Marketing Intelligence - Report Example

Marketing intelligence Table of Contents Learning Objective 3: Market size and future demand for Emirates airlines in the U.S 3 Market Size, Growth and Trends in the Tourism Industry of the U.S 3 Competitors Analysis in the North American Market 4 Delta Airlines 4 Southwest Airlines 4 JetBlue Airways 5 SWOT analysis 6 Strengths 6 Weakness 6 Opportunity 7 Threats 7 Learning Objective 4: Measurement of Customer Satisfaction 8 Techniques for Assessing Customer Satisfaction 8 Survey 9 Review of the survey 10 Reference list 11 Learning Objective 3: Market size and future demand for Emirates airlines in the U.S Market Size, Growth and Trends in the Tourism Industry of the U.S The travel and tourism sector of the U.S had generated an economic output of almost $1.5 million in the year 2012. The sector has been successful in providing jobs to almost 7.8 million people and accounts for almost 7% of the net exports of the nation. The sector represents 2.8% of the total GDP of the country (Select USA, 2015). A major share of profits in the sector comes from the domestic airlines sector, although international travel has also been growing steadily. In the year 2012, the international aviation sector accounted for $166 billion sales and it was predicted that the figures are likely to grow by 3% annually. A major reason for the predicted rise in international travel sector is due to the enhancement in the inflow of tourists (Mazzeo, 2003). In the coming few years, the U.S travel sector is expected to expand considerably. Canada and Mexico are expected to remain the top tourist destinations in the Northern American region. The enhancement of the economic conditions prevailing in the developing regions of India, China and Brazil are expected to bring in greater number of tourists to the U.S. As the economic relation between the nations of China and the U.S strengthen, it is expected that the travel between these two nations are likely to expand majorly (Fox News, 2015). The number of travelers who visit the U.S for business and pleasure are almost the same. Apart from being an important tourism destination, the U.S is also an important business hub located in the west. Hence, corporate professionals frequently visit the nation for transacting business. Since the last few years, the government of the U.S has been investing heavily for improving the services and the conditions prevailing in the travel and tourism sector. During the financial crisis period, the growth and expansion of the travel and tourism sector had rapidly slowed down (Aguirregabiria and Ho, 2012). Due to poor economic conditions, flight charges of both international and domestic airlines had increased considerably. This had weakened the travel sector. However, with the passage of time and the revival of the economic situation, the travel and tourism sector have again began to grow and show signs of high profit (Gursoy, Chen and Kim, 2005). Competitors Analysis in the North American Market Delta Airlines Delta Airlines is considered to be one of the leader of the airlines industry in the U.S. it is therefore one of the major competitors for Emirates. When most airlines operating in the U.S failed to make substantial profits due to rising fuel costs and reduced spending of Americans due to financial crisis, Delta was one of the few airline services which churned adequate profits. The company is considered as one of the smartest airlines firms which strategically makes use of every advantage present in the market and also never loses a chance to speak up for themselves. The company’s efforts towards innovation and developing better customer relations have remained largely successful. One of the strongest abilities of Delta airlines is that it is able to assess consumer needs well. Most of the improvements made by the company are customer centric. Therefore it is understood that the company deeply focuses on the needs of the targeted consumers and develops operational strategies accordingly. Delta mainly follows the hub system of operations. The network operations of the company have been designed in a manner such that all major airlines markets of the world are covered. This has facilitated Delta to emerge as a pioneer in the international airlines services of the U.S. Delta also has been successful in procuring bilateral and multilateral trade alliances with other overseas airlines. The logistics carrier services provided by Delta are also considered to be highly efficient and reliable. While most air craft carriers report misplacement and damage to freight, the services provided by Delta are considered to be highly efficient and damages to the goods are reported to be low. Delta’s offseason discounts are also preferred by many frequent fliers. Due to their success in the U.S market and high financial strength, the company has been able to increase their number of flights and expand their services. Delta’s continuous efforts towards innovation have facilitated the company to provide affordable and quality services to the the consumers in the market of the U.S (Sultan and Simpson Jr, 2000). Southwest Airlines Southwest Airlines is one of the largest and most profitably operating airlines in the U.S. The company is categorized as low cost airlines and hence is successful in attracting budget travelers. The speciality