Marketing: Custom Edition for Texas A&M University 17th Edition by William Pride,Ferrell

Exercise 3

Bombardier Serves Multiple Business Markets
Bombardier is all about trains and planes. Founded by Joseph-Armand Bombardier in 1942, the company originally marketed snowmobiles for transportation through the wintry terrain of Canada's Quebec province. Among its earliest products were snowmobiles for delivering mail, shuttling students to and from schools, and moving commercial freight shipments. The company also served consumer markets through its Ski-Doo, a pioneer of the personal snowmobile industry, and its Sea-Doo, a pioneer of the personal watercraft industry.
Today, however, Bombardier's primary markets are governments and businesses that purchase aerospace and railroad-related products. For example, Bombardier markets its narrow-body jetliners to commercial airlines. To seal such sales, Bombardier emphasizes fuel efficiency, low operating costs, and other bottom-line benefits that airlines seek when buying new planes. Competition for orders is especially intense as the global economy recovers from recession and airlines plan ahead to replace the oldest models in their aging fleets. Depending on their needs, airlines may look at aircraft made by Airbus, Boeing, Embraer, Mitsubishi, or other competitors, not just at Bombardier's products. The exact configuration of each jet is customized airline by airline, which means every order represents a major investment of time, energy, and negotiation for buyer and seller alike.
Bombardier also markets corporate jets, under the brand names of Learjet, Challenger, and Global, to big businesses that fly executives from state to state, across the country, or halfway around the world. Because different businesses have different needs, Bombardier listens carefully to learn where and when the aircraft will be used. Business customers that don't need a jet standing by every day may be good prospects for other Bombardier offerings. If they anticipate using a jet for 50 or more flight hours per year, they can become part-owners of a plane through Bombardier's Flexjet program. If they occasionally need a private plane for specific trips, they may prefer Bombardier's Skyjet charter program.
Both commercial airlines and corporate buyers expect a high level of customer service when they purchase a new jet. To meet their needs, Bombardier operates round-the-clock customer response centers staffed by specialists who understand each product inside and out, from engineering and technical systems to parts and supplies. When customers call, the company is ready to help get their planes back in the air as quickly as possible.
Government markets are the focus of Bombardier's rail transportation division. During the 1970s, with a global oil crisis hurting sales of gasoline-powered vehicles, such as snowmobiles, Bombardier diversified by winning a large and lucrative contract to make subway trains for its headquarters city of Montreal. This paved the way for marketing to other municipalities who were expanding or modernizing their mass-transit systems. Now the company markets all manner of train and railway equipment, including passenger cars, high-speed locomotives, mass-transit systems, signal and control mechanisms, and railway- related maintenance and services.
Rail transportation is booming these days as countries and urban centers upgrade their infrastructures. Although no two government buyers have exactly the same requirements, Bombardier knows that quality, reliability, safety, and price are always major concerns in such purchases. Therefore, to compete with General Electric, Siemens, and other rivals, the company showcases its manufacturing expertise and points with pride to its many satisfied customers worldwide. Sustainability is an increasingly important factor for government buyers as well. "Everybody accepts that rail transportation is an eco-friendly way to move people in large cities," says Bombardier's CEO. As a result, Bombardier's marketing communicates that the firm's new energy-efficient, low-emission rail products have been designed with the environment in mind.
Knowing that business and government customers care about the reputation of their vendors, Bombardier requires all employees, managers, suppliers, and agents to follow its strict code of ethics and business conduct. Its social-responsibility initiatives include programs to reduce waste, conserve water and energy, and obtain electricity from renewable power sources. From its current level of $19 billion in annual sales and a workforce of 70,000 employees on five continents, Bombardier is poised for even better performance as its business marketing takes off.
How does derived demand apply to the demand for commercial jets purchased by airlines? What are the implications for Bombardier's marketing efforts?