Introduction of Emirates Airline
Emirates airline is a Dubai based airline wholly owned by Dubai Investment Corporation. Emirates is the largest airlines in the Middle East operating over 3,600 flights per week. This airline is considered as the global leader who started its operations with only two aircraft. They offer their customers the comfort zone with the latest and most efficient aircraft. Emirates is successful because of its strong marketing strategies which is why Emirates is the only airline to face a very less economic downturn in the last few years. Emirates has expanded its operations, they currently fly to over 155 destinations in more than 80 countries around the world. They are committed to consistently provide quality services and to be the best airline in the world.
Section- 1: The marketing environment of Emirates Airline
Understanding the marketing environment is very essential for Emirates airline. It helps to determine the issues and develop business strategies to survive in the market. There are two types of marketing environments:
- Macro-environment
- Micro-environment
1. Macro-environment (Opportunities and Threats)
The macro-environment consists of different external factors which impact business organizations as a whole. These factors are unorganized and organizations usually have less personal control to cope-up with these factors, commonly known as Opportunities and threats for the company. These factors can be any of bellow mentioned detailed list.
1.1 Demographic Forces of Emirates Airline
The demographic forces can influence the market segmentation of the Emirates. It is important for an organization to determine these forces which include country/region, age, education, household lifestyle, cultural characteristics. They are important because Emirates need to keep itself updated and continuous improving services providing organization.
1.2 Economic Forces of Emirates Airline
Economic forces include different key-factors that can impact the Emirates services and consumer’s decision-making processes, these forces may include interest rates, exchange rates, inflation, taxes, demand/supply. The economic factors can pose different opportunities for Emirates Airways, The revenues are increasing every year which is a clear opportunity for Emirates Airways to invest in buying different new aircraft and hire different special trainers from different countries which can train their employees in order to create opportunities in the form of business growth and development.
1.3 Natural/ Physical Forces
Natural and physical forces impact the Emirates but have not too much influence to be counted as a big factor. But in case of rough weather conditions and natural disasters, company can be influenced with these forces.
1.4 Technological Forces
Rapidly changing environment is always an opportunity or threat for the Emirates. As, the company is working on the concept of providing best quality services and use of latest technology.
1.5 Political & Legal Forces
Political and legal forces include the influencing party and visionary relationship maintained environment for the organization with changing in political and legal environments. The legal factors can change the business game rules which can either take business downwards or upwards. Emirates Airways is a Middle East airline, Donald Trump and its administration recently imposed a legal act in which they have banned the Muslim Citizens to enter the US which has decreased the ratio of passengers from Muslim countries in US Markets. This is a threat to Emirates Airline, which can bring their sales downwards because most of the passengers who travel in Emirates airlines belong to Muslim countries.
1.6 Social & Cultural Forces
Sociocultural factors are very helpful in formulating a business marketing strategy which can affect the buying behavior of the consumers. These forces include lifestyles, customs, cultural aspects, reference group, family group, role, status, education etc.
A. The framework that apply to the macro-environment of emirates airways
To discuss the macro-environment of Emirates Airways, I chose Economic framework to define the position of the organization.
B. Economic factors – Emirates airline
Emirates Airline currently have a good stable economic condition. UAE government has invested a lot in its two airports: Dubai & Abu Dhabi. The results are quite clear from this development which has increased the number of daily flights and increased the profit margin. Emirates have faced many economic challenges but they are sure they can surpass these challenges as they did before. Emirates airline is one of the few airlines which had faced very little downturn ratio of their investments & profits. The profits of Emirates Airline are increasing every year with the number of passengers increasing. If we measure the economic stability, we can see the rise in 73.5% improvement as compared to the last year, Net profit of $429 million was recorded. This represents that Emirates Airways economic condition is improving day by day with its investments in different airlines. This is very sure that Emirates Airways have been increasing its profit margins. Which is why it has been able to buy such expensive aircraft with the help of this airline, Dubai tourism is being promoted which is a contribution in the economy.
2. Microenvironment of emirates airways (Strengths and Weaknesses)
Microenvironment factors are those factors which determine the organizations resource availability and helps in planning and preparation of business which include the long-term strategy development. These micro-environment include:
2.1. Customers of Emirates
Emirates Airline values its customers. Its fixed cost strategy for its clients. The cost of any travel is predefined. For Emirates Airways the customers are the valuable assets whom they provide quality services in best value.
2.2. Employees of Emirates
According to 2015, Emirates Airline has more than 20,000 employees who manages the whole network of airline. The employees are included in the top priority of Emirates Airline. Different allowances and incentives schemes are for employees of Emirates Airline.
