Executive Summary
- Emirates Airline has been selected as the largest airline of the Middle East. It is also now being recognized globally in other markets.
- It is known to provide the best quality of service however it is considered to be only for luxury travel and hence it misses out on a large market of the middle and higher middle class groups.
- There was a fall in profits by 72 percent in 2008 and the reason behind this is the shrinking business and first class market.
- Therefore there is a need to find a different market which has more potential. In this time of recession, the middle and higher middle class groups makes most sense.
- Market research is needed to find out which market it must target and how it will change its strategy.
- According to the hypothesis, the middle and higher middle class income groups have a huge potential and Emirates Airline will benefit by targeting them.
- To carry out market research, surveys on a large scale will have to be carried out. These surveys will help in understanding the customers.
- Surveys need a lot of planning and careful design. They only answer the questions that are asked and lastly surveys do not help in finding a cause and effect relationship between variables.
- After market research, it was discovered that Emirates must target the middle class income groups because they have a huge potential. The hypothesis was proven correct. However, it must change its strategy carefully. It must not lose its existing customers. The process of changing or rather expanding target customers is a slow process therefore it must be carried out accordingly.
Introduction
A product is defined as ‘anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. This includes both tangible and intangible goods and services (Kotler, P. & Gray Armstrong, 2008). For this paper, Emirates Airline has been selected for extensive analysis for this project.
Emirates Airline concentrates on providing the best quality of service in the industry. However, during this, it forgets that the customer is looking for something more than just quality. Today’s customer wants quality as well as affordability. If these two things are not there together, the customer is not interested. This marketing strategy would be targeted towards the people who see Emirates as ‘only’ a luxurious traveling airline. They need to be told that Emirates is for everyone. However, the challenge is that during this marketing campaign, it has to make sure that does not change its present customers’ perception regarding Emirates. If this happens, they will lose them.
The reason why Emirates has been selected for this project is that it is the largest airline of Middle East (BBC, 2009). It is also one of the fastest growing airlines and brands in the world according to another source (Scoop, 2009). It now runs in 60 countries worldwide with rapid growth in the number of destinations (Emirates, 2009). Global recognition of the brand is now at an all-time high with the airline ranking first, second or third in major markets such as the UAE, UK, Germany and France (Emirates, 2009). To study the marketing strategy of such a large organization will definitely be very insightful and informative.
History of Emirates
Emirates started of in 1985 with only 2 aircrafts. It was launched as the official airline of United Arab Emirates. In the beginning, it only concentrated on quality rather than quality. This is still the case and even now, Emirates lays very strong emphasis on quality of service that is provided to the customers. Since then it has grown and developed so much that it has now become one of the largest airlines in the world. It has become one of the most demanded airline because of its large network and excellent service. It has 134 aircrafts that fly to almost 100 destinations in 60 countries globally (Emirates, 2009).
Current Marketing Strategy
Emirates Airline is very popular for its global marketing. It carries out extensive marketing in all the country it actively operates in. Because of its strong marketing campaign, it has become one of the world’s most known and fastest growing brands (Scoop, 2006). The competition in the Airline industry is very strong and despite the market conditions, Emirates always manages to shine and stand out from the competition through its effective marketing and exemplary service.
One thing that Emirates believes is Walking the Talk. This means that whatever claims that are made by Emirates through advertising or any other medium, Emirates Airline lives up to them. This is very important and this is one reason why the customers completely trust Emirates and its claims in its advertisements. It has made its reputations like this therefore brand loyalty is very evident.
As mentioned above, one of the main aspects of the service of Emirates is Quality (Emirates, 2009). Whatever changes Emirates makes in its marketing strategy, it will not settle for and compromise for service of lower quality.
Its marketing slogans that are highlighted are ‘Fly Emirates, Keep Discovering’ and ‘Fly Emirates, To over Six Continents’. These slogans clearly highlight the two aspects of Emirates which it is known for, the experience of the flight and its large network.
Problem Definition
If one looks at how Emirates does it marketing, it may feel that there is no need to change it. However, deeper analysis shows that it has been using the same marketing strategy for far too long now. The conditions of the airline industry have changed. The people and their demands have changed. Companies are coming up with cheaper and cheaper offerings because of which customers are switching. There is a concept known as Marketing Myopia and this concept applies to Emirates.
