Managing Marketing of Etihad Airways - Research Paper Example

Etihad Airways Market Plan Outline Executive Summary Current Market Situation Market Description Product review Competitive review Logistics review SWOT Analysis Objectives and Issues Marketing Strategy Positioning Product strategy Pricing strategy Distribution strategy Market communications strategy Action Programs Budgets Controls References Executive Summary Etihad Airways is the premier airlines with global reputation in Asian region. The decision of the airline company to join the lucrative South Asia market is driven by the growth potential in the region and the preparedness of the company with the right products for this market. Etihad’s products are relevant to the market segment but needs brand awareness campaign to increase the consumer understanding of the product. The greatest objective in this market for Etihad is the development and control of the first and business class products in the region. Etihad targets to be in control of 80% of the market in the third year through rigorous branding and promotional campaigns involving establishment of strategic linkages . Table of content Executive Summary 2 Current Market Situation 3 Market Description 3 SWOT Analysis 8 Objectives and Issues 12 Marketing Strategy 12 Action Programs 16 Budgets 17 Controls 18 References 1 Current Market Situation Etihad Airways being the national airline of Abu Dhabi began its operations in 2003 and has been declared the fastest growing airline in Asia. The company’s positioning as a provider of personalized and luxurious travel services has made the company a global leader in the first class travel service. As stated by Bomber, Gittell & Kochan (2009) with this leverage, the company’s growth strategy is well founded and as it expands its market to Asia, the Company’s endeavor to be the market leader in Asia can still be enhanced on the same platform of offering personalized and luxurious travel service. The current challenge facing Etihad Airways as it endeavors to penetrate Asian destinations and market segment is competition from numerous airline companies and lack of brand awareness. Recent market studies have indicated a growing business in airline industry in Asia ranging between 30% and 40%. The research further indicates that the first class travel and business class travel are growing at a slighter lower rate of between 10% and 20% with most clients being international business people, tourist and professionals. Airline consumer survey done on the region further indicates increasing trends in consumer awareness on the airline service quality and experience (Skytrax 2010). Market Description Asian airline market has been in an endless growth for the last decade and this has seen the influx and development of several airline companies. The increasing economic growth in the region has made airline travel a choice for most business professionals and entrepreneurs. Etihad Airways intends to meet the needs of the market as whole while segmenting the market as per the users’ needs rather than the regional and geographical locations. The target market for Etihad Airways and Etihad brand are; i. Corporate users ii. Entrepreneurs and investors iii. Luxury travelers iv. Professionals The needs of most customers in this segment with reference to first class and business class product are travel safety, great customer experience in terms of travel ambience, entertainment, continuation of business and office work and finally timely and consistent travel schedule. Product review Etihad airways is associated with personalized and luxurious first class product- Diamond first class globally, this has made the company a global leader in this product category as per the 2010 Skytrax awards. The company has positioned its first class product as associated with style, space, luxury and ambience. The First class product- diamond class has been designed for greater customer experience to the corporate users, luxury travelers and entrepreneurs and has the following features; Spa treatment A la carte fine dining Champagne bar Lighting options Business room facilities Resting and refreshing facilities Great experience family room Cigar lounge Business class product for Etihad airways-pearl business product also performs exceptionally well having been rated by Skytrax as in the third position globally. The product positioning is that of comfort and convenience for business professionals on travel. The business-pearl class package has a range of features as follows; Spa treatment Five star dining Business room facilities Resting and refreshing facilities Great experience family room Entertainment facilities Our service quality is exceptional but customer awareness needs to be established for the Asian market segment where these products are still in the growth phase. In the first two years Etihad airways project to capture and control 50% of the first business class segment in the Asian market. With its integrated marketing programs, Etihad airways project 80% market dominance after the third year when the effects of the rigorous brand awareness campaigns begin to take effect. Etihad plans to further differentiate the first business class products to allow customers have a wide range of products according to their specific needs (Holliday, Bangs & Halliday 2001). Competitive review Competition in airline industry in Asian region is very challenging and with the emergence of low cost airlines, airfare becomes a very integral part of competition especially in the economic class product. In the First class and Business class segment, the clients will look beyond costs and consider the availability of professional and office communication facilities not excluding the general travel ambience. The key competitor of Etihad airways in the East Asian market with regards with the Business and First class products are as follows; 1. Singapore airlines 2. Pakistan International airlines 3. Srilankan Airlines 4. Air India, 5. Philippine airline All the airline companies are competitors of Etihad in the business class product but only Singapore and Air India provide a completion regarding the first class product. The main competitor of Etihad Airways being Singapore Airlines has its products positioned as follows; Singapore airlines Singapore airline first class product is positioned as offering privacy, exclusivity, flat bed, elegant seats and comfort. Business class product is highly differentiated to meets the needs of a wide range of customers. The product has the following attributes ergonomically designed seats, space and flat seats. The products are bundled with a loyalty programs, holiday travel, free tour and transfers. The company also has an online booking facility which eases the customer service requests and booking. In comparison with its closest competitor Etihad’s products proves to be above par and therefore only requires a proper repositioning to suite the market segment. The well differentiated products of Etihad’s first business class products have the ambience meeting most of its customer needs compared to Singapore airlines. It is only that the products need to be repositioned as cost effective and belonging to the Asian market so that customers may be able to choose the best products. Logistics review The accessibility of Etihad’s first and business class products is mainly through the internet. Etihad’s products will be mainly available in Airline’s website. The products booking is facilitated online and payment is made through selected international payment gateways. Other avenues for distributing and availing Etihad Airways products include; Strategic linkages Etihad will endeavor to hold strategic linkages and partnerships with holiday destinations in various cities of South East Asia. These are international holiday destinations and will provide the necessary leverage to the company with respect with customer numbers. Etihad will be offering a specific package compatible to holiday seasons so as to take advantage of tourist inflows to the region. Etihad plans to ensure that it has entered into strategic alliances with each and every corporate organization in the region (Baugh & Hamper 1990). The company will ensure that this market is assigned a relationship officer to ensure that their services are tailored to their needs. Value chain support Etihad will form strategic alliances will payment facilitators like supermarkets, online payment agencies like Visa and Master cards. Strategic alliances with airline booking vendors Airline booking agencies are very import marketing and distribution points for Etihad products therefore; the company will make a competitive offer for them in the region. This will be one of the cardinal strategies that will ensure easy penetration to the market as vendors and their clients will be offered a promotional package. SWOT Analysis Etihad Airlines Strength mainly lies in its quality services which are a greatest source of brand equity. The opportunities available for Etihad are endless given the Asia’s growing economy, numerous holiday destinations and less competition in the first and business class product category. The threat lies in entropy and ever growing number of airline companies flying the region. The main weakness facing the company is profitability which has not been good. Strengths Etihad airlines have the following strengths; Great and innovative customer experience; Etihad currently rated as the global leader in first class products has achieved this as a result of its innovativeness when it comes to product development and quality. The airline on board bar concept and family travel package are unique features that stand out in the whole of global airline industry. Other support feature like business communication support is one of the greatest strengths of Etihad. Highest travel safety standards Etihad is one of the global airline companies that do have their fleet consisting of not less than five year old planes with its own in house world class maintenance and servicing department. Coupled with no incidences recorded with reference to the company, Etihad has travel safety record being one of its main strengths. Consistency in travel schedules. Travel schedules are very important for business executives and therefore Etihad should endeavor to provide this feature with all the available resources at its own disposal. Etihad signs service level agreements with its first and business class customer guaranteeing travel as per the agreed schedules. This feature is a strength that reflects the seriousness of Etihad in offering their services. Weaknesses