spice jet lcc
TRANSCRIPT
-
8/9/2019 Spice Jet LCC
1/33
APROJECT ON
EFFICIENCY MANAGEMENTAT SPICE JET
Submitted To:Ms. Subhra Behl
Submitted By:Deepak Agarwal
Jagannath Dash
Manisha Gupta
Nitish Kumar
Poonam Yadav
Praveer Saini
-
8/9/2019 Spice Jet LCC
2/33
Plan Outline
1. Executive Summary2. Objectives3. Introduction4. Marketing Audit
Market Trends
Key Factor Affecting Aviation Industry
5. Competitors6. Situation Analysis
PEST Analysis
Porter Five Forces Analysis7. Competitive AnalysisValue Chain Analysis
8. STP9. Marketing Mix10. Key Issues & Opportunities
SWOT AnalysisTOWS Analysis
11.Marketing Strategy for chosen optionsCorporate and SBUs StrategyFunctional Strategy
12.Overall Competitive Strategy & Action PlanValue Addition to Customer
Perceptual Mapping
Branding Strategy
Blueprinting
Moments of Truth
Cause & Effect Chart for Airline Departure Delays
13.SERVQUAL Analysis14.Conclusion
-
8/9/2019 Spice Jet LCC
3/33
Executive Summary:In this project we have studied the cost efficiency management at Spice jet. The various
marketing strategies followed by it like cost focus, focusing to new market segment,
follower strategy, visionary strategy etc. We have also quantified the customer satisfaction
level by determining the service quality of Spice jet using SERVQUAL Method.
OBJECTIVESTo find out the various factor of strategy which makes spice jet more efficient?
To find out level of customer satisfaction of spice jet.
INTRODUCTIONSpice Jet is a low-cost airline based in Delhi, India. It began service in May 2005 and by2008, it was India's second-largest low-cost airline in terms of market share. Earlier it was
known as Royal Airways. And this was the first private company which had kept their step
into Indian Aviation Sector. Spice Jet marked its entry in service with Rs. 99 fares for the
first 99 days, with 9,000 seats available at this rate.
It was voted as the best low-cost airline in South Asia and Central Asia region bySkytraxin2007. Spice jet had its own 11 Boeing 737 to 800 aircraft. And currently it is operating 83flights daily which are connected to the 14 destination and it is highest in India for the
utilization of aircraft.
In the year 2008 the Spice jet is awarded as emerging company of the year. It is ranked
among the top 10 airlines in Asia.
It had enjoyed the market share of 8%. Rising fuel costs and increasing competition
resulted in Spice Jet posting a loss in the first quarter of 2008-09.
In August 2008, Spice Jet announced plans to raise US$100 million through foreign
investment in terms of market share. Spice Jetis one of Indias leading LCCs with a marketshare of 10%; during the past three years of its operations, the airline has flown more than
6 mn passengers. Currently Delhi-centric, the airline covers 17 sectors; Spice Jet plans to
attain a strong pan-India presence by expanding into Tier II cities such as Indore, Raipur,
Bhubaneswar, and Trivandrum, amongst others.
http://en.wikipedia.org/wiki/Low-cost_airlinehttp://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Rupeehttp://en.wikipedia.org/wiki/South_Asiahttp://en.wikipedia.org/wiki/Central_Asiahttp://en.wikipedia.org/wiki/Skytraxhttp://en.wikipedia.org/wiki/Skytraxhttp://en.wikipedia.org/wiki/Skytraxhttp://en.wikipedia.org/wiki/US$http://en.wikipedia.org/wiki/US$http://en.wikipedia.org/wiki/Skytraxhttp://en.wikipedia.org/wiki/Central_Asiahttp://en.wikipedia.org/wiki/South_Asiahttp://en.wikipedia.org/wiki/Rupeehttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Low-cost_airline -
8/9/2019 Spice Jet LCC
4/33
Spicejet operates 20 Boeing 737-800/900ER aircraft and has a 12% share of the Indian
market. In 2010, it was ranked India's No. 1 low cost airline in a nation wide survey.
Promoted by - Ajay Singh and the Kansagra family.Headquarters -Delhi, IndiaSecondary Hubs - MumbaiDestinations - 18Key executives - Sanjay Aggarwal (CEO), J.S. Dhillon (Exec. VP), Samyukth Shridharan(CCO)Fleet Size 20 (+9 orders)Website -www.spicejet.com
MARKETING AUDITMarket Trends Existing Market
o India - Fastest growing tourism destinationso Robust economic growth, higher disposable incomes, and growth in tourism
& business travel, are the major demand drivers.o Low-cost carriers (LCCs)
Resulted in middle-income people and self-employed shifting from premium classtravel in trains to air travel. Domestic air passengers grew at a 38.5% with 35.3million passengers flying in FY07 against 25.5 million in FY06. The Centre for AsiaPacific Aviation (CAPA) predicts that the domestic traffic would grow at 25%-30%annually until 2010* *Recent slump due to high ATF prices
Market Trends Emerging Marketo Well-suited to emerging markets of Asia - many first time travelers as well as
budget conscious short-stay holiday takers.o Different Traveler tribes which may emerge in the next 10-15 years, and that
have the potential to transform how the airline industry delivers productsand services
o Global Executives
http://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Indiahttp://www.spicejet.com/http://www.spicejet.com/http://www.spicejet.com/http://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Delhi -
8/9/2019 Spice Jet LCC
5/33
o Elite business travelers that want a private jet type experience,predominantly from emerging economic markets such as Brazil, Russia, Indiaand China.