of Southwest Airlines is that it offers differentiated services and tries to fulfill the needs of travelers from various categories. The company caters to the needs of both luxury and economic travelers and also offers a number of travel packages. Passengers prefer Southwest airlines due to their swift ticketing and refunding services. Southwest airlines also facilities their passengers to reimburse their payments towards future travel. This is an advantage that is provided by very few airlines services. However, the services of the company in the recent times have been condemned by many. The airline was criticized often for their delayed service and lack of efficiency. Many passengers have also complained that the airlines flight crew is not trained adequately. The company tries to minimize costs by hiring individuals who are not very efficient. Since the year 2013, the company has reversed things around. Strategic measures were taken up by the management to improve their services. The company had also reported a number of internal operational disputes which led to lack of cooperation between superiors and subordinates. The internal uneasiness had impacted the end services provided by the company. As a strategy to improve their services, the company has taken concrete efforts towards enhancing the timeliness of their services and remains more hospitable. To give effect to such initiatives, the company has enhanced their training programs and conducts frequent reviews of their employees. In the last quarter of the year 2013, the company’s performance in financial terms as well as on the basis of the feedback received from passengers was seen to have improved remarkably (Gittell, 2003). JetBlue Airways JetBlue is considered to be an important service provider in the U.S airlines industry. The services of the company are mainly concentrated in the U.S, Latin American and the Caribbean regions (Gittell, 2003). On the basis of customer satisfaction in low cost airlines sector, Jet blue is seen to top the list in the U.S market. Jet blue has received the award for the best airlines in terms of customer services for eight consecutive years. This makes JetBlue one of the most trusted airlines brands in the U.S. The strong brand image and quality services offered by the company have led it to remain as one of the top airlines services of the U.S. JetBlue consistently tries to update their services through procuring modern and latest technologies in the field of airlines. The sophisticated technologies used by the company facilitate it to provide timely and efficient services. A significant strength of JetBlue is their ability related to managing their financial resources. While most airlines had raised their fares post the financial crisis, JetBlue continued earning significantly high profits and therefore did not require altering their fares by a huge margin throughout this period. However, a significant drawback for JetBlue is that their activities are mainly concentrated in the North American region and hence their international presence is low. The company is seen to have no presence in the Asian markets as compared to other flight services such as Southwest airlines and Delta Airways. Another significant drawback for the organization is that their margin of profits has been low as per their expected standards. This has reduced their expansion capabilities. A major chunk of the profits earned by the company is utilized for meeting internal needs and to maintain their service quality. As a result, less financial resources are used for innovation related objectives. However, the company has introduced new flights to increase their revenues and to be able to retain greater profits for expansion and research related needs. JetBlue also ensures that customer grievances are mitigated on time so that the relationship that company shares with their customers are not effected in any manner. It is adequately essential that the company develops innovative and effective cost cutting measures in the near future so that JetBlue’s competitive position in the market is not threatened (Ito and Lee, 2003). SWOT analysis Strengths Emirates enjoy the advantages of a large scale business organization. The mass scale of operations and adequate financial strength has facilitated the organization to grow exponentially. Emirates operate in almost 55 nations of the world and are seen to continue to grow. The company ranks as one of the top ten international flights across the globe. Since the company has enough experience of operating in the diversified travel sector, and therefore understands the airlines sector well. The company is slowly seen to progress into the cargo business division. This would facilitate it to serve as an important carrier of logistics and thereby enter the supply chain of other industries. The fast travel systems of Emirates are likely to attract a number of corporate sectors for transporting goods (Lapré and Scudder, 2004). Weakness The company finds it difficult to establish in the market of the U.S. This is primarily due to the fact that the company belongs to the luxury or high end airlines sector. Being in the high end airlines category, Emirates does not provide affordable services to the market. The U.S travel market consists of a large number of consumers who prefer low or economic fares. For similar