Abstract

The use of air as the mode of choice to ship cargo has increased over the past several years. However, freight forwarders believe the means for handling this freight at large domestic airports is lacking. Thus, small and mid-size airports have an opportunity to enter or expand operations in the air cargo market. A market opportunity analysis (MOA) is a process used by companies to determine the feasibility of entering or expanding operations in particular markets for goods and/or services. This process can be applied to air cargo operations to determine the feasibility of airport entry or expansion into the air cargo market. Conducting an MOA will not only help airports judge their capabilities to pursue increased air cargo operations, but also equip them with the information needed to successfully attract and serve customers and outperform competitors. The entire transportation industry (i.e., all modes) could benefit from this process. This article describes the MOA process and how it was applied through a case study of air cargo operations at one small city airport. Implications and guidelines for transportation are provided.

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The use of air cargo has increased over the past several years, and sources expect this growth to continue (Clancy and Hoppin 2001). Airports of all sizes are aggressively competing to capture a substantial share of the increased air cargo volume. Air cargo operations generate additional revenue for airports, as well as the surrounding community, and provide better utilization of airport facilities as the majority of these services are conducted during off-hours (midnight to 6 a.m.). Many of the country's largest airports are facing major congestion issues with air and ground operations. While the amount of freight shipped via air is growing, the flight capacity for handling air cargo at domestic airports is not. In addition, air cargo providers, such as airlines and freight forwarders, are not getting the service they desire from these large airports (Soto 2000). This environment creates an opportunity for small and mid-sized airports to increase their role in this market.

Before a decision can be made regarding expansion of air cargo operations, airports must determine the feasibility of such an undertaking. Specifically, they need to determine customers' needs for air cargo operations and fulfill those needs better than other airports in close geographic proximity. Airports need to comprehensively assess the air cargo market to determine if they can accomplish increased market share. The assessment can be accomplished by applying a process called a market opportunity analysis (MOA). An MOA is used by companies to determine the feasibility of entering or expanding operations in particular markets for goods and/or services. The process involves assessing the external market-potential demand, current players in the market, and customers' needs-along with the internal capabilities of the company to determine the feasibility of pursuing the market.

Research on the process of conducting MOAs is limited to the marketing literature and consists primarily of normative frameworks for analyzing a market. A literature review reveals no studies applying this process to any aspect of the transportation industry. Thus, the purpose of this article is to contribute to the literature by demonstrating how the MOA process can be applied to transportation, specifically the air cargo industry. Conducting air cargo operations can be capital-intensive; therefore, it is important to know prior to making large investments that an airport has the capabilities necessary to succeed in this market. The MOA process presented in this article will not only help airports judge their capability to pursue increased air cargo operations, but also equip them with the information needed to successfully attract and serve customers and outperform competitors.

The remainder of this article is divided into three sections. The next section discusses the details of conducting a market opportunity analysis. A case study demonstrating how the MOA process was applied to a small city airport is provided in the fourth section. Finally, implications for managers and future research are presented.

MARKET OPPORTUNITY ANALYSIS

Entrance into any new market requires good market intelligence to identify, create, and sustain a competitive advantage. Macroenvironmental forces such as globalization, rapid change in technology, and widespread social changes add complexity to an organization's search for competitive advantage. As organizations struggle to adapt to uncertain environments, the structure and management of market intelligence become vital to their survival. Firms must keep a finger on the pulse of a variety of forces interacting with customers and competitors within a larger macroenvironment. To this end, the MOA is a systematic, logical process to assist managers in dealing with the uncertainty of the external environment. Figure 1 presents a conceptual model of an MOA that includes all the major elements necessary for a comprehensive assessment of market opportunities.

[FIGURE 1 OMITTED]

The first step involves analysis of the macroenvironment, which includes forces outside the control of the organization that can substantially impact market opportunity. The major forces to examine include economic, technological, social, political, and regulatory (Lehmann and Winer 2002; Cadotte and Brace 2003).

