Air Canada as One of the Largest Airline Companies in Canada - Coursework Example

Marketing plan for Air Canada Contents Executive summary 4 Company 4 Strategic focus plan 5 Mission 5 Goals 5 Core competency and sustainable competitive advantage 6 Situation analysis 7 Swot analyses 7 Industry analyses 8 Competitor in Canada market 9 Company analysis 9 Customer analysis 9 Product market focus 10 Marketing and product objectives 10 Target market 11 Customer value proposition 11 Point of differences 11 Marketing program 12 Product strategy 12 Price strategy 12 Promotional strategy 13 Distribution strategy 13 Financial data projection 14 Past sales revenue 14 Five year Projections 15 Implementation plan 16 Evaluation and control 17 References 19 Executive summary This study deals with the famous airline company Air Canada. This company is present in the airline industry of USA for a long period of time. This study highlights that Air Canada has created its strong presence in both national and international market. This airlines company has various financial and non financial goals. The mission of this firm is also focused in this paper. Based on its goals and mission the company develops its strategies for achieving success. The core competencies of Air Canada have been discussed in this paper. This airlines company puts huge effort in making its core competencies as competitive advantages. SWOT analysis of Air Canada has been conducted in this paper. With the help of SWOT analysis strengths, weaknesses, threats and opportunities of the firms are highlighted. Air Canada performs its business operations and functions in a very competitive industry. Many strong players are present in the airline industry of USA. The study highlights that the competitor companies are creating strong pressure on Air Canada. For this reason Air Canada is developing its business processes and services for holding its positing in the competitive market. Company analysis has been done in this paper. The customer base of Air Canada has been discussed in details. Upcoming product and marketing objectives of the Air Canada have been analysed in this study. Company description Air Canada is one of the largest airline companies in Canada. This airline company was founded in 1936. Air Canada deals with charter and scheduled air transport. It covers 178 destinations of the world. At present Air Canada is ninth largest passenger airline based on fleet size. The company has its headquarters in Montreal, Quebec. This firm is the founding member of Start Alliance. Air Canada was initially owned by the federal government of Canada. The airline market of Canada was deregulated 1980s. In 1988 the company Air Canada was privatised. The major accusation done by Air Canada is acquiring Canadian Airlines which enhanced the growth and development of the company. Presently Air Canada serves 35 million passengers throughout the year. It has a strong air transport network through the world. With strong mission, vision and values the company is able to perform its business activities and functions efficiently. Strategic focus plan In strategic focus plan of Air Canada, the mission, goals and core competences of the organization have been discussed in details. Mission The mission of Air Canada is to connect Canada with the world. The company facilitates the people in moving from one place to another by bringing them together and enriching their experiences. The firm aims to establish connection throughout the world so that it can become the global leader. Sustainable development of the company is it’s another important mission. Air Canada aims to build loyalty through its innovation and passion. Air Canada wants to make its customers feel that they are valued by the company. Goals The main goal of Air Canada is to achieve success in airlines industry by working effectively with customers, community and employees. The major financial and non financial goals of this company are as follows: Non financial goals Providing excellent service to the customers by satisfying their desires and expectations associated with air travel. Giving safe travel and enjoyable experience to the passengers. Ensuring that every customer of Air Canada receives consistent service from the company. Air Canada tries to create a positive and long lasting experience to the passengers. By this process the airlines company wants to retain its customer base. Acquiring more customers is one of the important goals of the firm. By satisfying existing customers Air Canada tries to bring more customers. Air Canada is continuously improving its working environment of increasing the productivity of the company. This organization aims to lead the market of airlines industry of the world. Financial goals Air Canada wants to increase its profit through passenger’s revenue. The company has a plan to increase its operating revenue. The firm aims to reduce some of its extra costs like cost per seat mile. Average annual wages of the employees of Air Canada will be increased by 2%. Air Canada will reduce many of its costs by doing agreements with some important Canadian unions. Doing financial agreement with various aircraft maintenance company on price competitive basis. Core competency and sustainable competitive advantage The teamwork, values and business operations of Air Canada contribute a lot in achieving its goals and objectives. The customer service strategy of Air Canada acts as its core competency. With the help of this strategy the company provides excellent service to its customers and make their air travel experience memorable. The customer service of this airlines company facilitates the brand in building a strong brand image. With the help of its efficient service the company emotionally connects with its customers and satisfy their needs which become its competitive edge. For transforming its core competencies into competitive advantage Air Canada works closely with its customers and the aircraft maintenance companies. This helps the organization in establishing strong relationship with them (Wintzer, 2007). Based on this relationship the company is able to satisfy large number of customers and creates a tough competition for its competing