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Adoption of an Effective Business Model Report (Assessment)


Introduction

Market analysis

The airline industry in Europe is currently ranked as one of the largest and fastest growing industry globally. According to Cento (13), the industry plays a significant role in as far as a country’s economic growth is concerned, by facilitating various economic activities such as tourism, international investment, and global trade.

Over the past two decades, the global airline industry has witnessed numerous dynamics as a result of changes in the market forces of demand and supply. Some of the changes in the external business environment have been favorable to firms operating in the industry. For example, there have been numerous changes in the legal environment as a result of deregulation.

Prior to the deregulation exercise, it was the state’s responsibility to regulate airfares through the bilateral agreements which have culminated into an expansion in the flight routes. The lucrative nature of the industry coupled with changes in the legal environment has resulted into a large number of investors venturing the industry. The new entrants have led into an increment in the degree of rivalry.

In an effort to survive in the long term, firms in this industry are adopting the low-cost model. Air Min is an airline firm which was established in 2008 within the British airline industry. Its headquarters located in London. The founders’ decision was to venture into the airline industry by adopting the low cost model which presents a high potential of surviving in the long term.

According to Cento (159), low cost airlines are a new revolutionary phenomenon in the European market. This indicates that there is a high probability of low cost carriers succeeding. In its operation, Air Min will face stiff competition from already established low cost carriers. Some of the firms which will present a challenge to Air Min include Easy Jet and Flybe.

Easy Jet

Easy Jet was founded in 1995 and has been able to develop expertise over the years. In addition, the firm has a well established financial base. EasyJet has been able to position itself in the industry by attaining relatively high price competitiveness. This has been attained through integration of an effective price determination model. The firm’s management team beliefs that by reducing airfares, there will be growth in demand for air transport (Mayer 3).

In an effort to ensure that the model is operational and that airfares are kept low, the firm’s management team has adopted the short haul model in segmenting its market. For example, the airline charges between 70 Euros and 130 Euros for a return flight between Luton and Amsterdam whereas it would cost between 315 Euros in traditional airlines. Over years it has been operation, Easy Jet has been has been able to increase the number of its routes to 88 by operating in 36 European airports (Cento 83).

To cope with the increased degree of rivalry, Easy Jet has incorporated the concept of consolidation in an effort to position itself effectively in the market. For example, Easy Jet acquired GO which was a low cost subsidiary of British Airways. The consolidation strategy is also aimed at ensuring that the firm attains a high growth.

The firm’s growth strategy was further enhanced through acquisition of 120 Airbus. The firm has also adopted the single segment model which gives the customers a high degree of flexibility. This means that the firm operates between single destinations thus enhancing the firm’s price competitiveness by avoiding ticketing processes which are relatively costly.

This also enables the firm to eliminate intermediaries especially travel agents. The model enables customers to book a number of flights through the firm’s website. The website does not only enable customers to book online but also enhances communication between the customers and the firm. In addition, customers can also exchange flights accord ding to their travelling preference.

Flybe

Flybe is ranked as the largest regional airline in the European Airline industry. The firm has managed to attain a relatively high market share. The firm has been able to develop expertise with regard to flying passengers as a result of being in operation for more than 25 years.

Flybe has also been able to develop a positive public image in the UK. The firm is also known to be a leader in the provision of innovative and high quality products at a relatively low price. For example, in 2009, the firm carried more 8 million passengers. According to statistics released by the CAA, Flybe conducted 120, 143 flights in 2009 which accounts for 11% of the total flights in the UK. The firm is ranked as the 3rd airline in terms of air movement. British Airways and Easyjet are ranked 1st and 2nd respectively.

The firm has incorporated the concept of takeover in its strategic management process. For example, in 2007, the firm acquired British Airways Connect which was operating at a loss. As a result, the firm was able to position itself effectively as a regional operator. Currently, the firm has more than 190 routes.

The firm operates in 30 European and 30 United Kingdom airports. The success of the firm is based on adoption of the low cost business model. In addition, the firm has incorporated point to point model across various Britain’s regions. In order to position itself effectively in the market, Flybe has implemented an effective advertising model.

In 2005, the firm’s management team developed a website which enables the customers to access information. For example, the website enables customers to book their flights online. In addition, customers can be able to access information regarding various destinations. According to Shah (45), Flybe website was ranked as the best website amongst airline companies in the UK by Wanderlust magazine in 2007.

