Marketing Plan for United Airlines - Essay Example

MARKETING PLAN FOR UNITED AIRLINES ID: of Executive Summary United Airlines is an air transport company based in Chicago, Illinois. United Airlines is entirely owned by United Continental Holdings, Inc. The company was founded in April 1926 and began operations in March 1931. The airline is a member of the Star Alliance. In October 2010, United Airlines and Continental Airlines went into a merger. The company operates from 9 hubs located in the United States, Japan, and Guam. According to current air transport statistics, United Airlines is the 3rd largest airline in the U.S. in terms of passengers handled. The company has a fleet size of 701 airplanes and serves over 370 destinations both internationally and domestically. The following is a marketing plan for United Airlines. The plan has an extensive analysis of the position of United Airlines in the aviation industry. The marketing plan contains an analysis of the current airline industry market and what United Airlines has to do in order to increase its market share. The plan further analyzes the competition; products offered; pricing strategy; SWOT analysis; and implementation plan for the firm. United Airlines’ main mission is to become the largest airline in the U.S. in terms of passengers handled. United Airlines plans to increase its revenue, fleet size and net income. United Airlines also aims at improving brand recognition and increasing loyalty among its customers through exceptional service. Situation Analysis The airline industry has become very competitive in recent years. Airline Due to the increasing number of people taking air transport has become necessary for airline companies to increase capacity, present low ticket prices, offer exceptional customer service and strengthen their brands (Forbes, 2014). Market Analysis Air transport is the second most popular means of transportation in the U.S. only behind road transport. Air travel is mainly used for leisure travel and business transport. Between 2008 and 2009, over 40% of adults in the U.S. had used air travel for leisure travel and over 45% had used air transport for business travel. Over half a million business trips are carried undertaken every year. Most air travel is mainly domestic but international flights have been increasing in the recent years. The average age of leisure travelers is higher than the average age of business travelers. In modern times, fewer adults are flying with their children. Households that frequently use air travel have higher income than households than prefer road transport. People with college diplomas and higher traveled more frequently than people without tertiary education. Most travelers do their ticket booking online (Sweet, 2009). Brand Analysis United Airlines has been in operation since 1931. United Airlines is currently the third largest airline company in terms of passengers handled and the fleet size. In 2010, the company went into a merger with Continental Airlines with the aim of increasing customer base and increase and strengthening the financial position of the firm. The company serves the four largest cities in the U.S. and is dominant in cities where it operates hubs. In areas where United Airlines does not serve directly, it offers services through other airlines that are part of the Star Alliance. United Airlines has potential for growth because of the merger with Continental Airlines. United Airlines can strengthen its brand through sound business practices and innovative marketing strategies (UCH, 2013). Target Market United Airlines’ target market is made up of adults aged 30 to 55 who have a minimum household income of approximately $70,000. The target customers live in the cities or areas close to the cities served by the company or its Star Alliance partners. The target customers are successful business people who are employed in full-time management, business or professional occupations. The target market has a minimum educational qualification of a college diploma. The United Airlines’ target market comprises approximately a third of the U.S. population (IATA, 2013). Competitive Environment United Airlines faces competition from other airlines in the United States. The main competitors are Southwest Airlines, US Airways, JetBlue and Delta Air Lines (Wyman, 2013). Southwest Airlines are known for their discounted prices, eco-friendly programs and excellent customer service. Southwest Airlines also has a large advertising budget. Delta Air Lines serve the highest number of passengers in the U.S. Delta Air Lines has customer friendly services and has a large advertising budget. US Airlines has a strong online presence and serves many domestic locations. The company hosts many successful social media campaigns on Facebook and Twitter. Another competitive edge US Airlines hold is the high number of loyal customers. JetBlue has a unique website which makes it easy for customers to book flights and access travel information (Times, 2014). SWOT Analysis United Airlines can view itself from a better perspective by extensively analyzing its internal factors such as company strengths and weaknesses. External factors such as opportunities and threats will also receive deep consideration. United Airlines will be able to build on its strengths, overcome weaknesses, capitalize on opportunities and avoid the adverse effects of the threats. Strengths United Airlines fly to over 370 domestic and international airports. Therefore, customers can fly to most cities in the U.S. Customers can also fly to several cities in Asia, Europe, Africa, Australia and Latin America. The broad coverage makes United Airlines a viable option for air travel in most cities. United Airlines serves all the major cities in the United States. The firm has a fleet of Boeing 777 and 787 Dreamliners that have a large capacity and are fuel-efficient. United Airlines has committed and hospitable staff. The company also has significant financial resources. Being a member of the Star Alliance means that the airline can offer service to customers even to airports that are it does not serve. Weaknesses The prices of fuel have increased in recent years, therefore, increasing the cost of operation for United Airlines. Sensationalized complaints by customers on social media and blogging sites have given the company a bad image. Training costs for pilots, aviation engineers, air hostesses and other staff is expensive (PWC, 2013). Opportunities The merger with Continental Airlines opens up United Airlines to a larger customer base. Merging with Continental Airlines also eliminated a major competitor. The merger provides United Airlines with a