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Copyright by John Samuel Wagle COPYRIGHT BY JOHN SAMUEL WAGLE, JR. 1958 AN ANAHSIS OF THE MARKETING OF UTILITX AIRPLANES, WITH EMPHASIS ON MARKET IM} PRACTICES AND PROBLEI-B OF MANUFACTURERS DISSERTATION Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of The Ohio State University By 4* JOHN SAMUEL WAGLE, B. S., M. B. A. The Ohio State University 1957 Approved by: ?d t d ' H . Adviser Department of Business Organization ACKNOWLEDGMENTS The author gratefully acknowledges his indebtedness to the following named persons for their assistance during the preparation of this study, Dr. Robert Miner, Dr. David M, Harr­ ison, and Dr. James H. Davis, for invaluable suggestions and constructive criticism; and tc Dr. T, N. Beckman for encourage­ ment during the period of research. Thanks are expressed to numerous executives in the utility airplane industry for their willingness to make unpublished data available for this study. Among those who were most generous of their time and knowledge are 0. A. Beech, President, Beech Air­ craft Corporation, L. Greever, Sales Manager, Beech Aircraft Corporation; Robert Chatley, Sales Promotion Manager, Cessna Aircraft Company; J. W. Miller, Sales Manager, Piper Aircraft Corporation; and Benjamin Muro, General Manager, Taylorcraft Incorporated. To Clarella Wagle sincere thanks for encouragement, editing and typing. To Jay and Candace Wagle goes the author*s appreci­ ation for their understanding and forbearance during this period of study. John S. Wagle TABLE OF CONTENTS Page LIST OF TABLES............................................... T LIST OF ILLUSTRATIONS .................................. vii Chapter I. INTRODUCTION.......................................... 1 Scope and Limitations Importance of the Area of Study Objectives of the Study Methodology II. THE INDUSTRY.......................................... 10 Development of the Industry History of Utility Airplane Manufacturers in Business in 1956 Summary III. THE PRODUCTS AND THE MARKET IN THE POSTWAR PERIOD 194-6 to 1956 ...................................... 41 The Philosophy in the Industry The Products Trends in Total Utility Airplane Sales Seasonal Market Behavior Division of the Utility Airplane Sales Among Competitors Since 1946 Summary IV. PROBLEJ-S OF DELINEATING THE CHARACTERISTICS OF THE MARKET. 74 Marketing Research Characteristics of the Market V. PROBLEMS CONCERNED WITH ORGANIZATION OF THE MANUFACTURER'S MARKETING DIVISION .................... 99 Organization Balance Organization Stability, Flexibility and Growth iii TABLE OF CONTENTS— Continued Chapter Selection of Personnel for Marketing Positions Summary VI. PROBLEMS C0H3ERNED WITH MARGINS AND CHANNELS OF DISTRIBUTION............................... Reasons for use of Middlemen Channels of Distribution Used Securing Distributors Distributor Territories Manufacturer’s Aids to Middlemen Summary VII, ADDITIONAL PROBLEMS OF DISTRIBUTION........... Cash Deposits Types of Sales to Middlemen Types of Transactions with Final Purchaser Manufacturer Owned Demonstrators Release and Delivery of Airplanes Incentives for Middlemen Summary VIII. CONCLUSIONS................................. BIBLIOGRAPHY LIST OF TABLES Table Page 1. Number of Military and Civilian Airplanes Produced by Manufacturers in the United States, 1909-194-2............ 14. 2. Number of Military and Civilian Airplanes Produced by Manufacturers in the United States, 1943-1955 20 3. Per Cent of Company Sales Made to Military Services by Utility Airplane Manufacturers................. .......... 44 4. Ten Single-Engine Utility Airplanes: Performance and Specifications D a t a ................... 46 5. Five Twin-Engine Utility Airplanes: Performance and Specifications D a t a ...................................... 49 6. Manufacturers' Utility Airplane Sales Per Cent of Yearly Total Accounted for by M o n t h s ............................ 60 7. Rank in Sales of the First Four Utility Airplane Manufacturers, 1946-1956. Ranked try Dollar S a l e s ........ 65 8. Rank in Sales of the First Four Utility Airplane Manufacturers, 1946-1956. Ranked by Number of Airplanes S o l d ............................................ 67 9. Hours Flown by Airplanes in General Aviation by Types of Flying, 1946-1954 82 10. Number of Aircraft Active in General Aviation Classified by Hours Flown During 1954 ................................ 88 11. Miles Flown in General Aviation by Type of Airplane and by Type of Use, 1954 ...................................... 93 12. Comparison of Active Civil Aircraft by Population and States, 1954 .............................................. 95 13. Cost of Owning and Operating a Cessna Model 1 7 0 ............ 168 14. Deposits Required on New Utility Airplanes.................. 