MARKETING STRATEGIES AND BUSINESS PERFORMANCE OF DOMESTIC AIRLINES IN NIGERIA – Complete Project Material


CHAPTER ONE

INTRODUCTION

1.1       Background
to the Study

In the aviation industry where air travel business is
highly competitive, marketing activities are inevitably vital to ensure
competitive edge and most airlines are doing just about anything in order to
remain relevant and still meet the ever dynamic needs of the passengers.
Studies have shown that for these airlines to survive the competition in their
industry, they need to take their marketing very seriously (Ibidunni, 2010).
The global world of business today is a very dynamic one, in order to satisfy
the changing needs of customers, organisations must first know their needs and
ensure such needs are met with the services they provide (Smith and Reece,
2012). In the airline industry, passengers pay higher fares at airports for
on-spot purchases where a single carrier controls a high fraction of traffic.
For airlines to survive in today’s competitive market, it has to treat the
marketing drive of its business with top priority to ensure adequate business
performance.

Business
performance has to do with the combination of management and analytic processes
that allow managers of an organisation to achieve pre-determined goals in their
business dealings. It is often set to align with the strategic and operational
objectives of the organisation in question: In doing this, organisations find
it easy to achieve their selected goals for the period (Makhbul, 2011). Measuring
business performance in today’s economic environment is an important issue for
practicing managers. Generally speaking, business performance is the
operational ability to satisfy the desires of the company’s major shareholders,
which is often assessed to measure the accomplishment of such organisation
(Smith and Reece, 2012).

In
today’s business dealings, an organisation’s ability to succeed or fail is
largely a product of how best such organisation can satisfy its customers and
this act places enormous task and responsibility by way of marketing on any
organisation intending to excel at satisfying the customers and clients
(Ibidunni, 2010). It starts with identifying accurately the needs of the
customers/clients and deciding on how best to handle the products and services
in order to satisfy the desires of all prospective buyers and sellers as the
case may be. Some indicators employed in measuring business performance are
profitability, market share, return on investment (ROI), working capital, sales
growth and customer retention (Wood, 2006).

The
primary focus of every airline business is to make profit and this is the
primary duty of the marketing manager through its marketing department to
formulate and implement policies and plans that will maximize the profit per
unit of capital employed in the business (Oyekanmi, 2013). Profitability means
a suitable price policy which in itself is influenced by cost and market
situation factors. In all endeavors, consumer’s satisfaction must be seriously
anticipated right from the onset as posited by (Falk, 2011). Profit is the
result a business owner considers necessary to make running the business
worthwhile, it is comparable to the next-best amount an organisation could earn
doing another job. Apart from profitability, another factor that enhances
business activities of firms is market share.

The
market share of a business is mainly considered to be the unit or revenue of
the market accounted for by such business. When nearly 200 senior marketing
managers were surveyed, result shows that 67% affirmed they found the
“dollar market share” metric very useful, and 61% saw that the
“unit market share” as been very useful (Farris, Neil, Phillip and
David, 2010). Market share is often monitored for signs of change in the competitive
market, and it frequently drives strategic or tactical action (Farris, Neil,
Phillip and David, 2010). This makes market share increment one of the
important objectives of a business and it enhances sales growth on a long run.

Sales
growth composed of the amount by which the average sales volume of a company’s
products or services has grown, typically from year to year (Blois and Ramirez,
2012). The sales growth is often measured sequentially. Sequential growth deals
with the Comparism of recent performance of an organisation with the period
preceding it. For instance, when a monthly report states that an organisation
experienced 5% sequential sales growth, it implies that recent sales have
increased by 5% since the previous month (Blois and Ramirez, 2012). Also, the
sales growth is closely linked to the working capital of such organisation.

Working
capital is the financial metrics which represents operating liquidity available
to a business (Black, 2015). It is a part of operating capital that is often
calculated as current assets minus current liabilities. Working capital should
be positive in order to allow firms the ability to continue its operations and
that it has sufficient funds to satisfy both maturing short-term debt and
upcoming operational expenses (Black, 2015). Working capital is often managed
with activities such as inventories, accounts receivable and payable, and cash.