2.3. Distribution Channels & Suppliers
There are different ticket distribution authorized franchises which allows easy ticket buying. Emirates Airline has their application (Both android & iOS) which allows its customers to buy tickets online or from nearby franchise.
2.4. Investors
Emirates is one of the biggest airlines of the world, Emirates Airline itself is investing in different other airlines, Emirates Airline has a market share of 39%. However, Emirates Airline have minority equity investments in different participating airlines. Moreover, different investors are entering in the market which can be a threat.
3. Conclusion of SWOT analysis of emirates Airline
SWOT Analysis the essential part to determine the internal and external factors which can help us understanding the rivals and comparing them in terms of strengths, weaknesses, opportunities and threats.
- STRENGTHS: Unique Business Model, Luxury Aircraft, Strong trade name
- WEAKNESSES: Weak diversification approaches used, Limited market range
- OPPORTUNITIES: Expansion in new market: Russia, Europe, Updating its technology.
- THREATS: Rival Companies like Etihad Airways, Qatar Airways, Lufthansa, Fly Dubai, Malaysia Airlines, Turkish Airlines, Saudi Arabian Airlines, Cathay Pacific, and PIA, also the fuel costs might increase as a threat to Emirates airline.
Section- 2 (Positioning and Targeting)
1.Market segmentation of emirates Airline
Every customer has a different taste, So the concept of market segmentation is used which allows the organizations to divide the customers into groups according to their needs and wants. Market segmentation enables the organizations to develop such strategies for group of customers so that they can satisfy every group according to the service standards.
Emirates Airline segments its customers following the traditional approach. Their market segmentation is as follow:
- Focuses on business travelers and price-sensitive travelers.
- To increase its market and expanding their business they are focusing on segment based on consumer loyalty.
- Emirates Airline use psychographic segmentation in order to divide the customers depending on their lifestyle, opinions, interests, behavior and attitude of customers
I. Target users:
Value-seeking fliers, Not very price-sensitive, Upper middle and Upper-class fliers seeking comfort and flying experience..
II. Preferences:
Two major groups of business and leisure travelers, they both differ in preferences of services. Hence, business traveler is given additional importance as compared to leisure travelers. This preference strategy is used by Emirates Airline in order to ensure services standards.
III. Demand nature:
Emirates Airline provide more space and services to their business travelers which include internet facility, telephone connections, work-space. While leisure travelers demand more entertainment features.
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2. Porter five forces model for effective segmentation:
With the help of 5 forces model, the attractiveness of the market segmentation can be identified. Firstly, if we have existing competition in the market, If market contains strong competitors then it is identified as less attractive.
Further factors are defined below:
- Bargaining Power of Suppliers: Emirates Airline has hundreds of thousands of suppliers, In this case they have limited power over customers. Aircraft manufacturers such as Boeing, Douglas and Airbus. Same in the case of fuel suppliers when fuel prices increased .last year. If there are few suppliers in the market, Airline has no option but to impose higher ticket prices.
- Bargaining Power of Customers: Emirates Airline have so many customers which include different potential customers who have bargaining power but as there are millions of customers to travel in different destinations. This is why customers have limited power individually to affect Emirates Airline.
- Threat of New Entrants: Emirates Airline has been the top class airline even the new entrant in the market hasn’t affected. But still there are threats of new entrants which can affect the company’s profitability by attracting its customers.
- Threat of Substitute Products: There are different substitutes in airline industry. Emirates Airline have specified the categories according to the classes which allow the customers to travel according to their preferences. However, the threat of substitute products if they revise their ticket pricing schemes so it can result as a threat.
Four generic target market strategies I would use:
- Multi-Segment targeting – This type of targeting strategy serves as targeting different groups by designing specific marketing mix for the groups.
- NICHE TARGETING – Targeting few very defined and specific segments of the consumer population according to the customer loyalty
- COST LEADERSHIP – By using cost leadership strategy, Targeting customers by being the low-cost producer in the market will allow to gain customers and switch from substitutes
- CUSTOMIZED TARGETING– Some customers prefer customized services, So customized targeting is the best strategy to use to attracted customers according to their preferences.
Emirates Airline positioning in comparison to competitors:
Emirates Airline direct competitors are Etihad Airways, Qatar Airways, Lufthansa, Fly Dubai, Malaysia Airlines, Turkish Airlines, Saudi Arabian Airlines, Cathay Pacific, and PIA and other international airlines. Emirates Airlines has a good market share in the market, it is achieving good profits with increase in revenues every year. Saudi Arabia Lines has more customers as compared to Emirates Airline because of its cost leadership strategy which allows it to gain the market share of lower-class users. Its positioning as compared to its competitors is great, Emirates is positioned as the Leader of the market in Middle East, Etihad Airline is the challenger, While Gulf airline is the follower and Air Arabia is niche because it targets small group of people who are price-sensitive and prefer low-cost. The Emirates airline is positioned as the premium airline of UAE offering best value services to its customers.