A stunning example of an event that has impacted several macroenvironmental forces was the terrorist attack of September 11, 2001. For example, social trends resulting from the event include people's attitudes toward certain ethnic populations, patriotism, air travel, and safety in general. Regulatory factors were far-reaching, impacting private citizens (e.g., tighter restrictions on carry-on luggage), pilots (e.g., carrying a firearm in-flight), airplane engineers (e.g., securing cockpit doors), air traffic controllers (e.g., newly restricted air space for commercial flights), and cargo handlers (e.g., substantially increased screening requirements), to name a few. Political factors relating to international trade restrictions with countries directly involved in or supporting terrorist activities continue to be more closely scrutinized, challenged, and revised. These are examples of macroenvironmental forces over which individual firms have no control, but by which they may be greatly affected and to which they must respond. Firms should recognize susceptibility to changes in macroenvironmental forces, and position themselves to minimize negative impact and leverage positive impact.

The second step in the MOA is the definition of markets. This task involves identifying the major markets in which the product or service competes, and segmenting the market into a product-market structure. Identifying the markets necessarily requires definition of the end-user markets. Who is the end user, and what need are they attempting to fulfill by using the product or service? This definition establishes the boundaries for all subsequent analyses. For example, broadening perceptions from "railroad industry" to "transportation industry," or "movie industry" to "entertainment industry," considers a much wider end-user market. Markets can very often be segmented into multiple product-market structures. Each product-market is a group of products or services perceived by customers as substitutable for one another in a particular use situation (Day, Shocker, and Srivastava 1979). This step is crucial to help understand the organization of the market and delimit the segment(s) in, and products/services against, which the firm will compete.

Following the definition of markets, the MOA process involves collection and analysis of information to determine market opportunities. Specifically, the objective of step three is to develop descriptive profiles to understand customers, competitors, and suppliers within the markets defined in step two. When profiling customers, it is important to include both channel customers (e.g., wholesalers, distributors, retailers, etc.) as well as end-use customers (individuals and businesses). Understanding the outcomes valued by customers as a result of product usage is a critical component to accurate profiling. Customer value is defined as "the customers' perception of what they want to have happen (i.e., the consequences) in a specific use situation with the help of a product or service offering, in order to accomplish a desired purpose or goal" (Woodruff and Gardial 1996, 54). For example, to understand what consumers value in product transportation services requires knowledge of the intended use situation (e.g., new customer versus existing customer; new order versus refill; long lead time versus short lead time), and desired outcomes of that situation (e.g., timeliness, consistency, speed, quality, security). Knowledge of these situation-specific consequences and desired outcomes can lead to broader understanding of market opportunities.

Competitor analysis involves profiling direct competitors as well as those offering alternative products or services that can fulfill the same needs and desired outcomes. While Standardized Industrial Codes (SIC) are useful in identifying competitors, managerial judgment and customer-based measures are also important. Customer-based measures include brand-switching behavior, cross elasticity of demand, and customer judgment (Lehmann and Winer 2002). Customer judgment assesses strengths and weakness of the competitors and how they compare to your firm's strengths and weaknesses. Competitor profiles that focus on the competitors' current objectives and capabilities as well as potential future strategies can lend insight into market opportunities.

Supplier analysis is an important step to determine both availability of and accessibility to supplies necessary to conduct your business. How narrow or broad is the supplier base? How well do the suppliers' offerings meet your needs and those of the end user? Answers to questions such as these better position the firm to understand current and future market potential and opportunities.

Collection and analysis of information regarding customers, competitors, and suppliers reveals the size and share of market and historical cost and profit data, as well as identifies long-term trends and short-term changes in the market (Lehmann and Winer 2002). Results from this stage establish the minimum requirements necessary to enter the market, and thus become an important input for quantifying demand in the Market Demand Forecasting step.

