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Title: Group work (1)


1
GROUP ASSIGNMENT GROUP 0005D  MARKETING
MANAGEMENT  (BUS 5112-01- AY 2023-
T1) UNIVERSITY OF THE PEOPLE INSTRUCTOR DR.
SANTHOSH KUMAR 19th October, 2022.
2
Topic
  • Customer loyalty
  • Prepared by
  • AUNG ZAW MOE IFEYINWA OKWUOSA

3
introduction
  • Customer loyalty is the act of choosing one
    companys products and services consistently over
    its competitors (Chambers, 2022)
  • Customer loyalty is a customer's willingness to
    repeatedly return to a company to conduct
    business (Bernazzani, 2021).
  • Customer loyalty is a customers likelihood of
    doing repeat business with you (Peek, 2022).
  • Customer loyalty simply means the difference
    between a one-time sale and a customer who comes
    back to you potentially for a long period of
    time.
  • There are several reasons why a customer will
    always return and these are based on some factors
    such as customer satisfaction, trust, sales
    promotion, price of a product or services etc.

4
objectives
  • This presentation covers the following concepts
    below using AIR KBZ as case study
  • Analyze marketing and implementation strategy.
  • Explain importance of CUSTOMER Retention.
  • Factors that determine prices of Airfares
  • Strategic benefits of brand loyalty that seem
    appropriate.
  • Key factors that influence customer loyalty after
    the first purchase.

5
Analyzing current marketing and implementation
strategy
  • The airline market can be divided into three
    parts
  • Airline company
  • Distributors
  • Customers
  • Distributors
  • These are all Third-party Companies that resell
    Travel Products to either the customers (OTAS),
    Or to Other Distributors (WHOLESALERS).
    Distribution In Travel Is Fully Controlled By
    Global Distribution Systems (GDSS) These are
    International Companies that Established An
    Oligopoly On The Travel Market, GDSS are Central
    Point Of Connection Between Airlines And
    Distributors.
  • CUSTOMERS
  • These are buyers of travel products.
    Traditionally these travelers are divided into
    two segments. They are
  • LEISURE AND
  • BUSINESS

6
  • LEISURE TRAVELERS
  • These Are The Largest Channel Of Sales. The
    Leisure Traveler Segment Is Budget-conscious, So
    Customers Are Primarily Interested In Optimal
    Pricing.
  • BUSINESS/CORPORATE TRAVELERS
  • These Are Individuals Or A Group People, That
    Travel Mainly For Business. Their Main Priority
    Is In getting Optimal Route Choice And Comfort,
    So High Service Class Is Preferred. Corporate
    travelers occupy A Much Smaller Part Of Flights,
    But They Bring More Total Revenue Compared To
    Leisure Travel, Especially In Traditional
    Airlines That Arent Practicing Low-cost
    Approaches.
  • Airlines have lots of opportunities to target
    different customer segments through direct and
    indirect channels. Here are some key airline
    marketing strategies
  • Considering that an airline ticket is a tangible
    thing (at least a paper one), the rest of the
    trip is service.
  • The price offer is always dynamic depending on
    the current demand, and how long before the
    departure tickets are sold.
  • A flight destination and country is a marketing
    opportunity for the carrier
  • The target market are travelers. Therefore, how
    airlines sell their flights make a big difference
    on direct channel (eg. Reservation on an airline
    website/app), or via a distributor. Direct sales
    bring an airline a lot of benefits, like customer
    data and the ability to market products using
    this data. Distribution using online travel
    agencies and global distribution systems are
    entirely different because, commissions are paid
    as a percent of a fare/service price.

