...MARKETING TERM PAPER FOR [pic] AIRLINES: A MODEL OF EXCELLENCE IN THE CIVIL AVIATION INDUSTRY Table of Contents 1.0 INTRODUCTION 3 1.1 Company Background 3 1.2 Research Topic 5 2.0 ENVIRONMENTAL ANALYSIS 6 2.1 Political, Economic, Social and Technological Analysis 6 2.2 Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis 7 2.3 Summary 9 3.0 SEGMENTATION, TARGET AND POSITIONING (STP) 10 4.0 PRODUCT, PRICE, PLACE AND PROMOTION (4Ps) 11 5.0 CONCLUSION 12 6.0 REFERENCES 13 6.1 ANNEX I 14 INTRODUCTION The Airline Industry has experienced global economic and ecological turmoil in the past two decades. This turmoil has brought to the fore the challenges being faced by the Aviation Industry in the world which have, in most cases, led to decreased profitability, lower growth rates, safety concerns and employee lay-offs among others. However, in-spite of the above mentioned challenges in the industry, Southwest Airlines has emerged as one of the most creative, most price competitive, safe, innovative and flexible company in the industry. The company has overcome unsurmountable challenges to become what is perceived today as a successful model of excellence in the industry with an extraordinary safety record in the last 40 years. In its forty-three years of service, the Dallas-based Airline continues to differentiate itself from other carriers with exemplary customer service delivered...
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...PRICING METHODS 1. MARKUP PRICING: - This method is to add a standard markup to the product’s cost. Construction companies submit job bids by estimating the total project cost and adding a standard markup for profit. Lawyers and accountants typically price by adding a standard markup on their time and cost. Unit cost = Variable cost + Fixed Cost Unit sales Markup price = Unit cost 1 – Desired return on sales 2. TARGET- RETURNS PRICING: - In target return pricing, the firm determines the price that would yield its target rate of Return On Investment (ROI). General Motors has priced its automobiles to achieve a 15% to 20% ROI. Target – returns price = Unit Cost + Desired return * Invested Capital Unit Sales 3. PERCEIVED- VALUE PRICING: - An increasing number of companies now base their price on the customer’s perceived value. Perceived value is made up of several elements, such as the buyer’s image of the product performance, the channel deliverables, and the warranty, quality, customer support, and softer attributes such as the supplier’s reputation, trustworthiness, and esteem. Companies must deliver the value promised by their value proposition, and the customer must perceive this value. The key to perceived value pricing is to deliver more value than the competitors and to demonstrate this to prospective...
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...382 PART 5 SHAPING THE MARKET OFFERINGS ter p ha C 14 In This Chapter, We Will Address the Following Questions 1. How do consumers process and evaluate prices? 2. How should a company set prices initially for products or services? 3. How should a company adapt prices to meet varying circumstances and opportunities? 4. When should a company initiate a price change? 5. How should a company respond to a competitor’s price change? As a high-end luxury goods provider, Tiffany & Co. knows the importance of preserving the integrity of its prices. Developing Pricing Strategies and Programs Price is the one element of the marketing mix that produces revenue; the other elements produce costs. Prices are perhaps the easiest element of the marketing program to adjust; product features, channels, and even communications take more time. Price also communicates to the market the company’s intended value positioning of its product or brand. A well-designed and marketed product can command a price premium and reap big profits. But new economic realities have caused many consumers to pinch pennies, and many companies have had to carefully review their pricing strategies as a result. For its entire century-and-a-half history, Tiffany’s name has connoted diamonds and luxury. Tiffany designed a pitcher for Abraham Lincoln’s inaugural, made swords for the Civil War, introduced sterling silver to the United States, and designed the “E Pluribus Unum” insignia that adorns $1 bills...
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...Developing Pricing Strategies and Programs Price is the one element of the marketing mix that produces revenue; the other elements produce costs. Prices are perhaps the easiest element of the marketing program to adjust; product features, channels, and even communications take more time. Price also communicates to the market the company’s intended value positioning of its product or brand. A well-designed and marketed product can command a price premium and reap big profits. But new economic realities have caused many consumers to pinch pennies, and many companies have had to carefully review their pricing strategies as a result. For its entire century-and-a-half history, Tiffany’s name has connoted diamonds and luxury. Tiffany designed a pitcher for Abraham Lincoln’s inaugural, made swords for the Civil War, introduced sterling silver to the United States, and designed the “E Pluribus Unum” insignia that adorns $1 bills as well as the Super Bowl and NASCAR trophies. A cultural icon—its Tiffany Blue color is even trademarked—Tiffany has survived the economy’s numerous ups and downs through the years. With the emergence in the late 1990s of the notion of “affordable luxuries,” Tiffany seized the moment by creating a line of cheaper silver jewelry. Its “Return to Tiffany” silver bracelet became a must-have item for teens of a certain set. Earnings skyrocketed for the next five years, but the affordable jewelry brought both an image and a pricing crisis for the company: What...
