Marketing Strategies of Oman Air - Essay Example

? Sustainable Marketing Plan Contents Sustainable Marketing Plan Introduction 3 Marketing budget & implementation 11 Introduction The introduction section of the marketing plan will covers brief description of organization, target market and goals of marketing campaign. Brief description of organization Oman Air is a prominent and recognized Muscat-based national airline and flagship enterprise of Sultanate of Oman’s Civil Aviation Sector. The airline commenced business operations in the year 1993 and has accorded rapid growth and expansion since the establishment. The Oman Air played a significant contribution in making Muscat as a major traffic hub through initiating wide number of commercial, industrial and tourism activities. The network of airline services of Oman Air operates in Middle East, Asia, Europe, and Indian subcontinent. The growth and development history of Oman Air witnessed the commitment towards offering sustainable, reliable and quality services to the customers (Oman Air 2012). Target market Stakeholder analysis and profitability figures of Oman Air have revealed that company is primarily engaged in delivering luxurious airline services to business travelers. Oman Air seeks to target elite class customers, leisure travelers and tourists aspire to enhance their airline service experience. The services are primarily designed to attract and cater international business, pleasure travelers, and upscale customers. In other words, upper middle and high income groups’ customers serve the major target market of Oman Air. The customers seeking comfort, convenience, and value added services are targeted by the company. The middle and low income class customers are already being taken by the low cost carriers and other airline companies. The battle remain in the upper middle and affluent customers, therefore the company intends to target and formulates marketing strategy in order to gain control over this target audience. Oman Air is strived towards delivering consistent and reliable airline services to the target audience evidenced by the continuous increase in the air passenger traffic report of CAPA-Centre for Aviation & Oman Air. The constant increase in the air traffic passengers of Oman Air also indicates the ever increasing expectations of target audience. The target audience adopts for the Oman Air airline services in the expectation of getting more personalized and innovative airline services (Oman Air 2012). Goals for marketing campaign (20 points) The marketing campaign of the Oman Air strives to provide new dimension to the existing airline services of the company. The goals of the marketing campaign in terms of both the 3B’s (Brand, Buzz, and Behavior) and the 3BL (People, Planet, Profits) are: Goals in terms of Brand, Buzz, and Behavior 1) Improving appearance of Oman Air as remarkable, safety, bold and fresh airlines through adding or improving in-flight services features. 2) Fostering the brand image of Oman Air as responsive, prompt, fast, customer oriented, and having courteous attitude. 3) To keep pace with the technological advancement in order to introduce new business models. 4) Formulating promotional messages showing respect and courtesy towards other cultures and backgrounds. 5) To become a member of global premium airline service platform in the coming ten years. 6) To become airline of choice for pleasure travelers and premium customers across worldwide. 7) Offering differentiated and personalized services from all key touch points to strengthen brand personality. 8) Increasing presence in the global cities to emerge as a global player. 9) Positioning the airline services in more personalized manner in order to stimulate existing market share. 10) Investigate and introduce new comfort, convenience, and technology driven factors in airline services of Oman Air. 11) Providing a delightful flying experience in order to gain foothold in new geographical regions. Goals in terms of profit, people, planet 12) To increase the revenue growth from 35% to 40% by the end of 2013. 13) To introduce new cost effective and sustainable aircraft and carriers in order to reduce recorded loss of 110 million in 2011 to 100 million in 2013. 14) To provide high returns to the investors in order to facilitate the process of capital formation and un-interrupt business operations. 15) To fasten the pace of CSR programs like opening schools, colleges, clubs, recreational facilities, etc for staff and society members. 16) Develop a sense of teamwork, integrity, and collaborative approach among personnel through initiating group programs and activities. 17) Organizing and rewarding members in accordance with their contribution towards CSR programs. 18) Contributing towards sustainable development of society through introducing fuel efficient aircraft models. 19) Identifying and proposing new business models creating less gas emissions to air, water and land. 20) Minimizing carbon footprint to improve environmental and climatic concerns. Marketing mix Marketing mix is being used as a general phrase specifies and describes the kinds of choices available to the company in bringing particular products and services to the marketplace. The marketing mix is an essential component of overall marketing plan as it determines the strategy currently employed by the company along with the necessary improvements to be made in current strategy. The marketing mix of the proposed marketing plan of the Oman Air is prepared in accordance with the ultimate objectives and goals. Marketing mix contains four elements viz. product, price, place and promotion. The four elements of the marketing mix need to be designed in such a manner that products and services offered by the company gains maximum customers acceptance and yield high profit and revenue to the company. The marketing mix of the Oman Air is explained below: Product: The product represents the first variable of the marketing mix. It entails the list of all products and services offered by the company to its customers. In other words, it outlines the choices and purchase options provided by the company to its customers. The wide portfolio of products and services allows the company to attract large customer base and entail high satisfaction. It is due to reason that each products under the product portfolio differ in terms of its nature and characteristics. The differences in terms of nature and characteristics increase the chances that wide categories of customers can be satisfied easily. On the other hand, wide range of products and services also increases the chances of generating high sales and revenue (Nykiel 2003). Air transportation service is the main product of