7
Challenges facing Airline Marketing strategies.
  • Air line business a services oriented
    organization and it cost a lot of money to
    advertise them since you cant touch, taste, or
    smell them, nor can they be explained in two
    words
  • Tickets and ancillaries have expiry date.
  • The price on the same ticket fluctuates due to
    various factors, so there is no constant value
    proposed to the user.
  • Airlines operate across the globe and that
    presents difficulties because different countries
    have their different policy regulations so
    carriers appear to be vulnerable to political,
    economic, geosocial, and climate factors, all of
    which may stand as an obstacle for the airline to
    plan marketing campaigns and advertise their
    products.
  • Tickets are often sold indirectly, airlines are
    cut off from the customer data that stays in the
    hands of these middlemen due to GDS oligopoly and
    technological anxiety of distributors.
  • CURRENT MARKETING STRATEGY OF AIR KBZ
  • Air KBZ and MAI had signed codeshare partnership
    and appointed a young celebrity pop-star as a
    brand ambassador since 2021.
  • Air KBZ uses integrated marketing communication
    (IMC) approaches via various channels such as
    magazine, FM radios, and social media platforms
    namely Facebook, Twitter, Instagram and LinkedIn.
  • Air KBZ maintained its famous customer services.
    It also has no record of aviation accidents
    compared to other competitors.
  • A mobile apps was created for both App store and
    Google play and it is a nice way to engage with
    both existing and potential customers. Online the
    launched of the company for ticketing services
    are made available with the use of VISA, Master,
    JCB, Union Pay, MPU mobile payments options.
  • Product life cycle (PCL) of Air KBZ is considered
    as growing stage as it has extended its
    destinations, fleet size and employees within the
    last ten years.
  • Word of mouth customer experience Air KBZ is
    famous for superior in-flight services right
    time departure and arrival as compared to other
    competitors and it has special promotional
    campaigns and offers for its customers.
    Source (Air KBZ, 2021)

8
Company Background of Air KBZ
  • Air KBZ also known as Air Kanbawza is a domestic
    airline, a privately-owned company of Myanmar and
    established in June 2010. Domestic flight service
    has launched since April 2011.
  • Currently Air KBZ has 15 destinations of domestic
    routes with total fleet size of 10 (ATR72- 600)
    aircrafts where over 100 employees are involved
    in the day to day operational activities.
  • Air KBZ aims to have more than 20 destinations in
    near future to various commercial centers of
    Myanmar (Air KBZ, 2021).
  • Although the company does not officially disclose
    its revenue, business experts estimated that the
    annual revenue of Air KBZ may be around 7
    Million (RocketReach, 2022).
  • COMPETITORS
  • There are 5 other airlines operating in the
    domestic market in Myanmar including one
    State-owned Enterprise named Myanmar National
    Airline. Among domestic competitors, Air KBZ has
    formed a codeshare partnership and Customer
    Loyalty Program with Myanmar Airway International
    (MAI) (Yangon Aerodrome, 2022)

9
VISION STATEMENT To become the most renown
commercial airline in Myanmar. MISSION
STATEMENT To cater to the demands of the industry
by providing excellent customer service through
safety comfort, hospitality and enriching
employees. SERVICE PHILOSOPHY IN AIR KBZ AIR KBZ
intends to interact actively with its customers
to create a superior value of service. Therefore,
it focuses on both employees and customers by
establishing a service-profit chain culture,
which aims to Enhance internal service
quality Produce greater service value Ensure
customer loyalty Create a healthy environment for
growth Source (Air KBZ, 2021).
10
customer retention
  • Customer retention is the ability of a brand to
    keep the customer to be subscribed or come back
    for repeated purchase of a product or service
    over a period of time, without switching to
    competitors (smith, 2022).
  • Importance of customer retention
  • Acquiring a new client is five to twenty-five
    times higher costing than retaining a repeated
    customer (gallo, 2014).
  • Research also pointed out that the chances of
    successful sales rate to a repeated customer will
    be 60 to 70 whereas that of a new customer will
    be only 5 to 20 (Patel, 2022).
  • It is also important to note that if a company
    increase its customer retention rate by 5 there
    will be the increased profitability from 25 to
    95 (Patel, 2022).
  • customer retention strategies used by air KBZ
  • Sky smile program was launched since 2021 in
    collaboration with codeshare partner, MAI (air
    KBZ, 2021). The program is mainly based on the
    number of miles travelled (points) with the
    following validity period
  • Membership tier points 2 years based on an
    accumulated basis
  • Award mileage 2 years but on a rolling basis,
    based on actual accruals/redemptions
  • Membership tier 3 categories based on mileage
    (jade-0 to 5K ruby- 5K to 10K and diamond- over
    10K)
  • Customers can earn miles, redeem miles and buy
    miles as per terms and conditions.
  • Partner privilege offers to shop with 35 business
    partners with up to 40 discount offer
  • (1.) 17 FB outlets (2.) 10 life style and
    shopping facilities (3.) 1 airport lounge service
    (4.) 3 health and wellness facilities (5.) 4
    hotels

