Research Articles Base: Marketing

Is Marketing Important In An Insurance Company?

THE IMPORTANCE OF MARKETING OF INSURANCE COMPANIES       There are different types of insurance this includes Health and Medical Insurance, Life Insurance, Property Insurance for the protection of home, car and building. Having your own insurance somehow guarantee protection and independence that you feel that having insurance keeps you safer from unusual incidents. Somehow Insurance companies have gained their success because people realize its value in their life and in the society to be able to prevent various realizations of catastrophe and sudden loss. Most government especially in western countries like in the USA they find it important to secure various insurance in employment and other transaction as a mandatory process to protect them. In a certain conditions for example car insurance is mandatory in most states and employees should secure health care insurance or Medicare for the elderly.       Due to this reasons most of this insurance does not necessarily promote insurance because it is use as mandatory, business who do not comply has a corresponding punishment they have to face but most private insurance find it important to create their own marketing strategy to gain clients and promote their business just like an ordinary organization. Insurance is business too, and customers need the information about their products before getting an insurance plan, the company must make sure that the company can be well trusted and most of their products and services would benefit their customers honestly and securely. The truth is, marketing strategy of insurance nowadays are badly needing more appropriate advertising and promotion in order to gain a higher standing of trust, there are many insurance companies who have failed to keep their promise that weakens the industry.         American Insurance Group is probably one of the largest insurance firm in the USA that offer more types of insurance and there are reports of violations that the company has ruined their standing by lack of funds and matured holder has not gained their benefits, lowering their guarantee, or delaying their releases etc. while they should be the one to protect the risk of the customers they themselves is now at risk and in danger of insolvency if the company would totally declare a bankruptcy. It is a good thing to know that the state government usually helps insurance companies to stand up when they have been in danger just imagine a holder who have been paying for years suddenly realized that the money they have insured for a long time does no longer exist is like a legal robbery with free consent. Cases like this worsen the industry even more.       As of today people no longer easily trust insurance companies who usually fail and most of the insurance who served well are also been endangered.  This gives the insurance an even more needs to market their products in order to gain the customers trust. Most insurance companies put on their effort to market their products, Sun Life Insurance say’s that they are the most trusted insurance company same with American Life Insurance and it is alright because it is a part of their marketing and promotion. They look for ways to attract and induce customers to buy their products because they know that there is so much competition and the customers have the freedom of choice.       Usually marketing insurance is not that easy, they need to gain more than trust but they must also exhibit a successful standing to be able gain the trust of new customers. They do house to house visitation, cold calling, internet marketing, and government and hospital linkage to gain customers. They will do just about anything including seminars and orientation to inform customers about the benefits of their products, using the media is one of the best way to introduce their products although this strategy is not necessary because it requires a large amount of capital but still the best marketing strategy that they can do is a personal or face to face selling.           Aon Insurance uses the most extensive technology reliance in their promotions, they uses webcasting to build their brand. They also send email invitation, webinars, and other online promotions in order to gain sales people and customers as well. They also conduct corporate accounts targeting the biggest companies to trust in their services Most of all they introduce their insurance and their benefits. This marketing strategy and their usual practices gathered a big advantage on their part to cover a wider reach and a more sustainable growing business. The participation of their sales-force has made all this possible to deliver a quality presentation and gain more customers. All this promotional and sales activities has also been done by the biggest and most trusted company. They should keep all their promise to keep their customers trust. This concludes that a good product and services makes no business without selling it. Marketing is indeed an integral part of most businesses this has been the reason why most insurance company fail after they succeed is because they have not maintained an active and continuous marketing campaign.          Credit:ivythesis.typepad.com

Is Marketing Important In An Insurance Company?

THE IMPORTANCE OF MARKETING OF INSURANCE COMPANIES There are different types of insurance this includes Health and Medical Insuranc...

Case Study On Marketing Issues/Strategies And Management Of Sunbeam and Café Series

