Airline Branding Strategy | Analysis

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02/06/17 Marketing Reference this

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This dissertation is focused on the study of overview of Airline industry and especially focused on airline named Air India. Air India is renowned and one of old airliner in India serving domestic and International destinations. Now, a day, there is tough competition in airline Industry in India. To gain the competitive edge, branding of airline is in current trend for marketing strategy. This research study depicts the branding strategy of Airline in detail. The study will also throw light on the factors shaping the Branding strategy and consumer perception towards the brand.

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Airline theoretically by definition is defined as an enterprise operating aircraft for commercial purposes which (i) performs scheduled or non-scheduled air transport, or both which are available to the public for carriage of passenger, mail and or cargo and (ii) is certified for such purposes by the civil aviation authority of the state in which it is established.

The means of transport which is commonly used in India was by roads, railway and the air transport were very expensive in 1990s. But, with advent of so many commercial airlines for both domestic and International, now air transport has become more common in India and with competitive affordable pricing. Airline business is very expensive but with tougher competition and increase in market demand, the industry has good prospects in Indian market.

Brand is merely not advertisement and neither it is some catchy name but, it holds some value and that value connects the target audience to its product or service. This research study will focused on the association of consumers towards Air India brand and its branding strategy.

Branding is also redefined as the experience added value to the service provided to its consumer. One important implication is that branding strategy is tightly coupled with the business strategy and vision of company. The detail components of the branding concept will be discussed in literature review section of this report.

Branding can also provides competitive edge and creates global awareness across the wide network of consumers. The main task in this research study is to evaluate the Air India Brand in nut shell to test different hypothesis and rational of consumers about the brands. Branding is not so simple and needs detail strategically ability of corporation to design, develop and implement the building process of brand.

Overview of Asian Aviation Industry

The aerospace industry has seen a gargantuan shift since the end of the millennium. Most not able the two main competitors, Boeing and Airbus, after the collapse of the commercial airline industry into submerge of several airline providers.

The airline industry is unique. It is cyclical in nature, incurs high-fixed costs, there are uncertainties due to heavy dependency on other fluctuating factors like oil prices and has a length of engagement with the customer that is not common in other industries

The basic transport statistics of various airlines are shown below with passenger, revenue and in terms of RPK which stands for Revenue per passenger kilometer and FTK which means freight tons kilometer. (Findlay & Goldstein, 2004, p.40) This statistical data gave us the picture of Air India positioning in Asian Airliner.

Air Network in India

This map shows the connectivity and various air travel destination throughout India and the number of location is rapidly increasing since last decade. It is becoming more popular mode of transport in India. Earlier, Railways were the main and heavily dependent means of transport but, now a day the scenario is changing with the rapid advancement of infrastructure. The various marks on the cities of map represent the Airport location on the map of India.

The major decision maker in Airline industry are infrastructure facility, GDP growth rate of nation, Political scenario, bureaucracy, taxation, state owned and private airline. The Airline model which best suggest the Indian economy is between low cost to medium cost service provider. (Acharya,2005)

History of Air India

Air India business performance is remarkably commendable since its origin in 1932. Air-India has created a brand association with its passenger and Air India brand name is legally protected trade mark. The brand is most valuable advertisement instrument and creates customer association with its service. Similarly, the Air- India branding strategy in contrast to its competitor is the area of core discussion in this assignment.

Air India has also association with Government of India and runs as the National Aviation Company of India Ltd (NACIL). In 948, Air India started its operations internationally and Air India has several private and government alliance flight on its schedule. At present Air India connects India with 44 destination around the world. The airline has Airbus A310-300, Airbus A330-200, Boeing 747-400, Boeing 777-200, Boeing 777-200ER, Boeing 777-200LR, Boeing 777-300ER and Boeing 787-8. [1] 

Air India International route map is shown below, which depicts the connection of Air India across the world in major cities [2] 

Airline Resources and Cost Associated with operations

A study conducted by Peter Horder (2003), Senior Vice President SH&E Ltd regarding the Airline Operating Costs and the expense distribution. The pie chart shows the various direct operating cost of airline and various costs schedule related to operational activity of Airline

Below table illustrates the expense distribution of various airlines. As, it is clearly visible that Air India has major portion allocated to Sales and Promotion category of expenses.