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...Abstract The role of human resources management is indispensable in Southwest Airlines and the Coca Cola Company. The department has the power of steering the companies to success and greatness. Indeed, this department deserve due attention because of the role it plays in the two organizations. However, the two companies, Southwest Airlines and the Coca Cola Company manage their human resources in somewhat different ways. Some of these ways employed by the company contravenes the conventional way of managing human resources. This paper therefore, made a critical evaluation of the human resources management of the two organizations. Apart from critically organizing the human resources management, the paper also highlights the organizational structure and change management issues in the two organizations. From this analysis, the paper claims that the because the two organizations operate in different industries, aviation industry and hotel industry, the manner in which the human resources management practices are conducted is unique for each of the organizations. It is also noted that each of the organizations has a distinct organizational culture. In the same note, it is observed in this paper that the two organizations have different organizational structure. Because of these differences, the PESTLE and SWOT analyses done are different for each of the organizations. In conclusion, the paper observes that depending on the organizational goals, the two organizations conduct...
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...OVERVIEW OF THE CASE In 2002 Delta airlines faced the unfortunate realization that the competition from low cost carriers like Southwest and JetBlue was becoming a serious problem. Even though Delta had been looking at this problem for a long period of time, the business model of Delta Airlines was organized by function and their solutions generally focused on individual aspects of the firm. For example, the marketing department provided marketing ideas, the customer service department offered customer related solutions etc. Delta realized that they did not have a comprehensive solution to dealing with the low cost carriers in the market. One of the simplest solutions proposed by Delta management was the idea that Delta could launch its own low cost subsidiary, however, looking at the rest of the airline industry, low cost subsidiaries seemed to be ideas that were either immediate failures or unsustainable over time. According to experts, they had “never seen a high-cost carrier transform itself into a low cost carrier”. With or without this option, Delta would have to find a solution to this problem. The airline industry in the United States is immense, with more than 620 million passengers and over $81 billion in fares in 2001 alone. Unfortunately, while immense in size, in terms of profit, the airline industry continued to perform below the average for other industries. Many investments made by the larger carriers were not profitable and the tragedy of 9/11 put more pressure...
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...Professor Edward Desmarais BUS 470 Business Policy and Strategy Spring 2004 SOUTHWEST AIRLINES CASE ANALYSIS Presented by: The Stategizers Lawrence Bluemmel, Irene Johnson, Dennis Mackey, Dorothea Morgan, Elaine Pereira, Jeff Piecuch, Heather Pontifex, Nicole Soucy TABLE OF CONTENTS I. Executive Summary 3 A. Mission 3 B. Vision 3 C. Objectives 3 D. SWOT Summary 6 E. Recommendations 7 II. Current Situation 8 A. Current Performance 8 B. Strategic Posture 9 III. Corporate Governance 25 A. Board of Directors 25 B. Top Management 25 IV. External Factors 27 V. Internal Factors 118 VI. Action Plan 178 Appendix A. Stakeholders Worksheet 206 Appendix B. Answers to Panel’s Questions 212 I. EXECUTIVE SUMMARY A. Mission To provide a low-cost/low-price/no-frills, reliable, friendly service with “more value for less money” mode of transportation for consumers traveling short distances for business and/or leisure. B. Vision ...
