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An Analysis Of Kingfisher Airlines Marketing Essay

3819 words (15 pages) Essay in Marketing

5/12/16 Marketing Reference this

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The times since the globalization has taken an immense impact in the economic environment today, the Gross National Product and employments opportunities have seen a domain shift from manufacturing activities to service activities. The growth of the service sector has immensely affected the tourism and hospitality department. The industry in various countries is a major element of service driven economy. The growth of the tourism activities has had great impacts in global tourism and hospitality activities in the concerned countries and markets. It has come into play with various new realities, challenges and opportunities. Therefore, the organizations operating in the industry would have to approach the different markets with appropriate services and strategies

Kingfisher airlines is part of the UB group, a group of companies comprising of 60 companies in various industries. It started providing its services in May 2005 and from that day, it has never turned back. The Kingfisher airlines have grown immensely over nearly 6 years of operation. There are various ways to analyze the marketing strategies that could be analyzed.

The following are the major attributes of the Airline:

(a)

Vision: “The Kingfisher Airlines family will consistently deliver a safe, value-based and enjoyable travel experience to all our guests.”

(b)

Safety: This is an overriding value. In this line of business, there is no compromise.

(c)

Service: In hospitality business customer satisfaction is very important and building trust, goodwill and loyalty of customers is at prime focus.

(d)

Happiness: Kingfisher seeks to build an organisation with people who choose to be happy, and will endeavour to influence their guests and co-workers to be happy too.

(e)

Teamwork: Kingfisher believes that “We will succeed or fail as a team. Each one of us must respect our colleagues regardless of their rank, and we must work together to ensure our mutual success”

SWOT ANALYSIS

A scrutiny of internal and external environmental factors has become an important marketing tool for the strategic planning process. Environment factors can be classified as:

Internal factors: The factors that are internal to the firm can be classified under the term of strength(S) and weakness(W)

External factors: The factors that are external to the firm could be classified under opportunities (O) and threats (T)

In short, this analysis could be also known as SWOT ANALYSIS. This is an important analysis due to the reason that it gives the information in comparing the organization capabilities and resources in relation with its competitors. The diagram as stated below shows how the analysis fits into its environment:

SWOT ANALYSIS OF KINGFISHER

PESTLE ANALYSIS

PESTLE is:

P – Political

E – Economic

S- Sociological

T – Technological

L – Legal

E – Environmental

This analysis influences the “strategic decision making” process in organization as the information provided from the technique would help in guiding the decision making process. The major reason as to why this factor influences the organization structure is due to the reason that various decisions are based on the micro and macro environmental factors that affect the functioning of the business. Micro environment indicates those environmental factors that have limited impact on the organization and thus can be under the control of the organizations. Macro environment factors include those factors which are outside the boundaries of the organization’s very control. An organization cannot influence the micro and macro environments but by gaining the information, the organization could maximize the opportunities and minimize the threats that affect the organization.

PESTLE analysis has grown to be an important tool for understanding the risks that are associated with the growth and decline of an organisation and for reviewing the position business of the organisation in the current market.

The various key elements that each of the 6 factors could include: –

Taken from: http://www.marketingminefield.co.uk/marketing-plan/pestle-analysis.html

FROM http://esfsourcebook.eu/index.php?id=1005

The various elements that affect Kingfisher Airlines with regards to PESTEL are:

MARKETING MIX

The services marketing, also known as the extended marketing mix, is an integral part of the service design of an organisation

Taken from: http://endeavoreg.wordpress.com/2010/08/08/a-business-plan-is-not-a-luxury/

Product – In a service industry, product is intangible in nature. Travel, tourism and hospitality industry is one of the primary examples for products. These sorts of products are diverse and perishable and thus cannot be owned and treated with care.

Place – Place is a location where the service could be provided at the best. This is a prime element where the marketers decide various strategies to implement to attract the customers.

Promotion – Promotional activities is important for the service providers to be able to provide the necessary atmosphere to provide the services along with the necessary training of staff providing the intangible services. The competition in the service sector tends to be immense and therefore the promotion plays a key role in the development of the service.

Pricing – Pricing in case of services is rather more difficult than in case of products.

People – The customers generally tend to judge the organisation by the personal service provided by the organisation to the customers. The attitude and behaviour of the service personal provided.

Process – Process is an important component of the marketing mix as the demand of the services would have to be met without losing the quality of services. The marketing of services and the delivery should be able to meet up with the expectations of the customers.