The firm has also incorporated onboard advertising via various mediums such as headrest covers, seatback tables, in-flight magazines and overhead lockers. As a low cost carrier, Flybe has positioned itself as the leading firm with regard to short haul flying. It has also positioned itself as the leading environmental friendly airline with regard to minimization of negative environmental. The core objective of adopting this positioning model is to promote sustainable growth within the industry.

Upon venturing the industry, Air Min intends to position itself by changing the consumer’s beliefs and attitudes towards low cost airline.

Market communication plan

To ensure success of the Air Min, the firm’s management team has developed a comprehensive market communication plan.

Objectives

Communication objectives

Varey (42) is of the opinion that the success of every firm is dependent on the effectiveness with which the firm has established a relationship with the consumers. Considering the fact that Air Min is a new low cost airline in the aviation industry, it is vital for the firm to draw consumer’s attention.

One of the ways through which this can be achieved is by marketing communication (Kodish& Pettegrew 65). According to Masterman and Wood (34), setting communication objective is vital in marketing communication planning. This arises from the fact that objectives act as keystone upon which the firm sets the direction and limits of the strategic decisions. In the course of operation, the Air Min management team has formulated a number of objectives as outlined below.

Air Min intends to attain sufficient market awareness within the UK market within a period of one year. Awareness of Air Min will be made across consumers of varying demographics. Through effective communication, it will be possible for the firm to influence consumers in their decision making process with regard to travel requirements. This arises from the fact that the communication will not only be informative but also persuasive.

It is also the firm’s objective to attain a comprehensive awareness of the various travel packages offered by the firm in the UK aviation industry through marketing communication within a period of one year.In addition, it is the firm’s objective to attain a high response rate by increasing the volume of its customer base. In an effort to survive in the long term as a going concern entity, Air Min has incorporated the concept of internationalization.

Strategy

Air Min will incorporate push strategies in creating awareness of its existence. According to Masterman and Wood (10), push strategies are aimed at ensuring that the end consumer receives the information. In order to be effective in its marketing communication, the firm’s management team has incorporated the concept of Integrated Marketing Communication (IMC). Creative combination of various methods of communication is aimed at ensuring that the communication campaign succeeds (Masterman & Wood 10).

Over the first decade, there has been a significant change in consumer behavior with regard to their attitude towards marketing communication. Consumers are becoming selective with regard to communication. Therefore, it is paramount for firm’s management teams to adopt a marketing communication method which will capture and maintain a large number of audiences.

Decision to incorporate IMC arose from the fact that the firm intends to create awareness of the firm’s existence to diverse customer categories. As a low cost airline, Air Min intends target individual travelers of middle income level. In its IMC strategy, Air Min Company will incorporate both emerging and traditional market communication strategies.

Decision to incorporate the two market communication strategies arise from the fact that diverse customer categories will be targeted. The traditional market communication strategies integrated includes public relations, advertising, direct marketing and sales promotion.

In its market communication strategy, it is the firm’s management team objective to ensure that the consumers develop a positive attitude towards the firm. This will increase the probability with which the firm penetrates in the market. According to Pickton and Broderick (8) advertising creates value in a product by instilling a positive perception amongst the consumers.

In its operation, the firm will not only target individual customers but also institutional customers. Direct marketing will be used when creating awareness to institutional customers. Direct marketing will be conducted by the firm’s sales representatives. Through its marketing department, Air Min will be able to develop a strong relationship with the institutional customers. As a result, it will be possible for the firm to understand the institutions decision making unit thus increasing its probability to influence its decision making process.

In addition, direct marketing to institutional customers will be enhanced by use of business letters. According to Duncan (438), business letters can be an effective means through which a firm can influence prospective customers. The firm’s salesmen will use the business letters when undertaking direct marketing. The firm’s management team will ensure that the business letter is concise and courteous.

When marketing to individual customers, the firm will make use of personal selling. This will also be conducted by the firm’s sales representatives. The sales representatives will evaluate the consumers travel requirements. This will aid in identification of their preferences. As a result, the firm will be able to offer travel services which meet the customers’ demand.

In its advertising strategy, the firms’ management team will make use of use of various mediums such as use of radio and television. In addition, the firm will also make use of print media such as magazines and newspapers. Air Min will also make use of outdoor advertising through use of bill boards. According to Duncan (439), outdoor advertising are considered to be valuable as a result of their flexibility. To attain this, the firm will enter into contract with advertising companies which owns bill boards that are strategically located.