While step three involves a historical view of sales and market share, step four requires estimating the potential for future market demand and the share of demand to be captured by the organization. Important considerations in estimating demand include the level of value conferred upon the organization's offering by customers, the degree of differential advantage when compared to the competition, the ease with which the offering can be copied by competitors, and the availability of supply. Each of these considerations should be addressed by the three market elements in step three above. The information collected in step three is often in both quantitative and qualitative form. Therefore, demand estimation techniques suited for analysis of both types of data must be adopted. Quantitative methods such as time series and regression models are used when historical results reflect future expectations. Qualitative-or informed judgment--methods are used when little or no historical data exist, or when events expected to impact future demand differ from those that impacted historical demand. Qualitative techniques convert the informed opinions of experienced personnel into formal forecasts that can supplement a quantitatively derived forecast. These techniques include jury of executive opinion, Delphi, salesforce composite, and customer composite (Mentzer and Bienstock 1998).

The final step in the MOA-Evaluation of Market Opportunity--is a two-stage process entailing identification of new opportunities, such as creating new ways or means for satisfying buyer needs that are consistent with core competencies, and matching those opportunities with organizational capabilities. In this stage, a SWOT (strengths, weaknesses, opportunities, and threats) analysis is recommended to focus attention on the fit between an organization's internal capabilities (evident in its strengths and weaknesses) and its external environment (reflected in environmental opportunities and threats) (Cadotte and Bruce 2003). Analysis of capabilities must include assessment of available resources to remain in the market during growth periods when cash flow is likely to be negative.

The MOA model provides a framework for managing the complexity of information necessary to understand and compete in the marketplace. Following the MOA process allows organizations to consider the interrelationship between major elements of market intelligence necessary to determine approaches to the market. In the present study, the five sequential stages of analyzing market opportunity were applied to a case study assessing expansion of air cargo operations at "Small City" airport (name disguised for confidentiality purposes). Description of the study and findings resulting from the MOA process are described below.

A CASE STUDY

The authors were asked by Small City Airport Authority to explore the feasibility of expanding its air cargo operations. Small City is within 500 miles of six major cargo airports and within 1,000 miles of 70 percent of the United States population. It is located in the southeastern U.S., close to rail transportation and interstate highways. Current air cargo operations were neither consistent nor growing, yet the airport authority believed its central location and ready access to complementary modes of transportation were features attractive to air cargo customers. The primary objective of expansion was to contribute to the economic development of the city and the surrounding counties. To determine the feasibility of expanding air cargo at this airport, the research team conducted a market opportunity analysis. Following the MOA, recommendations were made to the Small City Airport Authority regarding appropriate markets and customers to pursue. A business plan was prepared to help the airport authority pursue expansion of its operations.

In order to ensure valid and repeatable results, data for the analysis were systematically collected in a manner similar to Yin's case study approach (1994). Case study methodology calls for the use of a variety of evidence primary resources being interviews, direct observation, company documents, and the literature. For this study, a data collection protocol was used to guide collection of the market, customer, competitor, and supplier evidence. The protocol included questions that were asked of the informants and plans for collecting other evidence such as company documents and records. An iterative nature of comparing, explaining, and revising the data interpretation was used in order to draw conclusions about the market opportunity. Each of the steps in the MOA process conducted in this study is described in more detail below.

Macroenvironmental Analysis

The research team began the MOA process by analyzing the macroenvironment to determine the forces shaping air cargo market opportunities. Recent estimates position air cargo as a $150 billion industry (Ott 2001). The amount of freight shipped via air has been growing approximately 6 percent over the past several years due to various trends, such as increased demand for time-specific transportation services, global manufacturing, and decreases in air cargo prices (Scherck 1998; Pettit 1999; Clancy and Hoppin 2001). This trend was interrupted in 2001 as air cargo traffic fell 5.9 percent due to economic recession, collapse of the "technology bubble," new trade barriers and regulations, and modal competition (Boeing 2002). For example, industry experts have noted the 2001 softening of the U.S. economy shifted freight volume from air to trucking. In addition, the reduction in passenger air travel due to the events of September 11, 2001 had a negative effect on the shipment of air cargo (Schapiro 2001). However, cargo operations rebounded much faster than passenger operations; the 20 percent reduction in flights did not hurt the amount of freight shipped since most flights were already operating under capacity. Air cargo is also expected to be one of the first industries to recover from an economic recession because inventories are depleted, supply chains are shorter, and the need for time-specific transportation services has not diminished (Page 2001).