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...Contents South West Airlines 4 Goals and Objectives 5 Their Mission and Vision Statement 5 Strengths 6 Weaknesses 6 Opportunities 8 Threats 8 Analyzing company’s external environment 9 Analyzing the nature and strength of competitive forces 11 Competitive pressure stemming from bargaining power of buyer: 16 Determining whether the collective strength of the five competitive forces is conductive to good profitability: 17 Competitive pressure from seller of substitute products 18 Sign that competition from substitute is strong 19 Competitive pressure stunning from supplier bargaining power 20 PESTEL ANALYSIS 24 SCENARIO PLANNING 56 SCENARIO NO.1 58 SCENARIO NO.2 59 SCENARIO NO.3 59 SCENARIO NO.4 60 SCENARIO NO.5 60 SCENARIO NO.6 60 SCENARIO NO.7 61 SCENARIO NO.8 61 Competitors Objectives 62 Competitor's Current Strategy 63 Competitor's Resources and Capabilities 64 Competitor’s Assumptions 66 Regional Factors 67 Value chain activities: 68 Key competitive advantages: 72 Solutions: 82 Weights of Key success factors in five airlines: 86 COMPETITIVE ADVANTAGE 92 FIVE GENERIC COMPETITIVE STRATEGIES: 92 LOW COST PROVIDER STRATEGIES: 92 DIFFERENTIATION STRATEGIES: 95 BEST-COST PROVEDER STRATEGIES: 96 FOCUS (MARKET NICHE) STRATEGY: 96 STRATEGIC ALLIANCE AND PARTNERSHIP: 97 MERGER AND ACQUISITION STRATEGIES. 98 VERTICAL INTEGRATION. 98 OUTSOURSING. 98 OFFENSIVE...
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...low-costs structure and continue enlarging its market share in the competitive airline industry with increasing fuel costs. II. Strategic Considerations A. Industry Analysis 1. History a). American aviation pioneers attempted to start airlines using airships in the mid-19th industry. b). Aktiengesellschaft was world’s first airline which was founded in November 16, 1909 with the government assistance, and operated airships manufactured by Zeppelin Corporation. c). Tony Jannus conducted the United States’ first scheduled commercial flight on January 1914. d). In 1918, the United States Postal Service won the financial support from Congress to begin air mail service. e). In 1925, Stout Aircraft Company began to construct Ford Trimotor with 12-passenger capacity which became the first successful American airliner. f). At the same time, Pan American World Airways created an air network that linked America to the world. g). At the end of twenty century, a new style of cost airline appeared, offering a no-frills product at a lower price. The representative low-cost carriers are Southwest Airlines, JetBlue and AirTran Airways. h). The September 11th terrorist attacks resulted the airline industry bailout which lost $30 billion with 100,000 employees laid off. k). Today, JetBlue, Southwest and Air Tran have become the most successful low-cost models. 2. ...
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...Mission Southwest Airlines' mission statement reads: "The mission of Southwest Airlines is dedicated to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit." All these traits are what have made Southwest # 1 in fewest customer complaints for several years running. Southwest continues to thrive on its reputation from this # 1 ranking as well as reap monetary rewards that come with this distinction. Southwest’s commitment to their employees reads: “We are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer” Objectives Strategy The strategy that Southwest Airlines should use in order to continue its success is also based on the “Short-Haul” strategy. The difference is that the strategy must be inter-converted. Southwest can try its best to duplicate its “Short-Haul” strategy globally. For instance, it can do exactly the same business with the same strategy once again. But this time, Southwest has to do it in every part of the world. For instance, Southwest can expand its business in France, Germany, Australia, Russia, China, Japan, Poland, Greece, etc. All Southwest has...
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...AskAirAsia Search AirAsia Go Introduction Company overview Financial & statistics Whistleblowing Channel Analyst resources Airline 101 Bursa announcement IR FAQs How do I..? AskAirAsia Contact Us Pick A Seat Supersize my baggage Pre-book meals Self Check-In Earn BIGGIES What is low cost? In this section, we address the following subjects: History of the LCC How LCC can offer such low fares? Why can’t the full service carriers match LCC fares? How low cost fares are structured Common misconceptions on LCC History of the Low Cost Carrier (LCC) back to top The LCC boom began about 36 years ago when Southwest Airlines roam the skies of USA. Rollin King and Herb Kelleher got together and decided to start a different kind of airline with four set of principles: fly one type of aircraft to keep down engineering costs; keep overheads down; turnaround aircraft as quickly as possible; and abandon loyalty or air miles schemes. They began with one simple notion: “If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares and make darn sure they have a good time in doing so, people will fly your airline.” And you know what? They were right. Southwest Airlines is now the third largest airline in the world in terms of number of passengers carried and also one of the most profitable airlines in the world. Southwest Airline’s success spruced up interest in the LCC concept to all corners of the world. LCC now commands...
