Smart Airlines - Research Paper Example

Marketing Plan: Smart Airlines Table of Contents Executive Summary 4 Company/Industrial Analysis 4 Company Mission 4 Company’s Strategic Goals 5 Company’s Core Competency 5 State of the Industry 6 Situation Analysis 7 Market Summary 7 Target Market Description 7 Demographics 7 Geographics 7 Psychographics 7 Market Needs 8 Market Trends 8 Market Growth 8 SWOT Analysis 8 Strengths 8 Weaknesses 9 Opportunities 9 Threats 9 Environmental Scan 9 Competition 9 Technology 10 Regulations/Political Issues 10 Cultural/Social Changes 10 Economic 10 Market-Products Focus 11 Product Offering 11 Keys to Success 11 Critical issues 12 Objectives/Goals 12 Positioning 12 Marketing Mix 13 Product 13 Price 14 Place 14 Promotions 15 Marketing Research 15 Financials 15 Marketing Organization 18 Implementation Plan 19 Roll-out Plan 20 Contingency Plan 20 Controls 20 AppendixA 24 Marketing Plan: Smart Airlines Executive Summary Smart Airlines seeks to enter the airline industry in the case of the United States while aiming at offering quality, flexible, convenience, and reliable products. Smart Airlines will be a national carrier whose mission is to connect the United States and the rest of the globe. The middle-sized carrier will operate with profit while utilizing flight safety, as well as customer satisfaction with the quality of services as the elements of success. Smart Airlines will focus on the achievement of profitability under the influence of passion for excellence, customers, people, and spirit of the United States. One of the major keys to success for this middle-sized entity will be the ability to employ an experienced, as well as highly professional management team with the potentiality of combing the mission, vision, and adequate knowledge in relation to the aviation business. The organization will focus on positioning its operations and transactions through employee branding. There is need for the organization to utilize the employee branding with the intention of gaining an organizational position in relation to the minds of the consumers. Smart Airlines will focus on the utilization of cost, as well as availability in the course of promoting the brand across the market. Other promotional techniques for the organization will include internet market, print media advertising, billboards, and travelling portals. Company/Industrial Analysis Smart Airlines seeks to enter the airline industry in the case of the United States while aiming at offering quality, flexible, convenience, and reliable products. In this section of the marketing plan, the focus will be on the mission, strategic goals, core competencies, and state of the industry in relation to Smart Airlines. Company Mission Smart Airlines will be a national carrier whose mission is to connect the United States and the rest of the globe. In addition, the organization or company will contribute to the development of the airline industry and tourism in the globalized economy. The middle-sized carrier will operate with profit while utilizing flight safety, as well as customer satisfaction with the quality of services as the elements of success. Some of the values of this new middle-sized entity will include hospitality, passion, integrity, achievement, teamwork, diversity, change, and responsibility. From this perspective, Smart Airlines will focus on the achievement of profitability under the influence of passion for excellence, customers, people, and spirit of the United States. Company’s Strategic Goals In the course of venturing into the airline industry, the Smart Airlines will focus on the integration of the following strategic goals: i. Provision of high-quality services on routes and markets, which currently are poorly served, thus the opportunity to set new trend and pace in the airline industry ii. To adopt and incorporate cost-effective and leadership or differentiation mechanisms to generate higher load factors, reduction in costs, and improved efficiency, as well as flexibility iii. To exploit modern electronic and informational technologies in sales, as well as marketing to satisfying the growing needs and preferences of the consumers iv. To utilize friendly and cooperative, as well as highly professional face while interacting with the consumers within the airline industry v. Development and incorporation of associations, cooperation, and partnerships with the larger or more established airlines within and outside the United States Company’s Core Competency The organization will focus on the utilization of the following core competencies: i. Excellence ii. Responsibility iii. Innovation iv. Effective HRM practices v. Diversity and Passion vi. Hospitality State of the Industry In the course of determining the state of the economy, it is critical to adopt and incorporate Porter’s five forces analysis. It is essential to note that the power of suppliers in the airline industry is immense, courtesy of external environment’s influence that affects the three inputs: fuel, labor, and aircraft, thus the high power of suppliers. For instance, the cost of aviation fuel tends to fluctuate in relation to the global market for the oil because of the geopolitical and other factors. Secondly, it is essential to note that the power of buyers in the airline industry is moderate to high. This relates to the proliferation of the online ticketing approach, as well as distribution systems. Fliers no longer have to be at the mercy of the intermediaries