Physical Evidence – In a service industry, the judgement of the service cannot be provided unless consumed.

PRODUCT

PRICE

Product variety

Product sizes

Product quality

Brand name

Packaging

Presentation

List price

Quantity discounts

Special offers

Geographical pricing

Payment terms

Credit options

PROMOTION

PLACE (DISTRIBUTION)

Advertising

Public relations

Promotions

Channel section

Market coverage

Dealer support

SERVICE

PEOPLE

Pre sale services

Point of purchase services

After sales support

Staff requirements

Salaries and bonuses

Staff motivation

FROM:  http://www.marketingminefield.co.uk/marketing-plan/mix.html

Marketing mix of Kingfisher airlines:

Factors

Features

Product

Kingfisher provides unparallel services to features. The various differentiated products and services provided are:

Roving agents: These agents assist those people who have hand baggage’s so as they don’t have to wait in queue

Different check in: There is a online check in option

In flight entertainment: There is live TV as well as recorded events for them to watch

Special care for unaccompanied minors and senior citizens

Place

There is large number of flights connectivity of flights connecting to different locations.

Price

Kingfisher has been given the name of “first full frills – true value carrier”. The kingfisher expects to provide the customers luxury, comfort and enjoyment.

Promotion

Their objective is create the brand name that would last in the minds of the people by applying the 360 degree strategy. They have reached out through various communication channels as well as several brands. Kingfisher airlines have tied up with ICICI BANK for the credit card which could be used for kingfisher miles and for various discounts. King club membership card enjoy several privileges.

People

The staff members of the airlines are known for the quality for service provided to the customers. The crew goes through vigorous training programs. The airlines have set up kingfisher airline academy to ensure rigorous training for the service oriented employees.

Process

Kingfisher facilitates easy booking of tickets for their customers through sites, agents, and the customer care service and at airports. Personalized valet service is also provided from check till the arrival when they are taken to the right baggage belt.

Physical Evidence

All the aircrafts have designer interiors and well maintained aircrafts.

PORTER’S FIVE FORCE MODEL

Michael porter has provided five force models which would help a manger analyze the industry in which firm operates.

Diagram of Porter’s 5 Forces

 

SUPPLIER POWER

Supplier concentration

Importance of volume to supplier

Differentiation of inputs

Impact of inputs on cost or differentiation

Switching costs of firms in the industry

Presence of substitute inputs

Threat of forward integration

Cost relative to total purchases in industry

 

BARRIERS

TO ENTRY

Absolute cost advantages

Proprietary learning curve

Access to inputs

Government policy

Economies of scale

Capital requirements

Brand identity

Switching costs

Access to distribution

Expected retaliation

Proprietary products

THREAT OF

SUBSTITUTES

-Switching costs

-Buyer inclination to

 substitute

-Price-performance

 trade-off of substitutes

 

BUYER POWER

Bargaining leverage

Buyer volume

Buyer information

Brand identity

Price sensitivity

Threat of backward integration

Product differentiation

Buyer concentration vs. industry

Substitutes available

Buyers’ incentives

DEGREE OF RIVALRY

-Exit barriers

-Industry concentration

-Fixed costs/Value added

-Industry growth

-Intermittent overcapacity

-Product differences

-Switching costs

-Brand identity

-Diversity of rivals

-Corporate stakes

 I. Rivalry

Competition among the rival firms is a major driver to the business growth. Firms have to look out of the competitive advantage among the rival firms. The intensity of rivalry depends upon the industries.

If the rivalry is low, the industry is considered as disciplined which varies as per the degree of competition in the past, role of leading firm and the generally understood code of conduct in the industry. Rivalry intensifies depending upon the response of the rivalries. .

The intensity of rivalry is influenced by the following industry characteristics (http://www.quickmba.com/strategy/porter.shtml):

A larger number of firms increases rivalry because more firms must compete for the same customers and resources. The rivalry intensifies if the firms have similar market share, leading to a struggle for market leadership.

Slow market growth causes firms to fight for market share. In a growing market, firms are able to improve revenues simply because of the expanding market.

High fixed costs result in an economy of scale effect that increases rivalry. When total costs are mostly fixed costs, the firm must produce near capacity to attain the lowest unit costs. Since the firm must sell this large quantity of product, high levels of production lead to a fight for market share and results in increased rivalry.

