Emirates Airways Customer Perception

Emirates Airways Customer Perception For this project, we have used both primary and secondary data. As part of our primary data, a survey questionnaire was created and handed out to 50 passengers who have and continue to fly with Emirates Airlines. The aim of the questionnaires was to shape peoples perceptions of the brand and analyze whether or not Emirates is meeting its marketing mix objectives. Findings are spread out throughout the paper where relevant, and detailed tabulated form can be found in the Appendixes. 1.1 Introduction to the Organization In 1974, three years after independence, the rulers of the UAE decided to establish a joint flag carrier: Gulf Air. However, a tense relationship between the airline and the Dubai government existed ever since its inception, as the latter re fused to give in to Gulf Airs demands to abandon its open-skies policy. In reaction, Gulf Air reduced frequencies and capacities to and from Dubai by more than two thirds between 1984 and 1985 without advance notice (Wilson 2005). Since foreign carriers proved unable or unwilling to fill the gap, Dubais then ruler, Sheik Mohammed bin Rashid Al-Maktoum, convened a team of experts headed by Maurice Flanagan and later joined by Tim Clark and the rulers then 26- year old son, Sheik Ahmed bin Saeed Al-Maktoum to devise an emergency plan. The groups recommendation to set up a home carrier for Dubai was quickly accepted by the ruler, but he imposed two conditions: The new airline should meet the highest quality standards; And there would be no additional capital injections from the government other than the agreed USD 10 million start-up capital. On October 25th, 1985, Emirates first flight departed to Karachi, using an A300, wet-leased from Pakistan International Airlines. The rest is history. In 1987, Emirates began to serve it first two European destinations London Gatwick and Frankfurt. In 1995, it has operated an all wide body fleet, and in 2001, 2003 and 2005 Emirates placed some of the largest aircraft orders ever. As of October 2007, Emirates route network extends to 91 destinations on all continents. In its last business year, ending March 31st, 2007, the airline transported 17.5 million passengers and 1.2 million tons of cargo on 102 aircraft. Currently, 118 aircraft are on firm order (of which 20 will be all-freighters), including 55 A380 and 43 B777. PART TWO 2.0 Situation Analysis According to Kotler Keller (2008), situation analysis is a systematic collection and evaluation of past and present economical, political, social, and technological data. It is aimed at (1) identification of internal and external forces that may influence the organizations performance and choice of strategies, and (2) assessment of the organizations current and future strengths, weaknesses, opportunities, and threats. 2.1 Market Summary Airline Industry Portfolio The UAE airline industry is one of the aspiring industries not just in the Middle East and the surrounding South Asian, North African Region, but the world itself. The industrys huge market growth and success in the Middle East and the world is crucially based on the UAE, and especially the cities strategic geographical location and the governments determination to make the country an international business hub connecting the East to the West and vice versa. During the global recession and economic crisis, the airline industry in the UAE in comparison to other airline giants such as British Airways, Lufthansa, Air France and KLM and other business sectors within the country was the least affected. The UAE airline industry, which includes Etihad and Emirates, was affected by the crisis but has successfully resurfaced at being profitable in the year 2010 and has since contributed effectively to the growth of the countrys total economy (Bloomberg Business week, 2010). Emirates Airline Portfolio Emirates Airlines is one of the most successful and major airlines in the Middle East, currently operating around 3200 passenger flights per week, from its hub the emirates of Dubai to over 110 destinations in 62 countries (Emirates Airlines, 2011). This makes Emirates one of the fastest growing airlines in the airline industry. The Airline Industry is one of the dynamic and fastest growing industries in the world and has influence in the countrys economic growth, international investments and in tourism, mainly due to the Airline Deregulation Act of 1978 which allowed the industry to change its category of a public utility service to a much market driven industry (Florian, 2010). 