Air India Brand Logo

During 1940s – Early 2000s the Logo of Air India is as shown below can be analyzed first logo for Air India International was the centaur hitting an arrow in a circle representing the wheel of Konark. The centaur is the sophisticated version of Sagittarius the Archer, the more important, the 9th star sign. In old mythology a centaur, a creature with a man’s brain and trunk accompanied the personify of a horse at the base of the neck, stands for the inspirits of air, woods and mountains, in addition to representing the most honorable instrumentalist and adventuresome fighter aircraft protective the concerns by the idols.(Bonigala, 2009)

Current Air India brand logo is red colored flying swan as shown as the orange chakra on the tail of its plane. The Logo has name in Hindi language is also written on the tail to get more consumer perception of Indian consumers who may only read Hindi language.

The Chakra is representation of symbol of Konark Sun Temple in its logo as shown in the figure below and the chakra represents God Sun. The Konark Sun Temple is Situated in State Orissa, India.

The other brand logo for Air India is Maharaja as the Mascot as shown in the picture below with various lovable figures for the advertisement and brand logo of Air India across the world. (Air India Official Website, 2010)

Market Situation

The other major competitors of Air India are Jet line, Air Deccan, Indigo, Kingfisher, Indian Airlines and various other airlines. Since last decade, the Indian aviation industry is fastest growing market in aviation industry in the world. Some of the factors which have impacted the greater demand in Air Transport are the rise of middle class, purchasing power, value of time and low air fare offered by low cost carrier. [3] 

The Indian consumer preference shift for domestic transportation from air way than railways is on the way. There is massive infrastructure expansion such as renovation of airports and providing easy access for public travel is impacting the growth of aviation industry in India. While the aviation market around the world is in losses, Indian aviation market is booming and comparatively doing very well in 2010. [4] 

The increasing trend on Airline travel is also due to the rapid development of infrastructures. The number of airports has substantially increased in different across the nation. The better infrastructure encourages more carriers to enter in this Airline industry.

Air India market share is showing a increasing trend as reported through a survey by Air India in 2009. The domestic market share increase from 16.6% to 18.6% in three months in year 2009. The total number of passengers flew from Air India in 2009 accounts for 7.7 lakhs and which is increase of total 1.1 Lakhs passenger from year 2008.

Currently, Air India has program to slash down fares up to 23% to gain the more market share and enter the fare war zone with other major competitors in market. Although Air India has so much embedded in debt but, still this fare reduction for the domestic destination will help the Air India to increase the market share (Upadhay, 2010).

Air India has major losses of $10.4 billion dollar so far in 2010 and the Airline is putting lots of efforts to turnaround and improves the financial performance. This dissertation is detailed study of the current branding strategies framework utilized by the aviation provider and then provides recommendation in the end to design the branding strategies in context to Indian consumers and their mind set. This study will also undergo deep analysis of target market for which branding will associate them as their part of life.

“Air India projects the number of total 25 million travelers a year domestically and 15 million on overseas routes to break even in fiscal year 2015”, Arvind Jadhav, chairman and managing director, said on July 25.(Sharma, 2010)

The Maharaja of Indian aviation will restructure strategy to end its financial troubles. Air India, the country’s third-largest airline by market share, on Sunday announced its turnaround strategy due for completion by 2014.

According to the plan released on Sunday, the company will aim to achieve a positive balance sheet by 2014-15. The decision was approved following a meeting of the board of directors and employees with the company’s management.

“The focus of the plan is on reducing the cost of debt to the company and replacing high-cost debt with low-cost ones. The government will also infuse equity to the tune of Rs 1,200 crore in the coming months subject to the performance of the company,” said Praful Patel, civil aviation minister.

The carrier will restructure the working capital loan through a mix of bonds guaranteed by the government over the next four years and will infuse additional capital through sale of land or buildings or use them as security for loans, Air India said in a statement on Sunday.

The government has infused Rs 800 crore in the past to revitalize its financial difficulties and the additional infusion will largely depend on the company’s financial performance in the coming months.

Air India currently has a working capital debt of nearly Rs 18,000 crore and the airline had appointed SBI Capital to assess and plan its financial restructuring. The company will consider launching its domestic low-cost carrier in the coming months to take on the existing low-cost carriers that have been absorbing its market share.

The branding strategy can be detailed analyzed in this dissertation by the performance of Air India over a period of time. The environmental analysis and Porter generic strategy will help to analyze the forces experiences by Air India. Not all Industries are equal in terms of their potential profitability is a need to device any change in the strategies based on the external forces. Porter’s five forces model gives an idea of how much pressure does Air India can tolerate inside from those outside forces. Another important implication can drive about the growth and profitability alignment internally due to external pressure. All this strategically analysis discussed in detail in later section of this report will tie back to the branding strategy to gain the competitive edge in the market and become more profitable by earning more market share and consumer confidence level.