11
Factors that determine price of airfares
  • Airlines try to maximize profit
  • Airline carriers are aware that it is inefficient
    for an aircraft to take off almost empty and it
    can also be said that it is inefficient for all
    the seats in an aircraft to be fully occupied at
    low cost per seat, airline revenue managers have
    devised a balancing act between finding the
    highest price and filling as many seats as
    possible. To reach this balance airlines must
    first understand their customers. Carriers track
    traveler purchasing behavior, for instance, there
    are leisure travelers and there are business
    travelers, the leisure travelers are sensitive to
    prices and therefore plan their trips in advance
    like a few months before departure, they occupy
    the most seats in an aircraft, while business
    travelers need more flexibility and usually book
    a few days before departure. With all of these in
    mind, Airlines sell cheaper tickets to leisure
    travelers and earlier. This helps them to fill
    more seats. This is why airfare remain about the
    same for months before departure then, it starts
    growing in multiple distinct steps . These steps
    are caused by advance purchase discount
    requirements. If a traveler fails to purchase
    tickets at least two week before departure, the
    minimum fare will get considerably higher.
  • REACTING TO DEMAND
  • If there are about 50 seats on an aircraft, even
    though these seats belong to the same class and
    airline doesnt want to sell all of them at the
    lowest fare nor at the highest cost. Carriers
    divide all fifty seats into multiple fare groups
    or buckets. For instance, there will be only 5
    seats at the lowest fare with minimum services
    and smallest bag allowances, once the 5 seats are
    sold out, the fare bucket is closed. You can no
    longer purchase a seat at that bargain basement
    price but forty five seats with more services
    and bag allowances are still available at higher
    cost in other buckets. They start filling up and
    then gradually close.
  • Advance purchase discounts and fare bucket motion
    are the two main drivers that complement each
    other and cause most of the price changes at
    airlines because demand dictates pricing.

12
  • FACTORS THAT DETERMINE PRICE OF AIRFARES CONTD
  • EXTERNAL CONDITIONS
  • The fares within buckets can also change due to
    external conditions.
  • For instance, if the cost of fuel increases, it
    may cause the entire base fare to rise as well.
  • b. Seasonal Trends
  • Airlines also consider seasonal trends like if
    there are more people who fly for summer vacation
    to some destinations eg. Super bowl or a rock
    music festival, it will trigger airline revenue
    managers to manually increase fares as higher
    demand is anticipated for these dates.
  • c. New flight entry
  • Finally, if some low cost airline or
    competitors opens a new flight, the competing
    flight will get cheaper, even at traditional
    airlines. This is how dynamic pricing at airlines
    works today.
  • It also has a video done by (altexsoft, 2019).
    Dynamic pricing in airline industry why flight
    fares constantly change.
  • " href"https//www.youtube.com/watch?vjxKg65AimS
    It75s" class"replaced-iframe"

13
Strategic benefits of brand loyalty
  • Improved customer retention and referrals
  • Loyalty programs reward repeat customers with
    exclusive offers and personalized treatment, such
    as coupons and birthday gift cards, which drive
    customer retention. Loyal customers often tell
    their friends and family about the program's
    special offers, which brings in new referrals.
  • More customer data
  • Once a customer joins a loyalty program,
    marketing teams can track their preferences,
    buying habits and interests. In fact, most
    Americans are willing to trade personal
    information for loyalty program perks, according
    to Forrester research. Organizations can use this
    data to personalize outreach and customize
    monthly offers to different customer personas.
  • Use the customer's voice
  • Rather than develop many new marketing campaigns,
    marketers can rely on their rewards program
    members to drive more business. Organizations can
    ask customers to review the company or program on
    third-party sites. Successful loyalty programs
    often delight customers so much that they feel
    compelled to share their experiences on social
    media, which can bring in new business and
    loyalty members.
  • Cost savings
  • Although companies must spend money on the
    loyalty program benefits, management and
    marketing, it costs less than acquiring new
    customers to replace those who went to a
    competitor.