2.1.1 Market Demographics and Needs Emirates Airlines initial market consists of consumers and businesses located in the United Arab Emirates, mainly the Emirate of Dubai. Emirates goal is to cater the needs and demands of the ever growing population of the UAE especially the expatriates residing in the UAE who are the thriving workforce of the UAE and make up approximately 75 percent of the population of the country (UAE-Economic Development, 2010). Dubais and as a result Emirates spectacular growth in recent has been accentuated by two complementary factors: sound politics and its very favourable geographical location. Currently the Emirates Airlines market demographics are divided in three sectors, and they are: 2.1.2 Market trends and target market growth The soaring price of oil and the financial crisis had a tremendous effect on the airline industry. Most of the airlines were suffering from fuel price hikes and were running out of cash. However, Emirates Airlines had proven to be the most efficient and profitable despite the extra costs because of its strategic placement of its products in the market share by creating separate market sectors. These market sectors are part of Emirates product portfolio and have been divided in product share. Emirates Airlines current product share is: (Source: Emirates Group, Annual report, 2010) The reason for Emirates Airlines to design such a product share was simply to adjust its marketing strategy after the effects of the global financial crisis. The adjustment was made to accommodate factors that were pertaining to the demand (requirements) and supply (drivers) for its customer base who were also affected by this crisis. The current product share seems to be working fine for Emirates especially after the global economic crisis, which scarred many businesses in the UAE, especially government owned businesses. The crisis, however, has enormously affected its overall performance rating as a prestige high class inboard service that Emirates Airlines previously used to market to clients as a high value service. Emirates had to revaluate its cost and benefits to accommodate the passenger market needs of a cheaper, faster and safer means of transportation by downsizing its experienced onboard staff members and replacing them with inexperienced workforce and by underplaying the various onboard service options it previously use to boast about just few years before the crisis. 2.2 SWOT Analysis SWOT analysis is a tool that identifies the strengths, weaknesses, opportunities and threats of an organization, as its a fundamental and simple model that analysis the capabilities of an organization as well as its potential opportunities. The information for the analysis is derived from environment and further categorized into internal (strengths and weaknesses) and external (opportunities and threats) analysis. (M. McDonald, 2007) SWOT Analysis 2.3 Competition As said by the managing director of Emirates, forget about protection against competition. Thats not how Dubai works (Business Strategy, 2005). Well carriers such as Lufthansa, British Airways, Air Canada, and Air France are among the few competitors of Emirates. Emirates Airline is not affected by their direct competition in the air space. It is the accusations of unfair competitions posed on Emirates Airlines by these leading airlines that cause a major threat to Emirates. As a lie is continuously repeated, people start to eventually believe in it. 2.3.1 Accusations Spearheading the regions development strategy, and emblematic of the economic success of the UAE, Gulf carriers benefit from financial support from their local state, which provides a wide array of services: airports, civil aviation authorities, airport and navigation charges, and finally complementary infrastructure. Furthermore, these airlines enjoy a favorable tax environment, as there is no corporate tax or social security charges in their country (Business Strategy, 2005). In return to such accusations from its competitors, Emirates have denied these accusations by providing the below fact and figures (Emirates Group, 2011): Emirates purchases fuel on the same terms and conditions as other commercial airlines. Fuel accounts for 30% of Emirates total expenditure. Emirates Group states that it has recently paid the Government of Dubai US $776 million in dividends in return for the seed capital gifted to the airline at its ince Emirates total cost of benefits provided to expatriate employee amount to more than US 400 million per annum. On the other hand, Emirates also faces competition from its neighbors such as Qatar Airways, Etihad airways and other competitors such as Gulf Air, Singapore Airlines, and low cost airlines such as air Arabia. For analysis we will shed light on Etihad and Air Arabia. (See Appendix) Etihad Airways are competing with Emirates strategy for best standards in quality in its three product classes. In addition, working aggressively on its infrastructure expansion plans poses a high level threat to Emirates Airlines. Air Arabia: Due to the economic downturn and recession, customers have become highly price sensitive to the market. Air Arabia has become the emerging low cost airlines based in Sharjah and supported by its government, which attracts customers in terms of monetary value by providing cheap travel with an increasing high standard. PART THREE 3.0 Marketing Strategy Baker (2008) states that Marketing strategies is a process that can allow an organization to concentrate its limited resources to the greatest opportunities to increase sales and achieve a sustainable competitive advantage We would use this guideline to affirm, dissect and comment on Emirates Airlines marketing strategy. 