Marketing of F-16 Fighting Falcon - Research Paper Example

? Marketing F-16 Fighting Falcon and number submitted Marketing F-16 Fighting Falcon Introduction Marketing any product in an unfamiliar market requires extensive research and planning. The F-16 Fighting Falcon is the most successful fighter aircraft in history not only in terms of sale but also in terms of combat usage. Development of this aircraft began in the 1970s, and delivery started in the 80s, however the aircraft is still very much an asset for various defence forces across the world. It is an undeniable fact that the utility of a product determines the ease in marketing it. The F-16 was initially developed by the company General Dynamics, however General Dynamics sold its aircraft manufacturing facilities to Lockheed Martin and it has since been marketed by them. With the current race of weapons technology, it is also not deniable that management of the F-16 at Lockheed Martin will do very well to keep it relevant in the latest war arenas and war deterrence mechanisms of the world. In its field of work, the F-16's fate really depends on its manufacturers being able to keep it competitive with other aircraft of its role in terms of functionality. Functionality, Time, Place and Ease of Possession As stated in the previous statement the crucial feature for the F-16 as a product is the state of its functionality. Upgrading the F-16 has been vital in keeping it competitive. Unfortunately upgrading any product can never produce the same results as incorporating a technology in the design process of the product. There have been a few issues reported in latest block of type C/D aircraft. This is because the upgrading process is being severely hindered by technical complications due to the advent of sophisticated avionics software. One limitation on the upgrades has been the limited power and cooling capabilities of the aircraft, which have been stretched thinner in more advanced variants with more power hungry avionics (Hartung, 2011). With regard to the time requirements of the customer, the F-16 has been one of the most effective weapons ever developed. In fact it was the answer to the United States military's question of what it was to do about air superiority and air-to-air combat after the experiences of the Vietnam war. And even now it is said that production of the F-35 Lightning II, Lockheed Martin's current flagship aircraft has been suffering from the company's focusing resources on meeting customer demand for the F-16. Delivery of aircraft to the customer is a trivial matter in projects of complex military weapons development. In any case the operations of distribution are kept clandestine by the Supply Chain management. In fact according to Schultz (1993), "With the rise of Internet and hybrid models of purchasing, Place is becoming less relevant" even in mainstream product marketing models. Unfortunately Lockheed has not fared well in the past in dealing with customer countries' representatives in terms of displaying teamwork. It ranks number one on the 'contractor misconduct' database maintained by the Project on Government Oversight, a Washington DC-based watchdog group. However for the upgraded F-16s' program the company is looking to institute a culture of cooperation with the clients' right of possession and providing efficient technical assistance as stipulated in the contracts with the foreign defence forces. For better cooperation with international clients the company will be designating Program managers for each countries' F-16 delivery programs. The program managers will be responsible for the execution of the entire program: contract award, design, build delivery and post delivery sustainment. They will work with a variety of customers on multiple contracts including end item delivery, design enhancements, support and training. Customer Base for the F-16 The target market has obviously shifted away from the United States in the past decade and into some other developed countries of the world. However, now the company will be doing business with some developing nations which are to eventually become the only customers of the F-16. Lockheed Martin is a trusted defence contractor of the U. S. government and has the major part of its industry business in the United States. Hence it intends to keep cordial relations with the U. S. government and moulds its weapons development and marketing policies in accord with U. S. Defence Policy. Therefore by and large Lockheed Martin's foreign exports are determined by the government's foreign policy. To this end the largest contract of the upgraded F-16 should be awarded to South Korea which has been intending to buy upgraded block C and D fighter jets to assist it in deterring offensive action from North Korea which is a strategic threat to the United States. The other potential area of interest for marketing of F-16s is the middle east as the oil-rich nations of that region are looking to build up their defence capabilities with the help of the U. S. Only last year, Saudi Arabia was the highest spender on military advancement in relation to its Gross Domestic Product only behind the United States. The late trend in the current European market for the F-16s has been shifting towards four and a half generation fighters like the Eurofighter Typhoon. The main aspect of the developed world's defence forces that has been detrimental to the demand for the F-16 has been the development of sophisticated anti-aircraft radar and other detection systems. Russia is leading the race for Anti-aircraft missile systems and though it has placed a ban on export of its latest anti-air defence system, it may commence exports very soon. Hence the F-16 is suffering from a lack the of ability to incorporate stealth technology because of its structural constraints. Market Competitors There is virtually no competition for the F-16 in its current global markets because of two reasons: Firstly, most of its current customers have old contracts for the F-16s and have delayed deliveries to have the machines upgraded before inclusion into the Air Forces; And secondly the prospective buyers from the developing countries cannot afford any of the newly developed aircraft and will have to turn to towards upgraded F-16s as it is by far the most viable option. However, there is competition for Lockheed Marin in winning contracts for the upgrading of the C and D block models. BAE systems has developed intricate avionics software that can handle the load of the old engine electronics and has been putting up a determined fight for the wealth of contracts for upgrading that are to be awarded. While Lockheed has won many of the contracts to upgrade F-16s for different countries, BAE Systems did gain the South Korean upgrade order of July 2012, and since then additional orders have been received from the Governments of Oman, Turkey, and the US Air National Guard ("BAE Systems Growing Steadily In Defense Services By Beating Incumbents." 