Sunbeam and Café Series:on Marketing Strategies and Advantages   Executive Summary Success in any company that operates for marketing and profit acquisition lies on the ability of the management in positioning and establishing the products/services being offered. Furthermore, the ability of the company and its management to compete and maintain a competitive edge among its competitor is another basis to say that it is successful. The constant development and innovation on the product line and the growing number of clientele also define the corporate standing of a company. This paper aims to analyze and determine the major marketing issues of Sunbeam. Specifically, it will discuss the marketing decisions taken by the company administration in relation to the general marketing, especially of Café Series. A SWOT analysis and other relevant marketing and management related factors are also included on this report. Lastly, practical and strategic recommendations will also be elicited in relation to some pitfalls observed in the case study. With this case study, the following are the identified marketing issues that contributed to the overall standing of Sunbeam and its Café Series product line:       Deliberate product innovation and development       Superior and focused customer service satisfaction       Effective and appropriate implementation of the marketing mix The subsequent are the drawn recommendations that might help in the continuous growth and success of the company in marketing the products and managing the company.       Efforts and programs in innovations, research and development (R&D) must be sustained in order to determine the significant changes that might affect the overall status of the company.       Customer feedback system must be reinforced since customer satisfaction is among the strength of Sunbeam.       Leadership and management of the company must be a supplemental mechanism in the workforce. Human resources management improvements must be considered. Sunbeam established itself as Australia’s most trusted small appliance brand (Reader’s Digest 2001). With its achieved status, long years of operations, and various products being offered to its target market, the company obtained the creditability and reputation in providing quality and high standards products in the market. Its success is undeniably apparent. Sunbeam’s success in promoting its products lies within the effective implementation of marketing strategies and management of the company’s workforce.   SWOT Analysis Strength       The company has a long tenure in the appliance industry and gained market status (especially in Australia).       It offers unique products and constant innovation.       Sunbeam excels in focused customer service and ensured satisfaction.       They are committed in quality and performance with regards to its product offerings.        The management uses an efficient implementation technique on the chosen marketing strategy especially in relation to the marketing mix (Price, Product, Place, and Promotion – 4Ps). Weakness       Sunbeam as an appliance distributor is well-respected and trusted but it possesses an impression that it only caters to the upper class customers. Due to this perception, competitors can use this weakness to gain competitive advantage and acquire more income than the company.       Gendered marketing may also serve as a weakness for gender hinders the purchasing decisions of the potential clients. Opportunity       The company having a wide collection of products can use it to attract consumers who are looking for products that their competitors do not offer.       Since the company has an easy to use website, it should try to encourage buyers to purchase their products that are not selling. Threat       Sunbeam’s threat includes the changes that might occur within the area of operations such as economic changes, varying customer preferences, changing lifestyles, and other relevant factors.       The threat of stiff competition is always present.   Sunbeam’s Major Marketing Issues Among the major issues identified in the case study presented are the following: Product Innovations and Development. In order to sustain the growing market of the company, the efforts exerted in searching for potential opportunities and creation of new products for the target market is valuable. Generally, before a profit-oriented company start to operate, there should be product/s that is being offered. The various changes in the lifestyle and preferences of the consumers prompted every company worldwide to improve and to innovate their traditional product offerings. The term innovation means the development of something new from its beginning to its completion and from its initial idea until it becomes a viable business (Rouse 1992). Innovation plays a great role in creation and development of new products of Sunbeam. This is evident as shown in the launching and expanding the traditional product line. However, it must be considered that the product and business development processes must be supported by an appropriate culture throughout the enterprise (Robert 1995; Krackhard 1995). Thus, innovation and development in the product line must be a product of knowledge and culture (Zangwill 1993) within the immediate jurisdiction of the company’s operations. With Sunbeam, the management utilizes R&D programs and consumer feedback in order to identify the existing culture of the target market. Superior Customer Service Satisfaction. A certain marketing expert stated that in achieving business success, all you need is a customer. Theories and concepts on how to manage are no longer necessary. Solving all problems is not also a guarantee to be efficient. All you need is to find out what you do right for the customers and you’ve already got and do more of it. Truly, the customers play as the key players in the success of a business. That is why customers’ satisfaction and welfare must be the primary goals of the management regardless of some circumstances taken at hand. In Sunbeam, customers are always prioritized. Their satisfaction after their purchase of products is ensured by the company’s management. Meanwhile, customer satisfaction refers to the consumer’s positive subjective evaluation of the outcomes and experiences associated with using or consuming the product or service. It is inarguably one of the two core concepts that are at the root of the marketing theory and practice (Spreng and Mackoy 1996). Satisfaction occurs when the product has been able to meet or exceed the conceived expectations that the customer has (Padilla 1996). Furthermore, customer satisfaction may also be considered as the measure of the high degree of quality of the product (Jacobs et al. 1998). As the customers demand for higher standards, any shortcomings on the part of the companies to deliver would jeopardize the life of their respective company. Hence, it is really important for companies to not only maintain and protect these intangible assets. It is also a must that they increase these assets for future benefits (Sercovich 2003). According to the study of Jacobs and colleagues (1998), relationship with customers should not be regarded as a single transaction, rather, a long-term. Customer satisfaction is considered a must for customer retention and loyalty, and undoubtedly helps in realizing economic goals like profitability, market share, return on investment and other corporate target (Reichheld 1996; Hackl and Westlund 2000). The Sunbeam management is highly concerned with their customers’ welfare and satisfaction and this is the underlying principle on being the leader in their area of industry. Effective Implementation of Marketing Mix. Marketing mix, according to Kotler and Armstrong (1990, pp. 43-44), is “the set of controllable marketing variables that the firm blends to produce the response it wants in the target market.” The marketing mix is composed of 4Ps known as product, price, place, and promotion. Sunbeam perfected the application of the marketing mix. It is notable to restate that with the constant research and development in their product, pricing, placement and distribution, as well as promotion, their products remain as the leader in the appliance market. In their product, high quality is maintained. The fact that their products exceed the customers’ requirement, the price is fair. In terms of distribution, their strategic placement of the products contributes to the increase numbers of production and sales. Their products are highly prominent due to the different marketing communication tools used in promoting to the target market.  Sunbeam’s continuous integration of all the elements of the marketing mix and the appropriate marketing and management of the internal organization also serves as a powerful weapon in combating the rapid and stiff competition in the global marketplace. Recommendations The following could be considered as practical recommendations to further intensify the competitive edge of the company. The need to be innovative and the need to explore new approaches in the future are integral parts of the company’s culture. There is a willingness to take risks and an eagerness to break new ground. People are hired for their creativity and diversity. Innovative people are appropriately recognized. Thus, formal training sessions are used to help people free up their creative energies and become more innovative (Lepnurm and Bergh 1995). R&D programs must be directed to the progress and growth of the company. This will also help in developing more products that will address the competition in the market. In customer welfare, consumer feedback system must be reinforced. The resolution of customer complaints and problems is a key for companies to be able to maintain the loyalty of their dissatisfied customers. Dissatisfied customers are more likely to tell people about their experience than satisfied customers are (Ganey & Hall 1997). After finding out the problems from the viewpoint of the customers, Sunbeam should undertake actions that would not only address the complaints of the customers but as well as actions that would lead to organizational improvements. In implementing marketing strategies, there is a need for continuing optimization – the ability to assess a myriad of possibilities in order to find the best one or near best one (Hoctor & Thierauf 2003). In cooperation with the other elements of marketing and business management, strategies must be evaluated and improved. In building the impression of people about the company, Sunbeam must reach out to a broader target market and must project an image relevant to every members of the society. Its corporate social responsibility must be defined. In the management of Sunbeam,    leadership and administration of the company must be a supplemental mechanism in the workforce. Human resources management improvements must be considered to fully utilize human asset. With the growing market and competitive edge of Sunbeam, its workforce also plays a significant role in materializing defined objectives and achieving success. According to Kay (1995), “corporate success is based on the distinctive capabilities of the firm – those things, often the product of its particular history, which competitors cannot reproduce even after others realize the benefits these capabilities bring to the company that enjoys them.” For some people judge success by size, they look at a firm’s sales, its market share, and its value on the stock market. Sometimes performance is assessed by reference to rate of return. This can be measured as return on equity, on investment, or on sales. And sometimes success is measured by growth, reflected in increase in output, movements in earnings per share, or prospectively, the firm’s price-earnings ratio. All of these are aspects of successful performance. The current position of Sunbeam in the appliance industry of Australia is a clear definition of success.     Credit:ivythesis.typepad.com