14
Key factors that influence customer loyalty after
initial flying experience.
  • Service
  • From the moment a traveler purchases a ticket,
    the airline begins rendering its service to the
    customer.
  • Activities like
  • Change of travel date to cancellation of flight
    or refund of money paid for airfare and how soon
    money was refunded
  • Ticket attendants at the airport Where customers
    pick up their boarding pass how quick they were
    in issuing it, how their luggage was handled.
  • The waiting area (lounge) Customers take note
    of how clean the place is they also notice how
    new or broken the furniture is.
  • Punctuality Customers notice how punctual the
    time of departure is, if the flight took of at
    the exact time or not.
  • The moment they board the flight, is the plane an
    old aircraft or is it a new one? what kind of
    aircraft? Is it an Airbus or a Boeing?
  • Customers also consider if the service that was
    rendered by the host/ hostess on board (as it
    friendly or cold?).
  • When the flight arrives its destination Some
    passengers are good at checking flight time on
    arrival to their destination How good was the
    pilot in landing the plane and announcing weather
    and flight altitude.
  • Luggage Pick up Did they pack their luggage in
    the same aircraft as the one that they travelled
    in? Is their luggage missing? Is the airline
    going to pay for a lost luggage? Etc.
  • All of these activities that took place the whole
    time makes up a customer experience with flying
    the carrier and if it was satisfactory to the
    customer, there will be a repeat purchase of
    airfare and if at any point in the whole of these
    process, customer encountered a set back they
    will be reluctant to make another purchase the
    next time they consider travelling and purchasing
    an air fare.
  • TRUST Many travelers also look at air safety
    when making a decision, if the flight has a low
    to no record of accidents, customers stick with
    that Airline.

15
Recommendation for customer loyalty implementation
  • Put a free travel option in the current customer
    loyalty program because people consider free
    travel as a real reward and it is a highly
    aspirational award for customers (Boer, 2018).
  • Expand partnership with diverse business partners
    across commercial centers in the form of
    cross-promotion marketing so that customers can
    earn points while spending for shopping,
    restaurant dining, taxi rides, health facilities,
    and daily purchases such as fuels and foods
    (principles of marketing, 2015).
  • Develop a partnership with financial or
    card-issuing organization as a form of
    co-branding debit or credit cards (altexsoft,
    2022).
  • Include access to first tract service for loyal
    customers to meet their expectations (altexsoft,
    2022).
  • Add priority boarding service to the current
    program so that high value customer will love the
    privilege of the program (saxon spickenreuther,
    2018).
  • The company should reconsider current mileage
    policy based on numbers of flying miles and
    provide bonus miles with targeted threshold
    limits so that it can attract more to loyal
    customers to fly more.
  • Consider a special price offering for members of
    loyalty program during the time of economic
    hardship.
  • Promote selling miles to customers so that it
    will not only make passengers more loyal but also
    generate higher income stream for the airline
    (saxon spickenreuther, 2018).
  • Add extra bonus program for high frequency
    travelers to appeal higher use of air travel for
    loyal customers.
  • Consider the extension of expiry miles for loyal
    customers as a better breakage management.
    Currently the program set a validity of 2 years
    and it should be extended more than 2 years so
    that customers can redeem the miles without
    breakage (altexsoft, 2022) (saxon
    spickenreuther, 2018).