In
India, the airlines were responsible for a total of 79.5 million passengers on
scheduled services, an increase of 1.8 per cent over 2014. Among the largest
airline industry’s performance, Indian was among the world’s largest domestic
markets that had the fastest domestic passenger growth in 2015 (World Air
Transport Statistics (WATS), 2015). Meanwhile, airlines in Africa scored lowest
in global industry performance rating for year 2015, particularly in the area
of domestic passenger growth. A result recently released by The International
Air Transport Association (IATA) showed that African airlines had only 2.2 per
cent of the entire market share of passengers for the year under review (WATS,
2015).

Zografos,
Andreatta, and Odoni (2013) see the ability of businesses to perform viably as
one of the most important issues in both developed and developing countries.
Air transportation in Nigeria like other African countries was a very important
project that needed urgent establishment during the British colonial rule as
the need to reach out to other Colonies including Nigeria by the British
government became essential. However, that initial desire could not be
sustained over a long period of time due to poor performance in its managerial
roles (Akpoghomeh, 2010). Some of the challenges are increase of flight fares,
flight cancellations, delays, poor-onboard services, poor customer relations,
missing luggage’s, huge staff outlay (serving the purpose of its inception) and
poor equipment maintenance and breakdowns (Daramola, 2007).

With
reports of the varying degree of successes and failures recorded by airlines in
Nigeria, it is imperative to attempt to carry out a detail study of the various
marketing strategies being adopted by these airlines in carrying out their
operations with a view to establishing the place of marketing in their business
performances. Previous research indicates that several factors that influence
business performance are professional background of the owners, their
entrepreneurship capabilities and preferences, cultural and religious beliefs,
inadequate marketing strategies, marketing research, as well as the technology
and micro environment (Buttner, 2011; Makhbul, 2011). Marketing is one of the
most important aspectsof any business and airlines are not an exception.

Marketing
itself is an activity with a defined process used for creating, communicating,
delivering, and exchanging offers that have attached values for customers,
clients, partners, and society at large in exchange for money (American
Marketing Association, 2013). Marketing in business setting entails the process
of exchange which involves two parties, the buyer and seller. During the
process of exchange, value is given up by one party to the other party
receiving something of value as well. That is whyKotler & Connor (2013)
defines marketing as a process by which individuals and groups obtain what they
need and want through creating, offering, and freely exchanging products and
services of value with others. According to American Marketing Association
(AMA) (2013), marketing is a broader concept which entails the process of
planning and executing the conception, pricing, promotion, and distribution of
ideas, goods, and services to create exchanges that satisfy individual and
organisational goals. The ability of marketing managers to ascertain the right
marketing strategy to adopt in the organisation ensures the growth of sales,
share and profitability of any organisation.

Marketing
strategy in itself is the process of adapting the marketing mix elements to
environmental factors (Mavondo, 2000). It evolves as a result of the interplay
of the marketing mix elements and the environmental factors, which impact on
these elements. It functions by determining the nature, strength, direction,
and interaction between marketing mix elements and the environmental factors in
a particular situation (Osuagwu, 2001). The marketing variants like the total
quality management are mostly concerned with satisfying clients’ needs and
wants beneficially. Developing and implementing efficient and effective
marketing strategies which adopts relevant dimensions of the marketing concept
involve the organic tasks of selecting a target market (customers/clients) in
which to operate and developing an efficient and effective marketing ingredient
combination. Marketing thought, with its practice, has been moving speedily
into the service industry (Kotler and Connor, 1997). Literature, partly,
centers on the discussion of whether physical product marketing is similar to,
or different from, the marketing of service and concludes that the differences
between physical product and service might be a matter of emphasis rather than
of nature or kind (Creveling, 2010). Marketing is one of the salient and
important organic functions which help to service organisations to meet their
business challenges and achieve set goals and objectives (Kotler and Connor,
1997).