3.1 Mission Statement A mission statement is aÂÂ  strategicÂÂ  marketing andÂÂ  business development tool that adds value because they define yourÂÂ  products / services, goals and cultureÂÂ  to your employees, suppliers, customers, vendors, and the media.ÂÂ  A Mission Statement captures the uniqueness of yourÂÂ  company andÂÂ  acts as a base line for quality,ÂÂ  service and yourÂÂ  marketing messages (John, 2006). Emirates Airlines, or rather Emirates Groups mission statement is simply committed to the highest standards in everything we do (Emirates Group, 2011). Being a vast enterprise by itself, Emirates Group has been quiet successful in embodying the mission of committing to the highest standard onto one of its two core corporation Emirates Airlines, the other being DNATA, by marketing the brand of Emirates as the pinnacle emblem or a luxury standard throughout the world as an emerging Global Brand. This mission has contributed to the company garnering global praises for excellence in every aspect of its business in travel and tourism since its commencement. Emirates Airlines is a brand that is truly emerging as a global icon with its logo representation in Arabic script as a symbol of its origin. Emirates has committed on building an operational and service approach as a true global provider, by delivering high quality service and catapulting itself as the industrys youngest and most advanced fleet to retain its ever growing loyal customers worldwide. Emirates is able to achieve this boasting quality as an emerging global brand by updating its fly roster to 100 destinations in over 60 countries with more than 14 million passengers annually. 3.2 Value Proposition A value proposition is the collection of reasons why a person or company benefits from buying something (L. Richman, 2006). This statement should convince a potential consumer thatÂÂ  one particularÂÂ  product or service will add moreÂÂ  value or better solve a problem than other similar offerings Throughout the years, Emirates Airlines has successfully created a customer-focused value proposition, by offering a combination of products and services, information and experiences customized for its market demographics for each of its destination, it has also claimed that the geographical location of its hub (Dubai) is also a value proposition. This approach had led to an array of product offerings such as: The popular onboard ICE system (an Information, Communication and Entertainment system) fully loaded with hundreds of entertainment channels on demand All-in-one communication device accommodating customer needs of surfing the net, emailing or simply calling a land line whilst in the sky Competitive pricing and time effective routes to over 110 destination Dubai and personalized exclusive lounges for its clientele and the frequent flyer program Skywards also adds value to Emirates Airlines. Skywards Program plays a key role in facilitating Emirates build strong customer relationships. All the above product offerings have facilitated Emirates to deliver its value proposition to its customers and support its mission statement of committing to high standards. 3.3 Marketing Objective Important part of marketing strategies is its objective. According to Dess, an objective of an organization should be directed towards generating greater profits for the company and also towards customers and society at large (2008). It is given that an objective of any competitive organization in its marketing strategy is to be successful in a specific setting which needs a detailed investigation and detailed studies of the surrounding environment of the market, its competitors and key factors that influence the market (both internal and external). With this in mind, the organization should than aim for best results to benefit the company. Hence, Emirates Airlines or rather Emirates Group has carefully devised and constructed an objective and fused it with the groups mission statement. Emirates Groups mission statement is simply Committed to the highest standards in everything we do. In the beginning, Emirates Airlines objective was simply to be the national carrier for the Emirate of Dubai. Later on, with successful entry to the Middle East and Sub-Continent market with a strong financial backing from the Government of Dubai the objective was to be the Elite Flying companion and a dominant figure which focused on the provision of the inflight experience as a customer value in the market. Due to success and further expansions to other markets, Emirates soon realized that its objectives kept on changing and adapting to the targeted market. Below are Emirates current objectives: (Source: Emirates Group, 2010) In our opinion, Emirates decision on keeping the objective of the company specific and coherent to current situation of its target market is a good decision in this ever changing and growing industry, where various factors such as laws, resources, political barriers, wars and international laws can directly or indirectly effect a companys objective and therefore effecting the marketing strategy. 