Shaking Up The Value Chain

Packing your bags, coming home. Everything between those two moments is your journey, your travel experience. It could be a very different experience depending on your travel purpose and the accompanying mindset. But no matter the context, every trip is made possible by a chain of product and service companies, together shaping your total experience.

Tension in the Value Chain

In fact, the aviation industry offers a very complex value chain. Luckily you often do not notice this at all, a few companies will represent a specific part of the chain. You can think of the travel agency, the airport, the airliner, the accommodation and additional services like an airport shuttle or meeting facilities. On the surface it looks like they are all cooperating happily together, offering you that pleasant trip. But there is something important going on in aviation. Right now, all parties are cooking up plans to conquer a bigger share of the pie. They are stretching their activities, trespassing their neighbor’s clearly marked business area.
So, who has the best cards to decide on the new business domain borders?

The most important trend in aviation: ancillary revenues

Companies are fighting for new profit centers. Kerosene prices force airliners to rethink the flight schedule; parking a plane can be an economically right decision. The auction pricing model has become quite common and cost cutting by skipping on board services reached its boundaries. The new promise in aviation is called ‘ancillary revenues’. Meaning getting money out of almost everything except flying. Off course additional services and products exist already for a long time now. But given the new economic context they gain extra attention by airports, airliners and every other company linked to the travel value chain. Basically there are two things to do: A. find new profitable and differentiating ancillary products and B. fight for the client’s favour to become the supplier of the new proposition. This will lead to the following questions:

1. How to invent , develop and market compelling additional products and services?
2. How to become the most favorable supplier of the new proposition, being number one within the ‘evoked set’?

When you consider to answer those questions separately you might become disappointed. Why take the risk and costs inventing and developing products and services for end consumers, while you are not sure the client will purchase it? Market research is capturing client desires, often totally different of real consumptive behavior. Besides this, you are always to late because you start the development process at the moment the client states this need as being most important. By the time the product or service is available the world has changed, consumer desires are modified and the competitor comes up with exactly the same for even better prices.
‘Okay, in that case we do not compete on innovation power, but we launch best in class marketing.’ Good try, but what is the competition doing? Selling that commodity service just labeled with another flashy brand? When the client does not have a historic connection with your brand, a reason to switch supplier is hard to find. In addition to this, the client is less willing to listing to convincing arguments due to the commercial information overload.

It may sound strange, but there is one solution available covering the two topics at the same time.

Shake Up the Value Chain: set up direct end-user interaction, claim your added value and become most relevant.

Involving the client in product & service development, from idea phase to commercialization phase, has many advantages. The chance a consumer will buy a co-developed product is extraordinary realistic and it is quite usual the consumer will become a brand advocate. After the period of product and service development there is less urgency to reach out for traditional marketing methods. There is no gap to close with marketing, because you and your client already know the proposition is unique and relevant. And you will be the fastest supplier of a specific solution, because of the continuing dialogue with the end-user.
Of course this sound interesting, but why would the end-consumer decide to co-create especially with you? Maybe your company is just a small part in the chain; invisible because you are hidden behind a well known consumer brand. This is no excuse. You could be the first company that opens-up for real customer interaction. You can ask for ideas and improvements and you will receive ideas from interested prosumers, as long the topic is relevant. The ‘Shaking Up the Value Chain’ approach is split into three manageable steps to set up and maintain this end-user connection.
With every single moment of client interaction the perceived added value of your brand is strengthened. Your brand will become an unique selling argument, also used by other chain players.
In fact the value chain will become a value network with your company positioned as most relevant for the end-consumer.