o Active Seniors:o The wealthy, healthy older travelers, aged between 50 and 75, that will
continue to travel for cultural and leisure pursuits.o Cosmopolitan Commuters:o Those that live in one city but work in another and will use air travel to
commute.
Key factors affecting domestic aviation industry in 2008-09:i. Aviation Turbine Fuelii. USD Exchange Rateiii. Faresiv. Economic Slowdown
Major players in the Industry:
Launch: 1st August 1953Current Fleet: 91Variable fare, all frills.
Flies to over 80
destinations over the
world. Largest airlines in
India.
Launch: 1st August1953
Variable fare, all frills.
Merged with Indian
Airlines in 2007.
Launch: May 2005Current Fleet: 105Variable fare, all frills. Its
economy class
subsidiary Jetlite. Flies to
over 62 destinations
both domestic &
international.
Launch: August 03Low, variable fare, no
frills. Only EconomyClass. Mix of metro and
cross-country
destinations.
Was acquired by
Kingfisher and later
renamed Kingfisher Red
Launch: May 2005Current Fleet: 94
Variable fare, all frills.
Single Kingfisher class.
Premium in-flight
service. Only metro
destinations.
Launch: May 2005Current Fleet: 21
Low, variable fare, but
not cheap quality
service. Low frills, small
complimentary snack.
-
8/9/2019 Spice Jet LCC
6/33
Situational AnalysisPEST ANALYSIS
PoliticalOpen Sky Policy
Deregulations in different spheres
National and airport security
FDI : 49 % in Airlines, 100 % in airports
Freedom to determine faresUp gradation of airport infrastructure
EconomicIncome for salaried class up : 14 to 16 %
GDP growth of 8 % - 9 % in last 5 years
Nil Import tariff on Aircraft
Seat inventory Pricing
Tourism industry growth :14 %in 2005
SocialIncreasing travelling lifestyles
Increasing business travelling
Launch: August 2005Proposed Fleet: 8USP: Low fare, all frills.
Only Business Class at
less than economy fares.
Mostly non-metros.
Focus South India.
Launch: November2005
Proposed Fleet:19Low-cost, low frill
airline. Mix of metro
and cross-country
destinations.
Launch: October 2005Current Fleet: 17USP: Low-cost, low-frill
airline. Mix of metro and
small cities. Initial focus
to be western India.
-
8/9/2019 Spice Jet LCC
7/33
Growing Middle classo 1993-1999 : 39.5 m to 56.7 m householdso 2005 : 300 mo 2010 : 400 m (Estimated)
LCC as mass Transport mediumAir travel: from luxury towards necessity
TechnologicalModernization & Privatization of Airports
Modern Technology for efficient handling of aircraft,
passenger and cargo
IT revolution
Online Ticketing
Best price shopping services
PORTERS FIVE FORCE ANALYSISCompetitive Rivalry within the Industry:
o Competitive and over-crowded market,o Commoditized nature of product - Aggressive pricing, efficient distribution
and innovative communication mixeso Differentiation eg., narrow versus wide customer baseo regional towns versus main citieso Competition with conventional carriers - With low fares but a higher level of
service (more frills and main airport servicing) they are a big threat.o Consolidation in the market - Mergers, acquisitions and alliances (eg.,
Kingfisher Airlines acquired Air Deccan, Jet Airways acquired Air Sahara andmerger of Air India with Indian Airlines)
o Net Impact HIGHThreats of new entrants:
o Entry Barrierso High start up costs capital intensive industryo Over-crowded low cost airline market (too many budget airlines in the
Indian skies)o Dearth of aviation professionals (pilots, aviation engineers)o Limited infrastructure facilities
-
8/9/2019 Spice Jet LCC
8/33
o Price wars against newcomers.o Exit Barrierso Long gestation periodo Net Impact - LOW
Bargaining power of suppliers:o No control over ATF (Aviation Turbine fuel) priceso Negotiate favourable deals with most of their suppliers ( eg., Airline
operators do not have their own catering department for on-flightconsumables. )
o Leased aircraftso Specialized spare parts and limited number of manufacturerso Net Impact - HIGH
Bargaining power of customers:o Price dominated short-haul market with little or no product differentiation.o Low switching costso Price conscious consumers - little or no customer loyalty.o Net Impact - HIGH
Threats of substitutes:o Videoconferencing and other telecommunication technologieso Super fast trains for short haul flightso Net Impact LOW
COMPETITIVE ANALYSIS:VALUE CHAINValue chain analysis, the company is split into primary and support activities. Primary activities are
those that are related with production, while support activities are those that provide the
background necessary for the effectiveness and efficiency of the firm, such as HRM. The primary
and secondary activities of the firm are discussed in detail below.
