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Each issue of CMO Close-up features an interview with a CMO, as well as other marketing executives answering that issue's "Big Question."
This week's feature:
CMO Close-Up with Steve Liguori, executive director-global marketing at GE
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Issue Alert - Top Stories |
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Tinseth strives to keep Boeing on steady course
Sean Callahan
Story posted: February 8, 2010 - 6:01 am EDT
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Randy Tinseth was appointed VP-marketing for Boeing Co.'s commercial airplanes division in 2007. Boeing's wares—the 737, 747-8 and new 787 Dreamliner—are as b2b as products get. They're usually sold through multibillion-dollar contracts, and the complex sales process can take years to complete and involve hundreds of decision-makers, including the banks necessary to underwrite these deals.
In this Q&A, Tinseth discusses how Boeing's marketing and sales staff handled the delays in the flight test of the Dreamliner and how the company markets itself as an environmentally concerned corporation.
BtoB: How has the economy affected your marketing efforts in the past 18 months?
Tinseth: Last year, there was an underperformance in air traffic around the world, with passenger growth off about 3% to 5% and cargo off 15%. It was a very difficult year. Our customers have been forced to adapt and change to meet the realities of the market. They reduced capacity. They worked at ways to cut costs, and part of the way they did that was to replace aging airplanes with more fuel-efficient airplanes. That was good for us at Boeing.
[Airlines are] all looking for new efficiencies and ways to reduce costs. It's a really tough environment for our customers. So we adapted to the realities of the marketplace. Fortunately, because we had built a very large backlog and as a result of our strength in the low-cost carrier segment, we were able to react and deliver 481 airplanes last year, which was within our guidance.
When you're at the down part to the cycle, sales get much more difficult. Now is the time to work harder. Now is the time to reach out to your customers to see how you can help. In a business-to-business-type operation, we deal with a relatively small number of customers. The numbers of customers we work with are in the hundreds, not the thousands or the millions.
BtoB: As a marketer, how do you cope with the long sales lead time for your airplanes?
Tinseth: We're selling assets with a very long life, airplanes that will be around for a long, long time. They cost billions of dollars. When you're making these airplanes, you're not only in touch with your customers, you also have to be in touch with the financiers, the bankers, so that they understand the value of the product you're selling. They have to have confidence to invest in the product. You have to spend time talking about the long-term prospects of the market. You have to show that even in these difficult times, we're part of a market that will come back. It is a bit of a challenge, when you're trying to sell airplanes for 2013, or 2014 or 2015, to help fill the production lines. You have to demonstrate that your product is not only going to stand up to the competitors of today but also the competitors of the future.
BtoB: How did your department respond to the delay in the flight test of the 787 Dreamliner?
Tinseth: I had to go out and talk to a lot of media, and the first thing I had to do was acknowledge we disappointed our customers. You really had to acknowledge that. And you had to acknowledge that you disappointed yourself, because Boeing had a tradition of delivering programs on time. This certainly was an anomaly, but we had a lot of problems to work through, and you had to acknowledge that you have those problems. You have to be a little more humble as you work through these challenges. You have to recognize that you don't restore your credibility overnight. In order to restore credibility, you have to walk before you can run. You have to work day by day, week by week, month by month and year by year to restore that credibility. I had a chance to have this discussion with customers, but most of that came from the sales and marketing teams assigned to work with them [individual customers] on a daily basis. I tell you, it hasn't been easy. When you think of the delay, it means so many different things for different airlines. It means something different for an airline that wants delivery two years from now as opposed to one that wants delivery five years from now.
BtoB: How important is an environmentally-concerned marketing message to Boeing?
Tinseth: We're part of an industry that contributes about 2% to 3% to the world's carbon dioxide emissions. Even though the aviation industry is a small part of that, it's a very visible part. We as a company have to help the airlines be more sustainable as an industry, to find a way within the next few years to become carbon neutral.
