Monday, December 2, 2019
Marketing Plan of Emirates Airline Essay Example
Marketing Plan of Emirates Airline Paper Introduction With just purely two aircrafts, the Emirates airline was established in the year 1985 by the ministry of Dubai. After two decades Emirates has expanded its empire with 83 aircrafts soaring to 78 destinations in more than 55 countries worldwide. Emirates Airlines has a one of the largest number of cabin crews hailing from 95 different nationals. With such strong history Emirates Airlines are still venturing further in to the future. They have recently made orders which are worth more than 26 billion US dollars for about 45 numbers of A380 Airbus. This will make the company to be the worlds largest purchaser of Super-Jumbo Air bus. Emirates Airline is expected to become not only one of the greatest budding airlines but also the fifth most gainful airline in the world. Emirates Airlines is devoted to accomplish its mission. By installing individual entertainment system in all of its classes, having 22 audio 18 TV channels, as well as enabling customers to not only book online, search for flights but also to choose their seating arena consequently this airline is identified as a pioneering and customer-oriented contributor of advanced services because of these outstanding features. Emirates empowered over 280 international awards, one of them being the prestigious CAPA airline of the year award 2005 by the Centre for Asia Pacific Aviation. BUSINESS OVERVIEW We will write a custom essay sample on Marketing Plan of Emirates Airline specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Marketing Plan of Emirates Airline specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Marketing Plan of Emirates Airline specifically for you FOR ONLY $16.38 $13.9/page Hire Writer General Profile of the Airline Industry Today it is definitely the airline industry which is booming to be the most spirited and emerging industries in the world leading to not only economic growth, international investment, but also tourism. In the last decade, airline industry has urbanized powerfully by 7% annually for both business as well as relaxation needs. This industry is one among the best ever growing sectors with growth rates increasing on average of 3. 2 times greater than the GDP rates. This figure is predicted to rise by an average of 5 % a year from 2000 to 2010. Sometimes the airline industry is affected by the political, economical and trade factors. Taking an example of the political factors, the September 11th attack dropped the number of passengers who travel, because people were afraid of being attacked by terrorists. The economical factor which gets affected is due to increase in oil prices which shatters the profit of the global airline industry. Many airline companies initiated to modify their strategies and services not to just dwell but also to succeed in the airline industry. They invest deeply in the quality of services by introducing e-booking system, more comfortable seats for passengers, low cost carriers, new interactive entertainment systems and many other technological techniques. The ideas behind introducing these services were to magnetize customers faith also to gain a competitive advantage. To survive in such a challenging market, many companies set on agreeing with each other to reduce costs and also share the available resources, which is otherwise called as alliance. On the whole, the airline industry is expected to double the number of passengers by 2010 and also to exceed 3 billion due to the trade, economic development and tourism. Thus obeying the theory, survival of the fittest, successful airlines will be those that can continue to play smart by putting into action the above ideas so as to secure a strong position in the aviation market. Competitors Overview and Situation analysis The airline industry is in its prime of life, hence there is a tough competition in the market and the rate of sales growing faster before beginning to stabilize gradually. In this stage advertising and promoting sales makes it obvious that the competition is getting more aggressive. Furthermore to find best services required in gaining the attention of customers, many competitors have increased their research and development (RD) budgets. In view of this, many companies have now started on focusing to differentiate their products and services from their competitors in order to capture their customers brand loyalty. For case in point, there are companies concentrating on cutting the operating cost, the result is that the profit margin will decrease and so the least efficient companies will have to leave the market so that only the well-established companies remain. There are many companies which use offensive strategies instead of defensive strategies. They achieve this through modifying their market product and arketing mix to survive and compete during this stage. For instances to modifying the marketing mix, the Kuwait airways implemented the strategy by launching a low cost carriers with the intention of increasing its customer base and