180 v LIST OF TABLES— Continued Table Page 15. Examples of Cessna and Beech "Floor Plan" Financing Arrangement on Single-Engine Airplanes.................. 187 16. Essentials of Transaction to Finance Demonstrator Single-Engine Airplane for Cessna Distributor .......... 191 vi LIST OF ILLUSTRATION Chart Page 1. Structure of Aviation in the United States by Nature of Aircraft Usage ........................................... 2 2. Sales of Utility Airplanes in Dollars and in Units, 194-6-1956 55 3. Seasonal Index of Unit Sales of Utility Airplanes by Manufacturers, 1936 to 1956 Excluding 1942 to 1947 ..... 58 4. Per Gent of Total Utility Airplane Industry Dollar Sales Accounted for by Three Largest Manufacturers, 1946-1956 . 63 5. Hours Flown by Airplanes in General Aviation by Major Uses During 1954 ......................................... 83 6. Fluctuation in Hours Flown by Airplanes Used in General Aviation by Types of Use, 1946-1954 84 7. Fluctuation in Per Cent of Total Hours Flown in General Aviation Accounted for by Types of Flying, 1946-1954 .... 85 8. Aircraft Active in General Aviation Classified by Percentage in Major Categories, 1954 .......... ...... 90 9. Percentage of Total Hours Flown in General Aviation Accounted for by Major Types of Aircraft .................. 91 10. Percentage of Total Miles Flown in General Aviation Accounted for by Major Types of Aircraft.................. 92 11. Organization Chart of Beech Aircraft Corporation ......... 102 12. Organization Chart of Cessna Aircraft Company ........... 103 13. Organization Chart of Commercial Sales Division of Beech Aircraft Corporation ...................................... 106 14. Organization Chart of the Commercial Sales Division of Cessna Aircraft Corporation .............................. 107 vii LIST OF ILLUSTRATIONS— Continued Chart Page 15. Channels of Distribution Used by Manufacturers of Utility A i r p l a n e s ..................................... 140 16. Territories of Piper Distributors, 1956 149 17. Territories of Taylorcraft Distributors, 1956 150 18. Classification of fbtential Customers for Cessna Airplane ............................. 156 19. Path Followed in Changing a Non-Interested, Non-User Into a Customer for a Cessna Airplane........................ 159 viii CHAPTER I INTRODUCTION Scope and Limitations of the Study This is a study of the marketing of utility airplanes by manufacturers. The term “utility airplane" refers to aircraft produced and marketed for any civilian use which excludes airline activity. The marketing problems and practices studied are those of the manufacturer. No attempt is made to analyze activities of middlemen except insofar as they are directly related to the manufacturer. In the structure of aviation activities there are two basic classifications— military and civilian aviation. These are presented in Chart 1. The military group and its subdivi­ sions are not within the scope of this study except in those rare occasions where military airplane data will aid in an under­ standing of situations that have developed in the utility airplane industry. Civilian aviation can be subdivided into "airline" and "general." The former term includes both scheduled and nonscheduled air transport activities and is outside the scope of this research. General aviation is concerned with all other civilian aviation 1 CHABT 1 STRUCTURE OF AVIATION IN THE UNITED STATES BY NATURE OF AIRCRAFT USAGE U. S. Aviation Military Civilian ' TransportTactical Training Airline General Non- Business Instruction Bomber Pursuit Laison Scheduled Scheduled _ Agriculture Air Taxi Sport Source: Compiled from Aviation Facts and Figures 1955, Aircraft Industries Association of America, p. 41. 3 activities. This latter term, then, includes aviation for business, agriculture, aerial taxis, instruction, and sport. While airline aviation makes use of the larger multi­ engined aircraft, general aviation utilizes for the most part light twin-engine and single-engine products. These airplanes that are produced and marketed for use in general aviation are referred to as "utility airplanes." This explanation of the term is in conformity with current usage in the trade and is in agree­ ment with the concept of civilian aviation as advanced by the Aircraft Industries of America.^ More specifically there are four principal types of utility aircraft: 1) One and two-place, having a gross weight of 1,500 pounds or less. Powered with 65 to 125 horsepower engines, they have speeds from 70 to 125 miles an hour. In this group are found the kinds of aircraft most often used for instruc­ tion, for light agricultural use, and for sport. 2) Three to four-place, weighing from 2,200 to 2,700 pounds and powered with engines from 125 to 175 horsepower.
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