Oman Air. The company also offers wide number of air cargo products like cargo, courier, mail, valuable transport, cool chain, etc. However, air transportation service constitutes the main product and therefore selected for the proposed marketing campaign. The air transportation service of the Oman Air enables the tourists and travelers to travel from one place to another in a quick and faster manner. The marketing campaign is aimed towards improving in-flight services in order to enrich existing sir transportation service. In the present years, Oman Air is facing immense threat and stiff competition from many private and public airline players. The emergence of new players in the industry further intensified the existing competition level and increase pressure on the operating and financial margins of company. The ever increasing competition for market share and sustainable profitability demands the company to re-launch or modify the existing airline services. The re-launch or modification of existing services will enable the company to reposition its image in the customer minds and encourage them towards availing purchase option of Oman Air. In other words, this strategy can make the company as a highly preference purchase alternative in coming time. The already existing in-flight services of Oman Air provide comfort, pleasure, convenience and soothing experience (Nykiel 2003). Now-a-days tastes and preferences of consumers are changing in a frequent manner forcing the company to design and innovate new service features capable of providing some value adding experience to them. In present marketing scenario, customers are becoming more concerned with the benefits likely to provide by the company in the form of products and service packages rather than wide range of product portfolio. Modifications and improvement in the in-flight services will provide new added benefits and service experience to the customers. The modifications in the in-flight services can be made in context of seating configuration, attractive interiors, pleasing ambience, catering services, enhanced mobile and broadband connectivity, calling passengers as guests, etc. Price: Price is also an important variable determine the rate at which products and services should be offered to the customers. The pricing strategy of the company should be such helps in maximizing profit at minimum possible cost. Pricing strategy in the airline industry is the interplay of load factors, cost expenses incurred on providing airline services, airline schedule, and the class of customers. The commitment of Oman Air towards adding new premium yields and transforming existing services resulted in a significant loss of around USD 480 million and record loss of USD 203.5 million in the year 2010 (Oman Air reports record passengers, but also record losses 2012). The adding and improvement in the premium yield services bring an improvement in passenger traffic, but losses are continued to take place. The company adopted a premium pricing strategy in order to cover the losses incurred on account of adding new premium services and transformations. The premium pricing strategy also appeared justified in light of increasing fuel prices, launching new routes, introducing new fleets, and changes in the existing infrastructure and technology of fleet carriers. It was expected that premium pricing strategy will prove effective in reducing the cost burden and reimbursing all the expenses incurred in transformation of airline services. But, the strategy proved ineffective and figures of losses are rising continuously. The increasing cost burden necessitates the company to introduce competitive pricing strategy as adopted by other Gulf airline players. The competitive pricing strategy will drive the airline business of the company forwards and will be helpful in motivating customers towards adopting Oman Air services (Doganis 2006). The company can also make clear demarcation among the prices of the airline services offered to the middle class passengers and premium passengers. The demarcation will enable the customers to identify and understand the reasons behind differentiating pricing strategy. The competitive and differentiated pricing strategy will prove helpful in bringing the financial position of the company at least on breakeven level. Place: Place also constitutes an important variable of marketing mix. This variable of the marketing mix deals with the distribution of company’s products and services. Proper and timely distribution of products and services is extremely important as it allows customers to access the products and services. The proper and timely availability of products and services is also important as it affects the profitability and revenue potential of the company to a considerable extent. The success of all the marketing mix elements depends heavily on the proper distribution and availability of products and services. The elements of marketing mix and marketing strategy will prove futile in case customers cannot get easy accessibility of products and services. In this regard, proper distribution channel and strategy is significant at the time of drafting marketing plan. It is equally important for Oman Air to distribute and spread its airline operations across the world. Although the company has made adequate presence in Middle East countries and in some pacific regions, yet there is immense scope of expanding airline operations in Asian and western countries. It is necessary to expand airline operations in these countries as it will bring additional business opportunities to the company. The main distribution strategy of Oman Air includes company service desk, travel agents, and brokers. The travel agents and brokers of the company are available all over the world engaged in selling air tickets to the customers. The company employs hundreds of travel agents and brokers in different countries in order to provide timely and prompt airline services to the customers (Shaw 2007). The company has also initiated and launched online website to stimulate existing distribution channel and to increase reach among customers. The present era has accorded with various fast communications medium allowing customers to get products through mere visiting and using such medium. The website of Oman Air is also being viewed as a step by the company to keep pace with the technology advancement. Customers can visit the company’s website and selects the service packages in accordance with their needs and preferences. After selecting service package, the website provide the feature of making payment online without visiting any physical store or agents for payment purpose. Promotion: Promotion is the last element of marketing