Doing Business and Investing in the United Arab Emirates - Case Study Example

Emirates International Airlines Name Institution Date Table of Contents Table of Contents 2 1.0 Introduction 3 Emirates international airline is one of the top ten major airlines in the whole world. Emirates airline has branches in many in six continents including Europe, Asia, South America, North America and Africa among others. In Australia, Emirates has its main headquarters in Sydney. It has direct flights that fly within the country and also to the neighboring countries and their cities. The airline has a set of cabin products like first class, business class and the economy class. This essay will be based on the business class cabin product of the airline. This product is part of the airline industry and has recorded a great number of profits over the years for the airline. Supporting evidence from different academic journals, websites, newspapers, online publications and books will be used. 3 1.1Background of Emirates International Airline 3 2.0 Opportunities and Threats 5 2.1 Opportunities 5 2.2 Threats 5 3.0 Market segmentation 6 4.0 Product/Service 8 5.0 Product Life Cycle (PLC) 8 5.1 Branding 9 5.2 Price 10 5.3 Place 12 5.4 Promotion 13 6.0 Conclusion 14 7.0 List of References 15 1.0 Introduction Emirates international airline is one of the top ten major airlines in the whole world. Emirates airline has branches in many in six continents including Europe, Asia, South America, North America and Africa among others. In Australia, Emirates has its main headquarters in Sydney. It has direct flights that fly within the country and also to the neighboring countries and their cities. The airline has a set of cabin products like first class, business class and the economy class. This essay will be based on the business class cabin product of the airline. This product is part of the airline industry and has recorded a great number of profits over the years for the airline. Supporting evidence from different academic journals, websites, newspapers, online publications and books will be used. 1.1Background of Emirates International Airline Emirates Airline is based at the Dubai International Airport and was founded in 1985. The airline is the carrier of the emirate of Dubai and United Arab Emirates. It is the measured as one of the world’s largest airline and it carries a greater number of international passengers. The airline is fully owned by the government of Dubai. Over the years, Emirates international airline has shown more potential as the fastest growing airlines in the world. The growth has been made successful through the healthy competition that is found within this industry because of the open-skies policy which Dubai has. The airline pursues an aggressive expansion strategy which runs across all continents and countries. It covers countries in the Middle East, Africa, Europe, North America, South America, South Asia, East Asia and Australasia. It operates a wide fleet of Boeing and Airbus aircraft and it is the main customer of Airbus A380. The airlines main goal since its establishment up to now was and still is to provide the best quality of all the services that it offers. The airline has developed into a globally influential travel, tourism and business organization. The airline has made this possible by recording an annual profit since the third year after it launched its operations. The airline provides different services which include an international cargo division which covers more than sixty countries worldwide, cabin services with different products like, first class, business class and economy class. It also has a full-fledged destination management and leisure division which provide passengers and other tourists with accommodation, food and recreational services (iloveindia.com, 2009). The last business service that Emirates provides is that it is an Information Technology developer for other airlines as well as itself. The main and direct competitors of the airline are Delta airline, Lufthansa airline. Indirect competitors of the airline are Etihad airline and Qatar airline. Both the Qatar and Etihad airways are based in the Gulf region. Delta airline and Lufthansa airline are Emirates main competitors and the largest airline in America and Europe. In Australia, Emirates has recorded an increase in the number of passengers that are using the airline’s services. This has greatly encouraged tourism in Australia and has seen the number of new tourists visiting the country doubled. The airline ensured this happens through adjusting its flight prices (Creedy, 2013). The airline has direct flights between Australia and Dubai and also Australia and New Zealand. The flights operate out of Brisbane, Sydney and Melbourne to Auckland and Dubai respectively. There are direct flights that operate from Sydney to Christchurch. Jetstar, Norfolk, Qantas and Virgin Australia are some of the main competitors of Emirates airline in Australia (Backpack around Australia, 2002). 