companies. Situation analysis Situation analysis of Air Canada describes the current position of the company based on the market, industry, competitors, customers etc. Swot analyses SWOT analyses highlight various internal and external factors which affect the growth and development of Air Canada. Internal factors Strengths Weaknesses Management Highly experienced persons are present in the management board of Air Canada. Members of management have a bad relationship with the unions. Workforce Large, highly skilled and experienced workforce is present in this company. Often it becomes difficult for the management to manage such a large workforce. Brand Air Canada is into the business of airlines for a long period of time and has able to build a strong brand name in airlines industry. Brand affinity of Air Canada is low. Offerings The company offers memorable and luxurious experience to its customers. Price of its services is high. External Factors Opportunities Threats Tourism Canada is experiencing huge growth in tourism business which helps Air Canada in gaining many customers Huge competition is present in airlines market of Canada which hampers growth of this firm. Penetration Air Canada is trying to penetrate global market by lowering its various costs. Many companies are now focusing on low cost airline business which is creating obstruction for Air Canada in perpetrating new market. Industry analyses The airline industry of USA is very much competitive. Air Canada is operating its business not only in USA but in many other countries of the world. Threat of new entrance in airline industry is low because of high establishment cost. Companies require huge amount of capital for developing its business in airlines industry. Suppliers of Airlines Company exert a moderate pressure on the airlines firms. The major suppliers of this industry are aircraft manufactures, aircraft manufacturing companies, fuel suppliers etc. Various airlines company in this industry offer different type and facilities and air ticket price to their customers based on the quality of service they are providing to the customers. The customers can easily switch airlines companies based on their needs and requirements. This is because their switching cost is low. Competitor in Canada market Some big airlines companies are present in Canada market which creates strong competition in the airlines industry of Canada. Apart from Air Canada the major airlines company present in Canada are West Jet, Cathay Pacific, American Airlines Group Inc, DELTA Airlines Inc and Transat. These companies act as a strong competitor to Air Canada. West Jet offers budget airline service which helps the company in attracting large number of customers. This company has expanded its business within a short span of time. West Jet acquired huge amount of market share and tripled its revenue in five years (Boddy, 2005). West Jet’s strong corporate strategies reduced the market share of Air Canada. Company analysis Air Canada offers high quality of services to its customers and it facilitates the firm in achieving its goals and objectives. Effective marketing mix strategy applied by this company influences its employees in delivering good performances. The company has expanded its airlines service to many countries of the world which helps it in acquiring more customers and increasing its sales. The company is controlling its cost structure for supporting its business operations of low cost airlines. The company is focusing on business travellers for generating more revenue. Air Canada is improving its corporate culture for encouraging its employees to deliver good performances. Customer analysis Air Canada deals with a vast range of customers. The company has a wide range of flights offering difference facilities and services. Therefore different types of customers avails the fight service of Air Canada. The people who want luxurious experience while travelling, they generally prefer the flights of Air Canada. This airlines company provides high quality of services to the passengers. Business travellers and tourist is the main customer base of this company. The income level of this people is high and they want to maintain their status by travelling through reputed airlines (Blackburn, 2012). Product market focus The growth and development of a company depends largely on objectives and strategies which it is developing and implementing with the help of its products and services. Marketing and product objectives Air Canada fully utilizes the position and reputation of its brand for enhancing its position in the competitive market of airlines industry. The strong brand position of Air Canada in airlines industry contributed a lot in its growth and success. In upcoming five years the marketing and product objectives of this company will be as follows: Current market: Present Air Canada is conducting its business operation both nationally and internationally. In coming five years the company can increase its current market by expanding its business operations in various other destinations of the world. By this process the company can increase its sales and customer base throughout the world. Service Quality: With the help of advance technology and new business processes the Air Canada aims to improve its service quality as per the needs and expectations of its customers. The company will focus more on its premium class passengers for establishing strong relationship with them. New Products: Air Canada will also establish low cost airlines for acquiring ore number of customers and holding its position in International market. Target market Presently the company is targeting the market of Canada and the markets of several other places where it is operating its business operation. By launching low cost airlines, Air Canada can expand its airlines service in different developing countries of the world. Air Canada will also focus on upper middle class people by lower the price of its air tickets (Air Canada, 2015). Customer value proposition Air Canada always tries to focus on the things which adds value to its customer services and helps the company in satisfying its customers at a maximum level. The customer service of Air