Primary activities-The primary activities of the company include the following-
Inbound logistics:-
-
8/9/2019 Spice Jet LCC
9/33
These are the activities concerned with receiving the materials from suppliers, storing these externally
sourced materials, and handling them within the firm.
Buying the plans
Buying the software and other supportive system.
Operations-These are the activities related to the production of products and services. This area can be split into more
departments:
Creating a climate for positive behaviour
Recruiting right people and offering proper training
Outbound logistics-These are all the activities concerned with distributing the final product and/or service to the customers.
Ways of boarding the customer
Marketing and sales-This functional area essentially analyses the needs and wants of customers and is responsible for creating
awareness among the target audience of the company about the firms products and services.
Advertisement
Service:There is often a need to provide services like pre-installation or after-sales service before or after the sale ofservice.
Efficiency
Helpfulness of staff
Cabin crew in air & ground staff at check-in
Support activities-The support activities of a company include the following:
Procurement:This function is responsible for purchasing the materials that are necessary for the companys operations. An
efficient procurement department should be able to obtain the highest quality goods at the lowest prices.
Fuels & Oil
http://www.coursework4you.co.uk/sprtopem5.htmhttp://www.coursework4you.co.uk/sprtopem5.htmhttp://www.coursework4you.co.uk/sprtopem5.htm -
8/9/2019 Spice Jet LCC
10/33
Human Resource Management:Human resources are increasingly becoming an important way of attaining sustainable competitive
advantage.
Recruiting
Training & Development
Retention of Employees
Welfare of Employees
Technology Development:This is an area that is concerned with technological innovation, training and knowledge that is crucial for
most companies today in order to survive.
Online check-in service
Inflight email system
Notify
Airport lounges
Firm Infrastructure:This includes planning and control systems-
Finance, accounting, and corporate strategy
-
8/9/2019 Spice Jet LCC
11/33
The Porter Value Chain of Spicejet
FIRM INFRASTRUCTURE (4.41%)
SERVICE
(1.427 %)MARKETING
& SALES
(2.611 %)
OUTBOUND
LOGISTICS(1.339%)
TECHNOLOGY DEVELOPMENT (12.33%)
HUMAN RESOURCE MANAGEMENT (8.36%)
PROCUREMENT (2.13%)
INBOUNDLOGISTICS
(2.704%)
OPERATIONS
(3.735%)
(-0.523%)
(-0.523%)
Primary Activity 11.806%
Support Activity 27.23%
Support Activity > Primary Activity
So it indicates that company is occurring loss.
STPSegmentation- Demographic segmentation on the basis of income.Target- Middle class family- who are currently travelling in AC 1st class railway, frequentbusiness executive traveler.
Positioning- Tofulfill everyones dream of flying
-
8/9/2019 Spice Jet LCC
12/33
7PS OF MARKETING MIXPRODUCTThe Core Service: The core service of the airlines industry is to transport goods andservices to various destinations. As the needs of the people increased the entire system
became more organized and formal. After this stage comes the various supplementary
services.FLEET: The SpiceJet fleet consists of the following aircraft as of April 2010.
SpiceJet Fleet
Aircraft In Service Orders Passengers(Economy) Notes
Boeing 737-800 15 9 189 Deliveries re-starting 2010.
Boeing 737-900ER 5 212
Total 20 9
The Supplementary Services: As per Government of India regulations and for the comfortof our Guests, smoking is not permitted on any SpiceJet flights. SpiceJet also does not
permit the serving or consumption of alcohol on any of its flights.
SpiceJet sells snacks/refreshments and juices on selected flights subject toavailability. Water is provided free of cost on all flights of SpiceJet
The Augmented services : This phase is where the customers expectations are met; theservice providers kept working on new methods to meet the ever-changing customers
demands.
Spicejet provides online booking, which is very convenient for the service users.
http://en.wikipedia.org/wiki/Boeing_737http://en.wikipedia.org/wiki/Boeing_737http://en.wikipedia.org/wiki/Boeing_737http://en.wikipedia.org/wiki/Boeing_737 -
8/9/2019 Spice Jet LCC
13/33
This phase is the most crucial one; with increased competition service will become the final
differentiation.
PROCESSThe process of airline service lays emphasis on the involvement of channels, front line staff,travel agency offices, offices of the tour operators or so form where the services flow &reach to the ultimate users. Spicejet Airlines India offers daily flights to almost allimportant domestic destinations like Mumbai, New Delhi, Bangalore, Chennai, Goa, Kolkata,Pune, Ahmedabad and many more.
