Strategy and Management - Assignment Example

Strategy and Management Strategy and Management Introduction The airline company has adopted a pricing strategy which is aimed at ensuring the business operations remains profitable and the company is able to operate competitively within the industry. The industry has been deregulated by the authorities and this has enabled the companies within the airline industry to compete freely with each other. Marketing efforts for the company have been prioritised as the parts which could ensure the company meets the competitive advantage within the local airline industry. As a result of the deregulation, some of the major industry operators decided to quit the market and move to more profitable large markets. This company saw this as an opportunity to expand by capturing the market that had been left by the major industry players. A competitive marketing strategy has been adopted in seeking to help the company to capture the desired market. Markets and Routes There different markets available within the industry have prompted competitive strategies to be adopted by the airlines operating within the industry in order to compete effectively. The deregulation of the industry left all the markets and routes open to the available firms. Due to the changing market demographics, there is need to develop products that meet the needs of each market based on the characteristics of the market (Kotler & Keller 2011). These characteristics of the market vary in terms of distance, number of firms in the market and the daily demand for the airline seats. The company has adopted a pricing strategy that is aimed at ensuring all the markets that are available have been accessed. Accessing these markets will enable the company to become competitive within the industry by reaching a wide range of markets. The company has adopted an approach of flying once within each route in seeking to ensure that they have an extensive reach. As time progresses, there is hope to increase the number of flights to different routes to maximise on the widening customer base. The company is focused on flying within routes that terminate at large cities as they have large airline connecting and their clients can connect too many destinations. This approach has been adopted in order to ensure the customers are satisfied by the services as they can reach destinations where they connect to other airlines (Middleton & Clarke 2012). The preference for many customers is direct flights and the company has adopted such routes, except the route D, which has a stop-over. Flight Scheduling The scheduling element of the flight remains a crucial factor that can define the success of the company within the market. While many flights could be costly and drive the company at a loss, it is critical to understand the market before determining the number flights within route. Many of the current routes are new and the company is utilising a few trips in order to determine the profitability of each route in seeking to decide on the future prospects of the same route. The frequency of flights within each routes becomes a differentiating factor within the market since there are many firms within the same industry. The fundamental variation after the scheduling aspects of light management becomes the pricing strategy adopted by the company. Airline Equipment The aircrafts that are used in conducting operations are determined by the route that the airline will be servicing. This is determined in consideration of the number of passengers and the mileage of the particular route. The services provided aboard the aircrafts are also based on the state of the equipment being utilised within the particular route. The company understand the need to ensure that each market and route is provided with an aircraft that is fit for the specific operations and characteristics of the market. Longer routes for example have been provided with faster aircrafts in seeking to ensure that there are no delays that occur. Consideration of the market demographics and characteristics is critical in determining the type of equipment to be utilised within the same market. There are luxury customers and regular flyers whose demands in types of services differ and these are differentiated by the types of aircrafts provided for the different routes (An & Noh 2009). This type of differentiation provides the customers with the capacity to make choices in regard to the type of flights that they would like. The differentiation ensures that the company provides different types of services to the markets, aimed at satisfying the customer needs. Pricing Strategy The pricing strategy that the company has adopted is based on the standards that have been set within the industry. The utilisation of baseline pricing for the products that have been developed by the company ensures that the company remains within the competitive range with other commuter airlines in the same market. While the baseline fares remains the main approaches that are utilised in pricing, promotional prices are introduced into the market from time to time in seeking to enhance the popularity of the route and increase the income of the company (Dorinson 2004). The common trends within the market is coping fares of competitors and the company has devised pricing strategy in which the company does not copy competitors and becomes the trend setter. The fares that the company adopts for different segments seek to increase the demand within that particular market and are based on customer demographics in regard to purchasing power of the customers within the market (Hooley et al. 2012). The selling of the tickets for the company is mainly undertaken through the sales agents and online based ticketing systems. This has been fundamental in increasing the reach of the company tickets to various customers. The average costs for the ticketing services is about 10% and this becomes factors when calculating the estimated sales volume for the next quarter. Consideration of this fact seeks to ensure that the estimates are as accurate as possible. This becomes critical in determining the various operational costs for the company, which are determined before the quarter begins. The company has established bilateral agreements with the larger firms within the industry with the aim of increasing the sales by widening the ticketing services. Advertising and Promotions The company has undertaken into ensuring it attracts many customers in order to satisfy the increasing demand for services and enable the company to also increase the sales volume. Much of the promotional services involve the sales agents, providers of travel services and other specialists who help the company in selling tickets. The company provides these groups with packages and other incentives that are aimed at ensuring that they increase their selling efforts (Mullin 2010). The promotions that are developed and undertaken by the company define the target market for the company. Advertisement of the company products is mainly conducted through various electronic and print media, which include journals, bill boards, newspapers, television and radio. The small size of the firm does not allow the company to have a sales teams and the company mainly utilises third parties to market many of its products. The company depends on the sales agent and tour operators as the major marketing force. Once the markets become stable and the company becomes well established, a sales team will be developed. The fundamental advantage of having an internal sales team will be increasing sales through the direct sales of tickets (Bamber et al. 2009). The costs of promotional services provided by the sales agents will be utilised within the organisation and this will reduce the cost of these services from the current 10% to almost 7%. This significant reduction will be utilised as part of the profits which the company will be gaining Conclusion The airline industry is characterised by intense competition for markets and customers as well. In seeking to manage through this competition and gain a competitive advantage adoption of effective operational procedures remains inevitable for different organisations. Differentiation of products and services has been mainly undertaken through marketing efforts and promotional services. The pricing strategy adopted by the company aims at ensuring the company maintains profitability and a competitive advantage (Liou & Tzeng 2007). The difference on prices and a promotional activities has been the main strategy that the company has adopted in seeking to gain a competitive edge within the market. APPENDIX Reference list An, M. & Noh, Y., 2009. Airline customer satisfaction and loyalty: impact of in-flight service quality. Service Business, 3(3), pp.293–307. Bamber, G. J., Gittell, J. H., Kochan, T. A., & VonNordenflycht, A., 2009. Up in the Air: How Airlines Can Improve Performance by Engaging their Employees, Ithaca: Cornell University Press. Dorinson, D.M., 2004. The evolution of airline distribution channels and their effects on revenue management performance. Massachusetts Institute of Technology. Hooley, G., Piercy, N.F. & Nicoulaud, B., 2012. Marketing Strategy & Competitive Positioning 5th ed., Harlow: Prentice Hall. Kotler, P. & Keller, K., 2011. Marketing Management 14th ed., New Jersey: Prentice Hall. Liou, J.J. & Tzeng, G.-H., 2007. A non-additive model for evaluating airline service quality. Journal of Air Transport Management, 13(3), pp.131–138. Middleton, V.T.C. & Clarke, J.R., 2012. Marketing in Travel and Tourism 3rd ed., New York: Butterworth-Heinemann. Mullin, R., 2010. Sales Promotion: How to Create, Implement and Integrate Campaigns that Really Work 4th ed., London: Kogan Page Publishers.  Initial Strategic Plan The company has focused at maintaining the fares at the lowest possible levels per mile in seeking to beat the existing competition The company is only spending money on promotions and advertising within the marketing aspect of business operations. Due to the size of the company there are no sales persons and they might be recruited at a later stage when the company grows The current amount of fleet is maintained at a minimum of one aircraft per every route which the company has undertaken. This is bound to increase as business increases within the market. The financing options which have been adopted by the company is from the selling of stock of the company and this has been used in raising the capital for the company. Read More