reasons it is seen that airlines providing cheap flight services such as Virgin America are able to do well in the market of the U.S. Emirates although is considered to be highly efficient and a successful organization, not all its ventures have proved to be successful. Its operations in a number of nations in the Europe and in Asia have not been very profitable. The causes for lower demand for the services offered by Emirates are again associated with high costs. Another major disadvantage is that the company’s main headquarters and operational hub is located in Dubai from where all its flights activities are controlled. It has very few strategic subunits located in other nations. In order to be able to grasp the market of the U.S, it is essential that Emirates establishes a strategic sub unit in the U.S. This would facilitate in undertaking marketing and advertising activities in the North American region and thereby increase the popularity of the company (Fischer and Kamerschen, 2003). Opportunity Emirates, is well known for its high class services and the use of superior technology in providing aviation services. Not every airline has the ability to continuously innovate itself and provide unique services to its customers (Lee, 2003). Emirates, is known in the industry for its innovative and best in class facilities. The company aims to continue providing their customers with the advantages of high quality services through innovation. Much effort is put in place by the administrators of Emirates to develop the knowledge and efficiency of its employees across the globe. Another important opportunity for Emirates is the fact that the company can enter the budget airlines services by making alterations in their operational systems. Efforts towards such an initiative have already begun in the U.S so as to attract travellers who prefer cheaper and affordable fares. Emirates already have a very high reputation in the market of the U.S. Hence, if it enters the sector as an economic flight service provider it is likely to receive high acceptance (Gursoy, Chen and Kim, 2005). Threats Jet Blue, Delta Airlines, Ryanair, Virgin America and Southwest Airlines are the prime competitors of Emirates in the U.S. Most of these airlines are able to provide cheap and economic fares to the consumers in the North America (Gursoy, Chen and Kim, 2005). Since Emirates fares are much higher, the services of the company are not widely preferred, especially by the budget travellers. Also the number of flight options offered by Emirates in the domestic flights section is low. In order to overcome the threats of competition from such rivals, it is essential that Emirates develop strategies so that it can offer cheaper flight services in the U.S. In addition to the cheaper services, it is also essential that Emirates increases their number of flight options in the U.S., both on the domestic and international categories. Another major threat for Emirates is the continuously rising fuel costs. The rise in the fuel costs has made it difficult for even the low costs airlines to maintain low fares. As a result most airlines, both low cost and high end, have increased their flight rates marginally. Hence, Emirates needs to consider the price trends of fuel and accordingly set plans for diversifying their services in the U.S. Considering the fact that fuel prices are continuously rising and even the low cost airlines have increased their fares, Emirates must develop economical and low flight fares which are not only reasonable but at the same time does not lead to loses. It is expected that by enhancing the number of flight options and widening their business in the U.S by developing a strategic business sub unit, Emirates can be successful in enhancing their customer base in the U.S (Lee, 2003). Learning Objective 4: Measurement of Customer Satisfaction Techniques for Assessing Customer Satisfaction Customer satisfaction can be measured using direct and indirect methods. The direct methods involve survey and feedbacks, while the indirect methods include customer loyalty and complaints analysis. Surveys and feedbacks facilitate gaining direct responses from consumers. Surveys may be conducted through questionnaire or interviews. Surveys facilitate gathering information from a large number of respondents in a comparatively short period of time (Cronin, Brady and Hult, 2000). Since the company or the researchers themselves carry out such surveys to measure customer satisfaction, accuracy of data remains high. Questionnaire surveys facilitate easy deduction either qualitatively or by the use of statistical methods. This method is accepted when scientific research is required. Often questionnaire surveys with customers leads to the development of new ideas of improving services. Another significant method which many airlines organization use for measuring customer satisfaction is through obtaining direct feedback on their services. Such feedbacks are mostly taken online when consumers purchase tickets or browse through their services. Small and direct feedbacks are also taken from passengers when they avail different online services. A major disadvantage of the survey technique is that they are costly. Costs are incurred in respect of preparing questionnaires and distribution of the same. Also many at times it cannot be accurately predicted