Marketing
strategy give the avenue whereby organisations make use of their resources to
achieve their set goals and objectives with less stress (Waithaka, Muturi and
Nyabuto, 2014). Marketing strategy deals with the adapting of marketing mix
elements to business environmental forces which involves examination of the
marketing mix elements and the environmental factors (Li, Duan, Edwards and
Kinman, 2010). Part of the functions of marketing strategy is to determine the
nature, strength, direction, and interaction between the marketing mix-elements
and the environmental factors in a particular situation (Jain and Punj, 2014).

To
ensure the survival of an organisation, there must be in place a sound and
robust marketing commitment on the part of sales personnel, when considering
the subtle, unstable and seemingly hostile business environments in which
contemporary airline business organisations operates, it calls for targeted
marketing strategies which could be online, traditional, word of mouth or
direct marketing which are tailored to meet the objective of the organisation.
It becomes an important part of this study to assert that there is virtually no
limit to the types of marketing strategies that a business can adopt. This is
due to the fact that new concepts and designs are being discovered daily, and
the biggest problem that a business owner will face is choosing which one will
best suit his venture, online, offline or traditional, word-of-mouth, or direct
marketing (Akinyele, 2010).

Direct
marketing strategy is often used by several airline operators because they see
it as a powerful tool to attract and keep both old and new customers. It is a
successful way some organisations are using to generate huge sales from
existing and new customers (Edmund, 2011). Airlines, just like other
organizations, make use of direct marketing to provide physical marketing
materials to consumers to communicate information about a product or services
being marketed by the organisation (O’guinn, 2013). Direct marketing is a form
of advertising which allows businesses effectively communicate directly to
customers through several media such as, cell phone, email, website, online
advertisements, database marketing, fliers, catalog distribution, promotional letters
and targeted mail (Ayyadurai, 2013).

Word
of mouth Marketing is seen as the most effective and powerful marketing
strategy any company can employ (Lang and Hyde, 2013). The benefit of this
strategy is that it can instantly turn a consumer into a regular paying
customer. This type of strategy is a by-product of the traditional and online
marketing strategies (Lang and Lawson, 2013). The consumers show satisfaction
through their word of mouth marketing to their friends on what was provided in
exchange for their patronage (Thomas, 2012). Because word of mouth marketing is
placed on the shoulders of satisfied customers who then share this satisfaction
with people who trust them, this trust is then transferred to the business.

Another
marketing strategy examined in the course of the study is traditional marketing
which also known as offline in marketing. In the past, traditional marketing
used to be the only main focus for advertisers then, but now, it is no longer
the same. This type of marketing strategy is seen in two groups namely; print,
and collectively, electronics (Armstrong and Overton, 2010). It is still highly
effective, relevant and consistently produces good results. Also, online
marketing is another strategy which is seen as the newest and sometime
perceived by many businesses as the most powerful, as it has opened diverse
types of marketing strategies that have completely changed the face of
marketing (Rappaport, 2009). While using online marketing, a business owner or
marketing manager can find numerous methods to explore a new business idea.
Some of these ideas include affiliate marketing, article marketing, social
networking, and blogging. Affiliate marketing can take a similar form as print
based traditional marketing by placing banner advertisements on websites, but
can reach so many more people. Chekitan and Don (2013) posit that article
marketing and blogging on the other hand allows for two strategies at the same
time. They can both be used to promote any product or services directly, or can
be used for driving traffic (customers) to a website for the same purpose.
Rappaport (2009) observed that social networking is the online version of word
of mouth marketing and has the ability to “personally touch” a huge
number of people instantly with basically the touch of a button (mouse).