mix recommends the employment of various promotional tools to increase market share and market growth. The promotional tools are not employed intensively by the company. There is need to bring changes in the current promotional strategies and as well as in the tools currently employed by the company to approach customers. The three promotional tools that will be employed by the Oman Air in the proposed marketing campaign are advertising through television and radio, posters and outdoor advertisement, and company flyers. The mass media advertising will take place through displaying advertisement in various media channel specifically in television and radio. The advertisement promotional tool will be employed by the company in the initial period of marketing campaign. It is due to reason that initial phase of marketing campaign will be very crucial and will determine the success of marketing efforts. The advertising strategy will be directed towards generating greater public awareness and recognition among target audience. The advertisement through radio and television will take place at frequent intervals. The frequent display of advertisement will allow the target audience to recall and remember the brand name easily at the time of making purchase decision. The higher recall and recognition by the target audience increases the chances that customers might opt for Oman Air service packages. The advertisements of the Oman Air will emphasis on the unique service features and strong positioning statement of the company. The expenses of the advertisement will be financed through marketing budget of the company. The advertisement promotional tool will serve the first three stages of AIDA i.e., attention, interest and desire. The effective serving of first three stages paves the path of actual selling of company’s airline services and offers (Malaval and Naroya 2008). Likewise, posters and company flyers will also be displayed and located across different geographical regions. This promotional tool will be employed in the subsequent months after advertising. The posters and company flyers will be placed at prominent commercial places, business destinations, restaurants, hotels, tourist destinations, etc. The posters and company flyers pose the potential of attracting walk-in-customers or passers. These promotional tools attract the attention of general public, thus increases the chances of expanding target audience. Rather, such promotional tools are placed with the objective of increasing presence among general public in order to lead the general mass to recognize Oman Air as a purchase alterative. Repositioning The repositioning map of the Oman Air indicates that marketing plan will improve service features and quality of airline service of the company. The image of the company as dynamic, responsive, and technology driven will be enhanced and improve through new proposed marketing plan. At the same time, the company will also face stiff competition from competitors i.e., Qatar Airways and Etihad Airways in airline services and features. But, the new marketing will improve the current position and provides the company as new repositioning image and structure. Good Very Good Excellent Marketing budget & implementation The marketing budget depicts clearly the amount of money allocated to each marketing strategy and rationale behind such allocation. The marketing department conducts cost-benefit analysis in order to allocate financial resources towards each individual element. The cost benefit analysis is undertaken with the objective of assessing cost likely to incur on such element and benefit that will be accrued from it. The marketing budget is approved in case expected benefit exceeds the cost as it will stimulate overall sales and revenue figures. A detailed objective and task marketing budget of Oman Air in light of expected cost and sales likely to produce by it is presented and summarized below: Month Expected cost on advertising (TV & Radio) Expected cost on Posters & Outdoor advertising Expected Cost on Company Flyers Expected Sales January $ 30000 $ 20000 $ 10000 $ 50000 February $ 30000 $ 25000 $ 10000 $ 70000 March $ 50000 $ 40000 $ 12000 $ 122000 April $ 60000 $ 45000 $ 15000 $ 130000 May $ 20000 & 15000 $ 10000 $ 40000 June $ 20000 $ 15000 $ 10000 $ 42000 July $ 30000 $ 20000 $ 10000 $ 65000 August $ 30000 $ 20000 $ 10000 $ 70000 September $ 40000 $ 30000 $ 10000 $ 95000 October $ 40000 $ 30000 $ 12000 $ 97000 November $ 45000 $ 40000 $ 13000 $ 103000 December $ 70000 $ 50000 $ 15000 $ 150000 Total $ 465000 $ 350000 $ 137000 $1034000 Total Cost/Expected Sales $ 952000 $ 1034000 The marketing budget demonstrates that cost of advertisement, posters and outdoor advertisement changes with respect to change in time. The change in promotional expenses is positively correlated with the inflow and outflow of tourists and travelers. The travel industry experiences peak season and high inflow and outflow of tourists and business travelers from September to December and also from March to April. The Oman Air will increase the frequency and intensity of promotional tools in the expectation of more travelers and tourists in peak season period and thus increases amount of expected cost. The marketing budget is expected to deliver higher sales than the overall cost incurred on promotional tools. Conclusion The overall discussion of marketing plan of the Oman Air led to the conclusion that drafting of marketing plan demands adequate research and efforts on the part of marketing personnel of Oman Air. The goals of the marketing plan are outlined in terms of ultimate objective of improving airline services of the company. The goals are prepared for enhancing is prepared for enhancing brand image and positioning in the market place. The marketing mix also outlines the key changes or improvements in the existing products and services along with pricing and promotional strategy to be used by the company. References Doganis, R. 2006. The Airline Business in the 21st Century. UK: Routledge. Malaval, P. and Naroya, C.B. 2008. Aerospace Marketing Management: Manufacturers, Oem, Airlines, Airports, Satellites, Launchers. US: Springer. Nykiel, R.A. 2003. Marketing Your Business: A Guide to Developing a Strategic Marketing Plan. Uk: Routledge. Oman Air reports record passengers, but also record losses. 2012. [online]. Available at: http://centreforaviation.com/analysis/oman-air-reports-record-passengers-but-also-record-losses-71974 [Accessed on: 13 December 2012]. Oman Air. 2012. [online]. Available at: http://centreforaviation.com/profiles/airlines/oman-air-wy [Accessed on: 13 December 2012]. Shaw, S. 2007. Airline Marketing and Management. UK: Ashgate Publishing, Ltd. Read More