Contents

Contents..................................................................................................................... 1
Introduction................................................................................................................ 2
Purpose of the Paper..................................................................................................3
Summary of Situational Analysis................................................................................4
Market Positioning of the organization ......................................................................6
Responding Competitive Advantage...........................................................................7
Nature of Opportunity.............................................................................................7
Resource and Capabilities.......................................................................................9
Recommended Strategy Route...................................................................................9
Strategic Recommended..........................................................................................10
Increasing the Willingness to Pay..........................................................................11
Increasing the Ability to Pay..................................................................................14
References................................................................................................................15
Introduction

Fifield (2007) notes that whereas the department of sales in an organization

is about ensuring the customers actually buys whatever the organization is

making, the aim of the marketing department is to make whatever the

customer wants to buy. Even though marketing is usually just perceived by a

lay man to revolve around advertising of a commodity that a particular

organization is making, the concept of marketing is actually a lot deeper.

And given the complex and competitive world that is now being evolved, it is

very important for the organizations to best cater to the needs of the

customers and then again to attract as many customers towards them as

possible. One significant solution to this then is to develop a strategic

marketing plan.

Strategy has been defined by Proctor (2000) as the process through which

an organization develops and plans its goals and then achieves it. This

means that a strategy includes both planning and implementing. Going

further into the paper then, another important element of strategy,

evaluating will be studied. The successful implementation of the marketing

mix leads to satisfaction of customer wants and needs and increases the

likelihood of achieving an organization’s objective in the market place. In

recent years, relationship marketing has come to the fore as strategic

alliances and networks involving firms working together towards shared

goals has become more fashionable (Proctor, 2000). The aim of this entire

process employed by a business organization then is to be able to gain

competitive advantage in the market place. In the real, practical world, a

business organization is usually set up with a profit and an ongoing motive.

No business organization wants to just serve to the public with a reasonable

revenue attached to it for various reason of which the first and the foremost

is that even for serving selflessly, an organization needs funds which will not

be provided endlessly by another entity.

It is up to strategic marketing then, to analyze what the customers want, to

study the spending patterns and the behaviors of the public and to focus on

the expected impact of a marketing policy in order to provide to the

customers exactly what they desire while helping the organization make fair

amounts of profits. The word fair here, is obviously a relative term.

Purpose of the Paper

The purpose of the paper is to present a marketing strategy for Etihad

Airlines for the years 2012 to 2015. This will be done by initially giving a brief

summary of the situational analysis of the organization and then moving with

recommending a marketing strategy taking into account the opportunities

and threats that the organization has and given its external and internal

environments.
Summary of Situational Analysis

Etihad Airways targets the high income layer of people considering the fact

that it provides premium services at a premium price. However, the airlines

are moving towards the expansion of their business to capture the more

classes of travelers in order to achieve the economies of scale. Budgeting for

one thing is not a problem for Etihad airlines considering the fact that it is

based in one of the world’s richest cities and is supported by a large bank of

oil producing organizations. By sponsoring for various international events

and by gaining broader global base, the organization has been moving

towards the building of its brand and making it more known to the public.

Moreover, by intelligent advertising through televisions and newspaper,

Etihad has been able to get its names across various borders in a fairly short

period of time. On the consumer side, the price elasticity faced by the

airlines for the product that they supply is pretty low for reasons that will be

analyzed later in the paper. On the weaker side of the organization however

is the fact that it is based in a country which is very highly dependent on the

income produced by its oil reserves and the recent global crisis has proved

to the world that the prices of oil are prone to a lot of instability. Even though

the fuelling of the jets of Etihad airlines is not a major trouble, the reliance of

the overall economy on a fluctuating asset is a considerable threat. On the

other side of the story then is the fact that many new players in the field of

airline services are coming in. this is mainly due to the fact that the recent

few years have seen a sharp increase in the number of billionaires in the
world who are carefully investing into diverse businesses out off which the

airline business is definitely one. By analyzing the situation of competition

that Etihad is currently facing through Porter’s five forces of competition,

especially when taking the threat of new entrance into the industry in the

shape of better and improved technology or better rates and bargaining

power of the suppliers. Because the travelling industry is more or less a

necessity industry as the ratio of those travelling not for a vacation still out

does the number of those who do, the suppliers have considerable power to

exploit the necessities of the customers and obviously this leaves the

organization in question in a worse off position because apart from knowing

their own markets and risks, they need to have a significant idea about the

demand and the risks that their competitors face. The consumer has little or

no bargaining power and also, there is little room for substitutes for air

travelling because not everybody is adventurous enough to travel from Brazil

to Australia by road.