2.0 Opportunities and Threats 2.1 Opportunities Emirates Airline success and a big opportunity for future growth and expansion is its location. Close to 3.5 billion people reside within eight hour flight in Dubai. Dubai is strategically situated at the crossroads of some major cargo and passenger. The airline’s location is also a major and connection point for passengers coming from cities in Western Europe en route to Africa or Australia. The open sky policy in Dubai is also a great advantage and the government of UAE has been every effective in the negotiating free-trade agreements with the major economies in the world like the United States and European Union. The Gulf region has been among the world’s fastest growing regions economically and most of the countries in the region are embracing liberalization of the air transport and this provides more opportunities for growth (USA International Business Publications, 2007). The decision by Emirates Airline to operate a huge fleet of A380 aircraft will make it to continue growing at all slot-constrained airports it operates in. 2.2 Threats The political instability in the Middle East poses a great threat to the growth and expansion of Emirates Airline. Political crisis in the region that was featured by the Gulf war, war in Iraq and Afghanistan has always posed a threat to the airline. Threat of terrorism and other criminal insecurities has also posed as a threat to the Airline’s growth. The increasing lobbying by the Western competitors like Germany, France, Australia and legal protection against Emirates Airline expansion into Canada is a major threat that is facing the airline. Growth plans of Gulf-based carriers pose the greatest threat to the airline (USA International Business Publications, 2007). The respective governments of the rival Gulf carriers like Qatar and Etihad have allocated massive budgets to the expansion of the airport facilities. The two airways are expanding rapidly and will be serious competitors in the coming years. 3.0 Market segmentation Market segmentation is the subdivision and separation of a large market into divisions called segments. This divisions or segments are usually characterized by having similar needs. The needs are often referred to the needs and characters of the customer. The customers are categorized into clusters with identifiable number of customers or users. Market segmentation makes it easy for a company to reach its customers through advertising and promotion of a product. It also helps an organization in market targeting. Market segmentation should be done with comparison to the organization’s main competitors. Most companies do market segmentations in order for them to attract more customers. It is important for Emirates to do market segmentation with regard to the international cargo division because this will help the company acquire more customers. Market segmentation will also help Emirates in better matching of customer needs and wants. This is important because different customers have different needs. Creation of separate segments for different customers will help them in finding better solutions for their ticketing and travel arrangements. Segmentation will also help the Emirates airline in increasing its profits. Customers have different disposable incomes and this also brings a difference in how sensitive they are to prices. Through segmentation, Emirates will be able to increase its average prices and generally increase its profits. Lastly market segmentation will help Emirates in increasing its opportunities for growing. Through segmentation, the sales of the company will be increased. The Emirates International Airline is a well established company with already existing brand and customers. Being a well established company, it used the concentrated strategy in its market segmentation. Concentrated marketing is mostly used by companies which want to concentrate on one product or a particular area. Concentrated strategy is mostly used with large companies which wish to continue developing and growing while protecting their market share. Emirates also use this type of strategy because of the diversification of the consumer needs of their customers. Emirates airline analyzed the different marketing segmentation so as to learn the needs and wants of its targeted market. Through geographical segmentation, the company was able to serve people from a specific area especially in the Gulf region, Europe and United States. In demographic segmentation, the product was aimed at people of different age, educational level, gender and income. Psychographic segmentation is also referred to lifestyle segmentation and is used in determining customers’ attitudes, behaviors, values, emotions, beliefs and interests. The business class product is aimed at people with the same interest but their personalities, beliefs, perceptions and emotions might be different. Behavioral segmentation is mostly used with many airlines for example when the company was formulating a questionnaires that will be used in this segmentation, the company had to had to know the frequency of flying for customers, the cities that the airline goes to, money they are willing to spend on tickets. An individual’s attitude can also be determined in behavioral segmentation. Emirates should try and find out the motivations for air travel, what the customers think about the airline’s employees and fears of air travelling if there are any. 4.0 Product/Service A product is an idea, a good; a service created through a process and is aimed at serving a particular need or want. A product can be tangible or intangible. A product is meant to meet the requirements of a particular market and that will continue to bring in enough profit in the long term. It is very important for a company to understand the new product that it is launching into the market. A company can perform a product strategy which helps a company in defining the product through understanding what value the product has to the customers, what will be the pricing of the product and how will the product be distributed. Product understanding will mainly help Emirates airline in increasing their sales and relevance of their product in the market. 