Travel And Tourism Marketing - Case Study Example

Flydubai Name Class Unit Introduction Flydubai is a low cost airline established in 2009 in Dubai as part of the Emirates Group. The airline operates out of the Dubai International Airport (Flydubai, 2015). Fly Dubai first flight was in Lebanon in June 2009 and have been able to grow its flight at a great pace. The airline is fully owned by the government and hence has access to full facilities at the airports. Middle East has a large market for low cost airline (Saxena & Gupta, 2012). There has been a trend towards low cost airlines and high quality services. Dubai has an attractive tourism industry which gives the industry high hopes for growth. There has also been an increase in domestic flights. Despite the 2008 recession, the airline industry has been able to gain and perform well. The gulf low cost airline market is still at the growth stage hence offers great room for expansion (Gubisch et al., 2011). Through market segmentation, targeting and positioning, Flydubai have been able to grow and expand its market. This essay will show how Flydubai segments its customer base, the target market used and show the positioning strategy used through a positioning map. This will be complemented using academic theory, models and frameworks. Market segmentation Market segmentation involves dividing the market into segments with unique needs and characteristics. The division requires specific marketing strategies to cater for them. Business cannot be able to appeal to all buyers in a market. This is due to fact that there are many buyers who have varied needs (Wedel & Kamakura, 2012). Being a low cost airline, Flydubai focuses on the consumers who are price conscious. Because of the economic conditions and downturns, most of the consumers are looking for ways to save money. This makes them to choose low cost carriers. The airline has a large customer base. Market segmentation involves evaluating market targets and selecting the one which is more valuable (Yankelovich & Meer, 2006). Demographic (with specific targets) Flydubai have used demographic segmentation. This involves segmenting the market into groups based on income, family size, gender occupation and nationality among others. In this case, the valuable used is the income of the consumers. This is one of the most common forms of consumer segmentation used. Demographic valuables are easier to measure compared to other types of valuables (Yankelovich & Meer, 2006). Under demographic segmentation, the airline targets those above 20 years living in UAE and around the world where the airline have destinations. The airline targets those with average and higher income who prefers the low cost services. Most of the customers who fall under demographic segment are students, families and white collar workers. Psychographic This involves looking at the customers psychographic variables. This includes their personality and lifestyles. This form of segmenting is used to complement demographic segmentation. This is through providing additional information that helps to understand the behaviour of other potential target markets (McDonald & Dunbar, 2004). The group targeted under psychographic segmentation have free time and enjoys travelling. This is a group that enjoys experiencing with new things. The personality of this segment is independent, adventurous, young and dynamic. This includes both domestic and international tourists. Bahavorial This is based on the customers’ attitude towards the product, use and response. Flydubai uses bahavorial segmentation in its market. Under bahavorial segmentation, the main aspects looked at are; benefit sought, loyalty, user status and occasions (McDonald & Dunbar, 2004). The benefits sought are the low prices offered and quality services by the airline. Loyalty is based on the airline being price conscious through offering the lowest cost. Occasions occurs when the airline offers subsidised prices through promotions. Targeting After segmenting the market marketing targeting have to be carried out. Business has to identify which segments to target. This leads to use of the following strategies; undifferentiated marketing, differentiated marketing or concentrated marketing. Flydubai have used niche or concentrated marketing. This involves selecting the larger share of the market segment and concentrating on it. The airline relies on the low cost segment of the market and specialises on it. Concentrated marketing is highly profitable method. Despite this, the business can suffer a lot in case the segment underperforms (Saxena & Gupta, 2012). There is a large market share for the low cost segment and market homogeneity exists. The target market has low competition and the current market trends favours low cost carriers. Customers in the low cost segment require quality services at an affordable cost (Saxena & Gupta, 2012). The customers targeted are families and individuals who are keen to save. The airline have been charging cost effective prices while at the same time ensuring that they are competitive to other airlines. The target is a group of customers who are in need of fast, cheap and reliable air transport worldwide. Positioning Positioning is the third and final step in market segmentation. One the business have identified the segments and selected the target to market on, it have decide on the position to occupy on the segment (Chen & Uysal, 2002). Market positioning looks at the way in which customers perceive the products and how they define them. Through positioning, a firm is able to give a persuasive reason why the consumers should buy the product. Customers