Strategic Marketing Management and Consumer Behavior of Aer Lingus - Assignment Example

Q1- Strategic marketing management- why is Aer Lingus' complex competitive situation a problem for its economy class business? Discuss the implications of this situation. Aer Lingus, the national airline of Ireland has been positioned in a different way than its other counterparts. It has always competed on the basis of Irish values such as being hospitable, warm and immediate. However, some of the past world events have had a negative influence on the company’s financial health. They include events like agricultural problems faced by countries including Ireland and England. Moreover, the terrorist attacks on the World Trade Centre and Pentagon and the recent episodes of terror throughout Europe and Asia have threatened travelers a great deal. They are reluctant to travel freely like they used to. Other than these events, Aer Lingus’ staff went on strikes to get their pay increased which caused the airline heavy monetary losses as it had to stop functioning for a while. (Mulcahy, 2002) These reasons have had an adverse effect on the airline's financial conditions and it has been in serious financial distress. These reasons combined with many others are raising a problem for the economy class passengers who do not just require warm and hospitable service but they require all of this at affordable rates and a company with financial problems cannot provide them with this facility. Aer Lingus has positioned itself as a low cost carrier but this has resulted in deterioration of its service which was the basis of its superior image. (Mulcahy, 2002) There has been an ongoing debate about whether Aer Lingus which is Ireland's flag carrier should be provided with government aid. The reason for the rise of this debate is that European Union has stopped the provision of government aid to the firms. But those who are in the favor of this aid say that since, government is a shareholder in the Aer Lingus organization hence, they should provide it with support when it needs the most. (Mulcahy, 2002) Now, if Aer Lingus is given state aid, then it might recover from its current state however, in the absence of such aid, the airline's service will continue deteriorating. This will again prove to be very inconvenient for the economy class customers who desire the best they can get in the most affordable amount. (Mulcahy, 2002) A bill was proposed to privatize the company in 2003. There are always two sides to any decision. Privatization could help bring in better management and run the operations more efficiently but it would charge higher prices from customers thus, negatively affecting the economy class passengers. Recently a survey was conducted to find out passenger views about Aer Lingus and they believed it to be: 1. Understaffed 2. Very slow 3. Disrespect for customers Passengers believe that their low cost model has caused them a great deal along with the fact that travelers have been few in number for the past few years. Being low cost in an industry which is going through a downturn in its life cycle can be harmful for any firm and can endanger its financial stability. The cost of this has to be born by passengers who are charged higher prices to cover up for the incurred losses of the airline. (Mulcahy, 2002) Q2- Consumer Behavior- Discuss the importance of customer service in the original product proposition for Aer Lingus. What is the implication for Aer Lingus' competitive advantage? In a competitive industry like that of airlines, it is essential for any firm to keep its customers on the forefront and deliver them the best value. Initially, Aer Lingus was designed in such a way that it provided all the basic Irish values to its customers. It was branded so that it conveyed the image of an airline which placed customers before everything and strived to serve them best. (Tennam) In today’s hyper competitive environment, companies come up with newer services for their customers every other day and try to make a presence in the market by creating a difference and innovating new ideas. Hence, only being a safe airline does not get much attention from customers in today’s day and age. Also, there is a lot of excitement attached to air travel. Passengers have great expectations from the airline they are using and the place they are going to. As Gerard Tennam says “There is the sense of engineering, comfort and modernity in the gleaming machines that take us there. The departures and arrivals and the check-in and boarding throw up a whole series of emotional responses whilst the uniforms and livery sported by staff and equipment evoke their own glamour.” (Tennam) Aer Lingus achieved its competitive advantage by positioning it differently than the rest of the airline. It focused on customer service the most. It created its image as that of an airline which is based on Irish vales. Hence, customers were most important for them. The Irish people when coming back home form abroad were given a feeling as if they had already reached their country through the warm, hospitable and informal service of the airline. Then, it