Case Study On Marketing Issues/Strategies And Management Of Sunbeam and Café Series

Sunbeam and Café Series:on Marketing Strategies and Advantages Executive Summary Success in any company that operates for marketing ...

Marketing Strategies, Recommendations and Proposal of 3M Company

MARKETING STRATEGIES AND RECOMMENDATION         The 3M Company is one of the most popular brands of adhesive tapes, and office supplies that are highly used all over the world. No wonder their company requires creativity in every employee as much as possible, they are allowed to take a research or recommendation no matter what position they may be. This kind of company cultural behavior contributes largely not just to their employees but to the company itself.        Tracing back their history of one of their products the “Post it Notes” is a product of genuine spark of intelligent idea coming from the 3M Company scientist, Art Fry have turned his misfortune into a creative masterpiece when he is discovering an adhesive that wouldn’t stick that much they thought that this discovery was not very useful so they did not bother to continue the discovery.       While Art Fry was in the church as a choir member he would turn and mark the pieces of hymnal songs but every time he does it always fall that irritates him. He decided to use the adhesive on his hymnal and later found out that it sticks well on paper not only good for bookmark it is also good for writing notes as well because it stays in place and when you decide to remove it, it will not damage the paper or it will not even create a mark. Finally, Art Fry hits the jackpot that results in 3M post it notes and one of the most successful, best selling products that is distributed all over the world.         Some of the most successful products of 3M Company are some kind of various types of tapes, Adhesives, Silicone rubber products, Office products, Health care products, Sandpapers, etc. Basically their distribution is worldwide; their marketing strategies are usually developing partners from local suppliers and manufacturers from other countries for distribution supported by professional development team for creating and innovating their new products and services. Direct response by selling from various government agencies and offices, they also use some forms of internet and email marketing, direct phone call selling through company’s expense not in a call center.       They do not focus much about traditional advertising and promotion from various media as of today since they have not focused much on competition in their industry. They found out that this kind of approach above is more cost effective in their company since they are not a luxury or necessity or consumer products. They also have a marketing strategy which they call Two Steps Marketing by recycling their old customers to renew contracts or the new customers giving them time to study their products and letting the customers decide, wait for them to take orders, no forced selling but reminding them about the products which can be easily configured. Using this simple strategy they have gained a volume orders.       Maybe in some products or companies must require a very encouraging product demonstration but not in 3M company because every product is simple and the instructions are well written in every product. And basically that’s it they have delivered the company in a traditional yet very effective marketing and sales strategy.       3M company has been very successful in distribution and basically in sales because of their long term engagement and successful business partnership and marketing arm all over the world but 3M company here in the Philippines do not gain much attention about their various products it is only post it note and other products are popular. They are probably one of the best companies in the world in their industry that is why I believe they can use a thorough advertising and promotion scheme using all forms of media.       McDonald has been the number one and the market leader in fast food industry all over the world but here in the Philippines is it Jollibee who have penetrated the market. Jollibee’s all out marketing strategies has been very successful that they have dominated the market and took off the customers from McDonald. Although successful, 3M must still aim to maintain their position of market leadership for soon they will have a great competition that will out sale their products and they should not allow this to happen. They can use various forms of media including television, internet, magazines etc. to gain visibility and confidence from their clients whether corporate or individual.       Pricing strategy is another thing, if they can produce the products in the countries where they have established and distribute, they can sell their products for a lesser price. Most 3M products have a higher price rather than the competition because of its name and import cost. 3M must learn to initiate pricing strategy to eliminate the cost price in the future so that people will not go to the competition because of its price.                      Credit:ivythesis.typepad.com

Marketing Strategies, Recommendations and Proposal of 3M Company

MARKETING STRATEGIES AND RECOMMENDATION The 3M Company is one of the most popular brands of adhesive tapes, and office supplies th...