The beginning of 2002 showed signs of recovery as monthly volumes of air cargo began to increase once again. Growth is expected to expand over the next two decades, especially in the Asian market, at an average annual rate of 6.4 percent (Boeing 2002). Transportation exchange providers on the Internet have contributed to this growth--their ability to match providers with shippers has brought increased traffic to some carriers (Boeing 2002). While total air cargo is expected to increase, the international express market is expected to grow at a much larger rate of 17 percent (Boeing 2002). This market segment, with FedEx and UPS the principle players, comprises over 60 percent of U.S. cargo. Much of this is due to increased demand for just-in-time deliveries, which require more frequent, but smaller shipments (Buxbaum 2003).

The above macroenvironmental trend information was easily elicited from the academic and trade literature through searches on "air cargo" and "air freight." For specific U.S. information, the Department of Transportation and the Department of Commerce publish annual statistics on various aspects of transportation modes (see the respective government Web sites for more details). Factors that impacted these trends were also found in the literature. For example, the demand for more time-specific transportation, short product lifecycles, global sourcing or manufacturing, reduction of inventories, and the state of the economy all contribute to the decision of how to distribute a product. The presence of these types of factors needs to be determined to anticipate the future impact on air cargo.

Market Definition

Factors revealed in the macroenvironmental analysis shed light on the major markets in which air cargo competes. To determine the specific markets in which this service competes, the research team conducted further analysis of the academic and trade literature, as well as interviews with freight forwarders and airport authority personnel at several U.S. airports. The specific market segments identified included extremely high value products such as jewelry, luxury automobiles, and race horses; perishables such as fresh foods, flowers, and seasonal apparel; just-in-time products such as electronics and auto parts; and other time-sensitive products such as medical supplies and pharmaceuticals. When time becomes a primary consideration for delivery, air transportation is the mode of choice. Trends in just-in-time shipping--indicating smaller, more frequent shipments--point to increased use of express or courier services for shorter distances at a premium price.

Essentially, the service offering in this case study is defined as efficient, expedient delivery of goods. The product market-or services considered to be substitutable-includes any mode of transportation that can offer timely, cost-effective delivery, taking into account the nature of the product being delivered and the distance and infrastructure from origin to destination. Much of the air cargo industry consists of the shipment of goods internationally as this is the only mode that can provide expedient delivery of goods when traveling great distances.

A critical outcome of delineating the market is definition of the end-use customer of efficient, expedient delivery. In this case study, the end-use customer was identified as organizations responsible for scheduling delivery of products in the above-mentioned market segments, including freight forwarders and third-party providers that specialize in air cargo services, and manufacturers in those industries described previously that frequently use air transportation.

Customer Analysis

To understand the needs of customers defined in the previous step, several current and potential end-use customers of Small City air cargo services were interviewed. Specifically, potential customer interviewees were asked to describe the service and facility characteristics they consider necessary for conducting air cargo business at an airport. Those identified were the following:

* Volume of inbound and outbound freight, i.e., an industrial base to feed volume;

* Frequency of flights to handle capacity;

* Existence of/capability to accommodate international flights;

* Quick turn-around (in and out in a timely manner);

* Reliable flight and ground operations;

* Evening through early morning flights and services;

* Availability of space, systems, and support personnel;

* Clear, consistent operations processes;

* Adequate highway infrastructure for ground transport to and from the airport;

* Low, competitive costs; and

* Consistent passenger services, which typically provide additional belly cargo volume potential.