Etihad Airways is targeting the luxury as a commodity which means that

those who travel by the airline which has received the best airline of the year

award for two years in a row now, and the one which has beat the very

sophisticated Emirates airlines, will be served with the highest quality of

hospitality and general services.

The three year plan for the organization then, starting 2012 is to expand the

services in order to achieve economies of scale and to make the airlines the

local airline of the world.

For this purpose, it is necessary to put into account the marketing strategy

that will be implemented to achieve this and this is exactly what this paper is

going to do. Apart from recommending an implementation process for the

marketing strategy, this paper is going to propose an evaluation method to

be used after the marketing strategy has been put in order to see whether

the strategy resulted in the desired and expected results of the organization

or not.

Airline travel is all about making a customer loyal towards a brand because

usually, as Hanlon (2006) notes, a customer of an airline who has had a good

experience with an airlines would not experiment with another airlines unless

there a some serious issue. Under the circumstances of normal travelling,

loyalty of a customer is a very important phenomenon in the airline business.

Thus, for Etihad airlines to plan properly into expanding its business to cater

to the needs of people other than the high income layer of society, loyalty

schemes have to be taken into account very seriously.

Market Positioning of the organization

The International Air Travel Authority (2010) predicted that the number of air

passengers in 2011 is going to reach 2.75 billion people. On top of that,

considering the fact that Etihad is a two year winner of the best airline

award, it can be said that the organization under question is in a comfortable

marketing position and therefore has the edge of employing a new, fund

requiring strategy.

Responding Competitive Advantage

In response to Etihad moving to capture a greater share of the air traffic, the

response from other airlines is going to be strong and it is predicted that

several other airlines are going to come up with several new schemes as well

as various advertising campaigns to win their share of traffic of the air

travelers and thus the revenues accompanying it. The biggest competition is

being predicted to be faced by the Turkish and the Singaporean airlines as

well as Emirates. The competition imposed will be both from the Arab airlines

as well as the international and thus the organization needs to be extremely

careful while implementing the marketing strategy.

Nature of Opportunity

Even though one might argue that there is a considerable amount of risks

attached to the market expansion strategy that the organization is going to

employee, the opportunity is also great. As this world is becoming into a

global village, more and more people are shifting between countries for

various reasons. Some are going into a foreign nation to get a bright degree

for the CV and others are running for a business tour. Thus, the potential air
travelers have increased to a large extent and not all of them belong to the

high income layer of the society and therefore, the larger part of the society

is a great opportunity for Etihad airways.

The proposed marketing plan should give the following amounts focus on the

customers in the following way:

Even though the proposed strategy is to expand the number of customers of

the airlines by making the airline available for middle and upper middle

income people of the society, the truth is that the airline is maximizing its

profit by charging the highest fee for its services such that only the high

income people can currently utilize its facilities. Thus, the organization

should not compromise on its current customers and the 30% of its focus

should remain on maintaining the current employees. Then, the expansion

into “economy” classes should be done. For this purpose, the marketing plan
and the budget allocation approximation has been given below. Currently, it

is proposed that the airline focuses on the development of business within

the layers of the society. However, the long term focus and the more general

perspective of overall expansion should be kept in mind and therefore it is

proposed that the organization places 15% focus on the geographical

expansion of the business.

Resource and Capabilities

The organization is well equipped to launch such a program for various

reasons. The first one is the fact that it is supported by a rich background

and fuel oriented country for which the funding of a new marketing strategy

program is not a problem at all. In fact, the Arab world has recently started

various projects to diversify its sources of incomes and tourism has

developed to be one of the most important industries in the area. Through

the promotion of its national airline then, the government of the country will

actually be promoting its tourism industry. Moreover, as for the aircrafts and

the operational costs as well as a team of marketing managers to support

the strategic plan, the organization is fully equipped to take off for the

following marketing strategy.

Recommended Strategy Route

There are two broad strategic directions which are available to the firm

under discussion. The first direction is the primary demand centered one and
the other one of the selective demand centered one. A primary demand

centered marketing strategy is an attempt by the organization to actually

grow at the level of sales. This means that such a strategy will be focusing

on increasing the customers of the existing brand and this will be either done

by attracting those who are currently not using the product of the

organization (non users) or to make the existing users utilize the services of

the organization even more. Thus, in a primary demand centered strategy,

the increase in overall level of demand of a given product is the aim. On the

other hand, a selective demand oriented strategy aims at gaining

competitive advantage in the market by actually altering the product.