First-mover theory vs Late-mover theory

FIRST MOVER VERSUS LATE MOVER THEORY         Today we are going develop a new product that is new to the market this product is highly needed in every household and in the industry. This new product will definitely brought about positive changes in our lives. This product will be called “Neo-electro magnet”. This product is another electricity producing apparatus that uses magnet to produce and store additional electricity from dead batteries. It will definitely make dead batteries come alive even if it is not a rechargeable type.       But before we introduce our product to the market we will have to discuss the different variation we will undertake. We are going to prove two marketing theory and discuss its advantages and disadvantages, later on we will decide what theory we are going to use. We are doing this to ensure competitive advantage in the market. 1.    The first mover Theory: May be described as the Pioneer trendsetter in the market as the saying goes “the early bird catches the worm”. It has the following;   ·         Advantages. 1. You become the market leader since you have a high preference among customers, 2.High Profitability because you can reach a larger market, 3. No or limited competitor so you need to take advantage of this opportunities with less rivalry 4. High patent control. Your competition should be aware of your product rights and privileges being the leader. Examples are Xerox Machine, Quaker oats, Yahoo, ABT Telephone, Kodak all these sample brands are still continuously getting market popularity maintaining their advantages. ·         Disadvantages like 1. Free ride, your competitors is most likely to imitate or innovate your product. 2. Technological discontinuity, market leader tend to satisfy with their products before the entry of late movers. 3. Market uncertainty. You will need to exploit the market and distribute in small scale and when you succeed you will then need to expand to be accepted. 4. Adaptability- Beware of the changing phase of competitors since you is likely to be on the list of their innovation concern.  Ex. Ford, Cooper and Schendel steam locomotive are replaced by other brands, Brothers typewriter are now replaced by PC, Pocket belle pager are now replaced by Cellphone. VHs are out DVD are in. 2.    The Late Mover Theory: They are companies who respond to a competitive action but only after a considerable time after the first mover’s action have taken place and we may also say that this theory has its own advantage and disadvantages. “Wait and learn is its prime concern”.   ·         Advantages. 1. Leverage of information- you can learn from your competitors, 2. Late mover’s innovation- must be more adaptable and highly advance than the first mover to be accepted. 3. Possible market overtakes- If we can do this then we will be the market leader and eliminate the first mover 4. Easy outsourcing -let us explore the first mover’s resources where they got it. Ex. DVD, Nokia Cellphone, Dell Computer, Coca cola bottled water and Facebook. All these products outsell their competition. ·         Disadvantages: 1. Free rides- Your products are most likely to be called an imitation 2. Resolution of uncertainty- The market may or may not be viable or may not be sure if your new products will work for them unlike the first movers. 3. First mover inertia- Because of the effect of first mover’s market leadership a shift in customer preference may not occur.  4. Timing- To introduce a product one must make sure that is it in the proper time or waste all your energy and resources during the market introduction. Examples: Ovaltine cannot get ahead with Milo, Interactive Encyclopedia cannot replace conventional books, Solar panel because of high price,  Barnesandnoble.com are still far behind Amazon,com. Yahoo.com is still the best search engines among its competing search engines like ask.com etc.       Given the following proposition can’t help but to choose to become the first mover since we are new to the market and it shows that we have a very low failure rate. But we should be aware that late movers will find their way to compete with our products. Therefore we will need to develop continuous innovations and highly develop technological advancement and breakthrough with our products. Therefore if we have to compete we will be competing with ourselves.         We will undertake all the necessary precaution to stay on top. We will be using all our resources to create high impact in our market introduction. And ensure to strengthen customers support and loyalty.                                                                                                                                       Credit:ivythesis.typepad.com

First-mover theory vs Late-mover theory

FIRST MOVER VERSUS LATE MOVER THEORY Today we are going develop a new product that is new to the market this product is highly ne...