or agents and airlines for the satisfaction of the ticketing needs. In addition, the entry of low cost carriers has been of great benefit to the fliers or consumers. Similarly, buyers enjoy massive protection in relation to the tight regulation on the demand side of the airline industry. These factors make airline industry to cede power to the consumers, thus the moderate to high threat of power of buyers. The industry requires significant or huge capital investment to facilitate entering or existing of the sector. From this perspective, the industry boosts of high entry and exit barriers. From this perspective, the industry tends to experience low threats of new entrants because of the high costs. It is essential to note that the airline industry in the United States is extremely competitive because in relation to issues such as entry of low cost carriers, tight regulation of the industry, and utilization of unique business models in pursuit of competitive advantage in the market and industry of operation. Nevertheless, the industry does not experience threat from the substitutes or complementarities in the case of the United States. This is because consumers do not consider taking the train or the bus for journeys like in the context of the developing economies. Situation Analysis Market Summary Understanding market is one of the essential aspects of success. Consumers have different needs, thus the need to offer quality products in accordance to the needs. Smart Airlines will focus on the utilization of the appropriate strategies with the intention of addressing needs for business travellers requiring convenience, reliability, speed, and schedules in accordance with the business needs. In addition, the organization will offer quality services to the international organization travellers, as well as personal or leisure travellers in the industry. Target Market Description From the above illustration, the proposed airline will focus on targeting passengers seeking to address business, personal, and leisure needs from one destination to another. In addition, the organization will focus on cargo shipment or transactions. Demographics Smart Airline’s customers will represent all levels of education, average household income, and discretionary spending. In addition, the institution will offer quality products and services regardless of the gender, age, religious, and physical ability of the customers. Geographics The proposed airline will focus on the provision of products to people within the United States, parts of Europe, Asia, and African continent while seeking to explore the Latin America. Psychographics The organization will seek to address demands for the consumers seeking efficiency, flexibility, recreation, and reliability in relation to the products and services. Market Needs Consumer needs tend to vary from one entity to another. In this context, consumers have the tendency of demanding effective services, low cost products, flexible mechanisms, and reliable brand. Market Trends In the recent months, there has been massive reduction in the global costs of oil and gas. This has led to the rapid reduction in the cost of aviation. In addition, the influence of technology continues to be evident in effectiveness and efficiency in handling the demands and expectations of the consumers with reference to ticketing systems and procedures. Market Growth These developments have been essential in the growth and development of the airline industry under the influence of globalization. Moreover, there is substantial need for the organization to exploit the growing economic positions of the nations and citizens, thus increasing money in circulation. SWOT Analysis Strengths Smart Airlines will have the perfect platform to adopt and incorporate cost leadership and differentiation strategies successfully. In addition, the organization will focus on the usage of information technology with the intention of reducing or containing costs for the achievement of competitive advantage in the market and industry of operation. Moreover, Smart Airlines will focus on the utilization of the core competencies in the course of developing a reputation for great customer service. The organization tends to create a strong, fun-loving, and employee-oriented culture under the influence of the mission, vision, and values. This is through utilization of strong leadership. From the strategic goals, the organization will have a strong financial position through continuous generation of profits. Weaknesses On the other hand, the organization might have diverse weaknesses. For instance, major competitors have the tendency of providing shuttle services with the potentiality of competing against the company. In addition, the organization is a middle-sized entity, which will limit its capacity to compete effectively and efficiently in airline industry within the United States. Furthermore, the organization might experience limited space for the freight and cargo because of the middle-sized capacity. Opportunities One of the major opportunities for the organization will relate to the expansion into the international, as well as national markets. Secondly, the organization has the potentiality of investing in research and development with the intention of advancing its procedures and services within the airline industry. Moreover, the organization will consider extension of flights to further destinations while enhancing services for leisure, as well