Marketing Management

2020

Emirates Airline brand Case Study

By/Mahmoud Atef Elyamany

Submitted To/ Dr. Ashraf Talaat

Questions 1: How has Emirates been able to build a strong brand in the competitive
airline industry worldwide?

Emirates Airlines this successful brand in aviation industry with only 25 years in this filed
become No.1 not by sudden or by luck

They move step by step on STP (segmentation, Targeting, Positioning) process to build
there massive iconic brand and strengths the company POPs and PODs.

Understanding the marketing environment is very essential for Emirates airline. It helps to
determine the issues and develop business strategies to survive in the market. Emirates
Airline has formulated its success on the following attributes:

- Market Segmentation,
- Targeting the most profitable market
- and Positioning themselves through continuous brand awareness campaign
1. Market Segmentation:

Market segmentation is a marketing concept which divides the complete market set up
into smaller subsets comprising of consumers with a similar taste, demand and
preference.

Market segmentation helps the marketers to understand the needs of the target
audience and adopt specific marketing plans accordingly. Organizations can adapt a
more focused approach as a result of market segmentation.

Types of Market Segmentation

 Demographic segmentation the demographic variables used for market

segmentation are Gender, Age, Income, Marital status, Education and
Occupation.
 Age

There is no limitation for age of Emirates customer. Emirates segment its customers
according to their age; since there is different requirements apply to the customers
depending on their age. The airline has segment their age under infants, children
and adults.

 Infants 0-1 years: Tickets for infants travelling on the parent’s lap or in a
bassinet are discounted from the full adult fare. When booking online, a request
for a bassinet can be made in the Passenger Details section. Infants less than
seven days old will only be allowed on board in the case of travel for emergency
medical reasons (in incubators) or if the mother is travelling on compassionate
grounds.
 Children
(6-36 months): Children between 6-36 months may travel on board in car
seats as long as a separate seat is purchased for the child. During takeoff and
landing, however, the child must be held and restrained by the parent until the
aircraft has reached cruising altitude.  
Children 2-11 years: Tickets for children travelling in a separate seat are also
discounted from the full adult fare.
 Adults: Tickets for adults is from 12 years old or more.

 Gender
 Both genders – male and female can use Emirates airline services

 Family size and Family life- cycle

 There is no limitation for families, as long as the traveler be able to pay the ticket
cost and has the legal situation for travelling, they can use Emirates airline
services. Most of the tourists which visit Dubai are families and single persons
from the Middle East, Asia pacific, Africa and some from western countries.
 Income
 Most of the time the price for Emirates airline is average based on the services.
Those their salary are high and with average income can buy ticket from the
airline. For example customers with more between 4000 to 10000 AED are the
most customers for the airline.
 Psychographic segmentation
The basis of such segmentation is the lifestyle of the individuals. The individual’s
attitude, interest, value help the marketers to classify them into small groups.

 Behavioral Segmentation
The loyalties of the customers towards a particular brand help the marketers to classify
them into smaller groups, each group comprising of individuals loyal towards a
particular brand.

 Geographic Segmentation
Geographic segmentation refers to the classification of market into various geographical
areas. A marketer can’t have similar strategies for individuals living at different places.
Most of visitors to Dubai are from Middle East, Africa, western countries and Asia
pacific. According to emirates each year 14 million people visits Dubai. In addition, most
of the visitors are business man comes to Dubai for business purposes.

2- Targeting the most profitable market

According to (Kotler and Armstrong) targeting is the process of evaluating each market
segment’s attractiveness and selecting one or more segment to enter.

Emirates because of its special geographic position in the middle east between west Asia and
Europe union they choose to serve this very crowded area with new long haul trips for Australia
and Los Anglos .

They also focus on business travelers and price-sensitive travelers. To increase its market
and expanding their business they are focusing on segment based on consumer loyalty.