loyalty and also increasing sales of. The Competitors Emirates airlines are facing stiff competition with major international and national airlines on the market shares. However the major competitors identified here are the national airlines of other states of UAE. Air Arabia Air Arabia, a national airline of the Sharjah emirate is established in 2003 by Sharjah rulers decree. It is based in Sharjah airport and has got quick access to Dubai and fast check-in facility. Air Arabia is the only low-fare airline in UAE and the first airline to introduce the low budget airline in Middle East and Northern Africa since 2004. After success stories of American and European low-cost airlines Air Arabia modeled low fares on customized local preferences. They focused on their business mission by offering most convenient and frequent online booking as well as less expensive air fares in the market with better service and safety standards. Air Arabias worthy scheme Pay less. Fly more, enables customers to make smart travel choice; those who cant afford and were hesitant to travel in the past, to start flying and those who traveled more frequently, benefiting both and vacation travels. Etihad Airways Etihad Airways first captured the skies in November 2003, with only four member team organization. Now it stretched out to a family of over 2500 employees spread across region. Etihad airline has also reputed as the national airline of the UAE (Abu Dhabi) by a royal decree of Sheikh Khalifa bin Zayed Al Nahyan (President of UAE) with investment of AED 500 million. Compared to 2006, Etihad conceded more than 4. 6 million passengers in 2007. It has also been designated as the Worlds leading New Airline two years in a row, in 2004 and 2005. RAK Airways The fourth national airline of the UAE is RAK Airways which was established under an Emiri Decree by Ruler of Ras Al Khaimah in February 2006 The core intention of RAK Airways is to give support to the economic development of Ras Al Khaima. The development includes economic free zones to magnetize business as well as residential, leisure and tourism projects. This Airways function on charter as well as scheduled services so as to assemble the demand of the various markets that the airline will serve. In a cost successful manner they provide value for money to customers Emirates competitive advantage To gain a competitive advantage amongst its competitors Emirates Airlines adopts differentiation generic strategy by contributing the top notch quality services. This is done to be the best company in the market and to segregate from its competitors. For illustration, the first airline that offered TV screen for all classes was Emirates airways. Another instance, along with other airline company like Qatar Airways, Emirates airlines provided training courses by using the most modern machines, called plane simulator. This was a feather to the hat of Emirates airlines. The aim of such change is to be on top of the industry thus increase the awareness nationally and internationally which in turn increase the demand and the profit. STRATEGIC MARKETING FOCUS In this section we shall take a peek into mission, goals, core competencies and external and internal environments in regard to the Emirates airlines. 3. A Mission Offering consistently high-quality value-for-money service and to be the best airline on all of its routes. Emirates airline is determined to accomplish its mission by positioning itself as a long-term sustainable business providing value to its customers, employees and investors. 3. B Goals Discussing the goals, they are states as below: ?Focusing on maximizing the overall Groupââ¬â¢s return on capital. ?To be diverse and hence balance to the Groupââ¬â¢s earning streams Take full advantage of the groupââ¬â¢s competencies in market. Objectives Tangible objectives pertaining to the goals are : Retain and improve frequent business class travelerââ¬â¢s market share. ?Increase market share 40% to 55% by end of 2009 ?Tap low cost carriers market to achieve companyââ¬â¢s return on investment. ?Promote Dubaiââ¬â¢s Tourism activities and introduce Dubai to the world. 3C- Values Emirates Airlines has valuable human resources as well as a bunch of well qualified staff. The vice-chairman of the airline itself has more than 50 years of experience in the aviation industry. The airline also provides outstanding training to its staff and is devoted on improving their skills not considering the costs. In addition, Emirates Airlines is the international carrier of Dubai which is a politically stable area and has a strategic location especially for transit passengers. 