5.0 Product Life Cycle (PLC) A product life cycle is the period of time in which a good or service develops and grows. It is the duration between which a product is introduced into a market and when it is taken off the market. A product life cycle is used by companies to map the lifespan of a product. A product life cycle has four stages, the introduction stage, growth stage, maturity stage and lastly the decline stage. In the product life cycle process, the idea for the product has to go through a research and development and then it is introduced into the market. The business class product of the Emirates airline cabin has already been introduced into the market and is currently in the second stage-the growth stage (Borden and Schwartz, 1965). In the growth stage, the product is characterized by an increased growth in sales and profits in general. This is helping Emirates international airline invest more in promotional and advertising activities which will help in maximizing the potential of the growth stage. 5.1 Branding Branding is the name, symbol, term, sign or a design which is meant to identify the goods and services of a company. A brand can also be a combination of the name, symbol, sign and design of a product. A brand can be used as a trade mark of a company, for example, Emirates airline has established its brand and it uses a short slogan “Fly Emirates”. Branding helps companies in identifying themselves or setting themselves apart from their competitors and what they offer. Branding also helps a company to set an example and establish its product to be the best for the customers and the only solution to their consumer problem. Branding is very important both to the company and the customers in general. For Emirates airline, branding has helped them identify itself in the market and set itself apart from the competitors. Branding helps the company in delivering the message of the product more direct and clearly. It is a source of a promise that a company makes to its customers. Branding has helped Emirates airline in confirming its credibility to the customers and connects the target market emotionally. On the other side, branding helps customers finding a solution to their consumer problems quickly. It helps them in identifying what they want quickly. It motivates customers to buying and using the product. Branding also seals the user and provider loyalty to both Emirates airline and its customers. Emirates airline has different products in its cabin division that are used by different demographics. Emirates airline uses both family and individual branding strategy in order to appeal to its customers. Emirates airline has established its logo, mission statement and name for all the products that it offers. Family branding has been used by Emirates airline to reach out to its customers who use their wide range of products in their cabin division. Individual branding has also been used by Emirates airline in reaching to its customers who are from different demographics. This is because individual branding allows separate and distinctive categories of products which are what Emirates airline has. 5.2 Price A price is the value that is awarded to a product or service by a company and that is required to be paid by customers. Pricing is done or attained through analyzing the value, quantity and quality of the product or service being offered. The price of a product is also determined by how much a customer is willing to pay for the product and what the seller is willing to accept for the same. Price is what determines the revenue and sales of a product (Driussi, 2007). The business class product is targeted to be used by people of different demographics; individuals with different incomes, ages, educational levels. This was considered by Emirates airline when setting the prices for this product. The setting of the right price will help Emirates airline in assessing the value that the customers see in the business class product. Pricing affects the sales and profits of a product and if not carefully done Emirates might run at a loss. Emirates airline has considered different pricing objectives while setting its rates and price for the business class product. The first objective that the company considered was profit. Since the product had already been introduced in the market, the prices and rates had to be adjusted so that the sales and profits of the product can be increased. Since price has a great effect on the profits of a company, Emirates airline had to do the adjustments while also considering the cost of producing the product and in this case, the cost of putting together the service offered in business class. The primary profit-based objective of pricing is to maximize price for long-term profitability. The second objective that was considered was status quo. When facing competitors who offer the same product like Lufthansa and Delta airline, Emirates airline has to keep its prices in line with what they offer on the same product. This is done so as to avoid a price war and make sure that a stable profit generation is maintained. Pricing strategy is the method in which a company uses to award prices on its product and services. Most of the companies establish the prices of their products according to the production costs which include labor costs and advertising expenses (Driussi, 2007). There are different pricing strategies that can be used by companies like price skimming, product life cycle, competitive pricing, penetration pricing and discount pricing. Emirates airline has used different pricing strategies like the product life cycle and competitive pricing. Product life cycle was used when the business class product was introduced into the market and through its growth stage. While at the growth stage, the prices were made higher because the product had well been received by customers and the company wanted to take advantage of this and increase its profits. Competitive pricing was used after the competing airlines decided to reduce their customers so as to gain more customers. Emirates airline had to do the same so as to maintain its customers and lure in more. 5.3 Place Place is defined as the method in which a company gets its product or service to the customer. It can be the distribution method in