Purchasing process: Go to Spicejet Airlines India website. Spicejet India online ticketbooking is very simple, you just need to follow few steps. On the top left side, one is Round
tripand second one is One way. You can choose according to your requirement. Then select
your city and destination where you want to go. Now choose your date, month and day oftravelling. After then choose number of seats for people who would travel. You get your
Spicejet India ticket booked after clicking on the find flights button.Forms of payment: SpiceJet accepts MasterCard, VISA and American Express credit
cards. SpiceJet also accepts Internet Banking.
Check in Procedures: Guests require "Indian Armed Forces" Identity card to becarried, for the contract of carriage to be fulfilled. The identification proof should be
produced at the time of check-in & must be in possession of the guests throughout the
journey. The same will also be checked at time of boarding at the Boarding gate.
Check-in Time Guests are required to report at the Airport at least 2-hours prior todeparture time, at SpiceJet Check-in counters for all flights. Check-in counters for all our
flights close 30 minutes prior to departure.
Baggage AllowanceChecked Baggage SpiceJet allows a free checked baggage allowance of 20 kgper Guest. Excess Baggage will be charged at Rs. 100 per kg per flight.
Assigned SeatingSpiceJet offers assigned seating for all the guests at the Airport check-incounters.As a further value to its customers, SpiceJet allows Guests bookingthrough its internet website/ 24x7 Reservations Center/ AirportTicketing Counters to make an advanced seat selection of their choice at thetime of their booking on payment of a fee of Rs.50/- per seat selection.
-
8/9/2019 Spice Jet LCC
14/33
Boarding: Guests should be at the boarding gate at least 30-minutes prior todeparture as the boarding process closes 20-minutes prior to departure.
Special AssistanceThe use of wheelchairs is limited to only 4 guests per flight, which needs tobe booked in advance through our guest Sales & Service Reservation center.There is no charge for this service. Spice Jet also offers appropriate assistanceto blind guests. In-flight Services
Spice Jet Airline Flight Status:Spice jet flight status gives real time information about flight departures, arrivals
and even delays of all Spicejet flights across the country. You can find your flights
information via flights status. You can fill your flight information in the online form;
first you select your location and arriving location. Then select your flight date and
next flight number and get your flight status.
PR0MOTIONA successful product or service means nothing unless the benefit of such a service can be
communicated clearly to the target market.
Previously they were not doing any promotional activity. But later on they went for it.
They do promotion through
i. Newspaperii. Onlineiii. Television
Promotional Activities
SpiceJet: Spicing it up on TV A set of five commercials of 25 seconds each, in Hindi and English, will kick start the
campaign. The commercials have started live from January 25, 2010, prominent
Hindi and English, news, infotainment and movie channels.
http://book.spicejet.com/skylights/cgi-bin/skylights.cgihttp://www.afaqs.com/perl/advertising/creative_showcase/index.html?id=18763&media=TVhttp://book.spicejet.com/skylights/cgi-bin/skylights.cgi -
8/9/2019 Spice Jet LCC
15/33
Sam Sridharan, COO, SpiceJetSam believes that since LCCs in India are only 3 years old, in the consumers mind, theyreall the same. Most of the LCCs are still very price driven, and have not built a distinct brandpositioning yet.SpiceJet brand stands for, Sam answers, warmth, Indian-ness, Masti(fun) and vibrancy.SpiceJet launches new 'Get more' brand campaignThe airline will spend between Rs 3 crore and Rs 5 crore to launch its new campaign, 'Get
more when you fly SpiceJet', in magazine media and radio advertising.
SpiceJet SBI CardNOW Keep flying and get rewarded!The Card gives you 5 Reward Points for every Rs 100 you spend to buy Spicejettickets on the Card. Thats not all, you get 1 Reward Point for every Rs 100 spent on
the Card otherwise.
Quick Reward Points = Free Tickets!* You can request for Spicejet Vouchers once you earn a minimum of 1000 Reward
Points. Redemption of reward points would happen only for buying Spicejet
Tickets.
50 lacs of Personal Air accident Insurance coverThis insurance cover is meant to provide indemnity to Spicejet SBI MasterCard
Holder in case accidental death is caused while traveling by spicejet Airline only.
PLACEHubs Delhi
Secondary Hubs Mumbai Focus cities Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Pune Online Booking - www.spicejet.com Online Booking - Yatra.com, MakeMyTrip.com, ezeego1.com Credit Cards & Debit Cards Payment, SMS / Call Outlets in every major city and at every airport across the country.
http://www.spicejet.com/http://simpliflying.com/wp-content/uploads/samyuth-sridharan-chief-commercial-officer-spicejet-airlines.jpghttp://www.spicejet.com/ -
8/9/2019 Spice Jet LCC
16/33
Destinations: Hyderabad, Visakhapatnam, Guwahati, IGI Delhi, Vasco da Gama,Ahmedabad, Jammu, Srinagar, Bangalore, Kochi, Mumbai, Pune, Jaipur, Chennai,
Coimbatore, Agartala, Varanasi, Kolkata, Siliguri.