that the respondents are providing true judgements. It is also essential that the questions are formed in an easy way so that respondents do not have to spend much time in analysing them and can provide instant responses. The survey technique is also considered to be a more time consuming process as compared to the interview method. However, conducting interviews with customers are often not feasible in terms of effort although instant responses can be received. As a result, organizations mostly prefer using the questionnaire survey technique for analysing customer satisfaction (Gronholdt, Martensen and Kristensen, 2000). Customer satisfaction can also be analysed indirectly through the number complaints lodged by customers. When the numbers of complaints are large, it can be generally presumed that customers are not satisfied and immediate remedial measures must be taken to reduce customer grievances. Such a technique facilitates understanding the shortcomings of the services offered by the company. However, the technique offers no scope for understanding the level of satisfaction of the consumers in different areas of services. Hence an all round information regarding customer satisfaction cannot be obtained only through questionnaire survey (Fecikova, 2004). Survey A questionnaire survey has been conducted to review the level of satisfaction of the passengers who have availed the services offered by Emirates. The results of the survey are as follows: Questions Strongly agree Agree Neutral Strongly disagree Disagree 1) Does Emirates provide on time services? 15 6 2 4 3 2) Do you consider the prices of emirates as competitive? 11 14 4 1 0 3) Is the security system of Emirates efficient? 13 12 0 0 5 4) Is the ticketing facilities offered by Emirates convenient? 20 5 0 0 5 5) Are the baggage services offered convenient? 16 7 3 1 3 6) Are you satisfied with the in flight services? 21 8 0 0 1 7) Do you consider that the company meets customer complaints in real time? 11 15 0 0 3 Review of the survey From the survey conducted, it can be seen that the respondents are majorly satisfied with the ticketing, baggage and in flight services offered by the company. Emirates offers a range of in flight entertainment facilities and the cabin crew are particularly trained for meeting the needs of passengers in the most hospitable manner. The high quality in flight services is the main reason due to which customers prefer to fly frequently with Emirates. Special attention is given to food, snacks and other types of in flight services offered. Passengers are made to feel homely and their comfort remains a priority with the company. However, the area in which the company lacks efficiency is their pricing and security systems. Emirates also require enhancing the process used in meeting customer grievances. It is seen that most of the customer complaints are not mitigated on time. In terms of the security system, it is seen that few cases of mismanagement had led to breach of regulations for which the company had to deal with legal disputes. Hence, security systems are required to be made more competitive. Reference list Aguirregabiria, V. and Ho, C. Y., 2012. A dynamic oligopoly game of the US airline industry: Estimation and policy experiments. Journal of Econometrics, 168(1), pp. 156-173. Cronin, J. J., Brady, M. K. and Hult, G. T. M., 2000. Assessing the effects of quality, value, and customer satisfaction on consumer behavioral intentions in service environments. Journal of retailing, 76(2), pp. 193-218. Fecikova, I., 2004. An index method for measurement of customer satisfaction. The TQM magazine, 16(1), pp. 57-66. Fischer, T. and Kamerschen, D. R., 2003. Measuring competition in the US airline industry using the Rosse-Panzar test and cross-sectional regression analyses. Journal of Applied Economics, 6(1), pp. 73-93. Fox News, 2015. US tourism industry to see boom in overseas visitors. [online] Available at: [Accessed 17 March 2015]. Gittell, J. H., 2003. The southwest airlines way. New York: McGraw-Hill. Gronholdt, L., Martensen, A. and Kristensen, K., 2000. The relationship between customer satisfaction and loyalty: cross-industry differences. Total Quality Management, 11(4-6), pp. 509-514. Gursoy, D., Chen, M. H. and Kim, H. J., 2005. The US airlines relative positioning based on attributes of service quality. Tourism Management, 26(1), pp. 57-67. Ito, H. and Lee, D., 2003. Low cost carrier growth in the US airline industry: past, present, and future. Brown University Department of Economics Paper, 1(1), pp. 23-56. Lapré, M. A. and Scudder, G. D, 2004. Performance improvement paths in the US airline industry: linking trade‐offs to asset frontiers. Production and Operations Management, 13(2), pp. 123-134. Lee, D., 2003. Concentration and price trends in the US domestic airline industry: 1990–2000. Journal of Air Transport Management, 9(2), pp. 91-101. Mazzeo, M. J., 2003. Competition and service quality in the US airline industry. Review of industrial Organization, 22(4), pp. 275-296. Select USA, 2015. The Travel, Tourism and Hospitality Industry in the United States. [online] Available at: [Accessed 17 March 2015]. Sultan, F. and Simpson Jr, M. C., 2000. International service variants: airline passenger expectations and perceptions of service quality. Journal of Services Marketing, 14(3), pp. 188-216. Read More