Marketing
strategy development, planning and implementation process involves a lot, such
as, managerial experience, it has a high level of uncertainty, it requires
intensive business knowledge, with a broad strategic information needed for
success, rigorous process involving decision making by organisational managers,
placing emphasis on its unique strengths to ensure better customer value over a
long period of time (Jain and Punj, 2014). It is somehow difficult for
businesses to constantly realize efficient and effective marketing strategy
(Li, Duan, Edwards and Kinman, 2010). This could be associated with unstable
business environmental factors, which will then stand as a difficult task for
organisational marketing strategists to decide which strategy is best suitable
for achieving the set goal for the year. McDonald (2012) was of the opinion
that many factors prevent organisational managers from designing and
implementing efficient and effective marketing strategies. The fact is that
environmental factors were seen as major issues drastically affecting the
efficiency and effectiveness of managers in strategic marketing issues
(McDonald, 2012). The marketing strategies of airline operators in Nigerian
companies are expected to be adaptable to these environmental factors in order
to achieve set business performance goals and objective in a long run, though
it seems to have witnessed some form of corporate performance over the years
which can be attributed to their district level of market share and more needs
to be done on the adoption of effective marketing strategies to improve
business performance.

1.2       Statement
of the Problem

Air transport in Nigeria has been growing in relation
to the Gross National Product (GNP) as it accounts for a large part of
transport expenditure in the economy (Oyekanmi, 2013). The share of freight
movement on a tonne per kilometer is small compared to other modes; airlines
carry high value, perishable goods and provide emergency services that make
them an important part of the total transport system. Its transport system
helps to improve quality of life by broadening people’s leisure and cultural
experiences with a wider choice of holiday destinations around the world and an
affordable means to visit distant friends and relatives.

Effective
direct marketing strategy has been classified as one of the fundamental key for
the growth of any business organisation because no business can survive without
the marketing or sales of its products or services. Extensive marketing has
been recognized as the important factor for the sales growth of any business
and not just funding or capital should be consider as the growth of a business
(Waithaka, Mutiri and Nyabuto, 2014). For an enterprise to survive, it is very
crucial to have effective sales strategies that will win over its competitors
in the industry but most of the customers are cautious about the abuse of
direct marketing and are always worried that they may become victims of fraud
(Yen, Chen and Chen, 2008). Traditionally, executives in Nigeria aviation
industries have not been market driven, they have lagged behind in accepting
the marketing concept and have generally been slow in adopting promotional
methods, product strategy and other marketing techniques (Uhuegho, Olaniyi and Nwokocha, 2014).

Over the years the airlines industry in
Nigeria have been unable to grow, expand and be strong enough to attract more
Nigerians to travel by air, and this has contributed to excess capacity (or
performance below capacity) that leads to huge economic losses in terms of
potential turnover of air travelers not captured as passengers by the airlines
(Bankole, 2015). According to Asiegbu, Igwe, and Akekue-Alex (2012), many
airlines have suffered entropy (such as oriented, Barnax, Concorde, ADC,
Sossoliso airlines) and unable to provide the required service quality, some of
these airlines experienced low patronage and abysmal profit margin; and
eventually collapsed. The competitive nature of aviation industries in Nigeria
today is posing serious problems to various airline companies due to the
operations of Nigeria aviation industries in the volatile environments
(Olujide, 2003; Aremu, 2006). These problems have been attributed to the lack
of adequate implementation of direct marketing techniques.

Satisfied consumers will pass positive
information to others while dissatisfied consumers will pass negative
information about the products or services (Tucker, 2011; Vermeulen and
Seegers, 2009; Jalilvand, Samiei, Dini, and Manzari, 2012, Dennis, Merrilees,
Jayawardhena and Wright, 2009). Mouth to mouth marketing
communications is a major indicator to the success of a marketing strategy for
an organisation. For an organisation to successfully market its products or
services, such organisation must communicate with its customers or target
market (Louise van Scheers and Prinsloo, 2014). However, mouth to mouth
marketing might be counterproductive. On the one hand, it has been seen as an
influential marketing tool that might improve firm’s market share and
profitability (Arndt, 2009; Sheth,2000 and 
Guillermo, 2011); On the other hand, when the message about the firms’
services or product is negative, it may cause worst damage to the organisational
objective of controlling the market, this has been seen to have greatly
affected the airline industry (Richins, 1983; Hogan, Lemon and Libai, 2002;
Guillermo, 2011).

