Professional Documents
Culture Documents
Contents.............................................................................................................................................1
8. Marketing Strategy........................................................................................................................8
2.1 Following the attack on the twin towers in New York on 11 September 2001,
the world aviation market was cast in turmoil. Passenger volumes dropped and
aircraft values collapsed. This was the ideal environment for entrepreneurs to plan
the formation of a new aviation group.
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2.2 Many domestic competitors acquired aircraft prior to 11 September when the
value of the Rand was weak and aircraft prices were high. Consequently, the cost
structures of those airlines remain high. The strengthening of the Rand resulted in
an opportunity to start a new airline with a low cost base and a clean slate.
2.3 In August 2003, Glenn Orsmond, the then Financial Director of Comair,
resigned and teamed up with Rodney James, Gavin Harrison and Sven Petersen,
who owned aircraft maintenance company, to launch a new airline.
2.4 Michael Kaminski, an IT entrepreneur, and Mogwele, a BEE partner, were
attracted as additional investors.
2.5 1time Airline’s first flight took place on 26 February 2004 on the Johannesburg
– Cape Town route.
1Times airlines vision is “To make air travel accessible to those previously denied
the opportunities to travel by air” and its mission is “To consistently offer the lowest
air fares to the general public” with full commitment to the objectives and targets
set out in aviation transport charter.
3. Situational analysis
3.1. Macro environment (PESTEL) Analysis
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E (Economic) −Inflation controlled Income distribution Positive
and high inequality
-GDP growth Low employment
Sound monetary growth
policy Credit prone
Credit policy population
Diverse economic Close vicinity with
portfolio European exchange
Emergence of black markets
diamond
Stock exchange
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But, since 2008 international air travel, air freights and revenues start to slash down
and are expected to decline in the coming year.
Following the global recession the global air transport industry faces the worst
revenue since 50 years. This indicates that the air lines industry is sensitive to
global economic up & clowns.
At the time 1time airlines was established because of 9/11 terrorist attacks most airlines
companies are willing to sale their aircrafts at all time low price or alternatively to lease
with all time low fares for long term period due to this supplier bargaining power is very
low.
Bargaining power of Fuel, Finance & manpower suppliers should be
considered.
Customers in the case of airlines business are passengers and their bargaining power
is relatively high the chance of these customers leaving 1 time air lines is relatively
high because so many related companies can offer the same services the customer
and there.
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Because the distances traveled are shorter, the customer can choose to travel by
land, by car/bus/rail as they might prove to be cheaper alternatives and other airline
companies who are ready to offer the same service in the industry are the major
threats from substitutes and the level of threat is high.
The intensity of rivalry among existing competitors in the airline industry is very
high. Competitors including kulula mango, comair, SAA industry 3A cepress SA
air link and 1 time air line low cost carriers brands have had bigger more
established brands of SAA following low- cost manner are competing in the market.
Because market is declining the competition gets fiercer as each one tries to nab
customers from the other in order to keep their capacity utilizations at acceptable
levels.
The exit barriers are high because it is difficult to dispose off grounded planes’ as
there would be few buyers.
The above competitive forces analysis together indicates that the industry is not
attractive.
4. SWOT analysis
Strengths – S Weaknesses – W
- experienced leadership who desire to
do things in different ways - Turn back and landing of air
- effective and open business plan plane after taking off due to
- Innovation of industrial requirement engine trouble /poor maintenance
of aviation industry that is low-cost
service/.
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Carrier requirement. - Lack of promotion to increase
- Appropriate start up time for low- cost customers perception
carrier business
- Does not serve meals
- First introduced as low fare, therefore
known as low-fare leader - Domestic flights only
- Comfortable and convenient passenger - Short runway and short to
cabins
medium range route
- Low fares and low cost provider
- Share holder multi disciplinary profession - No frequent flier program
which can be useful to 1 time
- Low ground clearance reducing loading cost
- High utilization one of the secretes to offer
low fares
- Vertical integration with its maintenance
company
- Best passenger legroom
- Ticketless internet booking system
- Very successful and well cared call center
to handle queries ticketing and all aspects to
customer generated contact
- Provide additional service attributes of play
station for entertainment
- Strong motto “More Nice. Less Price”
- Operates only one aircraft type
- Optimistic income from aircraft maintenance
division
- Has sight on Africa and beyond
Opportunities – O Threats – T
Among the two segments 1time airlines identified country’s middle and low income
group. This segment is attractive to low cost carrier airlines because customers in
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this segment need low fares but this segment constitutes large portion of the total
market.1time airlines found this segment to be attractive as usage rate is high, costs
are low and routs covered are shorter.