Canada contributes a lot in the growth and development of the company. In coming five years the taste and preference of the passengers can change a lot. For this reason Air Canada can stay in touch with its potential and loyal customers for developing its service as per their changing values and preferences. Point of differences The point of differences makes Air Canada unique from other airlines companies operating in Canadian market. High quality of services: Air Canada provides a very high quality of service to its passengers within an affordable price range. The frequent flyer program of this company facilitates it to maintaining its differences from other airlines company present in Canada (Krashinsky, 2014). Trends: The Company is continuously improving its quality of services by implemented advanced technology. Air Canada puts huge effort in understanding the expectations of its valuable customers for improving its products and services. Marketing program Product strategy Air Canada implements different types of strategies with the help of its products and services for expanding its business in various countries of the world. Product line: Air Canada provides domestic, international and transborder flight services to various countries of the world. The flights of Air Canada have premium economy class, international business class, international economy class etc. Unique product quality: The service and the facilities offered by Air Canada makes it unique among other airlines companies. The luxurious service offered by this airline company makes the brand famous. With the help of advanced technology Air Canada provides different types of facilities to passengers which the low cost airlines fail to provide. Price strategy To some extent price of Air Canada’s ticket depends on the price of fuel. The company offers its air tickets at different prices based on the service and facilities. Initially the company mainly focused on high quality of service for satisfying its customers. For this reason the company targeted high end customers (Air Canada, 2012). But with the changing business environment and competition Air Canada has changed its pricing strategy. The company is lowering many of its extra cost for providing low cost airlines service to the passengers. This pricing strategy helps the firm in attracting many new customers. With its low cost pricing strategy Air Canada is trying to acquire more market shares. Promotional strategy Key promotional strategies of Air Canada contribute a lot in promoting its products and services in different countries of the world. The promotional strategies that Air Canada can use in future are as follows: Advertisements: The Company can advertize more about its products and services for reaching maximum number of customers throughout the world. It can maintain effective communication tactics with the help of innovating and interesting messages. Air Canada can create more brand awareness with the help of advertisements. Offers and discounts: Air Canada will provide early bird discounts to its customers. This will help the company in attracting more customers and retain them for a long time. By implementing this promotional tool the firm can increase its customer base. Long term objectives of the company can be fulfilled by this. Increasing air routes: Air Canada will increase its air routes by expanding its operation in different countries of world where it is not presently operating its business. By increasing air routes the company can enhance its presence on the global market. Tie up with tourism companies: This airlines company should tie up various tourism companies which will help Air Canada in selling maximum air tickets. By promoting the company through this way, Air Canada will be able to locate many new places where it can provide its flight services. Distribution strategy In its distribution strategy Air Canada is presently using its online site for distributing or selling its air tickets. In future the company may hire different agents who will facilitate Air Canada in selling its air tickets. These agents will be present in different countries of the world and will work on the behalf of the firm in acquiring more customers. Financial data projection Past sales revenue Air Canada is experiencing an increase in its sales revenue for the last 5years. From the sales revenue of the last five years it can be observed that the revenue of the concerned company increased in each consecutive year. This indicates the company is operating its business successfully. But the diagram signifies that the revenue increased at sales dramatic rate. The company is focusing on increasing its revenue for enhancing its competitiveness The above graph represents the sales revenue of Air Canada for last five years. The above diagram also signifies that the revenue and the cost of sales of the concerned company increased significantly from the year 2010 to 2014. But the company is required to focus on increasing the rate of increase in revenue for capturing the market. The significant increase in revenue will make the company more strong in facing the risk and uncertainty in its business operation. Five year Projections The five year projections signify that the operating income of the concerned company after meeting of its depreciation and selling and administrative expenses increased subsequently. This increase in the operating income indicates Air Canada is experiencing a sound financial position. But it can be observed from the projected figure that the operating income decreased in the year 2011 as compared to 2010 but the concerned company was able to increase its operating income in 2012 due to the increase in gross profit and reducing its expenses. The main reason for the decrease in revenue in 2011 is due to the earthquake which occurred in Japan reduced the passenger revenue by $28 million. The increase in revenue signifies the company is profitable and is capable of meeting its short term liabilities. The increase in operating income increases the efficiency and feasibility of the business. The operating income of the concerned company is generated from its number of passengers, cargo and others. The passenger revenue from the