3.4 Target Markets According to Nils (2007), Target Market is the specific group of customers that a company aims to capture from the total population. It is particular market segment at which the marketing campaign is focused after penetrating the market. Quality Destination ServiceEmirates Airline targets the whole globe at its target market. To reduce the complexity, target market is be divided into three parts which are further sub segmented into four parts to suit the target market according to their needs. Price Business travellers pay a lot of attention to convenience since they have to spend a lot of time on airports and airplanes. Touch points that they come across are lounges, frequent flyers, safety and good service and interaction systems. Emirates Airlines serves this market quite perfectly. It segments it with the help of quality and service such as skywards awards, availability of lounges in airports, comfortable seats, in-flight services (internet, telephone systems, entertainment systems lastly good food service) Leisure travellers pay a lot more attention on the flexibility of prices and destination compared to business travellers. Emirates Airline segments this market by destination and price by providing them with opportunity to book early and save, facility to provide visa, holiday packages for new destination each time and lastly a huge variety of destination routes. Cargo: A very strong focus on cargo traffic, which generates 20 percent of Emirates revenues one of the highest percentages in the airline industry 3.5 Positioning Positioning is the perception in the minds of the target market regarding companies brand or product (Ries, 1981). Elaborated by Ries (1981), positioning is an organized system for finding a window in the mind. It is based on the concept that the only time communication can take place is at the right time and under the right circumstances. Apparently, true needs and physical value are the main ingredients in which the company has to base its brand positioning in the minds of the target market. Business class focuses on brand values such as punctuality, reliability frequency, prestige and state conscious (Stephan, 2007). Therefore, airline should position itself to suggest it as a choice for successful people, for the product category of the business class. Leisure class focuses on price of the ticket as their prime factor. Therefore, brand position should be done in terms of value for money. According to Simon, Emirates has set out to be an innovative, modern, and customer-oriented provider of high quality air travel services (2005). He also added that brand positioning is that of a leading, international and quality airline serving the global community (Simon, 2005). In terms of the Emirates target market (business and leisure travelers), Simon adds, Today, air travel is affordable and accessible, and for Emirates, the whole world is our oyster. All customers are important to Emirates, and we strive to provide them with the best possible value for their money, regardless of which class passengers travel in. However, weve always considered the frequent business traveler the people who literally fly to work- as pivotal to our marketing strategy (2005). In terms of the target sub-segments (price, quality, destination, service), officials of Emirate Airlines say From the service provided at the point of ticket purchase to staff at the check-in counter; from facilities offered in our airport lounges to in-flight entertainment and service. At all customer touch points, Emirates pays close attention to our product and service to ensure that we deliver on our brand promise of innovation and quality (2005). In terms of delivering the value proposition of the brand Mr. Simon (2005) further adds, We operate a fleet of modern, wide-bodied aircraft equip these aircraft with the latest in-flight amenities and entertainment systems; We invest in the latest technologies to enable faster and more efficient handling of such functions as ticketing, baggage and cargo handling; We recruit our award-winning cabin crew from over 100 countries around the world and train them to the highest standards so you can be sure there will be someone who speaks your language onboard; We hire gourmet chefs to design and plan our in-flight catering menus; We invest millions of dollars to provide advanced engineering support for one of the worlds youngest fleet of aircraft; and the list goes on across the airlines business units. However, during the process of building a brand, the company also faces emerging challenges to sustain its global brand image. Brand Indigo LLC acknowledges that high levels of brand recall concurrently raise the expectation levels of customers (2010). Were living in an age where the majority of the people are tech savvy and any form of criticism and dissonance can be openly discussed in various blogs. This therefore may wear down the built brand esteem (Brand Indigo LLC, 2010). Brand Indigo LLC suggests that service recovery plans will have to be in put in place in quick earnest, or else customer franchise maybe negatively affected (2010). In addition to all the above, A Dubai based newspaper reported to Emirates that they are receiving reports about their slipping service which can be supported drops in Emirates Skytrax Airline year ranking (Gulf News, 2010). 