The Market Environment Analysis for Bmibaby Airlines in the UK - Case Study Example

Introduction Bmibaby is a British low cost airline which is a subsidiary of the British midland international. The airline was established in 2002 and it is however able to differentiate itself in the existing market place through its advertisements, its website which acts as an interactive tool as well as the low priced fares. The market environment analysis for BMI Baby airlines in the U.K After the completion of the bmibaby airlines rebranding program that ensured a successful and also a challenging market position for the airline, bmi turned its eye towards the increment of its market challenge in the low-cost airlines. The low cost airline Go on the other hand announced its intention’s to start flying on the airport of the east midlands as it will be acting as a catalyst for the bmi to further accelerate its entry into the low-cost market . (The British midland international 2005) This will also help the company protect its local turf airport and also aggressively enter the fray of the booming airline sector. The market segment in the airlines industry is already saturated with the various key players in the industry catching the attention of customers who shop by the price alone primarily. Bmibaby airline has a big challenge in giving these customers what they really want in a relevant yet a different way. Since this activity would also be understood in liaison with the newly rebranded bmi then any further preposition should positively infuse the master brand and not in any way contradict it. If on the other hand the bmi master brand was built on brand values such as charm, speed and also style then the low cost operations should be aversion of the economy that offers charm and speed which would be basic but not full of character. An assessment of its competitive position The bmibaby airline has been expanding rapidly in the European market especially since most of the major traditional airlines have been posted with heavy losses which have led to the recent downturn in their demand for the air travel. The bmi baby positioning has a very unique value since most of its competitive position relies heavily on the price which then results in a marketplace with very little real personality. The airline has further exceeded all its targets and it is now focusing on expanding its network in Europe. Bmibaby airline has achieved a growth rate of above 26% per annum and this has further led to its expansion and it has also made it remain profitable in the recent past. The airline however is facing some current challenges and also some future opportunities that include the extent to which it will sustain its low-cost advantage. The bmi airlines have been very successful on its leisure destinations on low cost services which have previously lacked reasonably priced air services. . (Bmi 2006) It has also captured a substantial market share by diverting the demand from the charters especially on the travellers who are independent and favour more flexible booking and also schedule. On the major airports the bmi performs rather more strongly taking a huge percentage of the market share and this has further pushed the traditional flag bearers from their leading positions on the routes. By establishing the bmibaby as a subsidiary the British airlines is utilizing the low-cost offshoot so that it will still remain the largest operator in the market place. (Bmi 2006) Although the bmi airlines has exploited a wide range of areas in order to achieve its cost levels below the other traditional airlines some of its cost advantages is most unlikely to be sustainable in the longer term since the major airlines bring their practices more into the line and thus the cross subsidies within the outside suppliers businesses is eliminated. PEST and the SWOT analysis for the airline A PEST analysis is useful in analyzing the external business environment of bmibaby airlines. It is however a simple analysis that involves the understanding of the economic, social, political and technological environments with reference to the bmis’ business partners as well as competitors. (Laws 2002) Political The political factors have had an adverse effect on the bmi airline both directly and indirectly. This has further affected the company’s performance and also its operations. The political factors include the decisions made by the government locally and also internationally especially the United Kingdom federal government. For instance the 2001 legal suites in minimizing the marketing and also production of the high performance computers had very huge implications it terms of revenue to the airline. Economic The economic factors that affect the airline are inclusive of the fiscal policy rates, the currency exchange rates, the consumer factors and also the interest policy rates. The economic climate in Europe dictates the consumer’s behaviour. This has further affected the airline such that it however has to adhere to the market fluctuations in relation to the customers perceptions. When on the other hand there is a recession in the economy most people opt for other means of transport in order to cut down their travel costs. Social This includes the factors that are within the society such as the media friends and also the families. The social factors on the other hand affect the consumer’s attitudes interests and also opinions on the way they view the services and products from the bmi airline. Technological The technological factors which affect the airlines operations include using the website as an interactive marketing tool in order for the company to meet the global market. This has had a profound effect on the company’s marketing mix strategies. The technology in the airlines industry changes so frequently and bmi has to keep up with the pace so that it would not compromise in its customer’s safety. A SWOT analysis on the other hand is an analysis framework which looks at the internal and the external environment of the airline. The strengths and the weaknesses are in the internal environment whereas the opportunities and threats are considered to belong to the external factors. (Buhalis and Laws 2001) Strengths The strengths of the bmibaby airlines would be inclusive of the capabilities and the resources that would help it achieve a higher competitive advantage over the other airlines. First and foremost the airline has a strong brand name which is also very unique and this therefore attracts more customers in using the airline Similarly the airline has the ability to reach a wider scope of the low socio-economic status people since it operates in very remote locations. The airline has also advanced technology which eases the provision of its services to its customers and it also has very experienced and qualified personnel who attend well to their clients. Weaknesses The airline on the other hand lacks a touch for the elites in the society since it mainly focuses on the lower and the middle classes of people. This makes it loose the opportunity of serving the first class travellers who are believed to bring a lot of income to the airline industry. On the other hand the airline has not updated its control system with the current technology. Opportunities The airline has very many opportunities and they range from upgrading its website which has become a very effective marketing tool for the company. This will further cause the company to increase in its profits. The company also has an opportunity in line with its technological advancement which has broadened its customer base since the consumers can easily access the company’s products and services efficiently. Threats The company also has various threats that are inclusive of the government regulations which may hinder the airlines operational strategies. Another threat involves the increased trade barriers which has made the airline to limit its operation in certain areas. The competitors such as Ryan air also pose as a threat to the airline in terms of the customer service as well as the policies which affect the running of the airline. A recommendation on the generic future market strategy The bmibaby airline should keep abreast with the growing technological advancement and as a generic future marketing strategy the airline has to outsource for experts who will keep the airline updated with the existing market trends. This will further allow he airline withstand the stiff competition in the market. Similarly the airline should continuously train its employees on way to beat other airlines in terms of having the greatest market share. (Holloway 2004) Conclusion In conclusion the bmibaby airline is a low-cost airline that is based in the UK and its market position is further affected by the political, economic and also social factors. The airline also has some strengths as well as weaknesses and this has further made it to come up with a marketing strategy for the future. The company’s strengths are inclusive of the ability of the airline to serve the people from low socio-economic status and also the company’s advanced technology that eases its provision of services to the customers. Bmibaby airline also has a big challenge in giving the customers what they really want in a relevant yet a different way. Similarly the Airline needs a generic future market strategy which should help it to further keep abreast of the growing technological advancement. On the other hand the generic future market strategy will allow the company to withstand the stiff competition that is in the market. Reference: Holloway, J. (2004): Marketing for tourism. Harlow, Financial Times Prentice Hall. Buhalis, D and E. Laws (2001): Tourism distribution channels, practices, issues and transformations. London, Continuum. Laws, E. (2002): Tourism marketing. Quality and service management perspectives. London, Continuum Bmi (2006): information about bmibaby airlines. Retrieved from; www.flybmi.com/en-gb/about-bmi/about-bmi.aspx accessed on; 29th October 2007 Bmi (2006): the key facts about bmibaby airlines. Retrieved from; www.flybmi.com/en-us/about-bmi/keyfacts.aspx accessed on; 29th September 2007 The British midland international (2005): The low-cost airlines boom. Retrieved from; www.low-cost-airliine-guide.com/en/low-cost.airline.htm accessed on; 29th October 2007. Read More