as business classes. Threats Among the greatest threats to Smart Airline’s operations emanate from fluctuations in the cost of oil and gas. Secondly, the costs for the airline security have the tendency of increasing on annual basis. Similarly, integration of the government regulations might increase the operational costs. There is massive potentiality for the reduction in the number of travellers for the leisure consumers because of the state of the economy. Environmental Scan Competition High competition exists in the airline industry in the U.S. This is because of the number of national and international airlines under the influence of globalization. Technology Technology plays a critical role in the determination and automation of the operations within the airline industry. For instance, it is the objective of technology to enable Smart Airlines to enhance convenience, flexibility, and reliability in relation to ticketing systems and procedures. The organization will focus on the usage of technology to reduce or contain costs while utilizing the low-cost business model. Regulations/Political Issues The United States tends to have appropriate political policies and regulations, which provide the opportunity for investments and generation of increased profit levels. In addition, the conditions or policies will provide the platform for the Smart Airlines to operate effectively and efficiently while addressing the demands and expectations of the consumers. Cultural/Social Changes In the modern context, consumers tend to consider business or leisure social activities in relation to consumptions of the products from the airline industry. This makes it appropriate for the organization to consider engaging or venturing into such opportunities. In addition, it will be appropriate for Smart Airlines to tailor the products in accordance with the cultural perspectives of the consumers in various destinations. Economic The rapid growth of the economy of the United States will have ideal influence in relation to the performance of the proposed airline. This is through massive influence in the behavior of the consumers seeking to consume diverse products and services within the airline industry. Moreover, economic policies will have massive implications on the money supply and the essence of interest rate. Market-Products Focus Product Offering The organization will focus on the generation of products and services for the freight and cargo transit. In addition, the company will seek to differentiate its products and services through incorporation of business and leisure class with reference to less tapped markets within the industry. Keys to Success One of the major keys to success for this middle-sized entity will be the ability to employ an experienced, as well as highly professional management team with the potentiality of combing the mission, vision, and adequate knowledge in relation to the aviation business. In addition, the organization will concentrate on the usage of the intelligent, progressive, and aggressive marketing strategies with the potentiality of identifying the diverse kind of player. This is through incorporation sharp, smart, and high level of professionalism, as well as operational standard in accordance with the demands and expectations of the target audiences. Similarly, the organization will focus on incorporation of advanced electronic and information technique with the objective of reducing operational and staff costs while expanding the potential market coverage. Furthermore, the approach will be ideal in simplifying and speeding baggage, cargo, and passenger handling, as well as enhancement of the consumer satisfaction, reliability, and convenience. It would be beneficial for the organization to incorporate all-jet fleet in relation to the newer and modern-built aircraft with the potentiality of providing high level of comfort, safety, and fuel or operational flexibility, as well as efficiency. These aspects have to be in accordance with the normal aviation standards. Critical issues The product is at the introduction stage, thus the need for differentiation and utilization of low-cost business model. Nevertheless, the industry is at the maturity stage focusing on the utilization of competitive advantage in the market and contexts of operation. This is because consumers are sensitive to quality and costs in relation to satisfaction of their needs. The company will seek to exploit the strengths concerning appropriate HRM practices to offer quality products and services in accordance with the demands and prospects of the consumers. Objectives/Goals The proposed airline will focus on pursuing the following objectives: i. To offer services while absorbing unmet demand in diverse traffic categories such as under-served routes with existing high demands ii. To adopt and implement an organizational and marketing strategy, which will offer quality services and flexibility products in accordance with the demands and expectations of the organization iii. To maximize revenues while reducing or containing costs of operations iv. To attain the projected results under the influence of appropriate marketing mix v. To create and maintain quality experience among the consumers through convenience and flexible, as well as reliable products and services Positioning Smart Airlines will focus on positioning its operations and transactions through employee branding. Employee branding comes out as a source of strategic competitive