Most air cargo service providers believe opportunities exist for smaller airports to expand operations. Any airport able to provide the service and facility characteristics that customers require and provide them better than the competition can succeed in expanding air cargo operations.

Competitor Analysis

As stated in the MOA section, it is important to understand the capabilities of the competition in order to determine the true opportunity to enter a market. For the Small City analysis, competitors were identified using the criteria of geography, market characteristics, and current cargo volume. The airports selected for competitive analysis included those airports that were located near Small City, airports in cities that had similar market characteristics, and other airports in the U.S. that had recently begun start-up or expansion of their air cargo operations. Maps, airport and community Web sites, interviews with airport authority personnel, interviews with air freight companies, and literature searches on air cargo operations were all used to identify and gather information on the competing airports.

From this analysis, a total of seventeen airports were analyzed for their competitive cargo capabilities. Necessary capabilities were identified in the interviews with potential customers (see customer analysis section above). Using information from the airport Web sites, phone calls, or visits to the airport authorities, along with customer interviews, each of the seventeen competing airports was analyzed on the following criteria:

* Flight capabilities (including number of runways, length and strength of runways, current volume of cargo handled, and flight capacity);

* Service capabilities (including hours of operation, facility characteristics, current cargo companies, maintenance availability, customs availability, and foreign trade zone status);

* Fees charged for flights and ground operations;

* Accessibility to other modes of transportation; and

* Typical products handled.

Runway length and strength are necessary factors in determining the size of aircraft that can be accommodated. Larger aircraft typically used for international cargo flights generally require longer runways and greater pavement strength than that required for smaller, shorter domestic cargo flights (PB Aviation 2000). An additional runway characteristic identified as important by interviewees was lighting. Air cargo operations occur primarily during night hours, requiring sufficient lighting for precision landing. Foreign Trade Zones (FFZ) are customs-privileged areas where foreign goods can be imported for storage and/or processing while tariffs and quota limits are postponed until the products leave the designated area (Caetora 1996). FTZs can be used to attract international air cargo volume. Ground transportation characteristics such as highway infrastructure are important to trucking companies and to integrator/express carriers who provide complete door-to-door service, including air transport and ground pickup and delivery. Additional services that should be available to support cargo carriers, integrators, and forwarders on a twenty-four-hour basis include accessibility to customs and brokers, fueling and maintenance services, and adequate apron space and lighting for cargo handling and aircraft maintenance.

After analyzing each competitive airport on the degree to which they possessed the above criteria, the airports were ranked based on their capabilities. Consequently, five airports were considered direct competitors with superior capabilities and were used to benchmark Small City in the analysis of their capabilities. Table 1 provides a summary of the type of benchmark characteristics on which these airports were assessed.

Supplier Analysis

A complete assessment of market opportunity requires analysis of the supplier base. In the present case study, suppliers were determined to be manufacturers of the products shipped via air cargo. As such, the supplier or shipper might also be considered a customer, although it is more likely the supplier contracts with a freight forwarder or other third-party provider to schedule delivery of products from origin to destination. The supplying industries included in the analysis consisted of those identified in the market definition section, namely high value items, products considered just-in-time, perishable items and other short lifecycle products, and time-sensitive items. To assess the supplier base, information was gathered and analyzed using a review of trade and academic literature, and interviews with industry representatives to discern the availability of supply, as well as the needs of suppliers near Small City related to air cargo.

High value items such as expensive automobiles, race horses, jewelry, and certain machine products and parts are of such high value that the expense of air transportation is justified when compared to the cost of holding the product in inventory for a slower mode of transportation. Products considered perishable, such as clothing and other short lifecycle products, fresh food items, or products considered just-in-time, such as electronics and auto parts, need to reach their destination quickly. For these products, particularly if traveling long distances, air transportation must be used. These products, however, are not representative of their entire industries and, therefore, could not solely support the operation of an air cargo facility.