8. Marketing Strategy
8.1. Alternative Marketing Strategy
Several authors (David, 2001; Pearce & Robinson, 2003; Strickland &
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Thompson, 2003) propose five generic strategies for outperforming other
organizations:
• A low-cost provider strategy: appealing to a broad spectrum of customers based on
being the overall low-cost provider of a product or service.
• A broad differentiation strategy: seeking to differentiate the company’s product
offering from rivals’ in ways that will appeal to a broad spectrum of buyers.
• A best-cost provider strategy: giving customers more value for money by
incorporating good-to-excellent product attributes at a lower cost than rivals; the
target is to have the lowest (best) costs and prices compared with rivals offering
products with comparable upscale attributes.
• A focused (or market niche) strategy based on lower cost: concentrating on a
narrow buyer segment and out-competing rivals by serving niche members at a
lower cost than rivals; and
• A focused (or niche market) strategy based on differentiation: concentrating on a
narrow buyer segment and outperforming rivals by offering niche members
customized attributes that meet their tastes and requirements better than the
products of rivals.
In addition, Strickland & Thompson (2003: 69) detail three tests that can be used to
evaluate the merits of one strategy over another:
• “The goodness of fit test – a good strategy has to be well matched to industry and
competitive conditions, market opportunities and threats, and other aspects of the
enterprise’s external environment. At the same time, it has to be tailored to the
company’s resource strengths and weaknesses, competencies, and competitive
capabilities. Unless a strategy exhibits tight fit with a company’s external situation
and internal circumstances, it is suspect and likely to produce less than the best
possible business results.
• The competitive advantage test – a good strategy leads to sustainable competitive
advantage. The bigger the competitive edge that a strategy helps build, the more
powerful and effective it is; [and]
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• The performance test – a good strategy boosts company performance.
Two kinds of performance improvements are the most telling of a strategy’s calibre:
gains in profitability and gains in the company’s competitive strength and long-term
market position”.
9. Strategy Implementation
10. Feedback and Control
Marketing
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Market segmentation is a process of partitioning a market into a number of distinct
sections, using criteria that reflect different and distinct purchasing behavior and the
motives of customers (Proctor, 2000).
Needs-based segmentation
Needs-based segmentation entails segmenting the market based on understanding
the needs of the customers (Greengrove, 2002).
Characteristics-based segmentation
Characteristics-based segmentation is based on characteristics, attitudes or behavior
of the customer and the characteristics of the area in order to segment customers
(Greengrove, 2002).
Marketing strategy
Marketing strategy specifies the target market and a related marketing mix. It is a
‘big picture’ of what a firm will do in a specific market. Two interrelated parts are
needed: 1) a target market — a fairly homogeneous group of customers the
company wishes to appeal to; 2) a marketing mix — the controllable variables the
company puts together to satisfy the requirements of the target group (Perreault &
McCarthy, 2002).
Strategic marketing plan
A strategic plan is defined as a plan that covers a period beyond the next fiscal year,
usually between three and five years (McDonald, 2002).
Tactical marketing plan
A tactical plan, or operational plan, is defined as a plan that covers in detail the
actions to be taken, and by whom, during a short-term planning period; usually one
year or less (McDonald, 2002).
Target market
A target market can be defined as the market or market segments which form the
focus of the firm’s marketing efforts (Proctor, 2000).
Positioning
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Positioning refers to the way customers perceive proposed and/or present brands in
the market (Gwin & Gwin, 2003).
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