The situation is such that there is a recession and credit crunch through out the world these days. An average person today does not have enough money to waste it just so that he can have a better flight in terms of service quality. Most people just want to reach their destination in time. The quality of service has become a lower priority for the economy class passengers.
If Emirates only concentrates on quality and does not revise its pricing, it is being myopic or short-sighted. It is not seeing the bigger picture. According to many sources, Emirates faced a fall in profits by great extent in the last year. In the fiscal year of 2008 and 2009, its profit was 1.49bn Dirhams and the year before that, the profits were a staggering 5.3bn Dirhams. This makes this a 72 percent fall in profits in only 1 year. The reason behind this cannot be the fuel prices because fuel prices have fell compared to previous years. The reason behind this fall in profits is nothing other than the recession that has affected every country in the world. The business and first class demand is still very weak (BBC, 2009). Emirates should therefore concentrate on that aspect of its market which is strong and this is why a new marketing strategy is required.
Objectives and Hypothesis
The objective of the market research that needs to be carried out is to find out the potential of different types of markets Emirates can cater to. It needs to find out whether it should keep targeting the higher income class of should position itself as an airline for everyone. It also must find out through market research how it must position itself to maintain both markets to some extent.
According to secondary research, it has been discovered that the profits have been shrinking for Emirates. The reason behind this is not the cost of operating an airline because the main cost which is of fuel has been decreasing. The real reason for the fall in profits is the worldwide recession because of which the business class and first class demand is very weak. The hypothesis is that the middle class has more potential therefore Emirates Airline must slowly position itself as an airline for everyone. It should not only be considered for luxury traveling because of which the number of customers who it can cater to has shrunk.
Research Method
The fact that Emirates must carry market research has been established. However, what is more important is deciding on a way in which it must carry out the research. It is very important to follow an accurate research method because a huge amount of investment will be put into this and if the wrong results are obtained, the decision making will be faulty and hence the strategy that will be implemented will be a failure. In short, market research is the first step of bringing in a change and the rest of the stages depend on this.
For this reason, a great deal of planning must be done before deciding on a research method. The right sample, medium and tools must be chosen. For this research, I believe that Emirates should carry out a survey. This is a simple method that companies often use, however the results are very helpful. It gives an insight into what the customers feel.
The sample size for the survey must be large and vast so that the results are accurate and can be generalized. For this situation, a sample size of 30,000 males and females from the age bracket of 18 and above must be selected. These people must belong to different geographical regions so that the results are not specific and can be generalized.
In order for a survey to be effective, the right questionnaire is needed. This questionnaire must be short and at the same time must reveal all the information that is needed from the research. The questions of the questionnaire must be closed ended. This is important because it makes it easier to analyze and quantify the results.
The reason why surveys should be used as a tool to carry out market research is that this method is effective. With little costs, it gives full insight into what and where the problem lies and how to solve it. It can be carried out in person or internet can be used to carry out online surveys. Online surveys are cheap to carry out and in addition to this a large number of surveys can be carried out with people located in different areas which will give generalized results (Colorado State University, 2009).
Limitations
There are many possible limitations of the research method that is suggested. First of all, surveys only gather information about the questions that are asked in the questionnaire. They do not reveal any information that the respondent may have to say other than what was asked. For instance, in interviews, when the questions are asked, the response is usually in depth and this reveals a lot of information regarding different aspects of the situation (Parnaby, P., 2007).
Surveys must also be carefully planned and implemented otherwise the results will be ineffective. This planning must be done by a professional and if this is not done properly, the entire findings of the market research will be incorrect and hence the decision that will be made will be faulty (Knowledge Bank, 2003).
Lastly, surveys help in describing a problem. However, finding a cause and effect relationship between the variables will not be identified and hence further research will have to be carried out in order to determine the relationships between the variables (London School of Hygiene and Tropical Medicine, n.d).
However, despite these limitations, carrying out surveys in this situation is the best option as any other option will not be worth the cost.
