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AIR INDIA

Marketing Analysis

August 29, 2011 Submitted by: AVIN SETH 11BSPHH010206 Section-H Seat no: 26

AIR INDIA
Air India is the largest and the first airlines in India started by J.R.D. Tata in July 1932. It is no longer privately owned but a state owned flight carrier. It has both domestic and international flight facilities. In 2006-07 Air India went through a financial crisis with losses of Rs.770 crores. In first quarter of 2009 the market share of Air India was 17.2%. It is mainly into service marketing. Services are distinguished from products as they are consumed, cannot be stored and enhanced marketing mix need to be deployed. Product Mix Consumers are more focussed on benefits that are offered rather than products or features of products. Air India product mix include 2 services: On ground services:- It involves tasks like cabin service, catering, passenger service, field operation service, etc. In-flight services:- Airbus A330 has wide screen displays in business and economy classes.

Price Mix Premium pricing Cheap value pricing

Components of pricing: Base Fare Air Fuel Surcharge Passenger Service fee Load Factor Ticket booking prior to the travel based on the number of days.

Bug Identification in pricing The major problem came with Air India when there has been an increase in the fuel surcharge. The company has been under a loss of $1 billion as per 2008-09 fiscal year and the past losses are close to $1.5 billion. The problem came when there has been increase in the fuel prices. As a result of this increase airlines like Kingfisher and jet airways increased the fuel surcharge by Rs.300. Air India didnt follow this strategy, its fares are now up to Rs.300 below than those of Kingfisher and Jet and 5-10% higher than that of the budget airlines like indigo, spice jet etc. By following this strategy the company increased its customer base on the other hand they also faced losses as they were not able to cope up with the increased fuel prices and is in heavy losses and debt at present. But the company being a state owned carrier is aiming at receiving help from the government is waiving off the debt. Air India also provides free flight services for Government employees. Even in the time of losses the Govt. employees as well as the Air India employees enjoy free travels through Air India. This is one of the major bug in the companys pricing strategy. The customers are not being provided with discounts whereas the Govt. employees and the employees of Air India fly for free.

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Air India being into service sector also lacks in services part as it is only limited to services in selected cities only. The company should have earlier focused on the service part they would have made a lot of profits as well as larger customer base and would not have been in such a situation. The turnaround time for Air India is very high as a result of which the flights are often delayed and the customers face inconvenience. Turnaround time here refers to the time between the arrival and departure of the flight. Air India has a larger turnaround time because after the arrival of the flight special staff comes in the flight to clean the entire flight, pick up all the left over stuff of the passengers whereas in other airlines it is the staff in the flight that collects all the left over material of the passengers and the flight is ready for boarding and departure the moment the flight lands thereby saving the time as well as money. Bug Rectification The solution to this could be that they should be more focused on customer satisfaction. They should increase their fares gradually keeping the market in view, focusing more on the profits and also increasing the customer base. At present a drastic increase in the profits is much more necessary along with a gradual increase in the no. of customers because the company needs to be out of the crisis first but also maintaining the customer base to sustain the market. They should increase their base fare but at the same time they should also increase the services for the customers. These services could include better catering services for the customers, in-flight entertainment, gift vouchers that allure customers, increased hospitality at the airports as well as in flight so that the customers get a better hospitality experience eg. Kingfisher airlines have very high fares but the facilities provided to the customers are of no match. The money being lost by the airlines in providing free travel to the Govt. employees should be utilized for providing better utilities for the passengers. The focus at this point of time should be value addition for making profits. As far as turnaround time is taken, company is lagging in services as well as making expenses by providing salaries to the cleaning staff. Air India should follow the steps of Southwest Airlines that focus on customer service by entertaining them in flight themselves instead of using screens and they dont provide catering and thus minimizing their costs in domestic flights. Air India being a service industry the main focus is on the customer satisfaction. Company

Enabling promises

Making Promises

Provider

Keeping Promises Customer

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Macroenvironment Factors and Air India Technological Better handling of aircrafts, passengers and cargo Airport modernization.

Demographic Change in travelling scenario of customers. Increase in fuel prices.

Political Air India being a state owned flight carrier has government to play a major role in many decisions eg in present day scenario the company is completely dependent on the government for the funds to clear the debt and come out of losses.

Microenvironment factors and Air India Market Intermediaries Market Intermediaries help to promote, sell and distribute the products and services of a company. Air India being state owned company, so the government is the market intermediary for Air India. Competitors To be successful a company must provide greater customer satisfaction and provide greater customer value as compared to its competitors. The major competitor for Air India is Indian Airlines as both are government controlled. Publics A public is a group that has an actual or potential interest in or impact on an organizations ability to achieve its objectives. Financial Publics Media Publics This group helps company to obtain funds. For air India government is the financial aid. It seeks all the finance form the Govt. for its operations. The media public can be beneficial as well as harmful for a company. As it is the media that provides all the news to the public about the companys current position in the market and also influences the mind of the public. Air India being is largely affected by Government publics as it is managed by Government itself. Being into service business the general public plays an important role. Air India needs to be concerned about the general publics attitude towards its services (on ground and in-flight services). A company must look after the needs of its employees with continuous positive reinforcement and motivation. As in case of Air India the employees went on strike protesting against managements gag order because of managements fault and company had to bear the losses for 2 days.

Government Publics General Publics

Internal Publics

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Customers As we have already said that in any company the most important focus is the customer satisfaction as it is the customers who make or break the companys reputation. So a company must study all the 5 customer markets i.e.s Consumer markets, Business markets, Reseller markets, Government markets and International markets.

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