Bottom of the Top or Top of the Bottom?

Posted by William Herp on Mon, Oct 01, 2012

Who is your target customer? What is your target market?

You needn't have attended the Harvard Business School to recognize that knowing the answers to those two intertwined questions are key to the success of a business. Businesses still need to properly manage their finances, operate at a high level of excellence, treat their employees and customers with respect and appreciation, create the right messages and deliver those messages well. But you really can’t do those things well if you fail to understand deeply the needs, desires and wishes of those consumers who could benefit from your service or product.

Recently Chris Bingham, an assistant professor at North Carolina’s Kenan-Flagler Business School used the case study “Linear Air: Creating the Air-Taxi Industry” (written by Mary Tripsas, an associate professor of entrepreneurial management then at Harvard, now at Boston College) in a couple of his MBA classes. He divided students into small groups and had them study actual problems faced in the past by Linear Air (detailed in Dr. Tripsas’ case study). Each group then proposed solutions to those problems. Next came the fun part - for me, at least. After all the groups had made their presentations I appeared in their classrooms – through the miracle of Skype (yes, even an air-taxi CEO uses Skype!) – to explain what we actually did in those situations.

And since Skype is interactive, I got to engage in some great give-and-take sessions with those bright young business leaders of the future. And our conversations quickly moved to the key question of defining a company’s target market. Among the observations I made, I told them that it is important to continue studying the market in order to more precisely define who your customers are, especially as market conditions change.

I told them that since the case study was written in 2007, Linear Air has continued to refine our target market by thinking of the total air travel market in this nation as a $126 BILLION-a-year pyramid, with a triangle at the top of that pyramid representing the roughly $6 billion-a-year market for private air travel, and the large trapezoid shape below that representing the $120 billion-a-year market for airline travel. Our first customers were in the bottom of the top. Those are the people who need or want private jet air service because of time constraints, or because they were traveling to destinations not served by airlines, and for whom our Eclipse jets offered the most economical option versus private jet ownership and other charter options.

Now, as customers continue to become more aware that air-taxi can compete with airline fares for customers traveling in groups to places not well-served by the airlines, our target market has grown to also include the top of that lower trapezoid within the pyramid. These are businesses and individual travelers who really can’t afford or don’t want to invest in owning or leasing a private jet, but who also find themselves frequently or occasionally flying to or through secondary or tertiary markets. They find themselves wasting hours on planes, in airports and in cookie-cutter hotel rooms; being forced to change planes two or three times per trip; and being compelled to sit in cramped regional jet seats with little or no carryon space. And even after they land they often have to rent cars and make long drives to reach their true destination. 

Travel to and from those smaller, out-of-the-way markets by people who can’t afford, or don’t want to own or lease private jets represents about $30 billion of that $120 billion trapezoid-shaped market served (some would say ill-served) by the commercial airlines.

Linear Air also serves that part of the market. And we serve it better than the airlines. We offer greater value to those travelers by saving them lots of time and improving their productivity. We provide better, more comfortable, more personal service that runs on the customer’s schedule, not ours, and flies into and out the airports closest to your home or office and closest to your actual destination. And we do all that at competitive prices.

So I tell those students these days that we are a good example of a company that continues to study changing market conditions so that we can better know who our customers are today than when we began flying a decade ago.

I’d also like the opportunity to prove that to you the next time your travel plans require you to go to or from somewhere a little off the beaten path.  Between Linear Air’s corporate owned-operations centered around the Boston and New York metropolitan areas, and our Linear Air partner operations in the Philadelphia, Dallas/Fort Worth, Phoenix, Southern California and Gainesville, Fla., areas, we can provide cost effective – not to mention convenient and comfortable – service to and from hard-to-reach places in about two thirds of the nation.

See you on-board.



Tags: air taxi, cirrus sr-22, eclipse 500, harvard business school

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