Developing a Marketing Plan for Kingfisher Airlines Limited - Case Study Example

Developing a Marketing Plan- Kingfisher Airlines Limited Contents Contents 2 Introduction 4 Discussion 6 Production Planning 6 Identifying the challenges 7 Situation Analysis 7 Company Analysis: 7 Customer Analysis 7 Competitor Analysis 7 Climate Analysis 8 SWOT Analysis 8 Analyzing alternative market strategies 8 Selection of best marketing strategy 9 Analysis Marketing Plan for Kingfisher Airlines Limited 10 PEST Analysis for Kingfisher Airlines Ltd 10 SWOT Analysis for Kingfisher Airlines Ltd 12 Understanding Marketing Strategies of Kingfisher Airlines Limited 12 Conclusion 13 References 15 Introduction Marketing plays an important role behind the success of a company, product or a brand itself. It is a process through which products and services are introduced and promoted to the potential customers. Therefore, marketing activities such as developing a market plan, market research, advertisements, public relations and promotions largely influence the sale of the product or service. Hence, without a proper marketing plan, a company may run out of business even if it produces the best quality product in the industry. In contrast, a sound marketing plan results in higher sales, good company reputation and healthy competition in the industry, which ensures stability and sustainability for the company. For the purpose of discussion, Kingfisher Airlines Limited, a former leading airline group based in India, has been considered. The parent company of the airline is United Breweries (UB) Group having a 50% stake in low cost carrier Kingfisher Red. The company had been holding the second position in the domestic air travel market till December, 2011. However, as a result of adopting several controversial marketing strategies and severe financial crisis, they had to shut down their operations at the end of 2012. Several attempts of the management to recover the airline proved to be futile and the CEO finally resigned his position in February 2014. In the course of discussion, the main objective of the study will be to understand how to develop a sound marketing plan and attempt to redesign the marketing plan for Kingfishers Airlines Ltd (Bhattacharya, 2009). Discussion Before the discussion about the marketing plan of Kingfisher Airlines Limited, it is important to understand how to develop a good marketing plan. Adoption of marketing planning strategies depends mainly on the industry size and uniqueness of the product. Generally, the following initiatives constitute a sound marketing plan (Armstrong and Stephens 2005). Figure 2: Outline of Marketing Plan Production Planning Product planning includes intensive market research to understand the company’s capability and existing resources to start up a new business, introduce new product or change the marketing strategy for an existing brand or product. Ideal product planning should be concise, measurable and practically achievable. Hence, existing facilities, cost of production as well as breakeven analysis should be done in this part of the marketing plan (Applegate and Johnsen, 2007). Identifying the challenges Identification of potential challenges and threats existing in the business environment should also be analysed before finalising the product or product line. Opportunities should be calculated in terms of sales figures, strategies and company wise goals etc (Assael, 2005). Situation Analysis The situation in terms of internal and external business environments must be analysed taking into consideration the social, economic, and political settings in which the company is operating, as well as the internal strengths and challenges of the company itself (Batey, 2012). The main parameters of the analysis are: Company Analysis: Mission and vision of the company and its ability to meet deadlines. Defining short term and long term goals. Work culture, employee capability and skill set in line with the product. Strength and weakness of the company. Estimated market share for a specific time period. Analysis of stakeholders, including capabilities and cooperation expected from various suppliers, distributors, subsidiaries etc (Belohlavek, 2008). Customer Analysis Potential customer base. Targeted demographics depending on the nature of product (age, status quo) Values drivers, i.e. the product’s capability of value addition to the customer base (Chaffey, 2009). Competitor Analysis No. of market players. Identification of the weaknesses of potential competitors to weigh one’s own opportunities. Existing market shares of the competitors (Cheverton, 2005). Climate Analysis The best way for climate analysis is to adapt the PEST evaluation system. PEST stands for the political, economic, and social and technological environments of a company. The study of political and legal environments includes changing regulations and legislations that may affect the business. Economic environment analysis puts emphasis on whether there are any opportunities for economics of scale, understanding imposition of tariffs, trade barriers and regulations for international trade. Social and cultural environment analysis ensures the demographics and hence scope for acceptability of the product whereas technological environment includes requirement for implementation of latest technologies and technology used by the competitive firms (Donald, 2007). SWOT Analysis SWOT Analysis refers to analyzing the internal Strength (competitive advantages) and Weakness of the company as well as external Opportunities those exist in the business environment and threats, having potential to destroy the business (Doole and Lowe, 2008). Analyzing alternative market strategies In order to select the best marketing strategy for a product or services, all possible strategies should be considered before arriving at the current strategy. Decision for changing strategies may lead to elimination of a particular product line or change in pricing strategy etc (Franzen and Moriarty, 2008). Selection of best marketing strategy After analyzing all such factors, the decision should be taken for selecting best possible strategy that will fetch good return in terms of product appreciation in near future. Hence, four Ps of marketing must be considered before arriving at any decision about the company’s decision. These are: product in terms of quality, acceptability, cost of production and distribution versus profit expectation, etc.; price in terms of competitors’ price, margins, discounts etc.; place in