This will ensure that the intended message is concentrated at a particular strategic point. In an effort to attain its market communication objective, the firm will integrate simple and catchy slogan in all its advertisements. The slogan ‘Travel More, Get value for your money’ will be used. Cashmore (213) is of the opinion that use of both the logo and the slogan contributed towards the consumers developing a positive attitude towards the firm.

In an effort to develop a positive public image, Air Min will also make use of public relation. This will be attained through conduction of campaigns aimed at educating the public regarding the firm’s travelling services. Conduction of public relations campaigns will enable the firm to develop a positive affiliation with the public hence creating an edge in marketing its products in the United Kingdom.

The firm will also make use of sales promotion through issuing of price discounts. The firm’s management team found it wise to use price discounts as a result of recognizing the fact that consumers are price sensitive in their consumption pattern.

The management team of the firm has realized that it can attain a high level of revenue through incorporation of the emerging Information Communication Technology (ICT). As a result, the team will integrate web based materials.

This will be achieved through incorporation of electronic commerce in an effort to communicate to the market. This shall be best attained through use of the internet. Considering the fact that it is the firm’s objective to create awareness of its operation to a large number of customers, Air Min will incorporate emerging market communication technologies.

Internet marketing will be attained through development of a website through which the firm will post information regarding the firm. Some of the information will include the flights routes, destinations, and the respective airfares. The use of internet marketing will also enable Air Min to create market awareness in an effective and efficient manner. This is due to the fact that developing these tools is not costly and will not also call for the services of an expertise in the field.

Considering the rate at technological innovations are talking place globally in all the sectors of the economy, the firm’s management team will also make use of emerging social communication tools such as use of MySpace, Twitter, Facebook, Youtube, Blogs and Wikis.

These tools will not only act as informative tools but will also enable the firm to create a relationship with its customers by enhancing communication between the two parties. Use of Wikis and Blogs will ensure that the firm creates an interactive environment between potential customers and the firm. This means that these tools will act as both informative and interactive tools. As a result the management will be able to know the customers views regarding the airline.

The firm will also enter into a contract with search engines such as Google and Yahoo. The contract will enable the firm to post information regarding its products on these engines. Use of search engines and social communication tools will enable a wide number of consumers to be informed about Air Min and its products. This arises from the fact that a large number of individuals access these tools and networks daily. A grand opening will be conducted by organizing various events such as live music.

In order to establish a long term relationship with the customers, the firm will incorporated the concept of LO3 marketing communication. This will be attained through integration of relationship marketing. Relationship marketing strategy will be implemented through development of a customized web page through which the firm will be able to interact with the consumer. This will play a significant role in the development of a strong customer relationship hence enhancing customer loyalty.

In an effort to improve its market penetration, the firm will also make use of LO4 marketing strategy. This will be achieved through establishment of a relationship with resellers such as retailers and wholesalers. The efficiency with which these parties contact with the customers will increase the effectiveness with which information regarding the firm’s operation is accessed in the market.

Time plan

In an effort to ensure that the marketing communication campaign in successful, Air Min management team has developed a time schedule. The aim of the schedule is to ensure that all the intended activities are conducted successfully so as to attain the set communication objectives.

Mile stone Date Department to undertake the event
Start End
Public relations campaign 21/11/2010 30/11/2010 Marketing
Advertising Campaign

Print media (Newspaper, magazines).

Use of radio and Television

Bill boards

22/11/2010

28/11/2010

29/11/2010

28/11/2010

2/12/2011

31/12/2010

Marketing
Grand opening 2/12/2010 2/12/2010 Marketing
Use of Information Communication Technologies 7/12/2010 Continuous Marketing

Budget

In order to implement the proposed marketing communication strategy, the firms

Management team has allocated $ 220, 000 in its marketing budget during the first year as illustrated below.

Item Year 1

Amount in $

Cost of promotion
Advertising cost (TV, print media, radio television, social networking tools) 100, 000
Sales promotion 30,000
Public relations 30,000
Grand opening 30,000
Contract with Yahoo and Google 50,000
Total estimated cost 220,000

Factors to consider when launching the brand internationally

After launching the firm, Air Min’s management team intends to expand its operation to the international market. In order to succeed, the firm will put into consideration a number of factors.