Competitors of Emerates Ailine:
- Etihad Airways
- Qatar Airways
- Lufthansa
- Fly Dubai
- Malaysia Airlines
- Turkish Airlines
- Saudi Arabian Airlines
- Cathay Pacific, and
- PIA (Pakistan International Airline)
Section – 3 (Marketing objectives)
Two smart marketing objectives
- Emirates Airline should highly concentrate on market penetration strategy. They should cut prices in existing markets. They should redirect it strategy to price competition to widen market coverage from lower-class market.
- Emirates Airline need to concentrate more on their strategic plan in order to reduce the costs and expenses and should have more customer loyalty and service programs which include discount for their corporate clients.
Emirates Airline objective is to become the top airline in the world and to provide customers with comfort services. In order to achieve this objective they have to work on their market penetration strategy, Most of the customers are price-sensitive so in this case to attract customers of every class this is the best way to comfort customers. On the other hand, The long-term objective of Emirates to provide discounts and different promotional offers to customers and creating a different strategic plan in order to save costs because this is the best way Emirates can save money and protect itself for long-term if it has enough retained earnings.
Section – 4 (Marketing mix of Emerates airline)
4 p’s of Emirates Airline:
The 4P’s are the instrument also known as “Marketing Mix” which helps us to understand what the product or service can offer and how to plan a successful product offering.
4.1 Product
Emirates Airline provide different classes according to its service standards. The classes include “Diamond First Class” which include all the luxurious services that a customer dreams of. This is the top-most standard service which include every basic to extraordinary services. Second class is “Pearl Business Class” which is specially designed for business executives who need extra work-space and facilities such as internet and phone facility. Third class is “Coral Economy Class” which is for an economy traveler include all the basic services such as entertainment, internet facilities etc.
4.2 Place
Emirates Airline has their offices in over 80 countries. They have different offices in different countries where they sell their air tickets and provide customer support 24/7.
4.3 Promotion
Emirates promotes its services and makes customer aware about its new offers and services through different sources like:
- Media Advertisements
- Sponsorships
- Loyalty Programs
4.4 Price
The pricing strategy of Emirates Airline is according to the market segmentation according to the class services offered by them. The top classes like Diamond & Business classes are mainly targeting upper-class so their prices are quite higher but comparatively low as compared to other top class airlines.
Implications
Emirates Airline with its outstanding performance became the leader of the market with the help of its strategies which it used. These strategies includes:
- Generic Strategies
- Intensive Strategies
- Diversification Strategy
Being the best services provider and the new ideas implementation. Emirates is the first airline to introduce the new ideas and implement them so fast, This is how they have implemented operational strategies which enables its fast growth and development. Its new services like entertainment service Skytrax and many more services have been launched by Emirates.
Moreover, its diversification strategies have enabled it to invest in different subsidiaries which also play a main role in the growth and development of the airline. It has diversified by investing in related industries and sectors including aviation engineering, air catering, tour operations etc. The future of emirates airline looks quite clear and bright, Emirates is the sixth largest airline which has grown its business to 2x times every 3.5 years which is such a big achievement. Emirates airline is expected to grow as it is financially stable in the market and holds a large market share.
Conclusion
In conclusion part, I would recommend Emirates Airline to work on their place strategies where they should expand its authorized office centers to provide customer service and provide comfort to customers who want to buy tickets from physical office nearby. Moreover, they should work on their pricing strategies and should shift towards price leadership strategy to gain lower-class price-sensitive customers too.
Read ASOS case study, A Rhetoric Analysis, Advertisement Analysis, AIDA analysis, and Rhetoric analysis of TCS advertisement with examples.
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Emirates airline connects over 145 cities to Dubai and to each other, facilitating trade and tourism flows across six continents; while it provides ground handling, catering, cargo and travel services not only in Dubai, but across 90 cities, in 38 countries on five continents.
Dubai is investing in infrastructure to meet the city’s future growth, and so is the Emirates Group. By 2020, Emirates expects to carry 70 million passengers per year on over 300 aircraft, and they are developing our workforce, and building cutting-edge facilities to support operations of this scale. They will also continue to strengthen our global footprint, so that emirates can serve and connect even more cities across the world.
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• With reference to the case study given above, highlight the segmentation and target market of Emirates. Explain the positioning strategy used by Emirates (3 marks)
• Explain how Emirates has used customer building blocks such as customer value and customer satisfaction in order to create an unforgettable experience for those flying with this airline (3 marks)
• Briefly explain how Emirates capture value from its customers in return
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