Question

PURPOSE
The purposes of this assignment are: 1. To prepare a marketing plan for a company. 2. Conduct the necessary studies and analyses which is to be included in the marketing plan. 3. Recommend the appropriate marketing mix strategies, implementation, evaluation and control to realise the marketing goals set in the marketing plan.
INSTRUCTIONS:
Select a low cost airlines over the world such as AirAsia, Norwegian, EasyJet, Jetstar Airways, AirAsia X, WestJet, IndiGo, Southwest Airlines, Eurowings, Scoot, Ryanair, Jetstar Asia, Peach, Jet2.com, Vueling Airlines, PAL Express, Citilink, Air Canada rouge, West Air and Nok Air (for your information this low cost airlines have listed as World’s Best Low-Cost Airlines in 2018). Prepare a practical marketing plan for the chosen company to achieve its marketing goals. The marketing plan should include the following components:
Executive Summary Table of Contents Body 1. Company background 2. Situation analysis 3. SWOT analysis 4. Marketing goals and objectives 5. Marketing strategies (4P)  Product  Price  Distribution channels  Promotion 6. Implementation 7. Evaluation and Control 8. Summary Supplementary References Appendices

. Your assignment should be between 2,000 words to 3,500 words excluding references. The number of words should be shown at the end of your assignment. Do not copy the assignment question and instructions to your answer

Answer 1

Executive Summary

B Airlines is looking to expand its operations in the European holiday industry by opening up new routes to new locations. The company is looking to expand its fleet and offer customers short breaks and various summer and winter holiday packages. This is a unique opportunity for the company to invest a new concept of marketing in the aviation industry. In order to achieve this B Airlines will need to create a demand in the holiday industry by providing a multitude of destination options, on flight services, cheap and competitive fare rates.

B Airlines will have to begin the process of expansion, a marketing strategy plan which incorporates the major ideas of marketing to promote the new holiday packages. This report offers various strategies that can be implemented for the benefit of the airline as well as compete with other airlines. According to the research conducted the direct competitors of B Airline operations will be Easy Jet and Ryan Air as they provide low/cheap fare for both long-haul and short-haul travel. However, these airlines have not completely carved a niche in the holiday market, which will be the main aim of B Airline to provide luxury holidays with little expense.

Overview of B Airlines

B Airline is a small but successful business mainly operating from small regional airports in the North of England with flights to 20 European destinations. The destinations that are catered to are either near major cities or seaside resorts. B Airline currently leases its fleet of 5 Boeing 737-600 planes with the capacity to carry 110 passengers. The current goals for B Airline include:

1. Upgrade its fleet to include planes that are able to hold 150 passengers
2. Increase current number of destinations to 30
3. Expand operations by offering customers holiday packages and short breaks

The market research conducted for the report includes industry trends, market segmentation, an analysis of the various competitors that B Airline will need to interact with, and customer trends/profile. The report develops the marketing strategy for the holiday expansion by following the marketing information system (MIS) approach and comprehending the environmental setting in which the company will be operating in.

Competitor Analysis

The SWOT analysis model enables to determine how B Airline compares to its peers and competitors. For this particular competitor analysis the following information is focused on:

• Air service offered: destinations, carriers, frequency, and aircraft type
• Business and leisure air fares
• Holiday package deals
• History of service at airports in North West England

From the previous section’s market research it is found that B Airline has the following competitors:

• Ryan Air
• Aer Lingus
• Emirates
• British Airways
• Wizz Air
• Easy Jet

  

The following are indirect competitors in terms of providing cheap rates for European holidays which includes the fares of flights and hotels:

• com
• co.uk
• co.uk
• com

Each of the competitors along with their products, brand attributes, and related marketing concepts are described in Figure 6 (See Appendix F). The competitor map highlights the method in which the airline product is bought from consumers. Each of the B Airline’s direct and indirect competitors have unique product items which separate them from the rest of the competition. For example, Easy Jet is known for its cheap domestic and international flights. The airline focuses on filling its seats and also provides discount rates to travellers that book at least three months in advance. Easy Jet has also invested in technology by developing a website that gives consumers excess to information for holiday adventures and recommends cheap hotels and rental cars in advance booking.

Market Segmentation

To complete market analysis and market segmentation this will require a specific passenger and destination survey which is an added cost and is recommended for B Airlines to conduct such an analysis.