advantage, which has been a basis for discussion in the recent years. There is need for the organization to utilize the employee branding with the intention of gaining an organizational position in relation to the minds of the consumers. In addition, it is critical to acknowledge the crucial role of the mission and values of the organization in the employee branding process. Moreover, employees have the obligation and responsibility of understanding the desired brand image for the achievement of competitive advantage in the industry of transaction. The positioning for Smart Airlines will focus on the utilization and exploitation of the human resource practices, thus the concept of employee branding. The technique will enable Smart Airlines to deliver the desired brand image to the consumers on a consistent basis, thus the perfect platform to solidify a clear position in the minds of the employees, as well as consumers. Employees will be able to achieve competitive advantage through internalization of the desired brand image and motivation from the images in relation to the constituents of the organization and consumers. From this perspective, the mission, vision, and values of Smart Airlines will be the cornerstones for the positioning of the company in accordance with the demands and expectations of the organization. Marketing Mix Marketing mix is essential in the determination of a product or brand’s offer while assessing price, product, place, and promotion strategies (Bahadir et al., 2015). In this context, the organization will focus on making decisions, which center the four P’s on the consumers within the target market with the intention of generating perceived value while generating positive experience from the consumers. Product The core product for the Smart Airlines will be air travel. It is essential to note that travelling is major for passengers, but the organization will seek to engage in the cargo line, which is a rapidly growing aspect. The company will concentrate on offering one of the best airline services in the United States through utilization of low-cost business model. The organization will be able to generate profits through exploitation of appropriate and adequate capacity, as well as efficiency in the services while containing diverse costs. Upon the rollout of the plan, the organization will consider integration of new flights in accordance with the growing needs and demands of the consumers. Price Price is one of the major factors in relation to the marketing mix of the Smart Airlines in the course of addressing the demands and expectations of the business entity. This is because of the influence of price and cost maintenance in the realization of success. Smart Airlines will the one of the cheapest, if not the cheapest airline in the context of the United States. The company will exploit this low-cost business model to achieve competitive advantage when consumers are comparing prices. The company will utilize computer-generated techniques in the determination of how much petrol is essential from point A to point B. The organization will seek to offer unique services and products in relation to cheap prices, thus attainment of the competitive edge in the market and industry of transaction. Place In the course of satisfying the needs and preferences of the consumers, the airline entity will enable customers to book their tickets on the internet platforms, as well as through various agencies within the United States. The approach aims at enabling the organization and consumers to experience convenience, reliability, and flexibility in the satisfaction of needs. Similarly, the airline will ensure the availability of its destinations in various major cities of the United States. The organization will have close to 40 destinations with the view to expand its operations. The strategy will relate to the provision of more capacity on fewer routes rather utilization of the thinly spread approach over numerous destinations. The approach will be critical in containing costs because of the potentiality of the new destinations to demand increased infrastructure costs. In addition, the approach will facilitate creation of more customers through flexibility, convenience, and reliability in the destinations of influence. Promotions Smart Airlines will focus on the utilization of cost, as well as availability in the course of promoting the brand across the market. In addition, the institution will adopt a promotion strategy in relation to connecting flights to other destinations from one destination, thus enabling consumers to limit the need to book another airline in order to arrive to their destination. Other promotional techniques for the organization will include internet market, print media advertising, billboards, and travelling portals (Thompson, 2013). These attributes will be ideal in the improvement of the awareness of the consumers on the products and services by the company, thus the perfect platform for the achievement of competitive advantage or edge against major competitors in the industry. Marketing Research The objective of the marketing research would be to determine the needs of the consumers, as well as untapped market segments with reference to the airline industry. The organization will consider the usage of qualitative and quantitative research designs in the course of collecting appropriate data in relation to the airline industry in the United States. The organization will focus