2013). However in the fall of 2009, the USAF assigned the total upgrade contract of some jets to Lockheed (Majumdar 2012). Segmentation, Targeting, and Positioning The situational analyst of the F-16 would divide the customer base into three main types of audiences: First, countries having a high probability of becoming a party to a potential regional conflict; second, developing countries that have budding air forces and need to establish their squadrons and train their pilots before proceeding towards incorporation of advance fighter fleets; and third, countries with a need to build their weapons arsenal for deterrence of potential aggressors in their surrounding areas. A method of allocating promotional activities towards potential market buyers is aligning the priority list according to the strategic United States objectives in order to build the company's relations with the administration of the United States as it is by far the biggest customer of Lockheed Martin. There are three methods of targeting a defined customer base for a product. Equal targeting implies paying no special attention to the characteristics of any segment of the customers base. Concentrated targeting refers to identifying a specific type of customer for focus while tailored targeting is targeting each segment with a suitable sales pitch. This third type of targeting requires a lot of resources and the F-16 program is one that is to be phased out soon and spending on market research is therefore not justifiable. The prospective F-16 program should focus on countries that require strength of air command in order to pursue a policy of deterrence of their neighbouring countries. Lockheed has already been serving both India and Pakistan which have a history of animosity with each other as neighbours and hence need to pursue a program of aggression deterrence especially as both the countries are nuclear-strike-capable. It is inevitable that more countries will be developing degrees of nuclear capability in the coming years which will enable them to acquire the capability of establishing respectable military defences through doctrines of nuclear deterrence. And to strengthen these defence systems these countries may look towards the F-16 which was recently upgraded with the capability of carrying heavy nuclear payload. Lockheed Martin does not have reputation outside of the United States and Europe as a reliable tailored weapons developer. To position it better for its potential future customers and prospective F-16 buyer countries, Lockheed Martin should establish physical presence in the developing nations. In the United States the company provides financial support to public office candidates who advocate focusing on homeland security, national defence policy and other issues which are relevant to Lockheed's business through its Political Action Committee (PAC) ("Political Disclosures" 2011). The company needs to take similar initiatives in the countries identified for targeting in the previous sections. Product, Price and Promotion As stated earlier, the company should be venturing out with direct contact with people in the political and military administration in the target countries. In addition promotion managers should attend defence expos in the selected countries where they may be able to build relationships with military officials and defence industry people of the said countries. Promotion for defence contractors is very different from promotional campaigns for conventional product sales. There is virtually no advertisement involved at all. One method of getting entry into some foreign markets through the F-16 program is to arrange presentations explaining the value of the F-16 in helping nascent Air Forces develop their fighter fleets. Pricing is a key strength of the upgraded F-16s in catching customer attention. At a production cost between fourteen and eighteen million dollars the F-16 is at an advantage over comparable fourth generation fighter jets around the world. The company has the ability of delivering even cheaper planes to customer by curtailing the upgrading costs. This is possible because the United States Air Force is phasing out its fleet of old models of the F-16 and it is all too ready to return them to Lockheed Martin which can recondition the aircraft and install modern avionics and hardware systems as per the will of the customer. Ethical Considerations The morality of developing weapons for military conflict is a debatable topic. The company's contention is that arms are for deterring conflict not causing it. There have been a lot of debate over the government spending on military expenditures all over the world, expenditures that may otherwise have been spent on public welfare projects. However it is an unchangeable truth that human nature is uncontrollable and is prone to causing provocation and being provoked. Hence the fear of consequences is the only factor that can provide sustainable peace and stability. There has also been some protest over Lockheed's arming the F-16s with heavy nuclear payload capability. In this regard as well the company refers to the doctrine of nuclear deterrence. No contract for carriers of weapons of mass destruction has been awarded to any country suspected of working on acquiring nuclear weapons technology. Conclusion The F-16 Fighting Falcon is poised to be phased out of the Air Forces of the United States and some European countries. In this state it is hard for the parent company to keep the sales happening because said air forces are also looking to find customers to sell F-16s. Yet in May 2013, Lockheed Martin stated it has enough orders to keep producing F-16s until 2017, with more orders possible (Fuquay, 2013). The ability to be upgraded is itself a quality injected to the initial design of the F-16. In the 1980s, the Multinational Staged Improvement Program (MSIP) was conducted to evolve new capabilities for the F-16, mitigate risks during technology development, and ensure the aircraft's worth. The program upgraded the F-16 in three stages. The MSIP process permitted the introduction of new capabilities quicker, at lower costs and with reduced risks, compared to traditional independent programs to upgrade and modernize aircraft (Camm 1993). It is the management during marketing of a product that matters the most after design and development. Following William A. Anders’ appointment as Chairman and Chief Executive Officer (CEO) on January 1,1991, GD reversed a four-year slide in market value and subsequently outperformed other firms in the defence industry and in the Standard & Poor’s S&P 500 (Dial 1995). The fighter jet of the 1990s lives on as a product because of its well-rounded functionality. References Top of Form Schultz, D. E., Tannenbaum, S. I., & Lauterborn, R. F. (1993). Integrated marketing communications. Lincolnwood, Ill., USA: NTC Business Books.Bottom of Form Top of Form Dial, J. (March 01, 1995). Incentives, downsizing, and value creation at general dynamics. Journal of Financial Economics, 37, 3, 261-314. Fuquay, Jim. "Iraq to buy 18 more Lockheed F-16 fighters." Star-Telegram, 1 May 2013. Majumdar, Dave. "US Air Force changes acquisitions strategy for F-16 radar modernization." Flight Global, 12 October 2012. "BAE Systems Growing Steadily In Defense Services By Beating Incumbents." Forbes, 12 September 2013. Hartung, William (2011-01-12) "Is Lockheed Martin Shadowing You?". Mother Jones "Political Disclosures". LockheedMartin.com. Retrieved January 4, 2011. Camm, Frank. "The F-16 Multinational Staged Improvement Program: A Case Study of Risk Assessment and Risk Management," (Accession No. ADA281706). RAND Corp, 1993. Retrieved: 2 June 2008.Bottom of Form Read More