The strong brand strength is very important and crucial factor in the success of Air India. There is certain objective of branding and it would analyzed that whether Air India has achieve all the necessary objective to become successful and strong brand. Developing branding is not a easy job and it needs lots of analysis of customer behavior so that proper association of brand to its target market can be well connected.

This growing trend of market share is interesting trend and it develops the concern that if this increase market shares of Air India is making airline profitable or not? Brand perception of Air India which is partially associated with government or state owned Airline and its shadow of brand strength in Indian market. What are the factors related to marketing strategy that are helping to change this market share data from last 5 years.

The research main objective is to analyze the branding strategic framework, that will be discussed in detailed to understand the key conceptual topic related to branding. The branding is mainly indented to earn loyal customer base and associate customer with the brand image and meanwhile earning competitive edge in this tougher aviation industry.

Besides the introduction and conclusion, the paper comprises three parts. The first sets up a framework of analysis, by examining the branding of Air India. Analyze if its market positioning is based on brand and how strong its brand perception is among Indian consumer mind. The concept of Branding will be reflected through Brand Strategy of Air- India and its Brand identity, Brand equity, Brand extension, Brand promotion, Service marketing and Porters generic strategy. The second part explores Air India’s research methodology to explore the branding strategies, to illustrate the effect of competitive edge through branding strategy. The conclusion will summaries the findings and to evaluate the likely implications of the findings

In short, the paper intends to examine Air India Branding strategy to gain market share in both domestic and international horizons , where there is tough competitive market in Airline industry explain the rationale behind the branding strategy and to illustrate likely implications on confidence in Indian consumer.

Review of Literature

The various business functions, one of the things that should become evident about the marketing process is that marketing takes an “outward” versus “inward” business view. Marketing links the company with the world outside the company. It could be considered the society, the customer, and/or the environment. Thus, in order to develop marketing plans or marketing strategy, one must first do an environmental audit assessment as well as identify potential target markets.

Competitive Environment

Competitive Structure of the Market is discussed in this element of environmental assessment (Four Economics Markets – Monopoly, Oligopoly, Monopolistic Competition, or Pure Competition). Competitors (Number, size, market share, location, product, marketing strategy, form of competition (direct or indirect)) and Competitive Analysis (Opportunities, barriers, trends)

Economic Environment

Economic environment includes the Global Economic Situation, Business Life Cycle(s), Interest rates, Inflation, Income, Consumer Disposal Income, Unemployment, Demand and Spending Patterns

Technological Environment

Technological environment is the analysis of New trends, New discoveries or innovations, Speed of Technology transfer and acceptance, Usage of Technology, Rates of obsolescence,

Social Environment includes the impact of business from or to pollution, unemployment, ethical use of information, security and privacy

Political Environment

Political environment includes the impact on business in terms of Nationalism, Terrorism, Formal political power (political parties, unions, elections) and Informal political power (lobbying groups, consumer groups, national sentiment, global sentiment)

Legal Environment

Legal environment constitutes of Government agencies (federal, state, local), Laws and regulations and Interpretations of the law

Social and Cultural Environment

Social and Cultural environment depicts from the Demographic Changes or Shifts or Trends (age, sex, income, employment, nationality, martial status, religion, etc.), Geographic Changes or Shifts or Trends (rural, urban, sections of the United States, World, etc.), Psychographics Changes or Shifts or Trends (lifestyles, attitudes, interests, etc.), Changing Family Structure (traditional, non-traditional, blended families, etc.) and Changing Culture Values (i.e. success, youth, work ethic, time, freedom, etc.)

Environment assessment is the basic foundation for the formulation for strategy development to exploit the opportunities and handle the threats came across the organization. Michael E. Porter generic strategic analysis is effective ground work before the strategy foundation and analyzing the current position of the company. Porter framework includes the following major elements entry barrier, competitor, suppliers, substitutes, and Customer.

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This framework helps to analyze the organization condition from the overall industry perspective and it is important technique to design the strategically changes in the organization. Organization should identify and analyze the internal and external forces underlying the company. Once the company know what those forces are, company need to come up with strategic choices to strengthen the firms’ position relative to the internal and external forces.

The objective of the Porter forces is to analyze the factors that shape the corporation vision, and strategy to establish in. This research study is focused on the strategic choices based on branding analysis of Air India branding strategic analysis. With the analysis of company core values and branding it would be easy to understand how to design the strategy to align core values to branding techniques used by company. The core concepts of branding and branding framework is discussed in detail in later section of this chapter to understand the branding structure and its strategy regarding the Airline named Air India.

