Monroe Express Airline
Marketing plan: Monroe Express Airline
Instructions:
The airline is called Monroe Express Airline and it is being launched in NYC airports
I. SITUATION ANALYSIS
This section presents relevant background data on the market, product, competition and distribution systems by providing the reader with a “snapshot” of the company by briefly commenting on all of the following areas:
Environment
1. Social and Cultural Factors: What social/cultural factors affect the acceptance or rejection of the product?
2. Demographics Forces: What demographic forces affect the acceptance or rejection of the product? Will the population shift into or out of the target market? (Again, find secondary data to support conclusions. A good magazine to examine is American Demographics.)
3. Economic and business conditions: What are the economic indicators/conditions in the region in which this product will be distributed? Specify the geographic target area and indicate how the business conditions in that area will affect the acceptance or rejection of the product. Use secondary data as a basis for these projections.
4. State of technology: Is this product high-tech state of the art? Are newer products succeeding older ones frequently? Does technology affect the production of this product, packaging, or distribution? In short, how is technology affecting this product?
5. Laws and Regulations: What current or pending laws or regulations affect the marketing of this product? Consider laws that might affect the product, the packaging, the label, the name, or any element of the marketing mix. Do not simply list the laws and regulations related to the product. Indicate how these laws may affect the company and what the team is doing to prevent violations of the laws or regulations.
6. Financial Climate: How much capital is needed to start this project? Is capital likely to be available to develop and promote this product? Describe. (Assume that the team can obtain a loan of up to $400,000 from a financial institution at the prevailing interest rate.)
The Competition
Describe direct and indirect competitors and their products. How do products compare? Are there any differential advantages over the competition, and vice versa? Describe. Research on the competition would be helpful here.
Strengths, Weaknesses, Opportunity and Threats Analysis (SWOT)
This section identifies the main external threats and opportunities that might impact the product. Its purpose is to make the manager anticipate important developments that can have an impact on the firm. List as many threats and opportunities as can be imagined.
Strengths: Does the team possess any special skills or experience that will foster the development, marketing, or management of this product? Explain.
Weaknesses: Does the team possess any significant weaknesses special that will impede the development, marketing, or management of this product? Explain.
Opportunities: are areas of buyer needs in which a company can perform profitably. Opportunities can be classified according to their attractiveness and their success probability. The company’s success probability depends on whether its business strengths not only match the key success requirements for operating in the target market but also exceed those of its competitors. Mere competence does not constitute a competitive advantage. The best performing company will be the one that can generate the greatest customer value and sustain it over time.
Threats: are challenges posed by an unfavorable trend or development that, in the absence of defensive marketing action, would lead to decline in sales or profits. Threats should be classified according to their seriousness and probability of occurrence.
Major threats can seriously hurt the firm and have a high probability of occurrence. To deal with these threats, the company needs to prepare contingency plans that spell out what changes the company can make before or during the threat’s occurrence.
Minor threats are those that are not serious and do not have a high probability of occurrences. These can be ignored.
Real threats are those either serious or have a high probability of occurring, but not both. This category of threat does not need contingency plans but does need to be monitored in case they grow into major threats.
II. Appendices
Solution
Marketing plan: Monroe Express Airline
Introduction
The report below details an analysis of Monroe Express airlines, a domestic airline operator which is to be launched at the NYC airports. It comprises of an analysis of the external factors affecting the company and will attempt to recommend whether the launch of the company is a
Situation analysis
- Social, cultural and demographic factors
Categorizing generations in the US according to the years of birth provides a great insight into the changing trend of air travel. The increased demand for air travel over the recent years is a clear indication of the traveling preferences among the latest US generation. Cederholm, (2014) categorizes the US population as follows: Baby boomers (1946-1964), generation X (1965-1979), Millenials –Generation Y (1980-1999) and the Z generation which was born after the year 2000. According to a Boston Consulting Group study on millennials, it was established that they spent 13% more than non-millennials per ticket, were more likely to pay for additional amenities such as wifi, inflight entertainment etc, were more likely to pay attention to promotional services such as discounts, low cost carriers etc and were also likely to employ technology such as online bookings. This information is important for Monroe Express Airlines as it helps in planning their target market, as well as which segment would lead to higher returns on investments.
- Economic and business conditions
Just like any other industry, the airline business is strongly impacted by the economic cycles. Monroe Airline express expects to benefit from the stable US economic environment. Since airline performance is related to economic growth, the stability of the economy is likely to inspire business, industrial and international trade confidence in the US market, which will positively impact on the airline business. In the recent past, a strong US economy supported revenue growth in most of the major US airlines such as Delta, American, United, Southwest and JetBlue airlines. The expected continuity in this trend is a positive indicator that time is ripe for other players such as Monroe Express Airlines to enter the market
- Technology
According to Stalnaker, Usman, and Taylor,(2016), technological advancements have become a driving factor in enhancing airline efficiency. Monroe Express Airline expects to leverage on information technology solutions to reduce costs and improve efficiency in operations. This will be done in areas such as advanced engine technology, mobile technology etc so as to increase connectivity and enhance travelers experience. Other areas that the company expects to benefit from technology includes fuel consumption, which currently accounts for 30% of airline operating expenses.
