Академический Документы
Профессиональный Документы
Культура Документы
Dissertation Proposal
How low cost airlines can achieve competitive advantage by adapting innovative marketing strategies?
Table of Contents
ABSTRACT..........................................................................................................................................2 1. INTRODUCTION ..............................................................................................................................3 1.1 Title ..................................................................................................................................................... 3 1.2 Background ......................................................................................................................................... 3 1.3 Problem Identification ........................................................................................................................ 4 1.4 Rationale of the Study......................................................................................................................... 4 1.5 Research Aims and Objectives ............................................................................................................ 5 2. LITERATURE REVIEW ......................................................................................................................6 2.1 Introdution .......................................................................................................................................... 6 2.2 Marketing Strategies ........................................................................................................................... 6 Topic1: Gap Analysis Model .................................................................................................................. 6 Topic2: Porters Model of Competitive Advantage .............................................................................. 7 Topic3: Organisational Environment .................................................................................................... 7 Topic4: Relationship Marketing Approach ........................................................................................... 8 Topic5: Marketing Mix .......................................................................................................................... 8 3. RESEARCH DESIGN AND METHODOLOGY ...................................................................................... 10 3.1 Research Paradigm ........................................................................................................................... 10 3.2 Data Collection Method .................................................................................................................... 11 3.2.1 Primary Data .............................................................................................................................. 11 3.2.2 Secondary Data .......................................................................................................................... 11 3.3 Data Analysis Method ....................................................................................................................... 12 3.4 Population and Sampling .................................................................................................................. 13 3.5 Research Methods Limitations ......................................................................................................... 14 3.6 Resource Planning and Timetable..................................................................................................... 15 3.7 Research Ethics ................................................................................................................................. 15 3.8 Research Limitations ......................................................................................................................... 16 4. CONCLUSION................................................................................................................................ 16 REFERENCES .................................................................................................................................... 17
ABSTRACT
Over the past two decades, the competition between European low cost airlines within the airline industry is becoming fierce and consequently these airlines are facing rigorous criticism in terms of customer service issues. The significance of this study is to demonstrate the situation of low cost airlines by following a marketing point of view and also to inform how low cost airlines can achieve competitive advantage by adapting innovative marketing strategies. For this purpose, five key marketing strategies and tools (i.e. gap analysis model, Porters model of competitive advantage, organisational environment, relationship marketing, and marketing mix) will be the part of the discussion throughout the dissertation. A mixture of data collection methods will be used to collect data where the questionnaire method will be employed to conduct primary research. The findings of the paper will suggest which marketing strategies are appropriate for low cost airlines to attain sustainable competitive advantage.
1. INTRODUCTION
1.1 TITLE
How low cost airlines can achieve competitive advantage by adapting innovative marketing strategies?
1.2 BACKGROUND
A few decades ago, people and businessman with high incomes could afford to travel through airlines but today, people with average incomes can also travel locally and internationally due to cheap fares offered by low cost airlines which are also known as no-frills or low budget airlines. The Southwest Airline was the first low cost airline which started its operations in 1971 and become popular in 1973 due to low fares against low customer quality (Oliveira and Huse, 2008). Nowadays, there are a number of low cost airlines exist that provide services in Europe and the rest of the world. The debate on obtaining sustainable competitive advantage using innovating marketing strategies is a subject of detailed examination from the past two decades (Obermiller and Burke 2008). The competition between no-frills within the airline industry is becoming fierce but competition with full service airlines cannot be neglected as well. Since 2000, the full service airlines (or traditional airlines) are facing a threat due to the expansion of low cost airlines. Indeed, some events such as 9/11 has affected many businesses including airline industry but low cost airlines did not face crisis due to low operating costs and the provision of low ticket options to customers. Barrett (1999) explains that customer support is an essential requirement for the establishment and survival of a low cost airline. In the beginning, customers may accept low services against low prices but in the future they expect improvement in services with same level price due to competitive offers from other airlines (ibid). Similarly, low prices may increase the number of the low cost airlines customer base but it cannot be said that the airlines can achieve customer loyalty on the basis of low prices. In this regard, the airlines should consider the changing needs and demands of the customers on regular basis (Lawton, 1999). Over the years, Ryanair is known as one of the successful low cost airlines that have attracted the customers on the basis of cheap fares but it also faced considerable criticism mainly on the basis of customer service issues
(The Economist, 2007). In addition, it is also observed that low cost airlines do not protect against the changes in customer perceptions and growing competitive environment.