Selective demand oriented marketing strategy is in fact there to reinforce

the demand for a specific brand that the overall organization is offering.

The interesting thing about this scenario is the fact that to achieve the

primary demand marketing strategy, selective strategy comes along.

For Etihad airways, it is proposed that a primary demand marketing strategy

be employed because the aim is to achieve an overall greater level of

revenue for the organization, which will be possible by attracting more and

more customer towards the organization.

Strategic Recommended

Current Users
Increasing the Willingness to Pay
For the current user, revenues can be increased by various ways.

Increasing the willingness to pay to buy the luxury that is to be provided

by the organization can be promoted in several ways one of which is

advertising. Everybody wants a share of luxurious trips across the world

and therefore all the organization really has to do is to stimulate that

instinct in the potential consumers by showing to them how their travel

can be if they choose Etihad to travel.

As an approximation, the organization can use the following budget,

Year 2012 2013 2014 2015

Expenditur 5 million 5 million 2.5 million 2.5 million

e on dollars dollars

marketing
Expenditur 1 billion 1 billion 2 billion 2 billion

e on dollars dollars dollars dollars

increase in

operations

As the chart above crafts out a budget plan for the upcoming four years,

one can see that the marketing expenditure decreases in 2014 and 2015
as compared to that in the previous years, however the expenditure on

the increase in operations is planned to increase over the years. This

strategy has been adopted so on the basis of the following idea.

In the years that the expenditure on operations is low, marketing should

be in order to attract people towards the airline. The lower investment in

operational cost is to decrease the amount of sunk cost as much as

possible. It is being assumed that in the after two years of strategic

marketing, which will include print, broadcast and billboard media, people

will be willing to try for Etihad airlines. The idea is to focus on upper

middle class and middle class airlines and thus, the marketing should

revolve around the idea of budgeted luxury by Etihad airlines. Once the

customers start pouring in, the airline should increase its operational

expense to further expand and promote the business. This expansion of

operational cost as an investment will be in itself an attraction for more

customers.

Through this, a number of non users can also be attracted because similar

desires and instincts hold true for the non users as well. The targeted

populations for these marketing strategies are the high class, high middle

class and middle class socio economic groups.

This process can actually be looked upon as an education process for the

potential consumers of the airline the result of which will benefit both the

organization and the traveler.

It has to be taken into account however that the information given by the

advertisements are actually an educative process for the potential

customers and one that will instigate the element of desire in the hearts

of the people. At least for the non users, the first travel needs to be

reinforced and convinced over and over again so that after they have

chosen to travel by Etihad airlines once, they can have the taste of the

luxury to which they can get addicted.

The current consumers on the other hand can also be reinforced to travel

by Etihad airlines by efficient servicing and also by advertising while

travelling through various methods which could include brochures and

leaflets.

Apart from educating the public, both current consumers and potential

consumers should be spoilt with the introduction of new schemes to

promote loyalty and attraction. The advertisement (the education process

basically) should include the new innovations that the organization is

bringing into its business and how the organization under discussion is

different from the ones that the potential customers already pay for to

travel aboard.
 The third part of the increasing the willingness to pay of the customers

includes the discussion and expression of the benefits and the fulfillment

that the customers are going to achieve by traveling through Etihad

airways. It is to be promoted that it is actually in the benefit of the people

themselves that they choose Etihad airways for travelling.

Increasing the Ability to Pay

In constraint of the budget is one of the most important factors when it

comes to people considering of taking a luxury tour. Otherwise as well, cost

is a major factor in determining what the customer will actually be choosing

for his or her travel. The focus of the implementation of the marketing

strategy then should be to make Etihad accessible not only to the elite and

the ones belonging to the high socio economic class, but also to the middle

and the upper middle class of the society.

Obviously, the luxuries of the ones paying more will be higher, but the

advertisements and the development of travelling packages should be such

as to maximize the benefit of each and to allocate the resource at the most

efficient levels.

For this purpose, the organization can seek to employ perfect price

discrimination while taking into account that costs that the organization is

incurring. It is not proposed however, that the services provided by relatively

same. In fact, the idea is to make the services and the travelling experience

through the Etihad airways great. For this, what is required is to educate the
potential and existing customers about the product that is to be offered and

to reinforce brand loyalty with the organization.

References

Fifield, P. (2007). Marketing Strategy. 3rd Ed. USA: Butterworth-Heinemann

Hanlon. (2006). Global Airlines. 3rd Ed. . USA: Butterworth-Heinemann

Proctor, T. (2000). Strategic marketing. 1st Ed. USA: Routledge.