Airline Marketing of Air Canada

Table of 	Content 	 TOC \o “1-3″ \h \z 	 	 	1      	Executive Summary. 	PAGEREF _Toc50826264 \h 3 	 	 	2      	Introduction. 	PAGEREF _Toc50826265 \h 3 	 	 	3      	Air Canada. 	PAGEREF _Toc50826266 \h 3 	 	 	3.1            	Introduction. 	PAGEREF _Toc50826267 \h 3 	 	 	3.1.1            	Fleet 	PAGEREF _Toc50826268 \h 4 	 	 	3.1.2            	Route Network. 	PAGEREF _Toc50826269 \h 4 	 	 	3.1.3            	Service. 	PAGEREF _Toc50826270 \h 5 	 	 	3.1.4            	Air Canada’s Subsidiaries. 	PAGEREF _Toc50826271 \h 6 	 	 	3.2            	Operating Performance and Financial Status. 	PAGEREF _Toc50826272 \h 6 	 	 	3.2.1            	Canada Domestic. 	PAGEREF _Toc50826273 \h 7 	 	 	3.2.2            	Canada-U.S. Trans-border. 	PAGEREF _Toc50826274 \h 7 	 	 	3.2.3            	Other International 	PAGEREF _Toc50826275 \h 8 	 	 	3.2.4            	Cargo. 	PAGEREF _Toc50826276 \h 8 	 	 	4      	Environment 	PAGEREF _Toc50826277 \h 9 	 	 	4.1            	Market 	PAGEREF _Toc50826278 \h 9 	 	 	4.2            	Profitability. 	PAGEREF _Toc50826279 \h 10 	 	 	4.3            	Industry Outlook. 	PAGEREF _Toc50826280 \h 11 	 	 	5      	SWOT Analyses. 	PAGEREF _Toc50826281 \h 11 	 	 	5.1            	Strength. 	PAGEREF _Toc50826282 \h 11 	 	 	5.1.1            	Network. 	PAGEREF _Toc50826283 \h 11 	 	 	5.1.2            	National Carrier. 	PAGEREF _Toc50826284 \h 12 	 	 	5.2            	Weakness. 	PAGEREF _Toc50826285 \h 12 	 	 	5.2.1            	High Personnel Cost 	PAGEREF _Toc50826286 \h 12 	 	 	5.2.2            	Fleet Arrangement and Aircraft Dispatch. 	PAGEREF _Toc50826287 \h 12 	 	 	5.2.3            	Geographic Location. 	PAGEREF _Toc50826288 \h 13 	 	 	5.3            	Opportunity. 	PAGEREF _Toc50826289 \h 13 	 	 	5.3.1            	Asia-Pacific Region. 	PAGEREF _Toc50826290 \h 14 	 	 	5.3.2            	Cargo. 	PAGEREF _Toc50826291 \h 14 	 	 	5.3.3            	Low Price No-Frill Market 	PAGEREF _Toc50826292 \h 14 	 	 	5.4            	Threat 	PAGEREF _Toc50826293 \h 15 	 	 	5.4.1            	Competition. 	PAGEREF _Toc50826294 \h 15 	 	 	5.4.2            	High Cost 	PAGEREF _Toc50826295 \h 15 	 	 	5.4.3            	Fleet Arrangement 	PAGEREF _Toc50826296 \h 15 	 	 	5.4.4            	Oversized Organization. 	PAGEREF _Toc50826297 \h 15 	 	 	6      	Three Year Strategic Plan. 	PAGEREF _Toc50826298 \h 16 	 	 	6.1            	Marketing Planning. 	PAGEREF _Toc50826299 \h 16 	 	 	6.1.1            	North American Market 	PAGEREF _Toc50826300 \h 16 	 	 	6.1.2            	International Market 	PAGEREF _Toc50826301 \h 17 	 	 	6.1.3            	Cargo. 	PAGEREF _Toc50826302 \h 17 	 	 	6.2            	Cost Reduction. 	PAGEREF _Toc50826303 \h 17 	 	 	6.3            	Organization Restructuring. 	PAGEREF _Toc50826304 \h 17 	 	 	7      	Conclusion. 	PAGEREF _Toc50826305 \h 17 	 	 	8      	Reference. 	PAGEREF _Toc50826306 \h 17 	  	1          	Executive 	Summary 	According to IATA’s (International Air 	Transport Association) report the total numbers of distance flown, 	passengers carried, freight tons carried and the revenue of world airlines 	have steadily increased in the past decade yet the yields have a trend of 	shrink since 2001. It may be the reasons of the macro economy of the world 	and the impact of 911 to whole aviation industry. No matter whatever the 	reason might be, it obviously demonstrates what worldwide airlines facing 	now: competition, uncertainty and shrinking profit. 	The emergences of low cost, no-frills 	airlines and their successes point out a possible course to airline 	operators; such as Easy Jet in Europe, West Jet in Canada and Southwest 	Airlines in the U.S. for instance. These low cost airlines and their 	marketing strategies have successfully competed with their rivals in intense 	competitions and achieved admirable financial reports. 	Low cost, no-frills type operations 	will be a new model to airline business, especially in those areas with high 	competition, de-regulatory environment and anti-trust implications like 	North America and West Europe markets for example. Full service airlines 	with a broad range of service span and higher expenses are getting more 	difficulties to survive in those markets. SARS, 911, economic slump have 	worsen the situation even more but made low-cost airlines more striking. 	Elements in airline marketing are seen and well practiced in low cost 	operations. Networking, pricing, product and distribution are four major 	pillars of low-cost type operators. Aviation macro-environment, low cost 	operations will be discussed and a 3-year marketing plan will be depicted 	based on the environmental influences and low-cost concepts. 	2          	Introduction 	This is an application report 	assignment of AERO2174 Airline Marketing. Air Canada is the research object 	in this report. The market environment, airline performance, market forecast 	are the main areas to look at and a SWOT (strength, weakness, opportunity, 	threat) analysis is used to summarize this topic. A 3-year market plan is 	constructed based on the analysis for Air Canada as its future marketing 	strategy and an action plan is designed to carry it out; measures and 	benchmarks are included to check the achievement of the plan. 	3          	Air Canada 	3.1         	Introduction 	Air Canada was established in 1937 	under the name of Trans-Canada Airlines (TCA). By 1964 TCA had become 	Canada’s largest and national airline and changed its name to Air Canada 	(AC). Air Canada was fully privatized in 1989; and it merged Canadian 	Airlines International, the second largest airline in Canada. AC employs 	approximately 40,000 people worldwide and is a full service, top tier 	carrier and the 10th largest airline in the world today. 	3.1.1      	Fleet 	AC has 330 aircraft in service now. 	The aircraft type and number are shown as table 1 below. 				Wide-body jets 				   				Narrow-body jets 				 				6 				Boeing 747s 				47 				Airbus A319s 				47 				Boeing 767s 				51 				Airbus A320s 				9 				Airbus A340-300s 				13 				Airbus A321s 				8 				Airbus A330-300s 				24 				Boeing 737s 				  				25 				Canadair Regional 				Jets 				70 				Total 				160 				Total 				 				* Including the Air Canada Jazz fleet of 100 aircraft. 	Table 1: Air Canada’s fleet.     	                     Source: Air Canada website 	3.1.2      	Route Network 	AC has direct service to 22 domestic 	cities, 33 U.S. destinations and 51 cities in Europe, Asia, Australia, 	Caribbean region and South America. AC is also a member of Star Alliance, an 	airline alliance consisting of Lufthansa, SAS, Thai Airways International, 	United Airlines, VARIG, Air New Zealand, All Nippon Airways, Austrian 	Airlines Group, Singapore Airlines, Mexicana, bmi british midland, Asiana 	Airlines and Spanair, provides extensive global network and aggrandized 	services to 700 airports in 128 countries. Following 3 figures illustrate 	AC’s global, U.S. and domestic network. Figure 1: Air Canada’s 	Worldwide 	Network.                                                                 	