on utilization of ongoing research with the objective of providing substantial support to the customer relationship marketing (CRM) initiatives (Ritter, 2014). Financials Break Even Analysis Data of operation ($ millions) fixed cost total cost revenue Jan 1.8 1.9 0 Feb 1.8 2.1 0 March 1.8 2.4 0 April 1.8 2.5 0.9 May 1.8 2.6 1.3 June 1.8 2.7 2.7 July 1.8 2.9 5.6 August 1.8 3.1 4.2 September 1.8 3.4 5.7 October 1.8 3.5 6.6 November 1.8 3.55 6.9 December 1.8 3.61 7.3 The graph analyses the financial viability of the airline using break even analysis and forecasted sales revenue. Breakeven point shows the point where all costs (variable + fixed costs) will be equivalent to revenue. In this analysis it is assumed that all factors that constitute to fixed cost remain constant through the year. However, the variable costs keep on changing through the year. From above graph, fixed cost is considered to be $1.8 million, which caters for salaries, crew training, hanger, insurance, and aircraft miscellaneous. Variable costs cater for the fuel, airframe maintenance, engine/APU maintenance and crew miscellaneous. Taking all these costs to consideration, the breakeven point will occur in June, where total cost equals revenue at $2.7 million. Sales Forecast: 1st year by month; 2nd and 3rd years by quarters $sales forecasted and timing – include charts showing the following Risks in not reaching forecasted numbers The primary risk of failing to reach the intended sales forecast is that the output will not be profitable. Given the fact that the U.S. airline industry is very competitive, it will be hard for Smart Airlines to break even in the current airline operation. Failure to reach the forecasted cost will implies that the company is operating at extra costs than the expected returns, hence leading to more losses. The most important components of sales performance required to reach the goals One of the most important components of the sales performance is reaching the sales goals just as created by Smart Airlines. Smart Airlines management requires to device adequate measures that will see the company increase on its passenger volumes and increasing on the frequency of flights to more destinations. The marketing team also has a role in marketing the new airline operations and reach customers as possible. Marketing Organization Organizational structure refers to the ways of dividing tasks, the flow of work, coordination, forces, and mechanisms for effectiveness and efficiency in the workplace. It determines the allocation of the responsibilities in relation to diverse functions, as well as processes to different entities with reference to department, branches, and workgroups. From this perspective, an organization structure or chart provides the environment in which people operate (Bahadir et al., 2015). The structure tends to affect communication and decisions. This makes it essential to adopt and implement appropriate structure or charts in the course of determining how an organization performs and transacts. The organization will focus on the integration of the following organizational structure: The hierarchical organizational structure will be appropriate in the improvement of efficiency and effectiveness in relation to communication and decision-making. Remarkably, the approach will enhance proficiency in addressing the needs and demands of the consumers. The managing director will be at the helm of the operations with the obligation of monitoring daily operations and transactions of the organization. Secondly, the organization will have marketing director, finance director, operations director, and HRM director. These directors will head respective departments with the intention of enhancing satisfaction of the consumers in different regions. Below the directors, the organization will have marketing managers, finance supervisors, production team leaders, and personnel manager. At the lowest rank of the organizational chart, the organization will have sales teams, accounts assistants, and production team members. The organizational chart is lean towards reduction or containing of costs within the airline industry (Ritter, 2014). Implementation Plan In this section of the plan, there is need to focus on the illustration of the roll-out plan and the contingency plan in the presence of risks. Roll-out Plan In the course of rolling this brand, it would be appropriate to execute substantive pilot assessment or market research with the intention of determining the needs and preferences of the consumers. Secondly, there will be need to adopt appropriate strategic goals as mentioned in the previous sections with the objective of maximizing the opportunities following extensive market research. It is also critical to note that the organization will focus on availing critical resources: financial, physical equipment, time, and human resources, which will be ideal in the achievement or implementation of the goals and mission. The final step will relate to the utilization of the marketing mix to ensure that the organization achieves its mission and vision under the influence of the core competencies. Contingency Plan On the other hand, in case of any risk in the implementation plan, the organization will focus on the utilization of appropriate research exercises and monitoring, as well as evaluation techniques. This is because of the need to understand the platform for the operations of the organization in pursuit of competitive advantage