3. D Core Competencies Various key factors should be implemented to sustain airline companiesââ¬â¢ achievement. Differentiation By providing advanced services airline companies tend to differentiate each other. For instance, the best way to invite customers and to distinguish the company from competitors is by providing the aircraft with the latest technology, such as wide seats, e-ticketing, etc. Strong brand name By obtaining a strong brand name it is easy to build a base of loyal customers. This guarantees that customers will stick with the strong brand name company and hence ignore any attractive offers coming from other competitors. There are airline companies utilizing some techniques such as offering a flyer mile to win a free ticket if the points were completed to retain their customers, Alliances As discussed earlier we are aware of alliance. By linking networks, alliance will allow different companies to share their resources so as to build a wide base of customers, expand services and increase number of routes. Moreover, the outcome of this is in sharing experience and decreasing the operation costs. Relations with supplier To construct a strong relation with suppliers the Airline companies must emphasis by setting long-term contracts. Such relations will be beneficial since this will keep them in the safe side even if there was any change in the pricing strategy in the future as there is a contract between them. 3. D External Environment PEST Analysis for Emirates PoliticalPolitical situations that affect the airline industry will be mainly wars and terrorism. For instance, due to the terrorist activities in different areas of the globe, namely in USA, Palestine, Iraq etc made these areas unpleasant for not just tourists but businessmen to travel. Economical One of the factors following the success of any airlines is to have the most sophisticated airports which are facilitated with cutting edge technologies to meet customerââ¬â¢s requirements. UAE has major plans on investing to develop such international airports in Abu Dhabi and Dubai. The benefits are to enhance the economical growth, reduction on oil revenues, to increase the number of tourists plus thereby driving profits to airline firms. Social The population of the world is shooting at high rates. Thus the social factors also increase. For instance, the population is expanding in UAE, this there is because UAE is a multicultural country. As the expatriates number in UAE increase, the profit obtained by the airline company also increase. Technological New technologies affect this industry in negative and positive manner. For example, the teleconferencing reduced the necessity for face to face business meetings. This reduced the number of businessmen traveling and hence the purchase of business tickets. 3. E Internal Environment SWOT analysis for Emirates Strengths ?Member of Arab alliance ( Arab Air) ?First Airline Company to offer Internet booking with various features and options. ?Self-Check in facility for customers in Dubai and partner airports. ?Long-haul flights Dubai to New York ?Worlds largest purchaser of Airbus by 2012 , booking 45 Airbus air crafts. ?Increasing employees devotion to work by providing training , rewards and performance analysis. ?Official sponsor of FIFA World Cup 2006. ?Skywards Miles FFP shared with many airlines including Sri Lankan airways Weakness Huge investment to purchase air planes and implementing latest technologies there is high amount of operational cost. ?Emirates airlines fares are higher than traditional airlines. ?No global alliance membership for Emirates Airlines No permission to operate in Abu Dhabi , capital of UAE Opportunity ?UAE ââ¬Ës higher per cap income ?Government is disposing money to develop regional airports. ?High forecasted growth rate for UAE tourists ?Growth on population and internet usages lighten World and Dubai makes room for opportunity. ?Dubai Air shows helps to promote regional aviation industry. Threat Might face losses of around 5 billion due to soaring oil prices ? Aviation security expenses and insurance will also increase operational expenses of airlines industry. ?Low cost carriers are another threat for traditional airline operators. ?Information security vulnerabilities poses danger to electronic ticket system ? Natural disaster and acute diseases affect tourism In a nut shell, Emirates Airlines has strengths like new technology, such as e-ticketing and self check-in services. An evident weakness is the elevated prices of Emirates due to its huge investments in ordering aircrafts. Although it has opportunitie s like investments in Abu Dhabi airport there are many threats are concerning it, such as increase of oil prices, low cost airlines and the spread of killer diseases. MARKETING PLAN 4. A Target Market Over the last few years, Emirates Airlines is one of the air carrier, which barely felt the economic and airline down turn. Emirates Airlines is one of the airlines, which hardly felt the economic and aviation down-turn of the last few years. Emirates airlines market segment is divided into three major categories of customers 4. A. 1 UAEs Tourism and Business segment Customers Dubais emergence as a regional business and tourism hub has provided emirates airlines plenty of room for growth and has fuelled regional air passenger traffic. The recent freehold ownership law has been a major reason for the attraction of tourists and business communities. Dubai aims to attract 15 million visitors by the year of 2010, the ruler of Dubai has emphasized about this on his strategic plan for the emirate of Dubai. The growth of the region especially GCCs is now started stimulating tourism and business sector and providing room for local airlines to further grow. According to World Travel and Tourism Council (WTTC) Middle East accounted for around 2. 