2. LITERATURE REVIEW
2.1 INTRODUTION
This section has an objective to provide a detailed literature review on how to achieve competitive advantage by adapting innovative marketing strategies. The basis of this research is to examine multiple innovative marketing strategies surrounding the marketing mix of low cost airlines for the intention to investigate key service quality issues. For this purpose, five key marketing strategies and tools (i.e. gap analysis model, Porters model of competitive advantage, organisational environment, relationship marketing, and marketing mix) will be the part of the discussion.
based on two types of gaps: customer gap and provider gap (Zeithaml et al., 2009). The customer gap refers the difference between customer expectations and customer perceptions whereas the provider gap is based on four other gaps to close the customer gap. They are: the management perception gap, the quality specification gap, the service delivery gap, and the market communication gap (ibid). These gaps will be used to investigate and analyse key service quality issues to low cost airlines. Topic2: Porters Model of Competitive Advantage According to Porter (1985), an organisation can achieve sustainable competitive advantage by occupying a sustainable leadership position against its competitors. Porters generic strategy framework is appropriate for any organisation to critically evaluate its competitive position by selecting a generic strategy which could be based on cost leadership, differentiation, or focus (Johnson et al., 2008). Cost leadership refers to the same services that a firm delivers against its competitors but at a lower price whereas differentiation occurs when an organisation provides greater services for similar price as of its competitors. A focus is an economics based strategy that firms adopt to target particular market segments in order to achieve local rather than an industry wide competitive advantage. Each low cost airline in the European airline industry follows a generic strategy. Barrett (1999) explains that sustainability of low cost airlines can be assessed through numerous success factors such as response of the customers, managements ability, value chain, and relationships to aviation segments. Environmental changes cannot be neglected in formulating a generic strategy. Today, the business environment is shifting from localisation to globalisation and it is also causing to a rise in global competition. The changes in the global business environment refer to an opportunity for the low cost airlines to improve their marketing strategies to respond competitors in the external business environment. Topic3: Organisational Environment According to Fifield (1998), no organisation in the 1990s and 2000s, regardless of size and market power, can pursue its goals in disregard of the business environment within which it operates (p. 33). The study of organisational environment gives an idea about the nature of the rivalry as a step for the firms intending to establish a sustainable competitive advantage (ibid).
7
Porter (2008) declared that rather than concentrating on immediate competitors, the main concern for any organisation should be to focus on four competitive forces such as suppliers, customers, substitute products, and new market entrants. He also mentioned that the fundamental causes of competitive forces will reveal current profitability of the sector as well as to provide a structure to foresee the level of profitability. Topic4: Relationship Marketing Approach The companies can use relationship marketing as a tool to influence a generic strategy. Relationship marketing is a strategy of targeting, attracting, and retaining customers (Day Wensley, 1998). In fact, this strategy contrasts with the transactional marketing approach which focuses on raising the number of individual sales. The purpose of relationship marketing is to understand and identify the needs of the customers in order promote customer loyalty, engagement, and interaction (Liou, 2009). Organisations usually attract customers with their products, brands, and pricing strategies whereas methods used to retain customers include loyalty cards, customer service, products quality, customer satisfaction, and customer feedback. Today, a relationship marketing strategy using social media platforms is more commonly used as compared to other marketing strategies. Customer Relationship Management (CRM) is a popular concept in the context of relationship marketing which is used to focus more on customer retention rather than customer acquisition. Barrett (1999) declared that a large customer support is one of the significant requirements to develop a successful low cost airline. The low cost airlines in Europe use relationship marketing to develop and retain long-term relations with their customers that influence generic strategies (ibid). Over the past few years, Ryanair is one such airline that has been successful in attracting customers using relationship marketing approach by offering them low fares. Topic5: Marketing Mix When firms market their products or services, they require to create a successful mixture of: the right price, for the right product, in the right place, using most appropriate promotional strategy. For this purpose, the organisations set a marketing mix strategy for their products which is a blend of 4Ps that are product, price, place, and promotion. On the other hand, service-based organisations use three additional Ps that include process, people, and physical evidence. In the
8
words of Kotler and Armstrong (2010), the marketing mix is a set of controllable tactical marketing tools product, price, place, and promotion that the firm blends to produce the response it wants in the target market (p. 52). The appropriate utilisation of marketing mix is very important for the low cost airlines in order to gain competitive advantage. The airline service industry is primarily based on two types of services: on the ground services and in-flight services. According to Barrett (1999), it is a best practice for no-frills to design different marketing mix strategies for different types of services. Easy Jet and Ryanair are the popular low cost airlines in Europe. These airlines are always in search to put pressure on each other and on full service-based airlines by making changes in each element of marketing mix (Doole and Lowe, 2008). Figure 2.1 shows the mixture of relationship marketing and Porters model of competitive advantage applied to low cost airline industry.