So they choose them Target users to be the:

- Value-seeking fliers
- Not very price-sensitive,
- Upper middle and Upper-class
- Fliers seeking comfort and flying experience

3- Positioning

To develop an effective positioning, a company must study competitors as well as actual and potential
customers Marketers need to identify competitors’ strategies, objectives, strengths, and weaknesses

Emirates’ solid brand positioning is grounded in its commitment to delivering best-in-class

products and services both in the air and on the ground, and staying attuned to its
customers’ needs.    
Boutros Boutros, Divisional Senior Vice President Corporate Communications, Marketing &
Brand for Emirates said: “We invest strategically in building our brand and it is reflected in
everything we do. We have differentiated the Emirates brand not only through our marketing
and sponsorships initiatives, but also through our competitive combination of quality
products and services, and technology-driven customer initiatives that our teams deliver
everyday both on the ground and on board. We work hard to identify, anticipate, and meet
the ever-changing needs of our diverse global audiences, as we firmly believe that this will
position us to outperform in our industry now and in the future.” 

In my point of view I see that Because of This strongly build strategies and well
implemented tactics make from Emirates Airlines make them one of the best and world
No.1 brand for many years and allows the company to cross the hard competition,
economic and political crises.

2. What are some of the apparent weaknesses with the company’s strategic
direction? How can the airline address them?

To better understand for the apparent weaknesses with the company strategic direction lets
analysis its SOWT analysis

According to product life cycle the airline industry is in the maturity stage, due to strong
competition in the market and the sales’ rate grows fast and then begins to stabilize gradually.
At this stage competition is more aggressive in order to increasing advertisement and promotion
activities. Further

Strengths
As one of the leading organizations in its industry, Emirates Airlines has numerous strengths
that enable it to thrive in the market place. These strengths not only help it to protect the market
share in existing markets but also help in penetrating new markets.

- High level of customer satisfaction 

- First airline in Arab world that introduce online booking system.
- World’s largest purchaser of Airbus’s superjumbo And boing A380.
- Providing qualitative training, reward and benefits, impressive salary packages to his
employees and also reducing labor costs and increasing employees’ loyalty (People).
- In March, 2010 held Festival of Literature and in 2006 sponsored FIFA World Cup in both
ways he gained its brand awareness and also makes its goodwill in market.
- Frequent Flyer Program (FFP) known as Skywards Miles that shared with Sri Lankan
Airways has its own program now.
Weaknesses
Weaknesses are the areas where Emirates Airlines can improve upon. Strategy is about making
choices and weaknesses are the areas where a company can improve using SWOT analysis
and build on its competitive advantage and strategic positioning.

- Emirates set to cut 9,000 jobs, citing COVID19 pandemic and this will affect the operation
process
-  Because of the huge fall in demand for air travel. Lot of plans have to review and this will
cost a lot
- Emirates bearing high operation costs due to huge investment on buying aircrafts and
implementing latest modern technologies.
- Prices are high comparatively to other airlines.
- Don’t have any hub in Abu Dhabi airport (capital of the UAE).
- Don’t have any alliance with any airline.
- Investment in Research and Development is below the fastest growing players in the
industry. Even though Emirates Airlines is spending above the industry average on
Research and Development, it has not been able to compete with the leading players in the
industry
Opportunities

- Huge investments will be made by the government of UAE for developing main airports in
Abu Dhabi and Dubai.
- There is an expected worldwide internet users and in UAE as well.
- Aviation events like Dubai Air Show promotes for Middle East airlines among other
participates over the whole world.
- A lot of international companies want to shift their headquarters in Dubai.

Threats

- Unfortunately it is located in politically instable region and recently some terrorism activities
have been increased in Middle East.
- The International Air Transport Association, which represents 290 airlines, is forecasting
that the world's airlines will lose more than $84bn and one million jobs this year Due to
COVID19
- New entrants of airlines with low cost.
- The rapidly spread of new sensitive diseases such as COVID19, SARS, Bird Flue that
affects tourism and airlines.

From Above analysis, I see clearly that even Emirates Airlines is a strong brand with great
growth last decade but it has some critical issues should take in consideration and from my
point of view there is some solutions may change this points of weakness as follow:

- Searching for new destination and routs to expand geographically

- Make a new low price commercial flight serve the domestic users especially in the high
competition regions
- Make alliances to serve and decrease its cost outside its hub like Star Alliance
- Think to show clearly that Emirates Airlines take very hard Preventive and precautionary
steps against COVID19
- Try hard to improve the quality of R&Ds to help the company in solving the current and
future Obstacles
- Make all possibilities to reduce fixed cost to cross the losses due to the huge fall in demand
by COVID19.
- Consolidation of airlines is something many are discussing as a fallout from the virus and
concurrent fuel market drop. Much like a ‘survival of the fittest’, the airlines with the most
liquidity and the most carefully considered hedging strategies will survive the downturn.