4 % global travel and tourism activity in 2006, forecasting a growth of 5. 9 % for the coming years. Emirates should plan to take advantage of this boom for increasing their passenger traffic. 4. A. 2 Expatriates in UAE UAE worlds 5th largest Crude Oil exporter and Dubai worlds fastest growing city has created huge demand of skilled and unskilled workforce to feed its booming economy and emerging labor market, the highly paid labor market is a major attraction for the various work force around the world. The overall expatriate population of the country equals 80% of its total population; the national emirate population is 20% of the total population. United Arab Emirates has got large amount diverse populations in the Middle East. As per the 2006 censes the total population of UAE is 4. 2 million consisting of the national emirate(20%) , other Arab and Iranian (23%) , South Asian (50%) and other (8%) constituting Westerners and east Asians. The diversity of this population enables emirates to plan their route all around the world; emirates have reached mutual agreement with almost all the national authorities around the world to operate in. Dubai operates in an open sky policy, which allows any carrier to compete with Emirates airlines. 4. A. 3 Transit passengers Dubai is the operational hub for Emirates airlines, the best positioned connection point between Europe and Asia/Australia has supported the growth of emirates airlines. Emirates airlines has been using this connection point in favor of promoting their business especially transit passengers, the well established and marketed wide range network enables Emirates Airlines to prosper in this particular segment. Emirates airlines presently operates 87 cities in 59 nations around the world (still growing). Additionally to accommodate the growth in the sector Dubai airport authorities are invested $4. 1 billion in the expansion of Dubai Airport, The Fly Emirates caption is well known to the world and attracting customers from around the world. 4. B Intended Strategies Airline industry achieved in the mature stage and there is a tough competition between various operators. According to the analysis of external and internal factors each airlines uses offensive strategies to secure their position on market. Emirates adopts below marketing strategies to operate business efficiently. 4. B. 1 Market Penetration (Improving In-Flight Services) Business focuses on selling existing products to existing markets drives growth strategy for Market Penetration. 1)Retain and boost market share of Emirate airlines product and services 2)Protect market dominance of Emirates airlines existing markets. 3)Driving out competitors by restructuring mature market. 4)Enhance usage of existing passengers Enabling passengers to make voice and data call over aircraftââ¬â¢s telecom system Tele-communication is vital element in everyone daily life, So communicating with others while on airplane would be very good value added service can provide by Emirates Airlines. This can be done by adding some infrastructural changes on aircraft to communicate and partnership with telecom provider who can assist deploy. Currently Emirates uses high expensive tele-communication method to make voice calls and internet, instead can deploy new system to make voice and data calls from traveler mobile phone via trusted telecom providers. Passengerââ¬â¢s mobile phone should be beam signal to the ground satellite system and from Immarsat which is already installed on most of the Emirates airplanes. Similar service, ââ¬Å"On Airâ⬠is being developed by Airbus SAS and air transport IT service provider SITA. Early of this year British carrier BMi and TAP-Air signed on to offer OnAirââ¬â¢s voice and text messaging services for European flights. 4. B. 2 Market development: (Extending New Routes) Deploying current services into new markets where company seeks to sell its products into new areas. Possible way to achieve this strategy by launching existing services into new geographical area or new market segments. Emirates Airlineââ¬â¢s objective is to build up Dubai into a widespread aviation center that will finally serve as an important universal long haul hub. It provides an alternative to the traditional European airline hubs like Heathrow Airport (London), Charles De Gaulle (Paris) and Schiphol (Amsterdam). The airline heavily promotes Dubai as a destination, offering reduced hotel rates as well as insight into events like the Dubai Shopping Festival, hoping to attract more visitors to the city. Adding new routes and destinations are suggested , especially there is growth in UAE tourism. Major regions are not operated by Emirates Airlines and have to extend some of the destination world-wide (especially attractive areas) As always, the airline conducted road shows and press conferences to