cannot remember all aspects of a product hence they store specific products image on their mind for recall during buying process. Flydubai have engaged in successful positioning through ensuring that the product is able to meet the desires and expectations of their clients (Teas & Grapentine, 2004). Map 1: strategy evaluation For Flydubai, there are two aspects to be considered in positioning. The aspects are novelty and effectiveness (Jackson, 2007). Novelty is measured through the product originality and the uniqueness of the strategy to get the customers. Effectiveness is based on the amount of awareness that the strategy have raised among the consumers. A well formulated marketing strategy should have the capability to evoke the customers’ attention. This helps a lot in enhancing the brand awareness and ensures that it is well recognised (Teas & Grapentine, 2004). Flydubai is among the first low cost airlines in the region. This has helped the airline a lot in attaining brand awareness, loyalty and recognition. The airline has an original strategy though promotions and endorsements that have been able to target the low cost market segment. The airline uses a lot of publicity from the government and enjoys the government facilities. The airline has great public relations activities and utilises advertising campaigns which are creative. Novelty Effectiveness Map 2: customer perceptions This refers to the amount of respect consumers’ awards a brand. It involves the reputation and public image which the customers perceive (Chen & Uysal, 2002). Preference in this case indicated the customers’ tendency to choose Flydubai over other airlines. Being government owned the low cost carrier has been well promoted in the country and globally. The airline reputation has been well built over the years. There is availability of facilities which makes the airline to serves the customers satisfactory (Teas & Grapentine, 2004). The airline has been able to maintain low costs compared to the competitors and still offer quality services. Due to the competitive price, Flydubai has been able to maintain high preference among the customers. Respect Preference Market mix Market mix covers four factors which are; product, place, price and promotion (Kotler, Keller, Ancarani & Costabile, 2014). In Flydubai, the marketing mix is as follows: Product- this refers to the flight services that are offered by Flydubai to consumers and manner in which it meets their demands. The company offers low cost flights to consumers to different destinations worldwide. Price- Flydubai enjoys a high cost margin. This is through use of modern technology and well trained staff who are able to offer the services conveniently. The airline uses cost plus pricing approach. This is through charging the cost of operation and adding a mark-up margin in their flight services. Promotion- the airline uses different forms of promotion. The airline relies on loyal customers who help a lot in making profits. The forms of advertisements used are; social media, television, cinemas, magazines and websites. Place- the airline is located in Dubai which is the primary place where operations are run. The airline has been profitable and has been witnessing large growth in UAE. Dubai has been gaining popularity as a business hub and the airline can exploit this opportunity to increase profits. Conclusion Flydubai market segmentation gives them high potential of growth in the industry. The low cost carrier sector in Dubai is still in the growth stage and has high potential. The airline has high potential to become dominant in the industry. Based on the current trends, customers wants low cost services with high quality. The airline has taken advantage of the consumers who are more conscious on price and travels a lot. Through demographic, bahavorial and psychographic segmentations, Flydubai has been able to select their market successfully. The airline is positioned as low cost, unique and quality airline. The airline maintains its preference through maintaining competitive prices compared to competitors. To sum up, the airline has been able to perfect their marketing strategy. References Chen, J. S., & Uysal, M. 2002, “Market positioning analysis: A hybrid approach,” Annals of Tourism Research, Vol.29, no.4, p. 987-1003. Flydubai, 2015, about Flydubai, Retrieved 24 July 2015 from, http://www.flydubai.com/en/?gclid=CjwKEAjwocKtBRCf9d_Q5ovcyHASJAAHhJYOC O49v02rDEvNpxiWQilFQZOQ8mCrGT0Bi83fuyQFIBoCrMTw_wcB Gubisch, M., Hoyle, C., Kaminski-Morrow, D., Kirby, M., Morrison, M., Trimble, S., & Waldron, G. 2011, “Flydubai is torn between two' gamechangers,” Flight International, Vol.180, no.5318, p. 18-18. Jackson, S. 2007, “Market share is not enough: why strategic market positioning works,” Journal of Business Strategy, Vol. 28, no.1, p.18-25. Kotler, P., Keller, K. L., Ancarani, F., & Costabile, M. 2014, Marketing management 14/e. Pearson. McDonald, M., & Dunbar, I. 2004, Market segmentation: How to do it, how to profit from it. Butterworth-Heinemann. Saxena, R., & Gupta, B. 2012. Flydubai-moving aggressively to dominate sector. 2nd Advances in Hospitality and Tourism Marketing & Management Conference, Greece, pp. 01-07 Teas, R. K., & Grapentine, T. H. 2004, “Testing market positioning themes: a perceptual mapping approach,” Journal of Marketing Communications, Vol.10, no.4, p.267-288. Wedel, M., & Kamakura, W. A. 2012, Market segmentation: Conceptual and methodological foundations (Vol. 8). Springer Science & Business Media. Yankelovich, D., & Meer, D. 2006, “Rediscovering market segmentation,” Harvard business review, Vol.84, no.2, p.122. Read More