Figure 2.1: Mixture of innovative marketing approaches
10
For instance: Respondents 15 25 41 10 9 100 Therefore, R.I. = [1(15) + 2(25) + 3(41) + 4(10) + 5(9)] / 100(5) = 273 / 500 = 0.55 (Moderate important) Figure 3.1 shows the flowchart of the research design of the study. Ordinary Scale 0.2 0.4 0.6 0.8 1.0
12
M. Sajid Saeed (+44 1414161015) Figure 3.1: Flowchart of research design of the study
13
The discussion will surround four low cost airlines: Ryanair, Easy Jet, Air Berlin, and Wizz Air. The selection of these airlines is based on some reasons. Most of the discussion will be based on Ryanair and Easy Jet because they are the present market leaders of European low cost airline industry and each airline serves around 50 million customers each year. Air Berlin and Wizz Air are two other low cost airlines which are relatively new in the airline industry and offering more services against cheap fares. The researcher will follow a convenient sampling approach which is a type of non-probability sampling and easily available to him (Bryman and Bell, 2007). There are two reasons for selecting convenient non-probability sampling approach. First, it is suitable for business studies (Ferber, 1977) and most of the business researchers used this approach in the past. Secondly, the alternate approach (i.e. probability sampling) requires lots of preparation, and a number of difficulties and additional costs are also associated with it (Bryman and Bell, 2007).
14
Wrenn (2006) argued that the quality of the secondary data is not credible in conducting marketing researches. Furthermore, the secondary data is also not up-to-date and the researcher may need to struggle for choosing the updated and correct data. Due to this reason, the researcher may get incomplete or unclear information about particular airline which may hinder the researcher to draw reasoned conclusions (Denscombe, 2010).
Preparation Literature review Design and distribute questionnaires Survey data collection Survey data analysis Evaluation and validation Thesis writing Thesis submission
15
Nobody will be forced to participate in the survey Participants will be informed about the objectives of the study The personal details of the respondents will not publicised and their identity will remain anonymous Ethical language will be used throughout the survey by keeping in mind the self-respect of the respondents No inappropriate or inadequate method/technique will be used to collect data The particular data will not be used against any organisation for illegal or threatening
purposes
4. CONCLUSION
Referring to the problem statement in section 1.3, low cost airlines in Europe are facing fierce competition on the basis of cheap prices against low customer quality. Currently, these airlines are also facing criticism in terms of customer service issues (The Economist, 2007) such as check in services, exhausting booking services, inappropriate seating environment, and unpleasant environment. Consequently, they are rapidly losing their credibility, profitability, and market share. It is believed that a combination of five marketing approaches (i.e. gap analysis model, Porters model of competitive advantage, organisational environment, relationship marketing, and marketing mix) can resolve this matter. A detailed investigation about these matters will include primary and secondary researches and the final conclusion of the dissertation will inform how low cost airlines can achieve sustainable competitive advantage by adopting innovating marketing strategies.