various countries includes Canada, Atlantic, US Tran’s border, pacific and others. The concerned company is focusing on expanding its business .It has also been observed that together with the increase in revenue of the concerned company from 2010 to 2014 the operating expenses of the company has also increased subsequently. The main reason for the increase in the expenditure of the company is due to the increase in the cost associated with terminal handling, miscellaneous fees and services, crew cycle, Air Canada vacation land cost, building, rent and maintenance and other allied or related cost. It is observed from the above income statement of the company that the operating income increased more in the year 2014 as compared to the previous years. This indicates the company is improving its business operations (Cox & Fardon, 2008). Implementation plan The implementation plan of Air Canada indicates that the company tapped four new markets in the year 2010. The concerned company is on the verge of expansion of its business in various areas of the world. Air Canada enhances its Tran’s border and domestic network through its agreements. The concerned company is on the verge of expanding its business in more than 50 countries towards the end of 2015. The company is expanding its business in the international market and increasing its traffic through its international gateways. The company is focusing on providing more facilities to its customers. The company is continuously focusing on generating revenue for covering its expenses and cost and offering best and adequate services to its customers across the world. The main aim of the company is to become the market leader. It is providing excellent service in the Canadian market and in the US market. Now the company is focusing on expanding its business in the new market for generating more revenue. The concerned company is focusing on expansion of its business particularly in the Asian markets, since it did not cover many of the Asian countries. Entering into the Asian market will contribute significantly in increasing the revenue of the company. It is engaged in providing unique and differentiated services as compared to its competitors across the world. Air Canada is providing various promotional and discounted fares to its customers. The prevalence of low cost carriers provides more competitive advantage in gaining market share as compared to its competitors. Year New Markets Added Cumulative market % Percentage in Canadian market 2010 4 4 19 2011 5 9 43 2012 3 12 57 2013 4 16 76 2014 5 21 100 The table above signifies that the cumulative number of market the concerned company is increasing significantly in each consecutive year and it is likely to increase more in the next year. It is on the verge of expanding its business by opening its business in more than 50 countries across the world by the end of the next year. The successful entering into the new markets from the year 2010 to 2014 indicates that the company can successfully enter into the new market in the future period of time (Helferty, 2001).  Evaluation and control On the basis of the financial statement of Air Canada it can be analyzed that the company is performing its business operation successfully. It is capable of generating adequate revenue for the last five years. The concerned company experiences a sound financial position. The operating income and the gross profit of the company increased subsequently in the last few years. But it experienced a decline in its income in the year 2011 it was due to the earthquake that prevailed in Japan which affected the revenue generation from Japan. The increase in the revenue indicates the company can successfully expand its business in the various international markets across the world. The concerned company is on the verge of entering into the Asian market and covering various countries of Asia which is yet to be entered by the concerned company. The company is successfully operating in the Canadian market and in the US market. It is engaged in providing various services to its customers for increasing its brand name and gaining competitive advantage over its competitors in the market. The increase in revenue of the concerned company indicates the increase in the number of passengers. Air Canada is required to focus on reducing its cost or expenditure, since together with the increase in revenue and the operating income of the country, the expenditure of the company also increased subsequently from the year 2010 to 2014. Therefore it is required to increase its a revenue and decrease its cost .it is required to emphasize on providing varied facility to its customers in order to attract its customers, increase its brand image, reputation and gain market share. The expansion of its business in Asian market will contribute immensely in generating adequate revenue for the company. It is already successful in the Canadian market. It is concentrating on various commercial arrangements for broadening its network across the world. The company in order to increase its profit is required to evaluate the performance and revenue of the company on quarterly as well as on half yearly basis (Higgins, 2008).  References Air Canada. (2012). Management’s Discussion and Analysis of Results of Operations and Financial Condition. Retrieved from https://www.aircanada.com/en/about/investor/documents/2012_MDA_q4.pdf . Air Canada. (2015). Air Canada Altitude. Retrieved from http://www.aircanada.com/en/aeroplan/altitude.html Blackburn, W. (2012). The Sustainability Handbook. London: Earthscan. Boddy, D. (2005). Management: An Introduction. Harlow: Pearson Education Limited. Cox, D. & Fardon, M. (2008). Management of finance. Worchester: Osborne Helferty, A. (2001). Financial Analysis: tools and techniques. New York: McGraw Hill Higgins, R. (2008). Analysis for financial management. New Jersey: McGraw. Krashinsky, S. (2014). Air Canada shifts marketing focus to increase global presence. Retrieved from http://www.theglobeandmail.com/report-on-business/industry-news/marketing/air-canada-spends-more-than-ever-on-marketing/article18739469/ Wintzer, E. (2007). Global competition and strategic management. Germany: GRIN Verlag. Read More