DISTRIBUTION NETWORKDirect Sales is becoming the norm for Low Cost Carriers. While implementing an Internetbased airline distribution for a LCC in Asia, InterGlobe Technologies (IGT) architected asolution that providesstandard XML basedinterfaces to other saleschannels like banks, travelportals etc.
-
8/9/2019 Spice Jet LCC
17/33
PRICESpice jet plays on the low cost segment.
Now it sets its standards high as it competes with the Indian Railway passengers
traveling in the AC coaches; this speaks tremendously for the cheap and discounted
SpiceJet airfares.
SpiceJet marked their entry in the service with INR. 99 fares for the first 99 days and
then followed with an INR. 999 promotional fare for select sectors.
Spice jet offers 'every day spicy fares' to budget conscious travelers.
Low cost airlines that offers budget travel at discounted rates with the best of services.Physical EvidencePhysical Evidence includes:
i. Spice jet SBI Cardii. Ticket Counteriii. Flight Infrastructureiv. Spice jet replica (Terminal 1D of IGI Airport New Delhi)
PEOPLEThis mix of marketing constitutes of 3 factors.
http://www.afaqs.com/perl/advertising/creative_showcase/index.html?id=19451&media=OOH -
8/9/2019 Spice Jet LCC
18/33
v. Employeesvi. Consumersvii. company
Employees: These are the people who are present at the time of delivering the service.These are boarding staff, pilots, air hostess, and security officers. These are well trainedprospects so as to meet the expectation level of travelers.
Consumers: These are travelers. These are in contact with the employees from the time ofarrival at the air port till the end of the board.Company: These mainly imply the people at the back end i.e. the technicians, the peoplehelping spice jet to function at the customer end.
KEY ISSUES & OPPORTRUNITIESTHE EXTERNAL ENVIRONMENTThis sector is largely affected by the tourism sector as well as the policies of Indiangovernment. key factors like the growth of tourism sector; number of passenger isanticipated to increase and increasing wealth and lifestyle of Indian middle class as keyopportunities. Because increase in purchasing power allows them to travel frequentlythrough airlines.
THE INTERNAL FACTOR ESTIMATIONThe foremost strength of this company is its promise for the lowest fare at any route whereit exists. It is also important from this prospective that it has grown up its image in themindset of customers as the cheapest airline. This company also has the tie-up with Indiasleading bank State Bank of India (SBI) for ticketing. Its management team is also proving asstrength for them as they have international experience ofmanaging low cost airlines.
SWOT ANALYSIS :STRENGTH
i. Cheapest airline in customers mind.ii. Second in LCC segment.iii. Fleet with highest no. of seats.iv. Tie-ups with SBI for ticketing.v. First to target middle classs
-
8/9/2019 Spice Jet LCC
19/33
WEAKNESSI. Very limited advertising.II. Reached at the threshold of cost efficiency (not profit generating).III. Small load efficiency.
OPPORTUNITIESI. Growth in tourism sector.II. Increase in purchasing power of Indian middle class.III. International fleets.
THREATSI. High attrition rate.II. Huge competition in LCC (Indigo, Go Air, Air Deccan).
TOWS MATRIX
SO Strategy1. Can start on some new route to grab
huge market potential.2. Company should come up with new
schemes for those new markets.
WO Strategy1. Can purchase new high efficient
carrier with the help of FDI investorsfor cost efficiency.
2. Initially these new carriers can beused for new route so new customer
will feel happy with the service.
-
8/9/2019 Spice Jet LCC
20/33
ST Strategy1. Contract with pilot training institutes
and pilots to stop attrition.2. Added services for competitive
advantage.
WT Strategy1. It can launch new marketing
campaign showing its servicesdespite of bad infrastructure and
services.
In the TOWS matrix we use companys internal strength, weakness and externalopportunities, threats to make strategy.
SO Strategies:As company is known among customer as the cheapest airline of India as well as India has ahuge market potential. So, Spice Jet should act aggressively and start services on somemore route, it can also enhance its market by starting in Bangladesh, Nepal and Burma. Bydoing this they can take first mover advantage because there is no low cost airline existingon this route.
WO Strategies:Spice Jets major weakness is its cargo efficiency and its carriers which are on lease. Spice
Jet can do one thing is that there are FDI investors available to give financial aid so it canreturn its low efficient leased carrier and purchase new high efficient carrier. It will alsohelp it in cost controlling.
ST Strategies :There are many threats where we cannot do much but for few we can make
strategy.i. There is a shortage of pilots in India so they can make a contract with pilot
training institutes for pilots. To stop attrition rate they can sign a long termcontract with pilots so they became legally bound and cannot leave company.
ii. Because of high competition in the segment there are a very little margins,for more margins they can start giving added services like showing movie inflight or describing the outer scenario as on where we are flying etc. These
-
8/9/2019 Spice Jet LCC
21/33
services can be charged or given for free but these services can give Spice Jeta competitive advantage.