announce its entry into a new city. These events allow travel agents, tour operators and local airline personnel in contact and gain information about Emiratesââ¬â¢ new routes, holiday packages and other benefits. After establishing a route to the countryââ¬â¢s economic hub ââ¬â Shanghai ââ¬â the irline offers passengers a chance to visit the epicenter of Chinaââ¬â¢s political and cultural activities. It is Chinaââ¬â¢s richest city in terms of historical value and has a heritage that dates back over 3000 years and houses marvels as the Forbidden City, the Great Wall of China and the Ming Tombs The success of Dubai as an intercontinental hub has been facilitated by airlin es such as Emirates. The geocentric nature of Dubai has become incredibly important. Now there are hardly two points on the globe where it is not logical or possible to use Dubai and connect any two cities, and usually it is a pretty direct route. . B. 3 Product Development (Private Suite) Introducing new services into existing markets implies product development. This strategy involves the development of fresh competencies and requires business to expand customized services which can apply to current markets. Since Dubai is a hub for all international business travelers this is high time to introduce new product to cater top level business executives. Imagine the CEO of multi-national company makes lengthy overseas journey to attend a board meeting that could have a major impact on the company financials. Of course, company wants CEO to be top of his game, rested, refreshed, relaxed and ready. The cost of CEOââ¬â¢s air travel is doesnââ¬â¢t seem so expensive after all. Thatââ¬â¢s why Emirate Airlines introduce high quality first class private lounges to attract business travelers. This premium class private suite would be fully outfitted with personal storage, coat cabinet, desk and individual mini bar. Long seat reclines to become fully horizontal couch and the 21â⬠wide screen entertainment over 500 channels. Exceptional level of personal services including a la-carte gourmet cousins and wide-ranging wines provided by specially trained multi-lingual cabin crews are the other value addition for this product. 4. B. 4 Diversification: (Low-cost carrier) Diversification is a strategy, where business sells new services into new market segments. Diversification is more risky strategy due to limited experience on particular new market areas. After the success stories of European low cost carriers, Middle East operators also started eyeing to explore new marketing concepts of Frills-free fly. The global low cost carrier sector is growing at more than three times the average industry global rate, with just under 50 million seats on 342,000 LCC services offered worldwide in January 2007, up 17% and 15% year-on-year, respectively. Low cost carriers are airlines that offer lower fares than traditional network airlines by eliminating certain complementary passenger amenities generally offered by traditional airlines. The key opportunity for low cost carrier lies in passenger fare elasticity, low air transport penetration rates and substation of traditional modes of low-cost transport such as trains and buses. Air Arabia dominates exclusively to this low cost carrier service in UAE, Emirates Airlines must decide how to respond this threat posed to the large expatriate market in UAE. Among the options considered there is scope to introduce low-cost subsidiary of Emirates Airlines. Emirates Airlines be supposed to diversify slightly from current marketing objectives to acquire low cost air travel market share and to retain its customer base of UAE expatriate market. This can be done launching new subsidiary to cater budget airline market. Key routes should be according to the high demand and large number of expatriates home country like Egypt, India and Pakistan. Under the arm of Emirate Airlines, new budget airline subsidiary has to introduce to new Al-Makthoum Inter-national Airport being constructed in Jebel Ali, located on Dubai border. This will provide residents of Dubai and Northern emirates enhanced travel option to neighboring destinations. Emirates Airlines is placing lease order of for 200 aircraft and to be operational by 2009. The carrier is expected to use Airbus A320 or a Boeing 737 on lease basis for the first few years prior to acquiring ownership status. Similar practices already succeeded the case of Kuwait airways and they implements the strategy of modifying marketing mix by beginning a low-cost carrier called Al-Jazeera in order to enhance its passenger base and loyalty and boost in sales. Business strategy over Ansoffââ¬â¢s growth matrix Ansoffââ¬â¢s product/market growth matrix provides for a business tends to grow depend on whether it sells new or current services in new or current markets. New products and new markets could relate to current products and current markets or may possibly distant and discrete. The result from the Ansoffââ¬â¢s product/market matrix is chain of recommended growth strategies that set the road of business strategy. Figure: Ansoffââ¬â¢s growth matrix