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...low-costs structure and continue enlarging its market share in the competitive airline industry with increasing fuel costs. II. Strategic Considerations A. Industry Analysis 1. History a). American aviation pioneers attempted to start airlines using airships in the mid-19th industry. b). Aktiengesellschaft was world’s first airline which was founded in November 16, 1909 with the government assistance, and operated airships manufactured by Zeppelin Corporation. c). Tony Jannus conducted the United States’ first scheduled commercial flight on January 1914. d). In 1918, the United States Postal Service won the financial support from Congress to begin air mail service. e). In 1925, Stout Aircraft Company began to construct Ford Trimotor with 12-passenger capacity which became the first successful American airliner. f). At the same time, Pan American World Airways created an air network that linked America to the world. g). At the end of twenty century, a new style of cost airline appeared, offering a no-frills product at a lower price. The representative low-cost carriers are Southwest Airlines, JetBlue and AirTran Airways. h). The September 11th terrorist attacks resulted the airline industry bailout which lost $30 billion with 100,000 employees laid off. k). Today, JetBlue, Southwest and Air Tran have become the most successful low-cost models. 2. ...
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...RUNNING HEAD: THE AIRLINE INDUSTRY The Airline Industry Name College Table of contents Abstract 3 Introduction: 4 Products and services: 4 Organization: 4 Major players in the airline industry: 5 Economic impact of the airline industry: 8 Employment within the industry: 9 Key trends in the airline industry: 9 - Economic forces: 9 - Technological forces: 11 - Socio-cultural forces and political-legal forces / Government Regulations 13 Logistics and supply chain factors 14 Porter’s Five Forces Analysis: 16 Strategies used by airlines: 17 Expected Entrants: 18 Conclusion and Recommendations: 18 List of Abbreviations 20 Appendix: 20 References 21 Abstract The US airline industry is one of the key sectors of the country’s economy. Employing over ten million people, it contributes up to half a trillion dollars in annual revenues (about 5% of the US GDP). In recent years, the industry has been faced with major challenges arising from its external environment. Some of these include rising fuel prices and the global economic recession. As a result, growth in the industry has significantly slowed down with the ATA estimating that by the end of 2008 the industry had lost between $9 and $24 billion. With high intensity of industry rivalry, high supplier bargaining power, low threat from new entrants, low threat of substitution, and low buyer bargaining power; the industry’s attractiveness can be described as moderate. To be successful...
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...subsistence allowance paid to the cabin crew, and landing fees, which do not depend on the number of passengers, but will not be incurred if the flight is cancelled. Variable costs, which vary with the volume of traffic carried, have traditionally been quite low in the airline industry. They include ticket commissions, baggage handling, and cabin amenities including food and beverages, among other passenger-related costs. With the recent spate of cost cutting, where ticket commissions to travel agents have been eliminated by the major airlines (with the exception of Southwest Airlines), a cap of $100 commission on international flights, and drastic reductions in the quantity and quality of meals, variable costs have gone down. To counter the effects of the September 11, 2001 terrorist attacks, U.S. airlines have reduced fares to lure back lost passengers. As a result, load factors for 2002 are estimated to be around 72 percent, but the breakeven passenger load factor has risen to 81 percent, so losses for 2002 are estimated at $9 billion. (3) Thus there is a tremendous imperative to fill up the planes, even with marginal low-fare passengers, as long as they clear variable costs. All of this is possible, because the airline passenger market consists of segments with different price elasticities of demand: business travelers who travel on corporate accounts, fare-sensitive pleasure travelers, business travelers flying on their own accounts, children...
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...HEAVY EDIT JetBlue Airlines: Getting “Blue” again?* JetBlue posted a net income $97 million in 2010. The airline continues to pursue its goal of becoming ―the Americas‘ Favorite Airline‖ and aims attainting positive free cash flow and long term sustainable growth while maintaining adequate liquidity position. Financially, the airline was far better than after the Valentine day fiasco in February 2007 and subsequent loss of $84 million in 2008. It focuses on controlling costs, maximizing unit revenues, managing capital expenditures and aims at achieving disciplined growth (see Exhibit 1).1 However, in the recent years, JetBlue appears to be moving away from its core strategy, in quite interesting ways, of being a low-cost player providing the distinctive ―JetBlue experience.‖ In its efforts to boost revenues, the airline began charging $10 to $20 for seats with extra legroom, doubled its ticket-change fee to $100, and introduced refundable tickets that cost more than nonrefundable ones. Further, the airline began charging $7 for a pillow-and-blanket kit, an amenity usually provided free of charge by other airlines.2 Breaking another low-cost rule, JetBlue moved away from ticket sales through its own Web site and signed up with travel agencies and the Galileo and Sabre global distribution systems in August 2006 and with online travel agencies such as Orbitz in January 2008. Further, it sold approximately 42.6 million shares of common stock to Deutsche Lufthansa, the German...
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