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Non-Aviation Business Progress Report
Juwaireya Jamal
Eau12141054
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Table of Contents
Introduction..............................................................................................................................3
Non Aviation Products and services.........................................................................................3
Core and Augmented products.................................................................................................3
Targeting and Positioning of Airline Non aviation product line................................................4
Marketing Mix for Non Aviation Products...............................................................................5
Conclusion..............................................................................................................................11
References..............................................................................................................................12
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Introduction
Airlines are integral components of aviation industry and cater the flying needs pf customers
through convenient, competitive, and affordable flight operations. The major operations of
airlines are not only linked with the flight from one destination to the other but also to
provide essential services and products during the travel (Lovelock, and Wirt 2012). The
products and services are required to meet the leisure and necessity needs of passengers like
food, comfort, and information, travel, and entertainment services. The passenger
transportation from their residence to the plane or vice versa and handling the cargo needs are
also important in customer services of the company. This report is based on the analysis of
the non aviation products marketing strategies and the corresponding impact on the revenue
and cost of the airline company.
Non Aviation Products and services
Apart from the flight operations, the products or services incorporated in airline sector are
called non aviation products and services. The report cater s the main products and services
with physical aspects as airline services. These services are divided in two broad classes of
in-flight an on-ground services. In this context, in-flight services are referred as the products
and services cater for the travel needs of passengers. The core service of flight crew,
ambience, food, comfort, and the entertainment modes provided during flight operations. The
level of these services is based on the type of airlines and the travel class of passengers. On
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the other hand, ground services included use of a large and convenient airport, car- parking
services, shopping venue from airline duty free shops, free meals from airport restaurants in
case of flight delays, security and clearance of luggage, and transport to and from airport to
the client destination.
Core and Augmented products
According to Kotler and Armstrong (2012), product is divided in three main categories, core,
actual, and the augmented or supplementary products, as show =n in the diagram below:
1. Core Product: The flight operations of airlines are core product or service to
passengers in a safe and desired mode of travel. The processes of booking, provision
of air transport, and safe transit for luggage are the core benefits of airline operation.
2. The Basic Product: The basic service of airlines generated from the core services
and include in the basic travel package. The basic services of airlines starts from
ticket booking to reach the final destination. These products are equally offered by
low cost and premium airlines.
3. Supplementary /Augmented Products: these products created difference between a
low cost and premium airline. The fulfillment of passengers’ additional expectations
and hedonic needs from the air travel lime exotic and hot food, friendly and caring
flight crew, transport services, entertainment facilities and provision of sophisticated
environment.
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Further expectations of the customers are termed as potential products which are
innovations in the industry such as the Limousine service of Thai airways, and shower
spas from Emirates airlines are exceptions in the industry.
Targeting and Positioning of Airline Non aviation product line
Target market of proposed marketing strategies of non aviation product line of this airline are
affluent, professional and business class and leisure customers belong to socio-economic
class A and B. The first class and business class passengers are the main target market for in-
flight additional food and ground transport facilities.
The brand positioning of airline is a modern, innovative, and safe travel operator that can
provide customer friendly premium in-flight and on-ground services (Ismail et al 2009). The
basic operational philosophy of the airline is to be p[art of fast growing , medium cost, air
traffic carriers global market. The satisfaction of knowledgeable and brand conscious
consumers is the ultimate priority of the airline.
Marketing Mix for Non Aviation Products
According to Kotler (2012), marketing mix strategies are planned to offer the products and
services to the selected customers with respect to the suitable product attributes, appropriate
pricing, convenient and noticeable placement, and effective promotions. Marketing mix is an
essential component of the airline marketing plan for non aviation products and services.
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The marketing mix strategies for selected non aviation products are discussed in this section.
The non-aviation department of this new venture has products and services such as Group
Bookings, Car leasing, and catering for the first year.
1. Carr Leasing Services Marketing Mix
i) Product: The selected car for leasing is Kia Optima with capacity of 4-5 people
and found economical in fuel consumption with all luxury features of Sedan
Car Type Specifications
Kia Optima 2014/15 Car type:
Sedan
Max Pax: 5
Door count: 4
Automatic
ii) Pricing: The pricing will be based on the leasing cost and fuel expenditures per
mile, the associated expenditures should be matched with the expected revenues.
