Success in any
company that operates for marketing and profit acquisition lies on the ability
of the management in positioning and establishing the products/services being
offered (Pasupathy & Triantis, 2007). Furthermore, Pasupathy & Triantis, (2007) also added that the ability of
the company which is in our case a newly established Airline business in
Australia and its management to compete and maintain a competitive edge among
its competitor is another basis to say that it is successful. The constant
development and innovation on services to be offered and the growing number of
clientele also define the corporate standing of a company. This paper aims to
analyze an Australian-based company that is about to venture into the airline
industry. With their secure US$500 million as capital investment this paper
describes and assesses the market demand for this new airline business, the
marketing practices to be considered and management structure that should be
put in place and how should the airline be organised. Lastly, practical and
strategic recommendations will also be elicited in relation to some pitfalls
observed in the case of this new venture.
Discussion
The Market Demand for New Airline Business
The
customer-oriented business like most of the service-related business today like
the airline businesses shows the importance of customers’ feedback (Crandall,
2008). The total quality in their service operations requests everyone, every
process and every institution to meet and exceed customer expectation. The
total participation stresses on the word “total”. Since the cabin crew and
staffs are treated as assets to the airline business, they are expected to
utilise their full potential in their work. The idea of “continuous
improvement” implies that TQM as part of service operation is a “quality
journey” striving for excellence (Kasper, Helsdingen, & De Vries, 1999).
However, in accordance to the US$500 million as capital investment of a new
venture, this is not enough developing a high class type of Airline Business
and would be also difficult to market such newly established business
considering that a lot of clients/passengers are looking for an Airline with
proven excellent service at low cost.
With
respect to this, the newly established Airline business might consider
venturing as a budget airline. Budget airlines are with their cut price flights,
served by fantastically low-price flights, and it would directly here to stay (Ambrosini, Johnson, &
Scholes, 1998). The premise ideas is that once you know where to
fly, you’ll be able to find out how much luggage you can take with, how to get
the cheapest of cheap seats, make sure that you are don’t pay a dollar more
than. For example in 1986 in London, Ryan-air launched its first ‘cheap’
flight, at that time the costing £90 from Dublin to Luton, they have been going
there from strength to strength ever starting (Recognising the airline
industry, 2007). Their prices have dropped further and further in order to
attract the public. Not only have they succeeded in desirable many to the skies
who would like never previously have been able to afford it, and they have also
created a new kind of traveller ever since the European ‘open skies’ agreement
of 1987 paved the way for easyJet (Recognising the airline industry, 2007).
People who will long onto the net to find a cheap flight and end up holidaying
somewhere they have never hear of.
In Australia and in accordance to low landing charges,
the newly-established Airline business might consider the idea of using online
booking and ticketing, fly to small airports with low landing charges, cut cost
by doing away with all the perks of flying like newspaper, magazine, food and
drinks, and, carry as many people as possible for the achievable fares.
Furthermore, budget airlines in response to the greater demand for cheaper
flights, some of the larger tour operators are beginning to muscle in on the
market, leading to hopes that budget flights would soon be available worldwide.
Marketing Efforts to be Considered
Venturing in a new
market is not an easy task to do (Adams, De Lollis, & Hansen, 2008). There
are lots of factors that need consideration.
With this, an evaluation of marketing mix is necessary.
Source: (Tutor2u 2011)
The
entire growth strategies of the newly-established Airline business in Australia
should focus on the three main strategies suggested by Ansoff: market
penetration, market development and product development.
Market
Penetration –
is the growth strategy which enables the business to focus on the process of
selling existing products into the existing market. It focuses on the objective
to maintain and even increase the market share of the company (Tutor2u, 2011). Thus,
the newly-established Airline business in Australia should review on its
pricing strategies, advertising and service promotion. This should be seen on
the effort of the company in applying online booking, technologies or
Information Systems in their entire process, in ensuring that they are giving
fast and efficient services towards the customers.
Market
Development –
this strategy focuses on the different actions of the business that seeks to
sell its existing products/services into a new market (Pasupathy &
Triantis, 2007).
This strategy focuses on extending their services on different parts of the
globe. As the newly-established Airline business debut in Australia as
low-priced Airline, they should never ceased in developing as they will soon continuously
expand in other market.
Product/Service
Development – pertains on the different growth
strategies which aim to introduce new products/services in an existing market. The
newly-established Airline business in Australia should focus on the different
strategies which improve its existing assets, by introducing new concepts or
improving their services. Thus, in order for the newly-established Airline
business in Australia should focus in maintaining their competitiveness as
low-priced Airline, they should offer low prices of tickets to save money. They
might not offer free in-flight food but they may sell sandwiches and a few of
other basic items to increase the company’s revenue. They might also consider
leasing of a good airbus instead of buying a new airbus which cost millions of
dollars.
Furthermore, since the newly-established Airline business in
Australia as a brand concept be similar to or is associated with
service stipulation, the 8Ps method adopted for service marketing may be
competently espoused for its advertising (Adams, et al., 2008). The
8Ps are:
Product – This refers to the stuff or services
to be offered by the company. In the case newly-established Airline business in Australia, their
services is about low-priced airline services, thus the need for constant
review should be bear in mind in order to meet the changing customer
expectations.