Lack of brand awareness. Etihad brand is still not widely recognized yet it has plenty of equity that it can boast of in the domain of quality service provision. Without rigorous brand communication campaigns, the brand will not build the necessary customer recognition and relationship. Low profitability. The company is yet to break even since its inception bringing to doubts its business concepts and strategies. This is one weakness which needs immediate resolution as the shareholders would like to have their investment returns. High prices. Etihad airlines pricing is much designed for the European standards but the pricing should be differentiated if the company intends to capture the Asian market. Most of the competitors of Etihad have developed a pricing relevant for the region. Opportunities Growing Asia’s economy The economic growth in the Asian market indicates an increased investment in the region consequently business and first class travel are expected to increased as a result of investors and corporate travels. This provides an opportunity for the airline company to provide the necessary products tailored to meet the needs of this segment. Global network The Etihad’s global links provides an opportunity for the airline company to further business in the region. Most travels to the region via these airlines alliances may be a nice opportunity for Etihad to establish itself as regional market leader. Various holiday destinations in Asia The numerous global holiday destinations in Asia have been a substantial boost to the airline industry. Etihad’s First and business class products will gain from this opportunity given their luxury and hospitality platform on which they are founded. Threats Increasing competition in airline industry. Airline industry has seen the new entrants with totally revolutionary concepts entering the market on regular basis. This poses a threat to the growth and expansion programs of Etihad Price wars amongst airline firms in the region. Asia’s airline market has seen the most low cost airline companies operating because of price wars. This poses a threat to the fragile profitability of Etihad. Asia traditions encouraging modesty as a way of life: The traditions in the market of upholding modesty may discourage the intake of luxury and comfort products. This poses a threat to Etihad’s products concepts and values. Table of Etihad’s SWOT Analysis Strengths Weakness Great and innovative customer experience Highest travel safety standards Consistency in travel schedules. Lack of brand awareness Low profitability High prices Opportunities Threats Growing Asia’s economy Global network Various holiday destinations in Asia Increasing competition in airline industry Price wars amongst airline firms in the region Asia traditions encouraging modesty as a way of life Objectives and Issues First two years 1. Etihad endeavors to ensure that every member of the Asia market recognizes Etihad’s brand. This will be achiever through rigorous brand awareness campaigns. 2. Etihad endeavors to be the market leader by acquiring 50% of the Asian market. Third to the fifth year 1. Acquire 80% of the Asian market. 2. Achieve 20% profitability and 5% associated to the region. Issues Etihad needs a rigorous brand awareness campaign which the company has to fund in tandem to market promotion programs in the region. Etihad will lead in market repositioning of its products to reflect the values and customer expectations in the region. Marketing Strategy First Class product Etihad Airways marketing strategy will be based on availing a well differentiated first class product to the various classes of consumers. The products will be positioned as offering great experience, travel safety and comfort and also provides an environment of business and office work continuity while traveling. Business class product This product will be positioned as a necessary package for business entrepreneurs and investors. The product will be positioned as a necessity for time conscious and entrepreneurs who appreciate great experiences Positioning Etihad Airlines first and business class products will be positioned as being the most luxurious, comfortable and offering great experience to business executives, professionals, investors and tourist who require business communication facilitation while travelling. The positioning of the products in the market will be undertaken through an integrated market communication strategy and further supported by the actual innovativeness of the Etihad’s products (Ryans 2000). Product strategy First Class Etihad’s first products needs further market repositioning through development of several sub-products of first class products relevant for the region in the first two years. This will ensure that all classes of customers have their products tailored to their needs. Business class The business class product will have to be repositioned as being a product for all travelers in the region but with great travel experience incorporating all office communication tools. Pricing strategy Etihad’s business class pricing strategy will be reviewed in the first year so as to enable various players in the value chain gain from the inflows into the company. The company will endeavor to cut down the agency costs and pass the benefit to the customers in the third year by