Marketing Objectives for Air China - Case Study Example

Air China Table of Contents Introduction 3 Marketing Objectives for Air China 3 Recommended marketing strategies 5 Reflective Report 7 References 9 Introduction Marketing audit is an important component not only in the process of marketing planning, but also in the process of corporate planning. It plays a key role in effectively finding information from various levels of the organisation to assist the decision making process at both top and middle level. The main objective of conducting a marketing audit is to identify the potential threats and opportunities that are likely to exist in the external environment of the organisation. With the identification of opportunities and threats, the process of developing marketing objectives starts. In other words, marketing audit facilitates the process of determining marketing objectives for the firm. While developing the marketing objectives it must be ensured that they are relevant to the corporate mission and vision. Furthermore objectives should be clearly understood by the firm itself. Moreover it should be closely related to the financial, human resources and infrastructural capabilities of the organisation. Establishing appropriate marketing objectives is the key to the organisation’s overall capability of achieving high level performance. Dibb, Pride, Simkin and Ferrell stated that “a marketing objective is a statement of what is to be accomplished through marketing activities” (Beamish & Ashford, 2005). A properly developed marketing objective should have SMART components, in other words objective should be Specific, Measurable, Attainable, Realistic and Time bound (Beamish & Ashford, 2005). This report describes the marketing objectives that are developed in the context of Air China. The report also includes the recommended strategies for achieving these objectives. Marketing Objectives for Air China Air China is one of the largest airline operators not only in China or Asia but in the entire world. As far as market capitalization is concerned, Air China is the largest carrier in the world. In its home country the company has almost 23% market share, ranking just behind China Southern and China Eastern which are the largest and second largest players respectively in the country (Lei, 2010). However, the company is China’s largest international carrier. It is a state-controlled company that is better known as the flag carrier of China. As far as recent developments are concerned, in March, 2010 the company announced its plan of taking over Shenzhen Airlines which is another important player in the Chinese airline market. On March 22 the company declared that it has acquired Shenzhen Airlines. According to Air China, almost $100 million will be injected into Shenzhen Airlines. Prior to the takeover, Air China had 25% share in Shenzhen and after the takeover almost 51% is owned by Air China (Anderlini, 2010). Moreover after the takeover, market share of Air China is expected to increase to 30% and if this happen then it will be the largest airline in the country (Lei, 2010). According to analysts and experts, the deal is expected to be beneficial for both the company as Air China will be able to strengthen its position in southern China and Shenzhen will be able to expand its reach in all the parts of the country with the help of brand image of Air China. As far as service is concerned, the overall service of the company is found to be commendable except the fact that crew members and call center staffs really struggle to speak in good English. They always prefer to interact in Chinese and this is a major problem for the foreign passengers. Moreover, some complaints have been registered regarding the quality of foods that are served in the flight. Complaints are also lodged regarding the space related problems inside the flight. International passengers sometimes have to suffer due to technical faults like oil leak. Overall satisfaction level among the customers is found to be ranging from moderate to good. Marketing objectives are established considering the above discussed facts regarding the company. The first marketing objective will be to increase the market share of Air China in the home country i.e. China. Various marketing strategies will be adopted with the objective of increasing the market share from 23% to at least 33% and this attempt is expected to be achieved by the end of the third quarter of present financial year. This marketing objective is very much attainable given the fact that the company has recently acquired Shenzhen. Hence, it is expected that the reach of the company will increase at least in the domestic market. Moreover effective marketing efforts are likely to push this increase. Hence it can be said that an objective of 33% market share is very much achievable. Furthermore this objective is time bound and it has to be attained by a specific period of time. Another marketing objective will be to improve the brand image of Air China in the global market. This objective is in the context of the fact that some passengers specially the foreign ones find the service of the company not up to the mark. Considering this fact, marketing objectives will be framed to increase the volume of international passengers by at least 5% and like the previous one this objective has to be achieved by the end of third quarter of this financial year as well. Another crucial marketing objective regarding the brand image of the company will be to reduce the volume of complaints by at least 10%. This objective will be achieved by end of the second quarter of current year. Each of these objectives has SMART components as they are very specific, measurable, realistic, attainable and time bound. Recommended marketing strategies Several marketing strategies can be recommended for achieving these objectives. As far as the first objective is concerned it can be achieved by modifying the pricing policies and by heavily promoting the brand as well as its service. The company should give attractive offers to the target customers. Furthermore it should give more focus to business executives, as the high growth rate