3. With the decline of fuel prices globally, airline companies continue to reap the
benefits. What impact will this have on Emirates’ business strategy in the future?

In the field of air transportation Jet fuel is the second largest airline expense after labor cost
as it about 30% of operation cost

The last decline in the fuel price is consider a huge opportunity to decrease operation cost
which will allow the company to recover from the last COVID19 pandemic

And for better understand this opportunity we have to understand what cause the oil price
fluctuating.

the main source of oil price fluctuations is OPEC (Organization of Petroleum Exporting
Countries) which controls over 40% of the global oil supplies. OPEC influences the price of oil
by setting production levels to meet the global demand for crude oil; it can influence the demand
by increasing or decreasing the production.
Because crude oil is a commodity, it is also subject to the economic laws of supply and demand.
When demand exceeds supply the prices will go up, and when supply exceeds demand, the
prices go down. Beside OPEC, politics, interest rates and natural disasters can also have an
influence on the prices of oil.

Some entities have resorted to fuel hedging to protect themselves from the volatile oil
costs.
A fuel hedge contract is a futures contract that allows an airline to establish a fixed or capped
cost, via a commodity swap or option. When the market is experiencing consistent hikes,
this strategy is used to increase certainty of fuel prices, which helps with the planning of ticket
prices and fleet planning in the long-term as opposed to speculating. Hedging also helps to
keep ticket prices stable if other factors are constant, which increases airlines’ competitiveness.
The downside of hedging is that airlines miss out on million-dollar short term savings as a result
of oil price drops, since their oil prices are locked. Like we have seen in the major price drop
that happened in 2015, most companies that were unhedged saw the immediate results of the
price drops and those who were hedged couldn’t take advantage of the lower prices.

For Emirates Airline case

Emirates airlines during 2009 has a hedged contract for fuel supply to get it for a year with fixed
price 80 dollar per barrel, and this after the price soar which reach 115 dollar per barrel ,but
after they signed this hedged contract by three months the price fell down and reach near 40
dollar per barrel losses of Dh1.57 billion (US$428 million) for its fiscal year ending , then and by
the end of the hedged contract in the end of 2009 the CEO Sir Tim Clark refused to make such
contract said that the company can make profit of this fluctuation in price even if it reach 115
$/barrel ,and this what happen in 2015 when fuel price fell down again and the company make
profit due to the decline this year

Hence, I see that the decline of fuel price in 2020 is a huge opportunity can used to support the
company like what happened in 2015, but it will not still for a long time until it raise again due to
the raise of demand after the end of restriction in flying because of corona virus so emirates
airlines have to move fast to reap maximum profit before it raise again.

The conclusion and Recommendation:

After this analysis about Emirates Airline I see that this strong brand in the maturity stage of its
life cycle so it has an aggressive competition and high growth so they have to gain most profit
from this stage and be careful about other competitors like El Etihad airlines and Qatar airlines.
emirates used to bass all crises and gain profit when other are suffering losses but now the
situation changed the world before COVID 19 not like after so they have to review all plans to
cope in line with this new situation and get maximum profits from its pros and cons .

References:

- Marketing Management by Kevin Lane Keller, Philip Kotler

- https://www.emirates.com/
- https://www.iata.org/
- https://www.marketingweek.com/emirates-introduces-new-brand-positioning/
- https://www.theglobaltreasurer.com/2020/05/14/airlines-in-hedging-dilemma/
- https://gulfbusiness.com/airlines-can-post-unprecedented-profits-oil-prices-stay-low-emirates-
head/-
- https://www.thenational.ae/business/travel-and-tourism/emirates-writes-down-dh1-5bn-in-
fuel- hedge-losses-1.563114
- https://www.tradefinanceglobal.com/posts/oil-prices-and-the-airline-industry/
- https://www.bbc.com/news/business-53369463