WT Strategies:
i. As we already mentioned that the airport infrastructure is not goodand it is affecting service of Spice Jet. Spice Jet can highlight this in itsadvertising that despite the poor infrastructure and facilities we are providingcheaper and good services. It can be helpful to get customers attention.
ii. The biggest threat is the intense competition and price war so the best way toeliminate this is horizontal integration. They should act aggressively and acquireGo Air.
MARKETING STRATEGY FOR CHOOSEN OPTIONSMarketing StrategiesSpiceJet has a unique marketing strategy that focuses on word-of-mouth marketing, supported by
print and Internet media initiatives. To build further on its branding value, SpiceJet has introduced
on-board merchandise sales such as goggles, airplane models, perfumes, caps and watches. Sales of
branded merchandise will also be available through the company's website.While there is stiff competition in the low-cost carrier market in India, the competitive edge for
SpiceJet lies in the quality of service offered during the flight. This has resulted in 42% repeat flyers,
45% of business travel and over 90% of passengers recommending the airline through word ofmouth.
Strategies for Future sustenancea) Expansion PlansSpiceJet started its operations with 5 Boeing aircrafts in its fleet and ramped it up to 18 aircrafts
covering 17 destinations and 117 flights daily by May 2008. It reported a net loss of Rs. 133.51
crores in the year 2007-08 and a loss of Rs. 17.91 crores in 3rd quarter of 2008-09. SpiceJet still has
major expansion plans. It has another 30 aircrafts on order for delivery between 2008 and 2011.
b) Op en to Foreign investments as well as buyoutsOn July 15, 2008 Billionaire Wilbur Ross invested $80 million (about Rs 345 crore) in the low cost
airline.
"If any foreign airline comes on board as a strategic partner, we will certainly welcome them.If the
right opportunity is presented SpiceJetcould be a buyer too." Chief Executive Officer, Sanjay
-
8/9/2019 Spice Jet LCC
22/33
Aggarwal on Feb 18, 2009. He expects consolidation in the Indian airline industry over the next 12
to 24 months as the landscape is too small for so many players.
c) Convenience to passengers
It plans to initiate roaming agents wherein passengers without baggage are assisted by the roamingagents at the airport to skip check-in are some of the other initiatives. In future, Spicejet plans to
start Web Access Protocol (WAP) on the mobile phones of the passengers and SMS check-in
through which passengers can skip check-in by just showing the barcode or the notification on their
mobile phones.
d) Ancillary RevenuesSpiceJet have entered into a Joint venture with The UK based online retailer UnderFivePound.com.
The company through its website, sells a range of mens, womens and childrens clothing along
with other items such as jewellery and houseware gadgets, all for less than 5 and is known for its
discounts and freebies.
Keeping the pricing of the merchandise in sync with the image of a LCC, SpiceJet expects to sell
value-for-money items on board, to its customers.
e) Automation to sustain expansionSpiceJet has automated its cargo business processes to support its aggressive expansion plans for
its domestic cargo operations. This will ensure an integrated management of cargo reservations
and ground operations including flight planning, inbound cargo operations, billing and shipment
tracking. SpiceJet becomes the first Indian LCC to use this high-end business solution.
HIERARCHY OF STRATEGIES
Corporate & SBUs Spice Jets mission is to become Indias preferred low-costairline, delivering the lowest air fares with the highest consumer value, to price sensitiveconsumers. We hope to fulfill everyones dream of flying.
With India's economic and business growth, the percentage of traveling population isburgeoning. More and more Indians are traveling for both business and pleasure andeveryone needs to save both time and money. SpiceJet's vision is to address that andensure that flying is for everyone.
-
8/9/2019 Spice Jet LCC
23/33
-The power to fly for everyoneWith a dynamic fare structure, SpiceJet offers fares that are affordable and significantlylower than most airlines. With contemporary interiors, modern graphics and vibrantcolours, SpiceJet is very much like todays traveler - practical yet stylish. A SpiceJetter will
feel this is the smart, international way to travel, I've made the smart choice. SpiceJet iscommitted to make sure you feel good at the end of a flight, arriving at your destination -fresh and on time.
The pow er of technologySpiceJet's new generation fleet of aircraft is backed by cutting edge technology andinfrastructure to ensure the highest standards in operating efficiency. With maintenancesupport by KLM and state of the art technology from world leaders like Star Navigation,Russell Adams and Tech Log there will be no compromise on safety, reliability or on-timetravel. The company has tied up with Navitaire the worlds renowned low -cost support for
reservations and revenue management. E-booking and e-ticketing facilities are availableonline along with tele-booking.
The power of performance.From aircraft to crew and ground staff the focus is on performance. Each SpiceJet employeeis groomed to be smart, friendly, efficient and well-informed, ensuring that any interactionwill make you feel welcome and looked after. Experienced pilots, well-trained cabin crewwill make every flight a comfortable one. The philosophy is no-frills but high-performance.
The pow er of safetySpiceJet invests heavily in safety, impeccable maintenance and a high level of expertise.Experienced pilots, engineers and maintenance crew go through rigorous training and arehand-picked for their technical knowledge and expertise. So you can rest assured that thereis no cut-back in this key area of modern day flying.