larger financial base for growth. The number of people travelling by air has been increasing exponentially in the recent past, thus opening up a wider market for the firm. The number of leisure destinations has also increased (Belobaba, et al., 2009). Threats Global terrorism has reduced the number of people traveling internationally. The ever increasing prices of fuel are a major threat to the company’s mission of making profit. Harsh travel rules and guidelines set by the government regarding air transport. Smaller airline companies are also providing competition to established carriers. Other competitors in the airline industry also pose a threat to United Airlines (Goll, et al., 2008). Marketing Objective The marketing objective is to satisfy customers and increase customer loyalty. United Airlines is aiming at receiving customer satisfaction values of 94% in the annual customer satisfaction survey. Another objective is to become the leading airline in passenger numbers from the United States. The company is aiming at increasing the fleet size with new efficient Boeing 787 Dreamliners replacing old less efficient airplanes. United Airlines is aiming at increasing the number of passengers traveling from the U.S to other countries particularly in Europe and Asia. The company is also targeting an increase in revenues. Marketing Strategy United Airlines plans to implement various strategies in order to meet the stated objectives. Promotional Plan The company will sponsor various sporting events especially in the National Football league. The company will be aiming to sponsor an NFL team or acquire the naming rights to one stadium. The company will offer better offers for frequent flyer miles. The company uses staff to market the company directly to customers (Armstrong, et al., 2012). Every year the company will offer gifts to the loyal customers. The gifts will be branded with United Airlines’ logo. Adverts will be placed on social media sites especially Twitter, Facebook and Instagram. The social media team will carry campaigns in social media to increase United Airlines’ brand visibility (Perreault, et al., 2011). Media Marketing Strategy United Airlines will increase the number of television adverts by 30%. The airline will place 30 seconds adverts in all major television stations especially CBS, ABC, NBC, and TNT. The company will also place video adverts on YouTube. Full-page adverts will be placed in all major local newspapers such as the Washington Post, USA Today, New York Times and Wall Street Journal (Doole & Lowe, 2012). Pricing and Positional Strategy The airline will increase the number of lounges in airports that it serves establish lounges in airports where it has none. Luxury lounges will also be available for customers who have higher income. The airline will increase its baggage handling capacity in the hubs and other busy airports. The airline offers economic and business class travel. The airline plans to offer affordable ticket prices for all economy class passengers. Business class travelers will be offered more luxury services such as a wider wine selection, wide seats and better customer service. The airline will offer tickets at lower prices than competitors for routes that customers frequently fly. In other routes the company will offer the same prices as competitors. Lower prices will increase the number of customers preferring United Airlines. Frequent customers will receive higher discounts on ticket prices (Granados, et al., 2012). Distribution Plan United Airlines is in the process of developing a safer and customer-friendly website. A user-friendly website will make it easy for customers to book flights and get information about flight schedules. The firm will also improve customer service in all offices around the country in order to the booking process easy for customers (Fifield, 2012). Financial Projections United Airlines aims at increasing passenger numbers from 16 million annually to 19 million. This will increase the revenue base for the company. The company plans to grow the revenues from $38 billion to $48 billion by 2016. The company’s current net income is around $570 million. United Airlines plans to grow the net income by 10% annually (UCH, 2013). The airline plans to increase the fleet size from 701 to 720 in one year. United Airlines aims at keeping the cash flow positive. The company also plans to keep the gross margins higher than 95%. Implementation, Monitoring and Evaluation. The company aims at replacing all Boeing 777 and 767 models with new Boeing 787 models by 2018. United Airlines targets at becoming the leading airline in customers by 2017. The company will have 20 new international destinations by 2017. The financial records will be evaluated monthly, quarterly and annually. Customer acquisition costs will be closely monitored quarterly. The company will include better offers for the frequent flyer program. Customer feedback will be given priority in order to make the necessary changes regarding customer service. Bibliography Armstrong, G., Kotler, P., Harker, M. & Brennan, R., 2012. Marketing: An Introduction. Chicago: s.n. Belobaba, P., Odoni, A. & Barnhart, C., 2009. The Global Industry. s.l.:John Wiley & Sons. Doole, I. & Lowe, R., 2012. International Marketing Strategy. s.l.:Cengage Learning. Fifield, P., 2012. Marketing Strategy. s.l.:Routledge. Forbes, 2014. Airline Industry Will Have To Maintain Capacity Discipline To Remain Profitable. [Online] Available at: http://www.forbes.com Goll, I., Johnson, N. B. & Rasheed., A. A., 2008. Top management team Demographic Characteristics, Business Strategy, and Firm Performance in the US Airline Industry:. In: Management Decision. s.l.:s.n., pp. 201-222. Granados, N., Gupta, A. & Kauffman, R. J., 2012. Online and Offline Demand and Price Elasticities: Evidence from the Air Travel Industry. s.l.:Informations Systems Research. IATA, 2013. Global Commercial Airline Industry Outlook. [Online] Available at: http://www.iata.org [Accessed December 2014]. Perreault, W., Cannon, J. P. & McCarthy, E. J., 2011. Basic Marketing: A Marketing Strategy Planning Approach.. s.l.:McGraw-Hill Irwin. PWC, 2013. Tailwinds: 2013 Airline Industry Trends. [Online] Available at: http://www.pwc.com [Accessed 2014]. Sweet, K., 2009. Aviation and Airport Security. Terrorism and Safety Concerns.. s.l.:s.n. Times, F., 2014. Airline Industry Analysis. [Online] Available at: http://www.ft.com UCH, 2013. United Continental Holdings Annual Report. [Online] Available at: http://ir.unitedcontinentalholdings.com [Accessed 2014]. Wyman, O., 2013. Airline Economic Analysis 2013. [Online] Available at: http://www.oliverwyman.com [Accessed 2014]. Read More