Research Findings
Markets keep on changing and it is very difficult to keep track of these changing trends by not conducting research. Market research is very important in order to make accurate decisions. It will help in understanding the market and the industry (Kander, J., 2008). After the market research, there are a number of key findings that were discovered. The main objective of the case study was to find out the potential of different types of markets Emirates can cater to. It needs to find out whether it should keep targeting the higher income class of should position itself as an airline for everyone. It also must find out through market research how it must position itself to maintain both markets to some extent.
Through market research it has been discovered that Emirates must maintain its position in the market as luxury traveling. However, at the same time it must target the economy class. It must inform to them that they can enjoy the quality of service that Emirates offers without actually having to pay too much. This service will have minimal service.
The reason why the economy class must be targeted is obvious. The market is huge and it has a lot of potential. The middle and higher middle class of the society in different counties is growing in number. This is a more promising target population and hence their needs need to be met. What they want from an airline is cheap rates and not the frills that Emirates is known for. This is the reason why they choose cheaper airlines like Etihad Airline.
Emirates with its huge network and presence in the market can provide this combination to its customers. Also, because the fuel prices are decreasing and because Emirates enjoys economies of scales, it is in a better position to cut its costs and pass on these lower costs to the customers in the shape of lower prices. However, at the same time, it cannot compromise on its reputation as being a quality service provider.
One challenge that Emirates will face when it is changing its position in the market is losing the business class. The reason behind this is that the business class use Emirates because it is known for its quality service. If however, the middle class starts using the same airline as them, they will start to feel that the quality will be compromised and hence would move to a different airline. Emirates must ensure that while targeting the middle class, it must not change its position in the market.
The execution of the new marketing strategy will have to be slow. They cannot change their target market in one day. It will be a time consuming process because the people will take time to realize that Emirates can also be an option for them the next time they are traveling.
The main idea of the new marketing strategy will be targeting the middle and higher middle income groups. They will be offered service with minimal frills. A challenge in this new marketing strategy will be to ensure that quality is not compromised and the positioning of Emirates in the minds of the consumers do not change. We have to ensure that the high class of the society does not stop using Emirates because of its effort to cater to the middle and higher middle class in the society.
The marketing strategy would involve inculcate the vacationing culture in its target customers. With this credit crunch and tight incomes, people are becoming less and less interested in going to different countries for vacations. Emirates has to design an advertising campaign which will attract people and motivate them to visit other countries. For this reason, the rates that it offers for the months of June July, August, November and December have to be the best in the industry. These are the months when people prefer to vacation because they get off then. Different deals will be offered which will include visa, traveling expense and hotel expenses all in one. A lump sum amount will have to be given by the customers and they can enjoy their vacations for a specific period of time.
Conclusion and Recommendations
There are a number of recommendations that need to be kept in mind when executing the marketing strategy. First of all, it is recommended that the market research phase is carried out accurately. It must be allotted sufficient time and resources in order to ensure accurate results. This is important because the rest of the marketing strategy will be based upon the results that were obtained from this research.
Besides this, the marketing department should include all other departments when making a change in the market offering. Marketing affects the entire organization therefore all the departments need to be included in the decision making. There might be certain points that only someone from a specific department will be able to point out and by including them in the decision making process, their expertise can be made use of.
Another very important recommendation that needs to be kept in mind is regarding positioning of the brand. Emirates is known for its reputation as being the best quality service provider. It must not compromise on this in any way. It must ensure that whatever cost cutting measures are taken, the quality aspect is not affected.
Another recommendation is to ensure that the advertising message is consistent through all mediums and advertising campaigns. The same message must be delivered through all sources to make sure that this idea gets incorporated into the minds of the consumers.
Lastly, it is suggested that the customers are informed that any changes that are made in the fare are solely made to benefit the customer. Therefore is there is any change in the experience during the flight, the customer will know that this is for the customers ultimate benefit (McShane, S. & Tony Travaglione, 2003).
If all these recommendations are kept in mind and this plan is executed properly, I believe that the marketing strategy will definitely benefit Emirates in the long run. It will be able to benefit from the customers it usually ignores. Its profits decreased in the last year, however this marketing strategy can turn around the situation if followed properly.
Bibliography
BBC (2009) Emirates airline profits down 72%.
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