The preliminary analysis that B Airline should conduct and include a variety of methods such as observations, interviews with travel and airline industry professionals, economic segmentations, future projections based on marketing plan, and experience within the region and market for planning purposes. The following is an estimate overall market segmentation retrieved from literature review:

• Business- 16%
• Government and International Organisations- 10%
• Regional (North England) Resident Personal and Leisure Travellers- 26%
• Personal and Regional travellers based in South England- 11%
• Seasonal Holiday travellers- 37%

It should be noted that the seasonal/holiday travel segment of the market may distort the overall market percentages due to the following two reasons:

1. Drop in business and government travel that is expected during the peak summer holiday travel season
2. Significant portion of season/holiday traffic is carried on flights employing specially chartered supplementation aircrafts.

The following chart shows potential markets based on the estimated population in each segment.

Figure 2- Market Segmentation based on Travelling Population

It is well known that the airline industry is dominated by major carriers such as British Airways, Aer Lingus, and Emirates who have become market leaders through strategic marketing. The airline industry is also known for its many mergers, acquisitions, and consolidations. The airline industry is no different from other industries as it has evolved into one that only makes space for companies in the market place who are either, major players; such as the names mentioned, or smaller “niche” participants such as Ryan Air and Easy Jet. In the airline industry two speciality segments have developed which have been exploited by new entrants to the industry. The niches have been divided into price and route. For example, Ryan Air is an airline that focuses on the route niche with providing services to various European destinations. Easy Jet, on the other hand, has focused on providing cheaper prices for flights. The current market is segmented to develop a cross between both niches in which airlines provide more convenient and less costly service between two heavily travelled destinations.

Low fares have become an expectation from consumers due the extent of de-regulation of airlines and focus on price positioning is no longer the only concept an airline needs to build on. The market segment opportunities for an emerging airline such as B Airline include a combination of service mix, price, route selection and has to decide on a service mix and price in conjunction with this as this decision will impact customer preferences. Speciality carriers are categorised as either “short-haul” or “long-haul”. B Airline needs to primarily focus on European holiday destinations and therefore should exempt from servicing long-haul routes due to major carriers being a threat and concentrate on short-haul market segment which is more suited for B Airlines as there is a small gap in the market in England.

Short-haul carriers usually operate efficiently out of a single hub. This allows them to develop a consolidation of services and economies at a more down-sized scale. Correspondingly, the revenues that are available from short-hauls are more relatively higher than long-hauls based on per-passenger-mile. Short-haul revenues are concurrently high enough to develop an extensive business that is able to reach in the hundred million pound multiple ranges.

Strategic Planning Tools

Various strategic tools such as PESTEL, Porter’s Five Model, and SWOT analysis will b e used to aid in the strategic planning of the holiday destination expansion. The previous section has discussed the SWOT analysis for B Airlines and further can be found in Appendix [A]. Porter’s Five model gives us a better understanding into the competitive forces at work and using the tools makes it possible to analyse the current strategic position (Payne et al. 2011, pp. 56) of B Airlines. Since the UK airline industry is highly deregulated there are very minimum direct entry restrictions for competitors (Chernatony et al. 2010, pp. 106). This should not be seen as a major threat because new entrants into the market will need large capital to sustain any form of business. There has been a saturation of the domestic environment due to Easy Jet and Ryan Air limiting the amount of new entrants in the market. Failure of new entrants such as Zoom and XL in 2008 has also discouraged potential entrants from joining the industry. According to Steves (2010, pp. 77) brand name is not an important factor for customers any longer who are looking for savings. Thus, there is minimal threat for substitute products for a long-haul market in which B Airline is working. TOWs Matrix (Appendix E) is another imperative strategic tool that needs to be used by B Airlines. The PESTEL analysis is an important strategic tool that will enable us to describe the macro-environmental factors used in environmental scanning in order to develop strategies and make decisions that are strategically beneficial for the company. One of the major factors ‘Legal’ has a major impact on the airlines. For example, the Open Skies Agreement enables B airlines and their competitors to freely transfer aircrafts between the U.S. and EU (Masson et al. 2010, pp. 49). Building good relations through this agreement can prevent industrial actions and operational interruptions.

Pricing Strategy

The airline industry is a competitive setting which is continuously changing and influencing the changes in B Airlines. Competition in the market will influence B Airlines into evolving their business model or competitors of the company to adapt their strategy in order to look for an advantage. However, with a strong pricing strategy along with revenue management and pricing solutions B Airlines can become flexible enough to achieve in the ever changing marketplace. It would be beneficial for B Airlines to integrate into their pricing strategy a designed solution that incorporates revenue management to effectively compete in with other carrier and low-cost carriers. The proposal would be to take advantage of B Airline’s connecting hubs using the company’s own network. An effective pricing solution needs to be able to collect information and analytics that allow it to respond rapidly and effectively against fare charges of their competitors.