The need for fruits, vegetables, and other perishables to be delivered as fresh as the day they were picked makes time and condition crucial. However, due to refrigeration technology and the fact that these items are heavy, low-value products, surface carriage remains the most efficient and economic mode of transportation. Air transportation is used in this industry only for the transport of higher-value berries and greens, as well as fish from Central and South America (Thuermer 1999). The volume for these limited food products requiring air transport is also insufficient to solely sustain an air cargo start-up operation.

The authors did find a few supplying industries that appeared to be promising opportunities for Small City. Fresh-cut flowers are flown from South America directly into Miami. Due to the congestion in Miami (Ferris 2000), which is the principal gateway from Central and South America, diverting shipments into a less congested and more centrally located cargo facility was considered a feasible alternative for this industry.

Medical supplies and devices comprise a $150 billion dollar market that is expected to increase (Standard and Poor's 2000). This market includes commodity items, as well as value-added products. The commodity items are lower in value and are typically transported via motor carrier. The value-added products and those that are perishable, such as research specimens, are considered just-in-time shipments and must be air shipped (Krause 2000). Although many of these are emergency items and cannot be planned ahead of time, a substantial volume of regularly planned shipments does exist. The consistent level of volume in this industry was sufficient to support start-up operations in a small, centrally located air cargo facility.

Another industry with substantial and consistent volume that is attractive for air transport is pharmaceuticals. The U.S. consumes 40.5 percent of the world's pharmaceuticals (Standard and Poor's 2000); however, most are produced offshore. The pharmaceutical industry revenue was $333 billion in 1999, and growth is predicted to remain strong and constant (Standard and Poor's 2000). This industry has the following characteristics:

* High-value products (cost-effective to pay more for transportation);

* Time-sensitive products (many have a limited shelf-life);

* Manufacturers operating with little or no buffer inventory (minimized inventory due to risk and cost); and

* Products that must travel globally to get to markets.

Each of these characteristics points to air transportation as the most effective means of shipment. The bulk of pharmaceutical shipments into the U.S. is handled by freight forwarders and air cargo specialists. While the southeastern region accounts for 26 percent of all U.S. pharmaceutical sales (United States Census 1999; Drug Store News 2000), the majority of air traffic for this industry flies into Newark, New Jersey and Philadelphia, Pennsylvania, both highly congested air traffic areas in the northeastern United States. As such, airports that offer less congestion, better service, and central location are likely to capture some of the substantial pharmaceutical air cargo business that cannot be sufficiently accommodated in the current airports serving the industry.

In summary, analysis of the supplier base revealed shippers that rely on air transportation are currently inadequately served by the airports into which they are flying, and have sufficient volume to accommodate start-up air cargo operations at smaller, well equipped, centrally located airports. Those that shipped via express or courier service were briefly considered; however, the current providers in that market (e.g. FedEx, UPS, Emery, Airborne Express, etc.) are so deeply entrenched that it did not seem reasonable to seriously consider this for Small City. Specifically, the three promising industries included fresh-cut flowers, medical supplies and devices, and pharmaceuticals. Pharmaceuticals, in particular, seemed to be the most promising target market for Small City.

Market Demand Forecasting

The fourth step in the MOA involved estimating the demand that Small City airport could expect to capture. The research team started by examining worldwide industry trends, then narrowed this down to the United States, and then to Small City and its surrounding areas. As stated in the Macroenvironmental Analysis section, air cargo worldwide has been growing and is expected to continue to grow. However, air cargo at Small City airport was not following the growth trends of the industry. Other factors were, therefore, taken into account for the assessment. Regional business initiatives to improve the surrounding communities, as well as congestion and capacity issues at competing airports, were likely to positively impact the amount of air freight handled at Small City.