16
conclusion
  • The Airline business is complicated but being
    able to understanding the marketing strategy and
    how to satisfy the expectations of the two
    segments of travelers (customer) identified is
    what keeps the Airline in Business.
  • Airline products such as air tickets are sold to
    customers in consideration with studying their
    purchase behavior, if it doesnt put both segment
    of travelers into consideration, it loses out on
    successful business transaction knowing fully
    well that the leisure travelers are those who
    fill up the most seats.
  • The satisfaction that customers get from the
    consideration in making the flight fares fit
    every member of the society using pricing and
    making service available to every segment of
    customers is a strategy for retention and this
    results in customer Loyalty.
  • Customers who are satisfied with a An Airlines
    service will return to make another trip and
    continuous transaction results to customer
    loyalty and retention.
  • Many airlines now use miles to calculate the
    level of loyalty plan each customer enjoys and
    some even go as far as giving out gift cards that
    can be used to make purchases like buy coffee at
    a café for shopping to buy clothing items or
    groceries.
  • Loyalty helps an organization save cost of
    getting new customers because retaining the old
    ones gives a company more sales and through
    referrals from existing customer, new customers
    patronize the business.

17
references
  • Air KBZ. (2021). About Us. Airkbz.com
  • https//www.Airkbz.com.Mm/Air-kbz-
    experience/About-air-kbz/About-us
  • Altexsoft. (2019, August 27) Dynamic pricing in
    airline industry why flight fares constantly
    change. Altesoft.com
  • https//www.youtube.com/watch?vj
    xKg65AimSIt75s
  • Altexsoft. (2022, January 28). Airline Marketing
    and Advertising Use Cases from American Airlines,
    Ryanair, Air France, and Others. Altesoft.com
    https//www.altexsoft.com/blog/airline-marketing-a
    dvertising/
  • Altexsoft. (2022, May 20). Airline Loyalty
    Programs Main Aspects, Types, And A
    Technological Perspective. Altexsoft.com
  • https//www.Altexsoft.Com/Blog/Ai
    rline-loyalty-program/
  • Bernazzani, S. (2021, January 12). Customer
    Loyalty. Hubspot blog
  • https//blog.hubspot.com/service/
    customer-loyalty
  • Boer, E. R. (2018). Strategies In Airline
    Loyalty Frequent Flyer Programs. Singapore FFP
    Investment Advisory Pte. Ltd.
  • Chun, S. Y., Boer, E. D. (2021, April 02). How
    Loyalty Programs Are Saving Airlines. (H. B.
    Review, Producer) Hrb.org
  • https//Hbr.org/2021/04/How-loyal
    ty-programs-are-saving-airlines
  • Gallo, A. (2014, October 29). The Value Of
    Keeping The Right Customers. Hbr.org
  • https//Hbr.Org/2014/10/The-value
    -of-keeping-the-right-customers

18
  • Miller, G. (2021). Importance of Airline Loyalty
    Programs In a Post-covid World. (Annex Cloud)
    Annexcloud.com
  • https//www.Annexcloud.com/Blog/A
    irline-loyalty-programs/
  • Patel, S. (2022, March 16). 15 Effective Customer
    Retention Strategies From Top Brands.
    Revechat.com
  • https//www.Revechat.com/Blog/Cust
    omer-retention-strategies
  • Peek, S. (2022, August 3). Build customer
    loyalty. Business News Daily.com
  • https//www.businessnewsdaily.com/
    16017-build-customer-loyalty.html
  • Principles of Marketing. (2015). University of
    Minnesota Libraries Publishing.
  • https//doi.org/10.24926/8668.1901
    (Original work published 2010)
  • RocketReach. (2022). Air KBZ Ltd. Information.
    rocketreach.co
  • https//rocketreach.co/air-kbz-ltd-
    profile_b445e474fa475fa8
  • Saxon, S., Spickenreuther, T. (2018, October
    10). Miles ahead How to improve airline
    customer-loyalty programs. mckinsey.com
  • https//www.mckinsey.com/industries
    /travel-logistics-and-infrastructure/our-insights/
    miles-ahead-how-to-improve-airline-customer-loyalt
    y-programs
  • Smith, L. (2022, June 03). 13 Customer Retention
    Strategies to Earn Loyalty. wordstream.com
  • https//www.wordstream.com/blog/ws/
    2022/03/09/customer-retention-strategies
  • Yangon Aerodrome. (2022). Airline Directory.
    Yangon International Airport
  • https//yangonairport.aero/index.ph
    p/en/flight-information/airline-directory
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