3.6 Strategy Summary The strategy summary reflects on the ways that the company will meet its objectives by placing strategic communication patterns that can help develop the desired position. With the perspective of branding in mind, the first and utmost aspect relating to Emirates rise as a global brand is its leaderships vision and foresight in linking the brand to its marketing strategy and committing the budgets and resources required for its strategic and tactical impact. Given the aspirations of the Emirates brand in being global, innovative and a customer-oriented provider of high quality services, the key to its success has been Emirates airlines ability to apply the brand in all aspects of its customer interactions. By paying close attention to its product and service to ensure that Emirates deliver on what the brand promises of innovation and quality. Another Cornerstone of Emirates Marketing strategy is sponsorships; Emirates branding employs all the major traditional and new marketing tools, but the most effective approach that help it to connect with its customers and enhance its brand awareness by sponsoring the major sporting events. PART FOUR 4.0 The Marketing Mix Kotler Keller (2006) define the marketing mix as the combination of elements that you will use to market your product. There are seven elements: Product, Place, Price and Promotion, People, Process, and Physical evidence. They are called the 7Ps of the marketing mix. 4.1 Product/Services A product is simply a marketing offering, whether tangible or intangible, that someone wants to purchase and consume. In reality, while decisions related to the consumable parts of the product are extremely important, the TOTAL product consists of more than what is consumed (Christian, 1994). The total product offering and the decisions facing the marketer can be broken down into three key parts (Appendix 2): Core Benefits Actual Product Augmented Product Core Benefits: The first layer of the product as defined by Cant (2009) is it represents the heart of the product Emirates airlines Core Product is the Air transportation of passengers and Cargo Actual Product: The second layer of the product as defined by Cant (2009) is the tangible product or service offered to the consumer For Emirates: Emirates First Class, Business class, Emirates holiday, in-flight entertainment system, luxury service, online check in, courteous spa. Augmented Product: .the third layer of the product as defined by Cant (2009) is the tangible product plus the additional customer services and benefits (also called features). For Emirates: National carrier of Dubai, chauffer service, lounges and spa, Dubai as transit hub and the most important is the private terminal at Dubai international Airport. Source: Three Levels of a Product, 2010, Marketing Teacher, accessed 12/02/2005, http://www.marketingteacher.com/lesson-store/lesson-three-levels-of-a-product.html Questionnaire findings suggest that people fly with Emirates for benefits other than the medium of transportation, such as travel experience (Appendix 2). 4.2 Price The price of the marketing product mix is the amount of money charged for a product or service or the sum of the values that consumers exchange for the benefits of having or using the product or service (Armstrong, Gary and Philip Kotler, 2009). Yield pricing Which offers its consumers discounted rates on early purchases, higher rates on late purchases, and the lowest prices on unsold inventory before it expires (Kotler Keller, 2006). Time Pricing It is an important element of Emirates pricing policy. With ticket fares varied by season, day, hour, early bird offers allow Emirates to charge a passenger less. Luxuries. The airline tries to position itself as having the highest value possible for consumers. Passengers who purchase business class, for example, have a complementary limousine pick-up, included in the fare of the ticket. Through collecting primary data research for our project, we found Emirates and Etihad have almost the same prices, with Qatar Airways having prices that are much lower than its competitors. In response to competitors reactions, it is best for Emirates to continue managing to maintain prices, simultaneously adding value by constantly improving the quality and consumers expectations of its services. Questionnaire findings show that 60% of the people surveyed say Emirates is relatively expensive compared to others (Appendix 2). 