Source: Air Canada website Figure 2: Air Canada’s 	U.S. 	Network.                                                                           	Source: Air Canada website Figure 3: Air Canada’s 	Domestic Network.                                                       	           Source: Air Canada website 	3.1.3      	Service 	Air Canada has been recognized as a 	global leader in air transportation and ranked as the safest airline in the 	world. In 2002, AC was voted the best airline in North America and its best 	frequent flyer program, Aeroplan, the best in the world. 	AC provides a newly designed first 	class service, International Executive Class, comfort, elegance and 	consideration with business price. 	AC is a full service, top tier 	airline. It offers add-value services such as: 	 	W   	Personalized Concierge service 	to Executive First and Aeroplan Super Elite customers. 	 	W   	Maple Leaf Lounge available to 	Executive First and Executive Class ticket holders, Aeroplan Super Elite and 	Elite members, Star Alliance Gold cardholders and Diners/enRoute Maple Leaf 	Club cardholders. The lounges offer a selection of newspapers, magazines as 	well as complimentary beverages. State-of-the-art business centers offer a 	complete range of leading-edge business equipment and computers, modern 	furnishings and high-speed Internet accessibility etc. 	 	W   	Freshing-up facility in London 	and Vancouver airports for passengers after long flight. These lounges have 	private shower rooms, valet services for clothes pressing and shoe cleaning, 	business centers, dining areas for continental breakfast and quiet, private 	rest areas. 	 	W   	Aeroplan, the most popular, 6 	million members, frequent flyer program in Canada. Members can earn miles 	from AC flight service, its regional and worldwide partners and Star 	Alliance carriers. Aeroplan members can also earn miles through extensive 	networks of car rentals, hotels, telephone and credit card companies. 	3.1.4      	Air Canada’s Subsidiaries 			Airlines 			Air Canada Cargo, Tango, Zip, Air Canada Jazz, Air Canada Jetz 			Internet Travel Services 			Destina.ca 			Travel Agent 			  			Maintenance Service 			Air Canada Technical Services 			Tour Company 			Air Canada Vacations 	Table 2: Air Canada 	Family.                             Source: Air Canada website 	Table 2 above shows a variety of 	business and service subsidiaries of Air Canada like airlines, travel 	agents, technical service and IT service companies. 	3.2         	Operating 	Performance and Financial Status 	AC’s operating performance will be 	viewed into 3 categories: domestic, Canada-U.S. Trans-border and other 	international. 	3.2.1      	Canada Domestic 	Before 2001 AC enjoyed continuous and 	progressive growths in domestic sector. However, after the 911 event AC 	suffered, like all other rivals in North America, a loss of passengers due 	to the fears of flying. The weak economy and war in Iraq also delayed the 	recovery. 	    	 	Figure 4: Domestic Passenger 	Revenue.             Source: AC website 	Figure 4 above shows a flat increase 	in AC’s domestic operation. 	3.2.2      	Canada-U.S. Trans-border 	 Likewise, AC’s Canada-U.S. trans-border was affected more 	severely from the 911 event. It has been declined 8% from 2001 as shown in 	figure 5 below. Increased competition and harsh environment make this sector 	harder to recover and back to before 2001 level.   	Figure 5: Canada-U.S. Trans-border 	Passenger Revenue.        Source: AC website   	  	  	  	  	  	  	3.2.3      	Other International 	 Other international routes comprising trans-Atlantic, 	trans-Pacific and Caribbean enjoyed strong growth because of demand and 	yield increasing even with the same disadvantageous factors in other two 	sectors.   	Figure 6: Other International 	Passenger Revenue.    Source: AC website 	Figure 6 above points out the strong 	growth of other international destinations in spite of the slump of North 	America market. 	  	  	  	  	  	  	3.2.4      	Cargo 	Cargo operation and revenue seemed not 	affected by 911 and economic difficulties at all. It enjoyed strong growth 	in 2001, especially in the Asia-Pacific region notwithstanding a slight 	decline in the domestic market. Figure 7 below illustrates the cargo 	operations of 2000 and 2001. 	 Figure 7: Cargo 	Revenue.                                    Source: AC website   	To summarize all, AC’s recovery in 	some specific region is not powerful enough to offset the loss in others. 	Shrinking revenues and expanding costs, mainly due to the rising insurance 	fee and fuel price, made Air Canada lost 1,315 and 828 millions in 2001 and 	2002 respectively. Figure 8 below demonstrates the income (loss) of AC from 	1998 to 2002.   	 	     Figure 8: 	AC’s Income 1998-2002.                     Source: AC website                     	Air Canada obtained an order from the 	“Ontario Superior Court of Justice” on Apr. 1st 2003, which 	providing creditor protection under the “Companies’ Creditors Agreement Act” 	(CCAA). Under current situation, Air Canada’s future and outlook will be 	depending and determined by the CCAA and the restructuring plan. At this 	crucial moment, the success or failure of AC transforming to a leaner, lower 	cost, more efficient airline will decide AC’s tomorrow. 	4          	Environment 	4.1         	Market 	 	According to IATA (International Air 	Transport Association) statistics the worldwide passenger traffic and 	airline industry had a consistent growth of approximately 6 to 8 percent 	over the last three decades regardless economic cycles. The booming markets 	in Asia and the Middle East have been the leaders of international airline 	business even after the turmoil of 911 and SARS. These two regions are also 	forecasted to maintain high growth in the future 10 years. Figure 9 below 	demonstrates the average growth of the past and figure 10 illustrates the 	traffic trend categorized by regions. 	 	Figure 9: Passenger Traffic 	Growth           Source: ICAO website 	 	Figure 10: Market Trend By Region, 	2002              Source:IATA 	Contrastingly, regions like Europe and 	North America however suffered a business decline from 2001, and these two 	areas are not forecasted to revive very soon due to strong competition and 	the shadow of war and dispute. 	4.2         	Profitability 	Figure 11 and figure 12 below show a 	tendency of shrinking profit and increasing cost observed from IATA’s 	analyses too. Again it is because of the increased competition and insurance 	expenses after 911 and the uncertainty of its repercussions. Airlines are 	becoming more sensitive to international affairs and geopolitical events, 	which augments the difficulty of planning and lessening yields. 	 	