- Laws and regulations
The airline industry is widely affected by regulations, laws, and restrictions that relate to international trade, competition, tax policies, disease outbreaks such as bird flu and Ebola, among others. While the recent consolidation of airlines such as the US airways merger with American West, Northwest with Delta, United with Continental, AirTrans with Southwest among others account for over 90% of the US airline market, thus threatening the entry of new airlines, the US department of transportation is closely monitoring the competitive landscape with the aim of preventing monopolies and protecting the interests of consumers.
- Financial climate
The airline business is extremely capital intensive, due to the high costs of purchasing or chartering airplanes. The regulatory requirements, initial working capital with regard to fuel, infrastructure etc require substantive investment and therefore the loan capital of $400,000 may be inadequate. Fortunately, there are many methods of financing such projects such as leasing of aircraft, etc.
Competition
The main actors in the US airline business include Delta Airlines, American Airlines, JetBlue airlines, Southwest airlines among others. Collectively, these airlines account for 90% of the US airline market. However, as noted above, the US airline industry is still strong and boasts of immense opportunity even for new players, given the increased airline travel, strong economic indicators and a growing millennial population that prefers to travel by air (Cook, 1996). Monroe Express Airlines will leverage on technology and package itself as a low cost, convenient and comfortable airline in order to capture a share of the market.
SWOT analysis Strengths
Monroe Express airlines boast of several strengths that it hopes to exploit to gain a competitive edge over existing operators. One of the key strengths of this airline is excellence in customer service. As an area that the management of the company feel has greatly been ignored by the existing airlines, the company expects to bring a revolution is customer service experience in a way that has not been witnessed in the US airline industry. The company banks on its youthful and knowledgeable staff extend excellent customer service experience to its customers.
Focus on the millennia’s market is expected to drive revenues. As research has indicated, the millennia’s spent more per ticket and are also likely to fly more, Monroe Express Airlines focus on this target market is expected to yield great results.
The company expects to derive significant competitive strength in focusing on low-cost flights and targeting increased efficiency in operations so as to reduce fares and offer great value to customers. Adoption of technology in marketing and operations will not only reduce costs but will also endear the airline to the consumers who will be attracted by convenience in booking and travel.
Weaknesses
As a new airline trying to compete with well-established players, Monroe Express Airlines should brace itself for extreme competition. Due to the fact that the other players are not only large and well established, they also a proven track record of efficiency, safety, and reliability, issues that Monroe Express Airlines will struggle with, at least for a given time.
The limitation in capital outlay will prove a significant weakness when the company executes the business plan. US$ 400,000 will be hardly enough, as the airline business is extremely capital intensive as Monroe Express Airlines will come to discover. Competing with airline giants with billions of dollars in retained earnings while armed with only less than half a million dollars will take a miracle.
Opportunities
As noted above, the last few years have witnessed increased use of air travel as a means of transport and analysts predict that this trend will continue. This presents a significant opportunity even for new entrants to get their share of the pie. The growth of the Hispanic population and the increased use of air transport by the millennia’s is a clear indication of the untapped potential that exists in the airline business.
Increased use of technology in airline production and operation presents a great opportunity for new entrants such as Monroe Express Airlines to manage their costs. Use of online booking, internet marketing, and ticketing, modern plane manufacturing techniques etc. increase efficiency while reducing running costs thereby increasing the bottom-line.
Threats
The main threat to the establishment and thriving of Monroe Express Airlines is the competition from well-established airlines that ply same route and destinations such as South West Airlines, Delta, and American Airlines. These are industry leaders with the ability to ward off any competition due to their financial muscle and market share.
Inadequate capital also poses a significant challenge to the ability of Monroe Airlines to operate. The projected borrowing of $400,000 may not be sufficient to set up and operate a commercial airline that expects to compete on equal footing with established giants. The ability of the company to raise further capital may also be hindered by the fact that the company is still new, and probably without adequate collateral. To this extent, the company may have to consider other sources of financing so as to support the establishment and successful launch of the airline.
Conclusion and recommendations
Monroe Express airlines have a great opportunity for success since the economy is vibrant and all external factors are favorable for the airline business. There is also a great market niche that can be exploited as long as the company comes up with great marketing strategies. The company should leverage its strengths to exploit the available opportunities while managing its weaknesses and threats if its to make an impact in the US airline market.
References
Cederholm, T (2014) Overview: External factors that influence the airline industry. Retrieved from: http://markTetrealist.com/2014/09/must-know-external-factors-influencing-airline-industry/
Cook, G.N (1996) A Review of History, Structure, and Competition in the U.S. Airline Industry: Journal of Aviation/Aerospace Education & Research
Stalnaker,T., Usman,K and Taylor,A (2016) Airline Economic Analysis.retrieved from: http://www.oliverwyman.com/content/dam/oliver-wyman/global/en/2016/jan/oliver-wyman-airline-economic-analysis-2015-2016.pdf