Since the early 1990s, the delivery of a
high level of service quality by airline companies became a marketing requisite
as the competitive pressures continued to increase. Most airlines began to
offer various incentives, such as the frequent flyer programmes in an effort to
build and maintain the loyalty of customers (Miller, 2015). Thus, in order to
remain competitive, service providers must render quality service to their
customers. However, Ott (1993), in his extensive study of frequent fliers,
showed that despite the airlines attempts to differentiate their services,
consumers did not perceive any difference between one carrier and another,
whereas Ostrowski, O’Brien, and Gordon (1993) noted that when all airline
companies had comparable fares and matching frequent flyer programmes,
companies with better perceived services drew customers from other carriers. Oghojafor and Alaneme (2014) added
that Nigerian aviation industry is fraught with poor customer service and
compensation for wronged and deserving customers. It has been observed that
there is a need for more competition in the industry to give customers a wider
range of choices in case their chosen carrier disappoints in any way (Udoh,
2013). In terms of customer satisfaction with the way the airlines handle the
comfort of their passengers, there is little to reflect the Category one (CAT
one) certification. In view of the challenge, much attention has been given to
the role of mouth-to-mouth marketing. The lack of mouth-to-mouth marketing
strategy negatively affects market share of the airline service providers in
Nigeria (Udo, 2013). Bassey and Anyadighibe (2014) further explained that
airline companies have not enjoyed the power of mouth-mouth marketing.  Hence, the needs to further investigate how
best effective marketing like mouth-to-mouth marketing could be used to enhance
their business performance.

It
is obvious that online marketing and its relevance in tourism industry,
manufacturing industry, banking industry etc have engrossed the attention of
many authors in developed, emerging and developing nations. Many scholars have
examined the relationship between online marketing and business performance and
yet general conclusion on the effect of online marketing on business
performance are yet to be reached. Past studies present conflicting findings as
some found a positive effect between the two (Sunny, Kim and Jeong, 2004;
Ulhas, 2007; Salwani, Marthandan, Norzaidi and Chong, 2009 and among others)
and some found no effect (Kirvijavi and Saarinen, 1995; Powell and
Dent-Micallef, 1997; Lo and Darma, 2000; Singh and Pandey, 2008; Shin, 2006;
Matikiti and Afolabi, 2012 and among others). This indicates that the effect of
online marketing on business performance is still debatable.

The aviation industry has not been left behind in
adopting e-marketing, as it is evident from numerous airline firms that have
established their presence on the Internet. 
However, it is not yet clear whether the spread and utilization of
Internet marketing has improved the profitability of the airlines firms in
Nigeria (IATA, 2007). 

A study
carried out by Uhuegho, Olaniyi and Nwokocha (2014) revealed that most airlines
operators in Nigeria are facing financial exigencies as a result of inability
to locate target customers and secure passengers’ loyalty, the global trade
trends, consumer protection and passenger rights, lack of online marketing
amongst others. All these have impacted negatively on the nature of airline
operations and their profitability. The study further showed  that the Nigerian aviation industry was
heavily indebted because of losses caused by low fares, high interest rates,
and rising fuel costs. In 2010 alone, Nigerian airlines owed a combined $59.5
million to Federal Airport Authority of Nigeria (FAAN) as at when the Central
Bank of Nigeria (CBN) announced a $1.2 billion bail-out for domestic carriers.
In 2011, the airlines owed $66.7 million (10 billion naira) to Nigerian
aviation agencies. Of the 150 active Nigerian airlines in 2001, the number
declined to 19 in 2011 and 8 in 2016 mainly due to financial mismanagement and
airline failures to meet industry policies. It is apparent that
Nigerian airline firms are adopting online marketing but it is not yet clear
whether the spread and utilization of online marketing has improved the
profitability of airline firms in the Nigeria aviation industry.