uses the colors green and blue which show caring and efficiency respectively. Only the choice of these colors makes the customers feel special. (Tennam) All these qualities implied that Aer Lingus has had a definite competitive edge over others and has been the preferred choice of most of the Irish people. However, moving to low-cost strategy has proved to be detrimental to the interests of the passengers as well the airline itself. Instead of building up a brand image in the minds of the customers so that they considered Aer Lingus something totally different from the rest it has started competing on something in which it already has string competitors like Ryanair. (Tennam) Hence, Aer Lingus should continue to compete on the basis of values that it used in the past for building its brand image to ensure having a competitive edge over others. However, such a competitive edge implies that the upcoming airlines might also position themselves in a similar way and offer some competition. The existing airlines could also start competing on the basis of these values but the customers would know the Aer Lingus was the first one who offered these values and the rest are copy cats. If Aer Lingus wants to stay in the business and keep growing as well than it cannot just rely on the fact that customers will be able to differentiate it from others even in the face of fierce competition rather, it will have to keep innovating and introducing newer features for its customers. (Tannam) Q3- Outline and justify a suitable marketing communications mix for Aer Lingus that will enable the company to build relationships with key customer segments. Aer Lingus offers services to various customer groups and being able to cater to everyone’s needs and meet their expectations is the ultimate challenge for the company. For this purpose they should design such a marketing strategy which covers all dimensions of marketing and at the same time it has to be extremely dynamic and flexible so that the company can make changes when necessary. (Schmid) Past research has shown that focusing on customers can add more value to a company than focusing on other variables such as profits, efficiency etc. Hence, it is advisable that Aer Lingus should develop a customer-oriented strategy. (Schmid) The marketing and communications mix that suits the company is as follows: Pricing: Coming up with innovations such as holiday packages, quantity discounts, frequent purchase discounts, loyalty schemes and many others like these can help Aer Lingus in creating value through repeat purchase. Also, prices should be such that they are neither too high so as to detract potential customers and neither too low that the company is unable to cover its costs. (Schmid) Service: Focusing on quality and efficiency can prove to be a key in designing a value added service that is appreciated by all. At the same time, the airline must remember that the cost of providing such a service must not exceed the company’s budget. Designing a high quality service that does not increase the cost for the company or its customers is a challenging task. For this Aer Lingus must rely on its highly capable staff members to come up with such value-added features which are cost effective. (Schmid) Promotion: Promotion of the company’s unique features can be done in a variety of ways. For targeting business class customers, Aer Lingus should use magazines and newspapers mostly read by that class. An advertisement that is placed once in a while can be beneficial in this regard. Moreover, Aer Lingus should place advertisements on websites visited by majority of its target market. (Schmid) Besides advertising in the conventional ways, promotional events such as sponsoring various shows help create a particular image in the customers’ minds. (Schmid) With these issues in mind, Aer Lingus should develop its new marketing `program for a better airline' with the customer in the centre of the business. Furthermore, the company already holds on-going contact with their customers in form of customer feedback and group discussions. The marketing program should focus on their customer's key concerns, which could be structured and prioritized as follows: 1. Punctuality 2. Queuing 3. In-flight experience 4. Baggage delivery 5. Airport facilities (Schmid) Focusing on these marketing mix elements and others such as pricing the tickets properly, coming up with low cost packages for customers, advertising promotional schemes while keeping in mind that the basic aim is to promote Aer Lingus' uniqueness and its differential qualities. The airline industry is in a hyper competitive state and only an aggressive marketing strategy can aid in the betterment of Aer Lingus. (Schmid) Bibliography: 1. Barry Mulcahy (2002). Not Just an Airline. Retrieved October 6, 2006 from http://www.airliners.net/articles/read.main?id=47 2. Gerard Tannam. The Brand in Action. Retrieved October 6, 2006 from www.islandbridge.com/print.asp?id=11&type=article 3. Volker Schmid. Consumer Behavior in the Airline Industry. Retrieved October 06, 2006 from http://www.grin.com/en/preview/38127.html Read More