The power behind the power to flySpiceJet's key management personnel are all senior, seasoned professionals and havesignificant international experience in both launching and managing low-cost airlines. Withthousands of cumulative man hours in the industry, the management is committed to bring
to customers in India all the benefits of the global revolution in the skies. SpiceJet aims tomake travel comfortable, affordable and refreshingly efficient experience for all.
Strategy at Functional level-Cost Focus- Spicejet is operating at very low cost. The aim of Spicejet to provide betterservice at lower cost. It is able to achieve low cost because its operational cost is very low.
-
8/9/2019 Spice Jet LCC
24/33
Functional Strategies Marketing Strategies
Product-Market definition and analysis
Ansoffs Product-Market Expansion grid
ANSOFFS PRODUCT/MARKET
EXPANSION GRID
CURRENT NEW
PRODUCTS PRODUCTS
CURRENT
MARKETS
NEW
MARKETS
1.More purchasing andusage from existing
customers
2.Gain customers from
competitors
1.Product modification vianew features
2.Different quality levels
1.New market segments
2.New distribution
channels
1.Joint venture
2.Mergers
3.Acquisition/take-
over
Spice jet
ProductDevelopmentStrategy
DiversificationStrategy
MarketDevelopment
Strategy
MarketPenetration
Strategy
Competitive position-Market follower- There is Air-Deccan has already operating in LCC (low cost carrier)segment. It entered in the market as a market follower. It followed the strategies like low
pricing and aircraft on lease etc.
Entry Level
-
8/9/2019 Spice Jet LCC
25/33
The Chasm
Early Late Markets
Techies Visionaries Pragmatists Conservative Sceptics
CHASM
Company
Innovator Early
AdopterEarlyMajority
LateMajority Laggard
Consumer
Spicejet
It is Visionary because in 2003 the LCC segment has introduced and in 2005 Spicejet has
entered in that segment. Spicejet entered in the market in growth stage before CHASM.
VALUE-ADDITION TO CUSTOMERSSpiceJet has introduced online travel insurance in partnership with TATA AIG with
which they have maintained a consistent rate of 28 per cent of sales since the introduction
of the product.
It provides value-adds to clients by having internet banking for customers, wherein
they can select any bank with which they have an account and can use their own login
credentials, which is essentially for customers not owning a credit card or not inclined to
using one, are among the other major initiatives.
Apart from these, it provides efficient information flow to clients, wherein the
system gives the clients a recorded call giving information about the flight; creating a portal
for crew (pilots and cabin crew), which enables them to communicate with each other.
SpiceJet plans to introduce an on-board wireless telephone system for all Spicejet
passengers.
-
8/9/2019 Spice Jet LCC
26/33
PERCEPTUAL MAPPING
-
8/9/2019 Spice Jet LCC
27/33
Branding Strategy:Spice Jet was conceptualized as an airline that provides safe, value-for-money, comfortableand hassle-free air travel. The brands rapid progress over its first four years was built on
excellent customer experiences and positive word of mouth. We realize that as we grow,we need to expand our brands reach and appeal to an audience who will want to travelmore than before and for reasons other than price; with a wider range of expectations fromthe airline. The challenge will always be to connect with this audience and position SpiceJet has a brand that offers more than others in its competitive set.In keeping with spice jet objective of establishing top of mind recall, Spice Jet has launcheda campaign moving away from pure market driven price point announcement to
communicating unique brand offerings, crystallized into clear brand message Get morewhen you fly Spice Jet. The unique value propositions that Spice Jet brings to eachconsumer, forms the essence of this national campaign.The communication highlights the unique value offerings including complementary
supervision of unaccompanied minors; free of charge web check-in; introduction of hot teaand coffee service; waiver for sports kits etc. The brand emerges as a product of customersvoice - as one that listens, understands and acts to deliver a superior service experience.This campaign positions the brand as one beyond price as one that offers experiences thatconsumers value. This positioning cuts through the clutter in a market driven by pricebased competition and distribution channels which commoditize our services.
-
8/9/2019 Spice Jet LCC
28/33
2. Competitive Analysiso Consolidation to result in increase in fares and yields
Consolidation in the domestic aviation sector. From a fragmented sectorwith more than 10 players, today there are 3 major players, and a coupleof other smaller players in the LCC space.
o The top three players together have a combined market share of around 80%Government plans to invest Rs 40,000 crore during the 11 th five-year plan toimprove airport infrastructure in India
3. Cost Comparison : Domestic Peers Cost leadership gives Spicejet an edge over peersAvailable Seat Kilometres (ASKM) : Represents the aircraft seating capacity multipliedby the number of kilometres the seats are flown
4. Cost and Value Driverso High seat densityo Single economy class having 189 seats.o Focuses on maximum space utilization for generating more revenue per aircraft.