Another factor in estimating potential demand for Small City air cargo services was consideration of the total consumption of the fresh-cut flower, medical supply and devices, and pharmaceutical industries for the population served within a two-day catchment area surrounding Small City airport (United States Census 1999; Drug Store News 2000). This assessment revealed pharmaceuticals as the industry with the largest potential for Small City airport. Additional factors included in demand estimation were passenger enplanement growth rate, low-fare entrant scenarios, and projected air cargo growth rate for the United States.

Evaluation of Market Opportunity

The final step in the MOA process is to assess the organization's capabilities to determine how they align with the market and customer's needs and how they compare against competitors' capabilities. This assessment helps to determine the true market opportunity available to the organization and shape what is needed to implement air cargo operations. For Small City airport, the research team analyzed existing Small City air cargo facilities and service offerings against those desired by customers. The research team also looked at all the criteria used to analyze competitive airports. The result was a list of advantages and disadvantages that Small City airport exhibited in the air cargo market. The objective of this analysis was to exploit the advantages and try to improve as many of the disadvantages as possible.

The research team found that Small City airport had several competitive advantages. One advantage was the budget allocated by Small City to build new air cargo facilities and increase services. While the budget and land appropriation were in place, construction had not yet begun, thus allowing flexibility to customize facilities to customers' needs. Additional advantages included Small City's location in the center of an industrial hub in a growth mode that could feed volume and provide balanced loads. This location is within twenty-four-hour ground delivery of 24 percent of the U. S. population and within forty-eight hours of 71 percent of the U.S. population. The airport has easy access to interstate highways, as well as rail transportation. In addition, much of the land surrounding the airport is available for purchase and commercial construction to build new facilities as necessary. The research team also analyzed Small City's disadvantages and recommended ways to improve them when moving forward. Recommendations included expansion of the main runway to accommodate larger aircraft and international flights, provision of twenty-four-hour operations and support services, and garnering support from the surrounding community to pursue and build industry clusters to support increased cargo volume. From the advantages and disadvantages, the research team was able to make specific recommendations for moving forward with expanding air cargo operations.

Based on the competitive advantages listed above, it was recommended that Small City Airport Authority initially pursue the pharmaceutical industry to increase its air cargo operations. Pharmaceuticals are high-value and time-sensitive products, and a great deal of pharmaceutical manufacturers' operations occurs offshore in Puerto Rico. These factors point to air transportation for pharmaceutical products. The characteristics of this industry closely match Small City's strengths while capitalizing on the weaknesses of the airports currently servicing the pharmaceutical industry. For example, the current runway length at Small City Airport can accommodate the smaller aircraft flying to and from Puerto Rico, and the recommended runway expansion would be able to accommodate the larger aircraft carrying pharmaceutical cargo from Puerto Rico. Also, the industrial commodities exported from Small City and the neighboring states closely match the industry commodities frequently imported to Puerto Rico. In addition, because the majority of current delivery flights are destined for congested northeastern airports, an opportunity exists for a less congested, more centrally located southeastern airport such as Small City to obtain a portion of the growing business. A list of third-party service providers already established as freight forwarders of pharmaceuticals was compiled and supplied to Small City to begin implementation of this business.

MANAGERIAL IMPLICATIONS AND FUTURE RESEARCH OPPORTUNITIES

Air cargo will continue to increase in importance for certain categories of products and their related industries. This potential will not be realized, however, if airports do not plan and build air cargo capabilities to accommodate these increased needs. This capacity increase cannot come entirely from major hub airports, which are already reaching flow capacity limits, both in the air and in their ground operations. Such plans for regional airports will not be effective if the airports do not first understand the nature of air cargo that will flow through their facilities and build the facilities to suit the unique needs of their target customers. The process of a market opportunity analysis, demonstrated here, is an effective way for airport management to assess the macro opportunities available to them, delimit these macro opportunities to specific target industries, design air cargo facilities to meet the specific needs of these industries, and develop marketing plans to solicit and gain air cargo business with these target customers. Different cities have different characteristics, which will make their target industries and customers unique to their own facilities. Thus, following the MOA process presented here may lead to very different targets than Small City derived, but targets specifically suited for those airports. Considering the investment in facilities necessary to build air cargo capabilities, however, implementation of the MOA process should be a prerequisite for any airport authorities undertaking such a plan. Doing so will reduce risk and more effectively focus marketing and planning efforts on selected target markets.

