IM Group – 2 Presentation Group 9

STUDY OF PRICE, PRODUCT AND

PROMOTION OF BOEING
 Boeing 747 – Jumbo Jet
Manufactured by Boeing's Commercial
Airplane unit in the United States, The Boeing
747 is  wide body commercial airliner and
cargo transport. It is among the world's most
recognizable aircraft, and was the first wide
body ever produced.
Variants
Family concept and commonality

The key to long-term survival for any

manufacturer of commercial aircraft is the
creation of a broad product line that satisfies
the various needs of airlines.

The most obvious advantage of the aircraft

family is that a manufacturer can offer a variety
of models to satisfy the myriad needs of
airlines.
Unit cost of the 747 Series
MODELS US $ Millions
747-100 24

747-200 39

747-300 83

747-400 228-260

747-8I 317.5

747-8F 319.3
 Facts about Pricing the VLA
Firstly, Boeing post list prices for their entire product
lines. – on websites

Secondly, it announces nominal changes to their

price list annually. Price changes are tied to an
explicit formula that places a 65 % weight on labor
costs and a 35 % weight on Producer Price Index.

Thirdly, planes sell at large discounts to list price

18-40%
 Clientele of Boeing 747
• Private Airline companies
Lufthansa
Garuda Indonesia
Air China
Korean Airlines
Air India
Around 70 operator worldwide

• Government and Military

 Domain of Boeing
• Boeing’s not just about commercial jetliners. It is also
one of the largest makers of military aircraft and a
leader in the aerospace business. It has capabilities in
Defense systems
Missiles
Satellites
Launch vehicles
Communication systems.
 The Jumbo Jet Segment
• Projects of high strategic intent
• High impact on the aviation industry
• Cost of product launch exorbitant
• High risk where many players in the industry doomed
with failure
• Oligopolistic market
• Only two major manufacturers currently
 Boeing Advantage
• Boeing 747 present since 1970
• Has subsequently produced various versions
• 747 a trusted marquee over the world
• Boeing has the ability to innovate at “zero costs”
• Market leader/ Monopolistic
• Airbus is a new entrant
• Competitive pricing prevails
• Threats can be absorbed thus, by strengths
• One of the largest defense contractors and exporters in the
US
 Deterrence to Airbus A380
• Rumored attempts to collaborate with Daimler- Benz
(then) and British Aerospace

• Private negotiations with Airbus

• Collaboration with Airbus in 1993 only to end in 1995

• Boeing Sonic Cruiser

 One partnership, Endless Opportunities
• It’s a tag line which Boeing used in their five India
centered advertisements.

First Ad :  focuses on the

commercial aviation business. 
Second Ad: conveys that while your
children are playing, its planes are
there to protect them, highlighting
partnerships in the defense arena.
With the improvement in Indo-US
relationship, Boeing has had a door
opened in the defense business. 
• Third Ad : About suppliers. During the Kerala boat
races, the team that has the best chance of winning
is one which rows in unison. It shows the synergy
effect.
Boeing’s suppliers in India are marquee companies
like state-owned Hindustan Aeronautics and Bharat
Electricals on the defense side. The company is also
working with Tata Consultancy Services and other
Tata companies, besides HCL, Infosys and Wipro.
• Fourth Ad: About research and technology,
young men stand on top of each other to
reach the dahi handi. The point the
company is emphasizing is the effort that
goes into it, but once you get there, you get
a big reward.
• Fifth Ad: Its an educational advertisement.
Again it is about teamwork, helping someone
fly a kite. Broadly, the full concept is of
helping one another, growing together, having
fun. Boeing works with all the Indian
Institutes of Technology and has a strategic
partnership with Indian Institute of Science,
Bangalore.
 v/s
Which one flies better ?
We are comparing 2 products
 Big is more...
• The bigger size and higher capacity of the A380 makes it possible
to integrate more features and flexibility in layout and
customization;
• The A380 requires important modifications of the airport
terminals. The runways have to be modified, but the boarding
bridges, the luggage handling etc. do also have to be adapted to
the large number of passengers. Compared to the B747, where
the embarkation and disembarkation time is shorter.
• The airspace on major routes is saturated with airline traffic.
Where Airbus’ answer to this is bigger aircrafts, Boeing’s answer
is direct point-to-point flights with an aircraft that gives a higher
operating flexibility. Direct routes between smaller airports can
help to reduce the load on the big hubs.
Value Curve Comparisons of A380 and B747
 Economies
Aircraft manufacturing thus displays three
important economies:
1. Static economies of scale (design,
development, and tooling)
2. Dynamic economies of scale (learning by
doing)
3. Economies of scope (learning transferred to
derivative models)
 Breakeven of A380 vs. B747
• Due to its higher productivity, the break-even load
factor of A380 is 58% instead of the B747’s 70%
(operating risk).
• For the A380, 323 seats must be sold to break-even
and 290 for the B747.
• With the A380, the remaining 232 seats represents a
profit potential, whereas this number is only 126 for
the B747.
• This means that the airline has a higher chance of
breaking even with a A380 than with a B747 on
routes with high demand.
Thank you !