5. Cost and Value Driverso Direct Distribution of Ticketso Sells its tickets via the Internet or call centre route.o Bypasses travel agents commissions, and expensive GDS (global distribution
system).o High aircraft utilizationo Consistently reporting high aircraft utilization (around 12 hours a day), in line
with international benchmarks.o Because of its high on-time performance (82% within 15 minutes) and a low
turnaround time of 20-25 minutes No loading of meals or complex cargo andfaster check-in system helps in reducing turn around time.
-
8/9/2019 Spice Jet LCC
29/33
BLUE PRINT
Moment of TruthGift bags for kids on board.Roving check-in facility at the airport.A parking person offering to park the car for the customer in a crowded parking area.Spicejet staff wishing a warm and unexpected Good Morning while passing by a customer
in the corridor.A person reached an hour early and he went CCD with his friend. He forgot his flight & he
got a reminder call from Spicejet.During the checks, cargo fire alarm module (unit) failed and it went off. As a matter of
caution the plane was declared unserviceable and passengers were shifted to another
aircraft.Delay in take-off.Well-mannered and enthusiastic, the flight attendants of Spicejet.The warmth and friendliness of in-flight services.Employee ask to customer for ticket.
Flour manager instruct to customers.
-
8/9/2019 Spice Jet LCC
30/33
Wishing of airhostess.Use of sheet belt.
Boarding pass is given after an avoidable delay, it is a dull moment of truth.
The ground staff person goes out if its way to help a passenger load his bags on the trolly, it
is a bright moment.
Wheelchair assistance at the airport.
Cause and Effect Chart for Airline Departure Delays :
-
8/9/2019 Spice Jet LCC
31/33
SERVQUAL ANALYSIS
Analysis and conclusion of servqualRating :
1.very poor 2.poor 3.good 4.very good 5.excellent
S.No VARIABLE RATING(1 to 5)
1 Up-to-date aircraft and in-flight facility 3 Good
2 Meal service (items, tastes, freshness, quantity, appearance, etc) 3 Good3 Seating comfort 3 Good
4 Seat space and Legroom 3 Good
5 In-flight entertainment services (books, newspapers, movies, magazines,etc.)
2 Poor
6 In-flight entertainment services (books, newspapers, movies, magazines,etc.)
2 Poor
7 Promptness and accuracy of reservation and ticketing 3 Good8 Frequent flyer program 3 Good
9 On-time performance 3 Good
10 Sincere interest in solving problems (flight cancellation, baggage loss,etc.) 3 Good
11 Safety record 4 Very go
12 Check-in service (waiting time, efficiency, etc) 3 Good13 Promptness and accuracy of baggage delivery 3 Good
14 The amount imposed for overweight baggage 2 Poor
15 Providing seat that passengers prefer 2 Poor16 Neat appearance of employee 3 Good17 Employees who are willing to help passengers 4 Very go
18 Courtesy of employees 3 Good
19 Employees who have the knowledge to answer passengers questions 4 Very go
20 Give passengers personal attention 3 Good21 Convenient flight schedule 2 Poor
22 Non-stop flight 2 Poor
-
8/9/2019 Spice Jet LCC
32/33
Airline image
Question Yes (%) No(%)
I have always had a good impression of this airline? 100 0
I believe that this airline has a better image than its competitors? 64.9 35.07
In my opinion, this airline has a good image in the minds ofpassengers?
78.57 21.42
Would you consider flying on this airline again in the future? 78.57 21.42
Would you recommend this airline to other people? 92.85 7.14
ConclusionThe awareness strategy are very good as all customers have a good impression ofthe airline.
It is better positioned as low cost airline than its competitors.Its able to create product loyalty.
Factor analysis
Factor Variable Variablerating
Factorrating
Reliability andCustomer services Courtesy of employeesEmployees who are
willing to help passengers
Employees who haveknowledge to answerspassengers questions
Give passenger personalattention
Neat appearance ofemployees
Safety of flying
Sincere interest inproblem solving
On-time performance
34
4
4
34
43
3.62
Convenienceand
Convenience ofreservation and ticketing
3
-
8/9/2019 Spice Jet LCC
33/33
accessibility Promptness and accuracyof reservation andticketing
Check-in service
Frequent flyer program
Promptness and accuracyof baggage delivery
Non stop flight
Convenient flightschedule
Providing seat thatpassenger prefer.
The amount imposed foroverweight baggage
3
334
3
22
2
3.12
In-flightServices
Seating comfort
Seat space and legroom
Meal service
In-flight entertainmentservices
Up-to- date aircraft andin-flight facility
334
2
3
3
The reliability and customer service is in between good and very good.
Te convenience and accessibility is good.
The In-flight services are also good.
ConclusionIn Aviation industry in India there are very high competition and less profit opportunity.Spicejet is
a low-cost airline. Their marketing theme offering low everyday spicyey fares and great guest
services to prices conscious travelers. Their aim to compete with the Railways passengers
travelling in AC coaches. They are running in losses for last 2 years so they expand their business
by entering in the cargo services in 2009 which are running profitably. Spicejet also planning to
expand their business by increasing theit fleet size by 2012.
------------