of the Chinese economy has drawn a number of executives who are likely to fly on frequent basis. Air China can form some agreements with some of the business houses whose executives are frequent fliers. However before getting into any such deal the company should identify these business houses properly. Pricing policy of airline operators is always a difficult one to establish as it depends on large number of internal as well as external factors. However, in order to increase market share it is very important to make some crucial modifications in the pricing policies without compromising the quality of service. Air China, in order to be ahead of its main competitor Southern China and to achieve the target of 33% market share has to play around with its prices more effectively. After the takeover of Shenzhen, Air China has more options of changing the air fares. In fact the company should try out an opposite strategy to the one followed by its competitor. It should decrease the fare slightly at the peak season in order to draw maximum possible passengers and decrease it to even lower at the off season. Market share can also be increased by operating in those areas where the company does not have significant presence. In this process Shenzhen’s market reach should be effectively used by Air China. It should heavily promote its brand in the unexplored markets of China as well as in the world. The volume of global passengers can be increased by re-positioning the brand. The company should ensure that no smell of ‘China’ is present when it is serving the global customers. In other words international customers should be served by being a truly international carrier, not a Chinese carrier. It should redesign its call center operation. Staffs at the call centers should be able to speak in English as fluently as they do in Chinese. Crew members at the international flights should also modify their communication skills according to the need of the global customers. Food items and their quality should also be modified according to the needs of the foreign passengers. Once these operational changes are done, the company should heavily promote its new look to the target customers. These measures will not only help the company to achieve the objective of increasing the volume of foreign customers but they are also likely to be effective in reducing the volume of complaints. Volume of international customers can also be increased by improving the global reach of the carrier. Air China should run more number of flights in the developing economies of the world. It should give special attention to the emerging Asian markets like India, Indonesia etc. Reflective Report Conducting this project was indeed a process of value addition as I have gained theoretical as well as practical knowledge. Since the project was on marketing audit, I have learnt the subtle nuances of marketing audit which is basically a major component of marketing plan. After the completion of the project I can now claim that I have a fair knowledge of the marketing plan and several of its components. I have also learnt the importance of preparing a marketing plan and conducting a marketing audit in the entire corporate planning process. I have also gained insight into the process of establishing marketing objectives and the importance of SMART components in a marketing objective. However, perhaps the most important thing that I have learnt during the course of doing this project is the significance of group dynamics. After doing this project I have realized the difference in working as an individual and working in a team. In a team, individual success is heavily dependent on the success of the team. Moreover there are factors like communication and leadership that have significant influence on the group performance. I believe problems like communication gap among the group members while working on a same objective is inevitable, as different individual has different perceptions regarding different aspects. It is the maturity of the team members and the leadership skills of one or two members that actually solve this type of problems. The team that will be able to solve the problems more effectively is likely to outperform the other teams. During the course of this project I have experienced these facts very closely. Like any other team, in my team also there was one individual who led the team. Tasks were allocated properly to each of the members. My job was to take care of marketing objectives. While doing this I realized the importance of co-ordination among the team members as I required knowing about the marketing audit and various other parts of the marketing plan. For information regarding these I had to depend on other team members who did these parts. As a result any lack of co-ordination between me and my other team members could have affected the project badly. After completing this project one thing I can say that my experience regarding working in a team has reached a new level. I have learnt what should be done and what not while working in a team. The team performance is heavily dependent on the individual performance. If each and every team member does his/her jobs efficiently and co-ordinates with each other properly, then the final outcome is likely to be one of the best outcomes in the class. Leadership and communication skills are the two most important factors that influence the team performance. After working on this project I have found that ideally only one person should be in the leadership position in a team of 4-5 members and he/she should take the responsibility of other factors like co-ordination among team members and specifications regarding time and quality. References Anderlini, J. March, 2010. Air China gets control of Shenzhen Airlines, Financial Times, [Online] Available at: http://www.ft.com/cms/s/0/31a5dc46-3572-11df-963f-00144feabdc0.html [Accessed on May 26, 2010] Beamish, K & Ashford, R. 2005, Marketing Planning, Elsevier Lei, H. 2010, Air China says Shenzhen Airlines to retain brand, China Daily, [Online] Available at: http://www.chinadaily.com.cn/china/2010-03/23/content_9631283.htm [Accessed on May 26, 2010] Read More