High storage costs or highly perishable products cause a producer to sell goods as soon as possible. If other producers are attempting to unload at the same time, competition for customers intensifies.

Low switching costs increases rivalry. When a customer can freely switch from one product to another there is a greater struggle to capture customers.

Low levels of product differentiation is associated with higher levels of rivalry. Brand identification, on the other hand, tends to constrain rivalry.

Strategic stakes are high when a firm is losing market position or has potential for great gains. This intensifies rivalry.

High exit barriers place a high cost on abandoning the product. The firm must compete. High exit barriers cause a firm to remain in an industry, even when the venture is not profitable.

A diversity of rivals with different cultures, histories, and philosophies make an industry unstable. There is greater possibility for mavericks and for misjudging rival’s moves. Rivalry is volatile and can be intense.

Industry Shakeout. A growing market and the potential for high profits induces new firms to enter a market and incumbent firms to increase production. A point is reached where the industry becomes crowded with competitors, and demand cannot support the new entrants and the resulting increased supply. The industry may become crowded if its growth rate slows and the market becomes saturated, creating a situation of excess capacity with too many goods chasing too few buyers. A shakeout ensues, with intense competition, price wars, and company failures.

II. Threat Of Substitutes

In the porter’s five force model, substitute products refer to products. The price elasticity of product depends upon the substitute products. The closer the substitute constitutes the ability to raise prices.

III. Buyer Power

The power of buyers also depends upon the customers in the industry. When the power of the buyer is strong, the relationship is near what people define as monophony. Under such market conditions, the buyer sets the price.

Buyers are Powerful if:

Buyers are concentrated – there are a few buyers with significant market share

Buyers purchase a significant proportion of output – distribution of purchases or if the product is standardized

Buyers possess a credible backward integration threat – can threaten to buy producing firm or rival

Buyers are Weak if:

Producers threaten forward integration – producer can take over own distribution/retailing

Significant buyer switching costs – products not standardized and buyer cannot easily switch to another product

Buyers are fragmented (many, different) – no buyer has any particular influence on product or price

Producers supply critical portions of buyers’ input – distribution of purchases

IV. Supplier Power

A producing industry requires raw materials – labor, components, and other supplies. This requirement leads to buyer-supplier relationships between the industry and the firms that provide it the raw materials used to create products. Suppliers, if powerful, can exert an influence on the producing industry, such as selling raw materials at a high price to capture some of the industry’s profits.

Suppliers are Powerful if:

Credible forward integration threat by suppliers

Suppliers concentrated

Significant cost to switch suppliers

Customers Powerful 

Suppliers are Weak if:

Many competitive suppliers – product is standardized

Purchase commodity products

Credible backward integration threat by purchasers

Concentrated purchasers

Customers Weak

V. Barriers to Entry / Threat of Entry

In theory, any firm should be able to enter and exit a market, and if free entry and exit exists, then profits always should be nominal. In reality, however, industries possess characteristics that protect the high profit levels of firms in the market and inhibit additional rivals from entering the market. These are barriers to entry. Barriers to entry are unique industry characteristics that define the industry. Barriers reduce the rate of entry of new firms, thus maintaining a level of profits for those already in the industry.

Easy to Enter if there is:

Common technology

Little brand franchise

Access to distribution channels

Low scale threshold

Difficult to Enter if there is:

Patented or proprietary know-how

Difficulty in brand switching

Restricted distribution channels

High scale threshold

Easy to Exit if there are:

Salable assets

Low exit costs

Independent businesses

Difficult to Exit if there are:

Specialized assets

High exit costs

Interrelated businesses

Five force model

Features

Bargaining Power of Suppliers

Only 2 possible suppliers of planes – Boeing and Airbus

Switching costs from one supplier to the other is high because all mechanics and pilots would have to be retrained.

€ Price of aviation fuel is directly related to the cost of oil

Regional Airports have little bargaining power as they are heavily dependant on one

airline

Bargaining Power of Customers

€ Customers are price sensitive

€ Switching to another airline is relatively simple and is not related to high costs(Internet-all

airlines are online)

Customers know about the cost of supplying the service

No loyalty

New Entrants

Some barriers to entry:

High capital investment,

Restricted slot availability makes it more difficult to find suitable airports.

Immediate price war if encroaching on existing LCC route.