4.3 Promotion Defined as the communication link between sellers and buyers for the purpose of influencing, informing, or persuading a potential buyers purchasing decision (Kurts, 2010). Many promotional activities are not really focused to stimulate immediate purchase, but are rather aimed to move the potential buyer a step forward in the buying process (Van W.1997). Sponsorships For Emirates, sponsorships believed to be the best ways to connect with passengers. (Emirates, 2011). Emirates have sponsored more sporting events than any other airline or company in the world (Hagey, 2009). According to the head of Emirates Airlines marketing department for the past two decades, below are breakdowns of how the budget was spent in the past, compared to the present (Hagey, 2009). Past Advertising 70.00% of budget Public Relations 30.00% Present Sponsorships 55.00% of budget Advertising 45.00% Marketing now makes up about 2.7%, compared to 2.3% previously (Hagey, 2009).The key indicator of success is the association people have of various events with the brand. For instance, the Arsenal player and the word Emirates immediately connects. In fact, the mere association of Arsenal or Dubai with Emirates is proof that sponsorship model works wonders for Emirates. Advertising. The airline also advertises in newspapers, billboards, magazines, and even on television channels such as CNN, for instance. Emirates use reminder advertising to increase brand awareness in the various markets. With the right amount of spending on advertising, Emirates marketing mix is very much in line with the companys objectives. . The most memorable ad with the passengers seems to be the Dubai Welcomes the World with Wonderful life by Black playing in the background (Appendix 1). Passengers have stated that it gives them a sense of calmness and excitement and they associate the advertisement with the cosmopolitan image of the emirate of Dubai (Appendix 1). Sales Promotions. Emirates Airlines often offers best deals, and discounts on specific travel destinations, at specific times of the year. The website of the airline offers the best available prices and gives the consumer the opportunity to pick the price of choice, at flexible dates. Gifts Emirates Airlines offers children on board the airline various branded gifts. Emirates could stress more on social media in order to build strong customer relationships with its passengers and build its own network of loyal customers. 4.4 Place Place represents the location where a product can be purchased. It is often referred to as the distribution channel. It can include any physical store as well as virtual stores on the Internet (Jerome, 1975). Emirates Airways distributes its ticket through quite a few touch points such as: Sales agents ( all over the world) Corporate website Customer service call center (Reservation and booking) In the future, Emirates Airlines can strengthen its place strategies by deploying more sales agents and branches in general. Moreover, it can provide more touch points in the leading malls around the world for an easy access for individuals to book flights. Questionnaire findings show that 80% of the people prefer to use the Internet as the source of ticket purchase, as it provides the best discounted price (Appendix 2). 4.5 People Service, expertise and skills of the people who work for the company and they can be used to set you apart from your competitors (Stephen 2007). . Recruitment and use of the staff and people It is an essential ingredient in any organization, and with the appropriate staff members at hand, the organization can obtain a competitive advantage. Emirates Airline has a staff of 36,652 (Emirates Fast Facts, 2011), who go through training to obtain the right skills and service knowledge that is vital in a service-providing company. Emirates could work on the inseparability characteristic of its service. It is therefore crucial for the cabin crew to remain patient and positive in conflicting situations, so as not to distort peoples perceptions of the brand. Prior to downsizing, Emirates had a staff of very experienced cabin crew members. Recently, however, as previously mentioned above, Emirates uses a mix of experienced and inexperienced cabin crew members. To improvise its people strategy Emirates should make their cabin crew wear name tags to create a friendly atmosphere on board the flight, but would also add to the cabin crews responsibility of complying with the right behaviour that would not damage the brand. Most of the Emirates passengers that were surveyed agree that the cabin crew is friendly and welcoming (Appendix 2). 4.6 Process Defined as the procedures, mechanisms and flow of activities by which services are used by the customer (Koichi Shimizu 2003). Emirates airline has a simple process for its passengers since the time of booking their flight to the time they depart or arrive from Dubai Airport. Emirates own its own terminal three at Dubai international airport to further simply the process (See Appendix 3). The diagram illustrates the whole process through which a passenger goes through since the time he arrives at the airport car park to departure. Emirates airline offers various types of check- in processes. For instance: online check-in, self-check in at the airport to simplify the process even f