Figure 11: Airlines’ 	Profitability               Source: IATA website 	 	Figure 12: Airlines’ 	Profitability                             Source: IATA   	4.3         	Industry Outlook 	Since 2001, airline industry has 	suffered from weak economy, excess capacity, less demand and lower fares 	from competition. Increasing security measures, insurance fees and high fuel 	prices etc. lead to inevitable costs augmentation as well. The future of 	airline industry remains uncertain resulting from the concerns over security 	and international conflicts and disputes. Several major North American 	airlines commenced bankruptcy protection in 2002. To the North American 	market, adverse conditions and unexpected events are still looming in the 	future. 	5          	SWOT Analyses 	SWOT (Strength, Weakness, Opportunity 	and Threat) model is an analytic tool for strategic-planning and 	decision-making. It helps managers to review current environment where 	organizations existing and self-conditions thus outside opportunities or 	threats can be identified and internal characteristics can be examined. We 	would use SWOT model to analyze Air Canada’s case as the following. 	5.1         	Strength 	Air Canada’s strength would be focused 	on the domestic market and the majority of Canadian public traveling in and 	out of Canada. AC is the national carrier and it would be Canadians’ first 	choice provided other considerations are same. Flying the aircraft carrying 	a logo of maple leaf, Canada’s national icon, and national flag would make 	all Canadians feel proud and home alike. 	In addition, the domestic market is 	dominated by AC as well due to its scale and almost monopolized routes 	structure in Canada. Canada’s small population scattering over such vast 	continent makes airlines hard to survive and new joiners higher financial 	entry qualifications to compete. This will prevent new airlines from 	entering into Canada’s relatively small market. AC’s strong points include: 	5.1.1      	Network 	Compared with other competitors, AC’s 	service network may be the most valuable and powerful strength over other 	rivals. AC has a full service network to Canada domestic and international 	destinations. Besides, AC has many regional partners or subsidiary airlines 	in the domestic market to form an integrated service network. Plus the 	membership of Star Alliance, AC can provide a worldwide network to 	passengers through other alliance members. 	5.1.2      	National Carrier 	To be the biggest, longest and 	full-scale-service airline in Canada, AC has become Canada’s national 	symbol. It would be Canadians’ first selection to fly with if fairs are 	reasonable. This would make AC more advantageous over other foreign 	competitors. 	5.2         	Weakness 	5.2.1      	High Personnel Cost 	 Perhaps AC’s weakness comes from too much support from 	the government, which makes AC rigid, inefficient, over sized and less 	competitive. From figure 13 below we can see that personnel cost (salaries, 	wages and benefits) counts up to 31% of AC’s total cost. It is a huge 	portion!   	Figure 13: AC’s 	Cost                                           Source: AC website 	Unionized employees such as pilots, 	flight attendants and mechanics make AC bearing heavy personnel burdens of 	salaries, wages, benefits and pensions. High personnel expenses compel AC a 	high cost airline, which would be a serious problem from now on. 	  	  	  	  	  	  	  	  	  	5.2.2      	Fleet Arrangement and Aircraft Dispatch 	Many of AC’s airplanes are wide-body 	ones. These wide-body airplanes play a major role in domestic and North 	American markets. With the horrible business depression after 911, war and 	SARS adverseness load factors have been decreased to a record low. Many 	seats are empty and operating performance deteriorated further as passengers 	scare of flight; thus the revenue becomes less notwithstanding the operating 	cost remains the same. It turns into negative numbers on the financial 	report eventually. Nevertheless, costs and losses could be minimized and 	mitigated if flights are consolidated on some low load factor routes, or a 	better usage and management of smaller, narrow-body airplanes. However, this 	cannot be done immediately. It needs a deliberated plan for future airplane 	purchase and fleet designs. Current fleet and airplane types in AC may not 	be suitable when business goes down or any similar crises encountered. 	5.2.3      	Geographic Location 	Canada shares the longest peaceable 	border in the world with her neighbour in the south-U.S.A. Yet Canada’s 	population, economic scale and business energy are not comparable with the 	U.S. Locating so closely to the world’s super power means advantageous as 	well as threatened. More or less, Canada’s importance and role to the world 	is diluted by the existence of the U.S. from the south. In addition, any 	economic chills or industrial occurrences will affect Canada’s performance 	too. 911’s impact is the best example, which explains the effects of the 	close tie between Canada and the U.S. and the harm of over-dependence. The 	unilateralism and new conservatism emerge in U.S. foreign policies towards 	the world would, and have, drawn unpredictable outcomes to U.S. itself 	socially, economically and psychologically and surely hammer Canada too. 	5.3         	Opportunity 	 There still are some opportunities although the 	environment is not friendly for airline industry, especially the North 	American market. Yet other international markets still have positive 	growths. Asia-Pacific, West Europe, South America and Caribbean regions 	experienced strong revenue growth in 2002. Figure 10 above reveals the 	potential markets waiting to be explored, in which Asia-Pacific, Latin 	America and Middle East would be most possible opportunities to AC.   	Figure 14: Passenger Revenue Change By 	Region.  Source: AC website 	Figure 14 above shows the passenger 	revenue changes classified by region. Non-U.S. international market revenues 	bounced the highest number from 2001. It is worth to give it a shot!            5.3.1      Asia-Pacific Region IATA has forecasted that the Asia-Pacific region would be the fastest growing market in the next 15 to 20 years. Areas like Mainland China, India and South East Asia are future’s locomotives of world economy. Canada just happens to receive huge numbers of immigrants from these areas. The economic ties, passenger traffic and cargo transportation between Canada and these areas are promising opportunities to Air Canada. The biggest west coast city, Vancouver, would become the transportation hub to the Asia-Pacific region and the demand increasing would be foreseen as well. 5.3.2      Cargo Cargo operation has always been lucrative and stable relatively regardless of external interferences. AC still had cargo revenue growths in 2001 and 2002 in spite of passenger business drop then, for example. IATA also predicts the world’s freight traffic average growth of 5.3% from 2002 to 2006 as figure 15 shows. The highest rate of growth was forecasted to be within Asia and on Trans-Pacific routes. Again, it points out potential market and opportunities to Air Canada. Figure 15: IATA’s Freight Forecast.                               