B Airline should focus on a leg-based origin and destination system to determine prices for tickets to implement this it is essential to hire an expert that is experienced in leg system analyst in order to maximise revenues. The Airlines can offer a simple fare structure that will be composed of 3 different fare types and vary according to kilometres totalled in destination’s from Northern England airports such as Manchester/ Leeds- Bradford. The pricing structure will be attractive to leisure travellers in order to expand on the holiday package services that B Airlines willprovide. The Ansoff Matrix (See Appendix G) can play a critical role to regulate the pricing for B Airlines determining customer demand and taking the airline’s existing customers and introducing them to new holiday destinations. Ansoffs’ Matrix relates to four major product-market growth strategies in which B Airlines will focus on in market development. The development of new markets for the holiday destination product is a good strategy for the airline because its core competencies are related more to the specificity of the product since it is expanding into a new market.

The proposed revenue management system that B Airlines should implement is a leg-based system for point-to-point and origin and destination (O&D) system. This type of system will allow the airline to manage markets with whom they are competing such as Easy Jet or markets with traditional rules-based pricing such as British Airways. According to Moller et al. (2004) the O&D revenue management, either leg-based or PNR based, has become a common standard in the airline industry. To increase the revenue of the company B Airline will need to incorporate actual customer behaviour in demand forecasting which has been described in the previous section. By increasing forecasting accuracy the airline will be able to compete effectively in any pricing environment through an integrated support system for traditional and simplified pricing. According to Phillips (2005) using this network management strategy is important for airlines that are offering connection services for their holiday packages. Figure 5 in Appendix C shows the distribution of passengers by fare class and total fare paid on an example flight departure from Manchester to Paris using the leg based system. According to Phillips (2005) the leg-based capacity allocation allows an airline to accept discount class or economy class passengers for long haul destinations while rejecting first-class passengers for short-haul passengers. The main aim of this sort of revenue and pricing strategy is to improve revenue by managing the mix of products along with a mix of fare classes that are being sold for each product (Phillips 2005).

Product and Branding Strategies

B Airlines’ main aim is to establish itself as a niche player in long-haul market but low cost fares by providing high level service and comfort at cheap prices. In order to do so the company will work on the following branding strategies to incorporate concepts of significance, positioning, and benefits:

• Frequent Flyer Miles Program

Major airlines such as British Airways, Emirates and Aer Lingus have been successful in retaining customers by giving them frequent flyer miles each time they travel. As customer mount miles they gain specific privileges which include access to airport lounges, upgrades, and free flights. B Airlines will introduce a frequent flyer program of its own which is simple and coherent with the holiday concept. B Airlines will offer frequent flyer internet cash to customers that can be spent on specific travel websites for holiday packages.

• Promotions Strategies

Offer special holiday promotions to destinations such as Paris, Madrid, and other for the first month of the holiday scheme operations to attract as many customers as possible and get them to experience the services.

• Airline’s Convenience Services for Flight’s Passengers
• e-tickets- Tickets purchased are 100% electronic and the passenger will need their passport and confirmation number in order to board the plane. They will also be able to print a copy of the itinerary from the company’s website.
• Free transfers to-from airports: A free shared car service will be offered between airports of destination areas to specific hotels, ones that are affiliates of B Airlines will be made available to customers.
• Larger carry-on luggage- Increased space on board will allow for the airline to accommodate larger carry-on luggage which is a sensitive issue for most travellers that do not wish to check in.

B Airlines needs to market its products under the brand position that it is the complete holiday planning company giving its customers luxury at an affordable price. The developing brand itself creates an emotional tie with the customer that goes further than just the price. B Airline’s brand signifies a holiday experience that is developed to allow its customers to make worthwhile memories with family or loved ones. This is evident in the development of logos that target customers to establish an emotional relationship with the company. The logos that have been suggested draw on the holiday notion that B Airlines is aiming for (See Appendix H).

Conclusion

The report features an analysis of the industry and external environment of B airlines and looks at strategic options that the company can implement in order to make the new holiday package destinations to become a success. In order to survive in this industry’s changing environment it is essential that the airline implements a strong marketing strategy that incorporates that various aspects that have been discussed in this report. Competing airlines are also working daily to improve their business operations. There is serious competition for B Airlines with Easy Jet and Ryan Air who are already operating regionally and to major European destinations. B Airlines should focus on improving and maintaining a high level of customer service along with affiliating with hotels and car rental companies to give the customer the ultimate holiday experience and value for money.