Need for low cost base

Flight Authorisations

Threat of Substitutes

€ No brand loyalty of customers€ No ‘close customer relationship’

No switching costs for the customer

€ Other modes of transport,

Competitive Rivalry

•The LCC market is highly competitive

€ Most cost advantages can be copied immediately

Low levels of existing rivalry as the two major low-cost airlines have avoided direct head to head competition by choosing different routes to serve

Not much differentiation between services. Price is the main differentiating factor

Kingfisher Airlines Marketing HR Financial Strategies

Some of the major strategies that Kingfisher Airlines had followed are:

It came up with the Tag line of Fly with the good times and it has reflected upon with the experience offered to its passengers.

The airlines have immense appeal with the LCC segment.

It had planned to re-launch commercial air service of UB airways but was withdrawn due to government restrictions

The company provides world class interiors along with entertainment within the flight to be able to provide appropriate customer service.

The company came up with only one class airlines to combine the features of business as well as economy class. This helped to enhance the leg spacing for the customers.

The passengers are considered as the guests for the company who could be provided with bigger leg room and bigger seat with better comfort.

Kingfisher Airlines is determined to become one of the largest airlines in terms of not only the capacity but also the market share.

KFA’s Promotional Strategies

With the tagline of “the new flying experience”, kingfisher has taken various initiatives for its promotional strategies which include: –

The advertisement hoardings at airports indicate various “funlines” which target the youthful nature of the airlines along with the fun filled and world class image of the airlines.

Kingfisher Airlines sponsors various movies for their promotional activities.

KFA promotes their brand through sponsoring various fashion shows, celebrity golf matches and New Year parties along with publishing their own monthly magazine called “Pegasus” which involves publishing information about the Kingfisher Airlines along with the products and services of other UB group

The Kingfisher airlines launched various offers including the King card in association with ICICI bank which was brought forward to create loyal customers for the kingfisher airlines. The various privileges that could be accessed through the card includes lounges, restaurants, free refreshments at airports, access to 180 golf clubs across India, special invites for lifestyle shows. They even started “King saver offer” which stated “Fly like a King, don’t play like one”.

Kingfisher airlines targeted the business travelers by offering King saver booklet which contained six free flight tickets and was presented as a free gift Passengers could avail off this offer if they showed there Jet Privilege Member (Gold or Platinum) card.

Financial strategies:

Kingfisher airlines had brought about various financial strategies which had eventually helped the organization to gain an increase in the market share. The financial strategies that kingfisher had decided to bring in are:

It purchased brand new A320 aircrafts powered by the cockpit that was a paperless environment.

In June 2005 Kingfisher Airlines planned to order US$5 bn at the Paris Air Show, for 5 new A350-800 aircraft, and five A330-200 aircraft.

Kingfisher Airlines was first Indian carrier to place an order for A380s.

It placed an order for 30 A 320 and 20 ATR72-500 aircraft at the Dubai Air Show. This ATR72-500 was worth US$750.

To further its expansion plan Kingfisher Airlines put in its bid to buy Sahara in November 2005.How ever negotiation came to a standstill when Kingfisher Airlines felt the valuation of Sahara Airlines of around US$750mn to US$1 bn. was too high.

Kingfisher Airlines has plans to make an Initial Public Offer (IPO) and raise around US$200 mn that would be used for its fleet acquisition and route expansion activities.

Human Resource Strategies

Prior to launch, Kingfisher Airlines signed a “non-poaching alliance” with Air Deccan under which both the airlines agreed not to hire each other’s employee. KFA’s flight attendants called “Flying models” were selected through a national level model contest.

Kingfisher Airlines also stressed the fact that its employees had to be capable enough to meet the airlines’ high service standards.

CONCLUSION

To conclude, Kingfisher airline should prioritize on bridging its ‘points-of-parity’ before enhancing its points of differences. It must improve its performance on key parameters like punctuality & air fares and should not introduce points of differences which increase the air fare of Kingfisher Red. Kingfisher Airlines should consider implementing a promotional campaign in mass media which educates people about Kingfisher & Kingfisher Red. While Kingfisher can continue with flashy ads featuring models depicting exuberance and lifestyle, Kingfisher Red ads can be more subtle focusing on safety, comfort & experience. The idea is amalgamate the two ends of the spectrum, to keep the consolidated identify of Kingfisher, while clearly spelling out to customers the differences between its premium and budget classes.

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