Operations and marketing alignment to reduce operational risk: how airlines circumvent well-guarded markets
by Kuangnen Cheng
International Journal of Advanced Operations Management (IJAOM), Vol. 10, No. 4, 2018

Abstract: Building upon the concepts that: 1) efficiency can be achieved by a better integration between operations and marketing functional units; 2) the intensity of competition is depicted by the correlation between service frequency and price dispersion, this empirical investigation intends to explain how airlines apply an operations and marketing alignment strategy to achieve a competitive advantage. Using US domestic carrier competition behaviours as an example, the methodology involves applying the Pearson product moment correlation (PPMC) to analyse 241,230 observations from panel data of real-life service frequencies and price dispersion from 2014, 2016 and 2017. The findings show that to align internal processes with external events, firms may wish to: 1) increase marketing efforts to gain market share or maintain competitiveness in markets shielded by historical rigid endogenous barriers or long-established reputations; 2) reduce operational resources and fall back from entrenched primary markets that are strategically guarded by powerful incumbents; 3) increase integration of operations and marketing to potentially expand into new secondary markets, since fare structures and services are increasingly indistinguishable between strategic groups.

Online publication date: Mon, 07-Jan-2019

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