0.1 Company Overview
Interlink airway was formed on the 12 of August 2009 and duly
registered as a private company .The company’s head office is in New York City.
The company has a mission of providing comfortable,
reliable and safe low-cost air travel service. Low cost production is a
concept that has been propagated from long time ago by people like Henry ford
who wanted to focus on the customer satisfaction (Levitt, 1975).
0.2 Executive Summary of Marketing Plan
Marketing can be said to be social since it involves the people
feelings and wants (Mullins, Walker &, 2010).Interlink airways is a new
airline company currently in its shaping stages. The company has been setup to
take advantage of the market segment that has not been fully utilized by the
current companies especially in the domestic market. This gap has been
identified in the low cost service flights out of New York, U.S.A. This
opportunity coupled with the fact that there is an increase in demand for
flight services for passengers exiting New York is a good predictor that
Interlink’s entrance into the market will guarantee it of a good market share
1.0 Description of the Target Market
The other factor that makes
the New York market desirable is the research that was carried out by
management on the major competitor it would have in this region. It was
established, based on some inside information that the biggest player in this
region was a full service airline. This meant that the segment of the low-cost
travelers had not been adequately seized. It was also seen that the main
competitor would not likely interfere with the market segment that Interlink
had curved out since the company would prefer to maintain the status quo for
fear of causing undesired effects within in its market.
The interlink company decided to take
advantage of the obvious absence of a true low-cost carrier on the New York
market. Since the threat of the existing player to come to this segment was
eliminated, the only other threat would be the entrance of another discount
airline. Interlink would strike while the iron is still hot so that it can get
the advantage of being the trend setter
2.0 Description of Competitors
Delta
Airline is operating in an oligopolistic environment with other international
carriers and this means they will have little concern about the local market.
This will enable interlink to move into the market with few hitches as far as
completion form the already established Delta is concerned. The fact that we
will be operating just one type of aircraft will also distinguish as from the
competitors. The full-service airlines like Delta have to operate different
kinds of aircrafts because of their diversified portfolio. This means they have
to incur extra overheads in maintenance and training.
Interlink
will have one major hub of operation which will be highly utilized on the basis
of price advantage. The lack of aircrafts outside our focus means that we will
have a competitive advantage over the multifaceted full-service companies like
Delta. These companies have the extra costs brought about by the different
market orientations across the different borders
Interlink
will however concentrate on the segment it has identified thereby avoiding the
overheads faced by the rest. Our concentration on our niche will also create a
barrier for other competitors who may want to enter the market at latter dates.
It will be counterproductive for the multifaceted all-service carriers to
compete with our discounted prices. They
will mostly concentrate on greener pastures on longer routes across the
borders. This will leave us in a good position to penetrate the market.
While
the full-service carriers concentrate on providing extra service for their customers,
interlink will concentrate on providing competitive prices. Interlink can for
instance attain a target of 7 cents for every available seat mile. This can be
made possible through a variety of cost saving mechanisms. One of the cost
cutting mechanisms will be done through flight crew utilization. While the
other the all-service providers have an average of 60 hours deployment of crew
per month, interlink will have an average of 85 hours deployment per month.
This will effectively save the company money through as a resulting of having a
leaner staff
Consequently,
Interlink intends to eliminate meal service. It is forecasts that this will
save the company at least three dollars per seat per flight. The company will also utilize airplane fleets
by doing an average of eleven hour in a day and seven days in a week. Interlink
will also configure the planes into a single coach. These coaches will seat 165
passengers. By and large, this will maximize the profits especially on short
flights. The company will use the MD-80 series aircraft. In summary, it will be
employing the pricing strategy as a tool for market penetration (Mullins,
Walker & Byod, 2010).
3.0 Description of Product or Service
Researchers
have long established that consumers still have a preference for lower fares
but this should be in an environment where they are guaranteed that their
safety has not been compromised. The consumers also want to be assured of the
convenience and reliability of the flights. One thing however, that customers
are willing to sacrifice on the altar of cheaper fares is service. If denying
them some services will cut down on some costs, then they are okay with it ( O’Connellà & Williams,
2005).