16
REFERENCES
Air Transport Association (2003). Airlines in Crisis: The Perfect Economic Storm. Air Transport Association: Washington, D.C. Aksoy, S. Atilgan, E., Akinci, S. (2003). Airline services marketing by domestic and foreign firms: differences from the customers viewpoint. Journal of Air Transport Management, 9(6), pp. 343-351. Assaf, S. A. and Al-Hejji, S. (2006). Causes of delay in large construction projects, International Journal of Project Management, 24, pp. 349-357. Baker, M. (2008). The Strategic Marketing Plan Audit. Cambridge Strategy Publications Limited Barrett, S. D. (1999). Peripheral market entry, product differentiation, supplier rents and sustainability in the deregulated European aviation market: a case study, Journal of Air Transport Management, 5, pp. 21-30. Bendant, J.S., Piersol, A.G. (2000). Random data analysis and measurement procedure, Measurement Science and Technology Electronic Journals, pp. 1825-1826, doi: 10.1088/09570233/11/12/702. Black, K. 2010. Business Statistics: Contemporary Decision Making. 6th edition, USA: John Wiley and Sons Bryman, A., (2008). Social Research Methods, 2nd edition. Oxford: Oxford University Press Bryman, A. and Bell, E., (2007). Business Research Methods, 2nd edition, Oxford: Oxford University Press Creswell, J. W. (2007). Qualitative inquiry and research Design: Choosing among five approaches. 3rd edition, London: Sage Publications Day, G.S. and Wensley, R. (1988). Assessing advantage: a framework for diagnosing competitive superiority, Journal of Marketing, 62(4), pp.1-20. Denscombe, M. (2010). The good research guide: for small-scale social research projects. 4th edition, Open University Press
17
Doole, I. and Lowe, R. (2008). International marketing strategy. 5th edition, London: Seng Lee Press Doloi, H., Sawhney, A., Iyer, K. C. and Rentala, S. (2012). Analysing factors affecting delays in Indian construction projects, International Journal of Project Management, 30, pp. 479-489. Doyle, P. (2008). Value-Based Marketing: Marketing Strategies for Corporate Growth and Shareholder Value. 2nd edition, John Wiley & Sons Ferber, R. (1977). Research by convenience, The Journal of Consumer Research, 4(1), pp. 5758. Fifield, P. (1998). Marketing strategy. 2nd edition, Routledge. Hooley, G., Saunders, J. and Piercy, N. (2004). Marketing strategy and competitive positioning. 3rd Edition, London: Prentice Hall Iyer, K. C. and Jha, K. N. (2005). Factors affecting cost performance: evidence from Indian construction projects. International Journal of Project Management, 23, pp. 283-295. Johnson, G., Scholes, K. and Whittington, R. (2008). Exploring Corporate Strategy, 8th edition, Prentice Hall Kasper, H., Helsdingen, P. and Gabbott, M. (2006). Services Marketing Management: a strategic perspective. 2nd edition, England: John Wiley and Sons Klophaus, R. (2005). Frequent flyer programs for European low-cost airlines: prospects risks and implementation guidelines, Journal of Air Transport Management, 11, pp. 348-353. Kotler, P. and Armstrong, G. M. (2010). Principles of marketing. 13th edition, Prentice Hall Kotler, P. and Keller, K. (2006). Framework for marketing management and customer case. 3rd edition, Prentice Hall Lawton, T. C. (1999). The Limits of Price leadership: Needs-based Positioning Strategy and the Long-term Competitiveness of Europe`s Low Fare Airlines, Long range planning, 32(6), pp. 573-586.
18
Liou, J.J.H. (2009). A novel decision rules approach for customer relationship management of the airline market, Expert Systems with Applications, 36, pp. 4374-4381. McDonald, M. (2008). Malcolm McDonald on Marketing Planning: Understanding Marketing Plans and Strategy. Kogan Page Publishers Milmo, D. (2010). Ryanair must move away from low fares. The Guardian, 12 September 2010 Moore, S. (2001). Sociology Alive. 3rd edition. Nelson Thornes Neuman, W. L. (2006). Social Research Methods: Qualitative and Quantitative Approaches, 6th edition, Boston: Pearson Education Obermiller, C. and Burke, C. (2008). Sustainable business as marketing strategy, Innovative Marketing, 4(3), pp. 20-27. Oliveira, A.V.M. and Huse, C. (2008). Localized competitive advantage and price reactions to entry: Full-service vs. low-cost airlines in recently liberalized emerging markets, Transport. Res. Part E, doi: 10.1016/j.tre.2008.09.003. Pollard, A. (2002). Readings for reflective teaching, Continuum International Publishing Group Porter, M. E. (1985). Competitive advantage: creating and sustaining superior performance. New York: The Free Press. Porter, M. E. (2008). The Five Competitive Forces that Shape Strategy, Harvard Business Review, January, pp. 7993 Saunders, M., Lewis, P. and Thornhill, A.(2009). Research methods for business students.5th edition, England: Pearson Education Limited. Smith, C. A., Kisiel, K. W. and Morrison, J. G. (2009). Working through synthetic worlds. Ashgate Publishing Ltd The Economist, (2007). Snarling all the way to the bank. 23 August 2007 Wrenn, W. B. (2006). Marketing research: text and cases. 2nd edition, Routledge
19
Zeithaml, V.A., Parasuraman, A. and Berry, L.L. (1988). SERVQUAL: a multi-item scale for measuring consumer perceptions of the service quality, Journal of Retailing, 64(1), pp. 12-40. Zeithaml, V. A., Bitner, M. J., and Gremler, D. (2009) Service Marketing: Integrating Customer Focus across the Firm. 5th edition, New York: McGraw-Hill
20