Segmentation

In order to succeed in the international market, the firm should effectively segment its target market. This will be attained through consideration of the most effective market segmentation variables. In order to achieve this, the firm will conduct a comprehensive market research to identify market segmentation variables.

Culture

Firms which have incorporated the concept of internationalization experience a challenge with regard to dealing with culture. This arises from existence of difference between the culture of the domestic and the foreign country. There is a high probability of the firm violating cultural norms of the foreign country due to lack of information.

In order to deal with this problem, the firm’s management team will conduct a comprehensive training on its human resource regarding the culture of its foreign destination. This will contribute towards the firm improving interpersonal relationship between the firm and its customers.

Media

In order to create awareness in the international market, the firm’s management team will conduct a comprehensive market research. The research will be aimed at identifying consumer attitude towards various marketing communication mediums. In addition, the choice of media will be determined by the size of the market. This will enable the firm’s management team to make a decision on the most appropriate medium to use. The resultant effect is that the firm will be able optimize on the identified mode.

Differences in objectives

When launching the product to the international market, the firm’s management team will consider the communication objective with regard to consumer attitude. The firm will evaluate the international’s market perception regarding low cost airlines.

Positioning

The firm’s management team will also evaluate the competitors’ market position. This will play a significant role in determining the positioning strategy to adopt so as to attain a high competitive edge.

Conclusion

Considering the competitive nature of the aviation industry, it is important for firms in the industry to position themselves effectively. One of the ways through which firms can attain this is through adoption of an effective business model.

Over the past few years, the aviation industry in UK has witnessed significant transformation with regard to operation model. One of these ways relates to incorporation of low cost model. The lucrative nature of the industry has culminated into a large number of firms venturing into the industry.

Air Min’s management team intends to adopt low cost model. Decision to adopt this model arises from realization of the fact that consumers are price sensitive. Adoption of the low cost model increases the probability with which the firm will attract customers. Marketing communication will play a significant role in the process of Air Min penetrating the market. This arises from the fact that creation of product awareness is the first step towards influencing the consumers purchasing decision.

In order to create effective market awareness, Air Min management team will incorporate a comprehensive marketing communication strategy. The concept of Integrated Market Communication will ensure that consumers are aware of the firm’s existence in the market.

Works Cited

Cashmore, Ellen. Making sense of sports. New York: Taylor and Francis, 2010. Print.

Cento, Allessandro. The airline industry: challenges in the 21st century. New Jersey: Butterworth Heinemann, 2008.

Duncan, Carson. Marketing its problems and methods. New York: Biblio Bazaar, 2009. Print.

Kodish, Simon and Pettegrew, Lawrence. Enlightened communication is the key to Building relationships. Journal of Relationship Marketing. 7( 2), 34-45. New York: The Haworth Press, 2008. Print.

Masterman, Gill and Wood, Edward. Innovative marketing communications: strategies for the events industry. New York: Butterworth, 2006. Print.

Pickton, Daniel and Broderick, Andrew. Integrated marketing communications. New York: FT Prentice Hall, 2005. Print.

Shah, Noor. Advertising and promotion. Ottawa: Tata McGraw-Hill, 2009. Print.

Varey, Reen. Marketing communication: principles and practices. New York: Rout ledge, 2002. Print.

This Assessment on Adoption of an Effective Business Model was written and submitted by user Sterling Wallace to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly.

Sterling Wallace studied at the University of Wisconsin-Milwaukee, USA, with average GPA 3.46 out of 4.0.

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Wallace, S. (2019, August 20). Adoption of an Effective Business Model [Blog post]. Retrieved from https://ivypanda.com/essays/marketing-communication/

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Wallace, Sterling. "Adoption of an Effective Business Model." IvyPanda, 20 Aug. 2019, ivypanda.com/essays/marketing-communication/.

1. Sterling Wallace. "Adoption of an Effective Business Model." IvyPanda (blog), August 20, 2019. https://ivypanda.com/essays/marketing-communication/.


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Wallace, Sterling. "Adoption of an Effective Business Model." IvyPanda (blog), August 20, 2019. https://ivypanda.com/essays/marketing-communication/.

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Wallace, Sterling. 2019. "Adoption of an Effective Business Model." IvyPanda (blog), August 20, 2019. https://ivypanda.com/essays/marketing-communication/.

References

Wallace, S. (2019) 'Adoption of an Effective Business Model'. IvyPanda, 20 August.

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