EVALUATION After marketing plan is implemented, it should be evaluated. Evaluation entails gauging the extent to which marketing objectives have been achieved during the specified time period. Below table demonstrate effectiveness of marketing strategies and counter-measure to improve/replace current plan. Improving In-Flight Services Success criteria of deploying a system to allow passenger to use their mobile phones to use voice and data communication is to increase market penetration. It can be measured in terms of voice and data usage and growth of market penetration. There is not corrective action plan if it fails to respond. Extending new routes New destinations are implemented to achieve market development. Flight occupancy is the best way to measure result of this strategy. It needs to re-discover new destination if the flight occupancy level is lower than expected. First Class Private Suites Itââ¬â¢s a new product of Emirates Airlines and can be measured the success of the product launch. Quantitative measurement of this product would be number of booking or occupancy. If it fails to respond, corrective plan is to reduce the price of ticket but again this is not price sensitive product and cannot be achieved by price reduction. Budget Airlines Success criteria would be capturing new customer base for the airline . Since its separate operating entity we can gauge financial results of operating profit would be good measure to evaluate the success of budget airline subsidiary. Effectiveness should be identified through external marketing auditor or agencies. A market audit helps management allocate marketing resources efficiently. Market audit should be comprehensive, systematic, periodic evaluation of the objectives strategies, structure and performance of the marketing organization. IMPLEMENTATION PLANS BUDGET Strategy # 1 (Market Penetration) Strategic Program Deployment a system to passenger to make voice and data call from their mobile phones Implementation Tasks Technical Study Feasibility Study Partnering strategic alliance with telecom service providers. Installation of system on aircrafts Marketing concepts to the audience Responsible Chief Technology Officer Vice President ââ¬â Finance General Manager ââ¬â Marketing Time Scale New service launch would be 1st January 2009 Cost Factors Approximate Budget 150,000 for each aircraft Marketing Budget 150,000 Strategy # 2 (Market Development) Strategic ProgramOperating new routes and destinations Implementation Tasks Researching market gap to operate new routes Feasibility Study Partnering hotels and tourist institutions at new destinations Partnering strategic alliance with local airports to operate Marketing new routes to the target market Responsible Vice President ââ¬â Finance Vice Present Operations General Manager ââ¬â Marketing Time Scale Four new routes are added every quarter starting from January 2009 Cost Factors Additional capital investment for new aircrafts USD 200 million Marketing budget for each route 0. 5 million Strategy # 3 (Product Development) Strategic ProgramIntroducing new First Class Private Suite Implementation Tasks Technical Study Feasibility Study Installation and modification of aircraftââ¬â¢s onboard faclilities Marketing concepts to the audience Responsible Chief Aircraft officer Vice President ââ¬â Operations Vice President ââ¬â Finance General Manager ââ¬â Marketing Time Scale New service launch would be 1st January 2009 Cost Factors Approximate Budget 300,000 for each aircraft Marketing Budget 150,000 Strategy # 4 (Diversification) Strategic ProgramLow cost carrier subsidiary Implementation Tasks Market Study Feasibility Study Leasing and buying used aircraft for operations Deploying new set of human resources for this subsidiary Developing Marketing force for the new target customers Marketing concepts to the audience Responsible President Chief Executive Officer Time Scale Mid of 2009 Cost Factors Approximate Budget USD 500 million Conclusion Traveling around the world will always remain as a special interest in the hearts of the people. Hence they are and will be in search for the best for themselves. This will increase the need for better safety as well. Hence it becomes the responsibility for the airline company to deliver their best in terms of services security to their customers. Emirates airlines have always been on top of the airlines list in the UAE. We know UAE is a country with different ethnic groups, and Emirates is the only airline in the country which suits these various cultures. But today as the number of the airline company is increasing there is immense pressure on Emirates airlines to keep up their fame and glory. A strong strategy has been studied and adopted to put words into action. Therefore Emirates with its unique qualities, untiring services and promising strategy will be able to improve in delivering the best efforts in a country like UAE having a mixture of different cultures hence keep their motto fly high! Bibliography Anon. (2005)Emirates expands self check-in service. 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