establishing a convenient relationship management department. The current Etihad first class product prices will be reviewed down in the first year so as to establish necessary awareness in the market and support the promotional activities. The product pricing shall remain premium so as to reflect the stature of the product. Distribution strategy Etihad’s distributions strategy is mainly online booking and payment. This method is preferred but there are clients who may not be technology savvy consequently making the use of agencies a necessity for effective sales of tickets. Etihad will facilitate their distribution strategy on via an effective online booking ands ticketing, great in flight enrollment to customer award schemes and ground lounge where booking and payments can be made over the counter. Ticketing Ticketing is mainly done via online systems whether over the internet or at the airport lounge ticket and customer support offices. Etihad’s Travel will be based on booking ticket which shall be online and a customer can print a copy or just remember the tracking number. In flight Distribution The distribution strategy in flight is facilitated via distribution magazines with the various centers where customers can be supported to access Etihad’s products across the world. Customers can enquire from in flight attendants and book even for further Etihad’s products. Ground distribution Ground distribution shall be effected by the building strategic alliances with various air travel agencies and ground handling organizations so as to avail Etihad’s products to their clients. Market communications strategy First class This product will be communicated using exclusive magazines and TV channels that will reflect the stature and serenity of the product. The use of loyalty programs and bundling strategies will be communicated as a way of customer invitation and retention strategies. Business class The communication strategy for this product will be based on availing the product to the mass market target almost all travelers. Therefore, an integration of TV, radio, internet, billboards, sponsorships and mobile messaging will used to drive home the brand position and promotional activities of the product. Market research will reflect the most relevant medium of communications in various segments of Asia. This means that the use of a particular media in certain region will be as per the research findings. All these market communications will be integrated and designed to pass a common message to market Market organization will be based at the marketing department of Etihad Airways Asia region headed by a marketing director with several key persons responsible for branding, promotion, advertising and sales under his direction. Action Programs Etihad Market penetration strategy will commence on January 2011. The plan will be executed for the next three years with a yearly review. January 2011 –December 2012 Etihad will launch its brand awareness and promotion campaign involving various TV commercials, online adverts and billboards throughout Asia. This will involve establishing of the necessary collaboration memorandum with various value chain stakeholders. This activity will cost an estimated budget of AED 20 million. Etihad will also establish value chain linkages with leading air travel agencies in the region. This network will ensure flow of customers to Etihad not only through online direct booking but also through agencies. January –December 2013 Etihad will endeavor to fund one of the major regional sporting events as part of its brand awareness campaign. The estimated budget for the same is AED10 million. Etihad is to fund a successful team as its brand ambassadors. Budgets The estimated budget for the implementation of the market plan is approximately AED100 Million for the period of three years. Budget line Amount in AED Branding and brand awareness 30 Million Market promotion 30 Million Market communication strategies 20 Million Marketing logistics 20 Million Total 100 Million The market plan is expected to generate 20% of Etihad’s global income hence making this marker critical for the success of the company. Controls Proper accounting controls have been instituted to ensure that expenditures relating to the plan will be authorized by both the budget holder and the financial management team leader. Quarterly audits both internal and external have been made part of the implementation milestones of the marketing plan. References Bangs, D 2000, The market planning guide: creating a plan to successfully market your business, product, or service, Kaplan Publishing, New York. Baugh, S & Hamper, R 2003, Strategic Market Planning, McGraw-Hill Professional, New York. Bomber, G, Gittell, J & Kochan, T 2009, Up in the air: how airlines can improve performance by engaging their employees, Cornell University Press, New York. Etihad Airways 2010, Etihad Airways, Abu Dhabi, viewed on 13th December 2010. Holliday, B, Bangs, D & Halliday, M 2001, The Australian Market Planning Guide: Creating a plan to successfully market your business, product or service, Allen & Unwin, Melbourne. Ryans, B 2000, Winning market leadership: strategic marketing planning for technology-driven businesses, John Wiley and Sons, New York. Skytrax 2010, Skytrax, London, viewed on 13th December 2010. Read More