Brand

Brand is defined by the American marketing association (AMA) as the name, symbol or a combination of them which depicts the product or services provided by company to differentiate it from other in market. Brand exists when it has gained some power to influence the market. The acquisition of the power takes time and it is long process and Companies need to manage the brand efficiently to maintain the brand equity otherwise it would lost. Brand is the set of unique attributes which would help to gain market share and leadership should be attractive, communicated, distributed and experienced by consumers. Brand Strength is determined by the behavioral indicator such as market share, market leadership, price premium, loyalty rate and competition. (Kapferer, 2008)

Aggarwal (2008) defined the brand as the intersection of company’s strength and customer value. Brand is the responsibility of everyone in the organization it does not mean to just build and create brand. It is often more important to maintain the brand image through employees behavior and company operational strategy to reflect back the brand image. He discussed the three drivers for the strong brand as the Intellect, emotions and senses. Organization drivers are based on the Mission, values and story while the branding drivers based on the principle, Personality and association. To maintain the strength of brand it is required to meet the customer perception and expectation related to the quality and value.

Brand should have clear and strong brand identity which would eventually drive the brand equity. Identity building is the way to create brand exposure. It is not necessary that consumer who only made buy the brand wants to know about the brand, but in fact some people who even don’t buy brand build the strong brand perception by supporting brand identity. It is one of the important and crucial steps to involve the consumer in the brand building process. Especially for any service industry like Airline, there is direct interaction with consumer and strong key decision to participate consumers in building the brand. To create the brand through consumer it is also essential to build the brand through consumer experience. The experience creates a relationship which is even beyond creating brand identity in terms of creating brand symbol or association with celebrity or character. (Joachimsthaler and Aaker, 1999)

Brand is valuable when customer perceived the associated benefits and image related to the brand. Consumer benefits related to brand identification, practicality, Guarantee, Optimization, Badge, Continuity, Hedonistic and Ethical. Brand system is shown in the diagram shown below which shows the brand management process top to down approach in this pyramid while, the brand perception process is the bottom up start from the product and build up to brand vision.

Brand System

This brand system depicts that products or services are the foundation stone for the brand system. The next level in brand system is the product features or physical signature which depicts the brand such as brand differentiation why it is different and unique and termed as the brand. The next higher level is the benefits and attributes of service or product which positioned the product in market. Above that brand builds the personality and core values thereafter. At the top the Brand is associated with company vision and purpose. This step is the alignment of brand image with company mission or vision statement. Such as the Air India logo of flying swan links the company mission of flying swan to serve the customer in deed.

This is the classical definition of the brand and in recent years the more definition of brand includes internal and Organizational processes. Heding, Knudtzen and Bjerre defined the seven different approaches to define brand. The seven different approaches are economic approach, identity approach, consumer based approach, personality approach, relationship approach, community approach and cultural approach.

Economic approach is traditional approach to define the brand in terms of marketing mix. Identity approach relates the brand to company identity. Consumer based approach based the branding definition based on the consumer perception and association towards the brand. Personality approach defines the brand in terms of character, celebrity or a role model to follow. Relationship approach defines it as the viable relationship partner. Community approach elaborates the brand as the social interaction and cultural approach defines the different cultural symbol in it. These seven different approaches are concluded by the author after extensive research of brand research articles and based on methodology proposed by Thomas Kuhn. These different approaches will result in different outcome and provides a complete overview of the brand management according to multi dimensional thinking. (Heding, Knudtzen & Bjerre. 2009, p.4-10)

Brand Management

The brand management process begins with the understanding and analyzing consumers and competitors. It includes the designing the brand based on target audience, articulate the brand essence, brand promise and brand personality. Next step to position the brand in the competitor grid to see where, the brand of the organization is positioned among the similar product or services offered by the competitor.

Brand management process includes the crucial steps such as developing branding plans or marketing plans based on environmental analysis, build brand awareness, position the brand to create competitive edge, transfer company operations to depict brand image, measure & monitor the brand equity and creating customer acquisition, retention and loyalty programs.