What we're doing is three things: First, we're building fuel-efficient airplanes. Second, we advocate upgrading the air-traffic control system to address congestion in the air. Today, the United States is using the latest technology of the 1950s. There's too much congestion around airports, and it wastes fuel. Finally, and this is outside of what Boeing does, but we support biofuels. I'm not talking about any fuels made from corn or anything that comes from the food supply. I'm talking about fuels that potentially could come from plants such as algae. M
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One Comment
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anonymous
February 9, 2010 10:58 am
The US Government has spent over $2.5 billion dollars on algae research in the last 35 years and all we have to show for it are shelves full of useless patents. Algae have been researched at universities and in laboratories in the US for over 50 years, financed in significant part by government funds. One of the largest problems is that the research has been done in laboratories and at universities, using federal funds, and there is fear at that level that commercialization will ‘ruin it for them’. What it will ruin is the steady stream of ‘free’ money flowing from the DOE, NREL, the DOD, DARPA and other Washington-based agencies to University Row. It was most disconcerting to hear from more than one agency that the funds it awards are, by Congressional mandate, restricted to research. If we could invest one years’ worth of awards into commercialization instead of research, we could easily move this industry into commercialization. The research would be needed to improve technologies, but Microsoft and the American Petroleum Industry, among others, can confirm that this is a necessary component of any industry growth.
According to my sources. another large problem is, in order to be a grant award recipient, the algae technologies must be investigated and approved by NREL, and that NREL is not particularly supportive of the private initiative. NREL is the same government agency that ran out of money and stopped the otherwise successful Aquatic Species Program after 18 years of federal funding. After the Consortium grant announcement, sources at various government agencies, including NREL itself, shared the fact that grants would only be awarded to proposed groups that included government agencies in their consortia. The truth of that statement lies in the fact that one of the groups that recently received an award is led by NREL and the other by the David Danforth Plant Science Center, and includes two national laboratories (one of which is also a participant in the NREL award) and 11 universities. According to its website, “Scientists at the Danforth Center receive more than half of their funding from federal agencies via competitive grant programs, with the rest of the funding coming from private companies and foundations. In addition to the USDA and the NSF, other federal granting agencies that fund research at the Center include the National Institutes of Health, the U.S. Agency for International Development, the U.S. Department of Energy, and the Environmental Protection Agency…”. In the last 2 years, it has received grants from the Department of Transportation and the National Sciences Foundation relating to biofuels, in addition to housing one of the DOE’s Energy Frontier Research Centers.
Federal agencies are incapable of commercializing anything. The only ones that are even remotely designed to earn money are those that regulate the financial institutions, and we all know that the American banking system has failed us miserably. Until someone in Washington who has power and authority to stop this steady stream of funding to nowhere, listening as the algae researchers continue to claim that they are 3-5 years away from completing their research, it’s too expensive and they need more time and money, they will receive grant money from the DOE, NREL, DOD and DARPA. Nothing will ever get commercialized at the university level. Until there is an industry, there is no value to the results of the research. Until development of this industry is taken out of the hands of the research community, and put into the hands of the business, not corporate, community, this industry will never support reducing our dependence on foreign oil.
The question you need to be asking is " Does the US really want to get off of foreign oil or do we want to continue to fund the algae researchers at the universities." The problem is we can grow, harvest and extract algae today with all "off-the-shelf" proven technology. We no not need genetic modification at all when there are existing algae strains currently on the market with 30-60% oil content. Algae production requires far less land and water than any other terrestrial crop (see page 194 of the DOE’s National Algal Biofuels Technology Roadmap), which has the farmers in an uproar right now. The ethanol credits went away, allegedly shutting down an industry – can it really be that without the tax credit, years of time, effort and expense will be for naught, leaving us with unedible genetically modified corn fields? The DOE is still awarding grants for algae pond research when it was established years ago that all algae ponds get contaminated and will never produce enough algae to get us off of foreign oil. Stop wasting monies on research. We need algae production!
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