Differ Airlines usually practice differential pricing strategy will be suitable as the
car service will be offered to the First Class and Business Class customers and
will accounted for the total ticket prices in a travel package from the company.
iii) Placement: Car service will be available from airport and customers can order
online for the car service or through the mobile app of the company.
iv) Promotion: Airline advertisements in print and online portal will contain the
details of care service amenities. The links to the car service page and rate will be
available to customers on company website and the printed information will be
available on booking counters on the airports. In the beginning six destinations
will be provided with car service.
Car leasing service is selected due to need of passengers on various businesses and
professional traveling with tight deadlines to meet. Company will facilitate urgent
transport needs of these eminent customers on priority basis.
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Cost versus benefit analysis of Car leasing service:
As for car leasing, selected car lease prices are quoted in the table
below:
cars Price per week Price per month
6 cars fleet 700x6= 4,200 4,200x4= $15,600
Car Price per Price per Fuel per Fuel per How much
leasing week month week month Charge for
each
One car 700 2600 200 2000 50
6 cars 4,200 15,600 1200 24000 50
Expected Profit /Loss per month on 100 customers base value
100 passengers per week are expected to use car service for an hour each individually
Fare per hour: $ 50 per hour (inclusive of drivers’ salary plus full cost and lease plus
maintenance expense)
Drivers’ salary: $2000 per month
Fuel plus maintenance Cost= $20 per hour (approximation)
Average running hours per month = 2400 hours @ 100 hrs per week for six cars each
Therefore on average total expense per month for six cars fleet is
$12000 +$15400 + $48000 = $75400
Expected revenue per month is 2400 x 50 = $120000
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Profit = Revenue – Cost = $120000 -$75400 = $44,600 per month
Hence, the operation will be profitable from the use of service from first 100 customers.
Thus, car leasing will be profitable addition in the non aviation services of the airline in first
year of operations.
2. Catering Services.
The provision of food and catering g services are also important for the survival of the
airline. The provision of fresh and selected cuisine during the flights and prices of snacks
on demand of passengers will be value added services of airlines. Though, these services
are not separately announced but the details will be available in flight menu cards,
passengers boarding passes, and the information available from in-flight attendants. These
services are planned on the consumption of passengers other than the provided standard
meals of the airline during flights. The possibility of catering service usage will be
increased in long haul flights and for passengers with additional food cravings.
The cost versus benefit analysis of catering services is as follows:
Food Items Number
Water500ml 4
Snack meal 10
Magazine 4
Newspaper 3
Costs of sales:
Item Cost Price Selling price for 1
Water 100ml 0.40 4.00
Snack meal 5.00 10.00
Magazines 3.00 4.00
Newspapers 1.60 3.00
Total 10.00 21.00
Total daily passengers: 864
Sales = 5% of Total Pax: 43
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Daily sales = 44 Pax x AED 21: 907
Monthly sales = 907 x 30 days: 27210
Yearly sales: $326520
Daily Cost = 44 Pax x 10: 440
Monthly Cost = 440 x 30 days: $13,200
Yearly Cost: $158,400
Estimated Annual profits:
Profit = Revenue – Cost = $326520 - $158,400= $168120 per annum
Marketing Communication Plan
The recommended marketing plan for Great Arabia is as follows:
Market high growth rate for small continental Specialty food
Trends outlets
Diverse clients’ requirements due to highly diversified
population in GTA.
Health and hygiene needs increase the demands of low fat
and low carbohydrate diets.
Segmentation Individual , family, and corporate clientele
Traditional Middle Eastern food for all age groups
Pricing In Great Arabia case, the brand image would be excellent,
strategy thrilling, and of premium worth.
Lunchtime and the dinner – full meal buffet ranges from $15 to
$25, including the selection from more than 50 dishes
Placement Yorkville and whole GTA
Outlet will be on Main Street of Yorkville near Boba
restaurant.
Promotion
Online sales: online order booking and delivery options
on Facebook pages will considerably increase sales for the
outlet.
Social media: Facebook, LinkedIn, Twitter, and Pinterest
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will assist in making more intuitive appeal to the young target
market along with the professionals in business market. Great
Arabia need to begin collaborating online networking/ ordering
and producing eWoM through electronic discount coupon
schemes. Also, contests for free deals and festive discount
packages will increase the social media members on restaurant
social media sites (Online Marketing Trends 2012)..
