Harvard Case - Intelligent Avionics: Breaking into the Inflight Entertainment Industry
"Intelligent Avionics: Breaking into the Inflight Entertainment Industry" Harvard business case study is written by Rob Britton, Robert Mackalski, Mary Dellar, Mary Towers. It deals with the challenges in the field of Marketing. The case study is 12 page(s) long and it was first published on : Dec 5, 2018
At Fern Fort University, we recommend Intelligent Avionics (IA) adopt a phased approach to entering the inflight entertainment (IFE) market. This strategy involves a focus on developing a strong brand identity, leveraging technology and analytics, and strategically targeting specific market segments. IA should prioritize building a robust product portfolio, establishing strategic partnerships, and utilizing a multi-channel marketing approach to achieve sustainable growth and gain market share.
2. Background
This case study focuses on Intelligent Avionics (IA), a company specializing in developing advanced avionics systems. IA seeks to expand its business by entering the inflight entertainment (IFE) market, a sector dominated by established players like Panasonic Avionics and Thales. The IFE market offers significant growth potential, driven by increasing passenger demand for enhanced entertainment options and connectivity during flights.
The main protagonists of the case study are:
- Mark Thompson: IA's CEO, responsible for strategic decision-making and leading the company's expansion into the IFE market.
- Sarah Jones: IA's VP of Marketing, tasked with developing a successful market entry strategy and managing the company's brand and marketing efforts.
- David Lee: IA's Chief Technology Officer, responsible for product development and ensuring the company's technological edge.
3. Analysis of the Case Study
To effectively analyze IA's situation, we can apply several frameworks:
1. SWOT Analysis:
- Strengths: IA possesses strong technical expertise in avionics systems, a reputation for innovation, and a dedicated team of engineers.
- Weaknesses: IA lacks experience in the IFE market, faces potential competition from established players, and might require significant investment to develop a competitive product portfolio.
- Opportunities: The IFE market is growing rapidly, offering opportunities for new entrants. Passengers are increasingly demanding advanced entertainment options and connectivity.
- Threats: Established players hold significant market share and brand recognition. The IFE market is characterized by high entry barriers and intense competition.
2. Porter's Five Forces Analysis:
- Threat of New Entrants: High, due to the high capital investment required and the dominance of established players.
- Bargaining Power of Buyers: Moderate, as airlines have some leverage in negotiating prices but are also dependent on reliable and innovative IFE systems.
- Bargaining Power of Suppliers: Moderate, as there are several suppliers of components and technologies, but some suppliers may hold specialized expertise.
- Threat of Substitutes: Moderate, as passengers can choose alternative airlines offering better IFE services or rely on personal devices for entertainment.
- Competitive Rivalry: High, as the IFE market is dominated by a few established players with strong brand recognition and market share.
3. Market Segmentation:
IA can segment the IFE market based on:
- Airline Type: Budget carriers, full-service airlines, regional airlines.
- Aircraft Type: Narrow-body, wide-body, regional jets.
- Passenger Demographics: Business travelers, leisure travelers, families.
- Route Type: Domestic, international, long-haul, short-haul.
4. Consumer Behavior Analysis:
- Passenger Expectations: Passengers expect high-quality entertainment options, reliable connectivity, and personalized experiences.
- Technology Adoption: Passengers are increasingly tech-savvy and expect seamless integration of personal devices with IFE systems.
- Value Perception: Passengers are willing to pay for premium IFE services, but value for money is crucial.
4. Recommendations
IA should adopt a phased approach to entering the IFE market:
Phase 1: Market Entry and Product Development (Year 1-2):
- Develop a niche product offering: IA should focus on developing a specialized IFE system targeting a specific market segment, such as regional airlines or budget carriers. This allows IA to gain traction without directly competing with established players.
- Partner with established players: IA can leverage its expertise in avionics systems by forming strategic partnerships with existing IFE providers. This allows IA to access existing distribution channels and gain market experience.