which the company uses so as to enable its customers accesses the product or service (Collier, 1991). This helps a company in making sure that the product is available in the right place, right time and right quantities. A company needs to understand the importance of place when introducing its product. Emirates airline needs inform its customers on where to get the tickets or any information concerning the booking of business class service. They should know who the appointed agents whom they can book the tickets through. The customers need to know if the booking can be done online, through the airline’s offices or even through appointed agents. The availability of this information will increase the number of customers and sales in general. The company should also check what the customers are doing in terms of place and reevaluate how they can improve. Emirates airline over the years has been using direct marketing in reaching out to its customers. For it being a large company and has been existing for many years and is well established in the market, the company is fit to use direct marketing. The company has been using marketer and sales people from its company in reaching out to its customers. Appointed agents are also being used as well as advertising and promotions through all platforms of media. Indirect marketing is also used but not at a greater length than direct marketing. Some customers learn about the products offered by Emirates airline through third party, like colleagues, friends and family. Most companies use both the horizontal and vertical marketing networks. Emirates airline is not one of those companies which applies both the vertical and horizontal networks in marketing. Emirates airline only uses a horizontal market because its products are aimed at different demographics and not from a specific industry. 5.4 Promotion Promotion is a method that is used to make the customers aware of a product. It is the communication that is done by a company in order to reach out to the customers. Promotion is part of marketing mix and different promotional tools are used in increasing sales. A well integrated marketing communication is very important to every company. Emirates airline needs to make the best decisions when choosing a mode of promoting its product. It should analyze its demographic and know which mode will best appeal to them, for example sales promotion, advertising, public relations, selling or advertising. Emirates airline has been able to integrate all these methods of communication and promotion. The use of pamphlets, coupons and magazines has also helped in boosting the company’s sales. A well knitted marketing communication will increase awareness of the products and in turn more people will be interested in using the product (Luan and Sudhir, 2010). The sales and profits will also be increased. Promotion has helped the company in increasing awareness, demand and sales. It also helps customers in differentiating products. Emirates airline has used different objectives which are direct, measurable and specific. The main objective that has been used in promoting the business class product is reminding customers and helping them differentiate the product from the same cabin products offered by competitors. Since the product is at the growth stage in its product life cycle, the company is running a promotion in order to remind people about the product and increase demand. Different promotional tools have been combined and used by Emirates Airline. Advertising through radio and TV networks, magazines, newspapers, coupons, pamphlets and billboards have been used. Digital technology has also been used. Online and e-mail marketing has greatly been used. Social media has also been embraced by the Airline. Public relations tools have also been used. These are usually presented to the public through the media and are free of charge. Public relations tools include press releases, news reports, newsletters and press conferences. These tools can be used either in promoting a product or in mending a damaged reputation or image. 6.0 Conclusion Although Emirates airline is one of the major airlines in the world, many upcoming airlines are putting more effort in improving their services so that they can attain that position. Emirates should check what its competitors are doing and improve to be better and to remain at the top. It should work on strategies that will be used to improve the quality of service that it is offering and also its customer base. It should work in making people aware of where and how they can access their services. They should also work in making its services affordable to all. Market segmentation should be done in order to know the kind of market and customers that it is working for. 7.0 List of References Collier, D, A 1991, "New Marketing Mix Stresses Service", Journal of Business Strategy, Vol. 12, Iss: 2, pp.42 - 45 USA International Business Publications, 2007, Doing Business and Investing in United Arab Emirates Guide. New York:  Int'l Business Publications Driussi, A 2007, Pricing: the lost component of the marketing mix? Professional Marketing Su, Vol. 57, p6-7 Luan, J, Y and Sudhir, K 2010, Forecasting Marketing Mix Responsiveness for New Products. Journal of Marketing, Vol. 47, No. 3, pp. 444-457. Borden, N, H and Schwartz, G 1965, The Concept of the Marketing Mix, New Jersey: Wiley Emirates airlines, 2009, Viewed 3 November 2013, Retrieved from: http://www.iloveindia.com/airlines-in-india/interational/emirates-airline.html Creedy, S Emirates sees strong sales in early bird fares to Europe, 2013, The Australian, 3rd November 2013, Retrieved from: http://www.theaustralian.com.au Backpack around Australia, 2002, International airlines that fly to and from Australia, 3rd November, 2013, Retrieved from: http://www.backpackaround.com Read More