The MOA process presented here can also be applied to other transportation modes besides air cargo. Deriving appropriate target industries and customers for rail and/or truck terminals from an MOA also allows more informed planning of terminal expansions, regardless of the mode. Thus, the MOA process has applicability to any transportation terminal planning effort.

The MOA process provides numerous future research opportunities in transportation and logistics, as well. First, the application of the MOA to other airports to delineate the airport characteristics and the resultant target industries and customers should provide considerable insight into the potential for flow of air cargo goods through various geographic regions, and the types of airports that facilitate these flows. This information would be of considerable value in understanding the future of the air cargo industry from both a macro and micro perspective.

Second, MOA can be applied not only to other modes of transportation, but also to other logistics activities. Each offering has specific nuances that are particular to it and that might moderate the results of such an analysis (i.e., the target markets chosen, based upon the environment and the inherent advantages and disadvantages of the mode or logistics activity). These should be explored along with the next logical step: factors necessary to implement the results (i.e., plans to pursue the target markets identified). Again, additional research into the market characteristics of multiple modes and multiple logistics services, the customer values they create, and plans to pursue those target markets could all provide considerable insight into the macro and micro nature of these industries and their potential growth trends.

Finally, extension of the process described in this article to specific companies would explore the applicability of analysis of market opportunities and the use of the results to design company-specific logistics systems. In addition, analyzing market opportunities allows companies that excel in logistics to better leverage this competency in their chosen target markets. The results should provide considerable insight into the further integration of logistics and marketing processes in the pursuit of competitive advantage.

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Table 1. Competitor Analysis Summary

Competitor   Runways         Facility     Cargo         Capabilities
             (feet)          Size         Volume
                             (sq. ft.)    (1999 Tons)

C1           9,000           2,000,000    883,149       International
             10,000                                     status
             11,889

C2           7,500           400,000      201,222       International
             8,845                                      status
             10,000

C3           12,000          20,000,000   84,981        International
                                                        status

C4           8,936           3,396,115    2,414,001     International
             9,000                                      status
             9,319
             11,100 (under
             construction)

C5           7,700           91,000       57,523        International
             8,000                                      status
             11,030

Competitor   Accessibility   Providers       Other

C1           3 major         Cargo           Tradeport with offices
             interstate      airlines,       and warehouse services,
             highways        charters,       perishables and
                             expediters,     equine facilities
                             forwarders,
                             third parties

C2           2 major         Cargo           Perishables facility,
             interstate      airlines,       planning animal facility
             highways        expediters,     and intermodal
                             forwarders,     complex
                             third parties

C3           2 major         Cargo           Multimodal, handle
             interstate      airlines,       textiles/pharmaceuticals
             highways        expediters,
                             forwarders,
                             third parties

C4           2 major         Cargo           Apron space to
             interstate      airlines,       accommodate over 150
             highways        expediters,     narrow and wide body
                             forwarders      aircraft

C5           3 major         Cargo           Handle electronics/
             interstate      airlines,       automotive
             highways        expediters,     components, 2 main-deck
                             forwarders      cargo loaders for
                                             wide body aircraft

Ms. Golicic is assistant professor, University of Oregon, Eugene, Oregon 97403.

Ms. McCarthy is assistant professor, Lehigh University, Bethlehem, Pennsylvania 18015. Mr. Mentzer is Bruce Excellence Chair of Business, University of Tennessee, Knoxville, Tennessee 37996-0530; e-mail: jmentzer@utk.edu.