- Focus on technology and innovation: IA should prioritize developing a differentiated IFE system that offers advanced features, such as personalized content recommendations, AI-powered entertainment, and seamless connectivity.
- Develop a strong brand identity: IA should establish a clear brand positioning that emphasizes its technological expertise, commitment to innovation, and customer-centric approach.
Phase 2: Market Expansion and Growth (Year 3-5):
- Expand product portfolio: IA should gradually expand its product offerings to cater to a wider range of airline types and aircraft models.
- Develop a multi-channel marketing approach: IA should utilize a combination of digital marketing, traditional advertising, industry events, and direct sales to reach its target audience.
- Build a strong customer base: IA should prioritize customer satisfaction and build long-term relationships with airlines by offering excellent customer service and technical support.
- Invest in data analytics: IA should utilize data analytics to understand customer preferences, optimize product development, and improve marketing campaigns.
Phase 3: Global Expansion and Market Leadership (Year 5 onwards):
- Target emerging markets: IA can leverage its technological expertise to target emerging markets with high growth potential in the IFE sector.
- Develop a global distribution network: IA should establish partnerships with international distributors and airlines to expand its global reach.
- Embrace sustainability and corporate social responsibility: IA can differentiate itself by incorporating sustainable practices and ethical considerations into its business operations.
- Stay ahead of technological advancements: IA should continuously invest in research and development to stay at the forefront of innovation in the IFE industry.
5. Basis of Recommendations
These recommendations are based on:
- Core competencies and consistency with mission: IA's core competency lies in its expertise in avionics systems. Entering the IFE market aligns with its mission to provide innovative and advanced technology solutions for the aviation industry.
- External customers and internal clients: The recommendations prioritize meeting the needs of airline customers by offering a differentiated IFE system and providing excellent customer service.
- Competitors: The recommendations acknowledge the competitive landscape and suggest a phased approach to market entry, focusing on niche markets and strategic partnerships.
- Attractiveness: The recommendations consider the growth potential of the IFE market and the increasing demand for advanced entertainment options and connectivity.
6. Conclusion
By adopting a phased approach, focusing on innovation, and building strategic partnerships, IA can successfully enter the inflight entertainment market and achieve sustainable growth. IA's commitment to technology, customer satisfaction, and ethical business practices will be crucial for its long-term success in this competitive industry.
7. Discussion
Alternatives not selected:
- Directly competing with established players: This would require significant investment and could lead to a costly price war.
- Focusing solely on technology: While innovation is important, neglecting marketing and brand building could limit IA's market reach.
Risks and key assumptions:
- Technological advancements: Rapid technological advancements could render IA's products obsolete.
- Market acceptance: Passengers may not be receptive to IA's product offerings.
- Financial resources: IA may not have sufficient financial resources to support its expansion plans.
8. Next Steps
- Develop a detailed market entry plan: This plan should outline IA's target market, product strategy, marketing plan, and financial projections.
- Secure funding: IA should secure funding to support its product development, marketing, and operational costs.
- Establish strategic partnerships: IA should identify and establish partnerships with key players in the IFE industry.
- Develop a pilot program: IA should launch a pilot program with a select group of airlines to test its product offerings and gather feedback.
- Monitor market trends: IA should continuously monitor market trends and adjust its strategy as needed.
By taking these steps, IA can successfully navigate the challenges of entering the inflight entertainment market and establish itself as a leading player in this rapidly growing industry.
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Case Description
Intelligent Avionics (IA) was an entrepreneurial company launching three inflight entertainment (IFE) systems. In April 2012, with a small development team working on the IFE system designs simultaneously, the time had come to meet with IA's leaders to determine where the company should focus its efforts. The company's vice-president of marketing contemplated which lines the company should bring to market and wondered how IA should market and launch its offerings. In addition, organizational and locational issues gnawed at him. He struggled with the company's virtual structure, given that IA was composed of fewer than 15 staff members living in five different countries. As he contemplated how the structure was affecting IA's effectiveness, he asked himself who IA's target market should be.
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