in the market and industry of operation. In addition, monitoring and evaluation techniques will enable the organization to identify these risks or failures of the strategic plan to aid the achievement or accomplishment of the mission and vision. From this perspective, the organization will consider transformation of the strategic goals, as well as the marketing risk with the intention of improving effectiveness and efficiency in the delivery of services and products to satisfy the consumers. Smart Airlines should consider incorporation of improved IT systems for the automation of the processes and procedures in handling demands of the consumers. Controls The organization will focus on the utilization of the finance department to monitor annual revenues and profit levels at the end of the fiscal period. Similarly, the organization will concentrate on the assessment of the success within the industry through the accomplishment of the goals and objectives. The organization will invest in R&D to facilitate collection and analysis of data in relation to the market environment and factors affecting the needs and preferences of the consumers. How to monitor expenses First would be to identify all costs incurred by the airline. The costs can further be classified as marketing and distribution, overhead costs, operation costs, maintenance costs and aircrafts costs. The company can adopt various cost reduction strategies in a bid to monitor expenses and maintain a higher profit margin. Such strategies include 1. Fuel reduction measures Fuel counts for 40% of the total costs incurred. Having a fuel reduction policy can significantly reduce this percentage therefore saving the airlines finances. Strategies that can be adopted include conducting fuel hedging policies and efficient fleet dispatch routines. In addition improving aircraft performance optimizes the flight speeds therefore resulting to a favorable efficient cost index. 2. Increasing direct ticket sales Having a long chain in the sale of tickets can be costly to the airlines. Such middlemen can be avoided without compromising on sales volume. The company can therefore do away with this operation cost by increasing direct sales of tickets. 3. Encouraging employee cost control Employees need to be involved in the cost reduction policies. This can be through training on the importance of cost reduction. Efficient ground operations improves productivity, reduces risks saving on time and money. In addition a proper crew scheduling program should also be implemented as an employee cost reduction strategy. For these cost reduction policies a target will be set which will show by the expected cost saved. The targets will be set on quarterly basis since cost reduction policies actually take time before materializing. However there will be a graph that will extrapolate weekly performance. There will also be monthly reporting and analysis during departmental meetings. At the end of each quarter comparison between the expected and actual results will be made. The margin of deviation will show whether or not the objectives have been met. Feedback from management and employees will also be used for evaluation. This is mostly through departmental meetings. Increasing revenue Increasing revenues means that that we need have more traffic in the airport where we have more customers and cargo being shipped. This can be achieved through effective marketing campaigns, competitive prices and exemplary customer service to ensure retained customer base. Targets will also be set on a quarterly basis and the performance be monitored monthly. Analysis of our market share and repeat customer performance will be used for evaluation. Assessing changes in the environment Assessing the environment will enable the company determine if the operations are effective. This entails analyzing market trends with regards to customer preference and identifying the market share occupied by the company. In addition the assessment involves identifying competitors and what they are doing differently. Effective market assessment not only improves product positioning but also identifies opportunities that can be exploited to increase profit maximization. References Bahadir, S. C., Bharadwaj, S. G., & Srivastava, R. K. (2015). Marketing mix and brand sales in global markets: Examining the contingent role of country-market characteristics. Journal of International Business Studies. Ritter, J. (2014). “What is the role of marketing in strategic planning"?. The Business & Management Review, 4(4), 88. Thompson, C. (2013). “Small but Mighty," Small Business Marketing Strategy for Entering into New Market Segments (Doctoral dissertation). AppendixA Sales Forecast Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Sales Scheduled Passenger Revenues 0% $0 $0 $0 $866,250 $1,299,375 $2,601,625 $5,155,920 $3,866,940 $5,255,920 $5,881,619 $6,180,451 $6,544,900 Scheduled Cargo Revenues 0% $0 $0 $0 $65,625 $98,437 $118,124 $188,997 $207,897 $293,966 $440,949 $390,600 $477,405 Special Flights Passenger Revenues 0% $0 $0 $0 $0 $0 $0 $247,200 $123,600 $185,400 $309,000 $309,000 $309,000 Special Flights Cargo Revenues 0% $0 $0 $0 $0 $0 $0 $5,760 $2,880 $4,320 $7,200 $7,200 $7,200 Package trips 0% $0 $0 $0 $0 $0 $0 $9,975 $10,973 $12,070 $13,277 $14,605 $18,100 Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Sales $0 $0 $0 $931,875 $1,397,812 $2,719,749 $5,607,852 $4,212,290 $5,751,676 $6,652,045 $6,901,856 $7,356,605 YEAR1 Read More