Marketing is the connection between
the satisfaction of the need of a society and its industrial activities which
then support a firm to survive within its competitive environment. The airline industry is considered to be of
strategic importance in every nation and it requires appropriate positioning to
ensure its sustainability. Across the world, for instance, over 2.1 billion
passengers travelled by air in 2006 (IATA, 2007). In Africa, the airlines
generated 6.7 million jobs and contributed US$67.8 billion to the GDP (Air Transport
Action Group, 2010). The Nigerian aviation industry is confronted by
myriad of challenges in terms of traditional marketing which have threatened
the day to day working capital and sales revenue of the firms. The airline industry in Nigeria has been
having some traditional marketing challenges in the light of upsurge in
competition and the dynamics in the global and local business environments (Air
Transport Action Group, 2010). According to Adeniran, Egwuonwu and Egwuonwu
(2015), most of the airlines in Nigeria do not have clearly stated positioning
statements to differentiate their market offerings, and attract customers. This
situation has resulted in high working capital and rates of airlines’
insolvency. Also, Nthiga (2008) noted that most firms do not use
marketing to improve their organisational working capital. In the context of
working capital it has been pragmatic that the difference of current assets and
liabilities, organisational savings, and lack of legal structure are the major
indicators to determine working capital of an organisationon the significant
impact of traditional marketing in improving the day to day sales revenue of
the organisation. Based on these problems, it is important to establish the
relationship that exist between traditional marketing, transactional marketing,
marketing strategies and selected performance indices of airline firms in
Nigerian aviation industry

Based
on the foregoing, the present study examined marketing strategies and business
performance of selected airlines in Nigerian Aviation Industry.

1.3       Objective
of the Study

The
general objective of the study was to examine the relationship between
marketing strategies and business performance of the selected airlines in
Nigerian Aviation Industry. The specific objectives are to:

  1. determine the relationship between
    direct marketing and sales growth of selected airlines in Nigerian
    Aviation Industry;
  2. examine the relationship between
    mouth-to-mouth marketing and market share of the selected airlines in
    Nigerian Aviation Industry;
  3. assess the influence of online
    marketing on the profitability of the selected airlines in Nigerian
    Aviation Industry;
  4. aascertain the effect of traditional
    marketing on working capital of the selected airlines in Nigerian Aviation
    Industry;
  5. examine the influence of transaction
    marketing on customers’ satisfaction of the selected airline firms in
    Nigerian aviation industry and
  6. evaluate the influence of marketing
    strategies and business performance of the selected airline firms in Nigerian
    aviation industry;

1.4       Research
Questions

To
guide the conduct of this research the following questions were raised:

  1. What is the relationship between
    direct marketing and sales growth of the selected airlines in Nigerian
    Aviation Industry?
  2. What is the relationship between
    mouth-to-mouth marketing and market share of  the selected airlines in Nigerian
    Aviation Industry?
  3. How does online marketing influence
    the profitability of the selected airlines in Nigerian Aviation Industry?
  4. In what way will traditional marketing
    affect working capital of the selected airlines in Nigerian Aviation
    Industry?
  5. What influence does transaction
    marketing have on customers’ satisfaction of the selected airline firms in
    Nigerian aviation industry?
  6. How do marketing strategies influence
    business performance of the selected airline firms in Nigerian aviation
    industry?

1.5       Hypotheses

The
following hypotheses were propounded and tested at 0.05 level significant:

Hypothesis One

H01: There is no significant
relationship between direct marketing and sales growth of the selected airlines
in Nigerian Aviation Industry.

Hypothesis Two

H02: There is no significant
relationship between mouth-to-mouth marketing and market share of the selected
airlines in Nigerian Aviation Industry.

Hypothesis Three

H03: Online marketing has no
significant influence on the profitability of the selected airlines in Nigerian
Aviation Industry.

Hypothesis Four

H04: Traditional marketing has
no significant effect on working capital of the selected airlines in Nigerian
Aviation Industry.

Hypothesis Five

H05: Transaction marketing does
not significantly influence customers’ satisfaction of the selected airline
firms in Nigerian aviation industry.

Hypothesis Six

H06: Marketing strategies
do not significantly influence business performance of the selected airline
firms in Nigerian aviation industry.

Rationale for Hypotheses

H01: There is no significant relationship
between direct marketing and sales growth of the domestic airlines in the
development of Nigerian Aviation Industry.