Billboards/ digital signage outside and inside the
premises.
Pamphlet/ brochure distribution in the areas with
majority Middle Eastern population with other Asian
immigrants.
The expected marketing budget for the upcoming two years is projected below:
Table III: Marketing Expenses
Year 2016 2017 2018
Marketing $25,000 $20,000 $20,000
expenses
Sales $3,51,456 $3,86,601.6 $4,63,919.2
% of Sales 7.1% 6% 4.3%
3. Group bookings Discounts
Price discounts are found in airline business in the form of season discounts and early
booking discounts normally (Susanne 2013). On the other hand, the new company will offer
group discounts as a differentiation strategy from other airlines. According to Porter (2008)
differentiation in services and products is a generic strategy and is based on features which
are different and worthwhile to customers. In the long run, the differentiated features become
the competitive advantage of the company. In this case, the differentiated strategy in the form
of group discounts will be offered on both off-peak and on- peak flights, with the minimum
group size of up to six members, and 10 plus members groups. In both classes of groups, the
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services will be same but the total ticket price will change due to a cumulative discount on
each ticket.
The marketing mix strategy is based on discount pricing and differentiated promotion
strategy. This strategy will be promoted through personal sales teams to corporate offices.
Senior organizational clients will be formed for business class on airline. The placement
strategy is advance booking s of flights at least a week before the scheduled time to arrange
the required number of seats. Also, the confirmation of group discount package is based on
availability of seats in required flight.
The pricing strategy is based on the revenue versus cost analysis of the group discount
package. The costing of this package is shown below:
Group bookings cost:
No. Of passengers Discounts
For 6 passengers 5% off
For 10+ passengers 10% off
The airline will charge for each passenger 150 per ticket, but for passengers booking in
groups of 6 people, they will get a discount of 5% which is approximately $142.50 per
ticket. As for people who book for 10 plus people they will be getting a discount of 10%
which is 135 per ticket.
No. Of passengers Price
For 6 passengers, each: 142.50
For 10+ passengers, each: 135
Group booking Discount cost Cost incurred per group
6 passengers 142.50 7.5
10+ passengers 135 15
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In this airline, group booking discounts offered for passengers who fly with us, groups of 6 –
10 gets a discount of 5% - 10% on their tickets. Passengers can benefit from our special
conditions for groups. The airline offers one fixed price for all passengers on the booking as
well as other fantastic benefits such as seats beside one another. For instance, students will
also get a discount of traveling in groups, such as for a school trip from Dubai to Abu Dhabi.
Hence, the discount cost is not significant as compared to the total revenue expected from
group tickets sale. Therefore, this option of non aviation service is also viable for the
company.
Conclusion
In conclusion, the non aviation products of this airline are found cost effective and a potential
source of new income, apart from regular flight operations revenue. These value added
services will add a differentiated feature in airline brand positioning and will strengthening
the marketing strategies n future. Further this additional line of revenue will expand in future
and can be resulted in vertical integration of purchasing the cars and food catering chain for
the airline.
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References
Care laesing (2016), accessed from https://www.rocketrentacars.com/car-rentals/kia-optima-
201415/
Ismail, A., Abdullah, M. M., & Parasuraman, B. (2009). Effects of service quality and
perceive value on customer satisfaction. International Journal of Management
Perspectives, 1(3), 29-44. Retrieved from http://ib-ts.org/ijmp
Lovelock, C. and Wirt z, J. (2012), Service Marketing: People, Technology, Strategy 7/e,
New Jersey: Prentice Hall. Chapter 1, pg. 12-24
Kotler, P. 2012, Marketing Management 14th ed. New Jersey. Pearson Prentice Hall, 55-60
Kotler, P. And Armstrong, (2012), Marketing Management , 14thedn. New Jersey: Pearson
Porter, (2008), Competitive Advantage, New Jersey: Pearson
Susanne B., 2013, Strategic Marketing Concepts of Airlines in the German Passenger Market.
Present Challenges, Munich, GRIN Verlag,
http://www.grin.com/en/e-book/271090/strategic-marketing-concepts-of-airlines-in-
the-german-passenger-market
