ContentsContents......................................................................................................................................................1

Introduction.................................................................................................................................................2

Purpose of the Paper...................................................................................................................................3

Summary of Situational Analysis..................................................................................................................3

Market Positioning of the organization ......................................................................................................6

Responding Competitive Advantage............................................................................................................6

Nature of Opportunity.............................................................................................................................6

Resource and Capabilities........................................................................................................................8

Recommended Strategy Route....................................................................................................................8

Strategic Recommended..............................................................................................................................9

Increasing the Willingness to Pay............................................................................................................9

Increasing the Ability to Pay..................................................................................................................12

References.................................................................................................................................................13

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 PayFor 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 2015Expenditure on

marketing

5 million dollars 5 million dollars 2.5 million 2.5 million

Expenditure on

increase in

operations

1 billion dollars 1 billion dollars 2 billion dollars 2 billion dollars

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.