Direct marketing is a form of advertising
which allows businesses and nonprofit organisations to communicate directly to
customers through a variety of media including cell phonetext messaging,
email, websites, online adverts, database marketing, fliers, catalog
distribution, promotional letters and targeted television, newspaper and
magazine advertisements as well as outdoor advertising. Among practitioners, it
is also known as direct response. Direct marketing is attractive to many
marketers
because its positive results can be measured directly. While many marketers
recognize the financial benefits of increasing targeted awareness, some direct
marketing efforts using particular media have been criticized for generating
poor quality leads, either due to poor message strategy or because of poorly
compiled demographic databases. Through conducting an empirical research, Gustafsson
(2006) confirm that direct marketing has a significant positive effect on
patronage of airline service firms in China and is essential for the successful
delivery of customer services.

Chang
and Yeh (2012) found that direct marketing is necessary for evaluating
airlines’ services. By collecting surveys from inbound air passengers at Macao
International Airport, Chan, Wang, Li, Liu, and Lam (2014) have employed the
SERVQUAL model in completing a comparative study of different competitive
advantages between traditional and low-cost airlines. Their findings clearly
show that different marketing and service delivery strategies should be applied
by different airlines (traditional vs. low-cost) in order for them to
respectively and satisfactorily meet their different service quality
dimensional needs of customers. Lázaro (2016) asserts that airlines that have
introduced direct marketing can offer products and services calibrated to
passengers’ needs. Norm (2011) found out that direct marketing has greater implication
on sales growth and it is a sales channel through which customers are offered
products and services. Bellman, Potter, Hassard, Robinson and Varan (2011)
agree that direct marketing is a promotional tool for generating notoriety and
a positive brand image.

However,
authors such as MMA (2011) and García (2012) did not find positive relationship
between direct marketing and sales revenue. They found that some direct
marketing tools could not contribute value to user management, information, and
resolution in an automatic and interactive manner. Costa, Barragáns and Rey
(2012) do not see direct marketing as a sales outlet, where distribution is the
entrance door that allows for the sale of business products and services. In
the light of these previous findings, this study hypothesize that there is no
significant relationship between direct marketing and sales growth of selected
airlines in Nigerian Aviation Industry.

H02: There is no significant relationship
between mouth-to-mouth marketing and market share of thedomestic airlines in
Nigerian Aviation Industry

Passengers
essentially need information about an airline company and its services to
choose it. They always collect information from the mass media including
television, radio, internet, etc. Although the mentioned resources provide
valuable information, passengers prefer to receive a huge part of their
information from informal resources such as their relatives, their friends,
their acquaintances and other people (Silverman, 2001). Since they are not
interested people, they are more noticed by the passengers. It must be
mentioned that the formation of positive words of mouth about a service company
can be due to different factors and will also have remarkable outcomes. In an
environment where there has  been  a 
reduction in consumer’s trust as 
well as  a decrease  in 
television,  radio  and 
outdoor  advertising, word of
mouth offers a way to obtain a significant competitive advantage  (International Word of Mouth Marketing
Conference, 2005).

 Recent studies in the field of different
service industries have proved positive and negative effects of words of mouth
on purchasing the services provided by service companies in different
industries. Most airlines began to offer various incentives, such as the
frequent flyer programmes, in an effort to build and maintain the loyalty of
customers (Miller, 2015). Yasvari, Ghassemi, and Rahrovy (2012) assert that
word of mouth is more important in final stages of the purchase process,
because it assures the consumer. Alire (2007) in a study empirically found out
that 90% of people trust the products or services confirmed by one of the
family members, friends or colleagues, because they are not sure of any
benefit. A study by Bughin, Doogan, and Vetvik (2010) suggest that word of
mouth is the primary factor behind 20 to 50% of all purchasing decisions and
generates more than twice the sales of paid advertising.