Source: IATA 5.3.3      Low Price No-Frill Market Low fare, no-frill operations may be another option for Air Canada. There are several successful examples of this kind of operation around the world, for instance, Easy Jet in Europe, VirginBlue in Australia, Southwest Air in the U.S. and WestJet in Canada. The secret of the success is very low cost, compared to full-service, top-tier airlines. By the utilizations of IT, Internet technology, spoke-to-spoke hub operation, appropriate airplane type (usually narrow-body, short to medium range aircraft), flexible revenue and price management and slim organization make this type of airlines profitable, pliable and very competitive in regional markets. They can lower the ticket prices to a level that full-service airlines cannot possibly offer. North America’s vast continent and scattered metropolises in Canada and the U.S., with ranges vary from 2 to 6 flight hours, is suitable for this type of operation. 5.4         Threat Air Canada is facing imminent threats under present conditions, both from internal financial pressure and externally industrial environment. 5.4.1      Competition North America is a totally deregulated, liberalized and free competitive market. Canada and the U.S. also impose anti-trust regulations on enterprises to protect consumers’ interests. Airlines cannot practice any forms of associated, consolidated or pre-agreed behaviour to manipulate, control or monopolize the market. Therefore, competition is fierce in this free market as well as those areas and countries with similar “open sky” agreements and regulations. AC has difficulties to compete with those lower cost airlines from Asia, Europe and the U.S. to win the market shares. 5.4.2      High Cost AC’s operating cost is high, especially expenses in salaries, benefits and pensions. Unionized work force makes AC strenuous to downsize the organization and reduce personnel expenses. For example, employee benefits expenses rose million or 15%, and future benefits rose million in 2001 due to higher pensions and increased health care costs. Workers’ compensation liability rose million in 2002 as well. With lessening revenues but increasing cost, AC is encountering tremendous challenges ahead. 5.4.3      Fleet Arrangement As mentioned before, AC needs to adjust its fleet and aircraft type in order to meet the requirements of load factor and efficient aircraft usages. Fly a wide-body airplane to the less-demanded routes will not do any good to the company but decreases the load factor and economic efficiency instead under recent turbulence. However, most AC’s fleets are wide-body airplanes excluding its subsidiary airlines. This would put AC into an adverse position during demand and business downed. 5.4.4      Oversized Organization The organization has been expanded and oversized after Air Canada acquired Canadian Airlines International in 2000. Yet the operating performance has not been multiplied after the merge. Moreover, AC either had to pay extra compensations to layoff Canadian Air employees or kept their positions preserved to prevent labour disputes. This causes AC overweight and carrying heavy cost loads. 6          Three Year Strategic Plan To cope with the business crisis and save Air Canada from bankruptcy, a strategic plan is needed to deal with: W   Market Planning W   Cost Reduction W   Organization Restructuring These three elements are actually aiming at the same target and strive for the same goal: redefine the airline market after those strikes and reduce operating costs to compete. 6.1         Marketing Planning Airline business has been totally changed after Sep 11, 2001. Passengers become suspicious to take air travel, depressed economy makes passengers more sensitive to prices and reduces business travellers, and, minute and complicated security measures are time and patience consuming to passengers. Airlines cannot do much about the security examination procedures because governments have managed most examination and check jobs since 911. Therefore, airlines can only lower their fairs and initiate market incentives and stimulants to attract more passengers, and persuade general public that airplane still is the safest, fastest and most comfortable vehicle for transportation. Low –cost and no-frill airlines have been popular among the public, especially during market recession periods. This type of airline is fitting in deregulated, liberalized and high competition markets such as North America and Europe. The operating cost is at least 1/3 lower than full-service airlines. Low-cost airlines can use flexible and low fair pricing strategies to fill up every seat. They also encourage passengers utilize direct Internet access for seat booking, ticket purchasing and other services requests. Hub-to-hub, spoke-to-spoke type routing structures provide airlines better airplane usage and enhance dispatch efficiency. All these operating features can reduce the costs further thus ticket prices can be lowered more. 6.1.1      North American Market At this crucial moment, Air Canada should transform its market targets to and focus on low-cost, no-frill sector to vie the market share particularly in the North America. Actually Air Canada has noticed the popularity of low-cost airlines and launched no-frill subsidiary ones like Tango, Jazz, Air Canada Jets, and Zip. Air Canada should continue to enhance this low-cost airline operations and work on prices reducing. 6.1.2      International Market Air Canada should grasp the growth opportunity and explore the Asian market, and introduce more flights and services to the booming areas such as China, South East Asia, Japan, India and Korea. AC also can take the advantages of the large number of Asian immigrants and their ties in the region to expand its business. 6.1.3      Cargo Cargo operations can be gradually shifted from the weak North American area to the promising Asia region. Based on previous statistics and future forecasts from IATA, Asia has the highest demands and growth rate in the world. This giant economic plate must not be ignored at all. 6.2         Cost Reduction 6.3         Organization Restructuring 7          Conclusion 8          Reference Air Canada, <http://www.aircanada.ca/>, July 2002 Accessed Airline Business Magazine, <http://www.airlinebusiness.com/>, July 2003 Accessed ICAO, <http://www.icao.int/>, Aug 2003 Accessed IATA, <http://www.iata.org/index.htm>, Aug 2003 Accessed   Credit:ivythesis.typepad.com

Airline Marketing of Air Canada

Table of Content TOC \o “1-3″ \h \z 1 Executive Summary . PAGEREF _Toc50826264 \h 3 2 Introductio...