Place –
newly-established
Airline business in Australia should also focus on the issue regarding
availability of services needed by the target market, i.e., current and
prospective clients. The newly-established
Airline business in Australia should consider online booking and
online ticketing in which clients can avail their services. Aside from this, the company may commit in
extending their services in other parts of the world.
Price – In terms of price, the newly-established Airline business fees should
be priced competitively and guaranteed at low price.
Promotion – The newly-established
Airline business in Australia should consider effective ways to
communicate to the various target groups to stimulate greater awareness,
interest and patronage are somewhat good but not exceptional. The newly-established Airline business in Australia might use TV
advertisement, Internet marketing, and billboard advertising.
Physical Evidence – In terms of presentation, the newly-established Airline
business services should be exceptional. Meaning, newly-established Airline business in
Australia should also consider well-dressed staff, logos on office doors/ business
centres, letter heads, brochures, complimentary cards, consultancy reports,
etc.
Process – With regards to the process, the business of newly-established Airline in
Australia should focus on well management in which makes their business
system flawless and customer complaints are easily handled.
People – When it comes to people, they should also choose the
best suitable person needed by the company. This means that the newly-established Airline
business in Australia should expertly indentify the capabilities of a person that
will reflect the value of their services.
Promise – The newly-established
Airline business in Australia with their consultants should deliver their promises.
In terms of quality of products and services, should offer it to their
customers at utmost quality despite of its low-priced services.
Public Relations – newly-established
Airline business stakeholders should carefully identify the various
publics that can impact on the company to which PR communications can be
directed. Such publics include individual consultants, clients, big practices,
small practices, other related professional associations, relevant agencies of
the United Nations, financial institutions, etc.
Management
Structure and Business Organisation
Using McKinsey’s 7-S (Kasper, et. al. 1999) and the
cultural web models, the newly-established
Airline business should formulate an action plan for implementation of the
potential strategies for business development.
The strategy, structure and systems of the newly-established Airline should
be formed. The skills, staff and style of the organisation should not be harder
to influence as the management style and attitudes and behaviour of staff can
be entrenched. However, if the company
is to succeed in the competitive market all seven elements of the model need to
be in harmony and the shared values reflected in the central paradigm of the
cultural web.
Consideration has been given to whether or not the
symbols of the organisation accurately reflect the vision of the company. It would seem inevitable that the “common
man” will no longer encapsulate the airline’s mission. The power structure, as noted in the 7-S
model will need to be devolved to expert managers and in turn the organisation
structure will need to become less flat (Pasupathy & Triantis, 2007). The rituals and routines of the organisation
have become stale, and cost factors have been allowed to dominate the existing
strategies with rigid control systems in place.
However, the ethos of the company reflected in the stories, is laudable
and in effecting change the company must not lose sight of the original vision
of its creator.
It is felt that in order to facilitate the new
strategic intent of the organisation a divisional structure should be adopted
as soon as possible. According to Kanter
(1984 p.95):
“The degree to
which the opportunity to use power effectively is granted or withheld from
individuals is one operative difference between those companies which stagnate
and those which innovate.”
This structure, along with the shared ownership
scheme, will help in the implementation process and will also help employees to
feel that they are making a contribution to policy within the organisation and
they will be more inclined to feel “ownership” of the organisation and its
strategies for the future.
It is clear that if any or all of these potential
strategies are to be adopted then the board of the newly-established Airline need to
be seen to support them and the Management team who have produced them.
Kotter (1995) suggests there should be “an urgency in sharing the vision, making
objectives, real and relevant.”
Everyone in the organisation needs to be involved and there needs to be
some short-term wins so that there is an atmosphere of success around the
changes made. In order to share the
vision it is suggested that a series of company- wide briefings take place to
explain the new strategies and the new divisional structure, which will be
‘sold’ as an opportunity to empower staff.
Then, without delay the new systems and routines can be assimilated into
the everyday operations of the organisation at every level thus
institutionalising new approaches.
Conclusion
The findings of this report strongly indicate that the
newly-established
Airline in the niche market is not yet established thus, immediate action is
required using the strengths of the company’s core competencies to consolidate
its present position whilst developing strategic opportunities that the growing
economy presents. Thus, the newly-established Airline will
become a prospector culture, a learning organisation, questioning and
regenerating itself when necessary.
The strategies of the newly-established Airline need to focus
more on the management and access of information rather the creation of
irrelevant airline services. For this reason, they have to develop a unique set
of guiding principles - simplicity, cost-efficiency and effectiveness. Total
commitment to these principles makes the airline services very user-friendly to
its customers. The newly-established
Airline should achieve a broad market leadership through various acquisition
deals over the years even there is a stiff competition in the market. The
strategies of should also focus on driving the growth of its airline services
and improving the company’s financial performance. These innovations might help
securing significant acquisitions and partnerships. And more importantly, these
innovations may led to the release of the potentials of the company’s employees,
thus building a quality performance- based culture.
References
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Johnson, G. & Scholes, K. (1998). Exploring
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Crandall, R.
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Kanter, R.M.
(1984). The Change Masters: Corporate
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Kasper, H.,
Helsdingen, P. V., & De Vries, W. J. (1999). Services Marketing Management : An International Perspective. New
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Kotter, J.P.
& Schlesinger, L.A. (1995) Why Transformation Efforts fail. Harvard
Business Review, March-April cited in Thompson, J. L. (2002) Strategic Management 4th Edition,
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Quality Management Journal, Vol. 14, No. 3.