Cronin
and Taylor (2012) found empirical support for the idea that mouth-to-mouth
marketing led to increased market share and argued that service quality was
actually an antecedent of market share. O‘Neill, Palmer, and Charters (2012)
conducted a study about airlines services in Australia and found that when the
belief leaders returned back to their country, they talked about their
experiences and their verbal recommendations led to the increase in the sale of
local airline services. Conducting a study in the US, Litvin, Blose, and Laird
(2011) found that choosing airline by tourists was affected by verbal recommendations
of the belief leaders and interestingly, a number of these choices were
affected by the formal media. Brown, Barry, Dacin, and Gunst (2015) in their
empirical study on word of mouth facets in restaurants confirmed that there is
a strong relationship between word of mouth and customer’s loyalty. The
researchers found out that positive word of mouth was directly correlated to
customer’s repeated purchase which transformed into higher market share. They
also discovered that the effect of positive or negative word of mouth on market
share differed substantially from industry to industry.

Mackinsey
group in 2009 reported that in the airline industry, the pass on rates for the
key positive and negative word of mouth can reduce a firm’s market share by
20%, all other things being equal. Heriyati and Siek (2011) study showed that
market share of low cost carriers did not significantly improve after receiving
information through WOM channel because passengers find it difficult to make a
decision about choices of services or when they are about to travel. From these
arguments and findings, it is hypothesize that there is no significant
relationship between mouth-to-mouth marketing and market share of selected
airlines in Nigerian Aviation Industry.

H03: Online marketing has no significant
influence on the profitability of the selected airlines in Nigerian Aviation
Industry

According
to Lerrthaitrakul and Panjakajornsak (2014), the aviation industries play a
significant role in generating new marketing and business across the world. In
order to survive in the modern marketplace, air-travel businesses need to give
consumers what they want, which is low prices and a wide choice. Online
marketing affords them a way to do that. Through the online platform, Airlines
enhance their relationship with their passengers who will book directly with
the airline rather than through travel agents. In addition, airlines increase
their revenues through sales of optional services such as baggage, seat
assignments and also ancillary services such as car-hire, hotels and insurance.
Online marketing enables airlines to offer more services to customers, more
channels to deliver their business, more intelligence to understand their
business, greater efficiency and lower cost. De Alarcon, Molina, and Feliz
(2005) in a study found that the actual cost per transaction goes down
considerably with online marketing as opposed to traditional marketing.

Stroehle
(2008) revealed that the application of online marketing in the airline industry
is influential on the improvement of the effectiveness of marketing activities.
Eid (2011) studied the use of online marketing in business management and
concluded that the use of online marketing mechanisms is effective on market
share and profitability of the companies. Jawabreh, Allahham, Alrjoub, and
Ahmad (2012) explored the impact of Information Technology on Profitability of
Airlines Industry on Royal Jordanian Airlines. The data were collected from the
financial statements of Royal Jordanian Airlines and analyzed by using
financial and statistical tools. From this study, it showed that some ratios
showed good results and the airline still had the opportunity to improve
effectively its financial performance and long term and short term solvency in
future.

However,
some studies have found no relationship between online marketing and firm’s
profitability (Ozituran & Roney, 2003; Shin, 2006). Wen (2009) pointed out
that the Internet had negative impacts on the industry, namely online pricing
transparency, price competition and a decrease in customer loyalty. Xiang,
Wang, O’Leary and Fesenmaier (2015) found that there has been no significant
change from 2007 to 2012 in the percentage of American travellers who used the
Internet as a source of information for trip planning. This situation clearly
indicates that some people regard the Internet as having barriers that are
difficult for them to overcome (Minghetti & Buhalis, 2010). On the other
hand, people prefer to use a travel agent for a variety of reasons. The most
recent figures of the Travel Weekly’s Consumer Trends (Tunney, 2014: C10)
indicate that 45% of travellers have used a travel agent to book a trip with a
large proportion of these travelers stating that they use a travel agent
because they were looking for expert advice. The figure of 45% clearly
indicates the relevance of travel agents in the travel and tourism today. Pan
and Fesenmaier (2006) revealed that travel-related websites are not as
user-friendly as they could be. Stoltz (2009) argue that users often get
frustrated when trying to book online, even CEOs of online travel portal
companies. In the light of these previous findings, this study proposes that
online marketing has no significant influence on the profitability of selected
airlines in Nigerian Aviation Industry.

H04


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