size across
the globe. This use of multiple products to multiple markets brings contentment to airline companies by
satisfying their needs. Boeing is also known to use the strategy of product differentiation from competing
companies to win over the trust of the Department of Defense. They’ve differentiated themselves by increasing
the seating and engine capacity of their aircrafts, which AirBus and other top competitors don’t, (Roth, 2020).
Boeing and NASA collaborate on several undertakings including the International Space Station, where
Boeing provides engineering and processing support for new experiments.

Top 3 Marketing Problems

One of the biggest issues currently in Boeing’s primary target market, the commercial airline industry, is the
grounding of the 737 MAX. The unexpected failures of the 737 Max have crippled Boeing’s reputation of
being a reliable and safe provider of aerospace products. This one issue has also caused production delays in
the 777X airframe, which have reflected negatively on Boeing’s image. Accompanied by COVID-19, the
airplane crashes have created a trickle-down effect that has forced Boeing to completely shut down its North
Charleston branch. This is a larger issue at hand because it is perceived by labor leaders and related officials as
an insulting mistake and this has further delayed company investments and production which have cost them a
surplus of capital. The principle of product safety and reliability as an aerospace manufacturer is an essential
component of marketing success.

In early March, COVID-19 put a halt to the defense industry’s production as defense companies didn’t have
the need, nor the desire, to be purchasing aviation products (Business Insights: Global, 2020). This halt in
Boeing’s secondary target market has many investors becoming concerned for their further investments in this
industry, which could cause more damage to the lower revenues Boeing is facing. Boeing is actively working
to reposition themselves to become more desirable and inclusive to a world upturned by a pandemic. This issue
has impacted the way Boeing markets to its customers because as the need for new products has decreased, so
has customer satisfaction and investor comfortability. Boeing’s involvement in the defense industry is
detrimental to their success as a company because this reveals to investors and customers that they’re
progressing and producing great quality products.

Boeing’s tertiary target market is the space industry, and their main issue with the market is not unique to
them. Over the past decade, the space industry has been booming with average annual profit growth of 3.2%
and seen a new wave of private companies enter the industry (Hiner, 2020). In the coming decades, space will
become commercialized. In the past, space was home mainly to government agencies with the help of
nongovernmental firms, but now powerhouse companies like Virgin, SpaceX, and Amazon have entered the
mix. Here is where the issue lies, for the race for the final frontier is already starting, but no one knows who is
going to come out on top. Therefore, the problem Boeing and other firms are trying to figure out who is who to
align with in order to maintain relevance in the industry and prepare for the future.

Conclusion
Preliminary Solution & Processes
The three main marketing issues identified were loss of customer trust, COVID-19 slowing the production of
defense products, and uncertainty for the future in the space market. As referenced in Figure 4 on the
references page, we came up with 3 preliminary solutions to these problems. Our top 3 solutions are getting the
737 Max back in the air to regain trust, waiting out the duration of the pandemic to allow defense spending to
rise again, and aligning with the U.S. government to gain the most profit from space markets like NASA.

Key Takeaways
From this analysis, we expanded on our Phase I deliverable of why Boeing continues to be an industry leader
and innovator. With Boeing’s wide range of aerospace products and services, they are able to appeal to both
the commercial airline market and the space, security, and defense market. Between these two markets Boeing
competes with companies like Raytheon and Lockheed Martin, but competes more head-to-head with Airbus,
who is trying to top Boeing as industry leader amid issues such as the 737 Max crashes. Environmental trends
like industry costs are being cut due to COVID-19, however, Boeing is still continuing to build more efficient
technology and environmentally friendly aircrafts. A seasonal trend that has been consistent over the years is
high demand for aircrafts often resulting in Boeing not being able to produce in time but this trend again has
shifted gears after COVID-19, which slowed production temporarily. Boeing segments its markets
geographically as domestic and international entities within its industry and as such has a chance to utilize
these markets to implement specific solutions to existing marketing problems moving forward.
 Attachments (Page 1)

Figure 1: SWOTT Analysis

Figure 2: Target Market Levels

 Attachments (Page 2)

Figure 3: Target Market Segmentation

Problem Solution 1 Solution 2 Solution 3 Recommended Contingency

Solution Solution

Loss of Getting 737 Finishing Creating a PHASE 3 PHASE 3

Customer Trust Max back in existing orders. rewards program
the air. for existing
customers.

COVID-19 Waiting out the Spending Persuading PHASE 3 PHASE 3

Slowed pandemic. capital to make governments to
Production of manufacturing increase defense
Defense safe according spending.
Products to CDC
guidelines.

Uncertainty of Aligning with Building Following in the PHASE 3 PHASE 3

Space Industry the U.S. relationships footsteps of other
Outlook for government. with private firms and flying
Boeing firms. solo.

Figure 4: Market Issues & Preliminary Solutions

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