terms of distribution and logistics, demographics, market structure and market environment; promotional activities are also an integral part of the marketing plan. Depending on the industry type and nature of products and services promotional activities should be chosen from the various alternatives such that advertisements, public relations, promotional programs, banners and hoardings etc (Gelder and Woodcock, 2005). Analysis Marketing Plan for Kingfisher Airlines Limited Based on this outline of marketing plan, the marketing strategies taken by Kingfisher Airlines Ltd is to be discussed for understanding their inherent potentials that led the company to continue as a market leader till the end of 2011 and identifying loopholes in marketing plan that resulted in severe destruction (Ferrell and Hartline, 2012). Kingfisher Airlines Ltd started its domestic commercial operations on 2005 and international operations on 2008. A 4% increase in the growth of Indian tourism industry, improving standard of living of the youth segment of the society, tendency among them to go abroad for education, services or holiday purpose, few service providers for the upscale clients etc influenced the management to start up the new airline business. According to Mr. Vijay Mallya, CMD of Kingfisher Airlines, the company aimed at selling a lifestyle similar to West, that the growing Indian middle class is expected to enjoy. They were to provide a world class experience at an affordable price. In this way, the management of Kingfisher Airlines did there service analysis, considering their constraints and potential threats (Ferrell and Hartline, 2012). . The organization had also done their situation analysis based on the following criteria. PEST Analysis for Kingfisher Airlines Ltd While analyzing Political, Economical, Social and Technological factors the followings attributes to be considered. Political Considerations included 49% of FDI ceiling in airlines sector, where FDI limits were 100% for Greenfield projects, 74% for existing airports and 100% for the NRIs. Economical aspects such that improvement in per capita income of the middle class, incremental growth of tourism sector, huge opportunity that may lead to sufficient contribution to Indian economy etc influenced management decision to carry on airlines operation. However, management also noticed the potential threats in terms of rising cost of fuel (Keller, 2008). Figure 5. PEST Analysis of Kingfisher Airlines Social factors such that more and more employment opportunities due to liberalization and globalization of the economy, infrastructural development of the country as a whole, construction of new airports due to increasing no. of potential passengers, stronger safety and security measurements helped the company to continue their operations (Groucutt, Leadley, Forsyth, 2004). The company also kept themselves upgraded through providing services like online tickets and check in facilities, e booking facilities, thus liaising with latest technologies (Pahl, and Richter, 2009). SWOT Analysis for Kingfisher Airlines Ltd Potential strengths for the company to operate successfully can be attributed to continuous research and innovation, quality of hospitality provided to the customers. Existing training institutions to train their employees’ better quality of hospitality added extra advantage to their operations. Weaknesses were such that huge initial investment requirements and service deliverables were counted by the management of Kingfisher Airlines (Hastings, 2013). Opportunities to penetrate into the domestic and international airlines industry to capture existing potential due to rise in tourism industry and untapped air cargo market pushed the managements to enter into this segment whereas they also considered potential threats from rising fuel cost, existence of dominant market players, continuous low profits etc (Hastings, 2013). Understanding Marketing Strategies of Kingfisher Airlines Limited Kingfisher introduced first airlines with full new fleet of aircrafts. It was not a low cost carrier; neither had they wanted to be. Their air was to capture that segment of the market those are willing to pay well, for international quality of services. Therefore, being a premium service provider, they adopt a premium pricing strategy (Kazmi, 2007). The airlines took an extensive promotional strategies including appointment of super models as brand ambassador, press release, hoardings and advertisements etc. Gradually, they expanded their network to 80 domestic as well as international destinations. Conclusion In spite of having such strong team of management, research and development unit, potential market and well established operations, Kingfisher Airlines couldn’t retain sustain in long term because of a large no. of loopholes in the marketing plans. The airlines company targeted the upper middle class of the society most of which are from service sector. Though the desire is always there among the middle class to get the best, moreover westernized service, being salaried, they have to take calculated decision while making a purchase of a luxury item. Repetition of customers or frequency of a customer to take the same service more than once is very less. Instead, if they would have adopted a low pricing strategy, targeting the same demographics, may have resulted in a continuation of their operation. Another thing that hit the airlines was the consequences of worldwide recession. The company could not assume the potential threat that the effect of recession will hit the salaried middle class the most. Hence, economic considerations such as effects of recession on the middle class, on one side, and rising fuel cost that accounted for as much as 45% of the total operating cost, on other side, pushed the company to shut down (Schindler, 2011). In spite of having increasing debt due to the establishment and expansion of the business, and continuous low profit, the company continued to invest huge amounts in their promotional activities. Starting from hiring most recent supermodels, the company continued to sponsor award functions such as MTV Style Awards, Formula 1 team Force India, IPL team Royal Challengers and many more. Clearly, limited vision of the airlines company, inability of taking correct decision depending on the economic scenario of the country, inconsistency in pricing strategy and many other similar factors are responsible for the company to shut down its operation. 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