Brand management is the management to solve the complex issues and it involves from the first step of building brand to creating customer loyalty towards the brand (VanAuken, 2003)

Brand Framework Model

Urde Brand Hexagon Model (1999) is the framework to understand the branding framework which associate brand identity with the brand equity in the direction of company image towards consumer perception. To define this model from the diagram shown below the company name is associated with brand and it connects to the audience through the personality, association, awareness and loyalty towards the product and its product category. (Guzman 2004)

In this study the Air India core value positioning is the central point of the model and the Air India brand name and its symbol of Maharaja and flying swan will creates the personality, loyalty, association of Air India towards its consumer. Brand name depicts the vision and mission of Air India to associate its consumer through the branding of airliner.

Corporate Branding Model

Knox and Bickerton (2003) identify six elements of corporate brand building as shown in the diagram below where, Brand context is the first element of this model which defines the positioning of brand and its clear meaning of the brand. Brand construction means building the brand positioning or context to create the value for brand or in other words creating stakeholder value through branding. Brand confirmation is the way the brand is delivered its message to outside world and build corporate image. Brand consistency is the depiction of the clear message and association towards the brand and consumer. Brand continuity element constitutes the alignment of corporation business processes in accordance to the brand image. Brand conditioning is ability to monitor and control the overall brand image and thus in turn covered corporate branding. (Guzman 2004)

Brand Conditioning

Brand Construction

Brand Context

Corporate randing

Brand Continuity

Brand Confirmation

Brand Consistency

Corporate Brand Building Model

Schultz and Hatch also defined this Corporate branding model is the brand vision of company’s activity and its association to business processes in accordance to brand image.

Branding Approach

This approach to define branding model describe that producer of brand i.e. the firm that created the brand is the active participant while, the consumer is the passive participant who engage in the transaction of buying or not buying decision. The various shape models are designed based on this ideology like triangle; pyramid brand model shows the systematic process of building the brand. The branding model starts with the concept of brand awareness which in deed is the functional desires of consumers such as affordability, accessibility, functional utility or benefit and quality. Thereafter this brand awareness is connected to the emotional attribute to set up the bounding between consumer and brand. Overall, the maximum consumer satisfaction and financial impact through branding result in building of brand equity in terms of tangible and intangible assets and benefits associated with the brand. (Amir & Burt, 2010)

Grassl (1999) and Blackston (1995) argue that relying completely on brand equity as the branding framework and modeling is incomplete view of the whole branding process. Grassl further argues that economic ideology misses the social association and social beliefs of consumer for the brand. The branding model proposed in the research of Amir & Burt discuss the several approaches for branding in different perspective in form of tree synthesis for branding process as shown in the tabular format below. This model proposed the various phases of branding process and related to the strategic connection at each phase related to branding concept for building a brand by firm or organization. (Amir & Burt, 2010)

Tree Metaphor

Branding approach

Central tenant for each branding approach

Underlying branding ideology

An organic framework for the branding process

Leaves

Managerial Approach

Social – Psychological Approach

Strategic Appeal or positioning

Brand Personality

Strategic

Communication

Trunk

Sociological Approach

The transcendental path

of customer identity

construction with

brands

Social

Transformation

Roots and Soil

Anthropological

Approach

Anchoring embedded cultural values

Cultural

Foundation

Managerial and social psychological approach is the strategic approach which appeals for the brand positioning and builds brand personality. It participates in the communication process of the branding. Sociological approach is the transformation stage and it is based on the social transition of brand to public. This approach creates the brand awareness and first step to build the brand association. Anthropological approach is the roots of the branding and it is compared to pouring sees in the soil stage. This approach builds the cultural roots of the brand and foundation stone for the brand. With the combination of all these approach a complete branding approach can be analyzed to create, aware and deliver brand to consumers.

Brand Measurement

In various commercial applications brand equity is measured are often collected to consumer level and defined as the association of consumer perception about brand and described as brand level. The brand reporting methodology is required to derive the relationship between consumer relevance perception and differentiation perception. The five set of A’s are the defined as the set of success of brand proposed by Keller and Lehman as the Awareness, association, attitude, activity, and attachment. Awareness is the recognition, familiarity and recall of specific brand in consumer mind if someone talk’s about the product or service category. Association is related to the tangible and intangible product or service consideration. Tangible association is related to the product or service offerings and intangible association is related to the emotional bonding of service to the consumer. Attitude is the acceptability and attraction of branded service to the consumer market. Activity includes the customer involvement, consumption and purchase decision. Lastly, Attachment is similar to attraction but attachment is related to loyalty as the repeated buyer of the product or service. This structure of five A’s describe the brand knowledge structure which is commonly deployed in both academic and commercial brand models.

In commercial world of brand measurement tool has different framework top-down approach, which evaluates the strength of brand in terms of relevance, commitment and price advantage. This top down framework helps to identify the

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