4.0 Marketing Budget.
Interlink will also employ the services of an
outsourced Publics relations company. Interlink will set aside 16% of its sales
for this entire exercise. This means that the projected expenditure for the
first year in this exercise will amount to 16.5 million dollars. Private Jet’s
experience is proof that this amount is enough to launch the airline company in
a single hub.
Interlink intends to make direct contact with the business
community. It is expected that the
travel departments in this firms will be attracted by the good prices. New York
City is arguable the business hub of the country. It is also among the leading
cities in conference tourism. We therefore project that close to 50% of all our
revenue will emanate from the business community. These projections are
inclusive of the relevant personnel and salaries.
The increase in year two is because we will be
adding more flights and aircrafts to the routes. This will lead to a
maximization of profits in the market segment. These profits will be without
having to incur additional costs of opening new markets. The other advantage is that there will be
more controlled growth thus eliminating uncertainties and risks that are bound
to occur with incremental growth. The chart below shows these projections:-
NOTE: Numerical values are in thousands
(000's).
5.0 Description of Location
Location is one of the important factors for any business. The
Interlink Airways Company will be located at the heart Of New York City. New
York is a business center with most companies having their head offices there
while those that don’t have a major branch of the company there. The city is
also one of the leading cities in the world as far as tourism conferencing is
concerned. New York is also one of the
major connector cities in the world from where destinations to many other parts
of the globe are routed. These among many other factors make New York a very
convenient location for an airline company since it’s a city full f travelers.
6.0 Pricing Strategy
ROUTE
|
ADVANCE
|
WALK-ON
|
SAME DAY.
|
Atlanta
|
$59.00
|
$89.00
|
$167.66
|
Dallas
|
$99.00
|
$159.00
|
$222.15
|
Boston
|
$99.00
|
$159.00
|
$185.25
|
Chicago
|
$89.00
|
$129.00
|
$184.99
|
Orlando
|
$79.00
|
$119.00
|
$141.69
|
Phil
|
$79.00
|
$119.00
|
$180.08
|
Detroit
|
$89.00
|
$129.00
|
$165.55
|
D.C.
|
$79.00
|
$109.00
|
$188.95
|
Ft. Lauderdale
|
$79.00
|
$119.00
|
$148.70
|
Key
Column
one is for advance reservation for 2 weeks. The fares are not refundable and
the flights can not be cancelled. Column two fares are is for fares purchased
within a time span of less than 14 days. Column three is for purchases of made
on the same day of travel
7.0 Summary and Implementation Plan
Interlink’s penetration and subsequent market
presence will be realized through its strategy of identifying and segmenting a
market which it will then focus on. This
market segment will further be locked through the strategy of competitive
pricing. The pricing policies which will see the fares set at almost 50% below
the industry rates will not only attract but also retain the customers.
Interlink will also employ various measures to ensure the company continues to
maintain a competitive advantage. This will mainly include the following:-
·
Media
campaign through local media like TV ads, Radio, Newspapers and billboards
·
Centralized
operations will make the process cost effective.
·
Cost
cutting mechanisms will make the company save a lot of money
References
IATA.
(2010). Scheduled Passengers Carried. Retrieved on 23 September, 2010, from http://www.iata.org/ps/publications/Pages/wats-passenger-carried.aspx
Levitt, T. (1975,
September-October).Marketing Myopia. Harvard
Business Review, p.8.
Mullins, J., W.,Walker,
Jr., O., & Boyd, H. W. (2010). Marketing
Management: A Strategic Decision Making Approach (7th ed.). Boston:
McGraw-Hill
O’ConnellÃ, J & Williams, G. (2005). Passengers’ Perceptions Of Low Cost Airlines
And Full Service Carriers: A Case Study Involving Ryanair, Aer Lingus, Air Asia
And Malaysia Airlines. Bedfordshire: Cranfield University.
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